Document:

EXHIBIT 10.7

 

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

 

VERMILION
COUNTY

 

This Document Prepared By And After Recording Mail
To:

 

Edward J.
Lieberman, Esq.

Husch Blackwell Sanders LLP

190 Carondelet Plaza,
Suite 600

St.
Louis, Missouri 63105-3441

 

Space Above for Recorder’s Use Only

 

DOCUMENT COVER SHEET

 

	
  TITLE
  OF DOCUMENT:

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

  
	
   

  	
   

  
	
  DATE
  OF DOCUMENT:

  	
  May 9,
  2008

  
	
   

  	
   

  
	
  MORTGAGOR(S):

  	
  Blackhawk
  Biofuels, LLC

  
	
   

  	
  22 Chicago Avenue

  
	
   

  	
  Freeport, Illinois 61032-4230

  
	
   

  	
   

  
	
  LENDER(S):

  	
  Fifth
  Third Bank

  
	
   

  	
  8000 Maryland Avenue, Suite 1400

  
	
   

  	
  St. Louis, Missouri 63105

  
	
   

  	
   

  
	
  LEGAL
  DESCRIPTION:

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

  

 

 

MORTGAGE OF
LEASEHOLD, SECURITY AGREEMENT, ASSIGNMENT

OF LEASES AND
RENTS AND FIXTURE FILING

(THIS IS A FUTURE ADVANCE MORTGAGE)

 

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

 

Recitals

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

8

 

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

 

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

 

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

 

9

 

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

 

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

 

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

 

10

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

12

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

13

 

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

 

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

 

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

 

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

 

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

 

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

 

22.                                 Intentionally Omitted.

 

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

 

14

 

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

 

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

 

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

 

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

 

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

 

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

 

15

 

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

 

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

 

30.                                 Taxes.

 

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

 

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

 

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

 

16

 

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

 

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

 

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

 

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

 

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

 

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

 

37.                                 Notices. All notices,
demands, consents, approvals and requests given or required to be given by any
party hereto to any other party hereto shall be in writing and delivered (a) in

 

17

 

person, by messenger or overnight courier, (ii) by
registered or certified mail, return receipt requested and postage prepaid, or (iii) by
facsimile, to the applicable party at its address or facsimile number set forth
below, or at such other address or facsimile number as such party hereafter may
designate as its address for communications hereunder by notice so given.

 

	
  If to Mortgagor:

  	
   

  	
  Blackhawk Biofuels, LLC

  
	
   

  	
   

  	
  22 South Chicago Avenue

  
	
   

  	
   

  	
  Freeport, Illinois  61032-4230

  
	
   

  	
   

  	
  Attention:  Ronald L. Mapes, Chair

  
	
   

  	
   

  	
  Facsimile:  (815) 235-4727

  
	
   

  	
   

  	
   

  
	
  and
  also:

  	
   

  	
  Lindquist &
  Vennum PLLP

  
	
   

  	
   

  	
  4200 IDS Center

  
	
   

  	
   

  	
  80 South Eighth Street

  
	
   

  	
   

  	
  Minneapolis,
  Minnesota  55402-2274

  
	
   

  	
   

  	
  Attention:  Dean R. Edstrom, Esq.

  
	
   

  	
   

  	
  Facsimile:  (612) 371-3207

  
	
   

  	
   

  	
   

  
	
  and
  also:

  	
   

  	
  Renewable Energy Group, Inc.

  
	
   

  	
   

  	
  416 S. Bell Avenue

  
	
   

  	
   

  	
  PO Box 888

  
	
   

  	
   

  	
  Ames, Iowa 50010

  
	
   

  	
   

  	
  Attention:  Jeffrey Stroburg

  
	
   

  	
   

  	
  Facsimile:  (515) 239-8009

  
	
   

  	
   

  	
   

  
	
  and
  also:

  	
   

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

  
	
   

  	
   

  	
  700 Walnut Street, Suite 1600

  
	
   

  	
   

  	
  Des Moines, Iowa 50309-3899

  
	
   

  	
   

  	
  Attention:  Rick Neumann

  
	
   

  	
   

  	
  Facsimile No.: (515) 283-3108

  
	
   

  	
   

  	
   

  
	
  If to Lender:

  	
   

  	
  Fifth Third Bank

  
	
   

  	
   

  	
  8000 Maryland Avenue, Suite 1400

  
	
   

  	
   

  	
  St. Louis, Missouri  63105

  
	
   

  	
   

  	
  Attention:  Shawn Hagan and
  Mary Ann Lemonds

  
	
   

  	
   

  	
  Facsimile No.:  (314) 889-3377

  
	
   

  	
   

  	
   

  
	
  and
  also:

  	
   

  	
  Husch Blackwell Sanders LLP

  
	
   

  	
   

  	
  190 Carondelet Plaza, Suite 600

  
	
   

  	
   

  	
  St. Louis, Missouri  63105

  
	
   

  	
   

  	
  Attention:  Edward J. Lieberman

  
	
   

  	
   

  	
  Facsimile No.:  (314) 480-1505

  

 

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

 

18

 

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

 

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

 

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

 

19

 

40.                                 Environment.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

20

 

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

 

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

 

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

 

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

 

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

 

21

 

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

 

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

 

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

 

	
  Annualized EBITDA/Rolling Four-Quarter EBITDA

  	
   

  	
  Applicable Margin

  	
   

  
	
  Equal to or greater than $7,000,000

  	
   

  	
  225 bps

  	
   

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

  	
   

  	
  250 bps

  	
   

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

  	
   

  	
  275 bps

  	
   

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

  	
   

  	
  300 bps

  	
   

  
	
  Less than $4,000,000

  	
   

  	
  325 bps

  	
   

  

 

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

 

22

 

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

 

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

 

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

 

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

 

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

 

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

 

“Effective Date” means May 9, 2008.

 

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

 

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

 

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

 

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

 

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

 

23

 

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

 

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

 

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

 

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

 

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

 

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

 

24

 

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

 

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

 

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

 

“Subsidiary” means any subsidiary of the Mortgagor.

 

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

 

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

 

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

 

46.                                Miscellaneous.

 

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

 

25

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

[SIGNATURE PAGE TO FOLLOW]

 

26

 

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

  

 

 

EXHIBIT A

 

Legal Description of Leased Premises

 

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

 

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

 

	
  Tax
  Identification

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

  
	
  Numbers and
  Common

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

  
	
  Addresses:

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

  
	
   

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

  
	
   

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

  
	
   

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

  
	
   

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

  
	
   

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

  

 

 

EXHIBIT B

 

Legal Description of Soybean Oil Pipeline
Easement

 

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

 

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

 

	
  Tax
  Identification Numbers:

  	
  23 09 108 005

  
	
   

  	
  23 09 108 006

  
	
   

  	
  23 09 100 132

  

 

 

EXHIBIT C

 

Legal Description of Access Right of Way
Easement

 

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

 

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

 

	
  Tax
  Identification   Numbers:

  	
  23 09 117 014

  
	
   

  	
  23 09 111 018

  
	
   

  	
  23 09 100 132

  
	
   

  	
  23 09 108 004

  
	
   

  	
  23 09 108 005

  

 

 

EXHIBIT D

 

Legal Description of Underground Gas Pipeline
Easement

 

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

 

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

 

	
  Tax
  Identification   Numbers:

  	
  23 08 226 001

  
	
   

  	
  23 08 226 002

  
	
   

  	
  23 09 115 003

  
	
   

  	
  23 09 112 007

  
	
   

  	
  23 09 113 001

  
	
   

  	
  23 09 111 018

  
	
   

  	
  23 09 110 001

  
	
   

  	
  23 09 109 005

  
	
   

  	
  23 09 109 133

  
	
   

  	
  23 09 100 132

  
	
   

  	
  23 09 100 014

  
	
   

  	
  23 09 100 016

  

 

 

EXHIBIT E

 

Legal Description of Biodiesel Pipeline
Easement

 

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

 

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

 

	
  Tax
  Identification   Number:

  	
  23 09 100 132

  

 

 

EXHIBIT F

 

Liens and Encumbrances

 

	
  1.

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

  
	
   

  	
   

  
	
  2.

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

  
	
   

  	
   

  
	
  3.

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

  
	
   

  	
   

  
	
  4.

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

  
	
   

  	
   

  
	
  5.

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

  
	
   

  	
   

  
	
  6.

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

  
	
   

  	
   

  
	
  7.

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

  
	
   

  	
   

  
	
  8.

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

  
	
   

  	
   

  
	
  9.

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

  
	
   

  	
   

  
	
  10.

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

  

 

 

	
   

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

  
	
   

  	
   

  
	
  11.

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

  
	
   

  	
   

  
	
  12.

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

  
	
   

  	
   

  
	
  13.

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

  
	
   

  	
   

  
	
  14.

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

  
	
   

  	
   

  
	
  15.

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

  
	
   

  	
   

  
	
  16.

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

  
	
   

  	
   

  
	
  17.

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

  

 

34EXHIBIT 10.8

 

SUBORDINATED
LOAN AGREEMENT

 

THIS SUBORDINATED LOAN
AGREEMENT (“Agreement”) is made and entered into this 9th day of May, 2008 (the
“Effective Date”), by and between REG
VENTURES, LLC, an Iowa limited liability company with its principal
offices at 406 First Street, P.O. Box 68, Ralston, Iowa 51458 (“REG”),
which is wholly owned by RENEWABLE ENERGY
GROUP, INC., a Delaware corporation (“Parent”), and BLACKHAWK BIOFUELS, LLC, a Delaware limited
liability company with its principal offices at 22 South Chicago Avenue,
Freeport, Illinois 61032 (“Blackhawk”).

 

RECITALS:

 

The following recitals are a
material part of this Agreement:

 

A.                           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.

 

B.                            Blackhawk intends to
acquire a leasehold interest in certain property located in the City of
Danville, County of Vermilion, State of Illinois described on Exhibit A
attached hereto (the “Property”) which is being developed for utilization as a
plant for the production of biodiesel fuel (the “Biodiesel Plant”)

 

C.                            The Property and Biodiesel
Plant are to be acquired pursuant to an Asset Purchase Agreement of dated March 14,
2008 between Blackhawk, Parent, Bunge North America, Inc., Biodiesel
Investment Group, LLC and Biofuels Company of America, LLC (the “Purchase
Agreement”).

 

D.                           The Property is to be
developed in accordance with the plans and specifications for the Biodiesel
Plant which are generally described in Exhibit B-1 attached hereto (such
plans and specifications, together with such additional plans and
specifications and all amendments and modifications thereof in accordance with
the terms of this Agreement are herein referred to collectively as the “Project
Plans and Specifications”) and the plans and specifications for the Biodiesel
Plant which are 

 

 

generally described in Exhibit B-2
attached hereto (such plans and specifications, together with such additional
plans and specifications and all amendments and modifications thereof in
accordance with the terms of this Agreement are herein referred to collectively
as the “Project Addition Plans and Specifications”); and

 

E.                            Pursuant to the Purchase
Agreement, Parent is required to issue at the closing of the Purchase Agreement
as defined therein (the “Closing”) 1,980,488 shares of the common stock of
Parent (“REG Common Stock”) and 127,273 shares of the Series B Preferred
Stock of Parent (“REG Preferred Stock”), which shares of REG Common Stock and
REG Preferred Stock together are valued at $21, 700,000.

 

F.                            In exchange for the
issuance by Parent of REG Common Stock and REG Preferred Stock pursuant to the
Purchase Agreement and the guarantee of a portion of the debt reserve account
under the Senior Mortgage, REG and Blackhawk are entering into this Agreement
and the agreements and instruments contemplated hereby.

 

NOW, THEREFORE, in consideration of the mutual agreements contained
herein and other good and valuable consideration the receipt and sufficiency of
which are hereby acknowledged, REG and Blackhawk hereby agree as follows:

 

SECTION 1.  DEFINITIONS.

 

1.1.          General
Definitions.  All terms as used in
this Agreement shall, unless otherwise defined in the body of this Agreement,
have the following meanings:

 

1.1.1.      Advances shall mean
all amounts expended by or on behalf of REG to or on behalf of Blackhawk
pursuant to this Agreement.

 

1.1.2.      Affiliate shall mean (i) a
Person which owns or otherwise has an interest in 5% or more of any ownership
units of Blackhawk, or (ii) 5% or more of the stock or other ownership
units of which Blackhawk (or any shareholder, director, officer, employee or
direct or indirect subsidiary of Blackhawk or any combination thereof) owns or
otherwise has an interest in, or (iii) which, directly or through one or
more intermediaries, is controlled by, controls, or is under common control
with Blackhawk.  For purposes of subpart (iii) above,
“control” means the ability, directly or indirectly, to affect the management
or policies of a Person by virtue of an ownership interest, by right of
contract or any other means.

 

1.1.3.      Biodiesel Plant shall
have the meaning set forth in the Recitals to this Agreement.

 

2

 

1.1.4.      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 Ames, Iowa.

 

1.1.5.      Capital Expenditures
shall mean expenditures made and liabilities incurred for the direct or
indirect acquisition of any fixed assets or improvements, replacements,
substitutions or additions thereto which have a useful life of more than one
year, including, without limitation, payments with respect to capitalized lease
obligations.

 

1.1.6.      CDBG Grant shall mean
that certain Community Development Block Grant from the City of Danville to
Blackhawk in an amount not less than $225,000.

 

1.1.7.      Change of Control
shall mean the sale of all or substantially all of the assets of a Person or
the sale or transfer of more than fifty percent (50%) of the outstanding shares
of capital stock of REG or any securities convertible or exchangeable into such
shares, in each case, in one transaction or series of related transactions.

