Document:

EXHIBIT 10.11

 

SUBORDINATED
MORTGAGE OF LEASEHOLD, SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND LEASES AND
FIXTURE FILING

 

VERMILION COUNTY

 

This
Document Prepared By And
After Recording Mail To:

 

G. R. Neumann

Nyemaster Goode,
P.C.

700 Walnut Street,
Suite 1600

Des Moines, Iowa
50309

 

Space Above for Recorder’s Use Only

 

DOCUMENT COVER SHEET

 

	
  TITLE
  OF DOCUMENT:

  	
   

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

  
	
   

  	
   

  	
   

  
	
  DATE
  OF DOCUMENT:

  	
   

  	
  May 9,
  2008

  
	
   

  	
   

  	
   

  
	
  MORTGAGOR(S):

  	
   

  	
  Blackhawk
  Biofuels, LLC

  
	
   

  	
   

  	
  22 South Chicago Avenue

  
	
   

  	
   

  	
  Freeport, Illinois
  61032

  
	
   

  	
   

  	
   

  
	
  LENDER(S):

  	
   

  	
  REG Ventures, LLC

  
	
   

  	
   

  	
  416 S. Bell Avenue

  
	
   

  	
   

  	
  Ames, Iowa 50010

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Illinois Tax Identification Number: 18622-27200

  
	
   

  	
   

  	
   

  
	
  LEGAL
  DESCRIPTION:

  	
   

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

  

 

	
  TAX
  INDEX NUMBERS AND LOCAL ADDRESSES OF THE PROPERTY IN DANVILLE, ILLINOIS:         EXHIBIT A

  
	
  23-09-107-006
  — 707 E Harrison

  	
   

  	
  23-09-106-017
  — 602 E Madison

  
	
  23-09-105-009 — 710 E Harrison

  	
   

  	
  23-09-106-012 — 614 E Madison

  
	
  23-09-106-011
  — 610 E Madison

  	
   

  	
  23-09-106-010
  — 608 E Madison

  
	
  23-09-106-009
  — 606 E Madison

  	
   

  	
  23-09-106-008
  — 604 E Madison

  

 

 

Exhibit B
- Soybean Oil Pipeline easement:

 

23 09
108 005

23 09
108 006

23 09
100 132

 

Exhibit C
- Access Right of Way easement:

 

23 09
117 014

23 09
111 018

23 09
100 132

23 09
108 004

23 09
108 005

 

Exhibit D
- Gas Pipeline easement

 

23 08
226 001

23 08
226 002

23 09
115 003

23 09
112 007

23 09
113 001

23 09
111 018

23 09
110 001

23 09
109 005

23 09
109 133

23 09
100 132

23 09
100 014

23 09
100 016

 

Exhibit E
- Biodiesel Pipeline easement:

 

23 09
100 132

 

1(a)

 

SUBORDINATED
MORTGAGE OF LEASEHOLD, SECURITY AGREEMENT ASSIGNMENT OF LEASES AND RENTS AND
FIXTURE FILING

 

THIS SUBORDINATED MORTGAGE OF LEASEHOLD, SECURITY
AGREEMENT, ASSIGNMENT OF RENTS AND LEASES AND FIXTURE FILING (“Leasehold
Mortgage”) is executed as of the 9th day of May, 2008, by and among BLACKHAWK BIOFUELS, LLC,  a Delaware
limited liability company (hereinafter referred to as “Mortgagor”), having an
address of 22 South Chicago Avenue, Freeport, Illinois 61032, and  REG VENTURES, LLC,  an Iowa limited liability company and its successors and
assigns, as beneficiary, having an address of 416 S. Bell Avenue, Ames, Iowa
50010 (hereinafter referred to as “Noteholder”).

Recitals

 

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

 

A.            Mortgagor
has entered into a Subordinated Loan Agreement with the Noteholder, dated even
date herewith (hereinafter, together with all amendments, modifications,
replacements and restatements thereof, the “Subordinated Loan Agreement”).  Capitalized terms unless otherwise defined
herein shall have the same meaning as ascribed to them in the Subordinated Loan
Agreement.

 

B.            Mortgagor
has executed and delivered to the Noteholder the Convertible Secured
Subordinated Note dated of even date herewith from Mortgagor, as maker, to the
Noteholder, as payee (hereinafter said Note collectively and all amendments,
modifications, replacements, restatements, renewals and extensions thereof, the “Note”), which Note evidences that Mortgagor has
become justly indebted to the Noteholder in the total principal sum of Twenty-One Million Seven Hundred Thousand and
00/100 U.S. Dollars (U.S. $21,700,000.00), lawful money of the United
States, together with interest thereon and attorney’s fees and other charges
and sums which may accrue thereon. NOTWITHSTANDING ANY
PROVISION HEREIN TO THE CONTRARY, IN NO EVENT WILL THE PRINCIPAL INDEBTEDNESS
SECURED HEREBY EXCEED $21,700,000. From the date hereof until fully
paid or converted pursuant to the terms contained therein, the Note shall bear
interest on the principal amount outstanding at the Interest Rate. From and after the date of any Event of
Default (as defined in the Note), interest on funds outstanding under the Note
shall accrue at the Default Rate. The entire principal balance outstanding plus
all accrued but unpaid interest under the Note shall become due and payable as provided
therein. NOTICE TO MORTGAGOR: THE NOTE CONTAINS A VARIABLE INTEREST RATE.

 

C.            The
Note is subordinate to any indebtedness of Mortgagor to Fifth Third Bank and
its successors and assigns (“Fifth Third Bank”) under that certain Senior Loan
Agreement of even date herewith (and any renewal or replacement credit facility
thereafter in favor of Fifth Third Bank and/or any Replacement Lender
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) (the “Senior Loan Agreement”), which is secured by, among

 

2

 

other
things, the Mortgage of Leasehold, Security Agreement, Assignment of Rents and
Leases and Fixture Filing of even date herewith by Mortgagor to Fifth Third
Bank (the “First Mortgage”), and to any working capital loan facility of
Mortgagor now or hereinafter existing, but only to the extent that such working
capital loan facility is secured by current assets of Mortgagor (any such
working capital loan and the security therefor, the “Secured Working Capital
Loan”). 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.

 

D.            Mortgagor’s
obligations under the Note, this Leasehold Mortgage (including, without limitation,
the performance of each covenant and agreement or Mortgagor incorporated herein
by reference or contained herein) and any other Debt Documents (as hereinafter
defined) now or hereafter executed and delivered by Mortgagor in favor of the
Noteholder, and any other indebtedness or other obligations of Mortgagor to the
Noteholder under the Debt Documents (as hereinafter defined), owing or which
may hereafter become owing, now or hereafter existing, whether monetary,
nonmonetary, direct, indirect, acquired, joint, several, joint and several,
liquidated, unliquidated, existing, future, fixed, contingent or otherwise, and
any replacements, renewals, consolidations, extensions and other modifications
of any of the above, together with any interest, fees, expenses and other
charges thereon, and any amounts expended by or on behalf of the Noteholder for
the protection and preservation of the mortgage lien and security interest
granted herein are hereinafter sometimes collectively called the “Obligations”.

 

E.             The
Subordinated Loan Agreement, the Note, this Mortgage and any other agreements,
documents or instruments evidencing, securing or otherwise relating to any of
the Obligations in favor of the Noteholder, and any replacements, renewals,
extensions and other modifications of any of the foregoing, are hereinafter
sometimes collectively called the “Debt Documents”. For purposes of additional
clarity, the term “Debt Documents” shall not include any agreements, documents
or instruments executed and delivered by Mortgagor in favor of any affiliate of
REG Ventures, LLC.

