Document:

Exhibit 10.3

 

EMPLOYMENT
AGREEMENT

Leon van Kraayenburg

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made as of May 1, 2006, by and among NOVA ENERGY HOLDINGS, INC., a Nevada corporation (the “Company”), and Leon van Kraayenburg,
an individual residing in Houston, Texas (“Partner”).

W
I  T  N  E  S  S  E  T  H:

WHEREAS, the Company, along
with its wholly owned subsidiary, Biosource America, Inc., is in the business
of the design, engineering, construction and operation of biodiesel refineries,
as well as the production and marketing of biodiesel fuel and glycerin,
including without limitation fuels containing fatty acid esters, with its
headquarters in Houston, Texas, offices in Butte, Montana, and actual and
anticipated operations in the United States, Canada and the member countries of
the European Union, and elsewhere;

WHEREAS, Partner currently is
an at will employee of the Company;

WHEREAS, the Company and
Partner desire to enter into an agreement regarding Partner’s employment with
the Company pursuant to the terms and conditions set forth herein;

NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, and intending to be legally bound hereby, the
parties covenant and agree as follows:

1.             Employment.  The Company hereby employs Partner and
Partner hereby accepts employment with the Company on the terms and conditions
set forth in this Agreement.

2.             Term of Employment.  The term of Partner’s employment hereunder
(the “Term”) shall commence May 1, 2006, (the “Commencement Date”) and shall continue (subject to
termination by either the Company or Partner as hereinafter provided in Section
5) for an initial term (the “Initial Term”)
expiring May 1, 2009 (the “Expiration Date”).
Notwithstanding anything to the contrary, at all times Partner’s employment
shall be on an “at will” basis and shall be terminable at any time and for any
reason at the will of the Company, subject to payment of the severance benefits
set forth in Section 5 of this Agreement. 
Upon termination of Partner’s employment, the Company shall have no
further obligation to Partner other than payment of earned and unpaid
compensation (as hereafter defined) under Section 5, and Partner shall have no
further obligation to the Company except as set forth in Sections 6 and 7.

 

3.             Compensation and Other Benefits.

a.             Salary.  As compensation for all services rendered by
Partner in performance of Partner’s duties or obligations under this Agreement,
the Company shall pay Partner an initial base salary in equal amounts on a bi-weekly basis, which
annualizes to the amount of $100,000 (assuming full work during the annual
period), which, upon successful closing of the Company’s private placement that
is anticipated to close in 2006, shall be increased to an amount as determined
by the Company’s compensation committee. 
Partner shall be paid in the manner customary for the Company, which is
currently every two weeks, all appropriate deductions for taxes and the
like will be made from the wages stated
herein. 
Partner acknowledges that he or she is being hired as a professional and
is exempt from receipt of overtime pay under the Fair Labor Standards Act.

b.             Expenses.  Partner shall be entitled to be reimbursed by
the Company for all reasonable and necessary expenses incurred by Partner in
carrying out Partner’s duties under this Agreement in accordance with the
Company’s standard policies and procedures regarding such reimbursements.

c.             Welfare Benefit Plans.  Partner shall be entitled during the Term,
upon satisfaction of all eligibility requirements, if any, to participate in
all health, dental, disability, life insurance and other welfare benefit
programs now or hereafter established by the Company which cover substantially
all other of the Company’s employees and shall receive such other benefits as
may be approved from time to time by the Company, each to the extent permitted
by law.  To the extent (i) Company has
not, as of the Commencement Date, established health or dental insurance
programs, and (ii) Partner elects continuation coverage for health and dental
insurance under COBRA for Partner and Partner’s immediate family members who
are qualified beneficiaries, Company shall reimburse Partner on a monthly basis
for the cost of such continuation coverage. 
Such reimbursement obligation shall terminate upon termination of
Partner’s employment with the Company, but subject to Partner’s continued
employment with the Company, shall continue until such time as the Company has
established health and dental insurance programs, but in no event to exceed 18
months from the Commencement Date.

d.             Vacation and Paid Time Off.  Partner shall be entitled to take 120 hours
of paid vacation/personal time (prorated based on the number of days worked in
the first calendar year of employment) in accordance with the vacation policy
of the Company.  This time can be used in advance of accrual,
subject to repayment by Employee if, when Employee’s employment terminates,
time has been used in excess of the accrual of that time. 
Vacation/personal time shall accrue at the rate of 10 hours per month of
employment, and there will be no payment for unused accrual of paid time.  This vacation/personal time will not be
subject to carryover from year to year or payment for unused accrual during
Partner’s employment, and such time will begin to accrue anew on January 1 of
each year of employment.  Partner also
shall be entitled to paid time off with respect to such holidays as are
designated by the Company as being generally available to employees in
accordance with the holiday policy of the Company in effect from time to
time.  Partner shall be entitled

 

to payment for accrued and unused
vacation/personal time in the given calendar year upon termination of this
Agreement after all extensions.

e.             Profit Share.  Partner shall be entitled to participate in a
profit sharing plan as will be hereafter established by the Company or Nova
(the “Profit
Share Plan”).  The Profit
Share Plan will be applied on a per project basis and be based on elements of
profitability, schedule and performance criteria that, when met, will result in
a distribution of money amongst the various project team members as determined
by the administrator of the Profit Share Plan.

f.              Equity Incentive Plan.  During the Term of this Agreement, Partner
shall be entitled to participate in the Nova Energy Holding, Inc. 2006 Equity
Incentive Plan (the “Equity Incentive Plan”).  To the extent not heretofore granted, no
later than the Commencement Date of this Agreement, the Company shall grant to
Partner under the Equity Incentive Plan an Award consisting of Non-Qualified
Stock Options to acquire not less than 500,000 shares of common stock of Nova
at an exercise price equal to the Fair Market Value of such shares of common
stock on the date such Stock Options are granted.  Such Stock Options shall have a term of ten
years from the date of grant of which 50% shall vest immediately and the
balance shall vest monthly in approximately equal amounts over a period of 24
months. Furthermore, the Stock Options shall vest regardless of continued
service and vesting shall accelerate upon termination of employment. No Stock
Options shall vest until such time as shares of common stock issuable upon
exercise thereof have been registered on Form S-8 whereupon all Stock Options
that would have vested prior to such date but for this proviso shall
immediately vest.  Partner acknowledges that,
if granted prior to June 1, 2006 and the filing of a registration statement on
Form S-8, such Award will have been issued without registration under the
Securities Act of 1933, as amended, pursuant to an exemption therefrom and
that, accordingly, the agreement evidencing such Award will bear a restrictive
legend pertaining to Rule 144 and that such Award and any shares of common
stock obtained upon exercise thereof will not be transferable unless registered
except in accordance the applicable rules and regulations of the Securities and
Exchange Commission.  Partner represents
that he or she is acquiring the Award for his or her own account without
a view to distribution within the meaning of the Securities Act; (ii) has
obtained or received from Nova its filings with the Securities and Exchange
Commission and all other information that he or she has deemed necessary to
make an informed investment decision with respect to an investment in Nova in
general and the Award and shares of common stock obtained upon exercise thereof
in particular; (iii) is financially able to bear the economic risks of an
investment in Nova; and (iv) has such knowledge and experience in
financial and business matters in general and with respect to investments of a
nature similar to the securities of Nova so as to be capable, by reason of such
knowledge and experience, of evaluating the merits and risks of, and making an
informed business decision with regard to, the acquisition of shares of common
stock of Nova upon exercise of the Award. 
The Company shall use commercially reasonable efforts to cause a
registration statement on Form S-8 to be filed with the Securities and Exchange
Commission and to be made effective as soon as practicable on or after the date
Nova first become eligible to use such form, which registration statement shall
provide for the registration of shares of common stock of Nova issuable upon
exercise of such Award or for the resale of such shares of common

 

stock.  Capitalized terms used but not defined in this
Section 3.f shall have the meaning given to such terms in the Equity Incentive
Plan.

4.             Duties.

a.             Partner
is employed as Principal Financial Officer, Vice President of Finance and
Treasurer .  Partner shall also serve in
such other offices or positions as shall be assigned to Partner from time to
time by the Company and perform such other duties, commensurate with Partner’s
position with the Company, as may be assigned by the Company from time to
time.  Partner shall initially be
involved in the Company’s financial reporting activities, compliance and
analysis, and treasury functions as related to the services and technologies of
the Company relating to the production of biofuels containing fatty acid
esters.  Specifically, Partner’s initial
duties shall include those specified on Exhibit        
attached hereto.

b.             Partner
agrees that during the period of employment, Partner shall devote full-time
efforts to Partner’s duties as an employee of the Company, Partner shall use
his or her best efforts to perform the duties of his or her position in an
efficient and competent manner and shall use his or her best efforts to promote
the interests of the Company and any affiliated companies.

c.             During
the period of employment, Partner agrees not to (i) undertake or engage in any
planning for or organization of, whether solely or jointly with others, any
business activity competitive with the business activities of the Company, and
(ii) directly or indirectly, engage or participate in any other activities in
conflict with the best interests of the Company.

d.             Partner
agrees that during the period of employment Partner shall refer to the Company
all opportunities in the Company’s industry to which Partner might become
exposed in carrying out his or her duties and responsibilities hereunder.