 

1.1.8.      Closing shall mean
the Closing of the Purchase Agreement as defined therein.

 

1.1.9.      Collateral shall mean
all real and personal property in which a security interest or other lien has
been granted to or for the benefit of REG pursuant to the Security Agreement,
the Subordinated Mortgage, or the other Subordinated Loan Documents or which
otherwise secures the payment or performance of any of the Obligations.

 

1.1.10.    Commencement of Production
shall mean the date that the Biodiesel Plant begins producing biodiesel fuel.

 

1.1.11.    Construction Documents
shall mean, collectively, the Project General Construction Contract, the
Project Addition General Construction Contract, the Equipment Purchase and Sale
Agreement and all Subcontracts.

 

1.1.12.    DCEO shall mean the
Illinois Department of Commerce and Economic Opportunity.

 

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

 

1.1.14.    Default Rate means a
variable rate of interest per annum equal to the Interest Rate plus five
percent (5%) per annum.

 

1.1.15.    De Smet shall mean De
Smet Ballestra North America, Inc.

 

1.1.16.    Due Date is defined in
the Note.

 

1.1.17.    Economic Development
Programming Assistance Grant shall mean that certain grant from IDOT
pursuant to its Economic Development in an 

 

3

 

amount not less than $751,167, which proceeds
shall be used for the construction of infrastructure improvements supporting
the Project.

 

1.1.18.    Effective Date shall
have the meaning set forth in the opening paragraph to this Agreement.

 

1.1.19.    Environmental Laws
shall mean any and all laws, statutes, ordinances, rules, regulations, orders,
or determinations of any governmental authority pertaining to health or the
environment in effect in any and all jurisdictions in which Blackhawk is or at
any time may be doing business, or where the real property of Blackhawk is
located, including without limitation, the Clean Air Act, as amended; the
Comprehensive, Environmental, Response, Compensation, and Liability Act of
1980, as amended (“CERCLA”), the Federal Water Pollution Control Act
Amendments; the Occupational Safety and Health Act of 1970, as amended (“OSHA”);
the Resource Conservation and Recovery Act of 1976, as amended (“RCRA”); the
Safe Drinking Water Act, as amended; and the Toxic Substances Control Act, as
amended.

 

1.1.20.    Equipment Purchase and Sale
Agreement shall mean that certain Equipment Purchase and Sale Agreement
dated September 7, 2006 by and between Blackhawk and De Smet for Blackhawk’s
purchase from De Smet of certain equipment used in the construction of the
Project and/or the operation of Biodiesel Plant, and all amendments,
modifications, replacements and restatements thereof.

 

1.1.21.    ERISA shall mean the
Employee Retirement Income Security Act of 1974, as amended from time to time,
and all rules and regulations from time to time promulgated thereunder.

 

1.1.22.    Event of Default shall
mean those events set forth in Section 8.1.

 

1.1.23.    Fair Market Value shall
mean the fair market value of Blackhawk, as of the end of the most recent month
prior to the Liquidity Notice Date, determined as follows:  At the expense of REG or Parent, REG or
Parent shall select an investment banking firm of national or regional standing
to determine a fair market value for Blackhawk, which value shall be stated or
estimated in the Liquidity Notice under Section 5.1.  If the Board of Managers of Blackhawk
disagrees with the determination of the fair market value made by the firm
selected by REG or Parent, Blackhawk shall within thirty (30) days of the
Liquidity Notice (A) give REG or Parent written notice of such disagreement
(the “Appraisal Notice”) and (B) engage an investment banking firm of
national or regional standing at Blackhawk’s expense to determine the fair
market value of Blackhawk as of the end of the most recent month prior to the
Liquidity Notice Date.  Such determination
shall be completed within thirty (30) days of the Appraisal Notice.  The average of the two fair market values as
so determined shall be the Fair Market Value of Blackhawk; provided, however,
in the event one of the two fair market values as so determined is ten percent
(10%) or more greater than the other such fair market value, (A) the two
previously selected firms shall select a third investment banking firm of
national or regional standing 

 

4

 

within fifteen (15) days after the
determination of the disparity of ten percent (10%) or more in the fair market
values; (B) the third firm so selected shall within thirty (30) days after
the deadline for the selection of the third firm, make a determination of the
fair market value of Blackhawk as of the end of the most recent month prior to
the Liquidity Notice; and (C) the average of the two closest fair market
values from among the three determinations made shall be the Fair Market Value
of Blackhawk.  If a third firm is
selected, REG and Blackhawk shall share equally the fees and expenses of the
third firm.  In the event any fair market
value determination is not received by REG and Blackhawk within thirty (30)
days after the deadline for the selection of any firm for such purpose, the
determination of fair market value by such firm shall be disregarded in
determining the Fair Market Value of Blackhawk and the Fair Market Value of
Blackhawk shall be determined based on the one determination or the average of
the two determinations, as the case may be, that have been obtained within the
applicable time period.  In the event the
closing of the IPO does not occur within one hundred eighty (180) days of the
Liquidity Notice Date, REG shall pay the fees and expenses of the firms that
otherwise would have been the obligation of Blackhawk.

 

1.1.24.    GAAP means generally
accepted accounting principles, applied on a basis consistent with the
accounting practices applied in the financial statements of Blackhawk, except
for any change in accounting practices to the extent that, due to a
promulgation of the Financial Accounting Standards Board changing or
implementing any new accounting standard, Blackhawk either (i) is required
to implement such change, or (ii) for future periods will be required to
and for the current period may in accordance with generally accepted accounting
principles implement such change, for its financial statements to be in
conformity with generally accepted accounting principles (any such change is
herein referred to as a “Required GAAP Change”), provided that Blackhawk shall
fully disclose in such financial statements any such Required GAAP Change and
the effects of the Required GAAP Change on Blackhawk’s income, retained
earnings or other accounts, as applicable.

 

1.1.25.    Ground Lease shall mean
that certain Amended and Restated Ground Lease Agreement dated as of November 3,
2006 by and between Bunge Milling, Inc. and Biofuels Company of America,
LLC which has been assigned to and assumed by Blackhawk on or about the
Effective Date, as amended by the First Amendment and Consent to Assignment of
even date herewith.

 

1.1.26.    Hazardous Materials
shall mean and include gasoline, petroleum, asbestos (asbestiform varieties of
chrysotile; crocidolite; amosite; anthophyllite; tremolite; and actinolite),
explosives, radioactive materials or any hazardous or toxic material, substance
or waste which is defined by those or similar terms or is regulated as such
under any law, statutes, ordinances, rules and regulations of any
governmental authority having jurisdiction over the Property or any portion
thereof or its use, including:  (i) any
“hazardous substance” defined as such in (or for purposes of) the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C.A. § 9601(14)
as may be amended 

 

5

 

from time to time, or any so-called “superfund”
or “superlien” Law, including the judicial interpretation thereof; (ii) any
“pollutant or contaminant” as defined in 42 U.S.C.A. § 9601(33); (iii) any
material now defined as “hazardous waste” pursuant to 40 C.F.R. Part 260; (iv) any
petroleum, including crude oil or any fraction thereof; (v) natural gas,
natural gas liquids, liquefied natural gas, or synthetic gas usable for fuel; (vi) any
“hazardous chemical” as defined pursuant to 29 C.F.R. Part 1910; and (vii) any
other substance, regardless of physical form, that is subject to any other Law
or other past or present requirement of any governmental authority regulating,
relating to, or imposing obligations, liability, or standards of conduct
concerning the protection of human health, plant life, animal life, natural
resources, property, or the reasonable enjoyment of life or property from the
presence in the environment of any solid, liquid, gas, odor, any form of
energy, any form of contaminant, or from any other source.

 

1.1.27.    IDOT shall mean the
Illinois Department of Transportation.

 

1.1.28.    IFA shall mean the
Illinois Finance Authority.

 

1.1.29.    IFA Guaranty shall mean
that certain guaranty issued by the IFA for the benefit of Fifth Third Bank,
which guarantees the repayment of at least 60.85% of the outstanding principal
balance of the Senior Loan, provided, that such guaranteed amount shall not
exceed Fifteen Million and 00/100 Dollars ($15,000,000.00).

 

1.1.30.    IFA Guaranty Documents
shall mean the IFA Guaranty, Lender’s Agreement executed by IFA and Fifth Third
Bank and any other agreements entered into by Blackhawk, the IFA and/or Fifth
Third Bank in connection with the IFA Guaranty.

 

1.1.31.    Improvements shall mean
the improvements for the development of the Property for utilization as a
Biodiesel Plant, including, without limitation, the Project, the Project
Addition and the equipment to be purchased by Blackhawk for such Biodiesel
Plant pursuant to the terms of the Equipment Purchase and Sale Agreement and
all the other improvements in connection with the construction of the
enhancements to the Biodiesel Plant.

 

1.1.32.    Indebtedness shall mean,
without duplication, (i) obligations for borrowed money or for the
deferred purchase price of property or services in respect of which Blackhawk
is liable, contingently or otherwise, as an obligor, guarantor or otherwise, or
in respect of which Blackhawk otherwise assures a creditor against loss; (ii) all
other obligations or items which, in accordance with GAAP, would be shown on
the liability side of a balance sheet as of the date of occurrence thereof; (iii) the
face amount of all letters of credit issued and, without duplication, all
drafts drawn thereunder; (iv) all obligations secured by any lien on any
property or asset; (v) obligations under leases which shall have been or
should be, in accordance with GAAP, recorded as capital leases in respect of
which, obligations Blackhawk is liable, contingently or otherwise, as an
obligor, guarantor or otherwise, or in respect of which obligations Blackhawk
otherwise 

 

6

 

assures a creditor against loss; and (vi) unfunded
vested benefits under each Plan maintained for employees of Blackhawk.

 

1.1.33.    Infrastructure Grants
shall mean, collectively, the CDBG Grant, the Economic Development Programming
Assistance Grant, and the TARP Grants.

 

1.1.34.    Interest Rate shall
mean LIBOR plus 500 basis points per annum compounded annually.

 

1.1.35.    IPO shall have the
meaning set forth in Section 5 hereof.

 

1.1.36.    Laws shall mean,
collectively, all federal, state and local laws, statutes, codes, ordinances,
orders, rules and regulations, including judicial opinions or precedential
authority in the applicable jurisdiction.

 

1.1.37.    LIBOR shall mean the
fluctuating rate of interest (rounded upwards, if necessary, to the next 1/8 of
1%) being asked on thirty (30) day Eurodollar deposits, as reported on page Reuters
Screen LIBOR 01 Page (or any successor) as determined by REG at
approximately 10:00 a.m. Cincinnati, Ohio time on the relevant date of
determination.

 

1.1.38.    Management and Operational
Services Agreement shall mean that certain Management and Operational
Services Agreement dated May 9, 2008 by and between Blackhawk, REG
Services Group LLC and REG Marketing and Logistics Group, LLC.

 

1.1.39.    Maturity Date is
defined in the Note.

 

1.1.40.    Note shall mean the
convertible secured subordinated note referred to in Section 2 hereof and
attached as Exhibit C hereto.

 

1.1.41.    Obligations shall mean
the Loan and all other advances, debts, liabilities, obligations, covenants and
duties owing, arising, due or payable from Blackhawk to REG under this
Agreement or any of the other Loan Documents of any kind or nature, present or
future, whether or not evidenced by any note, letter of credit, guaranty or
other instrument, and whether direct or indirect (including, without limitation,
those acquired by assignment), absolute or contingent, primary or secondary,
due or to become due, now existing or hereafter arising and however acquired,
and all replacements, renewals, extensions and other modifications of any of
the foregoing.  The term includes,
without limitation, all interest, charges, expenses, fees, attorneys’ fees and
any other sums chargeable to Blackhawk under any of the Loan Documents.  The term also includes any of the foregoing
that arise after the filing of a petition by or against Blackhawk under any
bankruptcy or similar law, even if the Obligations do not accrue because of the
automatic stay under Bankruptcy Code § 362 or otherwise.

 

1.1.42.    Oil Feedstock and Supply
Agreement shall mean that certain Oil Feedstock and Supply Agreement dated May 9,
2008 by and between 

 

7

 

Blackhawk and Bunge North America, Inc.,
and all amendments, modifications, replacements and restatements thereof.

 

1.1.43.    Operation
Documents shall mean, collectively, the Oil Feedstock and Supply Agreement,
the Management Operational and Services Agreement and the Services Agreement.

 

1.1.44.    Option
shall have the meaning set forth in Section 5 hereof.

 

1.1.45.    Permitted
Indebtedness shall mean, without duplication, any of the following:

 

	
  (i)

  	
   

  	
  Indebtedness arising under the Senior Loan Documents, including the
  Senior Mortgage;

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  Indebtedness to trade creditors incurred in the ordinary course of
  Blackhawk’s business;

  
	
   

  	
   

  	
   

  
	
  (iii)

  	
   

  	
  Indebtedness to REG;

  
	
   

  	
   

  	
   

  
	
  (iv)

  	
   

  	
  Indebtedness secured by Permitted Liens, to the extent such
  Indebtedness exists on the date of Closing after the funding of the Loan
  hereunder and as set forth on Schedule 1.1 to the Senior Loan;

  
	
   

  	
   

  	
   

  
	
  (v)

  	
   

  	
  Indebtedness relating to hedging agreements in the ordinary course of
  Blackhawk’s business;

  
	
   

  	
   

  	
   

  
	
  (vi)

  	
   

  	
  any other Indebtedness of Blackhawk in any amount not exceeding an
  outstanding amount of $250,000.00 at any one time; and

  
	
   

  	
   

  	
   

  
	
  (vii)

  	
   

  	
  Indebtedness, including, without limitation, notes payable from
  Blackhawk to any members of Blackhawk which are subordinated to the
  Obligations pursuant to the terms of a subordination agreement satisfactory
  to REG in its sole discretion;

  
	
   

  	
   

  	
   

  
	
  (viii)

  	
   

  	
  Indebtedness under the Ground Lease and under personal property
  leases permitted pursuant to this Agreement or otherwise consented to by REG
  in writing;

  
	
   

  	
   

  	
   

  
	
  (ix)

  	
   

  	
  Indebtedness under the contracts related to the Biodiesel Plant and
  consented to in writing by REG if said contract is (i) material or
  (ii) the Indebtedness under said contract exceeds $100,000, including,
  without limitation, any contracts contemplated by the Purchase Agreement and
  the Senior Loan; and

  

 

8

 

(x)            Indebtedness as a
result of the matter reflected in Schedule 6.2 hereof and other Indebtedness
approved in advance by REG in writing. .