 

F.             Pursuant
to that certain First Amendment, Assignment and Assumption and Consent to
Assignment of Ground Lease and Conveyance of Leasehold Improvements of even
date herewith between Mortgagor, Biofuels Company of America, LLC and Bunge
Milling, Inc as landlord (the “Lessor”), Mortgagor is the lessee under that
certain Amended and Restated Ground Lease Agreement dated as of November 3,
2006, by and between Lessor, and Mortgagor, as tenant (the “Lease”), with respect to the real property located in
County of Vermilion, City of Quincy, State of Illinois, as described in Exhibit A
attached hereto (the “Leased Premises”), as may hereafter be modified,
extended, renewed or amended from time to time.

 

NOW, THEREFORE, subject and subordinate to the
First Mortgage, the Senior Loan Documents and any Secured Working Capital Loan,
Mortgagor does hereby MORTGAGE, WARRANT, GRANT, BARGAIN, SELL, CONVEY, ASSIGN
AND PLEDGE, to the Noteholder, and to their successors and assigns forever, all
of Mortgagor’s right, title and interest in, if any, and to the following
property, whether such property or interest therein is now owned or existing or
hereafter acquired or arising (collectively, the “Property”): (i) the Lease and the leasehold estate
created by the Lease (collectively, the “Leasehold”), including, without
limitation, (a) all modifications, extensions and renewals of the Lease
and in and to all rights and

 

3

 

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

 

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

 

1.             Indebtedness
Secured.  This Mortgage has been
given and is intended to secure the full and prompt payment and performance of
the Obligations.  The
priority of the lien hereunder shall be subject and subordinate to the First
Mortgage, the Senior Loan Documents and any Secured Working Capital Loan and
shall relate back to the date this Mortgage was recorded.  The initial total principal amount of Obligations that may be secured by this
Mortgage

 

4

 

at any
one time is Twenty-One Million Seven Hundred Thousand and 00/100 U.S. Dollars (U.S.
$21,700,000.00).  In
addition, the Mortgage shall secure unpaid balances of advances made by Lender
(together with interest thereon) with respect to the Property, for the payment
of Impositions, as hereinafter defined, insurance premiums and costs incurred
for the protection of the Property and any charges, expenses and fees,
including, without limitation, attorneys’ fees, which, by the terms hereof,
shall be added to and increase the Obligations. 
This Mortgage shall remain in full force and effect with respect to all
of the Property until all Obligations shall have been paid and performed in
full.  If the Obligations are paid and
performed in accordance with the terms of the applicable Debt Documents,
including, without limitation, the observance of all the agreements contained
in this Mortgage, this Mortgage shall become void and shall be released at the
sole expense of Mortgagor.

 

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

 

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

 

4.             Lease
Obligations. Mortgagor shall perform and comply with all agreements,
covenants, terms and conditions imposed upon or assumed by it as lessee under
the Lease.  If Mortgagor shall fail to do
so the Noteholder may, but shall not be obligated to, take any action it deems
necessary or desirable to prevent or to cure any default under the Lease.  The Noteholder may rely upon any written
notice of default received by them from the Lessor and may take any action to
cure such default even though the existence of such default or the nature thereof
is questioned or denied by Mortgagor. 
Mortgagor hereby expressly grants to the Noteholder, and agrees that the
Noteholder shall have, subject to the First Mortgage, the Senior Loan Documents
and any Secured Working Capital Loan, the absolute and immediate right, to
enter in and on the Property to such extent and as often as the Noteholder, in
its sole discretion, deems reasonably necessary or desirable in order to
prevent or cure any such defaults by Mortgagor. 
The Noteholder may pay such sums of money as it reasonably deems
necessary in its sole discretion for any such purpose and Mortgagor agrees to
pay to the Noteholder, immediately upon demand,

 

5

 

all
such sums paid by the Noteholder together with interest thereon from the date
of such payment at the annual default rate under the Note.  All sums paid and extended by the Noteholder
and the interest thereon shall be added to the Obligations secured by the lien
hereof.  No such payment or performance made
or taken by the Noteholder shall relieve Mortgagor from any default hereunder.

 

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

 

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

 

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

 

7.             Restoration.  If any of the improvements or equipment
comprising the Property shall be damaged or destroyed, in whole or in part, by
fire or other casualty (whether or not covered by insurance), or by any taking
in condemnation proceedings or the exercise of any right of eminent domain,
Mortgagor shall use its reasonable best efforts to restore, replace or rebuild
the same to their condition immediately prior to such event.  Mortgagor shall give prompt notice to the
Noteholder of any damage to the Property by fire or other casualty,
irrespective of the amount of such damage.

 

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

 

9.             Compliance
with Laws; Use of Property.  Mortgagor
shall promptly comply with all present and future laws, statutes, ordinances,
rules, regulations and other requirements (including, without limitation, applicable zoning and building
requirements) of all governmental and
quasi-governmental authorities whatsoever having jurisdiction in respect of the
Property and

 

6

 

the sidewalks, curbs and
alleys adjoining or abutting the Leased Premises, and the condition, repair,
maintenance, use and occupation thereof.  Mortgagor shall promptly make all changes,
alterations and improvements necessary to comply with all such present and
future laws, statutes, ordinances, rules, regulations and other requirements.

 

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

 

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

 

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

 

If Mortgagor fails to maintain any insurance required hereunder, the
Noteholder may, but shall not be obligated to, purchase such required insurance
at Mortgagor’s expense to protect its interests in the Property.  This insurance may, but need not, protect the
Mortgagor’s interests in the Property. 
The coverage that the Noteholder purchase shall not be required to pay
any claim that the Mortgagor makes or any claim that is made against the Mortgagor
in connection with the Property.  The
Mortgagor may later cancel any insurance purchased by the Noteholder, but only
after providing evidence that the Mortgagor has obtained the insurance required
hereunder.  If the Noteholder purchase
insurance for the Property, Mortgagor will be responsible for the costs of the
insurance, including the insurance premium, interest thereon from the date of
each such payment or expenditure at the then applicable rate under the Note and
any other charges the Noteholder may impose in connection with the placement of
the insurance, until the effective date of the cancellation or expiration of
the insurance.  All sums so paid or
expended by the Noteholder, the interest thereon and the other charges in
connection therewith shall be added to the Obligations and shall be secured by
the lien of this Leasehold Mortgage.  The
costs of the insurance obtained by the Noteholder may be more than the cost of
insurance Mortgagor may be able to obtain on its own.

 

11.           Deposits for
Impositions and Insurance.  Upon
notice from the Noteholder (which notice shall not be given unless an Event of
Default has occurred and if the mortgagee under the First Mortgage has not
exercised similar rights under the First Mortgage), Mortgagor shall deposit
with the Noteholder on the first day of each month an amount equal to
one-twelfth (1/12th) of (i) the aggregate annual payments for the
Impositions, and (ii) the annual insurance premiums on the policies of
insurance required to be obtained and kept in force by Mortgagor under this
Leasehold Mortgage.  In addition, upon
notice from the Noteholder (which notice shall not be given unless an Event of
Default has occurred and if the mortgagee under the First Mortgage has not
exercised similar rights under the First Mortgage), Mortgagor shall deposit

 

7

 

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

 

12.           Condemnation.  If any of the Property is taken by
condemnation, eminent domain or other taking, any award or other compensation
due or received by Mortgagor in respect thereof shall be paid over to  the mortgagee under the First Mortgage as
provided in the First Mortgage, and the Noteholder shall have no right to any
award or other compensation due or received by such mortgagee except to the
extent such award or other compensation exceeds the obligations under the First
Mortgage, the Senior Loan Documents and any Secured Working Capital Loan.  All such excess awards or other compensation
which are received by the Noteholder may, at the Noteholder’ election, (i) be
applied to reduce the outstanding balance of the Obligations, whether then due
or not, or (ii) turned over, in whole or in part, by the
Noteholder to Mortgagor on such terms and conditions as the Noteholder may
elect for the purposes of rebuilding or otherwise improving the Property.