5.             Termination of Employment.

a.             Termination by the Company for Cause.  The Company may terminate Partner’s
employment for Cause without thereby giving rise to a breach of this Agreement
solely as a result of such termination.  “Cause” means the commission of an act of fraud, theft,
wrongful diversion of funds or dishonesty against the Company; conviction for
any felony; willful or repeated tardiness or absenteeism; insubordination;
self-dealing; willful or repeated violation of Company policy; willful or
repeated non-performance or substandard performance of duties; willful
violation of this Agreement or the Partner Confidentiality and Invention
Assignment Agreement between the Company and Partner in the form separately provided
to Partner (the “Employee Confidentiality Agreement”);
or violation of any state or federal laws, rules or regulation in connection
with or during performance of work.

b.             Termination by the Company without Cause.  The Company may terminate Partner’s
employment hereunder without Cause at any time upon thirty

 

(30) days notice
to Partner without thereby giving rise to a breach of this Agreement solely as
a result of such termination.  In the
event of receipt of such notice, Partner may elect to terminate Partner’s
employment immediately.  Upon termination
of Partner’s employment without Cause pursuant to this Section 5.b, the Company
shall pay Partner his or her base salary accrued through the date of
termination plus a severance benefit equal to the per diem rate of base salary
multiplied by the number of calendar days between such date of termination of
employment and the Expiration Date and, until the Expiration Date, Partner
shall continued to be entitled to participate in any Company welfare benefit
plans that Partner was entitled to participate in prior to such termination of
employment to the extent permitted by such applicable law or the terms of such
plan.

c.             Death.  Partner’s employment hereunder shall be
terminated (without thereby giving rise to a breach of this Agreement solely as
a result of such termination) automatically upon Partner’s death during the
Term.  In the event of such termination,
the Company shall pay to Partner’s estate within 60 days after the date of
Partner’s death, all benefits and compensation accrued hereunder prior to the
date of Partner’s death.

d.             Disability.  Partner’s employment hereunder shall be
terminated (without thereby giving rise to a breach of this Agreement solely as
a result of such termination) automatically upon Partner’s Total Disability
during the Term.  In the event of such
termination, the Company shall pay to Partner within 60 days after the date of
termination under this Paragraph 5.d, all benefits and compensation accrued hereunder
prior to the date of such termination plus a severance benefit equal to the per
diem rate of base salary multiplied by 30 days. 
“Total Disability” means the physical or
mental inability (excluding infrequent and temporary absences due to
ordinary illness) to perform Partner’s duties under this Agreement as
determined by the President of the Company upon the advice of a qualified
physician.  Before making any termination
decision pursuant to this Section 5.d, the Company shall determine whether
there is any reasonable accommodation (within the meaning of the Americans with
Disabilities Act) which would enable Partner to perform the essential functions
of Partner’s position under this Agreement despite the existence of any such
disability.  If such a reasonable
accommodation is possible, the Company shall make that accommodation and shall
not terminate Partner’s employment hereunder based on such disability.  Partner shall submit to such medical
examinations as the Company may request to determine whether a Total Disability
exists and shall authorize his or her physician or physicians to discuss his or
her physical or mental condition, test results, medical records, diagnosis and
prognosis with such representatives of the Company as the President may
designate, subject to the agreement of the Company to maintain the
confidentiality of such information pursuant to applicable law.

6.             Inventions and Creations Belong to the Company;
Non-Disclosure of Confidential Information; Non-Solicitation of Employees.  In connection with the execution of this
Agreement and in consideration of becoming or remaining employed by the Company
and the Company’s entering into this Agreement and providing the benefits
hereunder, Partner shall, to the extent not already done, enter into the
Employee

 

Confidentiality Agreement and Partner agrees to
comply with all terms and conditions of such Employee Confidentiality
Agreement.

7.             Limited Non-Competition Covenant.

Partner acknowledges
that, although Partner is an at will employee, the Company is hereby providing
Partner with an employment agreement for a definite Initial Term and
restricting its ability to terminate Partner during this Initial Term, has agreed to grant Partner Awards under the
Equity Incentive Plan, and also has provided, will provide and hereby agrees to provide Partner
with access to Confidential Information of the Company throughout the Term of
this Agreement’ each in reliance upon Partners’ agreement to enter into
and comply with the limited non-competition covenant set forth in this Section
7.  Partner acknowledges that the Company has
legitimate interests in protecting such information and its investment in the
Partner through the imposition of a limited covenant not to compete. Partner
acknowledges that the limited non-competition covenant set forth herein is the
least restrictive and most reasonable covenant available to adequately protect
the Company’s interest.

“Subject Client”
means any person or entity who is an existing client of the Company as of the
date Partner’s employment with the Company terminates for any reason and (i)
with whom Partner has had personal contact during the term of Partner’s
employment with the Company, or (ii) as to whom Partner has received
Confidential Information during the term of Partner’s employment with the
Company.  A client of the Company shall
be considered “existing” from the date of initiation of any business
relationship with the Company, including a request for bid, until such time as
the client has notified the Company that such business relationship has been
terminated, regardless of whether the client’s actual use of the Company’s
services has temporarily ceased.

“Covenant Term”
means a period commencing on the date hereof and expiring two (2) years after
the date Partner’s employment with the Company terminates, regardless of the
reason (subject to being extended due to Partner’s breach under Section 7(f)
below).

“Competitive Services or
Activities” means engaging in the design, engineering, or
construction or operation of refineries for biofuels containing or derived from
fatty acid esters, or engaging in the marketing or production of biodiesel fuel
and glycerin containing or derived from fatty acid esters, or engaging in
consulting with regard to the foregoing.

“Territory”
means the area within each city, county and parish of each state and territory
of the United States and the District of Columbia, each province and territory
of Canada and the member countries of the European Union.

a.             Partner
agrees that Partner will not, during the term of Partner’s employment with the
Company or during the Covenant Term, individually or as an employee, owner,
employer, consultant, agent, principal, partner, stockholder, director,
officer, lender, or any other individual or representative capacity for another,
call upon, solicit, offer, sell or provide Competing Services or Activities, or
assist with calling upon,

 

soliciting, offering, selling or providing
Competing Services or Activities to, any Subject Client located in whole or in
part in the Territory.

b.             Partner
agrees that Partner will not, during the term of Partner’s employment with the
Company or during the Covenant Term, whether individually or as an employee,
owner, employer, consultant, agent, principal, partner, stockholder, director,
officer, lender, or any other individual or representative capacity for
another, approach any Subject Client for the purpose of soliciting employment
or accept employment with any Subject Client to the extent such employment
involves performing or providing Competing Services or Activities in the
Territory, unless Partner obtains prior written permission from the Board of
Directors of the Company.

c.             Partner
agrees that Partner will not, during the term of Partner’s employment with the
Company or during the Covenant Term, individually or as an employee, owner,
employer, consultant, agent, principal, partner, stockholder, director,
officer, lender, or any other individual or representative capacity for
another, engage in any Competing Services or Activities in the Territory or
provide services to any person or entity engaged in any Competing Services or
Activities in the Territory.

d.             Partner
agrees that Partner will not, during the term of Partner’s employment with the
Company or during the Covenant Term, whether individually or as an employee,
employer, consultant, agent, principal, partner, stockholder, lender, corporate
officer or other representative of another, receive any remuneration in any
form as a result of any conduct described in Section 7(a), (b) or (c) above.

e.             The
ownership by Partner of stock of any company listed on a national securities
exchange shall not be deemed a violation of this Agreement provided Partner and
Partner’s associates (as that term is defined in Regulation 14A of the
Securities Exchange Act of 1934 as in effect on the date hereof) collectively
do not own more than 1% of the stock of such company.

f.              If
Partner violates any covenant contained in this Section and the Company brings
legal action for injunctive or other relief, the Company shall not, as a result
of the time involved in obtaining the relief, be deprived of the benefit of the
full period of any such covenant. Accordingly, in the event the Company brings
legal action for injunctive or other relief to enforce the rights granted under
this Section 7, the Covenant Term shall be extended by the period of time
specified as the Covenant Term from the later of (i) the date of the
termination of Partner’s employment with the Company, or (ii) the date of entry
by a court of competent jurisdiction of a final judgment enforcing the
covenants of Partner in this Section 7.

g.             Partner
acknowledges that in the event Partner willfully or intentionally breaches the
provisions of this Section 7 or otherwise renders services for any organization, or engages
directly or indirectly in any business, that is or becomes competitive with
Nova, the Company or any subsidiary of Nova,
such action shall constitute “Detrimental Activity” pursuant to the Equity
Incentive Plan and, if such event

 

occurs prior to or within two years after any
exercise, payment or delivery of an Award under such Equity Incentive Plan, such exercise, payment or delivery may be
rescinded by the Company within two years thereafter.  In the event of any such rescission, Partner
shall pay to the Company the amount of any gain realized or payment received as
a result of the rescinded exercise, payment or delivery, in such manner and on
such terms and conditions as may be required, and the Company shall be entitled
to set-off against the amount of any such gain any amount owed to Partner by
the Company or any subsidiary of the Company.

h.             Partner
acknowledges that this Section 7 contains independent covenants that shall be
operative regardless of the reasons for termination of his employment or the
performance or nonperformance of any obligations of the Company.