 

1.1.46.    Permitted Liens shall
mean any of the following:

 

	
  (i)

  	
   

  	
  the Senior Mortgage;

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  the encumbrances and other exceptions raised in the Title Commitment;

  
	
   

  	
   

  	
   

  
	
  (iii)

  	
   

  	
  the liens granted to the IFA pursuant to the terms of the IFA
  Guaranty Documents;

  
	
   

  	
   

  	
   

  
	
  (iv)

  	
   

  	
  liens for taxes, assessments or governmental charges not delinquent
  or being contested in good faith and by appropriate proceedings and for which
  adequate reserves in accordance with GAAP are maintained on Blackhawk’s
  books;

  
	
   

  	
   

  	
   

  
	
  (v)

  	
   

  	
  liens arising out of deposits in connection with workers’
  compensation, unemployment insurance, old age pensions or other social
  security or retirement benefits legislation;

  
	
   

  	
   

  	
   

  
	
  (vi)

  	
   

  	
  deposits or pledges to secure bids, tenders, contracts (other than
  contracts for the payment of money), leases, statutory obligations, surety
  and appeal bonds, and other obligations of like nature arising in the
  ordinary course of Blackhawk’s business;

  
	
   

  	
   

  	
   

  
	
  (vii)

  	
   

  	
  liens imposed by law, such as mechanics’, workers’, materialmen’s,
  carriers’ or other like liens arising in the ordinary course of Blackhawk’s
  business which secure the payment of obligations which are not past due or
  which are being diligently contested in good faith by appropriate proceedings
  and for which adequate reserves in accordance with GAAP are maintained on
  Blackhawk’s books;

  
	
   

  	
   

  	
   

  
	
  (viii)

  	
   

  	
  purchase money security interests for the purchase of equipment to be
  used in Blackhawk’s business, securing solely the equipment so purchased, and
  which do not exceed in the aggregate at any one time outstanding $250,000,
  and which do not violate any provision of this Agreement, provided, however,
  that such purchase money security interest shall be deemed Indebtedness for
  purposes of part (vi) of the definition of Permitted Indebtedness;

  
	
   

  	
   

  	
   

  
	
  (ix)

  	
   

  	
  leases of equipment and other personal property permitted pursuant to
  this Agreement; and

  

 

 

9

 

(x)           rights of way, zoning
restrictions, easements and similar encumbrances affecting Blackhawk’s real
property which do not materially interfere with the use of such property.

 

1.1.47.    Person shall mean an
individual, corporation, partnership, trust, governmental entity or any other
entity, organization or group whatsoever.

 

1.1.48.    Plan shall mean an
employee benefit plan (as defined in Section 3(3) of ERISA) now or
hereafter maintained for employees of Blackhawk.

 

1.1.49.    Plans and Specifications
shall mean, collectively, the Project Plans and Specifications and Project
Addition Plans and Specifications.

 

1.1.50.    Prime Rate shall mean
the Prime Rate of Fifth Third Bank, a Michigan banking corporation.

 

1.1.51.    Project shall mean the
construction of the Improvements on the Property in accordance with the Project
Plans and Specifications, the Project General Construction Contract, the
Equipment Purchase and Sale Agreement, the Project Addition General
Construction Contract and this Agreement.

 

1.1.52.    Project Addition shall
mean the construction of the Improvements on the Property in accordance with
the Project Addition Plans and Specifications, the Project Addition General
Construction Contract and this Agreement.

 

1.1.53.    Project Addition General
Construction Contract shall mean that certain Standard Form of Design
Build Agreement and General Conditions between Owner and Contractor dated as of
May 9, 2008 by and between Borrower and Project Addition General
Contractor for the construction of the certain additional Improvements to the
Project as set forth therein, and all amendments, modifications, replacements
and restatements thereof.

 

1.1.54.    Project Addition General
Contractor shall mean REG Construction & Technology Group, LLC.

 

1.1.55.    Project Addition Plans and
Specifications shall have the meaning set forth in the Recitals hereto.

 

1.1.56.    Project General
Construction Contract shall mean that certain Construction Management
Services Agreement dated September 8, 2006 by and between BCA and Project
General Contractor for the construction of the Project, and all amendments,
modifications, replacements and restatements thereof, as assigned to Blackhawk
pursuant to that certain Assignment and Assumption of Construction Management
Services Agreement dated as of May 9, 2008 by and between BCA and Borrower
and consented to in writing by Project General Contractor.

 

1.1.57.    Project General Contractor
shall mean Fagen, Inc.

 

1.1.58.    Project Plans and
Specifications shall have the meaning set forth in the Recitals hereto.

 

10

 

1.1.59.    Property shall have the
meaning set forth in the Recitals to this Agreement.

 

1.1.60.    Purchase Agreement
shall have the meaning set forth in the Recitals to the Agreement.

 

1.1.61.    REG Common Stock shall
have the meaning set forth in the Recitals to this Agreement.

 

1.1.62.    REG Preferred Stock
shall have the meaning set forth in the Recitals to this Agreement.

 

1.1.63.    Renewable Fuels Grant
shall mean a grant from the DCEO to Blackhawk under the DCEO’s Renewable Fuels
Grant program in an amount not less than $4,000,000.00.

 

1.1.64.    Replacement Lender(s) shall
mean any lender(s) other than the Senior Lender providing a renewal or
replacement credit facility for the Construction Term Loan and/or the Revolving
Credit Loan in an aggregate principal amount not to exceed $29,650,000.

 

1.1.65.    Restricted Payment
shall mean any dividend or other distribution (whether in cash, securities or
other property) with respect to any equity interests in Blackhawk, or any
payment (whether in cash, securities or other property), including any sinking
fund or similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such equity interests in
Blackhawk or any option, warrant or other right to acquire any such equity
interests in Blackhawk, except as permitted in this Agreement.

 

1.1.66.    Schedule of Construction
shall mean that certain schedule of construction of the Improvements,
containing specific dates and times of performance for each line item of the
Budget, attached hereto as Exhibit D.

 

1.1.67.    Security Agreement
shall mean the subordinated security agreement referred to Section 2 and
attached hereto as Exhibit E to be executed by Blackhawk on Closing in
favor of REG and by which such party shall grant to REG, as security for the
Obligations, a security interest in all presently owned or hereafter acquired
personal property of Blackhawk, including, without limitation, all inventory,
accounts, equipment and general intangibles of Blackhawk.

 

1.1.68.    Senior Loan shall mean
the Construction/Term Loan in the aggregate maximum principal amount of
$24,650,000 (the “Construction Term Loan”) together with the revolving line of
credit loan in the aggregate maximum principal amount of $5,000,000 (the “Revolving
Credit Loan”) dated May 9, 2008 between Fifth Third Bank and its
successors and assigns (the “Senior Lender”) and Blackhawk and any such loan or
replacement loan in favor of any Replacement Lender.

 

1.1.69.    Senior Loan Documents
shall mean the Senior Loan, the Construction/Term Loan Note, the Revolving
Credit Loan Note, the Senior 

 

11

 

Mortgage, the Debt Services Fund Guaranty,
the IFA Guaranty Documents, the Landlord’s Agreement and Consent, the Project
Construction Disbursing Agreement, the Project Addition Construction Disbursing
Agreement, the Rate Management Agreement, the Assignment of Oil Feedstock
Supply Agreement, the Assignment of Services Agreement, the Assignment of
Management and Operational Services Agreement, the Assignment of Equipment
Purchase and Sale Agreement, and the Assignment of Construction Documents, the
Assignment of Representations, Warranties and Indemnities, the Project Addition
Escrow Account Agreement, the Working Capital Escrow Account Agreement, the
Construction Escrow Account Agreement, the Subordination Agreement, the Oil
Supply Cure Rights Agreement, financing statements and all other documents,
instruments and agreements which evidence, secure or are otherwise executed in
connection with the Senior Loan, including all amendments, modifications,
replacements, restatements, renewals, substitutions, and extensions thereof.

 

1.1.70.    Senior Mortgage shall
mean the Mortgage of Leasehold, Security Agreement, Assignment of Rents and
Leases and Fixture Filing of even date herewith, by Blackhawk to the Senior
Lender, the note secured thereby, any related loan documents  and any amendments, modifications,
replacements restatements, renewals, substitutions and extensions of the
foregoing.

 

1.1.71.    Services Agreement
shall mean that certain Services Agreement dated May 9, 2008 by and
between Blackhawk and Bunge North America, Inc., and all amendments,
modifications, replacements and restatements thereof.

 

1.1.72.    Subcontracts shall mean
any contract or contracts entered into with any single subcontractor or
materialman employed by Blackhawk, Project General Contractor or the Project
Addition General Contractor in connection with the construction of the
Improvements, and all amendments, modifications, replacements and restatements
thereof.

 

1.1.73.    Subordinated Loan shall
mean this Subordinated Loan Agreement and the other Subordinated Loan
Documents.

 

1.1.74.    Subordinated Loan Documents
shall mean this Agreement, the Note, the Warrant, the Subordinated Mortgage,
Security Agreement, financing statements and all other documents, instruments
and agreements which evidence, secure or are otherwise executed and delivered
to REG by Blackhawk in connection with the Subordinated Loan, including all
amendments, modifications, replacements, restatements, renewals and extensions
thereof. For purposes of additional clarity, the term “Subordinated Loan
Documents” shall not include any documents, instruments or agreements executed
and delivered by Blackhawk in favor of any affiliate of REG.

 

1.1.75.    Subordinated Mortgage
shall mean that certain subordinated leasehold mortgage referred to in Section 3
hereof and attached hereto as Exhibit F.

 

12

 

1.1.76.    Subsidiary shall mean
any subsidiary of Blackhawk.

 

1.1.77.    TARP Grants shall mean
those certain grants pursuant to Truck Access Route Program from IDOT and the
City of Danville to Blackhawk in a collective amount not less than $9,000.00.

 

1.1.78.    Title Company shall
mean First American Title Insurance Company.

 

1.1.79.    Unavoidable Delays
shall mean any delays due to any strike, lockout or other labor disturbance,
nuclear accident, plague, epidemic, windstorm, fire, hurricane, earthquake or
other casualty, war, rebellion, civil insurrection or other civil disturbance,
banking moratorium or declaration of national emergency, other Act of God or
act of governmental authority (other than a consequence of failure by Blackhawk
to comply with any applicable Laws), or any other cause beyond the control of
Blackhawk; provided, however, that (i) any lack of funds shall not be
deemed a cause beyond the control of Blackhawk, (ii) any such delay and
the aggregate time of all such delays shall in no event exceed two months, and (iii) if
such an event occurs, Blackhawk shall deliver to REG notice of such a cause not
later than fifteen (15) days after the event claimed to cause the delay has
occurred.

 

1.1.80.    Warrant shall mean the
warrant referred to in Section 2 hereof and attached hereto as Exhibit G

 

1.2.          Accounting Terms.  All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles consistently applied.

 

1.3.          Computation of Time.  In this Agreement, in the computation of a
period of time from a specified date to a later specified date, the word “from”
means “from and including” and the word “to” means “to and including”.

 

SECTION 2.  THE LOAN.

 

2.1.          Loan Amount.  On the basis of the representations,
warranties and covenants of Blackhawk contained herein and subject to the terms
and conditions set forth herein and in the other Subordinated Loan Documents,
REG agrees to make a loan to Blackhawk in the amount of Twenty-one Million,
Seven Hundred Thousand and 00/100 U.S. Dollars (U.S. $21,700,000.00) for the
purpose of financing the acquisition of the leasehold interest in the Property
and Biodiesel Plant and financing the development of the Project at the
Property.  All Advances of the Loan shall
be evidenced by, and subject to the terms of, the Note.

 

13

 

2.2.          Loan Disbursement.  The Loan shall be disbursed by REG in the
form of REG Common Stock and REG Preferred Stock valued together at U.S.
$21,700,000.00 issued by Parent pursuant to the Purchase Agreement at Closing.

 

2.3.          Interest; Payment;
Maturity.

 

(a)           Interest Rate.  Subject to the terms and provisions of this
Agreement, the outstanding principal amount of the Note shall bear interest
from and after the date hereof at a fluctuating rate per annum equal to the
Interest Rate.  REG shall not be
obligated to give notice of any change in the Interest Rate.  Any adjustment to the Interest Rate pursuant
to the terms of this Agreement shall be determined solely by REG one banking
day prior to the date of adjustment. 
From and after the date of any default, interest on amounts outstanding
hereunder shall accrue at the Default Rate. 
All interest payable hereunder shall be computed for the actual number
of days elapsed on the basis of a year consisting of three hundred sixty (360)
days.  Notwithstanding any other
provision hereof, if REG is unable to determine LIBOR, or adverse or unusual
conditions in, or changes in applicable law relating to, the London interbank
market, in the reasonable judgment of REG, make the projected LIBOR
unreflective of the actual costs of funds therefor to REG, then interest shall
accrue on the Loans outstanding at the end of each day at a fluctuating rate
per annum equal to the Prime Rate of Fifth Third Bank, a Michigan banking
corporation.