 

The
application of any award or other compensation toward payment or performance of
any of the Obligations shall not be deemed a waiver by the Noteholder of their
right to receive payment or performance of the balance of the Obligations in
accordance with the provisions

 

8

 

thereof.  The Noteholder shall have the right, but
shall be under no obligation, to question the amount of the award or other
compensation, and the Noteholder may accept same without prejudice to the
rights that the Noteholder may have to question such amount.

 

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

 

14.           The
Noteholder’s Right to Perform Mortgagor’s Covenants.  If Mortgagor shall fail promptly and fully to
pay, perform or observe any of the Obligations, then the Noteholder may,
subject to the First Mortgage, the Senior Loan Documents and any Secured
Working Capital Loan, at the Noteholder’s option, but without any obligation to
do so, and without waiving or releasing Mortgagor from any of the Obligations,
pay any Obligation or perform any Obligation or take such other action as the
Noteholder deems necessary or desirable in order to cause such Obligation to be
paid, performed or observed, as the case may be.  Mortgagor hereby grants to the Noteholder,
and agrees that the Noteholder shall have, the absolute and immediate

 

9

 

right,
subject to the First Mortgage, the Senior Loan Documents and any Secured
Working Capital Loan, to enter in and upon the Property to such extent and as
often as the Noteholder, in the Noteholder’ discretion, deems necessary or
desirable for such purpose.  The Noteholder may pay and expend such sums
of money as the Noteholder, in its discretion, deems necessary for any such
purpose, and Mortgagor hereby agrees to pay to the Noteholder, on demand, all
such sums so paid or expended by the Noteholder, together with interest thereon
from the date of each such payment or expenditure at the Default Rate (as
hereinafter defined).  Any interest paid
under this section in excess of the maximum interest rate permitted by law
shall be deemed payment in reduction of the principal amount of the Obligations
and the excess, if any, shall be refunded to Mortgagor without interest.  All sums so
paid or expended by the Noteholder, and the interest thereon, shall be added to
the Obligations and shall be secured by the lien of this Mortgage.

 

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

 

16.           Transfer
of the Property.  Mortgagor shall not
sell, assign, mortgage, hypothecate, transfer, or sublease the Property,
without the prior written consent of the Noteholder, which consent shall not be
unreasonably withheld, conditioned or delayed.

 

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

 

10

 

18.
          Default.  The Obligations shall become immediately due
and payable in full as provided in the Note, and in addition, the Obligations
shall become immediately due and payable in full at the option of the
Noteholder upon the occurrence of any one or more of the following (subject to
prior written notice specifying the default and providing for a thirty (30) day
opportunity to cure or other shorter applicable cure period as provided herein)
(an “Event of Default”):

 

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

 

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

 

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

 

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

 

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

 

f)             Any representation
or warranty of Mortgagor to the Noteholder set forth herein, or in the other
Debt Documents, having been incorrect, incomplete or misleading in any material
respect at the time when made, or any such representation or warranty
subsequently becomes incorrect, incomplete or misleading in any material
respect and Mortgagor fails to give the Noteholder prompt notice thereof;

 

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

 

h)            There shall occur a
default or an event of default under any other mortgage or like real property
security instrument which encumbers the Property, including, but not limited
to, the First Mortgage, the Senior Loan
Documents or under any document evidencing any obligation secured
thereby, or any foreclosure or similar proceeding shall commence with respect
to the Property;

 

11

 

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

 

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

 

k)             If there shall
occur any default or event of default (however defined or described) under the
Note or any of the other Debt Documents;

 

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

 

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

 

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

 

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 the Noteholder or an affiliate of the Noteholder or a failure by the
Noteholder or an affiliate of the Noteholder to operate the Mortgagor’s
biodiesel plant substantially in accordance with the terms of any management
and operational services agreement or similar agreement between Mortgagor and
the Noteholder or an affiliate of the Noteholder.

 

19.           Appointment
of Receiver.  Subject to the First
Mortgage, the Senior Loan Documents and any Secured Working Capital Loan, after
the occurrence of an Event of Default, or if any action shall be commenced to
foreclose this Mortgage, without obligation to do so, the Noteholder, to the extent
permitted by applicable law, may apply for the appointment of a receiver of the
rents, issues and profits of the Property without notice or demand, and shall
be entitled to the appointment of such receiver as a matter of right, without
consideration of the value of the Property as security for the amounts due to
the Noteholder or the solvency of any Person liable for the payment of such
amounts.

 

20.           Acceleration;
Remedies.  Upon the occurrence of an
Event of Default at any time thereafter and subject to the First Mortgage, the
Senior Loan Documents and any Secured Working Capital Loan and any applicable
notice and cure provisions, the Noteholder, at their option, may exercise any
one or more of the following rights and remedies, in addition to any

 

12

 

other
rights or remedies provided for under (i) any of the other Debt Documents
or (ii) by law or equity:

 

 a)      Accelerate Obligations.  Lender shall have the right at its option
without notice to Mortgagor to declare the entire Obligations immediately due
and payable.

 

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

 

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

 

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

 

e)       Foreclosure.  The Noteholder may, to the extent permitted
by law and subject to the First Mortgage, the Senior Loan Documents and any
Secured Working Capital Loan, institute an action of judicial foreclosure, or
take such other action as the law may allow, at law or in equity, to enforce
this Mortgage and to realize upon the Property or any other security which is
herein or elsewhere provided for, and to proceed to final judgment and
execution for the entire unpaid balance of the Obligations, together with, to
the extent permitted by applicable law, all other sums secured by this
Mortgage, all costs of suit, and interest at the then applicable rate under the
Note on any judgment obtained by the Noteholder from and after the date of any
judicial sale of the Property (which may be sold in one parcel or part or in
such parcels or parts, manner or order as the Noteholder shall elect) until
actual payment is made to the Noteholder on the full amount due the
Noteholder.  The Noteholder may foreclose
or otherwise realize upon one parcel or any other part of the Property, on one
or more occasions, without releasing this Mortgage or precluding the further
foreclosure or other realization hereunder of any other parcels or parts of the
Property not so foreclosed or realized upon. 
Failure to join or to provide notice to

 

13

 

tenants or any other Persons as defendants or otherwise
in any foreclosure action or suit shall not constitute a defense to such
foreclosure or other action.  Upon any
foreclosure sale, whether by virtue of judicial proceedings or otherwise, the
Noteholder may bid and purchase the Property or any part thereof or interest
therein, and upon compliance with the terms of the sale, may hold, retain,
possess and dispose of the same in the Noteholder’ own absolute right, without
further accountability.  In lieu of
paying cash for the Property, the Noteholder may make settlement for the
purchase price by crediting against the sums secured by this Leasehold Mortgage
the sale price of the Property as adjusted for the expenses of sale and costs
of the action and any other sums for which Mortgagor is obligated to reimburse
the Noteholder under this Leasehold Mortgage.