8.             Partner’s Acknowledgement.  It is the express intention of Partner and
the Company to comply with the laws of the State of Texas and Montana, and the
laws of any other jurisdiction in which Partner may engage in activities
prohibited by this Agreement and the Employee Confidentiality Agreement, with
regard to non-competition agreements in effect as of the date of execution
hereof.  Partner stipulates that the
provisions of this Agreement and the Employee Confidentiality Agreement are not
oppressive or overly burdensome to Partner and will not prevent Partner from
earning an income following termination of this Agreement.  Partner warrants and represents that:

a.             Partner
is familiar with non-compete and non-solicitation covenants;

b.             Partner
has discussed or acknowledges the opportunity to discuss the provisions of the
non-compete and non-solicitation covenants contained herein with Partner’s
attorney and has concluded that such provisions (including, without limitation,
the right to equitable relief and the length of time provided for herein) are
fair, reasonable and just under the circumstances;

c.             Partner
is fully aware of the obligations, limitations and liabilities included in the
non-compete and non-solicitation covenants contained in this Agreement and the
Employee Confidentiality Agreement;

d.             The
scope of activities covered hereby are substantially similar to those
activities to be performed by Partner under this Agreement and the Employee
Confidentiality Agreement;

e.             The
non-compete and non-solicitation periods are reasonable restrictions, giving
consideration to the following factors: 
(1) Partner and the Company reasonably anticipate that this Agreement
and the Employee Confidentiality Agreement, although terminable under certain
provisions, will continue in effect for sufficient duration to allow Partner to
attain superior bargaining strength and an ability for unfair competition with
respect to the customers covered hereby; (2) the duration of such periods are
reasonably necessary period to allow the Company to restore its position of
equivalent bargaining strength and fair competition with respect to those
customers covered hereby;

 

and (3) historically, employees of all types have
remained with Partner for a duration of longer than the duration of the
non-compete and non-solicitation periods; and

f.              The
limitations contained in this Agreement with respect to geographic area,
duration and scope of activity are reasonable; however, if any court shall
determine that the geographic area, duration or scope of activity of any
restriction contained in this Agreement is unenforceable, it is the intention
of the parties that such restrictive covenants set forth herein shall not
thereby be terminated, but shall be deemed amended to the extent required to
render such covenants valid and enforceable.

9.             Remedies; Injunction.  In the event of a breach or threatened breach
by Partner of any of the provisions of this Agreement, Partner agrees that the
Company, in addition to and not in limitation of any other rights, remedies or
damages available to the Company at law or in equity, shall be entitled to
temporary and permanent injunctive orders without the necessity of proving
actual monetary loss, in order to prevent or restrain any such breach by
Partner or by Partner’s partners, agents, representatives, servants, employees
and/or any and all persons directly or indirectly acting for or with Partner
and without the necessity of posting any bond with respect to such injunctive
relief.  It is expressly understood
between the parties that this injunctive or other equitable relief shall not be
the Company’s exclusive remedy for any breach of this Agreement, and the
Company shall be entitled to seek any other relief or remedy which it may have
by contract, statute, law or otherwise for any breach hereof.

10.           Notices. 
Any notice, demand or request which may be permitted, required or
desired to be given in connection therewith shall be given in writing and
directed to the Company and Partner as follows:

	
  If to the Company, at:

  	
   

  	
  Nova Energy Holdings, Inc.

  
	
   

  	
   

  	
  2777 Allen
  Parkway, Suite 860

  
	
   

  	
   

  	
  Houston, Texas
  77019

  
	
   

  	
   

  	
  Attn: J.D.
  McGraw

  
	
   

  	
   

  	
  Facsimile No.
  (713) 869-6682

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  Bohreer & Zucker LLP

  
	
   

  	
   

  	
  2777 Allen
  Parkway, Suite 865

  
	
   

  	
   

  	
  Houston, Texas
  77019

  
	
   

  	
   

  	
  Attention: E.
  Michelle Bohreer

  
	
   

  	
   

  	
  Facsimile No.:
  (713) 526-8100

  

 

or, if to Partner, at the address and facsimile
number indicated on the signature page hereof.

Notices shall be deemed properly delivered and
received when and if either:  (i)
personally delivered; (ii) delivered by nationally-recognized overnight
courier; (iii) when deposited in the U.S. Mail, by registered or certified
mail, return receipt requested, postage prepaid; or (iv) sent via facsimile
transmission with confirmation mailed by regular U.S. mail.  Any party may change its notice address for
purposes hereof to any address within the

 

continental United States by giving written
notice of such change to the other parties hereto at least fifteen days prior
to the intended effective date of such change.

11.           Severability.  If any provision of this Agreement is
rendered or declared illegal or unenforceable by reason of any existing or
subsequently enacted legislation or by decree of a court of last resort, the
Company and Partner shall promptly meet and negotiate substitute provisions for
those rendered or declared illegal or unenforceable, but all the remaining
provisions of this Agreement shall remain in full force and effect.

12.           Assignment.  This Agreement may not be assigned by any
party without the prior written consent of the Company.

13.           Binding Agreement.  This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto, and their respective legal
representatives, heirs, successors and permitted assigns.

 

14.           Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas without regard to
principles of conflicts of law that would apply any other law.  Partner agrees that the non-exclusive venue
and jurisdiction for litigation or arbitration of any disputes relating to this
Agreement shall be Houston, Harris County, Texas, and Partner irrevocably
consents to personal jurisdiction of the Courts in Houston, Texas, and waives
any forum non convenience rights. 
Notwithstanding the foregoing, the Company shall have the right, at its
election, to bring litigation or arbitration relating to Partner’s
non-competition, non-solicitation and confidentiality obligations in any forum
having personal jurisdiction over employee.

15.           Agreement Read, Understood and Fair.  Partner has carefully read and considered all
provisions of this Agreement, agrees that all of the restrictions set forth are
fair and reasonable and are reasonably required for the protection of the
interests of the Company and understands and will faithfully comply with all
such provisions.

IN WITNESS WHEREOF, the parties have
executed this Agreement as of the date first above written, effective as of the
Commencement Date.

	
  

  	
  EMPLOYER:

  
	
   

  	
   

  
	
   

  	
  NOVA
  ENERGY HOLDINGS, INC.,

  
	
   

  	
  a Texas
  corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JD McGraw

  	
   

  
	
   

  	
   

  
	
   

  	
  Printed Name:

  	
  JD McGraw

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
  PARTNER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Leon van
  Kraayenburg

  	
   

  
	
   

  	
  Leon van
  Kraayenburg

  
	
   

  	
  Address for
  Notices:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Facsimile:Exhibit
10.4

PURCHASE
AND SALE AGREEMENT

by and
between

NOVA
BIOFUELS SENECA, LLC (“PURCHASER”)

AND

L&L
PROPERTIES LLC

AND

SHIPYARD
INDUSTRIAL PARK, INC (together, “SELLER”)

for the
premises commonly known as

LOT 1, SHIPYARD INDUSTRIAL PARK,
SENECA, IL

 

PURCHASE/SALE AGREEMENT

THIS AGREEMENT made as of
June 23rd, 2006
by and between Nova Biofuels Seneca, LLC, a Delaware limited liability company
(“Purchaser”), and L&L Properties LLC, an Illinois limited liability
company (“L&L”), and Shipyard Industrial Park, Inc, an Illinois corporation
(“SIP” and together with L&L, Seller”):

WITNESSETH:

WHEREAS:

A.     Seller
owns the property which is described in Exhibit A hereto (the “Property”) commonly known
as Lot 1 in Shipyard Industrial Park, Seneca, Illinois:

B.     Subject to the terms
and conditions hereinafer specified, Purchaser desires to purchase, and Seller
desires to sell, the Property:

NOW, THEREFORE, in
consideration of the premises, and the mutual covenants herein contained and
for other valuable consideration, each to the other given and obtained, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

1.      Preamble, Exhibits, Definitions. The preamble hereto and the
exhibits attached hereto (collectively, the “Exhibits”) are a part of
this agreement (hereinafter referred to as this or the “Agreement”). Any
word or phrase which appears in this Agreement set off by quotation marks and
capitalized shall for purposes of this Agreement have the meaning denoted by its
context. Wherever such words and phrases defined herein are intended to have
their defined meanings, the first letter of each such word, and the first
letters of all substantive words in each such phrase shall be capitalized.

2.     Purchase and Sale Agreement; Price. For the Purchase Price
and subject to the terms and conditions hereinafter specified, Purchaser agrees
to purchase, and Seller agrees to sell, the Property for the price of Three
Million Six Hundred Fifty Thousand Dollars ($3,650,000) (the “Purchase Price”)
subject to the adjustments thereto specified in Paragraph 12 hereof.

3.     Escrow. Concurrently with the execution of this Agreement,
the parties hereto shall, through their respective counsel, establish an escrow
(the “Escrow”) with Chicago Title Insurance Company (“Title Insurer”,
or in its capacity as escrowee, “Escrowee”) pursuant to an escrow
agreement (the “Escrow Agreement”), substantially in the form of Exhibit
B hereto.

4.     Earnest Money. Concurrently with the execution of this
Agreement and the Escrow Agreement, Purchaser is depositing with Escrowee Fifty
Thousand Dollars ($50,000) (the “Initial Earnest Money”). The Initial
Earnest Money shall be held in the Escrow and disbursed in accordance with the provisions
of the Escrow Agreement.

5.     Purchaser Investigations and Elections.    Subject to the limitations hereinafter specified,
and subject to being extended under the circumstances specified in Paragraph 8 hereof,
Purchaser shall have the right through the date (the “First Binding Date”)
which is sixty (60) days after the first date on which all due diligence
documents described in Part 2 of Exhibit C hereto have been delivered by Seller
to Purchaser (and thereafter to the Closing Date so long as Purchaser has not
terminated this Agreement prior to closing in accordance with this Paragraph 5
or any other provision herein providing Purchaser with such right), to make
such investigations and evaluations of the Property as Purchaser deems
necessary or desirable. In connection with such investigations:

 

 

(a)           Purchaser
acknowledges having received from Seller copies of the documents described in
Part 1 of Exhibit C hereto as having been delivered, and within ten (10) days after
the date hereof Seller shall deliver to Purchaser a true and correct copy of
each of the documents pertaining to the Property described in Part 2 of Exhibit
C hereto (collectively, the “Property Documents”).

