Document:

EXHIBIT 10.2

FOURTH AMENDMENT TO

REAL ESTATE OPTION AGRTEEMENT

THIS FOURTH AMENDMENT  is entered into between Freeport Area
Economic Development Foundation, an Illinois not-for-profit corporation, herein referred to as “Optionor,”
and Blackhawk Biofuels, LLC,
herein referred to as “Optionee.”

RECITALS

A.           Optionor and Optionee have previously entered into a Real Estate Option
Agreement; and Amendment to Real Estate Option Agreement; and a Second
Amendment to Real Estate Option Agreement, and a Third Amendment to Real Estate
Option Agreement, a copy of said documents are attached hereto and incorporated
by reference.

B.             The parties desire to further extend the date
for the exercise of the Option as herein set forth.

AGREEMENT

NOW, THEREFORE, the parties agree as follows:

1.               Paragraph 3(b) of the Real Estate Option
Agreement is amended effective the date hereof to read as follows”

This Option shall remain
in effect until September 30, 2007. 
Optionee may exercise this Option at any time prior to said date.

2.               Except as herein set forth, all other terms
and conditions of the Real Estate     Option Agreement remain the same and in full
force and effect.

IN WITNESS WHEREOF, the parties have executed this
Third Amendment.

	
  

  	
  OPTIONOR:

  
	
   

  	
   

  
	
   

  	
  Dated:  July
  31, 2007.

  	
  FREEPORT AREA ECONOMIC

  
	
   

  	
   

  	
  DEVELOPMENT FOUNDATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /S/ Robert J. Skurla

  	
   

  
	
   

  	
   

  	
   

  	
  Robert Skurla, Executive Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  OPTIONEE:

  
	
   

  	
   

  	
   

  
	
   

  	
  Dated:  July
  31, 2007.

  	
  BLACKHAWK BIOFUELS, LLC

  
	
   

  	
   

  
	
   

  	
  By

  	
  /S/ Ronald Mapes

  	
   

  

 

REAL ESTATE OPTION AGREEMENT

THIS AGREEMENT entered into this 20th day of June, 2006, between Freeport Area Economic Development Foundation, an
Illinois not-for-profit corporation, herein referred to as “Optionor,”
whose address is 27 W. Stephenson Street, Freeport, Illinois 61032, and Blackhawk Biofuels, LLC, herein referred to
as “Optionee,” whose address is 22 S. Chicago Avenue, Freeport, Illinois 61032.

1.             Consideration and Grant of Option.  In
consideration of the payments herein set forth from Optionee to Optionor,
Optionor hereby grants to Optionee an option to purchase Lot 7 in the Replat of
Mill Race Industrial Park (a copy of the draft of the Replat is attached hereto
marked at Exhibit A) which is located in the Stephenson County Economic
Development area in Stephenson County, Illinois (herein referred to as the “Property”),
together with all easements and appurtenances thereto, for the price and within
the time specified herein.  This Real
Estate Option Agreement is contingent upon Optionor obtaining all necessary
government approval and the filing of the Replat of Mill Race Industrial Park
in accordance with the Replat which is attached hereto.  In the event the Replat is not approved, this
Option Agreement shall be null and void and any monies paid to Optionor by
Optionee shall be refunded to Optionee.

2.             Payment for Option. 
Optionee shall pay Optionor the sum of Eight Hundred Twenty-five Dollars
($825.00) per month on the first of each month commencing August 1, 2006, and
on the first of each month thereafter. 
Said payment shall be in consideration for the Option granted to
Optionee.  The payment will not be
applied to the purchase price in the event Optionee exercises this Option.  In the event Optionee fails to exercise the
Option according to its terms, Optionor shall retain all sums paid under the
terms of this Option Agreement.

3.             Exercise of Option.  This
option may be exercised by Optionee as follows:

a.             By written notice from Optionee to Optionor,
at the address provided herein, which written notice shall provide for a date
for closing within 60 days of the date of the written notice.

b.             This option shall remain in effect until
December 31, 2006.  Optionee may exercise
this option at any time prior to said date.

c.             If Optionee fails to exercise this option within
the time period set forth above, Optionee’s right to exercise the option and
purchase the Property shall automatically terminate and this agreement shall be
of no force and effect.