 

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

 

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

 

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

 

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

 

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

 

22.           Intentionally
Omitted.

 

23.           No
Merger of Leasehold Estate.  Unless
the Noteholder shall consent in writing, the fee title to the property demised
by the Lease and the Leasehold shall not merge, but shall always remain
separate and distinct, notwithstanding the union of such estates either in the
Lessor, Mortgagor, or a third party, by purchase or otherwise.  If Mortgagor acquires the fee title of any
estate or interest in the Property superior to the Lease, it shall immediately
notify the Noteholder of such acquisition and, upon request, shall execute and
deliver such further

 

14

 

documents
as may be required to further evidence the grant and conveyance to the
Noteholder of all interest so acquired to such property.  Such execution and delivery, however, shall
not be deemed a condition to the lien of this Leasehold Mortgage, which shall,
upon any acquisition by Mortgagor in the fee interest of the Property,
automatically secure such fee interest with a priority dating to the date
hereof.

 

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

 

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

 

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

 

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

 

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

 

15

 

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

 

30.                                 Taxes.

 

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

 

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

 

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

 

32.                               Forbearance by the
Noteholder not a Waiver.  Any forbearance
by the Noteholder in the exercise of any right or remedy hereunder, under the
Note, or otherwise afforded by

 

16

 

applicable
law, shall not be a waiver of or preclude the exercise of any such right or
remedy.  Any waiver by the Noteholder of
an Event of Default must be explicitly stated in writing signed by the
Noteholder and shall not be deemed a waiver of any other Event of Default or of
the same type of Event of Default on any other occasion in the future.

 

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

 

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

 

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

 

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

 

37.
                              Notices.  All notices, demands, consents, approvals and
requests given or required to be given by any party hereto to any other party
hereto shall be in writing and delivered (a) in person, by messenger or
overnight courier, (ii) by registered or certified mail, return receipt
requested and postage prepaid, or (iii) by facsimile, to the applicable
party at its address or facsimile number set forth below, or at such other
address or facsimile number as such party hereafter may designate as its
address for communications hereunder by notice so given.

 

17

 

	
  If to Mortgagor:

  	
   

  	
  Blackhawk Biofuels, LLC

  
	
   

  	
   

  	
  22 South Chicago Avenue

  
	
   

  	
   

  	
  Freeport, Illinois
  61032

  
	
   

  	
   

  	
  Attention: Ronald L.
  Mapes, Chair

  
	
   

  	
   

  	
  Facsimile: (815)
  235-4727

  
	
   

  	
   

  	
   

  
	
  With copy to:

  	
   

  	
  Lindquist &
  Vennum PLLP

  
	
   

  	
   

  	
  4200 IDS Center

  
	
   

  	
   

  	
  80 South Eighth Street

  
	
   

  	
   

  	
  Minneapolis, Minnesota
  55402

  
	
   

  	
   

  	
  Attention: Dean R.
  Edstrom

  
	
   

  	
   

  	
  Facsimile: (612)
  371-3207

  
	
   

  	
   

  	
   

  
	
  If to Noteholder:

  	
   

  	
  REG Ventures, LLC

  
	
   

  	
   

  	
  416 S. Bell Avenue, P.O. Box 8808

  
	
   

  	
   

  	
  Ames, Iowa 50010

  
	
   

  	
   

  	
  Attention: Jeffrey Stroburg

  
	
   

  	
   

  	
  Facsimile:
  (515) 239-8009

  
	
   

  	
   

  	
   

  
	
  With copy to:

  	
   

  	
  Wilcox Polking Gerken
  Schwarzkopf & Copeland, P.C.

  
	
   

  	
   

  	
  115 E. Lincolnway
  Street, Suite 200

  
	
   

  	
   

  	
  Jefferson, Iowa 50129

  
	
   

  	
   

  	
  Attention: John A.
  Gerken

  
	
   

  	
   

  	
  Facsimile: (515) 386-8531

  

 

Such notices and communications shall be deemed delivered upon receipt
(or refusal to accept delivery) provided that all notices and
communications sent by facsimile shall also be evidenced by the facsimile
machine’s confirmation identifying the recipient’s facsimile number and
transmission and provided further that all notices or other communications sent
by facsimile shall also delivered by another means permitted by under this
Section.

 

38.                               Severability.  If
any term or provision of this Leasehold Mortgage or the application thereof to
any Person or circumstance shall to any extent be invalid or unenforceable, the
remainder of this Leasehold Mortgage, or the application of such term or
provision to Persons or circumstances other than those as to which it is
invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Leasehold Mortgage shall be valid and enforceable to the
fullest extent permitted by law.  If any
payments (including, without

 

18

 

limitation, any interest
payments) required to be made hereunder or under the other Debt Documents shall
be in excess of the amounts allowed by law, the amounts of such payments shall
be reduced to the maximum amounts allowed by law.

 

39.
                              Indemnification Against Liabilities. 
Mortgagor shall protect, indemnify, hold harmless and defend the
Noteholder from and against any and all liabilities, obligations, claims,
damages, penalties, causes of action, costs and expenses (including, without
limitation, attorneys’ fees and expenses) imposed upon incurred by or asserted
against the Noteholder by reason of (a) ownership of an interest in the
Property, (b) any accident or injury to or death of Persons or loss of or
damage to or loss of the use of property occurring on or about the Property, or
the adjoining sidewalks, curbs, vaults and vault spaces, if any, streets,
alleys or ways, (c) any use, non-use or condition of the Property, or the
adjoining sidewalks, curbs, vaults and vault spaces, if any, streets, alleys or
ways, (d) any failure on the part of Mortgagor to perform or comply with
any of the terms of this Leasehold Mortgage or the other Debt Documents, (e) performance
of any labor or services or the furnishing of any materials or other property
in respect of the Property made or suffered to be made by or on behalf of
Mortgagor, (f) any negligence or other tortious act on the part of
Mortgagor or any of its agents, contractors, lessees, licensees or invitees, or
(g) any work in connection with any alterations, changes, new construction
or demolition of the Property; except to the extent that any such liabilities,
obligations, claims, damages, penalties, causes of actions, costs or expenses
are, caused by, or otherwise arise out of, the Noteholder’ gross negligence or
intentional misconduct.  Mortgagor will
pay and hold the Noteholder harmless against any and all liability with respect
to any intangible personal property tax or similar imposition of the state in
which the Property is located or any subdivision or authority thereof now or
hereafter in effect, to the extent that the same may be payable by the
Noteholder in respect of this Leasehold Mortgage, the other Debt Documents or
the Obligations.  All amounts payable to
the Noteholder under this section shall be payable on demand and shall be
deemed Obligations secured by this Leasehold Mortgage and any such amounts
which are not paid within five days after demand therefor shall bear interest
at the Default Rate from the date of such demand.  In case any action, suit or  proceeding is brought against the Noteholder
by reason of any such occurrence, Mortgagor, upon request of the Noteholder
will, at Mortgagor’s expense, resist and defend such action, suit or proceeding
or cause the same to be resisted or defended by counsel designated by Mortgagor
and approved by the Noteholder.  All of
Mortgagor’s obligations under this section shall survive the foreclosure,
release or other termination of this Leasehold Mortgage and the satisfaction of
the Obligations.  Notwithstanding the
foregoing, no indemnification shall be required under this Section 39 if
the events which would otherwise require such indemnification are primarily
attributable to the negligence or intentional misconduct of the Noteholder or
an affiliate of the Noteholder or a failure by the Noteholder or an affiliate
of the Noteholder to operate the Mortgagor’s biodiesel plant substantially in
accordance with the terms of any management and operational services agreement
or similar agreement between Mortgagor and the Noteholder or an affiliate of
the Noteholder.