(b)           Seller shall permit Purchaser, and
representatives, agents, employees, contractors, architects, engineers, and
environmental specialists, designated by Purchaser (all of whom, including
Purchaser, are collectively referred to as “Property Consultants”)
during regular business hours and upon Purchaser’s reasonable notice to Seller
access to and entry upon the Real Property to inspect and determine the
condition of the Property, including, but not limited to, performing any
studies with respect to geotechnical, land site capacity for structural
integrity and environmental matters, provided, however:

(i)            prior to commencing any tests, or
taking any samples or otherwise engaging in activities affecting the physical
condition of the Property, Purchaser shall deliver to Seller evidence, in form
and substance reasonably satisfactory to Seller, that Purchaser and each
Property Consultant engaged by it and entering on the Property to perform such
tests, or take such samples, or otherwise engage in activities affecting the physical
condition of the Property are covered by adequate commercial general liability insurance,
and with respect to all persons at any time entering on the Property in connection
with such inspections, and workers’ compensation insurance and employers’ liability
insurance, all with companies, coverages and amounts reasonably satisfactory to
Seller; and

(ii)           all inspections, reviews and
investigations shall be at the sole risk and expense of Purchaser and to the
extent permitted by law, Purchaser shall defend, indemnify and hold Seller, its
beneficiaries, employees, agents, officers, directors, shareholders, parents,
subsidiaries and affiliates (collectively, “Seller Indemnities”) harmless
from and against any and all fees, charges, claims, causes of action, demands, injuries,
damages to persons or property, costs, expenses (including reasonable attorneys’
fees) or liability (collectively, “Liability”) imposed upon, suffered
by, incurred by or asserted against the Indemnified Parties as a result of
those inspections, reviews and investigations, including, without limitation, Liability
arising out of or relating to acts of any Property Consultants engaged by
Purchaser or any third party contractors engaged by any of them, and any
Liability resulting from any injury to any person or damage to or loss of any
part of the Property arising from any such investigations or tests made by any of
the Property Consultants.

(c)     Purchaser
shall cause the information disclosed to or acquired by it or its Property
Consultants in connection with the inspections and reviews described in this
Paragraph 5 or otherwise provided by Seller pursuant to any other paragraph of
this Agreement, to the extent such information is not a matter of public
knowledge or readily available to the public, to be held in confidence and not
disclosed prior to the Closing Date to any party other than as may be
reasonably required in connection with Purchaser obtaining financing for or
licenses, approvals, or permits to operate the Property

Purchaser shall have the
right through the First Binding Date to terminate this Agreement, if Purchaser,
in its sole discretion, is not satisfied with the results of such inspection,
by giving Seller and the Escrowee notice of the exercise by Purchaser of its
right to so terminate prior to 5:00 p.m. (where the Land is located) on the
First Binding Date. If Purchaser does so exercise its right to terminate this
Agreement

 2
 

 

prior to 5:00 pm
on the First Binding Date, the Initial Earnest Money shall be paid to Purchaser
and this Agreement shall terminate and be of no further force or effect, except
as otherwise specified in the next sentence. The obligation of Purchaser under
clause (b) above (the “Indemnity Obligation”) shall survive, and be
enforceable after, the Closing or a termination of this by Agreement by either
party hereto prior to Closing pursuant to any provision herein permitting such
termination. After the First Binding Date, the Earnest Money shall become fully
non-refundable and payable to Seller except as specifically provided under the
terms of this Agreement or under circumstances where the Seller has failed or
refused to close; is unable to deliver title to the Property as required by
this Agreement; is in violation of its representations and warranties hereunder;
or has otherwise breached its obligations hereunder (each, a “Seller Default”).
Purchaser shall have the right to extend the Binding Date (as extended, the “Extended
Binding Date”) for four (4) additional periods of thirty (30) days each by
depositing with Escrowee an additional Twenty-Five Thousand Dollars ($25,000)
of Earnest Money, per extension, (the “Additional Earnest Money”, and together
with the Initial Earnest Money, the “Earnest Money”) which Additional Earnest
money shall be non-refundable except as specifically provided under the terms
of this Agreement or following a Seller Default. At Closing, the Earnest Money
and any Additional Earnest Money shall be applied toward the Purchase Price. If
Purchaser terminates this Agreement at any time following the Binding Date for
any reason other than a Seller Default, the Earnest Money and any Additional
Earnest Money shall be paid to the Seller and this Agreement shall terminate
and be of no further effect except that the Indemnity Obligation shall survive
as set forth above.

6.     Title
Matters. Seller shall convey to Purchaser (or Purchaser’s Grantee,
as defined in Paragraph 2 (a) of the Escrow Agreement, if Purchaser so elects
in accordance herewith), by a recordable warranty deed, good and marketable fee
simple title to the Real Property and such other estates, if any, as comprise
the Appurtenances, subject only to (i) the matters enumerated in Exhibit D
hereto (all of which matters are hereinafter collectively referred to as “Permitted
Title Exceptions”) and (ii) each and every Insured Exception (hereinafter defined).
Within thirty (30) days after the date hereof, Seller shall:

(a)     cause
the Title Insurer to provide Purchaser with:

(i)       a
commitment (the “Title Commitment”) dated after the date hereof for an
extended coverage owner’s policy of title insurance (ALTA form 1992), in the
amount of the Purchase Price, naming Purchaser as the proposed insured and
covering the title to the Real Property and each of the Appurtenances, if any,
comprising a recorded easement for the benefit of the Land (each an “Insurable
Easement”) (the Real Property and every Insurable Easement are hereinafter
collectively referred to as the “Real Estate”);

(ii)      a
legible and complete copy of each of the instruments and documents referred to
in the Title Commitment;

(iii)     evidence
that the Title insurer is prepared to issue and make a part of the policy
described in the Title Commitment (the “Title Policy”) such endorsements
as are enumerated in Exhibit E hereto (collectively, together with such
endorsements as are agreed upon in accordance herewith to provide coverage over
each Insured Exception, the “Title Insurance Endorsements”), which
evidence shall include specimen forms of such required Title Insurance
Endorsements.

(b)     deliver
to Purchaser a plat of survey of the Real Estate made after the date hereof and
so certified by a licensed Illinois land surveyor and bearing a certificate,
naming Purchaser (and upon request of Purchaser, Purchaser’s lender) as one of
the parties to whom it is addressed, signed and sealed by said surveyor, that
(i) said plat and survey on which it is based were made in

 3
 

 

accordance with “Minimum Standard Detail Requirements
for ALTA/ACSM Land Title Surveys,” jointly established and adopted by ALTA and
ACSM in 1999, and includes Items 1-4, 6, 7(a), 7(b), 7(c), 8-10, 11 (a), and
14-16 of Table A thereof, and (ii) said plat reflects the locations of all
building lines, easements and areas affected by any recorded documents affecting
the Property, as disclosed in the Title Commitment (identified by issuer,
commitment number, and an effective date after the date hereof) (the “Plat
of Survey”).

If (i) the Title
Commitment discloses anyone other than Seller as being vested with fee simple
title to the Real Property, (ii) any title exception is disclosed in Schedule B
to the Title Commitment which is not one of the Permitted Title Exceptions, or
(iii) a matter (which is not a Permitted Title Exception) is disclosed in the
Plat of Survey that renders title unmarketable (any such adverse title finding,
exception or survey matter being hereinafter referred to as a “Title Defect”),
Seller shall use reasonable efforts to cure each such Title Defect (i.e., take
such action as will induce the Title Insurer to eliminate such Title Defect from
the Title Commitment and/or will induce the surveyor providing the Plat of
Survey to amend the same to show the absence of any such Title Defect), and if
not curable, to cause the Title Company to insure against loss or damage
resulting therefrom, pursuant to an endorsement in form and substance reasonably
acceptable to Purchaser (which, in any event, shall require the Title Insurer
to agree to issue the same endorsement to any subsequent title policy covering
the Real Estate), provided, however, Purchaser shall have no obligation to
accept insurance over any Title Defect, if Purchaser, in its sole discretion,
believes such insurance to be unacceptable in relation to the risk presented by
said Title Defect. Purchaser shall have fifteen (15) days from its receipt of
the Title Commitment, all underlying documents and the survey to notify Seller
of any Title Defect. In the event that any update to the Title Commitment
includes a reference to a new lien, encumbrance or other defect which
constitutes a Title Defect, Purchaser shall have an additional fifteen (15) day
period to notify Seller of such defect. Notwithstanding the foregoing,
Purchaser need not specify as a Title Defect any encumbrance securing an obligation
in a fixed or ascertainable amount which is less than the amount of cash to be
paid by Purchaser at Closing and which lien or encumbrance Seller shall cause
to be released upon payment of said amount at Closing. Any and each Title
Defect which the Title Company is willing to insure over on terms acceptable to
Seller and Purchaser, as aforesaid, is herein referred to as an “Insured
Exception.” If within ten (10) days after the document disclosing such
Title Defect is provided to Seller, or such later time as Purchaser may agree
to, Seller informs Purchaser that any such Title Defect cannot be cured or insured
over in the manner aforesaid (which event shall not constitute a default on
Seller’s part unless hereafter willfully causes such Title Defect, which shall
constitute a default on Seller’s part), or that Seller is unable to obtain one
or more of the title insurance endorsements described above. Purchaser shall
have the right either to (i) terminate this Agreement by giving Seller notice
of such election within ten (10) days after receipt of Seller’s notice; or (ii)
accept title with such Title Defect, or without such required Title Insurance
Endorsement, as the case may be, which shall be deemed Purchaser’s election if
this Agreement is not so terminated, in the manner aforesaid, and in which case
each such Title Defect not so cured or insured over shall be deemed added to
and made a part of the Permitted Title Exceptions. Should Purchaser elect to so
terminate this Agreement, the Earnest Money shall be returned to Purchaser within
five (5) days after notice of such election, and thereupon this Agreement shall
have no further force or effect, except as otherwise specified in Paragraph 5
hereof. If Seller does not so notify Purchaser within the aforesaid ten (10)
day period that a Title Defect cannot be cured or insured over, Seller shall cause
such Title Defect to be cured or insured over at or prior to Closing. The Title
Commitment, Title Insurance Endorsements, and the Plat of Survey shall
constitute conclusive evidence of Seller’s good and marketable title to the
Real Property, as to all matters insured and disclosed thereby, respectively.

