EXHIBIT 10.9
NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH
THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION, OR THE SECURITIES COMMISSION OF ANY STATE,
IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS, AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE
OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY, OR THE
COMPANY OTHERWISE SATISFIES ITSELF THAT SUCH TRANSACTION IS EXEMPT
FROM REGISTRATION. TRANSFER OF THE SECURITIES INTO WHICH THIS
NOTE IS CONVERTIBLE IS FURTHER RESTRICTED AS PROVIDED IN THE
COMPANY’S AMENDED AND RESTATED LIMITED LIABILITY COMPANY
AGREEMENT, AS IT MAY BE AMENDED FROM TIME TO TIME, A COPY OF
WHICH IS AVAILABLE AT THE OFFICES OF THE COMPANY.
THIS PROMISSORY NOTE IS SUBORDINATED TO ANY
PRESENT OR FUTURE INDEBTEDNESS OWING FROM THE MAKER TO FIFTH THIRD
BANK AND ITS SUCCESSORS AND ASSIGNS, AND MAY BE ENFORCED ONLY
IN ACCORDANCE WITH THAT CERTAIN SUBORDINATION AGREEMENT, DATED
MAY9, 2008, AMONG REG VENTURES, LLC, RENEWABLE ENERGY GROUP, INC.,
ILLINOIS FINANCE AUTHORITY, AND FIFTH THIRD BANK. THIS PROMISSORY
NOTE IS ALSO SUBORDINATED TO ANY INDEBTEDNESS OWING FROM THE MAKER
TO ANY REPLACEMENT LENDER ON ACCOUNT OF ANY SENIOR LOAN.
BLACKHAWK BIOFUELS, LLC
CONVERTIBLE SECURED SUBORDINATED
NOTE
Due
May 9, 2013 [Note: due date to be fifth (5 th
) anniversary
of
Loan Agreement closing date] (the “Due
Date”)
This Convertible Secured Subordinated Note
(“Note”) is issued by Blackhawk Biofuels, LLC, a
Delaware limited liability company (the
“Company”). This Note is designated as the
Company’s Convertible Secured Subordinated Note, due on the
date set forth above, in the principal amount of TWENTY-ONE MILLION
SEVEN HUNDRED THOUSAND AND NO/100 U.S. Dollars
(U.S. $21,700,000) (the
“Note”). This Note is issued pursuant to the
certain Subordinated Loan Agreement of even date herewith (the
“Loan Agreement”) by and between the Company and REG
Ventures, LLC, an Iowa limited liability company
(“REG”). Capitalized terms not otherwise defined
herein shall have the same meaning as ascribed to them in the Loan
Agreement. This Note is subordinate to any indebtedness of
the Company to Fifth Third Bank under that certain Loan Agreement
of even date herewith (and any renewal or replacement credit
facility consisting of a construction/term loan in the maximum
principal amount of $24,650,000 and/or a revolving line of credit
in the maximum principal amount of $5,000,000) and to any working
capital loan facility of the Company, but only to the extent that
such working capital loan facility is secured by current assets of
the Company. This Note is secured by a subordinated mortgage
of leasehold, security agreement, assignment of leases and rents
and fixture filing of even date herewith between the Company and
REG (collectively, the “Security Documents”).
Notwithstanding anything in the Subordinated Loan Documents to the
contrary, payment and performance under the Subordinated Loan
Documents is subject and subordinate to the terms, conditions and
restrictions set forth in the Senior Loan Documents with Fifth
Third Bank and/or Replacement Lender.
FOR
VALUE RECEIVED, the Company promises to pay to REG, or its
registered assigns (the “Holder”) at the address for
notices in Section 5 hereof, the principal sum of TWENTY-ONE
MILLION SEVEN HUNDRED THOUSAND AND NO/100 U.S. Dollars (U.S.
$21,700,000), on or before the Due Date (as the same may be
extended as provided hereunder), or such earlier date or dates as
the Note is required to be repaid as provided hereunder (the
“Maturity Date”) and to pay interest to the Holder on
the aggregate unconverted and outstanding principal amount of this
Note at a rate equal to the Interest Rate. Interest shall be
due quarterly on the first Business Day of each calendar year
quarter commencing July 1, 2008 payable at the option of the
Company either in cash or Class A limited liability company
units of the Company (“Units”) at a price of $2.00 per
Unit. Unless accrued and unpaid interest is paid earlier, all
accrued and unpaid interest will be paid on the Maturity
Date. Interest on this Note shall accrue daily commencing on
the date of this Note until the payment in full, or conversion of,
the outstanding principal sum, together with all accrued and unpaid
interest and other amounts, which may become due
hereunder.
The
Company shall have the right to prepay the principal amount of this
Note, in whole but not in part, at any time and from time to time
before the Maturity Date without penalty. Concurrently with
each such prepayment or upon the conversion of the Note pursuant to
Section 4 of this Note, the Company shall pay all
accrued and unpaid interest on the principal amount of the Note
that is prepaid or converted to the extent that such accrued and
unpaid interest is not otherwise converted. All prepayments
shall be applied first to any costs of collection related to this
Note, second to accrued and unpaid interest on the principal amount
of the Note, and then to principal of this Note.
This Note is subject to the following
additional provisions:
Section 1 . This Note is exchangeable for an equal
aggregate principal amount of Notes of different authorized
denominations, as requested by the Holder surrendering the same. No
service charge will be made for such registration of transfer or
exchange.