 

40.                               Environment.

 

(a)                                  With respect to the Property, Mortgagor shall
at all times comply in all respects with all Environmental Laws.  The Noteholder shall not assume or be deemed
to assume any responsibility, liability, or obligation with respect to
compliance with any federal, state, or local environmental law, rule,
regulation, order, permit, license, ordinance, judgment or decree;

 

19

 

provided, however, that in the event of the
imposition or assumption for any reason whatsoever of any such responsibility,
liability, or obligation, Mortgagor agrees to indemnify and hold the Noteholder
harmless from and against any and all claims, liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements, of any kind or nature whatsoever, including without limitation,
attorneys’ and experts’ fees, which may be imposed on, incurred by or asserted
against it in any way relating to or arising from the Obligations, this
Leasehold Mortgage, the other Debt Documents and/or the Property.  All of Mortgagor’s obligations under this
section shall survive the foreclosure, release or other termination of this
Leasehold Mortgage and the satisfaction of the Obligations.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

v)                                     any written application Mortgagor provides to
a governmental authority to obtain or amend a permit or approval relating to
the generation, storage, processing, emission, treatment, or disposal of a
Hazardous Substance or air contaminant.

 

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

 

20

 

c)                                      Remedial Work.  In
the event that any investigation, site monitoring, containment, cleanup,
removal, restoration or other remedial work of any kind or nature (the “Remedial
Work”) is required to be undertaken under any applicable local, state or
federal law or regulation, any judicial order, or by any governmental entity
because of, or in connection with, the current or reasonably threatened future
presence or release of a Hazardous Substance in or into the air, soil,
groundwater, surface water or soil vapor at, on, about, under or within the
Property (or any portion thereof), Mortgagor shall promptly after written
demand for performance thereof by appropriate governmental authorities (or such
shorter period of time as may be required under any applicable law, regulation,
order or agreement or, if any applicable law, regulation, order or agreement
expressly specifies a longer  period of
time, such longer period), commence and thereafter diligently prosecute to
completion, all such Remedial Work.  All
costs and expenses of such Remedial Work shall be paid by Mortgagor. In the
event Mortgagor shall fail to timely commence, or cause to be commenced, or
fail to diligently prosecute to completion, such Remedial Work following the
Noteholder’ written notice to Mortgagor of such alleged failure and adequate
time for Mortgagor to correct such alleged failure, the Noteholder may, but
shall not be required to, cause such Remedial Work to be performed and all
reasonable costs and expenses thereof, or incurred in connection therewith,
shall become part of the indebtedness secured hereby.
e)     Environmental Risk Assessment.  At any time (a) the Noteholder
reasonably believe that Hazardous Substances have been disposed of on, or have
been released to or from any of the Property and such release or disposal may
reasonably be expected to result in liability to Mortgagor or the Noteholder
under applicable Environmental Laws (a “Triggering Event”), or (b) after
an Event of Default within thirty (30) days after a written request therefor by
the Noteholder, Mortgagor shall deliver to the Noteholder a report prepared at
Mortgagor’s expense by an environmental consultant acceptable to Mortgagor
detailing the results of an environmental investigation with respect to the
Triggering Event or the matter resulting in the Event of Default the scope of
which is acceptable to the Noteholder, including results of any soil and ground
water samples that may have been taken in connection with such investigation.

 

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

 

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

 

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

 

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

 

21

 

“Default Rate” means the rate of interest
payable upon an Event of Default as provided in the Note.

 

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

 

“Event of Default” means those events set forth
in Section 18 of this Leasehold Mortgage.

 

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

 

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

 

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

 

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

 

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

 

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

 

44.
                              Waiver of Jury Trial.  TO THE FULLEST EXTENT PERMITTED BY LAW, AND AS
SEPARATELY BARGAINED-FOR CONSIDERATION TO THE NOTEHOLDER, MORTGAGOR HEREBY
WAIVES ANY RIGHT TO TRIAL BY JURY (WHICH THE NOTEHOLDER ALSO WAIVES) IN ANY
ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR
OTHERWISE RELATING TO THIS MORTGAGE, ANY DOCUMENTS, INSTRUMENTS OR AGREEMENTS
EXECUTED

 

22

 

AND DELIVERED IN
CONNECTION HEREWITH, THE OBLIGATIONS, OR THE NOTEHOLDER’S CONDUCT IN RESPECT OF
ANY OF THE FOREGOING..  TO EFFECTUATE THE
FOREGOING, THE NOTEHOLDER IS HEREBY GRANTED AN IRREVOCABLE POWER OF ATTORNEY TO
FILE, AS ATTORNEY-IN-FACT FOR THE MORTGAGOR, A COPY OF THIS AGREEMENT IN ANY
COURT, AND THE COPY OF THIS AGREEMENT SO FILED SHALL CONCLUSIVELY BE DEEMED TO
CONSTITUTE MORTGAGOR’S WAIVER OF TRIAL BY JURY IN ANY PROCEEDING ARISING OUT OF
OR OTHERWISE RELATING TO ANY OF THE DEBT DOCUMENTS, THE OBLIGATIONS, THE
COLLATERAL OR THE NOTEHOLDER’S CONDUCT IN RESPECT OF ANY OF THE FOREGOING..

 

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

 

46.
                              Miscellaneous.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

23

 

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

 

[SIGNATURE
PAGE TO FOLLOW]

 

24

 

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

 

	
   

  	
  MORTGAGOR:

  
	
   

  	
   

  
	
   

  	
  BLACKHAWK BIOFUELS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
      /S/ Ronald L. Mapes

  
	
   

  	
   

  	
         Ronald
  L. Mapes, Chair

  

 

ACKNOWLEDGMENT

 

	
  STATE
  OF

  	
   Illinois

  	
   

  	
  )

  
	
   

  	
   

  	
   

  	
  ) SS

  
	
  COUNTY
  OF

  	
   Carroll

  	
   

  	
  )

  
					

 

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

 

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

 

 

	
   

  	
  /S/ Mary A. Turnbaugh

  
	
   

  	
  Notary Public

  

 

 

My term expires: 
5-14-2011

	
   

  
	
   

  	
  OFFICIAL
  SEAL

  
	
   

  	
  MARY A.
  TURNBAUGH

  
	
   

  	
  NOTARY
  PUBLIC – STATE OF ILLINOIS

  
	
   

  	
  MY
  COMMISSION EXPIRES:05/14/11

  
	
   

  	
   

  

SUBORDINATED LEASEHOLD MORTGAGE SIGNATURE
PAGE

 

 

EXHIBIT A

 

Legal
Description of Leased Premises

 

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

 

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

 

 

EXHIBIT B

 

Legal
Description of Soybean Oil Pipeline Easement

 

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

 

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

 

 

EXHIBIT C

 

Legal
Description of Access Right of Way Easement

 

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

 

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

 

28

 

EXHIBIT D

 

Legal
Description of Underground Gas Pipeline Easement

 

 

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

 

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

 

29

 

EXHIBIT E

 

Legal
Description of Biodiesel Pipeline Easement

 

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

 

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

 

30

 

EXHIBIT F

 

Liens
and Encumbrances

 

	
  1.

  	
   

  	
  Taxes
  for the year(s) 2007, 2008 and subsequent years, not yet due and
  payable.

  
	
   

  	
   

  	
   

  
	
  2.

  	
   

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

  
	
   

  	
   

  	
   

  
	
  3.

  	
   

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

  
	
   

  	
   

  	
   

  
	
  4.

  	
   

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

  
	
   

  	
   

  	
   

  
	
  5.

  	
   

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

  
	
   

  	
   

  	
   

  
	
  6.

  	
   

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

  
	
   

  	
   

  	
   

  
	
  7.

  	
   

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

  
	
   

  	
   

  	
   

  
	
  8.

  	
   

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

  
	
   

  	
   

  	
   

  
	
  9.