7.     Representations and Warranties of Seller. To induce
Purchaser to execute, deliver and perform its obligations under this Agreement,
Seller hereby represents and warrants to Purchaser on and as of the date hereof
as follows:

 4
 

 

(a)     SIP
is a corporation, duly organized, validly existing, and in good standing under the
laws of the State of Illinois and duly authorized to transact business in and
in good standing under the laws of the State of Illinois.

(b)     L&L is a limited
liability company, duly organized, validly existing, and in good standing under
the laws of the state of Illinois and duly authorized to transact business in
and in good standing under the laws of the State of Illinois.

(c)     Except for Seller,
there are no persons in possession or occupancy of the Real Property or any
part thereof, nor are there any persons who have possessory rights in respect
to the Real Property or any part thereof.

(d)     Seller has full
capacity, right, power and authority to execute, deliver and perform this
Agreement and all documents to be executed by Seller pursuant hereto; all
required action and approvals therefor have been duly taken and obtained, and
the individuals signing this Agreement and all other documents executed
pursuant hereto on behalf of Seller are duly authorized to sign the same on
Seller’s behalf and to bind Seller thereto; Seller’s execution of and
performance under this Agreement shall not constitute a breach of any
agreement, understanding, order, judgment or decree, written or oral, to which
Seller is a party, or to which any part of the Property may be subject, or by
which Seller may be bound.

(e)     Neither
L&L or SIP is a foreign corporation, foreign partnership, foreign trust or foreign
estate (as those terms are defined in the Internal Revenue Code and Income Tax Regulations).

(f)     There are no claims,
causes of action or other litigation or proceedings pending or, to the best of
Seller’s knowledge (as defined below), threatened in respect to the ownership
or operation of the Property or any part thereof (including disputes with
governmental authorities, utilities, contractors, adjoining land owners).

(g)     Seller has not
received any notice of any fire, health, safety, building, pollution,
environmental, zoning or other violations of law in respect to the Property,
which have not been entirely corrected.

(h)     To
the best of Seller’s knowledge, there is no pending or threatened,  (i) condemnation of any part of the Property,
or (ii) widening, change of grade or limitation on the use of streets abutting
the Property.

(i)     There are no
contracts, agreements, leases, licenses, invoices, bills or understandings of
any nature, written or oral, formal or informal to which Seller is a party or
otherwise bound, other than as may be expressly set forth herein, which
Purchaser, upon becoming owner of the Property, will be required to assume or
pay or to which Purchaser may, as a consequence of entering into or closing
this Agreement, may become bound without Purchaser’s express and prior written
consent.

(j)     There are no options
or rights in any party to purchase, or acquire any ownership interest in the
Property, and Seller shall not grant any such options or rights prior to
Closing.

(k)     There
are no judgments or decrees of any kind affecting the Property that are unpaid
or unsatisfied of record; the Property is not in the hands of a receiver; no
application for any such receivership is pending; no petition in bankruptcy has
been filed by or against Seller.

 5
 

 

and there are no actions, proceedings, or
investigations pending or, to the best of Seller’s knowledge, threatened
against or affecting Seller or the Property, and no basis known to Seller for
the same, which, if
decided adversely, would affect the Seller’s ability to carry out the
transaction contemplated by this Agreement or would interfere with or prevent
the use of the Property for its industrial purposes.

(l)       All Improvements made to the Property
comply with applicable building codes, provided that the slate siding and pipe
insulation in the building previously constructed by the government may contain
asbestos.

(m)     All of the mechanical systems in the
Improvements, including the water, sewer, plumbing, heating, ventilation, electrical,
air conditioning and sprinkler systems, if any, are in working order.

(n)     The present use of the Property complies
with existing zoning regulations.

(o)     There are no governmental or private land use restrictions on the
Property that prohibit the use of the Property for biodiesel fuel production.

(p)     Except to the extent otherwise expressly
disclosed in any report pertaining to the Property obtained by Purchaser or
made available to Purchaser prior to the Closing Date, to the best of Seller’s
knowledge Seller and the Property are currently in compliance with all, and
otherwise not liable under any, applicable environmental laws, neither Seller
nor any of its predecessors in title to, or possession of the Property, has
violated or been found otherwise liable under any applicable environmental law.

If, prior to the Closing
Date, any event or change in circumstances occurs, through no fault of Seller, which
causes one or more of the foregoing representations and warranties to be no
longer true and correct, Seller shall inform Purchaser of such fact within
three (3) days after Seller learns of the occurrence of such change in
circumstances (but in no event later than the Closing Date). The
representations and warranties of Seller specified above shall be deemed remade
as of the Closing Date, unless and except to the extent modified in accordance
with the preceding sentence. The representations and warranties specified
above, as remade on the Closing Date, as aforesaid, shall survive for a period
of one (1) year after the Closing Date but not thereafter unless (i) Purchaser
shall have given Seller written notice of an alleged breach of such
representation or warranty within said survival period, or (ii) Purchaser’s
failure to discover such breach shall have been caused by the act or omission
of Seller constituting common law fraud, in either of which events the
representation or warranty shall continue to survive. Seller shall defend,
indemnify and hold Purchaser harmless from and against any and all damage,
cost, liability and expense resulting from any material breach of any of the
representations and warranties specified herein. Any investigation or
inspection conducted by Purchaser in order to verify independently Seller’s satisfaction
of any conditions precedent to Purchaser’s obligations hereunder and/or the
truth and accuracy of Seller’s representations and warranties specified herein
shall not in any way abrogate any of said representations and warranties or
constitute any waiver by Purchaser of its reliance thereon, unless prior to the
Closing Date, Purchaser receives written or other documentary evidence (or is
otherwise informed by
a third-party performing testing on Purchaser’s behalf) of facts which would
make any of the aforesaid representations and warranties materially untrue or
inaccurate and fails to disclose such facts to Seller prior to the Closing
Date. If prior to the Closing Date, Seller takes such action as cures or
mitigates to Purchaser’s satisfaction any adverse effect on Purchaser resulting
from any such breach of warranty or representation of which Purchaser gives it
notice, as aforesaid, such breach shall be deemed cured and of no further force
or effect hereunder.

 6
 

 

8.     Conditions Precedent to Purchaser’s Obligations.
Purchaser’s obligations under this Agreement are subject to each of the
following described conditions precedent having been satisfied to Purchaser’s
satisfaction, or otherwise waived in writing by Purchaser (except as otherwise specified
in the last sentence of this Paragraph 8, no such waiver shall be presumed or
inferred from any action or inaction of Purchaser), which Purchaser shall have
the right, but no obligation, to do:

(a)     As
of the Closing Date, Seller shall have fully and timely performed all of its
obligations under this Agreement, including, but not limited to, furnishing to
Purchaser the Evidence of Title specified in Paragraph 6 hereof.

(b)     Between
the date hereof and the Closing Date, no facts, circumstances, or events shall
have occurred, or become known to Purchaser, which would make any of the
representations and warranties of Seller specified in Paragraph 7 hereof
materially untrue, incorrect or misleading, or which, with respect to any
statement based on the best of Seller’s knowledge, would make said statement
materially untrue, incorrect or misleading and which, in either case, are not
cured or mitigated by Seller prior to the Closing Date in accordance with the
last sentence of Paragraph 7 hereof.

(c)     Seller
has performed all obligations pursuant to Paragraph 14 of this Agreement.

(d)     Purchaser
has entered into an Agreement with CSX Transportation, Inc. (“CSX”) in a form
acceptable to Purchaser, pursuant to which CSX has agreed to provide railroad
service to and from the L&L Property; and

(e)     Purchaser
has entered into an agreement or agreements, with Seller or other applicable
service providers in form acceptable to Purchaser, pursuant to which the
Purchaser shall have rights to access and utilize docks on the property.

In the event any of the
conditions precedent specified in sub paragraph (a)-(c)above is not satisfied
(and Purchaser does elect to waive the same), Purchaser shall have the right to
terminate this Agreement by giving Seller notice of its election to do so on or
before the Closing Date whereupon the Escrow shall be terminated and except as
otherwise specified in Paragraph 5 hereof this Agreement shall have no further
force or effect. If the Closing occurs, all of the aforesaid conditions
precedent shall conclusively be deemed to have been satisfied or otherwise
waived by Purchaser.

9.        Maintenance and Operation of Property Prior to Closing Date.
From and after the date hereof to the Closing Date, Seller shall refrain from encumbering
any of the Property, and shall maintain in force insurance coverage the same as
the coverages which currently are in force.

