Document:

EXHIBIT
10.9

 

	
   

  	
  Dated:
  May 9, 2008

  

 

NEITHER THIS NOTE NOR THE
SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION, OR THE SECURITIES COMMISSION OF ANY STATE,
IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, AS
EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY, OR THE
COMPANY OTHERWISE SATISFIES ITSELF THAT SUCH TRANSACTION IS EXEMPT FROM
REGISTRATION.  TRANSFER OF THE SECURITIES
INTO WHICH THIS NOTE IS CONVERTIBLE IS FURTHER RESTRICTED AS PROVIDED IN THE
COMPANY’S AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT, AS IT MAY BE
AMENDED FROM TIME TO TIME, A COPY OF WHICH IS AVAILABLE AT THE OFFICES OF THE
COMPANY.

 

THIS PROMISSORY NOTE IS
SUBORDINATED TO ANY PRESENT OR FUTURE INDEBTEDNESS OWING FROM THE MAKER TO
FIFTH THIRD BANK AND ITS SUCCESSORS AND ASSIGNS, AND MAY BE ENFORCED ONLY
IN ACCORDANCE WITH THAT CERTAIN SUBORDINATION AGREEMENT, DATED MAY9, 2008,
AMONG REG VENTURES, LLC, RENEWABLE ENERGY GROUP, INC., ILLINOIS FINANCE
AUTHORITY, AND FIFTH THIRD BANK. THIS PROMISSORY NOTE IS ALSO SUBORDINATED TO
ANY INDEBTEDNESS OWING FROM THE MAKER TO ANY REPLACEMENT LENDER ON ACCOUNT OF
ANY SENIOR LOAN.

 

	
  No. 1

  	
  U.S.
  $21,700,000

  

 

BLACKHAWK
BIOFUELS, LLC

 

CONVERTIBLE
SECURED SUBORDINATED NOTE

Due
May 9, 2013 [Note:  due date to be fifth (5th) anniversary

of
Loan Agreement closing date] (the “Due Date”)

 

This Convertible Secured
Subordinated Note (“Note”) is issued by Blackhawk Biofuels, LLC, a Delaware
limited liability company (the “Company”). 
This Note is designated as the Company’s Convertible Secured
Subordinated Note, due on the date set forth above, in the principal amount of
TWENTY-ONE MILLION SEVEN HUNDRED THOUSAND AND NO/100 U.S. Dollars

 

 

(U.S. $21,700,000) (the “Note”).  This Note is issued pursuant to the certain
Subordinated Loan Agreement of even date herewith (the “Loan Agreement”) by and
between the Company and REG Ventures, LLC, an Iowa limited liability company (“REG”).  Capitalized terms not otherwise defined
herein shall have the same meaning as ascribed to them in the Loan
Agreement.  This Note is subordinate to
any indebtedness of the Company to Fifth Third Bank under that certain Loan
Agreement of even date herewith (and any renewal or replacement credit facility
consisting of a construction/term loan in the maximum principal amount of
$24,650,000 and/or a revolving line of credit in the maximum principal amount
of $5,000,000) and to any working capital loan facility of the Company, but
only to the extent that such working capital loan facility is secured by
current assets of the Company.  This Note
is secured by a subordinated mortgage of leasehold, security agreement,
assignment of leases and rents and fixture filing of even date herewith between
the Company and REG (collectively, the “Security Documents”). Notwithstanding
anything in the Subordinated Loan Documents to the contrary, payment and
performance under the Subordinated Loan Documents is subject and subordinate to
the terms, conditions and restrictions set forth in the Senior Loan Documents
with Fifth Third Bank and/or Replacement Lender.

 

FOR
VALUE RECEIVED, the Company promises to pay to REG, or its registered assigns
(the “Holder”) at the address for notices in Section 5 hereof, the
principal sum of TWENTY-ONE MILLION SEVEN HUNDRED THOUSAND AND NO/100 U.S.
Dollars (U.S. $21,700,000), on or before the Due Date (as the same may be
extended as provided hereunder), or such earlier date or dates as the Note is
required to be repaid as provided hereunder (the “Maturity Date”) and to pay
interest to the Holder on the aggregate unconverted and outstanding principal
amount of this Note at a rate equal to the Interest Rate.  Interest shall be due quarterly on the first
Business Day of each calendar year quarter commencing July 1, 2008 payable
at the option of the Company either in cash or Class A limited liability
company units of the Company (“Units”) at a price of $2.00 per Unit.  Unless accrued and unpaid interest is paid
earlier, all accrued and unpaid interest will be paid on the Maturity Date.  Interest on this Note shall accrue daily
commencing on the date of this Note until the payment in full, or conversion
of, the outstanding principal sum, together with all accrued and unpaid
interest and other amounts, which may become due hereunder.

 

The Company shall have the right to prepay
the principal amount of this Note, in whole but not in part, at any time and
from time to time before the Maturity Date without penalty.  Concurrently with each such prepayment or
upon the conversion of the Note pursuant to Section 4 of this Note,
the Company shall pay all accrued and unpaid interest on the principal amount
of the Note that is prepaid or converted to the extent that such accrued and
unpaid interest is not otherwise converted. 
All prepayments shall be applied first to any costs of collection
related to this Note, second to accrued and unpaid interest on the principal
amount of the Note, and then to principal of this Note.

 

This Note is subject to the
following additional provisions:

 

Section 1.  This Note is exchangeable for an equal
aggregate principal amount of Notes of different authorized denominations, as
requested by the Holder surrendering the same. No service charge will be made
for such registration of transfer or exchange.

