Exhibit 10.3

After Recording Return To:

Nova Energy, Inc.

2520 South Third Street #206

Louisville, Kentucky 40208

Above Space for Recorder’s use only

MORTGAGE

THIS AGREEMENT, made April 5, 2010, between Tonaquint, Inc., a Utah corporation,
with its principal office at 303 East Wacker Drive, Suite 311, Chicago, Illinois
60601 (“Mortgagor”), and Nova Energy, Inc. a Nevada corporation, with its
principal office at 2520 South Third Street #206, Louisville, Kentucky 40208
(“Mortgagee”), witnesseth:

 

THAT WHEREAS the Mortgagor is justly indebted to the Mortgagee pursuant to the
terms of that certain Mortgage Note #1, Mortgage Note #2, Mortgage Note #3,
Mortgage Note #4, and Mortgage Note #5, each dated April 5, 2010 (each a “Note”
and collectively, the “Notes”), in the aggregate principal sum of One Million
Dollars ($1,000,000.00), each Note payable to the order of and delivered to the
Mortgagee, in and by which the Mortgagor promises to pay the said aggregate
principal sum and interest at the rate provided in the Notes, with a lump sum
payment of the principal and accrued interest of each Note due and payable as
set forth in each of the Notes. All of said principal and interest are made
payable at such place as the holders of the Notes may, from time to time, in
writing appoint, and in absence of such appointment, then at the office of the
Mortgagee at 2520 South Third Street #206, Louisville, Kentucky 40208.

NOW, THEREFORE, the Mortgagor to secure the payment of the said principal sum of
money and said interest in accordance with the terms, provisions and limitations
of the Notes, and the performance of the covenants and agreements therein
contained, by the Mortgagor to be performed, and also in consideration of the
sum of One Dollar in hand paid, the receipt whereof is hereby acknowledged, does
by these presents CONVEY AND WARRANT unto the Mortgagee, and the Mortgagee’s
successors and assigns, the following described Real Estate and all of its
estate, right, title and interest therein, situate, lying and being in the CITY
OF ARLINGTON HEIGHTS, COUNTY OF COOK, STATE OF ILLINOIS, to wit:

PARCEL ONE:

That part of the Southwest quarter of the Northeast quarter of Section 7,
Township 42 North, Range 11, East of the Third Principal Meridian, bounded by a
line described as follows:

Commencing at the Southwest corner of said Southwest quarter of the Northeast
quarter of Section 7; thence East along the South line of the said Southwest
quarter of the Northeast quarter of Section 7, a distance of 128.79 feet to the
West line of Kennicott Avenue; thence North and West along the said West line of
Kennicott Avenue, the following three courses, North and West along a curved
line, convex to the East and having a radius of 351.76 feet for a distance of
173.75 feet, arc measure, to a point of tangent; thence Northwesterly tangent
with the last described curved line, 81.96 feet to a point of curve; thence
North and West along a curved line, convex to the West and having a radius of
390.00 feet, a distance of 193.80 feet to a point of tangent, said point being a
point on the West line of the said Southwest quarter of the Northeast quarter,
425.00 feet North of the Southwest corner thereof and thence South along said
West line of the Southwest quarter of the Northeast quarter, 425.00 feet to the
place of beginning, in Cook County, Illinois.

PARCEL TWO:

The East 80.0 feet of the North 198.0 feet of the South 200.60 feet of the
Northwest quarter of Section 7, Township 42 North, Range 11, East of the Third
Principal Meridian, in Cook County, Illinois.

which, with the property hereinafter described, is referred to herein as the
“premises,”

Permanent Real Estate Index Numbers: 03-07-100-017 and 03-07-200-007

Addresses of Real Estate: 3050-3060 North Kennicott Avenue, Arlington Heights,
Illinois 60004

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TOGETHER with all improvements, tenements, easements, fixtures, and
appurtenances thereto belonging, and all rents, issues and profits thereof for
so long and during all such times as Mortgagor may be entitled thereto (which
are pledged primarily and on a parity with said real estate and not secondarily)
and all apparatus, equipment or articles now or hereafter therein or thereon
used to supply heat, gas, air conditioning, water, light, power, refrigeration
(whether single units or centrally controlled), and ventilation, including
(without restricting the foregoing), screens, window shades, storm doors and
windows, floor coverings, awnings, stoves and water heaters, if any. All of the
foregoing are declared to be a part of said real estate whether physically
attached thereto or not, and it is agreed that all similar apparatus, equipment
or articles hereafter placed in the premises by Mortgagor or its successors or
assigns shall be considered as constituting part of the real estate.

TO HAVE AND TO HOLD the premises unto the Mortgagee, and the Mortgagee’s
successors and assigns, forever, for the purposes, and upon the uses herein set
forth, free from all rights and benefits under and by virtue of the Homestead
Exemption Laws of the State of Illinois, which said rights and benefits the
Mortgagor does hereby expressly release and waive.

