Document:

Exhibit
4.2

	
  NB

  	
  

  	
   

  

 

NOVA BIOSOURCE FUELS, INC.

INCORPORATED
UNDER THE LAWS OF THE STATE OF NEVADA

SEE
REVERSE FOR CERTAIN DEFINITIONS

	
  This Certifies That

  	
  CUSIP 65488W 10 3

  
	
   

  
	
   

  
	
  is the owner of

  

 

FULLY PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK,
$.001 PAR VALUE, OF

NOVA BIOSOURCE FUELS, INC.

(the “Corporation”) transferable only on the books
of the Corporation by the holder hereof in person or by duly authorized
attorney, upon surrender of this Certificate properly endorsed.

In Witness Whereof, the said corporation has caused
this Certificate to be signed by its duly authorized officers and its Corporate
Seal to be hereunto affixed this        day
of                ,
A.D.                 .

	
  

  	
  NOVA BIOSOURCE FUELS, INC.

  CORPORATE

  SEAL

  February

  25, 2000

  NEVADA

  	
  

  
	
  Secretary     

  	
   

  	
  President

  
				

 

	
  COUNTERSIGNED AND REGISTERED:

  
	
  AMERICAN
  STOCK TRANSFER & TRUST COMPANY

  
	
  (NEW YORK, N.Y.)

  	
  TRANSFER AGENT

  	
   

  
	
   

  	
  AND REGISTRAR

  	
   

  
	
  BY:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  AUTHORIZED SIGNATURE

  	
   

  

 

 

NOVA
BIOSOURCE FUELS, INC.

The Corporation will furnish
without charge to any shareholder who so requests the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or restrictions
of such preferences and/or rights.

The following abbreviations,
when used in the inscription on the face of this certificate, shall be
construed as though they were written out in full according to applicable laws
or regulations:

	
  TEN COM

  	
  –

  	
  as tenants in common

  	
  UNIF GIFT MIN ACT–                 Custodian                      

  
	
  TEN ENT

  	
  –

  	
  as tenants by the entireties

  	
   

  	
  (Cust)

  	
  (Minor)

  
	
  JT TEN

  	
  –

  	
  as joint tenants with right

  	
   

  	
  under Uniform Gifts to
  Minors

  
	
   

  	
   

  	
  of survivorship and not as

  	
   

  	
  Act                        

  
	
   

  	
   

  	
  tenants in common

  	
   

  	
  (State)

  
								

 

Additional
abbreviations may also be used though not in the above list.

For Value Received,                             hereby
sell, assign and transfer unto

PLEASE INSERT SOCIAL SECURITY OR OTHER

IDENTIFYING NUMBER OF ASSIGNEE

 

	
   

  
	
  (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS,
  INCLUDING ZIP CODE OF ASSIGNEE)

  
	
   

  
	
   

  
	
   

  	
  Shares

  
	
  of the common stock represented by the within
  Certificate, and do hereby irrevocably constitute and appoint

  	
   

  
	
   

  	
   

  
	
   

  	
  Attorney 

  
	
  to transfer the said stock on the books of the
  within named Company with full power of substitution in the premises.

  	
   

  
	
   

  

Dated

 

	
  

  	
   

  	
   

  
	
   

  	
  NOTICE:

  	
  THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND
  WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY
  PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.

  

 

 

Signature(s) Guaranteed:

 

	
  

  	
   

  
	
  THE SIGNATURE(S) MUST BE GUARANTEED BY AN
  ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN
  ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE
  GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.

  	
   

  

 

 

KEEP THIS
CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, MUTILATED OR DESTROYED, THE
CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO THE ISSUANCE OF
A REPLACEMENT CERTIFICATE.Exhibit 10.39

Summary of Compensation of Executive Officers

as of October 31, 2006

The Compensation
Committee of the Board of Directors determines the compensation of the Chief
Executive Officer and other executive officers of the Company, including individual
elements of salary, bonus, incentive and equity compensation.  The current annual base salary of the Company’s
executive officers is as follows: 
Kenneth T. Hern, Chairman and Chief Executive Officer—$60,000; Lewis W.
(Jody) Powers, Chief Operating Officer—$125,000; J.D. McGraw,
President—$180,000; Leon van Kraayenburg, Vice President-Finance, Secretary and
Treasurer—$125,000; Russell Sammons, Vice President-Operations—$125,000; and
Richard Talley, President of Biosource America—$125,000.  To date the Compensation Committee has not
yet awarded bonuses to any executive officer. 
Messrs. van Kraayenburg, Sammons and Talley have employment agreements
with the Company and, along with Mr. Powers, are award recipients under the
Company’s 2006 Equity Incentive Plan. 
Each executive officer is eligible to participate in such employee
benefit plans as the Company may provide to employees generally.Exhibit 10.40

BIODIESEL
SALE AND PURCHASE AGREEMENT

(SENECA,
ILLINOIS)

This Biodiesel
Sale and Purchase Agreement (“Agreement”) is dated as of September 13, 2006, by
and between NOVA BIOFUELS SENECA, LLC,
a Delaware Limited Liability Company having its offices at 2777 Allen Parkway,
Suite 800, Houston, TX 77019 (hereinafter referred to as “Seller”) and CONAGRA TRADE GROUP, INC. a Delaware
corporation having its offices at Eleven ConAgra Drive, Omaha, Nebraska
(hereinafter referred to as “Purchaser”) (each of Seller and Purchaser is a “Party”
and together they are collectively referred to as the “Parties”).

RECITALS

WHEREAS, Seller
intends to build a biodiesel production facility at Seneca, Illinois (the “Plant”);
and

WHEREAS, Seller
has agreed to sell to Purchaser, and Purchaser has agreed to purchase from
Seller, certain quantities of Biodiesel produced at the Plant on the terms and
conditions set forth hereinafter.

NOW, THEREFORE,
for the mutual promises and covenants contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which hereby is
acknowledged, the parties hereto agree as follows:

ARTICLE
I

DEFINITIONS
AND INTERPRETATIONS

1.1                              Definitions.  In this Agreement, including the recitals, the
following words and terms shall have the following meanings ascribed thereto:

a)              “Agreement”
means this Biodiesel Sale and Purchase Agreement.

b)             “Biodiesel” means products meeting the specifications
set forth on Exhibit 6.1 attached hereto.

c)              “Confidential Information” has the meaning given in
Section 18.1.

d)             “Confirmed Orders” has the meaning given in Exhibit
2.1.

e)              “Constructively Placed” or “Constructive Placement”
means, with respect to either (i) a loaded shipment of Biodiesel by either
railcars or trucks, that such railcars or trucks are located at the Delivery
Point in such condition ready for receipt by Purchaser, or (ii) receipt of
either railcars or trucks for Biodiesel loading, that such railcars or trucks
are located at the Delivery Point and within the operating hours specified, in
such condition ready for receipt by Seller.

f)                “Contract Year” means the 12 month period during the
Term starting on the Initial Supply Date and ending on the day prior to the
first anniversary of the Initial Supply Date and each successive 12 month
period during the Term starting on the anniversary of the Initial Supply Date
and ending on the day prior to the next succeeding anniversary thereof.

 

g)             “Delivery” means the Biodiesel has crossed the flange and
resulted in the complete loading of the Biodiesel onto the applicable Transport
Vessel (ocean-going vessel, barge, railcar, or truck).

h)             “Delivery Point” means for Transport Vessels the
locations at the Terminal where Transport Vessels are received for loading of
Biodiesel on ocean-going vessel, barge, railcars, or trucks, respectively.  The Delivery Point for rail car shipments is
the railroads’ “Constructively Placed” designation.  The Delivery Point for trucks is the arrival
of the truck at the Terminal within the loading hours specified in this
Agreement.  The Delivery Point for vessel
and barge shipments is the Terminal at the earlier of the connection of the
first hose to the vessel or six (6) hours after notice of readiness is given at
such port.  “Delivery Point” for
Biodiesel product means the locations at the Terminal where shipments of
Biodiesel are completed on ocean-going vessel, barge, railcars, or trucks,
respectively, as follows:  the Delivery
Point for rail car shipments is the railroads’ “Constructively Placed”
designation; the Delivery Point for trucks is the departure of the truck from
the Terminal loading facility, and the Delivery Point for barge shipments is
the Terminal loading dock at the disconnection of the hose from the barge.

i)                 “Demurrage” means all costs, damages, penalties and
charges resulting from any delay in loading and/or unloading of Biodiesel
shipments, including, without limitation, any delay related to any truck, rail
car, ocean-going vessel or barge, as applicable: (i) being incapable of timely
loading any shipment of Biodiesel due to mechanical failure or for other
reasons, or (ii) delivering any shipment of Biodiesel to an incorrect Delivery
Point.