 

2

 

Section 2.  This Note has been issued subject to certain
investment representations of the original Holder set forth on Exhibit A
attached hereto.  Subject to the
restrictive legend at the top of the first page of this Note, this Note
(or the Notes as contemplated by Section 1) is transferable by the Holder
upon due presentment to the Company of a written assignment and instructions
for transfer by the registered Holder. 
Prior to due presentment to the Company for transfer of this Note, the
Company and any agent of the Company may treat the person in whose name this
Note is duly registered as the owner hereof for the purpose of receiving
payment as herein provided and for all other purposes, whether or not this Note
is overdue, and neither the Company nor any such agent shall be affected by
notice to the contrary.

 

Section 3.

 

(a)           An “Event of Default”, wherever used
herein, means any one of the following events (whatever the reason and whether
it shall be voluntary or involuntary or effected by operation of law or
pursuant to any judgment, decree or order of any court, or any order, rule or
regulation of any administrative or governmental body):

 

(i)            any default in the payment of the principal of or
interest on this Note as and when the same shall become due and payable
(whether on a Conversion Date or the Maturity Date or by acceleration or
otherwise), and such default shall not have been remedied within five (5) business
days after the date on which notice of such default shall have been given to
the Company;

 

(ii)           the failure to observe or perform any other covenant,
agreement or warranty contained in, or otherwise commit any breach of, this
Note, and such failure or breach shall not have been remedied within thirty
(30) days after the date on which notice of such failure or breach shall have
been given to the Company;

 

(iii)          the Company shall commence a case under any applicable
bankruptcy or insolvency laws as now or hereafter in effect or any successor
thereto, or the Company commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to the Company, or there is
commenced against the Company and not dismissed within sixty (60) days, any
such bankruptcy, insolvency or other proceeding; or the Company is adjudicated
insolvent or bankrupt; or any order of relief or other order approving any such
case or proceeding is entered; or the Company suffers any appointment of any
custodian or the like for it or any substantial part of its property which
continues undischarged or unstayed for a period of sixty (60) days; or the
Company makes a general assignment for the benefit of creditors; or the Company
shall fail to pay, or shall state that it is unable to pay, or shall be unable
to pay, its debts generally as they become due; or the Company shall call a
meeting of its creditors with a view to arranging a composition, adjustment or
restructuring of its debts; or the Company shall by any act or failure to act
expressly indicate its consent to, approval of or acquiescence in any of the
foregoing; or any other action is taken by the Company for the purpose of
effecting any of the foregoing;

 

3

 

(iv)            there
shall be any Event of Default (after any required notice or expiration of any
applicable cure period) under the Loan Agreement or any of the Security
Documents; or

 

(iv)          the Company shall fail for any reason to register the Units
into which this Note has been converted in the name of the Holder in the
Company’s Unit ledger or fails to execute the Holder’s LLC Agreement Signature Page (as
defined in Section 4(b) prior to the tenth (10th) business
day after a Conversion Date pursuant to and in accordance with Section 4(b),
or the Company shall provide notice to the Holder, including by way of public
announcement, at any time, of its intention not to comply with requests for conversions
of the Note in accordance with the terms hereof.

 

(b)           Notwithstanding
the foregoing, no Event of Default may be declared or shall be deemed to exist
or be continuing if the events which would otherwise constitute an Event of
Default are primarily attributable to the negligence or intentional misconduct
of REG or an affiliate of REG or a failure by REG or an affiliate of REG to
operate the Company’s biodiesel plant substantially in accordance with the
terms of any management and operational services agreement or similar agreement
between the Company and REG or an affiliate of REG.

 

(c)          If
an Event of Default occurs (including, but not limited to, if the Holder
permits the Note to remain outstanding after the Maturity Date or a Conversion
Date), interest shall continue to accrue at the Default Rate, and the Holder
shall have the right to declare immediately due and payable all amounts owing
under this Note.  Except as provided in
this Section 3, the Holder need not provide and the Company hereby waives
any presentment, demand, protest or other notice of any kind, and the Holder
may immediately enforce any and all of its rights and remedies hereunder and
all other remedies available to it under applicable law. Such declaration may
be rescinded and annulled by the Holder at any time prior to payment
hereunder.  No such rescission or
annulment shall affect any subsequent Event of Default or impair any right
consequent thereon.

 

Section 4.

 

(a)           All amounts outstanding under this Note, including both
principal and interest, shall be convertible at the option of the Holder, in
whole or in part, into Units at a price of $2.00 per Unit at any time from and
after the earlier of (i) the Maturity Date; (ii) the prepayment of
the principal balance of this Note; (iii) the closing of the sale of
shares of Common Stock of Renewable Energy Group, Inc., a Delaware
corporation (“REG”), in an IPO; (iv) a Change of Control of REG; or (v) any
time after three (3) years from the date of this Note.