 

(b)           Payments.  The principal amount and accrued interest of
the Note shall be due and payable on the dates and in the manner set forth in
the Note.  In the event the date of any
required payment falls on a non-Business Day, the required payment date shall
be the next Business Day thereafter.  Any
prepayment of principal shall be accompanied by a payment of interest accrued
to date thereon.

 

SECTION 3.  NOTE AND MORTGAGE.  At the Closing, Blackhawk shall execute,
issue and deliver to REG (a) a convertible secured subordinated promissory
note in the amount of $21,700,000 in the form attached hereto as Exhibit C
(the “Note”), (b) the subordinated mortgage of leasehold, security
agreement, assignment of leases and rents and fixture filing in the form
attached hereto as Exhibit F (the “Subordinated Mortgage”) and (c) the
subordinated security agreement in the form attached hereto as Exhibit E
(the “Security Agreement”).

 

SECTION 4.  WARRANT.  At the Closing, Blackhawk shall execute and
deliver to REG the warrant in the form attached hereto as Exhibit G (the “Warrant”).

 

14

 

SECTION 5.  LIQUIDITY OPPORTUNITY.

 

5.1.          Liquidity Event.  Blackhawk agrees that upon the request of REG
or Parent, Blackhawk shall submit to its members a proposal for the acquisition
of substantially all of the business and assets of Blackhawk by Parent or a
wholly owned subsidiary of Parent, or the merger of Blackhawk with Parent or a
wholly owned subsidiary of Parent, on the terms and conditions set forth in
this Section 5 (the “Liquidity Event”). 
REG or Parent may make such request by written notice to Blackhawk (“Liquidity
Notice”) at any time between one hundred eighty (180) days prior to the
anticipated date on which Parent expects to commence a firm commitment
underwritten public offering of REG Common Stock pursuant to an effective
registration statement under the Securities Act of 1933, as amended (“IPO”) or
Change of Control of Parent, and sixty (60) days following the closing date of
the IPO or Change of Control of Parent (the date of such notice the “Liquidity
Notice Date”).  The Liquidity Notice
shall be accompanied by a form of asset purchase or merger agreement (“Liquidity
Agreement”) containing standard and reasonable terms on which the transaction
would be completed and in form proper for submission to the members of
Blackhawk for their consideration. 
Blackhawk and REG shall, and REG shall cause Parent to, cooperate
diligently in the preparation of a proxy statement setting forth the terms of
the Liquidity Event, a registration statement on Form S-4 to register REG
Common Stock to be issued by Parent in the Liquidity Event, and other documents
and materials required for the purpose of the transaction.  If the Liquidity Agreement and the
transactions contemplated thereby are approved by the members of Blackhawk, the
closing of the Liquidity Event shall take place on a date of Parent’s choosing
prior to, simultaneously with or as soon as practicable after the closing date
of the IPO or Change of Control of Parent. 
If the Liquidity Notice is given prior to the closing date of the IPO or
Change of Control of Parent and the IPO or Change of Control of Parent is not
closed within ninety (90) days after the date of the meeting of members of
Blackhawk which had approved the Liquidity Agreement, Blackhawk, at its option,
may terminate the Liquidity Agreement and REG or Parent may again propose a
Liquidity Event by repeating the process.

 

5.2.          Liquidity
Consideration.  The consideration to
be delivered to Blackhawk, or to the holders of capital units of Blackhawk,
upon the closing of the Liquidity Event the (“Liquidity Closing”) shall be in
the form of REG Common Stock.  The number
of shares of REG Common Stock that Parent shall issue and deliver at the
Liquidity Closing shall be the number of shares of REG Common Stock determined
by dividing the Fair Market Value of Blackhawk by the price per share at which
REG Common Stock is sold to the underwriters in the IPO (public offering price
less underwriters’ commissions and discounts) or the price per share of REG
Common Stock in the event giving rise to the Change of Control.  In the event that the REG Common Stock
delivered at the Liquidity Closing is delivered to Blackhawk, such delivery
shall be made on the understanding that Blackhawk will expect to make an
immediate distribution of such REG Common Stock to the holders of Blackhawk’s
capital units.  REG shall cause Parent to
take such action as is necessary or appropriate to assure that such REG Common
Stock is freely tradable (subject to normal timing and volume restrictions on
affiliates of Blackhawk) in the public market for REG Common Stock after the
Liquidity Closing; provided, however, that if requested by the underwriters for
the IPO, transfer of the REG Common Stock delivered at the Liquidity Closing
may be restricted for a period

 

15

 

beginning
upon the Liquidity Closing and ending one hundred eighty (180) days following
the closing of the IPO.

 

5.3.         Termination Fee.  If the Liquidity Agreement and the
transactions contemplated thereby are not approved by the members of Blackhawk,
Blackhawk shall pay REG a termination fee equal to four percent (4%) of the
Fair Market Value of Blackhawk; provided, however, if a Change of Control would
not result in Blackhawk or its members receiving cash or marketable securities
in exchange for their Class A limited liability company units of
Blackhawk, no such termination fee shall be payable by Blackhawk.

 

SECTION 6.  REPRESENTATIONS AND WARRANTIES OF
BLACKHAWK.  To induce REG to enter
into this Agreement, Blackhawk represents and warrants to REG and, so long as
any amount of the Note remains unpaid or this Agreement remains in effect,
shall be deemed to continuously represent and warrant to REG as follows:

 

6.1.          Organizational
Status; Authorizations. 
Blackhawk is a limited liability company duly formed, validly existing
and in good standing under the laws of the State of Delaware, with full power
and authority to consummate the transactions contemplated hereby.  Blackhawk has full power and authority to
execute, deliver and perform all Subordinated Loan Documents, and such
execution, delivery and performance have been duly authorized by all requisite
action on the part of Blackhawk. 
Blackhawk  is duly
authorized to own and complete the development of the Property and the Project,
to operate the Biodiesel Plant and to enter into the transactions contemplated
by the Subordinated Loan Documents.  To
the extent required for the current stage of construction, Blackhawk has
obtained all licenses and permits and has filed all registrations necessary to
the operation of its business (except where the failure to so qualify or to
obtain such licenses or permits would not materially and adversely affect the
actual or prospective business, financial condition or operations of
Blackhawk).  This Agreement and the other
Subordinated Loan Documents and the provisions contained herein and therein are
and will be the valid and legally enforceable obligations of Blackhawk in
accordance with their terms.  Blackhawk
has done everything necessary to comply with all applicable local, state or
federal laws, statutes, ordinances, resolutions, orders and directives (except
where the failure to so comply would not materially and adversely affect the
actual or prospective business, financial condition or operations of
Blackhawk).

 

6.2.          No Actions.  Except as described on Schedule 6.2
hereof, there are no actions, suits or proceedings pending or, to the knowledge
of Blackhawk, threatened against or affecting Blackhawk, the Property or the
Project, or involving the validity or enforceability of the Subordinated Loan
Documents, at law or in equity, or before or by a governmental authority, and,
to Blackhawk’s knowledge, it is not in default with respect to any order, writ,
injunction, decree or demand of any court or any governmental authority.

 

6.3.          No Breach.  The consummation of the transactions hereby
contemplated and performance of this Agreement will not result in any breach
of, or constitute a 

 

16

 

default under, any deed to secure debt, mortgage, deed of trust,
indenture, security agreement, lease, bank loan or credit agreement, contract,
articles of organization, operating agreement, joint venture agreement,
partnership agreement or other instruments to which Blackhawk is a party or by
which it may be bound or subject.

 

6.4.          Ownership of
Property; No Liens.  Immediately
following the Closing, (a) Blackhawk will have good and marketable title
to its leasehold interest in the Property and Improvements, and (b) the
Property and the Improvements shall be free and clear of all liens, claims,
charges and encumbrances of every type or nature, except for the Permitted
Liens.

 

6.5.          No Defaults;
Complete Copies.  There is no
default on the part of Blackhawk under this Agreement, the Note, the other
Subordinated Loan Documents, the Ground Lease, the Operation Documents, or the
Construction Documents and no event has occurred and is continuing which with
notice or the passage of time or either would constitute a default under any of
the aforesaid instruments.  To the best
of Blackhawk’s knowledge, there is no default by the General Contractor under
the General Construction Contract nor any condition which, given notice or the
passage of time or both, would constitute a default under the General Construction
Contract.  The copies of the Construction
Documents furnished to date to REG are true, correct and complete copies
thereof and all of the aforesaid agreements are all in full force and effect.

 

6.6.          Financial
Statements.  In regards
to any financial statements delivered to REG at any time with respect to
Blackhawk, Blackhawk represents that the same are true and correct in all
material respects, and fairly present the respective financial conditions of
Blackhawk as of the respective dates thereof, no material adverse change has
occurred in the financial condition reflected therein since the respective
dates thereof and no additional borrowings have been made by Blackhawk since
the date thereof other than borrowing contemplated hereby or approved by REG.

 

6.7.          Leases.  Blackhawk has no interest in any existing
leases (excluding personal property leases where the scheduled lease payments
per calendar year do not exceed $35,000) other than the personal and real
property leases described in Schedule 6.7 attached hereto, which schedule shall
be updated by Blackhawk at the time of any material change in the leases
described therein and which revised schedule shall be promptly furnished to
REG.

 

6.8.          Environmental
Matters.

 

(a)           (i)  Except as
discussed in the environmental reports obtained prior to the date hereof and
delivered to the Senior Lender and REG, to the best of Blackhawk’s knowledge,
the Project, the Property and the operations conducted thereon do not violate
any applicable law, statute, ordinance, rule, regulation, order or
determination of any governmental authority or any restrictive covenant or deed
restriction (recorded or otherwise), including without limitation all
applicable zoning ordinances and building codes, flood disaster laws and Environmental
Laws and regulations; (ii) without limitation of clause (i) above, to
the best of Blackhawk’s knowledge, the Property and the operations conducted 

 

17

 

thereon by Blackhawk or any current or prior owner or operator of such
real property or operation, are not in violation of or subject to any existing,
pending or threatened action, suit, investigation, inquiry or proceeding by any
governmental authority or to any remedial obligations under any Environmental
Laws; (iii) all notices, permits, licenses or similar authorizations, if
any, required to be obtained or filed in connection with the operation or use
of the Property, including without limitation past or present treatment,
storage, disposal or release of a hazardous substance or solid waste into the
environment, have been duly obtained or filed; (iv) to the best of
Blackhawk’s knowledge, all Hazardous Materials and solid wastes generated at
the Property have in the past been and shall continue to be transported,
treated and disposed of only by carriers maintaining valid permits under RCRA
and any other Environmental Laws and only at treatment, storage and disposal
facilities maintaining valid permits under RCRA, where required, and any other
Environmental Laws, which carriers and facilities have been and are, to the
best of Blackhawk’s knowledge, operating in compliance with such permits; (v) Blackhawk
has taken reasonable steps necessary to determine, and has determined, that no
Hazardous Materials or solid wastes have been disposed of or otherwise released
and there has been no threatened release of Hazardous Materials or solid wastes
on or to the Property except in compliance with Environmental Laws; (vi) Blackhawk
has no material contingent liability in connection with any release or
threatened release of any Hazardous Materials or solid wastes into the
environment and except as disclosed in the environmental reports furnished to
REG; and (vii) the use which Blackhawk makes or intends to make of the
Property will not result in the unlawful or unauthorized disposal or other
release of any Hazardous Materials or solid wastes on or to the Property.  The terms “release” and “threatened release”
have the meanings specified in CERCLA, and the terms “solid waste” and “disposal”
(or “disposed”) have the meanings specified in RCRA; provided, however, in the
event either CERCLA or RCRA is amended so as to broaden such meanings, then
such broadened meanings shall apply subsequent to the effective date of such
amendment, and provided further, that, to the extent the laws of any state in
which any of the Property is located establish a meaning for “release”, “solid
waste” or “disposal” which is broader than that specified in either CERCLA or
RCRA, such broader meaning shall apply with regard to the Property.

 

(b)          Blackhawk is in compliance in all
material respects with federal, state, and local Environmental Laws applicable
to the Property and has not been cited for any violation of any federal, state,
and local Environmental Laws applicable to the Property and there has been no “release
or threatened release of a hazardous substance” (as defined by CERCLA) or any
other release, emission or discharge into the environment of any hazardous or
toxic substance, pollutant or other materials from the Property other than as
permitted under the applicable Environmental Law.  All Hazardous Materials and solid wastes
generated at the Property have and shall continue to be disposed of at sites
which maintain valid permits under RCRA and any applicable state or local
Environmental Laws where required.