4.             Non-Exercise of Option.  In
the event Optionee does not exercise the option to purchase the Property, the
consideration paid to Optionor pursuant to Paragraph 2 above shall be forfeited
and remain the property of Optionor.

5.             Assess to Property. 
During the option period, Optionee shall be granted access to the
property to perform any necessary due diligence as required by Optionee.  Provided however, Optionee shall respect the
rights of the current tenants on the premises and shall not disrupt or
interfere with the tenants or their business. 
Optionee shall return the Property to its original condition after the
completion of any tests, surveys or inspections.  All costs of due diligence studies shall be
borne by Optionee.

6.             Purchase Price and Terms of Payment.  The
purchase price paid for the property shall be $15,000.00 per surveyed
acre.  Optionor and Optionee agree that
upon the exercise of the Option, the

parties
shall sign an Agreement for Deed, prepared by Optionee’s attorney and approved
by Optionor’s attorney, the exercise of the option shall be contingent upon
both parties executing an Agreement for Deed which is acceptable to both
Optionor and Optionee.  The purchase
price shall be determined by survey, the total purchase price shall be the
number of surveyed acres times the price per acre as hereinabove set forth.

7.             Notice.  All notices provided for in
this instrument, if not delivered in person, shall be sent by U.S. Certified
Mail, Return Receipt Requested, to the party at the address given above, or to
any other address either party may have designated for receipt of such notices
by written notice of a change of address.

8.             Representations. 
Optionor and Optionee hereby warrant and represent to each other that no
real estate broker has participated in this transaction and that this
instrument contains the entire agreement of the parties and that any prior
discussions or negotiations not set forth in this Agreement are of no further
force and effect.

9.             Assignment.  Optionor and Optionee agree
that this Option may be assigned by Optionee without the prior written consent
of Optionor and that assignee of Optionee shall have all rights of Optionee
hereunder.

10.                 Governing
Law.  This Agreement shall be governed by the laws
of the State of Illinois.

11.           Prior Agreement Void.  Upon
the execution of this Amended Real Estate Option Agreement, the prior Real
Estate Option Agreement between the parties dated March 10, 2006, shall be null
and void and of no further force and effect.

IN WITNESS WHEREOF, the parties have executed this Option the day and
year first above written.

	
  

  	
  OPTIONOR:

  
	
   

  	
   

  
	
   

  	
  FREEPORT AREA
  ECONOMIC DEVELOPMENT

  
	
   

  	
  FOUNDATION

  
	
   

  	
   

  
	
   

  	
  By

  	
  /S/ Robert J. Skurla

  	
   

  
	
   

  	
   

  	
  Robert Skurla, Executive Director

  
	
   

  	
   

  
	
   

  	
  OPTIONEE:

  
	
   

  	
   

  
	
   

  	
  BLACKHAWK
  BIOFUELS, LLC

  
	
   

  	
   

  
	
   

  	
  By

  	
  /S/ Ronald Mapes

  	
   

  
	
   

  	
   

  	
  Member

  

 

Instrument
Prepared by:

Attorney
Dan G. Fishburn

Snow,
Hunter, Whiton & Fishburn, Ltd.

8
East Stephenson Street

Freeport, IL 61032 (815-235-2511)

EXHIBIT A

[SURVEY]

AMENDMENT TO

REAL ESTATE OPTION AGREEMENT

THIS AMENDMENT TO REAL ESTATE OPTION AGREEMENT is entered into this 27th day of November, 2006, between Freeport Area Economic Development Foundation, an
Illinois not-for-profit corporation, as Optionor, and Blackhawk Biofuels, LLC, as Optionee.

1.             Extension of Option. 
Paragraph 3(b) of the Real Estate Option Agreement dated June 20, 2006
(the “Option Agreement”) is hereby amended to replace the date “December 31,
2006” with “March 31, 2007”.

2.             Other Terms of Option Agreement. 
Except as amended by paragraph 1 hereof, all other terms of the Option
Agreement shall remain in full force and effect between the parties.

IN WITNESS WHEREOF, the parties have executed this Amendment to Real
Estate Option Agreement the day and year first above written.