 

(b)           The
Holder shall effect conversions under this Section 4 by delivering
to the Company a completed notice in the form attached hereto as Exhibit B
(a “Conversion Notice”) and a Signature Page to Amended and Restated
Limited Liability Company Agreement in the form attached hereto as Exhibit C
(the “LLC Agreement Signature Page”). 
The Conversion Notice shall set forth the amount of principal and
interest under the Note to be converted and the principal amount of this Note
and all accrued and unpaid interest thereon remaining unconverted as of the
date of the conversion.  The LLC
Agreement Signature Page will document the Holder’s agreement to become a
party to the Company’s Amended and Restated Limited

 

4

 

Liability Company Agreement, as it may be amended from time to
time.  The date on which a Conversion
Notice is delivered to the Company is the “Conversion Date” relating to such
Conversion Notice, and on and after such date, the Holder entitled to receive
the equity securities issuable upon conversion of all or a portion of the Note
shall be treated for all purposes as the record holder of such securities.  Unless the Holder is converting the entire
principal and interest outstanding under this Note, the Holder is not required
to physically surrender this Note to the Company in order to effect
conversions.  Conversions hereunder shall
have the effect of reducing the outstanding principal amount of this Note plus
all accrued and unpaid interest thereon, by the amount so converted, which shall
be evidenced by entries set forth in the Conversion Notice.  The Holder and the Company shall maintain
records showing the principal and interest amounts converted and the date of
such conversions.  The Company shall
cause to be issued and delivered certificates to the Holder on or before the
tenth (10th) business day after a Conversion Date.

 

(c)             Upon
a conversion under this Section 4, neither the Company nor REG
shall be required to issue or deliver Unit certificates representing fractions
of Units, and, in lieu thereof, the Company shall make a cash payment for such
fractional Unit.

 

(d)             The
issuance of certificates for Units on conversion of the Note under this Section 4
shall be made without charge to the Holder thereof for any documentary stamp or
similar taxes that may be payable in respect of the issuance or delivery of
such certificates, provided that neither the Company nor REG shall be
required to pay any tax that may be payable in respect of any transfer involved
in the issuance or delivery of any such certificates upon conversion in a name
other than that of the Holder of the Note so converted, and neither the Company
nor REG shall be required to issue or deliver such certificates unless or until
the person or persons requesting the issuance thereof shall have paid to the
Company the amount of such tax or shall have established to the satisfaction of
the Company that such tax has been paid.

 

(e)             All
Units issued upon conversion under this Section 4 hereof shall be
subject to applicable securities law transfer restrictions and transfer and
other restrictions under the Company’s Amended and Restated Limited Liability
Company Agreement, as it may be amended from time to time.

 

(f)              In
the event of any stock split, stock dividend, recapitalization, reorganization,
merger, consolidation, share combination or similar transaction with respect to
the Units after the date hereof, the conversion price and number of Units to be
issued to the Holder upon conversion shall be equitably adjusted.  Additionally, equitable adjustments shall be
made to reflect any other changes in the Units, including changes resulting
from a combination of outstanding Units or other sale, merger, consolidation or
similar transaction.

 

(g)             REG
shall have the preemptive and prior right to acquire a proportionate amount of
any capital or membership units of Blackhawk or securities convertible or
exchangeable for such units (the “Offered Securities”) proposed to be sold by
Blackhawk at the price and on the other terms and conditions proposed by
Blackhawk for a period of thirty (30) days after written notice of the proposed
sale is deemed given by Blackhawk to REG. 
REG’s preemptive right is exercisable as to the proportion of the
Offered Securities that the Units owned by REG or which it has the right to
acquire upon conversion of the Note or pursuant to the exercise of

 

5

 

any option or warrant bears to all other capital units of Blackhawk on
a fully diluted basis.  REG shall have no
preemptive right with respect to (i) Offered Securities issued as
compensation to managers, officers, agents or employees of Blackhawk, its
subsidiaries or affiliates; (ii) Offered Securities issued to satisfy
conversion or option rights created to provide compensation to managers,
officers, agents or employees of Blackhawk, its subsidiaries or affiliates; or (iii) Offered
Securities sold otherwise than for money. 
Offered Securities subject to preemptive rights that are not acquired by
REG may be issued to any Person for a period of one year after being offered to
REG at a consideration set by the Board of Managers of Blackhawk that is not
lower than the consideration offered by Blackhawk to REG.  An offer at lower consideration or after the
expiration of one year shall again be subject to the preemptive right of REG.

 

Section 5.               Any and all notices or other
communications or deliveries to be provided by the parties under this Note,
including, without limitation, any Conversion Notice, shall be in writing and
delivered personally, by facsimile, sent by a nationally recognized overnight
courier service or sent by certified or registered mail, postage prepaid,
addressed as follows:

 

If to the Company:

 

Blackhawk Biofuels, LLC

22 South Chicago Avenue

Freeport, Illinois 61032

Attention:  Ron Mapes

Facsimile:  (815) 235-4727

 

Lindquist &
Vennum, PLLP

Attention:  Dean Edstrom

4200
IDS Center

80
South Eighth Street

Minneapolis,
MN 55402

Facsimile:
(612) 371-3207

 

If to the Holder:

 

REG Ventures, LLC

416 S. Bell Avenue

P.O. Box 888

Ames, IA 
50010

Attention: 
Jeffrey Stroburg

Facsimile: 
(515) 239-8009

 

Wilcox Polking Gerken Schwarzkopf &
Copeland, P.C.

Attention: 
John Gerken

115 E. Lincolnway Street, Suite 200

Jefferson, IA 50129

Facsimile: (515) 386-8531

 

6

 

or such other address or facsimile number as a party may specify for
such purposes by notice to the other party delivered in accordance with this
Section. Any notice or other communication or deliveries hereunder shall be
deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile with
confirmation of receipt at the facsimile telephone number specified in this Section prior
to 5:00 p.m. (the recipient’s time), (ii) the date after the date of
transmission, if such notice or communication is delivered via facsimile with
confirmation of receipt at the facsimile telephone number specified in this Section later
than 5:00 p.m. (the recipient’s time) on any date and earlier than 11:59 p.m.
(the recipient’s time) on such date, (iii) four (4) days after
deposit in the United States mail, (iv) the Business Day following the
date of mailing, if sent by nationally recognized overnight courier service, or
(v) upon actual receipt by the party to whom such notice is required to be
given.