j)                 “Fees” means either (a) $.025 per gallon of
Biodiesel sold when the difference between the Net Price of Biodiesel
(calculated at a per gallon rate) and the Plant’s feedstock cost per gallon is
less than $.50, or (b) when the difference between the Net Price of Biodiesel
(calculated at a per gallon rate) and the Plant’s feedstock cost per gallon is
equal to or greater than $.50 per gallon, then the greater of (i) 1.25% of the
Net Price, or (ii) $.025 per gallon of Biodiesel sold.

k)               “Force Majeure” has
the meaning given in Section 13.2.

l)                 “Initial Supply Date” means the first day of the
calendar month in which Seller sells and delivers to Purchaser Biodiesel, or
Nonconforming Product accepted by Purchaser which has been produced at the
Plant.

m)           “Initial Term” has the meaning given in Section 3.1.

n)             “Logistics” means activities related to or connected
with either (i) transporting, storing and otherwise handling Biodiesel after
Delivery to Purchaser hereunder, or (ii) delivery of Transport Vessels to the
Delivery Point for loading.

o)             “Logistics Costs” shall mean the costs (including any
and all duties and other customs costs, as well as railcar lease costs),
without markup, for providing Logistics.

p)             “Net Price” means the price per gallon of Biodiesel
invoiced by Purchaser to its unaffiliated third party customers or principaled
by Purchaser, less applicable Logistics Costs; subject, however, to adjustment
for quantity, price and tax incentive if Biodiesel is blended prior to sale.

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q)             “Nonconforming Product” means any product delivered
(or attempted to be delivered) by Seller hereunder which does not meet the
specifications set forth in Exhibit 6.1.

r)                “Normal Operating Hours” has the meaning given in
Section 8.3.

s)              “Plant” means the Biodiesel production plant to be
constructed by Seller for the production of 60 million gallons of biodiesel
product per annum (prior to any expansion thereof) and to be located at Seneca,
Illinois.

t)                “Price” means an amount equal to the Net Price less
Fees.

u)             “Project Control Account” means the bank account as
established by Seller’s lenders and as designated to Purchaser in writing.

v)             “Renewal Term” has the meaning given in Section 3.2.

w)           “Representatives” has the meaning given in Section
19.2.

x)               “Start-up Period” means the period beginning on the
date the Plant commences Biodiesel production and ending at the end of the
first month in which the Plant has produced Biodiesel in excess of eighty
percent (80%) of its design capacity.

y)             “Storage Costs” means direct or indirect costs
incurred by Purchaser or charged by a third party for storing Biodiesel
together with insurance and all other charges incurred to third parties in
connection with such storage, without markup by Purchaser.

z)               “Supplier Annual Minimum Delivery” means the greater
of (i) 80% of the Biodiesel production at the Plant, or (ii) forty (40) million
gallons of Biodiesel, in each Contract Year less adjustment for the Start-up
Period.  Seller shall inform Purchaser of
Plant planned production for each Contract Year prior to the start of the
applicable Contract Year.

aa)         “Term” means the Initial Term and any Renewal Terms.

bb)      “Terminal” means the site and facilities of the
applicable terminal operator serving the Plant operations.

cc)        “Transport Vessels” means barges, railcars, or tank
trucks.

1.2                              Interpretation. 
Whenever the singular or
masculine  neuter is used in this
Agreement the same shall be construed as meaning plural or feminine or body
politic or corporate and vice versa where the context or the Parties hereto so
requires.

1.3                              Industry Usage.  Any word, phrase or expression that
is not defined in this Agreement and that has a generally accepted meaning in
the custom and usage in the biodiesel industry shall have that meaning in this
Agreement.

1.4                              Currency.  All references
to “dollars” or “$” in this Agreement shall be references to amounts expressed in
United States currency.  All calculations
of monetary sums shall be made in U.S. currency.

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ARTICLE II

PLANNING

2.1                              The planning, ordering, delivery and inventory
management procedures for Biodiesel are established in Exhibit 2.1.

ARTICLE III

TERM

3.1                              Initial Term. This Agreement shall become effective as of the
date signed by Seller and Purchaser and shall extend until the later of (a) ten
(10) years from the Initial Supply Date, or (b) May 1, 2018, unless extended
either by mutual agreement of the Parties or due to a delay (up to a maximum of
one (1) year) caused by an Event of Force Majeure pursuant to Section 12.4 (the
“Initial Term”).  Either Party shall have
the right on fifteen (15) days prior written notice to the other Party to
terminate this Agreement if the Initial Supply Date has not occurred by May 1,
2008 (unless such date is extended either by mutual agreement of the Parties or
due to a delay (up to a maximum of one (1) year) caused by an Event of Force
Majeure).  Upon any such termination no
Party shall have any liability to the other Party with respect to this
Agreement or the transactions contemplated hereby except in respect to
confidentiality obligations under Article XVIII.

3.2                              Renewal Terms. The Parties may, by written mutual agreement, extend
this Agreement for successive five (5) year terms (each a “Renewal Term”),
provided, however, that such extension agreement shall have been executed by
the Parties no later than six (6) months prior to the end of the then-current
Term.

ARTICLE IV

PURCHASE, SUPPLY AND DELIVERY OBLIGATIONS

4.1                              Delivery. Subject to Confirmed Orders and the other terms and
conditions herein, commencing on the Initial Supply Date and during each
Contract Year thereafter, it is expected that Seller shall sell and make available
for delivery to Purchaser, and Purchaser shall purchase and take delivery of,
approximately 60,000,000 gallons of Biodiesel produced at the Plant.  During the Start-Up Period or the six (6)
month period commencing on the beginning of the Start-Up Period (whichever is
lesser), the Parties’ sale and purchase obligations shall be reduced prorata
based on the amount that actual production bears to the Plant capacity of
5,010,000 gallons per month (or 60,000,000 gallons per annum).

4.2                              Purchase Shortfall.  If Purchaser
fails to purchase and take delivery of any quantities of Biodiesel specified in
Confirmed Orders, and Seller, using commercially reasonable efforts to mitigate
any damage, has produced and must sell such Biodiesel to a substitute purchaser
at a price lower than the applicable Price, Purchaser shall pay Seller the
amount by which the Price exceeds the actual sales price per gallon, multiplied
by the number of gallons sold to the substitute purchaser.  If Seller exercises commercially
reasonable efforts and is still unable to sell any such Biodiesel to a
substitute purchaser, then Purchaser shall pay Seller an amount equal to the
Price multiplied by the entire unsold portion. 
Purchaser shall remit payment within 15 days of receiving an invoice
from Seller.  In either case, Purchaser
shall also pay any additional costs solely and
directly incurred by Seller to identify a substitute purchaser.  The remedy specified in this Section 4.2
shall be Seller’s sole and exclusive remedy in the

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event Purchaser fails to purchase
and take delivery of the Biodiesel specified in the Confirmed Order.

4.3                                Seller Delivery Shortfall.  If Seller
fails to make available for purchase the quantity of Biodiesel specified in
Confirmed Orders under the Delivery Schedule, and Purchaser, using commercially
reasonable efforts to mitigate the damage, is unable to obtain a substitute
supply of Biodiesel at a price equal to or less than the Price, Seller shall
pay Purchaser the amount by which the Price is less than the price paid by
Purchaser for substitute supply, multiplied by the delivery shortfall
(Confirmed Order quantity less the amount actually delivered by Seller); plus
any additional costs solely and directly incurred  by Purchaser to identify a substitute
purchaser.  The remedy specified in this
Section 4.3 shall be Purchaser’s sole and exclusive remedy in the event that
Seller fails to make available for purchase the quantity of Biodiesel specified
in the Confirmed Order.

4.4                                Seller’s Non-Delivery.  If, in any
quarter within any Contract Year following the Start-up Period, Seller fails to
sell to Purchaser or otherwise make available for purchase hereunder one-fourth
(1/4) of the Supplier Annual Minimum Delivery, and if the Supplier Annual
Minimum Delivery for such Contract Year has not been exceeded, Seller shall be
obligated to pay Fees on such shortfall to Purchaser calculated on the average
Net Price for the preceding three (3) months. 
Following the Start-Up Period, unless this Agreement is terminated by
Seller pursuant to Sections 12.2 or 12.3, Seller shall in all other termination
events pay the Fees that, based on the Supplier Annual Minimum Delivery and
such average Net Price, Purchaser would have otherwise received had the
Agreement continued for the lesser of (x) one (1) year or (y) the balance of
the Initial Term.