	
   

  	
  OPTIONOR:

  
	
   

  	
   

  
	
   

  	
  FREEPORT AREA
  ECONOMIC DEVELOPMENT FOUNDATION

  
	
   

  	
   

  
	
   

  	
  By

  	
  /S/ Robert J. Skurla

  	
   

  
	
   

  	
   

  	
  Robert Skurla, Executive Director

  
	
   

  	
   

  
	
   

  	
  OPTIONEE:

  
	
   

  	
   

  
	
   

  	
  BLACKHAWK
  BIOFUELS, LLC

  
	
   

  	
   

  
	
   

  	
  By

  	
  /S/ Ronald Mapes

  	
   

  
	
   

  	
   

  	
  Chair

  

 

SECOND AMENDMENT TO

REAL ESTATE OPTION AGREEMENT

THIS SECOND AMENDMENT  is entered into between Freeport Area Economic
Development Foundation, an Illinois not-for profit Corporation,
herein referred to as “Optionor,” and Blackhawk Biofuels, LLC, herein
referred to as “Optionee.”

RECITALS

A.    Optionor and Optionee have entered into a
Real Estate Option Agreement dated June 20, 2006, a copy of said Agreement is
attached hereto marked Exhibit A.

B.    Optionor and Optionee entered into an
Amendment to Real Estate Option Agreement dated November 27, 2006.  The Amendment extended the Real Estate Option
Agreement until March 31, 2007.  A copy
of said Amendment is attached hereto marked Exhibit B.

C.    The parties desire to further extend the date
for the exercise of the Option as set forth.

AGREEMENT

NOW, THEREFORE, the parties agree as follows:

1.             Paragraph 3(b) of the Real Estate Option
Agreement is amended effective the date hereof to read as follows:

This Option shall remain in
effect until June 30, 2007.  Optionee may
exercise this Option at any time prior to said date.

2.             Except as herein set forth, all other terms
and conditions of the Real Estate Option Agreement remain the same and in full
force and effect.

IN WITNESS WHEREOF, the parties have executed this Second Amendment.

	
  

  	
  OPTIONOR:

  
	
   

  	
   

  
	
  Dated:  March
  20, 2007

  	
  FREEPORT AREA ECONOMIC 

  DEVELOPMENT FOUNDATION 

  
	
   

  	
   

  
	
   

  	
  By

  	
  /S/ Robert J. Skurla

  	
   

  
	
   

  	
   

  	
  Robert Skurla, Executive Director

  
	
   

  	
   

  
	
   

  	
  OPTIONEE:

  
	
   

  	
   

  
	
  Dated:  March
  20, 2007

  	
  BLACKHAWK BIOFUELS, LLC 

  
	
   

  	
   

  
	
   

  	
  By

  	
  /S/ Ronald Mapes

  	
   

  
	
   

  	
   

  	
  Ronald Mapes, Chair

  

 

This Instrument Prepared by:

Attorney Dan G. Fishburn

Snow, Hunter, Whiton &
Fishburn, Ltd.

8 East Stephenson Street

Freeport,
IL 61032 (815-235-2511)

THIRD AMENDMENT TO

REAL ESTATE OPTION AGREEMENT

THIS THIRD AMENDMENT  is entered into between Freeport Area Economic
Development Foundation, an
Illinois not-for-profit corporation, herein referred to as “Optionor,”
and Blackhawk Biofuels, LLC,
herein referred to as “Optionee.”

RECITALS

A.    Optionor and Optionee have previously entered
into a Real Estate Option Agreement; and Amendment to Real Estate Option
Agreement; and a Second Amendment to Real Estate Option Agreement, a copy of
said documents are attached hereto and incorporated by reference.

B.             The parties desire to further extend the date
for the exercise of the Option as herein set forth.

AGREEMENT

NOW, THERFORE, the parties agree as follows:

1.     Paragraph 3(b) of the Real Estate Option
Agreement is amended effective the date hereof to read as follows:

This Option shall remain in
effect until July 31, 2007.  Optionee may
exercise this Option at any time prior to said date.

2.     Except as herein set forth, all other terms
and conditions of the Real Estate Option Agreement remain the same and in full
force and effect.

IN WITNESS WHEREOF, the parties have executed this Second Amendment.

