Exhibit
10.1


 


March 26, 2009


 


Nova Biofuels Seneca, LLC

614 Shipyard Road

Seneca, IL  61360


 


Attn.:      Ken
Hern


 


Re:                               Nova Biofuels Seneca, LLC — -Fifth
Limited Waiver of Defaults


 


Dear Mr. Hern:


 


Reference
is hereby made to the Credit Agreement dated as of December 26, 2007 (as
amended from time to time, the “Credit Agreement”) among Nova Biofuels
Seneca, LLC, as Borrower (the “Borrower”), the lenders party thereto
(the “Lenders”), WestLB AG, New York Branch, as Administrative Agent
(the “Administrative Agent”), Collateral Agent, Issuing Bank, Lead
Arranger and Sole Bookrunner, and Sterling Bank, as Accounts Bank.  Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed to them in the Credit
Agreement.


 


The
Borrower has failed to make the principal payment in the amount of $540,000 and
the interest payment in the amount of $758,160.94 that was due on February 2,
2009.  Pursuant to Section 9.01(a) of
the Credit Agreement, (i) failure to pay principal when due, and (ii) failure
to pay interest within three Business Days from the date when due, each
constitute an Event of Default (the “Payment Defaults”).  By letters dated February 3, 2009, February 17,
2009, March 2, 2009 and March 18, 2009 the Administrative Agent
agreed to waive the requirements of Section 9.01(a) of the Credit
Agreement as they relate to payment of principal and interest first for a
period from February 2, 2009 through and including February 17, 2009,
then for a period from February 18, 2009 through and including March 3,
2009, then for a period from March 3, 2009 through and including March 20,
2009 and then for a period from March 20, 2009 through and including March 27,
2009.  Pursuant to the letters dated March 2,
2009 and March 18, 2009, the Administrative Agent also agreed to waive the
requirements of certain applicable subsections of Section 9.01 of the
Credit Agreement as they related to those certain additional Events of Default
identified on the Exhibit A attached to each such letter.


 


Borrower
has informed Administrative Agent that certain other Events of Default have
occurred and remain outstanding under the Credit Agreement, or are anticipated
to occur in the immediate future, under Sections 9.01(c), 9.01(d), 9.01(j)(i) and
9.01(o) of the Credit Agreement


 


 

















 


due to the failure of Borrower to comply with certain
other covenants under and provision of the Credit Agreement as required by such
Sections  9.01(c), 9.01(d), 9.01(j)(i) and
9.01(o), all as more specifically identified on Exhibit A attached
hereto (such existing and anticipated Events of Default, together with the
Payment Defaults, the “Specified Defaults”).  By its signature below, Borrower hereby
represents and warrants that, as of the date hereof, no Event of Default has
occurred and remains continuing under the Credit Agreement other than the
Specified Defaults.


 


In
order to allow the Borrower to continue to evaluate its financial condition and
prospects and to avoid the occurrence of a Default or an Event of Default, the
Borrower has requested that the Lenders 
agree to an additional waiver of the requirements under Sections
9.01(a), 9.01(c), 9.01(d), 9.01(j)(i) and 9.01(o) of the Credit
Agreement (the “Waiver”) for the period from March 27, 2009 through
11:59 PM EST on and including March 30, 2009 (the “Waiver Period”)


 


The
Administrative Agent, on behalf of, and with the approval of, Lenders
constituting Required Lenders under the Credit Agreement, hereby waive, during
the Waiver Period, and only during the Waiver Period, the requirements of Sections
9.01(a), 9.01(c), 9.01(d), 9.01(j)(i) and 9.01(o) of the Credit
Agreement as they relate to all of the Specified Defaults.  Immediately upon the expiration of the Waiver
Period, automatically and without any further action by the Administrative Agent
or the Lenders or any other party, all of the terms and provisions set forth in
the Credit Agreement with respect to all obligations and covenants thereunder
that are waived hereunder shall have the same force and effect as if this
Waiver had not been entered into by the parties hereto, and the Administrative
Agent and the Lenders shall have all of the rights and remedies afforded to
them under the Financing Documents as though the Waiver had not been entered
into.


 


As
consideration for the Waiver, the Borrower covenants and agrees as
follows:  (i) the Borrower shall
promptly remit to the Administrative Agent drafts of any Tolling Agreements
that it is considering entering into with any third parties; and (ii) during
the Waiver Period, Borrower shall not make any payments or transfers of cash or
cash equivalents to, for or on behalf of, any affiliate of the Borrower,
including, without imitation, the payment of any management fee to Nova
Biosource Services, LLC and any licensing fee to Nova Biosource Technologies,
LLC.


 


All of
the terms and conditions of the Credit Agreement and all other Financing
Documents remain in full force and effect, and none of such terms and
conditions are, or shall be construed as, otherwise amended or modified, and
(except as expressly set forth above) nothing herein shall constitute a waiver
by the Lenders of any Default or Event of Default, or, shall 


 


 


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constitute a waiver by the Lenders of any right, power
or remedy available to the Lenders or the other Senior Secured Parties under
the Financing Documents, whether any such defaults, rights, powers or remedies
presently exist or arise in the future.