4.5                              Quarterly Payment Reconciliation. No later than the third (3rd) business day following the end of every third month during each Contract
Year, each Party shall submit to the other an invoice and appropriate
documentation for all amounts due pursuant to Sections 4.2, 4.3 and 4.4 for the
preceding three-month period.  Within
five (5) business days thereafter, Seller and Purchaser shall reconcile amounts
due each other as provided in this Section. 
Any amounts due pursuant to Sections 4.2, 4.3 and 4.4 shall be paid
within five (5) business days
after such reconciliation.

4.6                              Purchaser’s Responsibilities. In addition to, and without limiting Purchaser’s
other obligations hereunder, Purchaser shall:

4.6.1                     Establish, monitor and communicate logistics to
ensure the shipment of Biodiesel purchased hereunder in accordance with the
applicable Delivery Schedule and Confirmed Orders.

4.6.2                     Be responsible for the management of railcars
(including Purchaser’s leased railcars), vessel and barge shipments, and truck
transportation related to Confirmed Orders, in accordance with Article VIII.

4.6.3                     Provide Seller with estimated annual Biodiesel
requirements and delivery schedules to assist Seller in preparing the Delivery
Schedule.

4.7                              Seller’s Responsibilities.  In addition
to, and without limiting Seller’s other obligations hereunder, Seller shall:

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4.7.1                     Inform Purchaser of all scheduled plant shutdowns at
least forty five (45) days prior to the beginning of each fiscal year of
Seller, and within forty eight (48) hours after Seller becomes aware of the
occurrence of any event that may result in an unscheduled Plant shutdown.

4.7.2                     Provide a designated individual for daily operational
and logistic issues, and provide a designated individual for pricing and other
contractual issues, associated with Confirmed Orders.

4.7.3                     Handle and supervise the loading and dispatch of
Biodiesel, prepare delivery documentation and generally be responsible for all
logistics ancillary to such matters, in accordance with Article VIII.

ARTICLE V

QUANTITY

5.1                              Delivery.  Following
the Initial Supply Date, delivery and receipt of Biodiesel purchased hereunder
shall take place at the applicable Delivery Point for Biodiesel product in
accordance with the applicable Confirmed Order.

5.2                              Quantities.  The
quantity of Biodiesel delivered to Purchaser shall be established by outbound
weight certificates.  The certificates
shall be obtained from either scales, certified metering devices, or surveyor-gauged
shore weights which are certified as of the time of weighing and which comply
with all applicable laws, rules and regulations.  The outbound weight certificates shall be
determinative in the absence of manifest error of the quantity of Biodiesel for
which Purchaser is obligated to pay pursuant to Article VII.

ARTICLE VI

QUALITY

6.1                                Specifications.  Seller
warrants that all Biodiesel delivered by Seller to Purchaser hereunder shall
meet the specifications set forth in Exhibit 6.1 at the time of Delivery
of such Biodiesel by Seller to Purchaser. 
Seller further represents and warrants that title to all Biodiesel
delivered and sold hereunder will be good and marketable, free and clear of all
liens, security interests, other encumbrances, or adverse claims of any
kind.  Except as set forth in the
preceding sentences, Seller makes no warranty whether expressed,
implied, statutory or otherwise, concerning the Biodiesel sold hereunder, and
Seller expressly disclaims any implied warranty of merchantability or fitness
or suitability for a particular purpose.

6.2                              Biodiesel Certification; Plant
Certification.  A Certificate of Analysis will be issued by
Seller to Purchaser for each shipment, confirming that the shipment of
Biodiesel conforms to the specifications in Exhibit 6.1.  Testing procedures will be certified
periodically by an independent laboratory. 
Seller will use its best efforts to obtain, and to thereafter renew and
maintain, BQ9000 certification for the Plant within one (1) year after the
Initial Supply Date.

6.3                                Samples.  Seller agrees
to maintain original sealed numbered samples of all Biodiesel prior to delivery
to Transport Vessels.  Seller will label
these samples to indicate date of shipment and the identity of the Transport
Vessel.  Seller will retain these samples
for six

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(6) months and shall send one such sample of each
requested shipment to Purchaser or its designated representative or agent
promptly upon Purchaser’s request.

6.4                              Nonconforming Product. If Biodiesel delivered from the Plant is found to be
out of specification by Purchaser or by an independent laboratory using
approved ASTM analysis and sampling methods, after Delivery, such condition
will be immediately communicated to Seller. 
Purchaser will provide a copy of the certified laboratory report(s)
evidencing the Nonconforming Product. 
Seller will then direct Purchaser to either (i) sell the Nonconforming
Product at a discounted price, or (ii) return the Nonconforming Product to
Seller.  If such Nonconforming Product is
not discountable, Seller may replace the Nonconforming Product with an
acceptable type and/or quality of Biodiesel within fifteen (15) days of receipt
of written notice that the delivered Biodiesel is nonconforming and such
nonconformance has been confirmed.  In
the event Seller cannot replace the Nonconforming Product within the fifteen
(15) day period, Purchaser shall have the option to return the Nonconforming
Product, withhold payment therefor and purchase replacement Biodiesel.  Seller will be responsible for all costs of
replacing or disposing of any such Nonconforming Product, including any costs
reasonably incurred by Purchaser as a result of the Nonconforming Product
and/or any unreasonable delay by Seller in obtaining conforming Biodiesel.  Such costs may include, without limitation,
reasonably incurred Storage Costs or costs reasonably incurred by Purchaser to
return such Nonconforming Product to Seller. 
If such Nonconforming Product is sold by Purchaser at a discount, the
Price payable by Purchaser will be calculated in the normal manner.

ARTICLE VII

PRICE

7.1                              Price.  For all sales
of Biodiesel to Purchaser hereunder, Purchaser agrees to pay Seller the Price
for each gallon of Biodiesel delivered to Purchaser, such quantity to be as
determined in accordance with Section 5.2. 
In determining the Price, it is agreed that feedstock costs shall be
calculated on a first-in, first-out basis. 
Purchaser shall furnish Seller with the applicable Net Price, and Seller
shall provide Purchaser with the Plant’s feedstock costs (on a per-gallon
basis) so that Purchaser can verify the Net Price.

7.2                              Taxes.  Seller shall
pay or cause to be paid all valid levies, assessments, duties, rates and taxes
(together “Taxes”) on Biodiesel delivered hereunder that arise prior to, or as
a result of, the sale and delivery of Biodiesel at the Delivery Point.  Purchaser shall pay or cause to be paid all
Taxes, including fuel or excise Taxes, on Biodiesel arising after the sale and
delivery of Biodiesel at the Delivery Point. 
Any and all state or federal tax, production, investor, or U.S. excise
credits, any and all emissions credits, other government incentives or credits
or benefits relating to the production of Biodiesel or the sale thereof to
Purchaser, shall inure solely to the benefit of Seller.

ARTICLE VIII

TRANSPORTATION AND
LOGISTICS

8.1                              Logistics Responsibilities.  Purchaser
agrees to secure and maintain all necessary agreements, licenses, documents and
contracts to transport Biodiesel purchased hereunder from the Delivery Point
following Delivery by Seller.  Purchaser
shall solely be responsible for the arrangement of Logistics which arise prior
to the Transport Vessel reaching the Delivery Point, and which arise after
Delivery.  Seller shall be responsible 

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for all logistics which arise once
the Transport Vessel has reached the Delivery Point up through Delivery.

8.2                              Logistics Costs.  Purchaser
will use the same general efforts to minimize Logistics Costs as it does for
its own operations.  Seller acknowledges
that the Logistics requirements hereunder may, due to the cargo involved and
other factors, be different from the Logistics needs for Purchaser’s other
operations.

8.3                              Seller’s Demurrage Obligations.  Seller’s
responsibility for Demurrage as it applies to rail car shipments begins to
accrue seventy-two (72) hours after the rail car has reached the Delivery Point
provided that the Constructive Placement occurs between the hours of 7:00 a.m.
and 3:00 p.m., Monday through Friday excluding holidays (“Normal Operating
Hours”), otherwise Demurrage will begin to accrue seventy-two (72) hours after
the start of Normal Operating Hours following Constructive Placement.  Seller’s responsibility for Demurrage for
tank trucks will begin to accrue (i) after the second (2nd) hour waiting to load
at the Plant provided the tank truck arrived during Normal Operating Hours or
(ii) after the twelfth (12th) hour
waiting to load at the Plant if arrival is outside the dates and times
specified in clause (i).  Seller’s
responsibility for Demurrage for barges includes any time such Transport Vessel
is loading  Biodiesel slower than the
rate set forth in the applicable freight contract.