 

18

 

6.9.          Compliance.  All Improvements shall be performed in
accordance with the Plans and Specifications and all applicable Laws,
including, without limitation, appropriate set back requirements, restrictive
covenants and the requirements of any governmental authority (except where the
failure to so comply would not materially and adversely affect the actual or
prospective business, financial condition or operations of Blackhawk).  Neither the construction of the Improvements
nor the use of the Improvements when completed as an industrial plant for the
production of biodiesel fuel will violate (i) any Laws (including
subdivision, zoning, building, environmental protection and wetland protection
Laws), or (ii) any building permits, restrictions of record or agreements
affecting the Property, the Improvements or any part thereof (except where such
violation would not materially and adversely affect the actual or prospective
business, financial condition or operations of Blackhawk).  Without limiting the generality of the
foregoing, all consents, licenses and permits and all other authorizations or approvals
(collectively, “Governmental Approvals”) required to complete the Improvements
in accordance with the Plans and Specifications have been obtained or will be
obtained prior to the Closing, except to the extent that failure to obtain any
Governmental Approval would not have a material adverse effect on Blackhawk,
the Improvements and/or the ability of Blackhawk pay and/or perform the
Obligations, and all Laws relating to the development, construction and
operation of the Improvements have been complied with in all material respects
and all permits and licenses required for the operation of the Improvements
which cannot be obtained until such development and construction is completed
can be obtained if the Improvements are completed in accordance with the Plans
and Specifications.  When the
Improvements are completed in accordance with the Plans and Specifications, no
building or other improvement will encroach upon any property line, building
line, setback line, side yard line or any recorded or visible easement (or
other easement of which Blackhawk is aware or has reason to believe may exist)
with respect to the Improvements, and the use of the Project will comply with
all requirements of governmental authorities and any restrictive covenants to
which the Property may be subject.

 

6.10.        Brokerage Fees.  No brokerage fees or commissions are payable
by or to any person in connection with this Agreement or the Loan to be
disbursed hereunder.

 

6.11.        No Margin
Stock; No Plan Assets.  The
Loan is not being made for the purpose of purchasing or carrying “margin stock”
within the meaning of Regulation G, T, U or X issued by the Board of Governors
of the Federal Reserve System, and Blackhawk agrees to execute all instruments
necessary to comply with all requirements of Regulation U of the Federal Reserve
System, as at any time amended. 
Blackhawk is not a party in interest to any plan defined or regulated
under ERISA, and the assets of Blackhawk are not “plan assets” of any employee
benefit plan covered by ERISA or Section 4975 of the Internal Revenue Code.

 

6.12.        Investments.  Blackhawk has no loans or investments in any
Person.

 

6.13.        Existing
Indebtedness.  Blackhawk
has no Indebtedness other than Permitted Indebtedness and Indebtedness
reflected on its most current financial statements submitted to REG.

 

19

 

6.14.        Insolvency.  After the execution and delivery of the
Subordinated Loan Documents, Blackhawk will not be insolvent within the meaning
of the United States Bankruptcy Code or unable to pay its debts as they mature.

 

6.15.        Taxes.  Blackhawk has filed all required federal,
state, local and other tax returns and has paid, or made adequate provision for
the payment of, any taxes due pursuant thereto or pursuant to any assessment
received by Blackhawk except such taxes, if any, as are being contested in good
faith and as to which adequate reserves have been provided.

 

6.16.        Negative
Pledges.  Except as provided in the
Senior Loan Documents and Permitted Liens, Blackhawk is not a party to or bound
by any indenture, contract or other instrument or agreement which prohibits the
creation, incurrence or sufferance to exist of any mortgage, pledge, lien,
security interest or other encumbrance upon any of the Collateral pledged in
favor of REG.

 

SECTION 7.  COVENANTS OF BLACKHAWK.

 

Blackhawk (in addition to and not in
derogation of its covenants contained in any of the other Subordinated Loan
Documents) covenants and agrees, from the date hereof and for so long as the
Loan or any portion thereof is outstanding and unless REG otherwise consents in
writing, as follows:

 

7.1.          Prohibition of
Transfers and Amendments to Blackhawk’s Operating Agreement.  Blackhawk shall not (i) sell, assign,
transfer or convey or further encumber (except for Permitted Liens) the Property
or any Improvements or any right, title or interest therein in any way without
prior written consent of REG, which consent shall not be unreasonably withheld
for easements or environmental deed restrictions reasonably required in
connection with the development of the Project, or (ii) dispose of any of
the Collateral without the prior written consent of REG, except for the sale of
inventory in the ordinary course of Blackhawk’s business and the disposition of
obsolete equipment not used or useful in Blackhawk’s business.  Except as provided in this Section, Blackhawk
shall not materially amend its operating agreement, articles or certificate of
organization or any of its organizational documents without the prior written consent
of REG, which consent shall not be unreasonably withheld, conditioned or
delayed.

 

7.2.          Licenses and Permits.  Blackhawk shall obtain and maintain all
necessary licenses and permits for the operation of its business, including,
but not limited to, the operation of the Biodiesel Plant, except where the
failure to so comply would not reasonably be expected to have a material
adverse effect on Blackhawk.

 

7.3.          Comply with
Requirements.  Blackhawk will
comply promptly with any and all Laws and any other requirements of any
governmental authority relating to the Property or the Improvements, except
where the failure to so comply would not reasonably be expected to have a
material adverse effect on Blackhawk.

 

7.4.          Inspection.  Blackhawk will permit REG to enter upon the
Property, inspect the Improvements and all materials to be used in the
construction thereof and to 

 

20

 

examine all detailed Plans and Specifications and shop
drawings which are or may be kept at the construction site.

 

7.5.          Reimbursement of
Expenses.  Blackhawk shall
pay on demand all costs and expenses in connection with the preparation,
negotiation, investigation, execution, delivery, filing, and recording of the
Subordinated Loan Documents and the Purchase Agreement from and after February 15,
2008.  In addition, but not as a
limitation, Blackhawk will pay:

 

7.5.1.       all
reasonable legal fees and expenses, including, without limitation, the
reasonable fees and expenses for services performed by REG’s counsel and sums
advanced in connection with this loan transaction and the purchase of the
Biodiesel Plant from
and after February 15, 2008;

 

7.5.2.       all
reasonable fees and out-of-pocket expenses of REG in connection with any
litigation, contest, dispute, suit, proceeding or action (whether instituted by
REG, Blackhawk or any other Person) in any way relating to this Agreement, any
of the other Subordinated Loan Documents or Blackhawk’s affairs, except where
REG or Parent has been found to be at fault or liable;

 

7.5.3.       all
reasonable fees and out-of-pocket expenses of REG in connection with any
reasonable attempt to enforce any rights of REG against Blackhawk by virtue of
this Agreement or any of the other Subordinated Loan Documents; and

 

7.5.4.       all
such costs, expenses and fees shall be payable on demand by REG to Blackhawk.

 

7.6.          Defects.  Blackhawk will, upon demand of REG, correct (i) any
structural defect in the Improvements, or (ii) subject to the provisions
of Section 7.16 below, any departure from the Plans and Specifications not
approved by REG in writing.

 

7.7.          Restrictive Covenants.  Blackhawk will comply with all restrictive
covenants affecting the Property and/or the Project.

 

7.8.          Insurance.

 

7.8.1.    Blackhawk
at its sole cost and expense shall provide or cause to be provided and shall
keep in force at all times for the benefit of REG, with respect to the Property
and the Project the following insurance coverages:

 

7.8.1.1.       builder’s
all-risk completed value, non-reporting form insurance to cover all development
and/or construction work, buildings, improvements and off-site and on-site
materials in an amount equal to the full insurable value of the Improvements;

 

7.8.1.2.       insurance
against loss of or damage to the Building by fire and other hazards covered by
so-called “extended coverage” and such other casualties and hazards as REG
shall require from time to time;

 

7.8.1.3.       insurance
against loss or damage by earthquake in a commercially reasonable amount;

 

21

 

7.8.1.4.       flood
insurance in a commercially reasonable amount if the Property is now or later
becomes designated as located in a flood hazard area as described in the Flood
Disaster Protection Act of 1973;

 

7.8.1.5.       comprehensive
general public liability insurance against claims for bodily injury, death or
property damage; and

 

7.8.1.6.       such
other insurance on the Property and the Project or any replacements or
substitutions thereof, as REG may reasonably require.

 

The
policies of insurance required by this paragraph shall be with companies having
at least an A-Class VIII rating by BEST Insurance Reports, and shall be in
forms, amounts, limits and coverages and for such periods and subject to such
deductibles, as REG and/or Fifth Third Bank shall reasonably require from time
to time, and shall insure the respective interests of Blackhawk, Fifth Third
Bank and REG.  Such insurance may not be
provided in umbrella policies covering more than one property without the prior
written consent of REG.  Original
policies and renewals thereof (or satisfactory certificates of insurance)
covering the risks provided by this Agreement to be insured against, bearing
satisfactory evidence of payment of all premiums thereon, shall be delivered to
and held by REG.  At least ten (10) days
prior to the expiration of each policy required to be provided by Blackhawk,
Blackhawk shall deliver renewal policies or certificates to REG with
appropriate evidence of payment of premiums therefore.  All insurance policies required by this
Agreement shall

 

(1)           include
effective waivers by the insurer of all rights of subrogation against any named
insured;

 

(2)           provide
that no cancellationor reduction in amount shall be effective until at least
twenty (20) days after receipt by REG of written notice thereof; and

 

(3)           be
reasonably satisfactory in all other respects to REG.

 

Blackhawk
shall not permit any activity to occur or condition to exist on or with respect
to the Property or the Project that would wholly or partially invalidate any of
the insurance thereon. Blackhawk shall promptly notify REG of any material
change in coverage under any insurance policy of Blackhawk.

 

7.8.2.       Subject
to the Senior Mortgage, Blackhawk irrevocably makes, constitutes and appoints
REG (and all officers, employees or agents designated by REG) as Blackhawk’s
true and lawful attorney-in-fact and agent, with full power of substitution,
for the purpose of making and adjusting claims under such policies of
insurance, endorsing the name of Blackhawk on any check, draft, instrument or
other item of payment of the proceeds of such policies of insurance and for
making all determinations and decisions with respect to such policies of
insurance required above or to pay any premium in whole or in part relating
thereto.  REG, without waiving or
releasing any obligation or default by Blackhawk hereunder, may (but shall be
under no obligation to do so) at any time or times hereafter maintain such
action with respect thereto as REG deems advisable.  All sums disbursed by REG in connection
therewith, including reasonable 

 

22

 

attorneys’
fees, court costs, expenses and other charges relating thereto, shall be
payable, on demand, by Blackhawk to REG and shall be additional obligations
hereunder secured by the Subordinated Mortgage and each of the other
Subordinated Loan Documents which secures the Note.  REG agrees not to exercise the power of
attorney granted in this subparagraph 6.8.2 until the occurrence of an Event of
Default.

 

7.8.3.       Subject
to the Senior Mortgage, all proceeds of the insurance required to be obtained
by Blackhawk hereunder, other than those relating to the insurance required
under clause 7.8.1.5, shall be paid to REG. 
REG may deduct from such proceeds any expenses, including, without
limitation, legal fees, incurred by it in connection with adjusting and
obtaining such proceeds (the balance remaining after such deduction being
hereinafter referred to as the “Net Insurance Proceeds”), and thereafter REG
may, subject to subsection 7.8.4 immediately below, apply such proceeds toward
the payment or performance of Blackhawk’s obligations evidenced by this
Agreement, the Note or any other Subordinated Loan Documents, whether or not
such obligations are then due, or release such proceeds to Blackhawk in
accordance with the terms and conditions of the Subordinated Mortgage.  So long as Blackhawk shall not be in default
hereunder, Blackhawk shall have the right to participate with REG in the
adjustment and compromise of any claims, but the decision of REG in any such
case shall be binding and conclusive upon Blackhawk.

 

7.8.4.       Subject
to the Senior Mortgage, in case of any loss covered by insurance or in case of
any damage caused by a taking or exercise of eminent domain, notwithstanding
anything in this Agreement to the contrary, provided that (i) no Event of
Default then exists, (ii) the Maturity Date does not fall within the six (6) month
period following the date of the casualty or taking, (iii) in REG’s good
faith judgment the Improvements can be repaired or restored prior to the
Maturity Date, (iv) REG reasonably determines the restoration of the
Improvements is economically feasible, (v) REG reasonably determines that
Blackhawk’s operation or financial condition will materially benefit from
restoration of the collateral, (vi) Blackhawk is a viable operating entity
at the time the loss occurred, and (vii) Blackhawk deposits with REG the
amount of deficiency, if any, between the estimated cost of (x) restoration
or repair and completion of the Improvements (as determined by REG in its good
faith judgment) and (y) the amount of Net Insurance Proceeds plus the
undisbursed proceeds of the Loan, then REG shall make the Net Insurance
Proceeds available to Blackhawk on the terms and conditions set forth in this
Agreement for disbursement of the Loan, together with such additional terms and
conditions as are customary and as may be reasonably required by REG in the
circumstances.  The application of any
insurance proceeds toward the payment or performance of the obligations shall
not be deemed a waiver by REG of its right to receive payment or performance of
the rest of the obligations and the interest thereon in accordance with the
provisions of this Agreement.

 

7.8.5.       To the
extent permitted by such policies, in the event of a foreclosure under the
Subordinated Mortgage, the purchaser of Blackhawk’s interest in the Property
and the Project shall succeed to all of the rights of Blackhawk, including any
right to unearned premiums, in and to all policies of insurance which Blackhawk
is required to maintain under this paragraph and to all proceeds of such
insurance.