 


This
letter shall for all purposes be considered a Financing Document and shall be
governed by, construed and interpreted in accordance with, the laws of the
State of New York without regard to principles of conflict of laws (other than Section 5-1401
of the New York General Obligations Law).


 


Please confirm
your agreement with the foregoing by countersigning below and returning a copy
to me.


 




	
   

  	
  Sincerely yours,

  
	
   

  	
   

  	
   

  
	
   

  	
  WestLB AG, New York Branch, as

  Administrative Agent and Lender under the Credit Agreement

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Horst
  Kleinecke

  
	
   

  	
  Name:

  	
  Horst Kleinecke

  
	
   

  	
  Title:

  	
  Executive Director

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Christopher
  Nunn

  
	
   

  	
  Name:

  	
  Christopher Nunn

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
				






 


AGREED TO AND ACCEPTED 

AS OF THE DATE FIRST WRITTEN ABOVE:


 


Nova Biofuels Seneca, LLC, as Borrower under the
Credit Agreement


 




	
  By:

  	
  /s/
  Kenneth T. Hern

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Kenneth T. Hern

  	
   

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  	
   

  






 


 


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Exhibit A


 


Additional Events of
Default


 


1.                                       Borrower has not, and will not prior to
the end of the Waiver Period, complied with the requirements of Section 7.01(c)(ii) of
the Credit Agreement to pay and discharge all Contractual Obligation as the
same shall become due and payable, as Borrower has elected to delay payments on
certain of its unsecured accounts payable obligations, including amounts
payable to Lipid Logistics, LLC under the Feedstock Agreement, due to its
current liquidity issues.  These ongoing
failures to pay amounts owing to Lipid Logistics, LLC under the Feedstock
Agreement also constitute a separate Event of Default under Section 9.01(j)(i).


 


2.                                       As previously disclosed by Borrower to
Administrative Agent, Borrower has begun taking actions to convert all of its
existing feedstock and other raw material inventory into biodiesel and other
saleable Products, to cease the acquisition of new feedstock and other raw material
inventory and to otherwise reduce its operating expenses, including through the
reduction of Borrower’s workforce.  As a
result of these actions, Borrower anticipates that, at some point prior to the
end of the Waiver Period, Borrower will not be in compliance with the
requirements of Section 7.01(d)(iv) of the Credit Agreement to
continue to engage in business of the same type as was conducted on the Closing
Date, and an Event of Abandonment, as contemplated by Section 9.01(o) of
the Credit Agreement, may be deemed to have occurred.


 


3.                                       Borrower has not, and will not prior to
the end of the Waiver Period, complied with the requirements of Section 7.01(j) of
the Credit Agreement regarding adoption of an Operating Budget.


 


4.                                       Borrower has not, and will not prior to
the end of the Waiver Period, complied with the requirements of Section 7.01(l)(i) of
the Credit Agreement to take all actions necessary to prevent termination or
cancellation of the Feedstock Agreement, as Borrower has elected to delay
payments on amounts payable to Lipid Logistics, LLC under the Feedstock
Agreement due to its current liquidity issues. 
These ongoing failures to pay amounts owing to Lipid Logistics, LLC
under the Feedstock Agreement also constitute a separate Event of Default under
Section 9.01(j)(i).


 


 


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5.                                       Borrower has, since the Closing Date,
failed to comply with the technical requirements of Section 7.01(s) of
the Credit Agreement to formally prepare and provide to Administrative Agent
certified calculations of Borrower’s Debt Service Reserve Required Amount,
Historical Debt Service Coverage Ratio and Prospective Debt Service Coverage
Ratio (although the information needed to perform such calculations has been
provided by Borrower to Administrative Agent in connection with Borrower’s
financial statement reporting under the Credit Agreement).


 


6.                                       Borrower has not, since the Closing Date,
and will not prior to the end of the Waiver Period, complied with the
requirements of Section 7.01(t)(ii) of the Credit Agreement to
provide updated Financial Models upon the occurrence of the conditions and
circumstances specified in such Section 7.01(t)(ii).


 


7.                                       Borrower has not, since the Closing Date,
and will not prior to the end of the Waiver Period, complied with the
requirements of Section 7.01(u) of the Credit Agreement to maintain
certain Interest Rate Protection Agreements in the amounts required by such Section 7.01(u).


 


8.                                       Borrower has not, since the Closing Date,
and will not prior to the end of the Waiver Period, complied with the
requirements of Section 7.01(v) of the Credit Agreement to propose a
Commodity Risk Management Plan nor has Borrower maintained any Commodity
Hedging Arrangements.


 


9.                                       Borrower has not, and will not prior to
the end of the Waiver Period, complied with the requirements of Section 7.03(a),
(b) and Section 7.03(c) of the Credit Agreement regarding the
delivery of annual audited financial statements for Borrower and a related
Financial Officer’s Certificate and the delivery of quarterly financial
statements for Borrower and a related Financial Officer’s Certificate.


 


10.                                 Borrower has not, since the Closing Date,
and will not prior to the end of the Waiver Period, complied with the
requirements of Section 7.03(o) of the Credit Agreement regarding the
delivery of Operating Statements.


 


 


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