 

Section 6.               This Note shall not entitle the
Holder to any of the rights of a member of the Company or a holder of Units,
including without limitation, the right to vote, to receive dividends or other
distributions, or to receive any notice of, or to attend, meetings of Unit
holders or any other proceedings of the Company, unless and to the extent
converted into the Units in accordance with the terms hereof.

 

Section 7.               If this Note is mutilated, lost,
stolen or destroyed, the Company shall execute and deliver, in exchange and
substitution for and upon cancellation of the mutilated Note, or in lieu of or
in substitution for a lost, stolen or destroyed Note, a new Note for the
principal amount of this Note so mutilated, lost, stolen or destroyed but only
upon receipt of evidence of such loss, theft or destruction of such Note, and
of the ownership hereof, and indemnity, if requested, all as shall be
reasonably satisfactory to the Company.

 

Section 8.               THE VALIDITY AND INTERPRETATION OF
THIS NOTE, AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF IOWA WITHOUT GIVING
EFFECT TO PROVISIONS RELATING TO CONFLICTS OF LAW TO THE EXTENT THE APPLICATION
OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

 

Section 9.               Any waiver by the Company or the
Holder of a breach of any provision of this Note shall not operate as or be
construed to be a waiver of any other breach of such provision or of any breach
of any other provision of this Note.  The
failure of the Company or the Holder to insist upon strict adherence to any
term of this Note on one or more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Note. Any waiver must be in writing.

 

Section 10.             If any provision of this Note is
invalid, illegal or unenforceable, the balance of this Note shall remain in effect,
and if any provision is inapplicable to any person or circumstance, it shall
nevertheless remain applicable to all other persons and circumstances. If it
shall be found that any interest or other amount deemed interest due hereunder
shall violate

 

7

 

applicable laws governing usury, the applicable rate of interest due
hereunder shall automatically be lowered to equal the maximum permitted rate of
interest.

 

Section 11.             Whenever any payment or other obligation
hereunder shall be due on a day other than a business day, such payment shall
be made on the next succeeding business day.

 

Section 12.             If any action at law or equity is
necessary to enforce or interpret this Agreement, the prevailing party shall be
entitled to receive from the other party or parties reasonable attorneys’ fees,
costs and necessary disbursements (including costs of collection) in addition
to any other relief to which the prevailing party or parties may be entitled.

 

Section 13.             The Company shall reserve, issue
and deliver to the Holder the number of Units as may be necessary under the
conversion rights set forth in this Note or as otherwise required to be issued
pursuant to this Note.  The Company
represents and warrants that all securities issued by the Company and delivered
to the Holder through the Company pursuant to this Note (i) will be duly
authorized and validly issued and will be fully paid and nonassessable without
any additional consideration, (ii) will be issued in full compliance with
all applicable state and federal laws concerning the issuance of securities,
and (iii) will not violate the Company’s Certificate of Formation, the
Company’s Amended and Restated Limited Liability Company Agreement, as it may
be amended from time to time, or any preemptive right or any agreement,
contract, license, arrangement, understanding evidence of indebtedness, note,
lease or other instrument binding on the Company.

 

[SIGNATURE
PAGE FOLLOWS]

 

8

 

IN WITNESS WHEREOF, the Company has caused
this Note to be duly executed by a duly authorized officer as of the date first
above indicated.

 

 

BLACKHAWK BIOFUELS, LLC,

a Delaware limited liability company

 

 

	
  By:

  	
     /S/ Ronald L. Mapes

  	
   

  
	
   

  	
     Ronald L. Mapes, Chair

  	
   

  

 

CONVERTIBLE SECURED SUBORDINATED NOTE
SIGNATURE PAGE

 

9

 

EXHIBIT A

 

HOLDER
INVESTMENT REPRESENTATIONS

 

In connection with the delivery of the
Convertible Subordinated Note dated May 9, 2008 in the principal amount of
$21,700,000 (the “Note”) issued by Blackhawk Biofuels, LLC, a Delaware limited
liability company (the “Company”), Holder understands that neither the Note nor
the Class A limited liability company units of the Company into which the
Note is convertible (collectively the “Securities”) have been registered under
the Securities Act of 1933, as amended (the “Securities Act”), or applicable
state securities laws (together with the Securities Act, the “Securities Laws”).
Holder also understands that the Securities are being offered and sold pursuant
to an exemption from registration contained in the Securities Laws based in
part upon Holder’s representations. Holder hereby represents and warrants to
the Company as follows:

 

(a)           Restriction
on Transfer.  Holder understands and
agrees that the Securities may not be transferred to any third party except in
accordance with the Company’s Amended and Restated Limited Liability Company
Agreement, as it may be amended from time to time.  As a consequence, Holder understands that the
Securities may be prohibited from sale or transfer for an extended period of
time and that Holder may have extremely limited opportunities, if any, to
dispose of the Securities.  Holder
consents to the placement of a stop transfer order with any registrar and
transfer agent for the Securities and to the placement of appropriate legends
consistent with the foregoing on any certificates which may be issued
representing the Securities.

 

(b)           Holder
Bears Economic Risk.  Holder is capable
of evaluating the merits and risks of its investment in the Company and has the
capacity to protect its own interests. Holder must bear the economic risk of
this investment indefinitely unless the Securities are registered pursuant to
the Securities Laws, or an exemption from registration is available. Holder
understands that the Company has no present intention of registering the
Securities. Holder also understands that there is no assurance that any
exemption from registration under the Securities Laws will be available and
that, even if available, such exemption may not allow Holder to transfer all or
any portion of the Securities under the circumstances, in the amounts or at the
times Holder might propose.