  	
   

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

  
	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  Terms,
  agreements, provisions, conditions and limitations contained in the Lease,
  executed by Bunge Milling, Inc., an Illinois corporation, as Lessor, and
  Biofuels Company of America, LLC, an Illinois limited liability company, as
  Lessee, dated November 3, 2006, a memorandum of which was recorded
  November 16, 2006 as document 06-14831 and re-recorded November 22,
  2006 as document 06-15109, as amended and assigned to Blackhawk Biofuels, LLC pursuant to
  that certain First Amendment, Assignment and Assumption and Consent to
  Assignment of Ground Lease and Conveyance of Leasehold Improvements by and
  among Bunge Milling, Inc., Biofuels Company of America, LLC and Blackhawk Biofuels, LLC, dated as of
  May 9, 2008, a

  

 

31

 

	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
  11.

  	
   

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

  
	
   

  	
   

  	
   

  
	
  12.

  	
   

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

  
	
   

  	
   

  	
   

  
	
  13.

  	
   

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

  
	
   

  	
   

  	
   

  
	
  14.

  	
   

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

  
	
   

  	
   

  	
   

  
	
  15.

  	
   

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

  
	
   

  	
   

  	
   

  
	
  16.

  	
   

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

  
	
   

  	
   

  	
   

  
	
  17.

  	
   

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

  
	
   

  	
   

  	
   

  
	
  18.

  	
   

  	
  Terms
  and conditions contained in Landlord and Mortgagee Agreement dated
  May 9, 2008 between Bunge Milling, Inc., Landlord and Fifth Third
  Bank, Mortgagee, recorded                                 
  as Document No.                 .

  
	
   

  	
   

  	
   

  
	
  19.

  	
   

  	
  Mortgage of Leasehold,
  Security Agreement, Assignment of Rents and Leases and Fixture Filing dated                 
  and recorded                 as
  document                 
  made by Blackhawk Biofuels, LLC to Fifth Third Bank, a Michigan banking
  corporation, to secure a construction/term loan note in the amount of
  $24,650,000.00 and a revolving credit loan note in the amount of
  $5,000,000.00, and the terms and conditions thereof.

  

 

32EXHIBIT 10.12

 

THIS WARRANT, AND
ANY LIMITED LIABILITY COMPANY UNITS ACQUIRED UPON THE EXERCISE OF THIS WARRANT,
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”)
OR ANY OTHER APPLICABLE SECURITIES LAWS. 
THIS WARRANT HAS BEEN ACQUIRED FOR INVESTMENT AND NEITHER THIS WARRANT
NOR ANY OF SUCH UNITS MAY BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION OF THEM UNDER THE ACT AND ANY OTHER APPLICABLE
SECURITIES LAW, OR RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL OR OTHER
EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH SALE OR TRANSFER IS EXEMPT FROM
REGISTRATION UNDER THE ACT.  NEITHER THIS
WARRANT NOR ANY OF SUCH UNITS MAY BE TRANSFERRED EXCEPT UPON THE
CONDITIONS SPECIFIED IN THIS WARRANT, AND NO TRANSFER OF THIS WARRANT OR ANY OF
SUCH UNITS SHALL BE VALID OR EFFECTIVE UNLESS AND UNTIL SUCH CONDITIONS SHALL
HAVE BEEN COMPLIED WITH.  TRANSFER OF
THIS WARRANT OR ANY OF SUCH UNITS IS FURTHER RESTRICTED AS PROVIDED IN THE
COMPANY’S AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT DATED (THE “OPERATING
AGREEMENT”), A COPY OF WHICH IS AVAILABLE AT THE COMPANY’S OFFICES.

 

	
  Certificate
  No. W - 1

  	
   

  	
  Date of Issuance: May 9, 2008

  

 

UNIT PURCHASE WARRANT

 

To Purchase Class A

Limited Liability Company Units of

BLACKHAWK BIOFUELS, LLC

 

THIS CERTIFIES THAT, for value received, the receipt
and sufficiency of which is hereby acknowledged:

 

Subject to the conditions set forth herein, REG
Ventures, LLC, with its principal offices at 416 S. Bell Avenue, Ames, Iowa
50010, together with any of its registered assigns or any transferee of all or
any portion of its rights hereunder (the “Holder” or “Holders”),
is entitled to subscribe for and purchase from Blackhawk Biofuels, LLC, a
Delaware limited liability company (the “Company”), at any time or from
time to time after the date hereof and continuing during the Exercise Period
(as hereinafter defined), Fifty-one Thousand Five Hundred Sixty-three (51,563)
fully paid and nonassessable Class A limited liability company units of
the Company (the “Units”), at an exercise price of  $.01 per Unit (the “Exercise Price”),
subject to adjustment from time to time pursuant to the provisions of this
Warrant (the “Warrant Units”). 
This Warrant is subject to the following provisions, terms and conditions:

 

Definitions.  For the purpose of the Warrants, the
following terms, whether or not capitalized or underlined in the text of this
Warrant, shall have the following meanings:

 

“Capital Units” shall mean any and all shares,
interests, participations, or other equivalents (however designated) of capital
units of the Company.

 

 

“Company” shall have the meaning specified in
the introduction to this Warrant, and shall include any corporation or business
entity resulting from the merger, consolidation, or conversion of the Company.

 

“Exercise Agreement” shall have the meaning
specified in paragraph 2(a) hereof.

 

“Exercise Period” shall have the meaning
specified in paragraph 2(b) hereof.

 

“Exercise Price” shall have the meaning
specified in the introduction to this Warrant.

 

“Trading Days” shall mean any days during the
course of which the principal securities exchange on which the Common Stock is
listed or admitted to trading is open for the exchange of securities.

 

“Unit(s)” shall have the meaning specified in
the introduction to this Warrant.

 

“Warrant(s)” shall mean this Warrant of even
date herewith, including all amendments to any such Warrants and all warrants
issued in exchange, transfer or replacement therefor.

 

“Warrant Units” shall have the meaning
specified in the introduction to this Warrant.

 

2.                                       Exercise
of Warrant.

 

(a)                                  Exercise
Agreement.  While this Warrant
remains outstanding and exercisable in accordance with subparagraph 2(a) below,
the Holder may exercise, in whole or in part, the purchase rights evidenced
hereby:  (i) the surrender of the
Warrant, together with a completed Exercise Agreement in the form attached
hereto (“Exercise Agreement”) to the Secretary of the Company at its
principal offices, (ii) the payment to the Company of an amount equal to
the aggregate Exercise Price, for the number of Warrant Units being purchased,
in cash (in the form of immediately available funds in U.S. Dollars); and (iii) full
compliance with the other applicable provisions of this Warrant.

 

(b)                                 Exercise
Period.  This Warrant is exercisable
at any time from and after the date hereof (the “Exercise Period”) as
follows:  20% of the Warrant Units
through the one (1) year period from the date of this Warrant and an
additional 20% of the Warrant Units on each one (1) year anniversary of
this Warrant.

 

(c)                                  Issuance
of Certificates.  Certificates for
the Warrant Units, representing the aggregate number of Units specified in said
Exercise Agreement, shall be delivered to the Holder within a reasonable time,
not exceeding five (5) business days, after the rights represented by this
Warrant shall have been so exercised. 
The Unit certificate or certificates so delivered shall be in such
denominations as may be requested by the holder hereof and shall be registered
in the name of said Holder or such other name as shall be designated by said
Holder (subject to the transfer restrictions applicable to this Warrant and to
Units purchased upon exercise of this Warrant). 
If this Warrant shall have been exercised only in part, then, unless
this Warrant has expired, the Company shall, at its expense, at the time of
delivery of said Unit certificates(s), deliver to said holder a new Warrant
representing the right to purchase the number of Units with respect to which
this Warrant shall not then have been exercised.  The Company 

 

2

 

shall pay all expenses and charges payable in connection with the
preparation, execution and delivery of Unit certificates (and any new Warrants)
pursuant to this paragraph 2 except that, in case such Unit certificates shall
be registered in a name or names other than the Holder of this Warrant or such
Holder’s nominee, funds sufficient to pay all Unit transfer taxes which shall
be payable in connection with the execution and delivery of such Unit
certificates shall be paid by the Holder to the Company at the time of delivery
of such Unit certificates by the Company as mentioned above.