The name of the record owner is: Tonaquint, Inc.

This mortgage consists of six pages. The covenants, conditions and provisions
appearing on pages 4, 5 and 6 are incorporated herein by reference and are apart
hereof and shall be binding on Mortgagor, its heirs, successors and assigns.

Witness the hand of Mortgagor the day and year first above written.

TONAQUINT, INC.

By: /s/ John M. Fife            

John M. Fife, President

State of Illinois, County of ______________ ss.

I, the undersigned, a Notary Public in and for said County, in the State
aforesaid, DO HEREBY CERTIFY that John M. Fife, president of Tonaquint, Inc.,
personally known to me to be the same person whose name is subscribed to the
foregoing instrument, appeared before me this day in person, and acknowledged
that he signed, sealed and delivered the said instrument as his own free and
voluntary act, for the uses and purposes therein set forth, including the
release and waiver of the right of homestead.

Given under my hand and official seal, this ___day of __________________ 2010.

Commission expires ______________

_____________________________________________

NOTARY PUBLIC

This instrument was prepared by
__________________________________________________________

 

(Name and Address)

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THE COVENANTS, CONDITIONS AND PROVISIONS REFERRED TO ON PAGE 2

1.

Mortgagor shall (1) promptly repair, restore or rebuild any buildings or
improvements now or hereafter on the premises which may become damaged or be
destroyed; (2) keep said premises in good condition, and repair, without waste
and free from mechanic’s or other liens or claims for lien not expressly
subordinated to the lien thereof; (3) pay when due any indebtedness which may be
secured by a lien or charge on the premises superior to the lien hereof, and
upon request exhibit satisfactory evidence of the discharge of such prior lien
to the Mortgagee; (4) complete within a reasonable time any building or
buildings now or at any time in process of erection upon said premises; (5)
comply with all requirements of law or municipal ordinances with respect to the
premises and the use thereof; (6) make no material alterations in said premises
except as required by law or municipal ordinance.

2.

Mortgagor shall pay before any penalty attaches all general taxes, and shall pay
special taxes, special assessments, water charges, sewer service charges, and
other charges against the premises when due, and shall, upon written request,
furnish to the Mortgagee duplicate receipts therefor. To prevent default
hereunder, Mortgagor shall pay in full under protest, in the manner provided by
statute, any tax or assessment which Mortgagor may desire to contest.

3.

If, by the laws of the United States of America or of any state having
jurisdiction in the premises, any tax is due or becomes due in respect of the
issuance of the Notes hereby secured, the Mortgagor covenants and agrees to pay
such tax in the manner required by any such law. The Mortgagor further covenants
to hold harmless and agrees to indemnify the Mortgagee, and the Mortgagee’s
successors or assigns, against any liability incurred by reason of the
imposition of any tax on the issuance of the Notes secured hereby.

4.

The Mortgagor shall have such privilege of making prepayments on the principal
of the Notes (in addition to the required payments) as may be provided in the
Notes.

5.

Mortgagor shall keep all buildings and improvements now or hereafter situated on
said premises insured against loss or damage by fire, lightning and windstorm
under policies providing for payment by the insurance companies of moneys
sufficient either to pay the cost of replacing or repairing the same or to pay
in full the indebtedness secured hereby, all in companies satisfactory to the
Mortgagee, under insurance policies payable, in case of loss or damage, to
Mortgagee, such rights to be evidenced by the standard mortgage clause to be
attached to each policy, and shall deliver all policies, including additional
and renewal policies, to the Mortgagee, and in case of insurance about to
expire, shall deliver renewal policies not less than ten days prior to the
respective dates of expiration.

6.

In case of default therein, Mortgagee may, but need not, make any payment or
perform any act hereinbefore required of Mortgagor in any form and manner deemed
expedient, and may, but need not, make full or partial payments of principal or
interest on prior encumbrances, if any, and purchase, discharge, compromise or
settle any tax lien or other prior lien or title or claim thereof, or redeem
from any tax sale or forfeiture affecting said premises or contest any tax or
assessment. All moneys paid for any of the purposes herein authorized and all
expenses paid or incurred in connection therewith, including attorney’s fees,
and any other moneys advanced by Mortgagee to protect the mortgaged premises and
the lien hereof, shall be so much additional indebtedness secured hereby and
shall become immediately due and payable without notice and with interest
thereon at the default rate set forth in the Notes. Inaction of Mortgagee shall
never be considered as a waiver of any right accruing to the Mortgagee on
account of any default hereunder on the part of the Mortgagor.

7.

The Mortgagee making any payment hereby authorized relating to taxes or
assessments may do so according to any bill, statement or estimate procured from
the appropriate public office without inquiry into the accuracy of such bill,
statement or estimate or into the validity of any tax, assessment, sale,
forfeiture, tax lien or title or claim thereof.

8.