 

(c)           Acquisition
for Own Account.  Holder is acquiring the
Securities for its own account for investment only, and not with a view towards
their distribution except as permitted by the Securities Laws.

 

(d)           Holder
Can Protect Its Interest.  Holder
represents that by reason of its, or of its management’s, business or financial
experience, Holder has the capacity to protect its own interests in connection
with the transactions evidenced by this Note and the related warrant.

 

(e)           Accredited Investor. 
Holder represents that it is an accredited investor within the meaning
of Rule 501(a) of Regulation D under the Securities Act.

 

10

 

(f)            Company
Information.  Holder has received and
read the financial records and other disclosures provided to it by the Company
and has had an opportunity to discuss the Company’s business, management and
financial affairs with directors, officers and management of the Company.  Holder has also had the opportunity to ask
questions of and receive answers from, the Company and its management regarding
the terms and conditions of this investment.

 

(g)           Rule 144.  Holder acknowledges and agrees that the
Securities are “restricted securities” as defined in Rule 144 promulgated
under the Securities Act as in effect from time to time and must be held
indefinitely unless they are subsequently registered under the Securities Laws
or an exemption from such registration is available. Holder has been advised or
is aware of the provisions of Rule 144, which permits limited resale of
shares purchased in a private placement subject to the satisfaction of certain
conditions, including, among other things: the availability of certain current
public information about the Company, the resale occurring following the
required holding period under Rule 144 and the number of shares being sold
during any three-month period not exceeding specified limitations.

 

(h)           Residence.  The
office or offices of Holder in which its investment decision was made is
located at the address of Holder set forth in Section 5 of the Note.

 

 

	
  Dated: May 9, 2008

  	
  REG VENTURES, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
						

 

11

 

EXHIBIT B

 

NOTICE OF CONVERSION

 

(To be Executed by the Registered Holder in order to Convert the Note)

 

The undersigned hereby elects to convert the attached Note 1 issued by
Blackhawk Biofuels, LLC, a Delaware limited liability company (the “Company”),
into                            
Class A limited liability company units of the Company (the “Units”),
according to the conditions hereof, as of the date written below.  If Units are to be issued in the name of a
person other than the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto and is delivering herewith such certificates and
opinions as reasonably requested by the Company and in accordance therewith. No
fee will be charged to the holder for any conversion, except for such transfer
taxes, if any.

 

	
  Conversion Calculations:

  	
  Holder’s Signature:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date to Effect Conversion

  	
   

  	
  Name of Holder

  
	
   

  	
   

  	
   

  
	
  $

  	
   

  	
   

  	
   

  
	
  Amount to be Converted

  	
   

  	
  Signature of Holder or Authorized Person

  
	
   

  	
   

  	
   

  
	
  $

  	
   

  	
   

  	
   

  
	
  Applicable Conversion Price

  	
   

  	
  Name

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Number of Units to be issued

  	
   

  	
  Title (if applicable)

  
	
   

  	
   

  	
   

  
	
  $

  	
   

  	
   

  	
   

  
	
  Remaining
  Principal Balance and

  any Accrued and Unpaid Interest

  	
   

  	
   

  
	
   

  	
   

  	
  Residence or Principal Office Address

  
	
   

  	
   

  	
   

  
	
  Date

  	
   

  
	
   

  	
   

  
	
   

  	
  Telephone Number (include area code)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Social
  Security or Taxpayer ID Number

  
							

 

12

 

EXHIBIT C

 

BLACKHAWK BIOFUELS, LLC

 

SIGNATURE PAGE TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

 

This
Signature Page to Amended and Restated Limited Liability Company Agreement
constitutes an Amendment to that certain Amended and Restated Limited Liability
Company Agreement, as it may be amended and may subsequently be amended (the “Agreement”),
by and among the Members of Blackhawk Biofuels, LLC, a Delaware limited
liability company (the “Company”), and the persons and entities who are or
hereafter become parties to or bound by the Agreement, as provided therein or
herein.

 

WHEREAS,
the undersigned wishes to acquire Class A Units of the Company; and

 

WHEREAS,
the Agreement contains provisions which provide that the rights and obligations
of members of the Company and of holders of Units of the Company will be
determined by the Agreement;

 

NOW,
THEREFORE, in consideration of the premises, the mutual covenants and
commitments set forth herein and in the Agreement, and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, by
executing this Signature Page, the undersigned hereby becomes a party to and is
hereby bound by all of the provisions of the Agreement as it may be amended and
may subsequently be amended and agrees that the Class A Units of the
Company acquired by the undersigned are Class A Units within the meaning
of that term in the Agreement.

 

Except
as specifically amended hereby, all of the provisions of the Agreement shall
remain in full force and effect and terms defined in the Agreement shall have
the same meaning herein.

 

This
Signature Page to Amended and Restated Limited Liability Company Agreement
shall be effective upon the acceptance and execution hereof by the Company.

 

IN
WITNESS WHEREOF, the undersigned has (have) executed this Signature Page to
Amended and Restated Limited Liability Company Agreement as of the date set
forth below.