	
  

  	
  OPTIONOR:

  
	
   

  	
   

  
	
   

  	
  Dated:  June
  25, 2007.

  	
  FREEPORT AREA ECONOMIC

  
	
   

  	
   

  	
  DEVELOPMENT FOUNDATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /S/ Robert J. Skurla

  	
   

  
	
   

  	
   

  	
   

  	
  Robert Skurla, Executive Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  OPTIONEE:

  
	
   

  	
   

  	
   

  
	
   

  	
  Dated:  June
  26, 2007.

  	
  BLACKHAWK BIOFUELS, LLC

  
	
   

  	
   

  
	
   

  	
  By

  	
  /S/ Ronald Mapes

  	
   

  

 

This Instrument Prepared by:

Attorney Dan G. Fishburn

Snow, Hunter, Whiton &
Fishburn, Ltd.

8 East Stephenson Street

Freeport,
IL 61032 (815-235-2511)EXHIBIT
10.3

	
  1st Farm Credit Services

  
	
  At the heart of
  a growing America

  
	
  Peoria Branch –
  I-74 & DuBois Road – P.O. Box 70 – Edwards, IL 61528-0070 – (309)
  676-0069 – Fax (309) 676-1398

  

 

Term Sheet Proposal

This is a proposed
term sheet for a possible lending relationship between Blackhawk Biofuels, LLC
(Borrower) and 1st Farm Credit Services or its agent/assignee
(Lender). The loan proposal described below is conditioned upon completion and
approval of loan underwriting requirements leading to a loan commitment and
conditions precedent contained herein.

BLACKHAWK
BIOFUELS, LLC

FREEPORT, IL

LOAN TERMS AND CONDITIONS

June 6, 2007

	
  Borrower:

  	
  Blackhawk Biofuels, LLC

  
	
   

  	
   

  
	
  Project Costs:

  	
  The total estimated cost of this 30 million gallon
  biodiesel production project is $62,000,000 per the Borrowers updated sources
  and uses estimate dated 05/30/07.

  
	
   

  	
   

  
	
  Minimum Equity Funding:

  	
  The borrower will provide a minimum of $34,500,000
  of equity contribution as follows: Member cash equity $34,500,000. All
  non-cash equity sources must be approved by lender.

  
	
   

  	
   

  
	
  Construction Facility:

  	
  1st Farm Credit Services will provide a single
  construction loan of a maximum of $27,500,000 or approximately $.917/gallon.

  
	
   

  	
   

  
	
  Maturity Date:

  	
  Maturity date of construction credit facility will
  be for 16 months based upon the loan closing date of those facilities.

  
	
   

  	
   

  
	
  Purpose:

  	
  The purpose of the loan is for the construction of a
  30 million gallon biodiesel and co-product production facility.

  
	
   

  	
   

  
	
  Availability Period:

  	
  The construction loan is available from the day of
  formal loan closing until the earlier of 60 days post construction or the
  maturity date. A third party engineer must certify confirmation of the end of
  the construction period.

  

 

 

	
  Construction Loan Interest Payments:

  	
  Interest shall be calculated on the actual number of
  days each loan is outstanding on the basis of a year consisting of 365 days.
  Accrued construction interest is due quarterly from the month of closing.

  
	
   

  	
   

  
	
  Construction Bonding:

  	
  Construction bonding acceptable to the lender will
  be required.

  
	
   

  	
   

  
	
  Term Facility:

  	
  1st Farm Credit Services will provide a term
  loan of a maximum of $25,000,000 or approximately $.83/gallon. Upon
  completion of construction and with appropriate certification of the plant
  operation, the total outstanding construction loan balance will be converted
  into the term credit facility.

  
	
   

  	
   

  
	
  Maturity Date:

  	
  Maturity date of term credit facility will be for
  ten years based upon the loan closing date of those facilities.

  
	
   

  	
   

  
	
  Purpose:

  	
  The purpose of the loan is for the long term
  financing of a 30 million gallon biodiesel and co-product production
  facility.

  
	
   

  	
   

  
	
  Principal and Interest Payments:

  	
  All principal payments are due quarterly along with
  interest (calculated on a 365 day basis) as will be described in the term
  loan facilities. The term loan amortization will be equal payments of
  principal and interest fully amortized on a 10 year schedule.