8.4                              Purchaser’s Demurrage Obligations.  Purchaser
will, with respect to Biodiesel sold hereunder, coordinate all logistics for
arrival of Transport Vessels at Delivery Points and shipment of such Biodiesel product from Delivery Points.
Purchaser shall be responsible for Demurrage (i)
for the time period between the point of origin of Transport Vessel to the
Delivery Points, (ii) for the time period between Delivery of Biodiesel product
to the point of sales, (iii) as a result of any failure of arriving Transport
Vessels to meet Transport Vessel requirements of Exhibit 6.1, and
(iv) in the case of barge shipments, forty-eight (48) hours after arrival of
barges at the Delivery Point or as otherwise set forth in the applicable
contract.

8.5                              Notification of Problems with
Delivery.  Seller shall inform Purchaser of any problem
regarding any shipment of Biodiesel, without delay, by fax and telephone after
Seller becomes aware of any such problem. 
An example of this includes, but is not limited to the possible event
that one or more Biodiesel orders are not available from Seller in the quantity
originally set out in the Confirmed Order. 
Purchaser shall inform Seller, without delay, by fax or telephone of any
problems in delivering Transport Vessels in accordance with the Delivery
Schedule or taking any shipment of Biodiesel.

ARTICLE IX

BILLING AND
PAYMENTS

9.1                              Payment Terms.  For all
Biodiesel delivered hereunder, Purchaser shall pay to Seller the amount
calculated according to Article VII above by direct wire transfer or electronic
transfer of immediately available funds to Seller’s Project Control
Account.  Payments will be made within
fifteen (15) days from receipt of invoice. 
The parties agree that payment terms may, as mutually agreed, be revised
to reflect current market terms.

9.2                              Billing Information.  For each
shipment of Biodiesel to Purchaser, Seller shall furnish the following in
reasonable detail: (i) an invoice giving the actual quantity and date of

 8
 

 

shipment of the Biodiesel, and (ii) the documentation
described in Section in 6.2, (iii)  a
copy of the bill of lading, and (iv) the feedstock costs as described in
Section 7.1.

9.3                              Payment Verification.  Any payment
made pursuant to this Article will not preclude a Party from subsequently
verifying payments of the other Party as permitted in Article XV of this
Agreement.

ARTICLE X

POSSESSION AND
TITLE

10.1                        Title; Risk of Loss.  Title to and
risk of loss in Biodiesel purchased hereunder shall pass from Seller to
Purchaser upon Delivery.  Until such
time, Seller shall be deemed to be in control of and in possession of and shall
have title to and risk of loss in the Biodiesel.

10.2                        Responsibility for Product.  Purchaser
shall have no responsibility or liability with respect to any Biodiesel
deliverable under this Agreement until Delivery.  Without prejudice to Purchaser’s right to
reject Nonconforming Product as set forth in Article VI and without affecting
Seller’s liability for the Delivery of Nonconforming Product, Seller shall have
no responsibility or liability with respect to the Biodiesel after its Delivery
or on account of anything which may be done or happen to arise with respect to
such Biodiesel after such Delivery.

10.3                        Product Insurance.  Purchaser
shall, in respect to CIF shipments to its customers, bear the cost of insurance
with respect to the Biodiesel at and after product has crossed the flange of
the Transport Vessel at the Delivery Point.

ARTICLE XI

REPRESENTATIONS,
COVENANTS AND WARRANTIES

11.1                        Seller Representations.  Seller
represents, warrants and covenants to Purchaser, as of the date hereof and at
all times during the Term, as follows and acknowledges that Purchaser is
relying upon such representations and warranties in connection with the
purchase of Biodiesel hereunder:

a)                                      Seller is duly organized and a validly existing
corporation under the laws of the State of Delaware with full power and
authority to carry on its business, to enter into this Agreement and to fully
carry out its terms;

b)                                     The execution and delivery of this Agreement and the
completion of the transactions contemplated herein have been duly and validly
authorized by all necessary action on the part of Seller;

c)                                      There is no action, proceeding or inquiry pending or,
to Seller’s knowledge, threatened, against Seller or any of its affiliates, nor
does Seller know of or have any reason for believing there is any action,
proceeding or inquiry, in either case which may materially affect its ability
to carry out its obligations hereunder;

d)                                     Seller will have title to all Biodiesel to be
delivered hereunder, the right to sell the same to Purchaser, and the Biodiesel
delivered hereunder will be delivered free

 9
 

 

from
any liens and encumbrances other than those to a bank or other financing
source;

e)                                      Seller covenants that it shall procure and maintain
in force all licenses, consents and approvals required for its operation of the
Plant and manufacture and sale to Purchaser of the Biodiesel under this
Agreement and shall be solely responsible for and indemnify Purchaser against
any costs, liabilities or fines arising out of Seller’s failure to comply with
any applicable requirements of such licenses, consents and approvals;

f)                                        Seller covenants that it will maintain accurate and
complete production and delivery records in a prudent and businesslike manner
in accordance with sound commercial practices in respect of the Biodiesel
produced by Seller hereunder;

g)                                     Seller covenants that it will promptly notify
Purchaser of any actual or anticipated production downtime or disruption to
Biodiesel availability; and

h)                                     Seller is a limited liability company in good
standing in the jurisdiction of its organization and is authorized to conduct
business in each state where the nature of its business requires such
authorization and is a U.S. entity for purposes of state and federal income and
excise taxes.

11.2                        Purchaser Representations.  Purchaser
represents, warrants and covenants to Seller, as of the date hereof and at all
times during the term of this Agreement, as follows and acknowledges that
Seller is relying upon such representations and warranties in connection with
the sale of Biodiesel hereunder:

(a)                                  Purchaser is duly incorporated and a validly existing
corporation under the laws of the State of Delaware with full power and
authority to carry on its business, to enter into this Agreement and to fully
carry out its terms;

(b)                                 The execution and delivery of this Agreement and the
completion of the transactions contemplated herein have been duly and validly
authorized by all necessary corporate action on the part of Purchaser;

(c)                                  There is no action, proceeding or inquiry pending or,
to Purchaser’s knowledge, threatened, against Purchaser or any of its
affiliates, nor does Purchaser know of or have any reason for believing there
is any action, proceeding or inquiry, in either case which may materially
affect its ability to carry out its obligations hereunder;

(d)                                 Purchaser is a corporation in good standing in the
jurisdiction of its incorporation and is authorized to conduct business and is
in good standing in each jurisdiction where the nature of its business requires
such authorization and is a U.S. entity for purposes of state and federal
income and excise taxes; and

(e)                                  Purchaser covenants that it shall procure and
maintain in force all licenses, consents and approvals required for its
purchase and export of Biodiesel hereunder and all its other obligations under
this Agreement and shall be solely responsible for and indemnify Seller against
any costs, liabilities or fines arising out of Purchaser’s failure to comply
with any applicable requirements of such licenses, consents and approvals.

 10
 

 

ARTICLE XII

DEFAULT AND TERMINATION

12.1                        Termination by Mutual Agreement.  This
Agreement may be terminated upon mutual written agreement between the Parties.

12.2                        Termination By Either Party.  Except as
otherwise provided in this Agreement, either Party may immediately terminate
this Agreement upon written notice to the other Party if:

(a)                                  The other Party defaults on any material term,
covenant or condition hereunder and fails to cure such default within sixty
(60) days after receiving written notice thereof from the non-defaulting Party;
or

(b)                                 Such other Party becomes the subject of any
bankruptcy, insolvency or similar proceedings.

12.3                        Termination for Non-Performance.   If either
Party does not make payment as required hereunder, the non-defaulting Party may
immediately terminate this Agreement if such default is not cured within ten
(10) days written notice to the defaulting Party.

If the Seller fails to make Deliveries in accordance with
the terms of Confirmed Orders for a period of sixty (60) consecutive days, such
action shall be deemed an event of default and (notwithstanding any term to the
contrary in Section 4.3 hereof), the Purchaser shall have the right to
immediately terminate this Agreement upon written notice to the Seller.  For purposes of calculating such sixty (60)
day period, each day for which there is no Delivery scheduled (pursuant to a
Confirmed Order), shall be deemed to be a day on which the Seller has failed to
Deliver.

12.4                        Termination for Force Majeure. In the event that Force Majeure shall continue
unabated for a period of six (6) months from the date the Party claiming relief
under Article XIII gives the other Party notice of Force Majeure in accordance
with the provisions of Article XIII, either Party hereto shall have the right
to terminate this Agreement by furnishing written notice to the other no less
than thirty (30) days prior to the expiration of such six (6) month period,
with termination effective only upon the expiration date of such six (6) month
period.