10.      Seller Indemnification.
Subject to the limitation hereinafter specified, Seller shall indemnify and
hold Purchaser, and its agents, officers, directors and employees
(collectively, the “Purchaser Indemnitees”) harmless from and against
any and all Costs pertaining to any claims which are asserted against any of
the Indemnitees and which are allegedly based on or otherwise arising out of a
violation of any environmental law during the ownership and operation of the
Property by Seller. Seller shall have no obligation under the preceding
sentence unless such indemnitees against whom any such claim is asserted
promptly notify Seller of any such claim, and that such Indemnitees do not
incur any Costs with respect thereto (other than at their own expense) and do
not take any actions, including an admission of liability, which would bar
Seller from enforcing any applicable coverage under policies of insurance held
by Seller or would prejudice any defense or prosecution of any claim of Seller
in any appropriate legal
proceedings pertaining to any such matter, or otherwise prevent Seller from
defending itself with respect to any such matter, so long as Seller is
resisting or defending the same in any

 7
 

 

reasonable manner
which protects such Indemnitees from having to pay such Costs and so long as
any such restraint by such Indemnitees does not imperil the Property or
Purchaser’s interest therein. Notwithstanding the foregoing, Seller shall not
be required to indemnify, hold harmless, or reimburse the indemnitees with
respect to any matter (i) to the extent the same resulted from negligence or
willful malfeasance of the indemnitees or (ii) for which no claim is made
hereunder within one (1) year after the Closing Date. As used herein, the term “Costs”
means all liabilities, judgments, penalties and fines arising out of any claims
referred to in this Paragraph 10, and all costs and expenses, including, but
not limited to, reasonable attorneys’ fees incurred in dealing with such claims
or defending any actions brought thereon, and further including, in connection
with any matter pertaining to an alleged or actual violation of any
Environmental Laws, without limitation, the costs of any required or necessary
investigation, testing, monitoring, repair, cleanup, detoxification,
preparation of any closure or other required plans, or other removal, response
or remedial action at or relating to the Property, and the costs of complying
with any requirement of any insurer of the Property or any portion thereof, or
any settlement, agreement, consent order or judgment, injunction, or
restraining order relating thereto, Notwithstanding anything to the contrary
contained herein Seller indemnification obligations under this Paragraph shall
not exceed the Purchase Price.

11.     Closing.     Subject
to Purchaser’s right to terminate this Agreement prior to its consummation, as specified
in Paragraphs 6, 7, and 8 hereof, the consummation of this agreement (the “Closing”)
shall occur on the date  (the “Closing
Date”) which is sixty (60) days after the First or Extended Binding Date as
applicable or such earlier date as the parties may agree.

(a)     At Closing, Seller
shall deliver or cause to be delivered to Purchaser the following:

(1)                                  The
warranty deed conveying the Property to Purchase;

(2)                                  a
bill of sale conveying the Personal Property to Purchaser;

(3)                                  All
keys in the Seller’s possession;

(4)                                  An
ALTA Statement showing no exceptions to the assurances specified herein except
for Permitted Title Exception;

(5)                                  A
GAP undertaking duly executed on behalf of Seller for the period from the most
recent effective date of the Title Commitment and the Closing Date;

(6)                                  A
FIRPTA Affidavit from each of L&L and SIP;

(7)                                  Evidence
that all necessary corporate and limited liability company authorizations
required to complete the transactions contemplated hereunder have been
undertaken by each of L&L and SIP;

(8)                                  Such
other evidence, affidavits and indemnities as the Title Company reasonably
requires to issue the Title Policy;

(9)                                  Recordable
easements entered into pursuant to Section 14 hereof; and

(10)                            A certificate
recertifying that all representations and warranties made by Seller in this
Agreement are true and correct as of the Closing Date.

 8
 

 

(b)     At Closing, Purchaser shall deliver or cause
to be delivered to Seller the Following:

(1)                                  The
Purchase Price;

(2)                                  Evidence
that all necessary corporate action required to complete the transactions
contemplated by this Agreement has been performed and approved by Purchaser;
and

(3)                                  As
necessary, counterparts to easement agreements entered into pursuant to Section
14 hereof.

12.      Prorations,
Credits and Charges. At or prior to the Closing referred to in
Paragraph 11 hereof, Seller shall pay (i) the costs of obtaining and/or keeping
in force the Title Commitment and the premiums for the title insurance
described therein (including the charge for the extended coverage Title Insurance
Endorsement required hereunder) up to the amount of the Purchase Price, (ii)
the costs of obtaining the Plat of Survey, (iii) one-half of the charges of
Escrowee for administering the Escrow including the fee for a “New York Style
Closing”, (iv) all state, county and municipal taxes imposed by law on the
transfer of title to the Property, (v) the amounts required to obtain and
record the release of all liens and encumbrances, if any, affecting the
Property (unless the same is an Insured Exception), (vi) the charges of Seller’s
counsel and other advisors to Seller including, but not limited to, the
Brokers, and (vii) all costs and expenses pertaining to obtaining and
delivering to Purchaser the Property Documents. Purchaser shall be responsible
for paying (i) one-half of the charges of Escrowee for administering the Escrow
including the fee for a “New York Style Closing”, (ii) the premiums for the
Title Insurance Endorsements other than for extended coverage and for title
insurance in an amount, if any, exceeding the Purchase Price, or required in connection
with any loan policy of title insurance issued in connection with this
transaction, (iii) all of the charges of Escrowee for administering any
separate money lender’s escrow agreement in connection with this transaction,
(iv) recording costs for recording the deed of conveyance and all mortgage loan
documents, and (v) the charges of Purchaser’s counsel and other advisors to Purchaser.
General real estate taxes which are a lien but not yet due and payable and
other ad valorem taxes and other state, county or city taxes, fees, charges and
assessments affecting the Property shall be prorated as of the Closing Date on
an accrual basis on the basis of the most recent ascertainable amount and
credited to Purchaser on the Closing Date. Said taxes shall be reprorated by
the parties when and as the actual amount of such item of income or expense
becomes known, and the diference between the respective actual and estimated
amount shall be paid, together with interest thereon at the rate of ten percent
(10%) per annum if not paid within fifteen (15) days after the amount has been
determined, by the party who received a preliminary credit in excess of, or
gave a preliminary credit less than the applicable amount as finally
determined, as the case may be. Water, gas and electric charges shall not be
prorated, provided Seller has arranged for final meter readings with respect to
these charges. Seller shall remain liable for any such charges accruing prior
to the Closing Date.

13.     Possession. Possession of the Property shall be delivered on
the Closing Date free of any occupants or parties claiming any possessory
interest therein.

14.     Easements.
Seller agrees to grant to Purchaser, prior to closing, nonexclusive easements over,
across and through Seller’s remaining property and existing easements within
the Shipyard Industrial Park which it has the right to grant and which are
reasonably necessary for the operation of Purchaser’s facilities on the
Property or reasonably required by Purchaser, including but not limited to, the
following:

 9
 

 

(a) Access to railroad
lines and spurs, if any, located within the Property and the Shipyard
Industrial Park, together with the right to place railroad track switches or
turnouts necessary to accommodate Purchaser’s use of railroad trackage
constructed and used by Purchaser at or upon the Property. All tracks, lines,
spurs, switches and turnarounds to be utilized by Purchaser shall he identified
on the Plat of Survey.

(b) Connection of water
and sanitary sewer facilities as approved by the City of Seneca or other
applicable authority along designated routes as shown on the relevant documents
of Seller for the Property.

(c) Connection of
telephone, electric and gas lines, as approved by the appropriate utility
companies, to those installed at or upon the Property

(d) Connection of streets
and/or roads for vehicular traffic to roads immediately adjacent or near the
Property, subject to Seller’s prior approval of any proposed curb cuts and
roadway improvements for the Property

(e) Location, placement
and maintenance of production and/or handling pipelines connecting the Property
to wharves and/or barge mooring docks, as may be necessary for Purchaser’s
activities and/or operations, and upon payment or arrangements for payment to
Seller of appropriate fees therefor.

Seller shall have no
obligation to furnish any easement which would in the exercise of its
reasonable discretion interfere with the orderly development and/or utilization
of Seller’s other property, in whole or in part, nor shall any easement exceed
the height, depth or width reasonably necessary for Purchaser’s operation of
its facilities on the Property. Purchaser shall notify Seller of any easements
which Purchaser requires within forty-five (45) days of the date of this Agreement.
Seller shall notify Purchaser within five (5) business days of its receipt of a
request for easements from Purchaser as to whether Seller will grant such
easement. Any and all easements in which rights shall be granted hereunder
shall be embodied in written easement agreements which shall be recorded at the
Closing. Reasonable surveying costs associated with the preparation of legal
descriptions and surveys of the easement areas shall be borne by Purchaser.

15.     Destruction
or Damage. If, after the Binding Date and prior to the Closing Date,
the Improvements shall be destroyed or damaged in an amount in excess of
$100,000.00 by fire, vandalism or other casualty, then Purchaser shall have the
right and option to terminate this Agreement by giving Seller written notice to
such effect, within twenty (20) days after the date of receipt by Purchaser of
written notification of such fire or other casualty, or (ii) within five (5)
days after the determination of the amount of such damages as provided in this
paragraph, whichever is later. Should Purchaser elect to so terminate this
Agreement, the Earnest Money shall be returned to Purchaser within five (5)
days after notice of such election, and thereupon the parties hereto shall be
released from any and all further obligations hereunder except as others specified
in Paragraph 5 hereof. In the event of fire, vandalism or other casualty
causing damage in the amount of $100,000.00 or less, (or more than $100,000.00
and Purchaser does not elect to terminate), then Purchaser shall not have the
right to so terminate this Agreement and in such event shall have the right to
participate in the adjustment and settlement of any insurance claim relating to
said damage, and at the Closing Seller shall assign the interest of Seller in
and to any insurance proceeds with respect to said damage to Purchaser and
Purchaser shall be given a credit against the Price in an amount equal to the
amount if any deductible under the applicable insurance policies. If the
Closing Date is a date prior to the expiration of the time periods specified
above, the Closing shall be delayed until Purchaser makes its election within
the time periods specified above.