  
	
   

  	
   

  
	
  Voluntary Prepayments:

  	
  There will be a penalty if prepayment of the senior
  term facility indebtedness is paid in its entirety according to the following
  schedule: If within one year after the conversion to the term facility senior
  = 2 percent; If within the second year after the conversion to the senior
  term loan = 1 percent.

  
	
   

  	
   

  
	
  USDA
  Guarantees: 

  Term Facility A:

  	
  

  Approval of a 60% USDA Business & Industry Guarantee with conditions
  acceptable to the Lender is required prior to closing.

  
	
   

  	
   

  
	
  Term Facility B:

  	
  Approval of a 70% USDA Renewable Systems and Energy
  Efficiency Improvements Guarantee with conditions acceptable to the Lender is
  required prior to closing.

  
	
   

  	
   

  
	
  Interest Rates-

  Term Facility A & B

  	
  At conversion, up to 50% of the term loan facility
  is eligible for the variable base rate at 90-dayi LIBOR plus 340 basis
  points.

  

 

 

	
  

  	
  Variable rate incentive pricing: 

  After receipt of the first annual audit report post conversion, variable rate
  reductions or premiums are offered based upon achievement of certain owner
  equity benchmarks and loan covenant compliance; as measured according to
  lenders underwriting methods. 

  When owner equity is less than 50%; LIBOR + 365 bps 

  When owner equity is >50% - <60%: LIBOR + 340 bps 

  When owner equity is >60% - <70%: LIBOR + 300 bps 

  When owner equity is >70%: LIBOR + 275 bps

  
	
   

  	
   

  
	
   

  	
  Fixed Rate:  

  A minimum of 50% of the term facility will be required to be priced on fixed
  rates at the conversion of the construction loan to the term loan. The rate
  will be determined by adding 325 bps to Lender’s funding costs or a similar
  benchmark existing at the time of conversion.

  
	
   

  	
   

  
	
   

  	
  Fixed rates are not eligible for rate incentives.

  
	
   

  	
   

  
	
  Operating Facility:

  	
  1st Farm Credit Services will provide an
  operating Line of Credit of a maximum of $5,000,000.

  
	
   

  	
   

  
	
  Maturity Date:

  	
  Maturity date of operating Line of Credit facility
  will be 364-days from the loan closing date of those facilities.

  
	
   

  	
   

  
	
  Purpose:

  	
  General operating and risk management funding needs.

  
	
   

  	
   

  
	
  Borrowing Base:

  	
  Loan will be governed by a monthly borrowing base
  which will limit the outstanding balance under the loan to a maximum of 75%
  of the value of inventory at cost and receivables to be defined.

  
	
   

  	
   

  
	
  Principal and Interest

  Payments:

  	
  Principal will be due at loan maturity. Quarterly
  interest payments (calculated on a 365 day basis) required.

  
	
   

  	
   

  
	
  Interest Rate-

  Operating Loan

  	
  The operating loan facility is eligible for the
  variable base rate of the 30-day LIBOR plus 325 bps.

  
	
   

  	
   

  
	
  Fees:

  	
  1. There will be a $225,000 underwriting and
  participation fee; $50,000 is due upon acceptance of the term sheet by the
  borrower and $175,000 is due at loan closing.

  

 

 

	
  

  	
  2. There will be an annual servicing fee of $25,000
  beginning at the conversion of the construction loan to the term facility and
  annually thereafter until loan maturity. The servicing fee is solely for the
  account of the lender, not the participants. 3. There will be an unused
  commitment fee of 30 bps paid quarterly during the term of the Operating Line
  of Credit.

  
	
   

  	
   

  
	
  Costs:

  	
  All costs associated with this construction and
  senior loan are the responsibility of the borrower. Some of these costs
  include but are not limited to: appraisal, title insurance, engineer
  oversight, document recording, legal costs, construction bonding, interest
  swap agreement and guarantee fees.

  
	
   

  	
   

  
	
  Security:

  	
  First security interest covering all real estate and
  personal property including but not limited to such things as accounts
  receivables, inventory, machinery, equipment and investments. Assignment of
  all material contracts per lender discretion. Maximum 60% combined term loans
  to facility value required.

