Document:

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Exhibit 10.4

                          MEMORANDUM OF UNDERSTANDING

         This Memorandum of Understanding ("Agreement") is entered into between
the Biodiesel Development Corporation ("BCD"), a Delaware corporation, and
Haycock Petroleum Distributing ("Haycock"), a Nevada corporation, for the
purpose of establishing a mutually exclusive relationship for the distribution
of biodiesel in Southern Nevada ("Territory"). BDC and Haycock shall be referred
to jointly as the "Parties."

         The term of this Agreement shall be for one year beginning upon the
date of this Agreement, and continuing thereafter with the mutual written
consent of the Parties.

         BDC agrees to sell to Haycock in the Territory, and on an exclusive
basis and to no other customers, retailers or distributors, biodiesel which
meets the ASTM PS 121 specifications for biodiesel as a motor fuel. BDC agrees
to guarantee a minimum supply volume of one rail car per month (@ 20,000
gallons) for the term of this Agreement, at an initial delivered price of $1.90
per gallon, by railcar to Haycock's location on Bonanza Boulevard in Las Vegas,
Nevada. Said price shall not be inclusive of any applicable taxes, but shall be
modified after the first three (3) months of this Agreement to reflect any
changes in prices for feedstocks used for making biodiesel.

         Haycock agrees to purchase biodiesel exclusively from BDC during the
term of this Agreement, and to provide for the storage of delivered railcars at
its location on Bonanza Boulevard in Las Vegas, Nevada. Haycock shall be
responsible for the safe handling, storage and distribution of the biodiesel
once it has been received at its location. Haycock agrees to pay the agreed upon
price for the biodiesel, as evidenced by its written purchase order to BDC,
within thirty days of receiving confirmation of shipment, or confirmation of
availability in the event of pickup by Haycock, and to be solely responsible for
the collection and payment of any and all applicable taxes on its purchase and
subsequent sale of biodiesel. Haycock agrees to use its best efforts to
distribute and market biodiesel within its Territory.

         The Parties agrees that any and all disputes regarding this Agreement
shall be resolved by binding arbitration conducted by and in accordance with the
commercial rules then in effect of the American Arbitration Association in Las
Vegas, Nevada, in accordance with the laws of the State of Nevada.

         This Agreement can only be modified with the mutual written consent of
the Parties.

         As consideration for this Agreement BDC agrees to sell, and Haycock
agrees to purchase an initial order for biodiesel at a price of $1.65 F.O.B.
Cold Springs, Kentucky, as evidenced by the attached Purchase Order.

         Agreed to this 14th day of March, 2000 at Las Vegas, Nevada.

/s/ Russell Teall                                 /s/ John Haycock
------------------------------                    ------------------------------
Russell Teall, Chairman                           John Haycock, President
on behalf of BDC                                  on behalf of Haycock

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                                   Biodiesel
                                  Development
                                  Corporation

                     Hoover Unit Proposal, November 3, 2000

This proposal is made in conjunction with the Draft Private Placement Memorandum
("PPM") dated October 14, 2000 and describes the intended use of a minimum
funding level of $175,000. Said funding to be provided by Haycock/Jensen as a
convertible loan, the terms of which provide for repayment of the loan plus
interest from profits generated by the unit to be constructed and which allows,
at the lender's discretion, for the unpaid balance of the loan to be converted
to shares of stock in BDC of Southern Nevada upon the same terms as the offering
described in the PPM. BDC of Southern Nevada will be operated as a subsidiary
division of BDC, instead of as a separate corporation for tax purposes, and will
be supported by a special class of stock and directed by a divisional board of
directors upon which Haycock/Jensen may designated a director until such time as
the loan is repaid. The terms of the convertible loan will be fully described in
a mutually agreed upon document, including a mutual noncircumvention clause.

Objective: To build and operate a biodiesel production facility at Haycock
Petroleum's Sloan location which will be capable of profitably producing 150,000
gallons of biodiesel per year (operating on a 40 hour week for 50 weeks) from
used cooking oil, commonly known as the "Hoover Unit." It is the intention of
BDC of Southern Nevada to expand its operations to their full potential as
described in the PPM, and to extend an exclusive license to distribute its
product in the designated territory to Haycock Petroleum.

Fundamentals: Fabrication of the Hoover Unit will be undertaken by Dale Shutte
of Pahrump, Nevada according to specifications provided by BDC and under license
to use BDC's proprietary technology. The unit will be designed to produce a
minimum of 150,000 gallons of biodiesel per yer utilizing used cooking oil as a
feedstock. Cost of construction and placement at the Haycock site is $135,000 to
be paid in mutually agreed upon progress payments, with final payment due upon
successful demonstration of the unit's design capabilities. Estimated
construction time is 90 days.