12.5                        Rights and Obligations on
Termination.  Except
as otherwise provided in this Article XII, any rights of Purchaser or
Seller to receive payments accrued through termination, as well as obligations
of the Parties under Confirmed Orders for the delivery of Biodiesel to
Purchaser that exist at the time of such termination, shall remain in effect
notwithstanding any termination of this Agreement.  The above notwithstanding, Seller shall have
no obligation to supply Biodiesel to Purchaser after termination, provided that
such termination is due to a breach by Purchaser of its payment obligations
under this Agreement. Purchaser shall have no obligation to order any shipments
of Biodiesel after termination or, subject to the first sentence of this
Section 12.5, to accept or pay for shipments of Biodiesel, if Purchaser
terminates this Agreement pursuant to Section 12.2 or 12.3.  Upon termination of this Agreement, each
Party shall be relieved from its respective obligations, except (i) as set
forth in this Section 12.5, (ii) for obligations for payment of monetary sums
which arose prior to termination, and (iii) for obligations under the
confidentiality provisions set forth in Article XVIII and the rights and
obligations set forth in Article XIV and Article XVII.

 11
 

 

12.6                        Non-Waiver of Future Default.  No waiver by
either Party of any default by the other Party in the performance of any of the
provisions of this Agreement will operate or be construed as a waiver of any
other or future default or defaults, whether of a like or of a different
character.

ARTICLE XIII

FORCE MAJEURE

13.1                        Force Majeure. 
In the event either Party
hereto is rendered unable by reason of Force Majeure, as defined in Section
13.2, to carry out its obligations under this Agreement, such Party shall give
written notice and reasonably complete particulars of such Force Majeure to the
other Party stating the obligation(s) the performance of which are, or
are expected to be, delayed or prevented, as
soon as possible after the occurrence of the event.  The obligations of the Party giving such notice
shall be suspended during and to the extent affected by Force Majeure and such
event shall, so far as possible, be remedied with all reasonable dispatch.  In the event Purchaser declares Force
Majeure, Seller may contract for the sale of Biodiesel to other parties until
Purchaser can resume taking delivery. 
The Initial Term shall be extended, up to a maximum total of one (1)
year (subject to Section 12.4), for the period(s) during which a Party’s
obligations are suspended hereunder by Force Majeure.

13.2                        Definition of Force Majeure.  The term “Force
Majeure”, as used in this Agreement, shall mean any cause not reasonably within
the control of the Party claiming suspension and which, by the exercise of due
diligence, such Party is unable to prevent or overcome.  Such term shall include, but not be limited
to: (i) acts of God, (ii) strikes, lockouts or other industrial acts of the
public enemy, (iii) wars, blockades, insurrections, riots, epidemics, acts of
terrorism, (iv) transportation shortages, and (v) landslides, lightning,
earthquakes, fires, storms, floods, washouts.  The term “Force Majeure” shall
specifically include those events affecting any transporter of Biodiesel acting
on behalf of Purchaser but shall in all events exclude any economic or commercial
changes involving the production of Biodiesel. 
Events directly and proximately caused by the gross negligence or
willful misconduct of a Party or its affiliates shall in no event constitute
Force Majeure.

ARTICLE XIV

LIMITATION OF LIABILITY; INDEMNIFICATION

14.1                        Limitation of Liability.  Without
limiting any express remedies set forth in this Agreement, and except for any
acts of willful misconduct or fraud, or damages arising from third-party
product liability and product warranty claims, neither Seller nor Purchaser
will be liable to each other or any third party for any indirect,
consequential, punitive, exemplary or special damages, loss of business
expectations, lost profits, business interruptions, or any damage to third
parties arising out of this Agreement or any breach of this Agreement.  Under no circumstances (other than for
willful misconduct or fraud) will either Party be liable to the other for any
damages for breach that arise under this Agreement, and exceed the total amount
of $500,000.  In the event such excess
damages arise, the sole remedy of the damaged Party shall be to terminate this
Agreement.  The foregoing limitations
shall not apply in respect to (a) the payment by Purchaser for Biodiesel
received hereunder, (b) the obligation of Seller to reimburse Purchaser for any
payment made for nonconforming or undelivered Biodiesel, (c) Claims

 12
 

 

asserted under Section 14.2, or (d) damages arising from third-party
product liability and product warranty claims. 
In the event such excess damages arise, the sole remedy of the damaged
Party with respect to such excess damages shall be to terminate this Agreement.

14.2                        Indemnification.  Each Party
(the “Indemnitor”) shall release, defend, indemnify and hold harmless the other
party, its affiliates, its contractors, and their respective members, partners,
directors, officers, shareholders, managers, employees, agents, representatives
and insurers (collectively, the “Indemnitee Group”) from and against any and
all losses, damages, fines, liens, levies, penalties, claims, demands, causes
of action, suits, legal or administrative proceedings, orders, governmental
actions and judgments of every kind and character, and any and all costs and
expenses (including, without limitation, reasonable attorneys’ fees, reasonable
expert witness fees, and court costs) related thereto (collectively, “Claims”)
asserted by any person or entity against any member(s) of the Indemnitee Group
on account of, incident to, in connection with, arising out of, resulting from or
related in any way, directly or indirectly, to this Agreement, which claims
allege bodily injury to or death of persons (including, but not limited to,
employees, representatives and agents of the Indemnitee Group and Indemnitor
Group) or damage to or loss of property (including, but not limited to,
property of the Indemnitee Group and the Indemnitor Group), resulting from the
negligence or willful acts or omissions of, or any breach of this Agreement by,
any member of the Indemnitor Group.  For
purposes of this Section 14.2 “Indemnitor Group” shall mean Indemnitor, its
affiliates, its contractors, and their respective members, partners, directors,
officers, shareholders, managers, employees, agents, representatives and
insurers.

Seller shall defend, indemnify and hold Purchaser (and its respective
Indemnitee Group) harmless from and against any and all Claims asserted by
third parties that arise from the condition or quality of the Biodiesel sold
hereunder, except to the extent such Claims are the result of Purchaser’s
negligence.

The Party claiming
indemnification shall give prompt written notice to the Indemnitor of any
matter for which the Indemnitor may become liable under this provision.  Said notice shall contain full details of the
matter in order to provide the Indemnitor with sufficient information to assess
its potential liability and to undertake defense of the Claim. The indemnified
Party shall have the right at all times to participate in the preparation for
and conducting of any hearing, trial or other proceeding related to the
provisions of this Article, as well as the right to appear on its own behalf at
any such hearing, trial or other proceeding. 
Any such participation or appearance by the indemnified Party shall be
at its sole cost and expense.  The
indemnified Party shall cooperate in all reasonable respects with the
Indemnitor and its counsel in defending any Claims and shall not take any
action that is reasonably likely to be detrimental to such defense.  The Indemnitor shall obtain written approval
from the indemnified Party prior to any settlement that might impose
obligations or restrictions on the indemnified Party.

ARTICLE XV

RECORDS AND
VERIFICATION

15.1                        Books and Records. Purchaser will establish and maintain at all times,
true and accurate books, records and accounts in accordance with United States
generally accepted accounting principles applied consistently from year to year
consistent with good industry practices, distinguishable from all other books
and records of Purchaser, in respect of all prices paid, payments, statements
charges and computations made pursuant to this

 13
 

 

Agreement and will preserve these books, records and accounts for a period
of at least one year after the expiration of the Term.  Seller will establish and maintain at all
times true and accurate Biodiesel production records, quality certificates and
test records for at least one (1) year after the expiration of the Term, but in
no event shall a Party be obligated to retain records longer than seven (7) years
from the date of creation.

15.2                        Audit Rights. Upon five (5) business days notice and during normal
business hours each Party has the right to audit such books, records and
accounts of the other Party to the extent necessary in order to verify the
accuracy of any statement, charge, computation or demand made under or pursuant
to any provision of this Agreement.  If
any material error is discovered in any statement rendered hereunder, such
error will be adjusted within seven (7) days from the date of discovery, but no
adjustment will be made for errors discovered more than two years after
delivery and receipt of such statements. 
Any error or discrepancy detected which has led to an overpayment
or an underpayment between the Parties shall be corrected by a balancing
payment to the Party that received the underpayment or by a refund by the Party
that received the overpayment in each case to the extent of such underpayment
or overpayment as applicable.  Such
balancing payment or refund shall be made no later than five (5) days from the
date of the adjustment of the underlying error.

ARTICLE XVI

NOTICES

16.1                        Addresses.  Except as
specifically otherwise provided herein, any notice or other written matter
required or permitted to be given hereunder by one Party to the other Party
shall be deemed to be sufficiently given if delivered by hand or via
nationally-recognized overnight courier, or sent by telecopy and confirmed by
U.S. mail (certified mail, return receipt requested), and addressed as follows:

	
  If to Purchaser:

  	
  ConAgra Trade Group, Inc.

  
	
   

  	
  Eleven ConAgra Drive

  
	
   

  	
  Omaha, NE 68102-5011

  
	
   

  	
  Fax: (402) 271-7802

  
	
   

  	
  Attn: Bill Davis

  
	
   

  	
   

  
	
  With a copy to:

  	
  ConAgra Foods, Inc.