  
	
   

  	
   

  
	
  Documentation:

  	
  The Loans will be subject to the negotiation,
  execution and delivery of a definitive Master Loan Agreement (including
  schedules, exhibits and ancillary documentation) and all such other
  documentation (“Loan Documents”). The terms, conditions and definitions in
  this Term Sheet are set forth in relative detail not for the purpose of
  establishing precise terminology for the Loan Documents, but for the purpose
  of establishing the basic elements of the offered financing package.

  
	
   

  	
   

  
	
  Representations and

  Warranties, Conditions

  Precedent, Affirmative and

  Negative Covenants:

  	
  Documentation will contain representations,
  warranties, conditions precedent, affirmative (including, without limitation,
  the Financial Covenants) and negative covenants, reporting requirements that
  are reasonable and customary for Loans of this type.

  
	
   

  	
   

  
	
  Participants:

  	
  This commitment is subject to 1st Farm Credit Services obtaining sufficient
  participants to fund the transactions as outlined. 

  

 

This space left
intentionally blank.

CONDITIONS PRECEDENT:

	
  1.

  	
  Borrower or a permitted assignee is to provide
  Lender with copies of all agreements with third parties, including but not
  limited to the following areas: construction, management, output marketing,
  input purchasing, transportation, rail access, water & wastewater
  treatment, energy sources & distribution, road improvement, insurance and
  other contracts used in the normal operations of Borrower. Lender approval of
  all agreements is required.

  
	
   

  	
   

  
	
  2.

  	
  Assignments of all applicable contracts to be
  provided to Lender prior to loan closing.

  
	
   

  	
   

  
	
  3.

  	
  Borrower will provide Lender with proof of insurance
  naming the primary lender as lender’s loss payable and/or mortgagee as
  requested. Lender approval of all insurance coverage is required.

  
	
   

  	
   

  
	
  4.

  	
  Independent construction inspections are to occur on
  a scheduled basis, with unscheduled inspections by Lender and/or Bank Group
  at their discretion.

  
	
   

  	
   

  
	
  5.

  	
  Borrower will provide 1st FCS with proof of total equity prior to
  first advance of loan disbursements. Cash equity requirements will be not
  less than $27,000,000 with combined cash equity plus a Letter of Credit
  payable to lender totaling 34,500,000. The Letter of Credit and Draw
  Conditions must be acceptable to the lender.

  
	
   

  	
   

  
	
  6.

  	
  All equity will be disbursed by the designated
  Lender escrow agent for agreed upon construction purposes prior to the first
  disbursement of loan proceeds.

  
	
   

  	
   

  
	
  7.

  	
  If applicable, Borrower will accept the designated
  agent of 1st Farm Credit Services for co-leading the
  senior debt of this project.

  
	
   

  	
   

  
	
  8.

  	
  Completion of an acceptable appraisal by a third
  party appraiser as selected by Lender supporting the maximum 60% term loan to
  value requirement.

  
	
   

  	
   

  
	
  9.

  	
  Borrower to provide Lender copies of all necessary
  permits to construct and operate proposed facilities.

  
	
   

  	
   

  
	
  10.

  	
  Approval and compliance with all conditions required
  to obtain the USDA guarantees.

  

 

LOAN
COVENANTS:

	
  1.

  	
  To achieve and maintain minimum working capital of
  $7.0 million at the end of the construction period, $8.5 million after the
  end of the first 12 months of production, $10.0 million after the end of the
  first 24 months of production and to be maintained continually at $10.0
  million thereafter. Working Capital to be defined as GAAP basis current
  assets less GAAP basis current liabilities.

  
	
   

  	
   

  
	
  2.

  	
  To achieve and maintain a minimum Owner Equity of
  50% at the end of the construction period and thereafter. Owner Equity to be
  defined as GAAP basis equity divided by GAAP basis total assets.

  
	
   

  	
   

  
	
  3.

  	
  To achieve and maintain a minimum Net Worth of not
  less than $32M at the end of the construction period and thereafter. Net
  Worth to be defined as GAAP basis total assets less GAAP basis total
  liabilities.

  
	
   

  	
   

  
	
  4.