         With the assistance of Greg Jensen, BDC has been able to acquire sample
used cooking oil from the MGM Grand, and has successfully made biodiesel from
it. The MGM Grand has extended an offer to give BDC all of its used cooking oil,
which is currently estimated at 200 to 800 gallons per week. With similar
arrangments from other hotels, BDC should be able to acquire high quality used
cooking oil feedstocks for free in sufficient volumes to support the Hoover
Unit.

         Labor for the first Hoover Unit will be disproportionately high because
a single operator will be capable of operating multiple units.

         Site preparation will consist of providing a graded paved area
approximately 20' x 60' with waste water drain, fresh water and possible
containment if required by permitting.

Use of Proceeds:
     Construction                                      $135,000
     Consummables (methanol, NaOH)                       10,000
     Consulting by Jensen                       (stock options)
     Permit engineering                                  10,000
     Site preparation                                    20,000

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Profitability:
     Materials cost per gallon
          Feedstock costs                                  $.00
          Consumables                                      $.20
          Energy                                           $.05
                                                           ----
          Total materials cost per gallon                  $.25

     Revenues
          150,000 gallons at $1.20 per gallon          $180,000
          Materials cost @ $.25 per gallon              (37,500)
          Plant operator @ 25% of revenues              (45,000)
                                                       ---------
          Net Revenues                                 $ 97,500

     Net Revenues distribution
          50% to loan repayment and 50% to project management

         These numbers represent projections based upon numerous assumptions
which may or may not actually occur and are subject to the risks outlined in the
PPM. This is not intended as a guarantee of returns but rahter as a projection
based upon conditions which BDC feels are most likely to exist.

                                             Submitted by,

                                             /s/ Russell Teall
                                             Russell Teall
                                             Chairman<PAGE>

EXHIBIT 10.5

                        [BIODIESEL INDUSTRIES, INC. LOGO]

                       BIODIESEL PRODUCTION UNIT PROPOSAL

         This proposal is made in conjunction with the terms of the attached
Preferred Distributor Agreement and describes the intended use of a funding
level $300,000. Said funding to be provided by Western States Oil, Inc. ("WSO")
as a convertible loan, the terms of which provide for repayment of the loan plus
interest from projects generated b the unit to be constructed and which allows,
at WSO's discretion, for the unpaid balance of the loan and accrued interest to
be converted to shares of stock in Biodiesel Industries, Inc. ("BI") upon the
same terms and conditions as the offering described in the Private Placement
Memorandum (PPM). BI of San Jose, CA will be operated as a subsidiary division
of BI, and will be directed by a divisional board of directors upon which WSO
may designate a director until such time as the loan is repaid or the loan is
converted to shares of stock in BI. The convertible loan will be repaid, in
monthly payments, from 50% of the net projects from the operation of the
biodiesel production unit described in this proposal, with simple annual
interest at the rate of 8%. The net profits remaining, after principal and
interest payments, will be divided 49% to LEO and 51% to BI, until the loan is
repaid in full or converted to shares in BI.

         OBJECTIVE: To build and operate a biodiesel production facility at
WSO's location in the Bay Area which will be capable of profitably producing
1,000,000 gallons of biodiesel per year from used cooking oil, commonly know as
the Modular Production Unit ("MPU") and described in the attached specification
sheet. It is the intention of BI to expand its operations to their full
potential as described in the PPM in the attached Preferred Distributor
Agreement. The MPU will remain the property of BI, but will be subject to a
UCC-1 lien held by WSO until the loan is repaid in full or converted to shares
in BI.

         FUNDAMENTALS: Construction of the MPU will be undertaken by BI
commencing with the execution of this Proposal, and the deposit of the first
progress payment of $50,000. The unit will be designed to produce a minimum of
1,000,000 gallons of biodiesel per year utilizing used cooking oil as a
feedstock. Cost of construction and placement at WSO's Location is $300,000, to
be paid in mutually agreed upon progress payments of $50,000, with final payment
due upon successful demonstration of the unit's design capabilities. Estimated
construction time is 90-120 days.

         BI will be responsible for the day-to-day operation of the MPU and the
hiring and training of all personnel, although it may be agreed by the Parties
that the personnel may be employees of WSO.

         Site preparation will consist of providing a graded paved area
approximately 70'x60' with waste water drain, fresh water, suitable electrical
power and possible containment if required by permitting. Providing the location
and permitting for the operation and placement of the MPU shall be the
responsibility of WSO, with cooperation in providing required information by BI.

         This Proposal, to be accepted, must be signed and returned to BI no
later than August 21, 2001.

Submitted by,                       Agreed 2nd day of October, 2001 this to by,

/S/ RUSSELL TEALL                   /S/ S L CUREY
Russell Teall, President
on behalf of BI                     on behalf of WSO

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