  
	
   

  	
  One ConAgra Drive

  
	
   

  	
  Omaha, NE 68102

  
	
   

  	
  Fax: (402) 595-6149

  
	
   

  	
  Attn: Capital and Contracts

  
	
   

  	
   

  
	
  If to Seller:

  	
  Nova Biofuels Seneca, LLC

  
	
   

  	
  The Riviana Building

  
	
   

  	
  2777 Allen Parkway, Suite 800

  
	
   

  	
  Houston, TX 77019

  
	
  

  	
  Fax:

  	
  (713) 782-1965

  	 

	
   

  	
  Attn:

  	
  JD McGraw

  	 

					

 

 14
 

 

16.2                        Change of Address.  Each Party
shall give notice within thirty (30) days to the other Party, in the manner
herein provided, of a change in its address for notice.

16.3                        Effective Date of Notice.  Any notice
or other written matter shall be deemed to have been given and received: if
delivered by hand, on the date of delivery; and, if sent by telecopy, on the
business day following the sending of the notice.

ARTICLE XVII

MISCELLANEOUS

17.1                        Assignment.  Neither Party
may assign this Agreement in whole or in part or any of its rights or
obligations hereunder, without the prior written consent of the other Party,
which consent may not be unreasonably withheld or delayed, except that Seller
may assign its rights (subject to its obligations) in this Agreement to any
lender providing primary debt or equity financing arrangements for the benefit
of Seller and/or its any affiliates in respect to the Plant.

17.2                        Waiver.  No delay or
omission in the exercise of any right, power, or remedy hereunder shall impair
such right, power, or remedy or be construed to be a waiver of any default or
acquiescence therein.

17.3                        Dispute Resolution. Except where a different dispute resolution
mechanism is specified herein, in the event a dispute arises in connection with
the performance or non-performance of this Agreement, either Party has the
right to notify the other Party in writing of the substance of such
dispute.  The Party receiving such notice
must respond in writing within thirty (30) days of receipt of such notice and
either (a) provide evidence that the matter has been resolved, or (b) provide
an explanation of why it believes that its performance is in accordance with
the terms of this Agreement and specify three (3) dates, all of which must be
within thirty (30) days from the date of its response, for a meeting to resolve
the dispute.  The notifying Party will
then select one (1) of the three (3) dates, and a dispute resolution meeting
will be held.  If the Parties cannot, in
good faith discussions, resolve their dispute at such meeting, either Party may
request that the dispute be submitted to senior executives representing each
Party who are authorized to resolve such dispute, respectively.  If said dispute cannot be settled within
thirty (30) days after the initial request for a senior executive level
meeting, the Parties shall submit such matter to arbitration using a sole
arbitrator under the Commercial Arbitration Rules of the American Arbitration
Association, or using another independent arbitrator and set of rules mutually
acceptable to the parties, provided such matter involves commercial aspects of
the delivery of Biodiesel (otherwise, the Parties shall have available whatever
rights or remedies exist at law or equity). The arbitrator(s) shall have no
power to award damages inconsistent with this Agreement.  All aspects of the arbitration shall be
treated as confidential and judgment on the arbitrator’s award may be entered
in any court having jurisdiction.  The
expenses of the arbitrator(s) shall be shared equally by the Parties, and each
Party shall bear its own legal costs, unless the arbitrators determine that
legal costs shall be otherwise assessed. 
Nothing contained in any indemnification provision hereunder shall be
construed as having any bearing on the award of attorney’s fees under this
Section.  The foregoing
dispute-resolution process shall in no event be deemed to excuse either Party
from continuing to fulfill its respective obligations under, or prevent or
impede either Party from exercising its rights or remedies set forth in, this
Agreement.

 15
 

 

17.4                        Inurement. This Agreement will inure to the benefit of and be
binding upon the respective successors and permitted assigns of the Parties.

17.5                        Entire Agreement. This Agreement and the Exhibits attached hereto and
made a part hereof constitute the entire agreement between the Parties with
respect to the subject matter contained herein and any and all previous
agreements, written or oral, express or implied, between the Parties or on
their behalf relating to the matters contained herein are hereby terminated and
canceled.

17.6                        Amendments.  There will be
no modification of the term and provisions hereof except by the mutual
agreement in writing signed by the Parties.

17.7                        Governing Law; Venue. The Agreement will be interpreted, construed and
enforced in accordance with the procedural, substantive and other laws of the
State of Illinois without giving effect to principles and provisions thereof
relating to conflict or choice of law even though one or more of the Parties is
now or may do business in or become a resident of a different state.  Subject
to Section 17.3, all disputes arising out of this Agreement shall be resolved
exclusively by state or federal courts located in Illinois, and each of the
parties waives any objection that it may have to the bringing of an action in
any such court.

17.8                        Compliance with Laws. This Agreement and the respective obligations of the
Parties hereunder are subject to present and future valid laws and valid
orders, rules and regulations of duly constituted authorities having
jurisdiction.

17.9                        Furnishing of Information. The Parties will, upon request, provide such
additional information as may be reasonably required to allow the Parties to
efficiently and effectively carry out their respective obligations hereunder
and to determine and enforce individual or collective rights under this
Agreement.

17.10                  Cumulative Remedies.  Unless
otherwise specifically provided in this Agreement, the rights, powers, and
remedies of each of the Parties provided in this Agreement are cumulative and
the exercise of any right, power or remedy under this Agreement does not affect
any other right, power or remedy that may be available to either Party under
this Agreement or otherwise at law or in equity.

17.11                  Faithful Performance and Good Faith. The Parties shall faithfully perform and discharge
their respective obligations in this Agreement and endeavor in good faith to
negotiate and settle all matters arising during the performance of this
Agreement not specifically provided for.

17.12                  No Partnership. This Agreement shall not create or be construed to
create in any respect a partnership or any agency or joint venture relationship
between the Parties.

17.13                  Costs To Be Borne by Each Party. Seller and Purchaser shall pay its own costs and
expenses incurred in the negotiation, preparation and execution of this
Agreement and of all documents referred to in it.

17.14                  Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if Seller and Purchaser had signed the
same document and all counterparts will be construed together and constituted
as one and the same instrument.

 16
 

 

17.15                  Severability. Any provision of this Agreement, which is or becomes
prohibited or unenforceable in any jurisdiction shall not invalidate or impair
the remaining provisions of this Agreement, and the remaining terms of this
Agreement shall continue in full force and effect.

17.16                  Setoff.  In addition
to, and without limitation of, any rights of either Party hereunder, if either of
Seller or Purchaser becomes insolvent, however evidenced, or any default occurs
and the defaulting Party has failed to cure the default within the period
specified in Section 12.2(a), then any and all amounts due to and owing by such
insolvent or defaulting Party under this Agreement may be applied by the other
Party toward the payment of amounts due and owing to such insolvent or
defaulting Party under this Agreement.

17.17                  Headings.  The
article and section headings used herein are for convenience of reference only
and shall not affect the construction or interpretation of this Agreement.  Unless the context of this Agreement
otherwise requires, (i) words of any gender shall be deemed to include each
other gender; (ii) words using the singular or plural number shall also include
the plural or singular number, respectively; and (iii) the terms “hereof,” “herein,”
“hereby,” “hereto,” and derivative or similar words shall refer to this entire
Agreement.  The Agreement is the product
of negotiation by and among the Parties hereto. 
The Agreement shall be interpreted and constructed neutrally as to all
Parties, without any Party deemed to be the drafter of the Agreement.

ARTICLE XVIII

RISK MANAGEMENT

18.1                        Monitoring of Biodiesel Positions.  Purchaser
will monitor Biodiesel sales made hereunder and may, from time to time, make
suggestions concerning Seller’s risk management program and the position of its
Biodiesel sales to Purchaser for future physical delivery.

18.2                        Market Conditions.  Purchaser
will review with Seller on a monthly basis market conditions relating to
Biodiesel and associated feedstocks, and forward marketing strategies in an
attempt to assist Seller in maximizing its revenue on Biodiesel sales to
Purchaser.  It is understood by Seller
that all risk management services must be tied to a valid written purchase
contract requiring physical delivery of Biodiesel by Seller to Purchaser.

18.3                        No Liability. Seller recognizes that Purchaser’s monitoring of
positions, periodic suggestions, review of market conditions and risk
management services are informational and optional, and the final decisions
concerning purchases and risk management strategies, and the implementation of
such strategies, will be made by, and is the sole responsibility of, Seller.  Purchaser is not responsible for any Seller
losses or entitled to any Seller gains resulting from risk management
information supplied by Purchaser.