 

[Signatures
follow on next page]

 

13

 

	
  Individuals:

  (Includes joint tenants, tenants in common

  and individual IRA beneficiaries)

  	
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  Date

  	
   

  	
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Acceptance by Company:

 

Blackhawk
Biofuels, LLC hereby consents to and accepts this Signature Page to
Amended and Restated Limited Liability Company Agreement and to the amendment
of the Amended and Restated Limited Liability Company Agreement, as it may be
amended and may subsequently be amended, as provided herein and as of the date
set forth below, on behalf of itself and its Members and the persons and
entities who are or hereafter become parties to or bound by the Agreement.

 

 

BLACKHAWK BIOFUELS,
LLC

 

 

	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  
					

 

14EXHIBIT 10.10

 

SUBORDINATED
SECURITY AGREEMENT

 

This
Subordinated Security Agreement (the “Agreement”) is given as of May 9
2008 from BLACKHAWK BIOFUELS, LLC, a Delaware limited liability company (the “Borrower”),
to REG VENTURES, LLC, an Iowa limited liability company (“REG”).

 

Preliminary
Statement.  The Borrower and REG have entered into, or
contemporaneously herewith are entering into, a certain Subordinated Loan
Agreement dated on or about the date hereof (as amended or otherwise modified
from time to time, the “Loan Agreement”) pursuant to which, and subject to the
terms and conditions thereof, REG has agreed to extend credit to or for the
benefit of the Borrower.  Capitalized
terms used and not defined herein shall have the meanings given to them in the
Loan Agreement.  The Borrower now desires
to grant to REG a subordinated security interest in all present and future
personal property of the Borrower as security for all present and future
obligations of the Borrower to REG.  The
security interest granted hereby is subordinate to the security interest of
Borrower granted to Fifth Third Bank under that certain Loan Agreement dated May 9,
2008 between Fifth Third Bank and Biofuels Company of America, LLC, and to any
working capital loan facility of Borrower, but only to the extent that such
working capital loan facility is secured by current assets of the Borrower. Notwithstanding
anything in the Subordinated Loan Documents to the contrary, payment and
performance under the Subordinated Loan Documents is subject and subordinate to
the terms, conditions and restrictions set forth in the Senior Loan Documents
with Fifth Third Bank and/or any Replacement Lender.

 

NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Borrower and REG agree as follows:

 

l.  Grant of Security Interest. The
Borrower hereby grants to REG a subordinated security interest in all assets
and personal property of the Borrower, including but not limited to all the
Borrower’s right, title and interest in and to the following property, wherever
located, whether such property or interest therein is now owned or existing or
hereafter acquired or arising (collectively, the “Collateral”):

 

(a)                                 all accounts, accounts
receivable, payment intangibles, lease payments, rental payments, lease rights,
contract rights and other rights to the payment of money, and all goods whose
sale, lease, rental or other disposition by Borrower have given rise to
accounts and have been returned to or repossessed or stopped in transit by
Borrower;

 

(b)                                all inventory of Borrower,
wherever located, including, without limitation, (i) all inventory under
lease, in transit, held by others for Borrower’s account, covered by warehouse
receipts, purchase orders and/or contracts, or in the possession of any
lessees, renters, carriers, forwarding agents, truckers, warehousemen, vendors
or other persons or entities and (ii) all inventory consisting of raw
materials, work in process, finished goods, supplies, goods, incidentals,
office supplies and/or packaging and shipping materials;

 

 

(c)                                 all documents, including, without limitation, all warehouse receipts,
bills of lading and similar documents of title relating to goods in which
Borrower at any time has an interest, whether now or at any time or times
hereafter issued to Borrower or REG by any person or entity, and whether
covering any portion of Borrower’s inventory or otherwise;

 

(d)                                all instruments (including,
without limitation, promissory notes) of any kind or nature whatsoever, whether
negotiable or non-negotiable;

 

(e)                                 all chattel paper of any
kind or nature whatsoever, including, without limitation, all leases, rental
agreements, installment sale agreements, conditional sale agreements and other
chattel paper relating to or arising out of the sale, rental, lease or other
disposition of any of the Collateral;

 

(f)                                   all general intangibles of
any kind or nature whatsoever, including, without limitation, all payment
intangibles, all patents, trademarks, copyrights and other intellectual
property, and all applications for, registrations of and licenses of the
foregoing and all computer software, product specifications, trade secrets,
licenses, trade names, service marks, goodwill, tax refunds, rights to tax
refunds, franchises, rights related to prepaid expenses, rights under executory
contracts, choses in action, causes of action and rights under partnership,
joint venture, co-ownership, management and/or similar agreements and/or
arrangements, except to the extent that Borrower is prohibited from granting a
security interest in any of the foregoing under the applicable license or
agreement giving rise to Borrower’s rights in same;

 

(g)                                all goods, machinery,
equipment, motor vehicles, trucks, tractors, trailers, appliances, furniture,
furnishings, tools, dies, jigs and other tangible personal property and all
accessories and parts relating thereto;

 

(h)                                all deposit
accounts and certificates of deposit and all interest or dividends thereon;

 

(i)                                    all investment property and financial assets of any
kind or type, whether certificated or uncertificated, including, without
limitation, all securities,
securities accounts, securities entitlements, stocks, bonds, options, warrants,
commodity contracts, futures contracts, commodity accounts, commodity options, commercial paper, money market funds and/or accounts, Treasury bills,
notes and bonds, instruments, certificates of deposit, mutual fund shares, cash
and money, together with all rights, income, revenues, proceeds and profits
therefrom, including, without limitation, all dividends, distributions (cash or
stock, extraordinary as well as ordinary), interest and other payments, all
additions thereto, substitutions or replacements thereof, any goods or other
property to be delivered thereunder, and any exchanges for or changes in any of
the foregoing;

 

2

 