  	
  To achieve and maintain a minimum Debt Service
  Coverage Ratio of at least 1.20 in the first year and all subsequent year’s
  of operations. Debt Service Coverage Ratio is defined as: i) net income after
  taxes, plus depreciation and amortization divided by ii) current portion of
  long term debt. Initial measuring time is the end of the first full year
  after production and will be measured annually based on fiscal year-end audit
  thereafter.

  
	
   

  	
   

  
	
  5.

  	
  No distributions/dividends will be allowed for the
  first 3 fiscal years of operation aftser the construction loan is converted
  to term loans. Thereafter, the maximum distributions/dividends allowed will
  be 30% of previous year’s net income, including state and federal incentive
  payments. Distributions/dividends may be paid out annually or as negotiated
  with lender, based on a 12-month year to be determined by Lender and
  Borrower, after Lender has received annual audited financial statements and after
  all Lender covenants are met on a post-distribution/dividend basis.

  
	
   

  	
   

  
	
  6.

  	
  Maximum annual capital expenditures, other than
  construction of the plant per approved plans, of not greater than $250,000.

  
	
   

  	
   

  
	
  7.

  	
  No additional borrowings without Lender approval.

  

 

 

	
  8.

  	
  Free Cash Flow Sweep  

  
	
   

  	
   

  
	
   

  	
  In addition to the Term Loan payment schedule, the
  Company shall also within 120 days of each fiscal year end make a sweep
  payment applied to the principal installment in inverse order of maturity of
  the term loan equal to 75% of the available (if any) Free Cash Flow* of the
  Company. The Free Cash Flow payment requirement will be limited to a maximum
  $2,500,000 annually and will be discontinued when the aggregate total
  received, exceeds $10,000,000. 

  
	
   

  	
   

  
	
   

  	
  Not withstanding the paragraph above, in any periods
  in which the Federal Biodiesel Tax Credit is scheduled to expire in less than
  12 months or is reduced to < $.80/gallon or is replaced by an alternative
  support structure not acceptable to the Lender in its sole discretion, the
  Free Cash Flow Sweep rate will increase to 100% and the annual/aggregate
  limits will not apply.

  
	
   

  	
   

  
	
   

  	
  Cash Flow Sweeps will be suspended in any year where
  owner equity is >70% but will be reinstated if the owner equity
  goes below 70% owner equity. 

  
	
   

  	
  

  

  
	
   

  	
  *The term “Free Cash Flow”
  is defined as the Company’s annual profit, plus the respective fiscal
  year depreciation and amortization expense, minus allowed capitalized
  expenditures for fixed assets, allowed dividends/distributions to the
  members/owners, and regular scheduled term loan payments to Lender and other
  long-term creditors.

  
	
   

  	
   

  
	
  9.

  	
  Lender must approve any changes in plant management
  or any decision to excuse management.

  
	
   

  	
   

  
	
  10.

  	
  Lender approval of all construction changes orders
  required.

  
	
   

  	
   

  
	
  11.

  	
  To provide monthly interim compiled financial
  statements (balance sheet and income statement), prepared in accordance with
  GAAP along with calculations of financial covenants and borrowing base,
  within thirty (30) days of month-end.

  
	
   

  	
   

  
	
  12.

  	
  To provide accountant prepared unqualified audit of
  fiscal year-end financial statements within 120 days of fiscal year-end.

  
	
   

  	
   

  
	
  13.

  	
  To provide a quarterly Compliance Certificate,
  completed by the Plant or General Manager, certifying that Borrower is in
  compliance with all Lender covenants, within thirty days of quarter-end.

  

 

 

	
  14

  	
  To provide a monthly production report in form
  agreed between the parties outlining input and output levels within thirty
  days of month-end.

  
	
   

  	
   

  
	
  15.

  	
  Lender approval of the plant’s initial Risk
  Management Plan and any significant modification is required.

  

 

This commitment expires if not accepted and
presented to 1st Farm Credit Services by Borrower before
07/06/07. Borrower hereby accepts this Term Sheet.

	
  Signed by 

  	
  /s/ Ronald Mapes

  	
   

  	
  Dated:  July 5, 2007

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Signors printed name: 

  	
  Ronald Mapes,

  	
   

  	
   

  
	
   

  	
         Chairman

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00128-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00128-of-00352.parquet"}]]