 17
 

 

ARTICLE XIX

CONFIDENTIALITY

19.1                        Confidential Information.  For purposes
of this Agreement, the term “Confidential Information” shall mean the pricing
terms of this Agreement and any information which is not in the public domain
and is disclosed by one Party to the other pursuant to this Agreement and which
is in written, graphic, machine readable or other tangible form.  Confidential Information may also include
oral information disclosed by one Party to the other pursuant to this
Agreement, provided that such information is designated as Confidential
Information at the time of disclosure and is reduced to writing by the
disclosing Party within a reasonable time (not to exceed ten (10) days) after
its oral disclosure, and the writing is marked in a manner to indicate its
confidential nature and delivered to the receiving Party.  Nothing in this Agreement shall be construed
to prohibit or limit a receiving Party from disclosing information, (including
ideas, concepts, know-how, techniques, and methodologies) (a) previously known
to it, (b) independently developed by it without use of the disclosing Party’s
Confidential Information by those employees or representatives of the
disclosing Party that have not had access to such Confidential Information, as
can be substantiated by reasonable evidence, (c) acquired by it from a third
party which was not, to the receiving Party’s knowledge, under an obligation to
the disclosing Party or any third party not to disclose such information, (d)
that is or becomes publicly available through no breach  by the receiving Party of this Agreement or (e)
to the extent disclosure of such information is required by law or by the
rules, regulations or practices of the Securities and Exchange Commission or
any exchange or automated quotation system upon which shares of such Party may
be listed, quoted or traded.

If a receiving Party receives a
subpoena or other validly issued administrative or judicial process demanding
Confidential Information of a disclosing Party, the receiving Party must
promptly notify the disclosing Party and tender to it the defense of such
demand.   Unless the demand has been
timely limited, quashed or extended, the receiving Party will thereafter be
entitled to comply with that demand to the extent required by law but shall
exercise commercially reasonable efforts to obtain an order or other reliable
assurance that confidential treatment will be accorded to such Confidential
Information.  If requested by the
disclosing Party, the receiving Party shall cooperate (at the expense of the
disclosing Party) in the defense of such a demand.

19.2                        Seller Nondisclosure.  Seller
acknowledges that, by reason of this Agreement, it and the principals (members,
managers, officers and the like), employees, agents, advisors, lenders, other
financing sources, representatives and affiliates (collectively, “Representatives”)
of Seller may become privy to Confidential Information belonging to Purchaser.
Seller agrees that it will not, without the prior written consent of Purchaser,
disclose to any third parties or use for its own benefit any such Confidential
Information except in the carrying out of its obligations under this
Agreement.  Seller shall inform any of
its Representatives to whom Seller intends to disclose Confidential Information
of the confidential nature of such Confidential Information and shall require
such persons to be bound by the provisions of this Article XIX of this
Agreement.  The confidentiality
obligations hereunder shall survive any expiration or termination of this
Agreement.

19.3                        Purchaser Nondisclosure. Purchaser acknowledges that, by reason of this
Agreement, it and its Representatives may become privy to Confidential
Information belonging to Seller. 
Purchaser agrees that it will not, without the prior written consent of
Seller, disclose to any third parties or use for its own benefit any such Confidential
Information 

 18
 

 

except in the carrying out of its obligations under this Agreement.  Purchaser shall inform any of its
Representatives to whom they intend to disclose Confidential Information of the
confidential nature of such Confidential Information and shall require such
persons to be bound by the provisions of the Article XIX of this
Agreement.  The confidentiality
obligations hereunder shall survive any expiration or termination of this
Agreement.

19.4                        Injunction.  Each Party
hereto acknowledges that a violation or attempted breach of any of its
covenants and agreements in this Article XIX will cause such damage as will be
irreparable, the exact amount of which would be difficult to ascertain and for
which there will be no adequate remedy at law, and accordingly, each of the
Parties hereto agrees that in the event of a breach of this Article XIX the
non-breaching Party shall be entitled as a matter of right to an injunction
issued by any court of competent jurisdiction, restraining breaching Party or
the affiliates, principals, employees, agents or representatives of the
breaching Party from such breach or attempted violation of such covenants and
agreements.  The Parties hereto agree
that no bond or other security shall be required in connection with such injunction.  Any exercise by a Party hereto of such party’s
rights pursuant to this Article XIX shall be cumulative and in addition to any
other remedies to which such Party may be entitled.

19.5                           Announcements. 
Any public statements, press releases, and similar
announcements concerning the negotiation or consummation of the
transactions contemplated hereby, including such statements made by
Representatives of the Parties, shall be jointly planned and coordinated by the
Parties.  Neither Party shall issue any such statement absent the consent
of the other Party, which consent shall not be unreasonably withheld or
delayed.

ARTICLE XX

INSURANCE

20.                              Each Party shall, during the Term, provide the
insurance coverages as set forth in Exhibit 20.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year first above written.

	
  CONAGRA TRADE GROUP, INC.

  
	
   

  
	
   

  
	
  By: 

  	
    /s/ Martin Higgins

  	
   

  
	
   

  
	
   

  
	
  NOVA BIOFUELS SENECA, LLC

  
	
   

  
	
   

  
	
  By: 

  	
    /s/ Kenneth T. Hern

  	
   

  

 

 19
 

 

EXHIBIT 2.1

PLANNING, ORDERING, DELIVERY, AND INVENTORY MANAGEMENT OF
BIODIESEL PROCEDURES

The
following procedures are set forth to clarify the planning, ordering and
delivery of Biodiesel from the Plant.

1.                                       Delivery Schedule.  The parties shall jointly develop a delivery
schedule (the “Delivery Schedule”) that will serve as the formal planning tool
for Biodiesel to be purchased for each quarter and each month of the quarter
under this Agreement.  The initial draft
of each Delivery Schedule shall be submitted by Seller to CTG no later than ten
(10) business days prior to the end of each calendar quarter.  The Delivery Schedule shall pertain to the
second subsequent quarter of Biodiesel delivery requirements (e.g., the Delivery
Schedule submitted prior to the end of the quarter ending December 31 will
cover the quarter beginning April 1 and ending June 30).  The use of the Delivery Schedules shall
commence for the first calendar quarter in which the start-up of the Plant
and/or the first shipments of Biodiesel are forecasted.  The initial draft of the Delivery Schedule
shall be a three (3) month daily forecast and shall include:

·                                          Submission Date.

·                                          Production plan with estimated production of
Biodiesel.

·                                          Estimated start-of-quarter inventory of Biodiesel
in gallons.

·                                          Comments regarding operations, scheduled shutdowns,
and other comments relating to market, logistics, and inventory management.

·                                          Should any changes from the Delivery Schedule be
anticipated for the subsequent three (3) quarters, Seller shall communicate
this in writing together with the above information.  Such changes could include: production rates
per month, quantities of Biodiesel to be produced and a list of special
operational and delivery considerations.

The
specific format of the Delivery Schedule will be created with mutual consent of
both Parties to accommodate the required information outlined above.

CTG shall review the
initial draft of the Delivery Schedule and advise Seller of market conditions,
inventory management, and transportation and logistics issues relating to the
Delivery Schedule within ten (10) business days after receipt.  CTG shall amend the Delivery Schedule to
include planned shipments of Biodiesel (in gallons) purchased hereunder and the
expected mode of transport for these shipments.

2.                                       Confirmed Orders.  It is understood that, in all events, pricing
of Biodiesel shall be bid by CTG and either accepted or rejected by
Seller.  Price bids for Biodiesel
shipments shall be submitted to Seller by CTG on all Biodiesel to be produced
at the Plant pursuant to the Delivery Schedule, and Seller shall reject or
accept the price bid by the close of that same business day or earlier if
notified by CTG of price changes due to specific market conditions.   Price bids that are not expressly rejected
by Seller at least fifteen (15) days prior to the first day of the month in
which the applicable Biodiesel shipment is to be made shall be deemed

 20
 

 

accepted by Buyer.  Such acceptances shall constitute “Confirmed
Orders” and the price in $/gallon thereunder shall be the Price for the
applicable Biodiesel.  The monthly
schedules of the Delivery Schedule shall reflect and be further governed by
such Confirmed Orders of Biodiesel.  The
Parties understand and agree that telephone conversations are recorded by CTG
and may be recorded by Seller in the ordinary course of their respective
businesses for purposes of, among other things, further documenting the
quotation and acceptance of Biodiesel prices in order to establish and verify
Confirmed Orders. CTG shall be responsible for marketing, selling, and shipment
for each gallon of Biodiesel per the Confirmed Orders.