 

(d)                                 No
Fractional Shares.  This Warrant
shall be exercisable only for a whole number of Warrant Units.  No fractions of Units, or scrip for any such
fractions of Units, shall be issued upon the exercise of this Warrant.

 

3.                                       Units
to be Fully Paid; Reservations of Units. 
The Company covenants and agrees that all Warrant Units will be duly
authorized and validly issued and upon issuance in accordance with the terms
and conditions hereof, will be fully paid and nonassessable and free from all
taxes, liens and charges with respect to the issue thereof.  Without limiting the generality of the
foregoing, the Company covenants and agrees that it will from time to time take
all such action as may be required to assure that the par value per Warrant
Unit is at all times equal to or less than the Exercise Price then in effect.  The Company further covenants and agrees that
during the period within which the rights represented by this Warrant may be
exercised, the Company shall at all times reserve and keep available out of its
authorized but unissued Units, solely for the purpose of effecting the exercise
of the rights represented by this Warrant and any other Warrants, such number
of its Units as shall from time to time be sufficient to effect the exercise of
all then outstanding Warrants; and if at any time the number of authorized but
unissued Units shall not be sufficient to effect the exercise of all then
outstanding Warrants, in addition to such other remedies as shall be available
to the Holder, the Company will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but unissued
Units to such number of Units as shall be sufficient for such purposes,
including, without limitation, engaging in best efforts to obtain the requisite
member approval of any necessary amendment to the Certificate or Articles of
Organization

 

4.                                       Anti-Dilution
Provisions.  The number, rights and
privileges of the Units issuable upon exercise of this Warrant shall be subject
to the following adjustments:

 

a.                                       Subdivisions,
Combinations and Stock Dividends.  If
the Company shall at any time prior to the expiration of this Warrant subdivide
its Units, by split up or otherwise, or combine its Units, or issue additional
Units as a dividend with respect to any Units, the number of Warrant Units
issuable on the exercise of this Warrant shall forthwith be proportionately
increased in the case of a subdivision or Units dividend, or proportionately
decreased in the case of a combination. 
Appropriate adjustments shall also be made to the Exercise Price payable
per share, but the aggregate Exercise Price payable for the total number of
Warrant Units purchasable under this Warrant (as adjusted) shall remain the
same.  Any adjustment under this
subparagraph 4(a) shall become effective at the close of business on the
date the subdivision or combination becomes effective, or as of the record date
of such dividend, or in the event that no record date is fixed, upon the making
of such dividend.

 

3

 

b.                                      Other
Distributions.  In the event the
Company shall declare a distribution payable in securities of other persons,
evidences of indebtedness issued by the Company or other persons, assets
(excluding cash dividends) or options or rights not referred to in subsection
4(b), then, in each such case for the purpose of this subsection 4(b),
provision shall be made by the Company such that the Holder shall receive upon
exercise of this Warrant a proportionate share of any such distribution s
though it were the holder of the Units as of the record date fixed for the
determination of the Unit holders of the Company entitled to receive such
distribution.

 

c.                                       Reclassification,
Reorganization and Consolidation.  If
the Company shall effect any reclassification or similar change of the
outstanding shares of the Company’s Capital Units (other than as set forth in
subparagraph 4(a) or 4(b) above), or a consolidation or merger
of the Company with another corporation, this Warrant shall, after such
reorganization, reclassification, consolidation, or merger, be exercisable only
for the number of Capital Units or other properties, including cash, to which a
holder of the number of Units deliverable upon exercise of this Warrant would
have been entitled upon such reorganization, reclassification, consolidation or
merger if this Warrant had been exercised immediately prior to the effective
date of such event; and, in any such case, appropriate adjustments shall be
made in the application of the provisions set forth in this Section 4
with respect to the rights and interest thereafter of the Holder in order that
the provisions set forth in this Section 4 (including provisions
with respect to changes in and other adjustments of the exercise rights in this
Section 4) shall thereafter be applicable, as nearly as equivalent
as may be practicable, to any shares of stock or other securities thereafter
deliverable upon the exercise of this Warrant.

 

d.                                      Notice
of Transaction.  The Company shall
give written notice to the Holder at least ten (10) business days prior to
the consummation of any transaction within the scope of clause (a) through
(c) of this paragraph 4 and provide in such written notice a brief
description of the terms and conditions of such transaction.

 

e.                                       Notice
of Adjustment.  When any adjustment
is required to be made in the number or kind of shares purchasable upon
exercise of the Warrant, or in the Exercise Price, the Company shall promptly
notify the Holder of such event and of the number of Capital Units or other
securities or property thereafter purchasable upon exercise of this Warrant.

 

5.                                       Certain
Agreements of the Company.  The
Company covenants and agrees that:

 

a.                                        Certain
Actions Prohibited.  The Company will
not, by amendment of its Certificate or Articles of Organization or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance of this Warrant and will take all such actions as may reasonably be
requested by the Holder of any Warrant in order to protect the exercise
privilege of the Holders of the Warrants against impairment.

 

b.                                      Successors
and Assigns.  This Warrant will be
binding upon any entity succeeding to the Company by merger or consolidation.

 

c.                                       Issuance
of Warrant Securities.  If the
issuance of any Warrant Units required to be reserved for purposes of exercise
of this Warrant is required to be registered with 

 

4

 

or approved by any
federal or state governmental authority under any federal or state law (other
than any registration under the Act or state securities laws), before such
Warrant Units may be issued upon exercise of this Warrant, the Company will, at
its expense, use its best efforts to cause such shares to be so registered or
approved, at such time, so that such shares may be issued in accordance with
the terms hereof.

 

6.                                       Issue
Tax.  The issuance of certificates
for Warrant Units upon the exercise of Warrants shall be made without charge to
the Holders of such Warrants or such shares for any issuance tax in respect
thereof, provided that the Company shall not be
required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any certificate in a name other than
that of the Holder of the Warrant exercised.

 

7.                                       Closing
of Books.  Subject to paragraph 9,
the Company will at no time close its transfer books against the transfer of
any Warrant, of any Warrant Units issued or issuable upon the exercise of any
Warrant, or in any manner interfere with the timely exercise of this Warrant.

 

8.                                       No
Rights or Liabilities as a Holder of Units. 
This Warrant shall not entitle the Holder to any voting rights or other
rights as a holder of Units of the Company. 
No provision of this Warrant, in the absence of affirmative action by
the Holder to purchase Warrant Units, and no mere enumeration herein of the
rights or privileges of the Holder, shall give rise to any liability of such
Holder for the Exercise Price or as a holder of Units of the Company, whether
such liability is asserted by the Company or by creditors of the Company.