 10

 

 

16.           Condemnation.
If, prior to the Closing Date, any proceeding, judicial, administrative or otherwise, which shall relate to the proposed
taking of any portion of the Property by condemnation or eminent domain
or any action in the nature of eminent domain, or the taking or closing of any
right of access to the Property, is instituted or commenced, Purchaser shall
have the right and option to terminate this Agreement by giving Seller written
notice to such effect within ten (10) days after actual receipt of written
notification of any such occurrence or occurrences or the day prior to the
Closing Date, whichever is earlier, whereupon all Earnest Money shall be
returned to Purchaser and this Agreement shall be of no further force of
effect. Failure of Purchaser to give such notice within such time shall be
conclusive evidence that Purchaser has waived the option to terminate by reason
of the occurrence of which it has received notice, and Purchaser shall be
credited with or be assigned all Seller’s right to any proceeds therefrom.
Seller hereby agrees to furnish Purchaser written notification in respect to
any such proceedings within forty-eight (48) hours of Seller’s receipt of any
such notification or learning of the institution of such proceedings. Should Purchaser
elect to so terminate this Agreement, the Earnest Money shall be returned
forthwith to Purchaser within five (5) days after notice of such election, and
thereupon this Agreement shall have no further force or effect except as others
specified in Paragraph 5 hereof. If the Closing Date is less than ten (10) days
following Purchaser’s receipt of such notice, then the Closing shall be delayed
until Purchaser makes such election. Notwithstanding the foregoing, if such
proceeding by way of condemnation or eminent domain shall be “insubstantial”
Purchaser shall not have the right to terminate this Agreement but shall be
credited with or be assigned all Seller’s right to any proceeds therefrom. An “insubstantial”
proceeding shall be one which (i) does not relate to the taking or closing of
any right of access to the Property, (ii) affects only the perimeter of the
Property and does not involve more than the equivalent of $100,000.00 in value,
(iii) does not enable Purchaser’s lender, if any, to terminate its loan
commitment to provide financing for Purchaser’s acquisition of the Property.

17.           Remedies for Defaults.

(a)           If Purchaser defaults hereunder prior
to Closing in any material respect and such default remains uncured ten (10)
days after notice thereof from Seller to Purchaser in which the nature of the
default is described with particularity, (and no such notice shall be required
and no cure period given in respect to a default on the Closing Date) Seller
shall have the right to terminate Seller’s obligations hereunder and Purchaser’s
rights under this Agreement, and whatever interest in the Property is derived
hereunder, by giving notice of such election to Purchaser, in which event
Seller shall (i) be paid, and have the right to retain, the Earnest Money, if
such default is in the performance of any obligation of Purchaser hereunder
other than the Indemnity Obligation, which payment to Seller of the Earnest
Money in respect of such default shall be Seller’s sole and exclusive remedy
therefor (Seller and Purchaser each agreeing that the amount of said Earnest
Money to be so paid to Seller under such circumstances is the mutually agreed
upon amount of compensation to Seller for making the Property available to
Purchaser on the terms and during the pendency of this Agreement, and that the
payment thereof will not result in a penalty or forfeiture, and shall be in
lieu of any other remedy or damages), and (ii) be paid by Purchaser Seller’s
damages resulting from any default by Purchaser in performing the Indemnity
Obligation.

(b)           If Seller defaults hereunder prior to
Closing in any material respect and such default remains uncured ten (10) days
after notice thereof from Purchaser to Seller in which the nature of the
default is described with particularity, (and no such notice shall be required
and no cure period given in respect to a default on the Closing Date) Purchaser
may elect, as Purchaser’s sole and exclusive remedy, either to: (i) terminate
Purchaser’s obligations hereunder by giving notice of such election to Seller,
in which event the Earnest Money shall be returned to Purchaser, and Seller
shall, subject to the conditional limitation hereinafter specified, reimburse
Purchaser for Purchaser’s actual documented out-of-pocket expenses incurred by
it in connection with entering into this Agreement, making and causing to be
made evaluations and investigations of the Property, and arranging financing to
consummate the purchase of the Property (including, but not limited to,
non-refundable loan commitment fees and other borrowing costs).

 11
 

 

 

or (ii) compel Seller to
perform its obligations hereunder in accordance with the terns hereof through
an action for specific performance. In the event Purchaser elects to terminate
its obligations hereunder, as aforesaid, Seller’s obligations to reimburse
Purchaser for its out-of-pocket expenses shall not exceed in the aggregate
$100,000 unless Seller has acted fraudulently, in which case there shall be no
such limitation, and Purchaser shall be entitled to such other damages as the
law allows. For purposes of this Agreement, a default by either party hereunder
shall be deemed material unless damages for such default are an adequate remedy
at law and the amount thereof does not exceed $10,000.00, and in the event of a
non-material default by either party, the other party’s sole and exclusive
remedy therefor shall be money damages.

18.           No
Assignments; Binding Effect. Neither party shall assign this
Agreement without the other party’s prior written consent, except that
Purchaser may assign its rights hereunder to any entity which it controls, is
controlled by or is under common control or ownership with Purchaser. This Agreement
shall inure to the benefit of and be binding upon the permitted successors and
assigns of the parties hereto.

19.           Real Estate Brokers.
Each party represents to the other that it has not engaged the services of, or
been assisted by, any real estate broker or sales person in connection with
this transaction. If any claims for brokerage commissions or fees are ever made
against Seller or Purchaser in connection with this transaction by anyone, all
such claims shall be defended and/or paid by the party whose actions or alleged
commitments form the basis of such claim, and the party whose actions or
commitments form the basis of such claim shall indemnify and hold harmless the
other from and against any and all such claims and demands with respect to any
brokerage fees or agents’ commissions or other compensation asserted by any
person, firm or corporation in connection with this contract or the
transactions contemplated hereby.

20.           Notices.   Each notice, request, demand,
approval, consent, election, or other communication permitted or required to be
given hereunder (each being herein referred to as a “Notice”) shall be
in writing, shall be effective for all purposes if delivered by hand or by
means of a service, including, but not limited to, the United States Postal
Service, which provides proof of delivery (or attempted delivery, as the case
may be), and shall conclusively be deemed given on the date of actual receipt
by the party to which it is directed, notwithstanding any further direction to
the attention of any individual or department, provided that where provision is
made for the attention of any individual or department, the Notice shall be
effective only if the wrapper in which it is sent is addressed in accordance with
such provision, or on the date such a delivery is attempted but cannot be made
because of a changed address of which no Notice was given, rejection, or other
refusal to accept said delivery. Each party hereto may from time to time
request, as shown below, or by Notice given in the manner aforesaid, that a copy
of any Notice given in accordance with this section be sent to no more than two
(2) additional representatives of the party making such request, addressed in
the manner indicated in such request, in which event the party to whom such
request is made shall send via regular mail, postage prepaid, on the day of
personally delivering or depositing for delivery via mail or courier service
any Notice intended for the party making such request, a copy thereof to the
representative so designated, provided, however, that the effectiveness and
date of giving any Notice to any party shall, for all purposes hereunder, be determined
solely by the provisions of the first sentence of this section. Notices shall
be addressed to the respective parties, as follows:

	
  If for Seller:

  	
  Shipyard Industrial Park, Inc.

  
	
   

  	
  520 Shipyard
  Road

  
	
   

  	
  Seneca, Illinois
  61360

  
	
   

  	
  Attn: George R.
  Lamb

  

 

 12
 

 

 

	
  with a copy to:

  	
  Paul E. Root, Attorney at Law

  
	
   

  	
  P.O. Box 688

  
	
   

  	
  Morris, Illinois 60450

  
	
   

  	
   

  
	
  If for Purchaser:

  	
  Nova Biofuels Seneca, LLC

  
	
   

  	
  c/o Nova Energy Holding, Inc.

  2777 Allen Parkway, Suite 800

  Houston, Texas 77019

  
	
   

  	
  Attn: Dallas Neil

  
	
   

  	
   

  
	
  with a copy to:

  	
  Baker & McKenzie LLP

  
	
   

  	
  130 East Randolph Drive

  Chicago, Illinois 60601

  
	
   

  	
  Attn: Christopher L. Kopecky

  

 

Each party hereto may, from
time to time, change the address or name specified above for it by giving
Notice to the other party (or parties. as the case may be) in accordance with
this section.

21.           Governing Law.
This Agreement shall be construed, and the terms hereof shall be enforceable,
in accordance with the internal laws (as distinguished from the conflicts of
law provisions) of the State of Illinois, and in the event any legal
proceedings are brought in connection with this Agreement, the parties agree
that the venue therefor shall be only state and federal courts located in
LaSalle County, Illinois, and the courts to which an appeal therefrom may be
taken.

22.           Expenses of Enforcement.
In the event of litigation between the parties with respect to the Property,
this Agreement, the performance of their obligations hereunder or the effect of
a termination under this Agreement, the losing party shall pay all costs and
expenses incurred by the prevailing party in connection with such litigation,
including reasonable attorneys’ fees.