(j)                                    all commercial
tort claims (REG acknowledges that the attachment of its security interest in
any commercial tort claim as original collateral is subject to Borrower’s
compliance with Section 3(c));

 

(k)                                 all supporting obligations;

 

(l)                                    all letter of credit rights;

 

(m)                              all books,
records, computer records, computer disks, ledger cards, programs and other
computer materials, customer and supplier lists, invoices, orders and other
property and general intangibles at any time evidencing or relating to any of
the Collateral;

 

(n)                                all accessions
to any of the property described above and all substitutions, renewals,
improvements and replacements of and additions thereto; and

 

(o)                                all proceeds,
including, without limitation, proceeds which constitute property of the types
described in (a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (l), (m) and/or
(n) above and any rents and profits of any of the foregoing items, whether
cash or noncash, immediate or remote, including, without limitation, all
income, accounts, contract rights, general intangibles, payment intangibles,
chattel paper, notes, drafts, acceptances, instruments and other rights to the
payment of money arising out of the sale, rental, lease, exchange or other
disposition of any of the foregoing items (provided, however, that nothing
contained herein shall be deemed to permit or assent to any such disposition
other than the sale or lease of inventory in the ordinary course of business
(which does not include any sale, lease or other transfer of inventory in
partial or total satisfaction of any Indebtedness)), or the disposition of
obsolete Collateral in the ordinary course of business, and insurance proceeds,
and all products, of (a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k),
(l), (m) and/or (n) above, and any indemnities, warranties and
guaranties payable by reason of loss or damage to or otherwise with respect to
any of the foregoing items.

 

2.  Security for Obligations.  This Agreement secures the payment and
performance of all obligations of the Borrower to REG under (i) the Loan
Agreement and the other Loan Documents, and (ii) any other obligation of
the Borrower to REG whether monetary, nonmonetary, direct, indirect, acquired,
joint, several, joint and several, liquidated, unliquidated, contractual,
noncontractual, existing, future, contingent or otherwise, and any
replacements, renewals, extensions and other modifications of any of the above,
together with any interest, fees, expenses and other charges thereon, and any
amounts expended by or on behalf of REG for the protection and preservation of
the security interest granted herein by the Borrower to REG (collectively, the “Obligations”).

 

3.  Further
Assurances.

 

(a)  The Borrower agrees that from time
to time, at the sole expense of the Borrower, the Borrower shall promptly
execute and deliver all further instruments and 

 

3

 

documents, and take all further action, that may be necessary, or that
REG may reasonably request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable REG to exercise
and enforce its rights and remedies hereunder with respect to any
Collateral.  Without limiting the
generality of the foregoing, the Borrower shall:  (i) if any receivable shall be evidenced
by a promissory note or other instrument, deliver and pledge to REG such note
or instrument, duly endorsed with recourse by the Borrower, and accompanied by
duly executed instruments of transfer or assignment, all in form and content
satisfactory to REG; and (ii) execute and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as REG may reasonably request, in
order to perfect and preserve the security interests granted or purported to be
granted hereby.

 

(b)  The Borrower hereby authorizes REG,
following the filing by Fifth Third Bank, to file one or more financing or
continuation statements, and amendments thereto, relating to all or any part of
the Collateral, without the signature of the Borrower. A copy of this Agreement
shall be sufficient as a financing statement to the extent permitted by law.

 

(c) 
The Borrower will furnish to REG from time to time statements and schedules
further identifying and describing the Collateral and such other reports in
connection with the Collateral as REG may reasonably request from time to time,
all in reasonable detail.

 

(d) 
The Borrower agrees that if Borrower shall at any time hold or acquire
a commercial tort claim, Borrower will promptly notify REG in a writing signed
by Borrower of the brief details thereof and grant to REG in such writing a
security interest therein and in the proceeds thereof, all upon the terms of
this Agreement, with such writing to be in form and substance satisfactory to
REG.

 

(e)  The Borrower’s (i) chief
executive office and all Collateral locations are as provided in Schedule 3(e) of
this Security Agreement; (ii) State of Organization is Delaware and (iii) exact
legal name is Blackhawk Biofuels, LLC.

 

4.  REG’s Duties.  The powers conferred on REG hereunder are
solely to protect its interest in the Collateral and shall not impose any duty
upon it to exercise any such powers. Unless otherwise required by
law or as agreed to in writing between the Borrower and REG, REG shall have no duty as to any Collateral or
as to the taking of any necessary steps to preserve rights against other
parties or any other rights pertaining to any Collateral.

 

5.  Borrower Remains Liable.

 

(a) Notwithstanding
anything herein to the contrary, (a) the Borrower shall remain liable
under the contracts and agreements included in the Collateral to the extent set
forth therein to perform all of its duties and obligations thereunder to the
same extent as if this Agreement had not been executed, (b) the exercise
by REG of any of its rights hereunder shall not release the Borrower from any
of its duties or obligations under the contracts 

 

4

 

and agreements
included in the Collateral, and (c) REG shall not have any obligation or
liability under the contracts and agreements included in the Collateral by
reason of this Agreement, nor shall REG be obligated to perform any of the
obligations or duties of the Borrower thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.

 

(b) This Agreement and
any and all security interests created or evidenced hereby and all Obligations
will continue to be effective or be reinstated, as the case may be, as though
payment had not been made, if at any time any amount received by REG in respect
of the Obligations is rescinded or must otherwise be restored or returned by
REG, including upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Borrower or upon the appointment of any intervenor or
conservator of, or trustee or similar official for, the Borrower, any
substantial part of its assets, or otherwise.