Mortgagor shall pay each item of indebtedness herein mentioned, both principal
and interest, when due according to the terms of the Notes. At the option of the
Mortgagee and without notice to Mortgagor, all unpaid indebtedness secured by
this mortgage shall, notwithstanding anything in the Notes or in this mortgage
to the contrary, become due and payable (a) immediately in the case of default
in making payment of any installment of principal or interest on the Notes, or
(b) when default shall occur and continue for fifteen days in the performance of
any other agreement of the Mortgagor herein contained.

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9.

When the indebtedness hereby shall become due whether by acceleration or
otherwise, Mortgagee shall have the right to foreclose the lien hereof. In any
suit to foreclose the lien hereof, there shall be allowed and included as
additional indebtedness in the decree for sale all expenditures and expenses
which may be paid or incurred by or on behalf of Mortgagee for attorneys’ fees,
appraiser’s fees, outlays for documentary and expert evidence, stenographers’
charges, publication costs and costs (which may be estimated as to items to be
expended after entry of the decree) of procuring all such abstracts of title,
title searches, and examinations, title insurance policies, Torrens
certificates, and similar data and assurances with respect to title as Mortgagee
may deem to be reasonably necessary either to prosecute such suit or to evidence
to bidders at any sale which may be had pursuant to such decree the true
condition of the title to or the value of the premises. All expenditures and
expenses of the nature in this paragraph mentioned shall become so much
additional indebtedness secured hereby and immediately due and payable, with
interest thereon at the default rate set forth in the Notes, when paid or
incurred by Mortgagee in connection with (a) any proceeding, including probate
and bankruptcy proceedings, to which the Mortgagee shall be a party, either as
plaintiff, claimant or defendant, by reason of this mortgage or any indebtedness
hereby secured; or (b) preparations for the commencement of any suit for the
foreclosure hereof after accrual of such right to foreclose whether or not
actually commenced; or (c) preparations for the defense of any actual or
threatened suit or proceeding which might affect the premises or the security
hereof.

10.

The proceeds of any foreclosure sale of the premises shall be distributed and
applied in the following order of priority: first, on account of all costs and
expenses incident to the foreclosure proceedings, including all such items as
are mentioned in the preceding paragraph hereof; second, all other items which
under the terms hereof constitute secured indebtedness additional to that
evidenced by the Notes, with interest thereon as herein provided; third, all
principal and interest remaining unpaid on the Notes; fourth, any overplus to
Mortgagor, its heirs, legal representatives or assigns, as their rights may
appear.

11.

Upon or any time after the filing of a complaint to foreclose this mortgage, the
court in which such complaint is filed may appoint receiver of said premises.
Such appointment may be made either before or after the sale, without notice,
without regard to the solvency or insolvency of Mortgagor at the time of
application for such receiver and without regard to the then value of the
premises or whether the same shall be then occupied as a homestead or not, and
the Mortgagee may be appointed as such receiver. Such receiver shall have power
to collect the rents, issues and profits of said premises during the pendency of
such foreclosure suit and, in case of a sale and a deficiency, during the full
statutory period of redemption, whether there be redemption or not, as well as
during any further times when Mortgagor, except for the intervention of such
receiver, would be entitled to collect such rents, issues and profits, and all
other powers which may be necessary or are usual in such cases for the
protection, possession, control, management and operation of the premises during
the whole of said period. The Court from time to time may authorize the receiver
to apply the net income in his hands in payment in whole or in part of (1) the
indebtedness secured hereby, or by any decree foreclosing this mortgage, or any
tax, special assessment or other lien which may be or become superior to the
lien hereof or of such decree, provided such application is made prior to
foreclosure sale; and (2) the deficiency in case of a sale and deficiency.

12.

No action for the enforcement of the lien or of any provision hereof shall be
subject to any defense which would not be good and available to the party
interposing same in an action at law upon the Notes secured hereby.

13.

The Mortgagee shall have the right to inspect the premises at all reasonable
times and access thereto shall be permitted for that purpose.

14.

If the payment of said indebtedness or any part thereof be extended or varied or
if any part of the security be released, all persons now or at any time
hereafter liable therefor, or interested in said premises, shall be held to
assent to such extension, variation or release, and their liability and the lien
and all provisions hereof shall continue in full force, the right of recourse
against all such persons being expressly reserved by the Mortgagee,
notwithstanding such extension, variation or release.

15.

Mortgagee shall release or cause to be released this mortgage and lien thereof
in accordance with the terms of that certain Escrow Agreement dated April 5,
2010, by and among the Mortgagor, Mortgagee and Escrow Agent.

16.

This mortgage and all provisions hereof, shall extend to and be binding upon
Mortgagor and all persons claiming under or through Mortgagor, and the word
“Mortgagor” when used herein shall include all such persons and all persons
liable for the payment of the indebtedness or any part thereof, whether or not
such persons shall have executed the Notes or this mortgage. The word
“Mortgagee” when used herein shall include the successors and assigns of the
Mortgagee named herein and the holder or holders, from time to time, of the
Notes secured hereby.

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