3.                                       Delivery Schedule Deviations.  The
Parties recognize the need to maintain a degree of flexibility to accommodate
the Start-up Period of the Plant,
unexpected changes in the Plant operating capacity, and changing Biodiesel
market conditions.  Upon notification by
either Party of any substantial deviations to the Delivery Schedule, the
Parties agree to work in good faith to jointly resolve any such discovered
deviations and correct such deviations within fifteen (15) days following first
notification.

4.                                       Liability Disclaimer.  Each of the Parties understands and agrees
that except for quantity, grade, and price quotations confirmed by the Parties
in Confirmed Orders pursuant to this Exhibit 2.1, the planned production
rates, estimated costs, pricing and market information, and all other
information furnished by the Parties in the preparation of the Delivery
Schedules is for planning and informational purposes only. Neither Party shall
be responsible to the other for any actions taken in reliance on such
estimates, plans and other information.

 21
 

 

EXHIBIT 6.1

BIODIESEL
SPECIFICATIONS

Seller, as producer of Biodiesel product, is
responsible for the compliance with the following standard of quality,
specifications, and methods of analysis and sampling.  Seller and Purchaser agree to the
specifications and procedures set forth herein.

1.                                       Product Stewardship.  Purchaser and Seller will mutually establish
a Product stewardship program to assist end-use customers in the safe handling
and responsible use of Biodiesel products purchased and sold hereunder.  Seller will provide to Purchaser product
information and material safety data sheets for all Biodiesel products.

2.                                       Industry Standards.  Purchaser shall be responsible for the
administration of and compliance with all applicable industry transportation
and safety standards for delivery of Biodiesel to customers.

3.                                       Standard Specifications.  Seller shall comply with the standards of
quality for Biodiesel as defined in ASTM D6751-06 by the National Biodiesel
Board.  The specifications are provided
in Table 6.1-1.  In the event changes in ASTM
D-6751 are adopted by the National Biodiesel Board, Seller shall make every
reasonable effort to upgrade the Plant or modify operations, if required, to
meet such changes in standards.  However,
failure to upgrade or modify operations will not relieve Seller of its
obligations to pay the Fees otherwise owed pursuant to Section 4.4 of the
Agreement.

4.                                       Sampling and Analysis Methods.  Seller shall use applicable approved ASTM
analysis methods, defined in Table 6.1-1, or certified equivalent test methods
and comply with the applicable sampling procedures, as defined in ASTM D6751.

Seller shall take
samples of Biodiesel product in storage tanks prior to loading vehicles and
analyze contents per specifications. 
Seller shall have responsibility for loading Biodiesel product.  Samples will be taken of each shipment and
will be retained for six (6) months.  The
quality of the Biodiesel product at the time of Delivery shall govern in the
compliance to the specifications. 
Samples of product Biodiesel may be requested by Purchaser for
analysis.  Seller shall make available
product samples to Purchaser at the Plant.

5.                                       Quality Control Procedures.  Upon Seller’s receipt of Transport Vessels
and prior to product loading, each Transport Vessel will be visually inspected
for equipment integrity, safety, and potential contamination.  Seller has the right to reject any Transport
Vessel for loading, which does not materially comply with minimum safety
standards and/or is contaminated with products or materials.  Seller shall notify Purchaser immediately in
the event any Transport Vessel does not meet the minimum requirements.  Seller shall invoice Purchaser for all
handling costs for any rejected Transport Vessel, including all costs incurred
by Seller for placement, set-up and return of vehicle to Purchaser.  If Purchaser requests Transport Vessel cleaning
at the Terminal, Purchaser shall be responsible for all associated cleaning
costs.  Seller shall provide certified
tare weights with each transportation device. 
Seller shall provide certified weights for each shipment and the
certificate of analysis for each shipment by invoice to Purchaser.

Purchaser and Seller shall work together to qualify
individual customers of Biodiesel prior to sales and develop a list of
qualified customers.  Seller shall
provide to Purchaser samples, analysis data, and information for use in the
development of sales.  Seller shall have

 22
 

 

the
right to disqualify customers based on the customers’ safe and environmentally
responsible end-use of Biodiesel and other qualification criteria mutually
established by both Parties.

Seller and
Purchaser shall jointly cooperate to improve specifications’ requirements from
customers.  Additional specifications can
be added to Table 6.1-1 or the contents of Table 6.1-1 can be amended upon
mutual agreement of Purchaser and Seller.

 23
 

 

TABLE 6.1-1

BIODIESEL SPECIFICATIONS

	
  Property

  	
   

  	
  Units

  	
   

  	
  Specifications

  	
   

  	
  Test Methods

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Flash Point
  (closed cup)

  	
   

  	
  °C

  	
   

  	
  130°
  min - U.S.

  	
   

  	
  ASTM D 93

  
	
  Water and
  Sediment

  	
   

  	
  % volume

  	
   

  	
  0.05% max

  	
   

  	
  ASTM D 2709

  
	
  Kinematic
  Viscosity at 40° C

  	
   

  	
  mm2/sec

  	
   

  	
  1.9 to 6.0 -
  U.S.

  	
   

  	
  ASTM D 445

  
	
  Sulfated Ash

  	
   

  	
  % wt

  	
   

  	
  0.02% max

  	
   

  	
  ASTM D 874

  
	
  Sulfur

  	
   

  	
  ppm

  	
   

  	
  S 15 Grade @ 15
  max 

  S 500 Grade @ 500 max

  	
   

  	
  ASTM D 5453

  
	
  Copper Strip
  Corrosion

  	
   

  	
  3 hrs at 50°
  C

  	
   

  	
  No. 3 max - U.S.

  	
   

  	
  ASTM D 130

  
	
  Cetane Number

  	
   

  	
   

  	
   

  	
  47 min - U.S.

  	
   

  	
  ASTM D 613

  
	
  Cloud Point

  	
   

  	
  °C

  	
   

  	
  Report to
  Customer

  	
   

  	
  ASTM D 2500

  
	
  Carbon Residue
  100% sample

  	
   

  	
  % mass

  	
   

  	
  0.050% max

  	
   

  	
  ASTM D 4530

  
	
  Acid Number

  	
   

  	
  mg KOH/gm

  	
   

  	
  0.50 max

  	
   

  	
  ASTM D 664

  
	
  Free Glycerine

  	
   

  	
  % mass

  	
   

  	
  0.02% max

  	
   

  	
  ASTM D 6584

  
	
  Total Glycerine

  	
   

  	
  % mass

  	
   

  	
  0.24% max

  	
   

  	
  ASTM D 6584

  
	
  Phosphorous
  Content

  	
   

  	
  % mass

  	
   

  	
  0.001% max

  	
   

  	
  ASTM D 4951

  
	
  Sodium/Potassium

  	
   

  	
  ppm

  	
   

  	
  5 max combined

  	
   

  	
  UOP 391

  
	
  Distillation
  Temperature 

  (Atm P, 90% Recovery)

  	
   

  	
  °C

  	
   

  	
  360°
  max

  	
   

  	
  ASTM D 1160

  

 

 24
 

 

EXHIBIT 20

INSURANCE COVERAGES

Each Party shall be required to purchase, maintain and provide proof (via
Certificate of Insurance) of the following insurance:

Commercial General Liability Insurance - $2,000,000 Combined Single Limit

Policy shall include coverage for liability resulting from
Premises/Operations, Products and Completed Operations, Blanket and Contractual
Liability.  Policy shall also included
coverage for Broad Form Property Damage, including explosion, collapse and
underground hazards. Such insurance shall be on an occurrence basis.

Environmental Pollution Liability Insurance - $2,000,000 Combined Single Limit

Policy shall include coverage for bodily injury or property damage arising
from the transportation, handling, storage, disposal, dumping, processing or
treatment of waste.  Such insurance shall
be on an occurrence basis.

In addition, Purchaser shall be required to carry the following insurance:

Commercial Automobile Liability Insurance - $1,000,000 Combined Single
Limit

Policy shall include coverage for liability resulting from the operation of
all owned, non-owned and hired automobiles. 
Such insurance shall be on an occurrence basis.

Prior to the initial sale of Biodiesel and at all times during the Term of
the Agreement, Seller shall carry and maintain product liability insurance with
minimum limits of $2,000,000 (combined single limit) for Biodiesel per accident
or occurrence.  The provisions for
product liability insurance may be satisfied by issuance of separate policies,
or included under the commercial general liability policies, or a combination
of general commercial liability policies with umbrella/excess liability
policies.

Each Party shall also carry excess or umbrella liability insurance with
limits of at least $4,000,000 per occurrence for bodily injury or property
damage in excess of the limits afforded for general liability, automobile
liability and environmental liability provided above.

All required policies of insurance
shall be endorsed to provide that the insurance company shall notify the
certificate holder at least thirty (30) days prior to the effective date of any
cancellation or material change of such policies.

 25

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