 

6.  Remedies.  If any Event of Default shall have occurred
and be continuing:

 

(a) 
REG shall have the right to take immediate possession of the Collateral, and (i) to
require the Borrower to assemble the Collateral, at the Borrower’s expense, and
make it available to REG at a place designated by REG which is reasonably
convenient to both parties, and (ii) to enter any of the premises of the
Borrower or wherever any of the Collateral shall be located, and to keep and
store the same on such premises until sold or otherwise realized upon (and if
such premises are the property of the Borrower, the Borrower agrees not to
charge REG for storage thereof).

 

(b)  REG shall
have the right to sell or otherwise dispose of all or any Collateral at public
or private sale or sales, with such notice as may be required by law, all as
REG, in its sole discretion, may deem advisable.  The Borrower agrees that ten (10) days
written notice to the Borrower of any public or private sale or other
disposition of such Collateral shall be reasonable notice thereof, and such
sale shall be at such locations as REG may designate in such notice.  REG shall have the right to conduct such
sales on Borrower’s premises, without charge therefor.  All public or private sales may be adjourned
from time to time in accordance with applicable law.  REG shall have the right to sell, lease or
otherwise dispose of such Collateral, or any part thereof, for cash, credit or
any combination thereof, and REG may purchase all or any part of such
Collateral at public or, if permitted by law, private sale and, in lieu of
actual payment of such purchase price, may set off the amount of such price
against the Obligations. REG may comply with any applicable state or
federal law requirements in connection with a disposition of the Collateral and
compliance will not be considered to adversely affect the commercial
reasonableness of any sale or disposition of the Collateral.

 

(c) 
REG may exercise in respect of the Collateral, in addition to other rights and
remedies provided for herein, under the Loan Agreement or under the other Loan
Documents, all the rights and remedies of a secured party on default under the
Uniform Commercial Code or otherwise available at law or in equity.

 

5

 

7.  Indemnity and Expenses.

 

(a) 
The Borrower agrees to indemnify REG from and against any and all claims,
losses and liabilities arising out of or relating to REG’s enforcements of its
rights and remedies under this Agreement and/or any of the Obligations, which
indemnification shall survive the termination of this Security Agreement and
the Loan Agreement and payment in full of the obligations.

 

(b) 
The Borrower shall upon demand pay to REG the amount of any and all reasonable
expenses, including, without limitation, the fees and disbursements of its
counsel and of any experts and agents, which REG may reasonably incur following
Borrower’s default in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use of, or the sale of,
collection from, or other realization upon, any of the Collateral, (iii) the
exercise or enforcement of any of the rights of REG hereunder or (iv) the
failure by the Borrower to perform or observe any of the provisions
hereof.  All such fees, expenses and
disbursements shall be deemed Obligations under the Loan Agreement that are
secured by this Agreement.

 

(c) 
Notwithstanding anything to the contrary in paragraphs (a) and (b) of
this Section 7, no indemnification of REG or payment of expenses to REG
shall be required if the events which would otherwise require such
indemnification or payment are primarily attributable to the negligence or
intentional misconduct of REG or an affiliate of REG or a failure by REG or an
affiliate of REG to operate the Borrower’s plant substantially in accordance
with the terms of any management and operational services agreement or similar
agreement between Borrower and REG or an affiliate of REG.

 

8.  Notice.  All notices, requests and demands to or upon
a party hereto shall be given in accordance with Section 9.3 of the Loan
Agreement.

 

9.  Governing Law.  This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Iowa without
giving effect to any choice of law rules thereof; provided, however,
that if any of the Collateral shall be located in any jurisdiction other than
Iowa, the laws of such jurisdiction shall govern the method, manner and
procedure for foreclosure of REG’s lien upon or other interest in such
Collateral and the enforcement of REG’s other remedies in respect of such
Collateral to the extent that the laws of such jurisdiction are different from
or inconsistent with the laws of Iowa.

 

10.  Miscellaneous.  No amendment or waiver of any provision of
this Agreement nor consent to any departure by the Borrower herefrom, shall in
any event be effective unless the same shall be in writing and signed by the
party against whom enforcement of such amendment, waiver or consent is sought,
and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.  The paragraph and section headings herein are
solely for convenience and shall not be deemed to limit or otherwise affect the
meaning or construction of any part of this Agreement.  This document shall be construed without
regard to any presumption or rule requiring construction against the party
causing such document or any portion thereof to 

 

6

 

be drafted.  If any provision or provisions of this
Agreement shall be unlawful, then such provision or provisions shall be null
and void, but the remainder of the Agreement shall remain in full force and
effect and be binding on the parties.  A
facsimile or other electronically transmitted signature of the Borrower shall
be deemed an original signature.

 

11. Waiver
of Jury Trial.  TO THE FULLEST EXTENT
PERMITTED BY LAW, AND AS SEPARATELY BARGAINED FOR CONSIDERATION TO REG, THE
BORROWER HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY (WHICH REG ALSO WAIVES) IN
ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR REG’S CONDUCT IN RESPECT HERETO.

 

[SIGNATURE
PAGE TO FOLLOW]

 

7

 

IN WITNESS WHEREOF, the Borrower has caused this
Agreement to be executed and delivered by its duly authorized representative as
of the date first above written.

 

	
   

  	
  BLACKHAWK
  BIOFUELS, LLC,

  
	
   

  	
  a
  Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
      /S/
  Ronald L. Mapes

  
	
   

  	
   

  	
      Ronald L. Mapes, Chair

  

 

 

SUBORDINATED SECURITY AGREEMENT SIGNATURE PAGE

 

8

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