 

23

 

7.8.6.       If
Blackhawk fails to maintain any insurance required hereunder or under the other
Subordinated Loan Documents or fails to provide evidence of such insurance as
required hereunder or under the other Subordinated Loan Documents, REG may, but
shall not be obligated to, purchase such required insurance at Blackhawk’s
expense to protect its interests in the Property and the Improvements.  This insurance may, but need not, protect
Blackhawk’s interests in the Property and the Improvements.  The coverage that REG purchases shall not be
required to pay any claim that Blackhawk makes or any claim that is made
against Blackhawk in connection with the Property and the Improvements.  Blackhawk may later cancel any insurance
purchased by REG, but only after providing evidence that Blackhawk has obtained
the insurance required hereunder and under any other Loan Document.  If REG purchases insurance for the Property
and/or the Improvements, Blackhawk will be responsible for the costs of the
insurance, including the insurance premiums, interest thereon from the date of
each such payment or expenditure at the then applicable rate under the Note and
any other charges REG 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 REG, the interest thereon and the other charges in connection therewith
shall be added to the Loan and shall be secured by the lien of the Subordinated
Mortgage.  The costs of the insurance obtained
by REG may be more than the cost of insurance Blackhawk may be able to obtain
on its own.  Unless REG otherwise agrees
in writing, Blackhawk shall pay to REG the full costs of such insurance,
together with the accrued interest thereon and the other charges in connection
therewith.

 

7.8.7.       In
addition to the insurance requirements under 7.8.1-7.8.6 of this Section 7.8,
Blackhawk shall maintain all insurance required to be maintained pursuant to
the terms of the Ground Lease and the Senior Mortgage.

 

7.9.          Governmental
Requirements.  Blackhawk will
comply with all Environmental Laws and all land use, building, subdivision,
zoning, OSHA, pollution, sales practices laws, regulations and similar laws,
rules, ordinances and regulations promulgated by any governmental authority and
applicable to Blackhawk’s business, the Property, its development and
construction of Improvements and the sale or operation thereof, except where
the failure to so comply would not reasonably be expected to have a material
adverse effect on Blackhawk, the Improvements, or Blackhawk’s ability to pay
and/or perform the Obligations.

 

7.10.        Additional Documents
and Information.

 

7.10.1.             Reporting
Requirements. 
Blackhawk shall furnish the following to REG:

 

7.10.1.1.          Quarterly
Statements. 
As soon as available and in any event within forty five (45) days after
the end of each fiscal quarter of each fiscal year of Blackhawk, an unaudited
and internally prepared financial statement certified by Blackhawk’s chief
financial officer.

 

7.10.1.2.          Quarterly
Covenant Compliance Certificates.  As soon as available and in any event within
forty five (45) days after the end of each quarter of each fiscal year of
Blackhawk, a consolidated compliance certificate,

 

24

 

in the
form attached hereto as Exhibit H setting forth (A) a restatement by
reference of each of the representations and warranties contained in Section 5
hereof (or providing detailed information why any such representation or
warranty cannot be restated), and (B) a certification that no Default or
Event of Default exists as of the date of such certificate, or if any Default
or Event of Default exists, providing detailed information concerning the
nature of all existing Defaults or Events of Default, which such compliance
certificate shall be certified by Blackhawk and by Blackhawk’s chief financial
officer or president;

 

7.10.1.3.          Audited
Year-End Statements. 
As soon as available and in any event within one hundred twenty (120)
days after the end of each fiscal year of Blackhawk, final audited financial
statements (as described above but including a statement of changes in
financial position) as of the end of such fiscal year of Blackhawk, prepared by
independent certified accountants reasonably satisfactory to REG and a copy of
any management, operation or other letter or correspondence from such
accountant to Blackhawk in connection therewith;

 

7.10.1.4.          Annual
Tax Returns. 
As soon as available, but in any event within one hundred twenty (120)
days following the end of each calendar year, copies of current annual tax
returns of Blackhawk;

 

7.10.1.5.          Borrower
Reports. 
As soon as available, copies of all reports, financial information and
other information which is required to be distributed to any member under the
terms of Blackhawk’s Operating Agreement; and

 

7.10.1.6.          Other.  Such other information respecting the
condition or operations, financial or otherwise, of Blackhawk or the
Improvements, as REG may reasonably request from time to time.

 

7.11.        Leases,
Sale Agreements, and Subordination, Non-Disturbance and Attornment Agreements.  Without the prior written consent of REG and
except for the Ground Lease, Blackhawk shall not enter into any lease, except
for equipment leases which provide for annual payments not exceeding Thirty-Five
Thousand and 00/100 Dollars ($35,000.00). 
Without the prior written consent of REG, which consent may be given or
withheld in REG’s reasonable discretion, Blackhawk shall not enter into any
purchase or sale agreement of the Property and/or the Improvements.  Without the prior written consent of REG,
which consent may be given or withheld in REG’s reasonable discretion,
Blackhawk shall not enter into any subordination, non-disturbance and
attornment agreement with respect to its interest in the Property and/or the
Improvements.  Blackhawk shall provide
REG with a copy of any proposed lease, purchase and sale agreement, or
subordination, non-disturbance and attornment agreement no less than forty-five
(45) days prior to the anticipated execution thereof.  Blackhawk shall provide REG with a certified
copy of any fully executed original of any such lease or purchase and sale
agreement promptly following its execution.

 

25

 

7.12.        Restrictions
on Blackhawk.

 

7.12.1.             Blackhawk
shall not, without REG’s prior written approval, (i) merge, consolidate,
liquidate, terminate or voluntarily dissolve, (ii) make any loans or
gifts, or (iii) pay any loans payable to any Person or entity affiliated
with Blackhawk other than REG and its affiliates.

 

7.12.2.             Blackhawk
shall not, nor shall it permit any Subsidiary to, declare or make, or agree to
pay or make, directly or indirectly, any Restricted Payment, or incur any
obligation (contingent or otherwise) to do so, except, so long as no Default or
Event of Default has occurred and is continuing, Blackhawk may pay dividends or
make distributions to its members permitted under the Senior Loan Documents.

 

7.13.        Encroachments.  Blackhawk shall not permit any Improvements
to be constructed on the Property which would cause an encroachment upon any
easements, rights-of-way or adjoining properties.  When erected, the Improvements shall be
wholly within any building restriction lines however established.  Blackhawk shall furnish at the request of REG
evidence reasonably satisfactory to REG that Blackhawk is in compliance with
this section including without limitation a survey showing the Improvements
erected on the Property are free from the aforesaid violations.

 

7.14.        Certificates.  Blackhawk shall furnish to REG not later than
one hundred twenty (120) days after the completion of the Improvements (i) a
copy of the original certificate of occupancy issued by the governmental
authority having jurisdiction over the Property and all other necessary
consents and approvals of any governmental boards, bureaus or departments
having jurisdiction over the Property, (ii) all material certificates and
approvals of the appropriate Board of Fire Underwriters or other similar body
acting in and for the locality in which the Property is situated, and (iii) all
required licenses and agreements in respect of any easements extending beyond
the boundary lines of the Property.

 

7.15.        Employee
Plans. 
Blackhawk shall (i) notify REG promptly of the establishment of any
Plan, except that prior to the establishment of any “welfare plan” (as defined
in Section 3(1) of ERISA) covering any employee of Blackhawk for any
period after such employee’s termination of employment other than such period
required by the Consolidated Omnibus Budget Reconciliation Act of 1986, or “defined
benefit plan” (as defined in Section 3(35) of ERISA), it will obtain REG’s
prior written approval of such establishment; (ii) at all times make
prompt payments or contributions to meet the minimum funding standards of Section 142
of the Internal Revenue Code of 1986, as amended, with respect to each Plan; (iii) promptly
after the filing thereof, furnish to REG a copy of any report required to be
filed pursuant to Section 103 of ERISA in connection with each Plan for
each Plan year, including but not limited to the Schedule B attached thereto,
if applicable; (iv) notify REG promptly of any “reportable event” (as
defined in Section 4043 of ERISA) or any circumstances arising in
connection with any Plan which might constitute grounds for the termination
thereof by the Pension Benefit Guaranty Corporation or for the appointment by
the appropriate United States District Court of a trustee to administer the
Plan, the initiation of any audit or inquiry by the Internal Revenue Service or
the Department of Labor of any Plan or transaction(s) involving or related
to any Plan, or any “prohibited 
transaction” as defined in Section 

 

26

 

406
of ERISA or Section 4975(c) of the Internal Revenue Code of 1986, as
amended; (v) notify REG prior to any action that could result in the
assertion of liability under Subtitle E of Title IV of ERISA caused by the
complete or partial withdrawal from any multiemployer plan or to terminate any
defined benefit plan sponsored by Blackhawk; and (vi) promptly furnish
such additional information concerning any Plan as REG may from time to time
reasonably request.

 

7.16.        Construction;
Change Orders. 
All construction and development shall be performed by Blackhawk in all
material respects in accordance with the Plans and Specifications, appropriate
set back requirements, any restrictive covenants and the requirements of any
governmental authority, and the anticipated use to which the Improvements will
be put will comply with all requirements of governmental authorities and any
restrictive covenants to which the Property may be subject.  Except as specifically permitted by this
Section, no plans and specifications shall be utilized and no changes shall be
made in the Plans and Specifications referred to herein, unless first approved
by REG in writing, and any other party where approval may be required by REG;
provided however, that Blackhawk may make changes to the Plans and
Specifications without REG’s approval if (i) Blackhawk notifies REG in
writing of such change within forty-eight (48) hours thereafter; (ii) Blackhawk
obtains the approval of all parties whose approval is required, including the
Project General Contractor, the Project Addition General Contractor and any
Governmental Authority to the extent approval from such parties is required; (iii) sufficient
funds are available in the Budget line items affected by the change; (iv) the
structural integrity of the Improvements is not impaired; (v) no
substantial change in architectural appearance is effected; (vi) the
performance of the mechanical, electrical, and life safety systems of the
Improvements is not adversely affected; and (vii) the cost of or reduction
resulting from any one such change does not exceed $50,000 and the aggregate
change in cost of all such changes does not exceed $250,000. For the purposes
of computing such “aggregate change in cost,” pursuant to clause (vii),
increases shall be added to, rather than netted against, decreases. Blackhawk
shall promptly furnish to REG and the Inspecting Engineer, copies of all change
orders, regardless of whether REG’s approval is required.

 

7.17.        No
Modifications. 
Except as expressly permitted under Section 7.16 immediately above,
Blackhawk shall not amend, modify or terminate any Construction Document or
waive any rights with respect thereto, without REG’s prior written
consent.  Blackhawk shall not amend,
modify or terminate any Operation Document or the Ground Lease without REG’s
prior written consent, which consent shall not be unreasonably withheld ,
conditioned or delayed.

 

7.18.        Conduct
of Business. 
Blackhawk shall maintain in full force and effect (a) its
organizational existence, good standing and right to transact business in those
states in which it is now or may hereafter be doing business, and (b) all
licenses, permits, registrations, bonds, franchises, leases, patents, contracts
and other rights necessary to the operation of the Biodiesel Plant or to the
profitable conduct of its business, including, without limitation, all notices,
permits or licenses, if any, filed or obtained with regard to compliance with
Environmental Laws, except where the failure to do any of the foregoing would
not have a material adverse effect on Blackhawk, the Project or Blackhawk’s
ability to pay and/or perform the Obligations. 
Blackhawk shall engage in 

 

27

 

no
business other than the production, processing, transportation, marketing or
distribution of biodiesel or by-products of the production thereof or the
ownership, leasing, construction or operation of biodiesel facilities and
business incidental thereto.

 

7.19.        Hazardous
Substances. 
Blackhawk shall not cause a release, omission or discharge of any
Hazardous Substances in excess of amounts thereof permitted pursuant to
applicable Environmental Laws.

 

7.20.        Notice.  If Blackhawk shall receive any of the
following:

 

7.20.1.             notice
that any violation of any Law or Environmental Law may have been committed or
is about to be committed by Blackhawk or otherwise affecting the Improvements,
or

 

7.20.2.             notice
that any administrative or judicial complaint or order has been filed or is
about to be filed against Blackhawk or the Improvements alleging violations of
any Environmental Law or requiring Blackhawk to take any action in connection
with the release or threatened release of hazardous substances or solid waste
into the environment, or

 

7.20.3.             notice
from a federal, state, or local governmental agency or private party alleging
that Blackhawk may be liable or responsible for costs associated with a
response to or cleanup of a release or disposal of a Hazardous Materials or
solid waste into the environment or any damages caused thereby, including without
limitation any notice that Blackhawk is a “potentially responsible party” as
defined by CERCLA, or

 

7.20.4.             notice
under any Construction Document that Blackhawk is in default thereunder, or

 

7.20.5.             notice
under any Operation Document that Blackhawk is in default thereunder, or

 

7.20.6.             notice
under the Ground Lease that Blackhawk is in default thereunder, or

 

7.20.7.             notice
of any default under any of the Grants or any agreement executed in connection
therewith, or

 

7.20.8.             notice
of any default under the Senior Mortgage,

 

then
Blackhawk shall provide REG with a copy of such notice within five (5) days
of Blackhawk’s receipt thereof.  In
addition, Blackhawk shall give prompt notice in writing to REG of any breach of
any of the representations, warranties or covenants in this Agreement or the
other Subordinated Loan Documents or any development or the occurrence of any
event, financial or otherwise, which constitutes a Default or Event of Default
or which constitutes a material default under any other agreement to which
Blackhawk is a party or which may or shall materially and adversely affect the
business, properties or affairs of Blackhawk or its ability to pay and perform
its obligations under this Agreement or the other Subordinated Loan Documents.

 

28

 

7.21.        Litigation.  Blackhawk shall advise REG within five (5) Business
Days, in writing, of any actions, suits or proceedings brought against it prior
to full payment of the Note, where the amount in dispute is in excess of
$50,000.