 

9.                                       Transfer
and Exchange.

 

a.                                       Transfers.  This Warrant may not be transferred or
assigned in whole or in part without compliance with all applicable federal and
state securities laws and the Operating Agreement, by the Holder or the
transferee (including the delivery of investment representation letters and
legal opinions reasonably satisfactory to the Company, if such are requested by
the Company).  Subject to the terms of
this Warrant with respect to compliance with applicable securities laws and the
Operating Agreement, this Warrant may be transferred, in whole or in part, to
any person or business entity, by presentation of the Warrant to the Company
with written instructions for such transfer. 
Upon such presentation for transfer, the Company shall promptly execute
and deliver a new Warrant or Warrants in the form hereof in the name of the
assignee or assignees and in the denominations specified in such instructions.

 

b.                                      Warrant
Exchangeable for Different Denominations. 
This Warrant is exchangeable, upon the surrender hereof by the Holder at
the principal office of the Company (or such other office or agency of the
Company as it may designate by notice in writing to the Holder), for new
Warrants of like tenor representing in the aggregate the right to subscribe for
and purchase the number of Units which may be subscribed for and purchased
hereunder, each of such new Warrants to represent the right to subscribe for
and purchase such number of shares as shall be designated by said Holder at the
time of such surrender.

 

c.                                       Replacement
of Warrant.  Upon receipt of written
notice from a Holder or other evidence reasonably satisfactory to the Company
of the loss, theft, destruction or mutilation of this Warrant or any stock
certificate for the Warrant Units and, in the case of any 

 

5

 

such loss, theft
or destruction, upon receipt of indemnity reasonably satisfactory to the
Company, or in the case of any such mutilation upon surrender and cancellation
of such Warrant or Unit certificate, the Company will make and deliver a new
Warrant or Unit certificate in lieu of the lost, stolen, destroyed or mutilated
Warrant or Unit certificate.

 

d.                                      Cancellation;
Payment of Expenses.  Upon the
surrender of this Warrant in connection with any exchange, transfer or
replacement as provided in this paragraph 9, this Warrant shall be
promptly canceled by the Company.  The
Company shall pay all taxes (other than securities transfer taxes) and all
other expenses and charges payable in connection with the preparation,
execution and delivery of Warrants pursuant to this paragraph 9

 

e.                                       Compliance
With Securities Laws.

 

(i)                                     The
Holder of this Warrant represents and warrants that this Warrant and the
Warrant Units to be issued upon exercise hereof are being acquired solely for
the Holder’s own account and not as a nominee for any other party, and for
investment, and that the Holder will not offer, sell or otherwise dispose of
this Warrant or any Warrant Units to be issued upon exercise hereof except
under circumstance that will not result in a violation of the Act or any state
securities laws.  Upon exercise of this
Warrant, the Holder shall, if requested by the Company, confirm in writing, in
a form satisfactory to the Company, that the Warrant Units so purchased are
being acquired solely for the Holder’s own account and not as a nominee for any
other party, for investment, and not with a view toward distribution or resale.

 

(ii)                                  This Warrant and all Warrant Units issued upon
exercise hereof or conversion thereof shall be stamped or imprinted with a
legend in substantially the following form (in addition to any legend required
by state securities laws):

 

THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAWS.  SUCH
SECURITIES AND ANY SECURITIES ISSUED HEREUNDER OR THEREUNDER MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT AND ANY OTHER APPLICABLE LAWS.

 

10.                                 Lock
Up.  In the event the Company shall
undertake its first sale to the public pursuant to a registration statement of
the Company filed under the Act, each Holder shall agree in writing, in form
and substance customary for similar transactions, if requested by the managing
underwriter or underwriters hereof, not to lend, offer, pledge, sell, contract
to sell (including, without limitation, any short sale), sell any option or
contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, or otherwise transfer or dispose of,
directly or indirectly, any Units or other securities of the Company
convertible into or exercisable or exchangeable for Units held by such Holder
immediately before the effective date of the registration statement for such
offering, or enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
Units (whether any such transaction as described in this subsection is to be
settled by delivery of 

 

6

 

Units or such
other securities, in cash or otherwise, except for securities to be sold to
such underwriter pursuant to such registration statement); provided, however,
that:

 

(a)                                  such
period shall not exceed one hundred eighty (180) days after the effective date
of the registration statement, except that such 180-day period may be extended
for not more than eighteen (18) days if such extension is reasonably necessary
to allow the Company’s underwriters to comply with NASD Conduct Rule 2711
(or any similar successor rule); and

 

(b)                                 the
Company’s directors, officers and holders of Units individually owning more
than one percent (1%) of the Company’s outstanding Units also agree to such
limitations.

 

The Company may
impose stop-transfer instructions with respect to the Units or other securities
of the Company convertible into or exercisable or exchangeable for Units
subject to the foregoing restriction until the end of such 180-day period (or
the extended period set forth above).

 

11.                                 Miscellaneous.

 

(a)                                  Notices.  All notices and other communications required
or permitted hereunder shall be in writing, and shall be deemed to have been
delivered on the date delivered by hand, telegram, facsimile or by similar
means, on the first (1st) day following the day when sent by recognized courier
or overnight delivery service (fees prepaid), or on the third (3rd) day
following the day when deposited in the mail, registered or certified (postage
prepaid), addressed: (i) if to a Holder of any Warrant, at the registered
address of such Holder as set forth in the register kept by the Company at its
principal office with respect to the Warrants, or to such other address as such
Holder may have designated to the Company in writing, and (ii) if to the
Company, at 22 S. Chicago Avenue, Freeport, Illinois 61032-4230,
Attention:  Chief Executive Officer or
addresses as the Company may have designated in writing to each Holder of any
of the Warrants at the time outstanding; provided, however,
that any such communication to the Company may also, at the option of any
Holder, be either delivered to the Company at its address set forth above or to
any officer of the Company.

 

(b)                                 Governing
Law.  THIS WARRANT SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE
GOVERNED BY, THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS.

 

(c)                                  Remedies.  The Company stipulates that the remedies at
law of the Holders in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.

 

7

 

(d)                                 Amendments.  This Warrant and any provision hereof may be
amended, changed, waived, discharged or terminated only by a written instrument
signed by the Holder and an authorized representative of the Company.

 

(e)                                  Descriptive
Headings.  The descriptive headings
of the several paragraphs of this Warrant are inserted for purposes of
reference only, and shall not affect the meaning or construction of any of the
provisions hereof.

 

(f)                                    Successors
and Assigns.  Subject to the
restrictions and requirements of this Warrant, the terms and provisions of this
Warrant shall inure to the benefit of, and be binding upon, the Company and the
Holder and their respective successors and assigns.

 

[SIGNATURE PAGE FOLLOWS]

 

8

 

IN WITNESS
WHEREOF, the Company has caused this Warrant to be signed by its duly
authorized officer this 9th day of May, 2008.

 

 

	
   

  	
  HOLDER:

  
	
   

  	
   

  
	
   

  	
  REG VENTURES, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
     /S/ Daniel J. Oh

  
	
   

  	
   

  	
       Daniel J. Oh,
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  BLACKHAWK BIOFUELS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
     /S/ Ronald L. Mapes

  
	
   

  	
   

  	
       Ronald L. Mapes, Chair

  

 

UNIT PURCHASE WARRANT SIGNATURE PAGE

 

9

 

FORM OF EXERCISE AGREEMENT

 

To:  Blackhawk Biofuels, LLC

Attention:  Chief Executive Officer

 

The undersigned hereby elects to exercise this Warrant
for
                                  
Class A limited liability Company Units of Blackhawk Biofuels, LLC pursuant
to the terms of the Warrant.

 

The undersigned is acquiring such Units for the
purpose of investment and not with a view to or for sale in connection with any
distribution thereof.

 

	
   

  	
   

  	
  HOLDER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  REG
  VENTURES, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
								

 

	
  Name in which
  Units should be registered:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00142-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00142-of-00352.parquet"}]]