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Section 2 . This Note has been issued subject to
certain investment representations of the original Holder set forth
on Exhibit A attached hereto. Subject to the
restrictive legend at the top of the first page of this Note,
this Note (or the Notes as contemplated by Section 1) is
transferable by the Holder upon due presentment to the Company of a
written assignment and instructions for transfer by the registered
Holder. Prior to due presentment to the Company for transfer
of this Note, the Company and any agent of the Company may treat
the person in whose name this Note is duly registered as the owner
hereof for the purpose of receiving payment as herein provided and
for all other purposes, whether or not this Note is overdue, and
neither the Company nor any such agent shall be affected by notice
to the contrary.
Section 3 .
(a)
An “Event of Default”, wherever used herein, means any
one of the following events (whatever the reason and whether it
shall be voluntary or involuntary or effected by operation of law
or pursuant to any judgment, decree or order of any court, or any
order, rule or regulation of any administrative or
governmental body):
(i)
any default in the payment of the principal of or interest on this
Note as and when the same shall become due and payable (whether on
a Conversion Date or the Maturity Date or by acceleration or
otherwise), and such default shall not have been remedied within
five (5) business days after the date on which notice of such
default shall have been given to the Company;
(ii)
the failure to observe or perform any other covenant, agreement or
warranty contained in, or otherwise commit any breach of, this
Note, and such failure or breach shall not have been remedied
within thirty (30) days after the date on which notice of such
failure or breach shall have been given to the Company;
(iii)
the Company shall commence a case under any applicable bankruptcy
or insolvency laws as now or hereafter in effect or any successor
thereto, or the Company commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the
Company, or there is commenced against the Company and not
dismissed within sixty (60) days, any such bankruptcy, insolvency
or other proceeding; or the Company is adjudicated insolvent or
bankrupt; or any order of relief or other order approving any such
case or proceeding is entered; or the Company suffers any
appointment of any custodian or the like for it or any substantial
part of its property which continues undischarged or unstayed for a
period of sixty (60) days; or the Company makes a general
assignment for the benefit of creditors; or the Company shall fail
to pay, or shall state that it is unable to pay, or shall be unable
to pay, its debts generally as they become due; or the Company
shall call a meeting of its creditors with a view to arranging a
composition, adjustment or restructuring of its debts; or the
Company shall by any act or failure to act expressly indicate its
consent to, approval of or acquiescence in any of the foregoing; or
any other action is taken by the Company for the purpose of
effecting any of the foregoing;
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(iv)
there shall be any Event of Default (after any required notice or
expiration of any applicable cure period) under the Loan Agreement
or any of the Security Documents; or
(iv)
the Company shall fail for any reason to register the Units into
which this Note has been converted in the name of the Holder in the
Company’s Unit ledger or fails to execute the Holder’s
LLC Agreement Signature Page (as defined in
Section 4(b) prior to the tenth (10 th )
business day after a Conversion Date pursuant to and in accordance
with Section 4(b) , or the Company shall provide notice
to the Holder, including by way of public announcement, at any
time, of its intention not to comply with requests for conversions
of the Note in accordance with the terms hereof.
(b)
Notwithstanding the foregoing, no Event of Default may be declared
or shall be deemed to exist or be continuing if the events which
would otherwise constitute an Event of Default are primarily
attributable to the negligence or intentional misconduct of REG or
an affiliate of REG or a failure by REG or an affiliate of REG to
operate the Company’s biodiesel plant substantially in
accordance with the terms of any management and operational
services agreement or similar agreement between the Company and REG
or an affiliate of REG.
(c)
If an Event of Default occurs (including, but not limited to, if
the Holder permits the Note to remain outstanding after the
Maturity Date or a Conversion Date), interest shall continue to
accrue at the Default Rate, and the Holder shall have the right to
declare immediately due and payable all amounts owing under this
Note. Except as provided in this Section 3, the Holder
need not provide and the Company hereby waives any presentment,
demand, protest or other notice of any kind, and the Holder may
immediately enforce any and all of its rights and remedies
hereunder and all other remedies available to it under applicable
law. Such declaration may be rescinded and annulled by the Holder
at any time prior to payment hereunder. No such rescission or
annulment shall affect any subsequent Event of Default or impair
any right consequent thereon.
Section 4 .
(a)
All amounts outstanding under this Note, including both principal
and interest, shall be convertible at the option of the Holder, in
whole or in part, into Units at a price of $2.00 per Unit at any
time from and after the earlier of (i) the Maturity Date;
(ii) the prepayment of the principal balance of this Note;
(iii) the closing of the sale of shares of Common Stock of
Renewable Energy Group, Inc., a Delaware corporation
(“REG”), in an IPO; (iv) a Change of Control of
REG; or (v) any time after three (3) years from the date
of this Note.
(b)
The Holder shall effect conversions under this
Section 4 by delivering to the Company a completed
notice in the form attached hereto as Exhibit B (a
“Conversion Notice”) and a Signature Page to
Amended and Restated Limited Liability Company Agreement in the
form attached hereto as Exhibit C (the “LLC
Agreement Signature Page”). The Conversion Notice shall
set forth the amount of principal and interest under the Note to be
converted and the principal amount of this Note and all accrued and
unpaid interest thereon remaining unconverted as of the date of the
conversion. The LLC Agreement Signature Page will
document the Holder’s agreement to become a party to the
Company’s Amended and Restated Limited
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Liability
Company Agreement, as it may be amended from time to time.
The date on which a Conversion Notice is delivered to the Company
is the “Conversion Date” relating to such Conversion
Notice, and on and after such date, the Holder entitled to receive
the equity securities issuable upon conversion of all or a portion
of the Note shall be treated for all purposes as the record holder
of such securities. Unless the Holder is converting the
entire principal and interest outstanding under this Note, the
Holder is n
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