 

7.22.        Other
Indebtedness. 
Blackhawk shall not incur any Indebtedness other than the Permitted
Indebtedness.

 

7.23.        Inspection.

 

7.23.1.             REG,
or any person designated by REG, shall have the right, from time to time
hereafter, to call at Blackhawk’s place or places of business (or any other
place where the collateral or any information relating thereto is kept or
located) during reasonable business hours, without hindrance or delay, (i) to
inspect, audit, check and make copies of and extracts from Blackhawk’s books,
records, journals, orders, receipts, correspondence and other data relating to
Blackhawk’s business or to any transactions between the parties hereto and
whether such items or data are maintained in accordance with Blackhawk’s
standard operating procedures or pursuant to this Agreement, (ii) to
verify such matters concerning the collateral as REG may consider reasonable
under the circumstances, (iii) to discuss the affairs, finances and
business of Blackhawk with any officers, employees or directors of Blackhawk,
and (iv) to inspect the real property of Blackhawk, and any books,
records, journals, orders, receipts, correspondence, notices, permits or
licenses, with regard to, among other things, compliance with Environmental
Laws.  Blackhawk will deliver to REG,
within five (5) days of request therefore, any instruments necessary to
obtain records from any person maintaining the same.

 

7.23.2.             REG
may inspect (i) the construction of the Improvements, the Property and all
materials used or held in storage on site to be used in the construction of the
Improvements, (ii) the Plans and Specifications, (iii) the
construction disbursements, and (iv) such other matters, documents and
information as REG deems reasonably necessary or desirable.  REG’s inspection of the Property and the
Improvements and such other matters, documents and information is solely for
its own benefit in administering this Agreement.  Such inspection may not be relied upon by any
other party, person or entity.

 

7.24.        As-Built
Survey. 
Upon completion of the Project, Blackhawk shall provide REG with an “as-built”
survey of the Property showing the dimensions and boundaries of the Property,
the area of the Property in square feet; any then-existing improvements,
including without limitation, the Project, fences, set-back lines,
encroachments, roads, paths, driveways, rights of way, easements and other
matters of interest to REG with courses and distances so as to permit a verbal
description of the Properties and of any other item noted on the survey, all of
which shall be reasonably acceptable to REG and the Title Company.  The survey shall be in compliance with the
minimum standards as adopted by the American Land Title Association and the
American Congress on 

 

29

 

Surveying
and Mapping (2005), with a certificate of the surveyor and such additional
requirements as REG may reasonably request.

 

7.25.        Capital
Expenditures. 
Commencing upon the final completion of the Project Addition, Blackhawk
shall not make Capital Expenditures which exceed $300,000 during any fiscal
year of Blackhawk without the prior written consent of REG.

 

7.26.        Collateral
Appraisal. 
Upon reasonable request of REG, Blackhawk shall, at Blackhawk’s expense,
provide to REG an appraisal of the Collateral by a third-party appraiser
reasonably acceptable to REG, provided, that so long as no Default or Event of
Default has occurred and is continuing, REG shall not request such appraisal of
Collateral more than once per calendar year.

 

7.27.        Liens
and Security Interests. 
Blackhawk shall not create or suffer to exist any lien, security
interest or other charge or encumbrance, or any other type of preferential
arrangement, upon or with respect to any of the Collateral, whether now owned
or hereafter acquired, except for Liens in favor of REG and Permitted Liens.

 

7.28.        Restricted
Investments. 
Blackhawk shall not make or permit to exist any loans or advances to or
any other investment in any Person (including any shareholders of Blackhawk or
any Affiliates), except investments in (i) interest-bearing United States
Government obligations, (ii) prime commercial paper rated AAA by Standard
and Poor’s or Prime P-1 by Moody’s Investor Service, Inc., (iii) agreements
involving the sale and guaranteed repurchase of United States Government
securities, or (iv) any other investments for which REG has given its
prior written consent.

 

7.29.        Payment
of Taxes. 
Blackhawk shall pay and discharge, before they become delinquent, all
taxes, assessments and other governmental charges imposed upon it, its
properties, or any part thereof, or upon the income or profits therefrom and
all claims for labor, materials or supplies which if unpaid might be or become
a lien or charge upon any of its property, except such items as it is in good
faith appropriately contesting and as to which adequate reserves have been
provided to REG’s satisfaction.

 

7.30.        Maintenance
of Properties and Leases. 
Blackhawk shall (i) maintain, preserve and keep its properties,
including, without limitation, the Collateral, and every part thereof in good
repair, working order and condition (except for such properties as Blackhawk in
good faith determines are not useful in the conduct of its business), (ii) from
time to time make all necessary and customary property repairs, renewals,
replacements, additions and improvements thereto so that at all times the
efficiency thereof shall be fully preserved and maintained, and (iii) maintain
all leases of real or personal property in good standing, free of any defaults
by Blackhawk thereunder.

 

7.31.        Material
Contracts. 
Blackhawk shall not enter into any material contract related to the
construction or operation of the Biodiesel Plant without the prior written consent
of REG which consent shall not be unreasonably withheld, conditioned or
delayed..

 

30

 

SECTION 8.  EVENTS OF DEFAULT AND REMEDIES.

 

8.1.          Events of Default.

 

The following shall constitute Events of
Default hereunder:

 

(a)           If Blackhawk shall fail
to pay any sum due and owing under the Note on the date each such amount
becomes due and payable or if Blackhawk shall fail to pay any other monetary
obligation hereunder or under any of the other Subordinated Loan Documents on
the date each such amount becomes due and payable, and such failure continues
for a period of five (5) Business Days after said amount was due.

 

(b)           If Blackhawk
breaches or fails to comply with any covenant made by it in this Agreement or
in any of the other Subordinated Loan Documents, (other than a failure which
would be an Event of Default under another subsection of this Section 8.1),
which breach or failure to comply is not cured to REG’s satisfaction within
thirty (30) days following written notice from REG of such breach or failure to
comply with such covenant; provided, however REG may exercise its setoff rights
during such cure period; provided further, that if such breach or failure to
comply (i) is incurable, (ii) results in a lien that has priority
over REG’s lien in the Collateral and the priority of REG’s lien is not fully
insured over such prior lien by REG’s title policy, or (iii) if the
Blackhawk has committed any fraud or conversion as to such Collateral or
misrepresentation as to the value or condition of such Collateral, REG need not
provide the Blackhawk with any notice of or right to cure such breach or failure
to comply.

 

(c)           If at any time any
representation or warranty made by Blackhawk herein or in any of the
Subordinated Loan Documents, shall be materially incorrect, and any such
materially incorrect representation or warranty could reasonably be expected
(in REG’s sole discretion) to have a material adverse effect on Blackhawk, the
Improvements and/or the ability of Blackhawk to pay and/or perform the
Obligations, which breach or failure is not cured to REG’s satisfaction within
thirty (30) days following written notice from REG of such breach or failure.

 

(d)           If any default or event
of default shall exist under any of the Subordinated Loan Documents other than
this Agreement and such default or event of default shall continue beyond any
applicable grace or cure periods.

 

(e)           If the
construction of the Improvements is not carried on with reasonable dispatch,
and materially in accordance with the Schedule of Construction, or at any time
be discontinued for a period of ten (10) consecutive Business Days provided,
however, this paragraph shall not apply to Unavoidable Delays.

 

31

 

(f)            If Blackhawk, other
than as herein provided, executes any security agreement, chattel mortgage or
other instrument creating a security interest in any materials, fixtures or
articles intended to be incorporated in the Improvements or the appurtenances
thereto, or in any articles of personal property placed in the Improvements, or
files or permits the filing of a financing statement publishing notice of such
security interest, or if any of such materials, fixtures or articles are not
purchased so that the ownership thereof will vest unconditionally in Blackhawk
on delivery at the Property, or if Blackhawk does not promptly produce to REG
upon demand the contracts, bills of sale, statements, receipted vouchers or
agreements, or any of them, under which Blackhawk claims title to such
materials, fixtures or articles.

 

(g)           If Blackhawk defaults
beyond any applicable grace or cure period under the terms of any other
indebtedness of Blackhawk, and such default could reasonably be expected to
have a material adverse effect on Blackhawk, the Improvements, and/or Blackhawk’s
ability to pay and/or perform the Obligations.

 

(h)           If Blackhawk assigns
this Agreement or any interest herein, or if the Property and/or the
Improvements is conveyed, assigned, mortgaged, pledged or encumbered in any way
other than as herein provided without the prior written consent of REG.

 

(i)            If a lien or claim of
lien in excess of $50,000 for the performance of work or the supply of
materials to be filed against the Property or the Improvements and remains
unsatisfied for a period of fifteen (15) days after the date of filing thereof,
provided that Blackhawk may cure this default by escrowing an amount equal to
125% of the amount of such claim with REG.

 

(j)            If Blackhawk
shall generally not pay its material debts as such debts become due, or shall
admit in writing its inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors; if any proceeding shall be
instituted by Blackhawk seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee, or
similar official for it or for any substantial part of its property; if any
proceeding shall be instituted against Blackhawk seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of its or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee or similar official for it or for any substantial part of its
property and any such proceeding is not dismissed within sixty 

 

32

 

(60) days; or if Blackhawk shall take any action to authorize any of
the actions set forth in this subsection (j).

 

(k)           If any judgment or
order, singly or in the aggregate, for the payment of money in excess of
$100,000 shall be rendered against Blackhawk 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.

 

(l)            If any provision of
any Loan Document after delivery thereof shall for any reason cease to be valid
and binding on Blackhawk, or Blackhawk shall so state in writing; or the
Subordinated Mortgage after delivery thereof to REG shall for any reason,
except to the extent permitted by the terms thereof, cease to create a valid
and perfected priority lien and security interest in any of the Collateral
purported to be covered thereby subject only to the Senior Mortgage, except to
the extent due solely to the negligence or intentional misconduct of REG or any
affiliate of REG.

 

(m)          Any challenge, whether
by litigation or otherwise, shall be asserted against the validity of this
Agreement, the development of the Project or any of the transactions carried
out pursuant to any of them, including, without limitation, a claim that
Blackhawk has no authority to enter into them, or that such transaction violate
any federal, state or municipal constitution, charter, law, ordinance,
regulation, resolution or rule, or any court order, and such challenge shall
not be dismissed or resolved within sixty (60) days following the date on which
Blackhawk first becomes aware of such challenge.

 

(n)           If notice is given to
REG purporting to terminate the operation of the Subordinated Mortgage as
security for future advances and/or future obligations.

 

(o)           If (i) there shall
occur any default or event of default under the Ground Lease which could
reasonably be expected to lead to a termination of the Ground Lease, and such
default or event of default shall continue beyond any applicable grace or cure
periods, or (ii) there shall occur any termination of such Ground Lease.

 

(p)           If (i) Blackhawk
shall receive a notice from Project General Contractor or Project Addition
General Contractor that it intends to stop work or terminate the General
Construction 

 

33

 

Contract or Project Addition General Construction Contract, as
applicable due to Blackhawk’s breach of or failure to perform under the General
Construction Contract or Project Addition General Construction Contract, as applicable,
including, without limitation, failure to make payment, and Blackhawk fails to
cure such breach or failure to perform within seven (7) days after receipt
of such notice, or (ii) there shall occur any other default or event of
default under the General Construction Contract or Project Addition General
Construction Contract which is not waived by applicable contractor and such
default or event of default shall continue beyond any applicable grace or cure
periods.

 

(q)           If there shall occur
any default or event of default under the Equipment Purchase and Sale Agreement
which is not waived by De Smet and such default or event of default shall
continue beyond any applicable grace or cure periods, or any termination of
such Equipment Purchase and Sale Agreement.

 

(r)            If there shall occur
any default or event of default under any of the Operation Documents which
default or event of default is not waived, and such default or event of default
shall continue beyond any applicable grace or cure periods, or any termination
of any such Operation Documents.

 

(s)           If there shall occur
any default or event of default under any of the Senior Loan Documents or any
agreement executed in connection with the Senior Loan Documents, and such
default or event of default shall continue beyond any applicable grace or cure
periods, or if the IFA Guaranty is revoked, terminated or otherwise cancelled
by the IFA for any reason.

 

(t)            If there shall occur
any default or event of default under any agreement executed by Blackhawk and the
DCEO in connection with the Renewable Fuels Grant, and such default or event of
default shall continue beyond any applicable grace or cure periods, or if the
Renewable Fuels Grant is revoked, terminated or otherwise cancelled by the DCEO
for any reason.

 

(u)           If there shall occur
any default or event of default under any agreement executed in connection with
the Economic Development Programming Assistance Grant, including without
limitation (i) the Company/Local Agency Agreement or (ii) the
State/Local Joint Agreement, and such default or event of default shall
continue beyond any applicable grace or cure periods, or if the Economic
Development Programming Assistance Grant is revoked, terminated or cancelled
for any reason, including, without limitation, the failure of Blackhawk to
submit any reports required in connection with the Economic Development
Programming Assistance Grant.

 

34

 

(v)           If there shall occur
any default or event of default under any agreement executed in connection with
the CDBG Grant, and such default or event of default shall continue beyond any
applicable grace or cure periods, or if the CDBG Grant is revoked, terminated
or otherwise cancelled by the City of Danville for any reason, and such default
has a material adverse effect on Blackhawk, the Project, and or the ability of
Blackhawk to pay and/or perform the Obligations.

 

(w)          If there shall occur any
default or event of default under any agreement executed in connection with
either of the TARP Grants, and such default or event of default shall continue
beyond any applicable grace or cure periods, or if either of the TARP Grants
are revoked, terminated or otherwise cancelled by either the IDOT or the City
of Danville for any reason, and such default has a material adverse effect on
Blackhawk, the Project, and or the ability of Blackhawk to pay and/or perform
the Obligations.

 

(x)            If there is a Change
of Control of Blackhawk.

 

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

 

8.2.     Remedies. 
Upon the occurrence of any Event of Default and in addition to all
remedies conferred upon REG by law or in equity, by the terms of the
Subordinated Loan Documents, or by the terms of any other documents serving as
security for Blackhawk’s indebtedness, REG may pursue any one or more of the following
remedies:

 

(a)           To cancel this
Agreement by written notice to Blackhawk, in which event REG shall be fully
released and relieved of all obligations and liabilities to Blackhawk under
this Agreement.

 

(b)           To institute
appropriate proceedings to specifically enforce performance hereof.

 

35

 

(c)           To take immediate
possession of the Project and Blackhawk’s leasehold interest in the Property,
as well as all other property to which any right, title or interest is owned or
leased by Blackhawk (and in which REG has a security interest) as is necessary
to fully complete all on-site and off-site improvements contemplated to be
developed and/or constructed under this Agreement.

 

(d)           To appoint a receiver
as a matter of strict right without regard to the solvency of Blackhawk for the
purpose of preserving the property above described, preventing waste, and to
protect all rights accruing to REG by virtue of this Agreement, or under the
Subordinated Loan Documents and expressly to make any and all further
improvements, whether on-site or off-site, as may be determined by REG for the
purpose of completing the Project in accordance with this Agreement.  All expense incurred in connection with the
appointment of said receiver, or in protecting, preserving, or improving the
Property or the Project, shall be chargeable against Blackhawk and shall be
enforced as a lien against the Property and the Project.

 

(e)           To accelerate maturity
of the Subordinated Mortgage, and/or the Note, and demand payment of the
principal sums due thereunder with interest, advances, and costs, and in
default of said payment or any part thereof, to exercise the power of sale if
given and available, and pursue its other rights and remedies under the Subordinated
Mortgage or the other Subordinated Loan Documents.

 

(f)            To foreclose and to
enforce collection of such payment by foreclosure under the Subordinated
Mortgage, and/or other appropriate action in any court of competent
jurisdiction.

 

(g)           Upon or after the
occurrence and during the continuation of any Event of Default, REG is hereby
authorized at any time and from time to time, without notice to the Blackhawk
(any such notice being hereby waived by the Blackhawk), to set-off and apply
any indebtedness at any time owing by REG to or for the credit or the account
of the Blackhawk against any and all of the obligations of Blackhawk to REG
irrespective of whether or not REG shall have made any demand under this
Agreement or the other Subordinated Loan Documents and although such
obligations may be unmatured.  The rights
of REG hereunder are in addition to other rights and remedies (including,
without limitation, other rights of set-off) which REG may have.

 

(h)           Blackhawk shall permit
REG, if REG so elects in its sole discretion, to pay or perform Blackhawk’s
Obligations hereunder or under the other Subordinated 

 

36

 

Loan Documents or any other agreement to which Blackhawk is a party or
by which it is bound, and shall reimburse REG, on demand, or, if REG so elects,
by REG making either (i) an Advance on Blackhawk’s behalf, which Advance
and interest thereon at the Default Rate from the date of the Advance until
paid in full shall be secured by the Subordinated Mortgage, or (ii) setting
off any such amount against any amount owed by REG to Blackhawk, for all
amounts expended by or on behalf of REG in connection therewith and all
reasonable costs and expenses incurred by or on behalf of REG in connection
therewith.

 

The remedies and rights of REG shall be
cumulative and not exclusive of any other remedies of REG under any other
provision of this Agreement or under any other instrument or at law or in
equity.  REG shall be privileged and have
the absolute right to resort to any one or more, or all of said remedies, none
to the exclusion of the others, concurrently or successively, in such order, as
REG may select.

 

SECTION 9.  GENERAL
CONDITIONS.

 

The following conditions shall be applicable throughout the terms of this
Agreement:

 

9.1           Waiver.  Waiver of any provision of this Agreement
shall not be deemed a waiver of future compliance therewith and such provision
shall remain in full force and effect.

 

9.2          Form Satisfactory.  Not in any way in limitation of any other
provision of this Agreement, all proceedings taken in connection with the
transactions provided herein, all documents required or contemplated by this
Agreement, the designation of the persons responsible for the preparation and
execution thereof, and the form or policies of insurance and the issuers
thereof shall be reasonably satisfactory to REG.

 

9.3          Notices.  Any notice, request, demand, consent,
confirmation or other communication hereunder 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.

 

37

 

	
  If to
  Blackhawk:

  	
  Blackhawk Biofuels, LLC

  
	
   

  	
  Attention: Ron Mapes

  
	
   

  	
  22 South Chicago Avenue

  
	
   

  	
  Freeport, Illinois 61032-4230

  
	
   

  	
  Facsimile: (815) 235-4727

  
	
   

  	
   

  
	
  With copy
  to:

  	
  Lindquist & Vennum PLLP

  
	
   

  	
  Attention: Dean R. Edstrom

  
	
   

  	
  4200 IDS Center

  
	
   

  	
  80 South Eighth Street

  
	
   

  	
  Minneapolis, Minnesota 55402

  
	
   

  	
  Facsimile: (612) 371-3207

  
	
   

  	
   

  
	
  If to REG:

  	
  REG Ventures, LLC

  
	
   

  	
  Attention: Jeffrey Stroburg

  
	
   

  	
  416 S. Bell Avenue

  
	
   

  	
  P.O. Box 888

  
	
   

  	
  Ames, Iowa 50010

  
	
   

  	
  Facsimile: (515) 239-8009

  
	
   

  	
   

  
	
  With copy
  to:

  	
  Wilcox Polking Gerken
  Schwarzkopf & Copeland, P.C.

  
	
   

  	
  Attention: John A. Gerken

  
	
   

  	
  115 E. Lincolnway Street, Suite 200

  
	
   

  	
  Jefferson, Iowa 50129

  
	
   

  	
  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 be delivered by another means permitted by under
this Section.

 

9.4          No Oral Amendments.  Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated orally, but only by an
instrument in 

 

38

 

writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is sought.

 

9.5          Additional Remedies.  The remedies herein provided shall be in
addition to and not in substitution for the rights and remedies which would
otherwise be vested in REG in any Loan Document or in law or in equity, all of
which rights and remedies are specifically reserved by REG.  The remedies herein provided or otherwise
available to REG shall be cumulative and may be exercised concurrently.  The failure to exercise any of the remedies
herein provided shall not constitute a waiver thereof nor shall use of any of
the remedies hereby provided prevent the subsequent or concurrent resort to any
other remedy or remedies.  It is intended
that all remedies herein provided for or otherwise available to REG shall
continue and be each and all available to REG until all sums due it by reason
of this Agreement have been paid to it in full and all obligations incurred by
it in connection with the construction or operation of the Improvements have
been fully discharged without loss or damage to REG.

 

9.6          No Partner.  REG is not a partner with Blackhawk or any
other party in the building or operation of the Improvements.  REG shall not in any way be liable or
responsible by reason of the provisions hereof, or otherwise, for the payment
of any claims growing out of the building or operation of any Improvements.

 

9.7          Terminations and Satisfactions. Upon
conversion of the Note or satisfaction of the Obligations, REG agrees to
promptly file, or cause to be filed, appropriate termination statements and
satisfactions and/or releases with respect to its security interests and
mortgages with the applicable state or local governmental authorities.

 

9.8          The Subordinated Mortgage and Security
Agreement as Security.  The
Subordinated Mortgage and Security Agreement shall constitute security for all
monies advanced by REG and all obligations incurred by REG in excess of the
Loan advanced or incurred by REG pursuant to the authority of this Agreement;
and all such monies advanced and obligations incurred shall constitute a lien
upon Blackhawk’s interest in the Property and Improvements secured by the
Subordinated Mortgage and Security Agreement, and recovery therefor may be had
by REG upon the Subordinated Mortgage and Security Agreement in addition to all
other remedies herein granted to REG.

 

9.9          Usury Savings.  Notwithstanding any provisions herein or in
any other Loan Document, the total liability of Blackhawk for any payments of
interest or in the nature of interest shall not exceed the limits imposed by
the usury laws of the State of 

 

39

 

Iowa. 
In the event that such payment is paid by Blackhawk or received by REG,
then such excess sum shall be credited as a payment of principal, unless Blackhawk
shall notify REG, in writing, that they elect to have such excess sum returned
forthwith.  Such return or credit shall
not cure or waive any Event of Default under this Agreement, the Subordinated
Mortgage or any other Subordinated Loan Document.

 

9.10        Additional Documents.  Blackhawk agrees upon demand to do any act or
execute any additional documents (including, but not limited to, security
agreements on any personalty included or to be included in the Property or the
Improvements) as may be reasonably required by REG to secure the Note, to
confirm the lien of the Subordinated Mortgage, or any other applicable
Subordinated Loan Document, or to otherwise create, evidence, assure or enhance
REG’s rights and remedies under, or as contemplated by, the Subordinated Loan
Documents or at law or in equity.  All of
said documents shall be in form and substance prepared by or reasonably
acceptable to REG. REG agrees to enter into such further and additional
agreements, including subordination agreements, and take such other actions as
may be reasonably requested to document and consummate a Senior Loan in favor
of the Senior Lender or any Replacement Lender.

 

9.11        Binding Effect; Continuing Agreement.  The terms, conditions, covenants, agreement,
powers, privileges, notices and authorizations herein contained shall extend
to, be binding upon and available to the heirs, executors, administrators,
successors and, to the extent permitted hereunder, the assigns of each of the
respective parties hereto. 
Notwithstanding the foregoing, Blackhawk shall not, without the prior
written consent of REG, assign or transfer voluntarily or by operation of law
this Agreement.  An assignment or
transfer in violation of this provision shall be invalid and of no force or
effect.  Blackhawk’s obligations,
covenants, representations and warranties hereunder shall continue for so long
as Blackhawk has any obligations outstanding to REG, or REG has any lien on any
property of Blackhawk.  This Agreement
shall not be construed for or against any of the parties hereto, regardless of
whether any party was more responsible for its preparation.

 

9.12        Governing Law.  This Agreement and each transaction
consummated hereunder shall be deemed to be made under the laws of the State of
Iowa and shall be construed in accordance with and governed by the laws of such
State without regard to conflicts of laws principles.

 

9.13        Headings.  The titles and headings of the paragraphs of
this Agreement have been inserted for convenience of reference only and are not
intended to summarize or otherwise describe, limit, modify or expound upon the
subject matter of such paragraphs.

 

40

 

9.14        REG’s Discretion.  Any condition of this Agreement which
requires the submission of evidence of the existence or non-existence of a
specified fact or facts implies as a condition the existence or non-existence,
as the case may be, of such fact or facts and REG shall, at all time, be free
independently to establish to its satisfaction and in its reasonable discretion
such existence or non-existence.  Except
as otherwise expressly provided in this Agreement, whenever REG’s judgment,
consent or approval is required hereunder for any matter, or REG shall have an
option or election hereunder, such judgment, the decision as to whether or not
to consent to or approve the same or the exercise of such option or election
shall be in the reasonable discretion of REG.

 

9.15        Consent to Forum.  As part of the consideration for new value
this day received, Blackhawk hereby consents to the jurisdiction of any state
court located within Des Moines, Polk County, Iowa or the United States
District Court, Southern District of Iowa, in Des Moines, Iowa, and waives any
personal service of any and all process upon Blackhawk and consents that all
such service of process be made by certified or registered mail directed to
Blackhawk at the address set forth in the preliminary statements hereof, and
service so made shall be deemed to be completed upon actual receipt
thereof.  Nothing contained herein should
be deemed to affect the parties’ right to remove to Federal Court within the
Southern District of Iowa.  Blackhawk
waives any objection to jurisdiction and venue of any action instituted against
Blackhawk as provided herein and agrees not to assert any defense based on lack
of jurisdiction or venue.  Nothing in
this section shall affect the right of REG to serve legal process in any other
manner permitted by law or affect the right of REG to bring any action or proceeding
against Blackhawk in the courts of any other jurisdictions.

 

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

 

9.17        Counterparts.  This Agreement may be executed in
counterparts, any one of which shall be deemed an original, and all of which
taken together shall be treated as one document.

 

IMPORTANT.  READ BEFORE SIGNING, THE TERMS OF THIS
AGREEMENT SHOULD BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING 

 

41

 

ARE ENFORCEABLE.  NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED
IN THIS WRITTEN CONTRACT MAY BE LEGALLY ENFORCED.  YOU MAY CHANGE THE TERMS OF THIS
AGREEMENT ONLY BY ANOTHER WRITTEN AGREEMENT.

 

[SIGNATURES
ON FOLLOWING PAGE]

 

42

 

IN WITNESS WHEREOF, REG and Blackhawk have executed this Agreement on
the date first above written.

 

 

	
  BLACKHAWK BIOFUELS, LLC,

  	
   

  	
  REG VENTURES, LLC,

  
	
   

  	
   

  	
   

  
	
  a Delaware limited liability company

  	
   

  	
  an Iowa limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
      /S/ Ronald L. Mapes

  	
   

  	
  By

  	
      /S/ Daniel J. Oh

  
	
             Ronald
  L. Mapes, Chair

  	
   

  	
              Daniel
  J. Oh, President

  
					

 

SUBORDINATED LOAN SIGNATURE
PAGE

 

43

 

Schedule 6.2
to Subordinated Loan Agreement

 

Threatened claim by Stephenson County against
Blackhawk Biofuels, LLC in letter dated April 22, 2008 by Frank Cook,
Attorney at Law, on behalf of Stephenson County.

 

44

 

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.

 

45

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