23.           Amendments.
Neither this Agreement nor any provisions hereof may be waived, modified,
amended, discharged or terminated except by an instrument in writing signed by
the party against which the enforcement of such waiver, modification,
amendment, discharge or termination is sought, and then only to the extent set
forth in such instrument.

24.           Non-Business Days.
If any date herein set forth for the performance of any obligations by Seller
or Purchaser or for the delivery of any instrument or notice or for the
satisfaction of any condition precedent, as herein provided should be on a
Saturday, Sunday or legal holiday, the compliance with such obligations or
delivery or satisfaction of such condition shall ipso facto extended to the
next business day following such Saturday, Sunday or legal holiday. As used
herein, the term “legal holiday” means any state or federal holiday for which financial
institutions or post offices are generally closed in the State of Illinois for
observance thereof.

25.           Construction of Agreement;
Entire Agreement. This Agreement shall not be construed more
strictly against one party than against the other merely because of the fact
that it may have been prepared by counsel for one of the parties, it being
recognized that both Seller and Purchaser have contributed substantially and
materially to the preparation of this Agreement. The headings of various
paragraphs in this Agreement are for convenience only, and are not to be
utilized in construing the content or meaning of the substantive provisions
hereof. This Agreement supersedes all previous agreements between Seller and
Purchaser pertaining to the Property and this Agreement therefore constitutes
the entire agreement and understanding of the parties hereto.

 13
 

 

 

26.           Survival of Certain
Provisions. The provisions of this Agreement, which by their nature
are intended to be performed or be applicable after the Closing, shall not
merge in the deed of conveyance and shall survive the Closing (but only for the
duration specified in Paragraph 7 with respect to the matters specified
therein), and all other provisions of this Agreement shall have no further
force or effect after the Closing, if a Closing occurs.

27.           Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute but one and
the same instrument.

[remainder
of page intentionally left blank]

 

 14

 

 

IN WITNESS WHEREOF, the
Purchaser has executed this Agreement on the day and year first above written:

 

	
  PURCHASER:

  	
  SELLER:

  
	
   

  	
   

  
	
  NOVA
  BIOFUELS SENECA, LLC

  	
  SHIPYARD
  INDUSTRIAL PARK, INC

  
	
   

  	
   

  
	
  By:

  	
  /s/ Dallas Neil

  	
   

  	
  By:

  	
  /s/ George R. Lamb

  	
   

  
	
  Name:

  	
  Dallas Neil

  	
   

  	
  Name:

  	
  George R. Lamb

  	
   

  
	
  Its:

  	
  Vice President

  	
   

  	
  Its:

  	
  President [ILLEGIBLE]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  L&L
  PROPERTIES LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ George R. Lamb

  	
   

  
	
   

  	
  Name:

  	
  George R. Lamb

  	
   

  
	
   

  	
  Its:

  	
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  JOINDER:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  NOVA ENERGY
  HOLDING, INC., a Delaware corporation, hereby executes this Agreement for the
  sole purpose of guaranteeing Purchaser’s Indemnity Obligation as set forth in
  Section 5.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  NOVA
  ENERGY HOLDING, INC., a Delaware corporation

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Dallas Neil

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Dallas Neil

  	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
  Executive
  VP-Corporate Development

  	
   

  	
   

  	
   

  	
   

  
														

 

 

EXHIBIT A

DESCRIPTION
OF PROPERTY

1.             A fee simple estate in the land described on Schedule
A-1, attached hereto and made a part hereof commonly known as Lot 1,
Shipyard Industrial Park, Seneca, IL (the “Land”).

2.             The existing building on the Property (the “Building”),
together with any and all other improvements thereon or fixtures thereto
(including all replacements or additions thereto between the date of the
Agreement and the Closing Date) such as, but not limited to, all systems,
facilities, fixtures, machinery, equipment and conduits to provide fire protection,
security, heat, exhaust, ventilation, air conditioning, electrical power,
lighting, plumbing, refrigeration, gas, sewer, water, telephone, canopies, and
signs (which such other improvements and fixtures, together with the Building,
are collectively referred to as the “Improvements”) (the Land and
Improvements are collectively referred to as the “Real Property”). 

3.             All privileges, rights, easements, hereditaments, and
appurtenances belonging to or for the benefit of the Land, including, but not limited
to, all right, title and interest of Seller in and to any streets, alleys,
passages, and other right-of-way included thereon or adjacent thereto (before
or after the vacation thereof) and vaults beneath any such streets (hereinafter
collectively referred to as the “Appurtenances”).

4.             All
right, title and interest of Seller in any and to all furniture, carpets, rugs,
draperies, Property operating equipment, telephones, and all other machinery,
equipment, furnishings, signs and other tangible personal property situated in
or upon or used solely in connection with the operation or maintenance of the
Property and located in the Building on the date of this Agreement.

 

 

 

EXHIBIT
A-1

 A-1

 

	
  

  	
  

  

  Professional Engineers & Land Surveyors

  
	
  

  1304 GEMINI CIRCLE · OTTAWA, IL
  61350-1692

  TEL:
  815-434-3925 · FAX:
  815-434-3953

  

 

DESCRIPTION OF LOT
1 SHIPYARD INDUSTRIAL PARK

Part of the East Fractional Half of Section 25, Township 33 North, Range
5 East of the Third Principal Meridian,
and part of the Northwest Fractional Quarter of Section 30, Township 33 North,
Range 6 East of the Third Principal Meridian, all lying north and west
of the Illinois River and south and west of the C.S.X.T. Railroad, described as
follows: Commencing at the northwest corner of the East Fractional Half of said
Section 25; thence South 1°25’10” East 724.90 feet along the west line of said
East Fractional Half to the southwest
corner of a parcel conveyed by Warranty Deed from Conticarriers & Terminals,
Inc. to Pipe & Piling Supplies U.S.A., LTD, as recorded August 18, 1986 as
Document #86-08950 in the LaSalle County Recorder’s Office; thence South 89°58’51”
East 916.77 feet along the south line of said Pipe & Piling parcel to the
southeast corner of said Pipe & Piling parcel; thence North 79°33’50” East
198.84 feet to the west line of a parcel conveyed by Warranty Deed from
Conticarriers & Terminals, Inc. to John A. Biewer Company of Illinois,
recorded as Document #700632 in the LaSalle County Recorder’s Office; thence
South 22°l5’08” East 155.94 feet along the west line of said Biewer parcel to
the southwest corner of said Biewer parcel, said southwest corner being the
POINT OF BEGINNING; thence continuing South 22°15’08” East 53.97 feet along the
southerly extension of the west line of said Biewer Parcel; thence North 68°00’37”
East 560.06 feet to the beginning of a 70 foot radius curve concave to the
southwest; thence Southwesterly 146.61 feet along said curved line whose chord bears
South 8°00’37” West 121.24 feet to the beginning of a 70 foot radius curve
concave to the southwest; thence Northwesterly 73.30 feet along said curved line whose chord bears North 81°59’23”
East 70.00 feet; thence South 21°51’10” East 2005.7 feet to the north edge of
the Illinois River; thence Northeasterly along the north edge of said Illinois
River to the southwesterly right-of-way line of the C.S.X.T. Railroad; thence
North 42°52’36” West 571.37 feet along the southwesterly right-of-way line of
said C.S.X.T. Railroad to the beginning of a 3714.48 foot radius curve concave
to the southwest; thence Northwesterly 589.66 feet along said curved
southwesterly right-of-way line whose chord bears North 47°25’28” West
589.05 feet; thence North 51°58’20” West 1658.80 feet along said southwesterly right-of-way
line to the east line of said John A. Biewer Company of Illinois parcel; thence
South 43°45’l3” East 89.89 feet along the east line of said Biewer parcel;
thence South 41°38’55” East 20.34 feet along said east line; thence South 29°08’51”
East 19.10 feet along said east line; thence South 18°36’37” East 39.00 feet
along said east line; thence South 13°47’02” East 40.93 feet along said east line;
thence South 11°53’28” East 31.10 feet along said east line; thence South 9°49’47”
East 30.87 feet along said east line; thence South 3°26’10” East 79.05 feet along
said east line; thence South 3°56’49” West 60.17 feet along said east line;
thence South 9°06’33” West 29.12 feet along said east line; thence South 11°51’53”
West 30.54 feet along said east line; thence South 17°17’01” West 40.09 feet
along said east line; thence South 21°16’02” West 30.43 feet along said east
line; thence South 24°09’13” West
29.79 feet along said east line; thence South 27°56’06” West 39.60 feet along
said east line; thence South 32°35’44” West 30.17 feet along said east line;
thence South 37°56’59” West 39.16 feet along said east line of said Biewer
parcel; thence South 56°51’46” West 240.16 feet along the south line of said Biewer
parcel; thence South 88°45’09” West 43.09 feet along said south line; thence
South 68°10’05” West 155.89 feet along said south line of said Biewer parcel to
the POINT OF BEGINNING; situated in LaSalle and Grundy Counties, Illinois.

Also to be known as Lot 1 in
Shipyard Industrial Park.

www.ctch-dutt.com

EXHIBIT B

FORM OF
ESCROW AGREEMENT

CHICAGO TITLE AND TRUST COMPANY

171 North Clark, Chicago, Illinois 60601

	
  Refer to:

  	
  Jennifer Rench

  
	
  Phone No.:

  	
  (312) 223-2986

  
	
  Fax No.:

  	
  (312) 223-5801

  

 

STRICT
JOINT ORDER #1 ESCROW TRUST INSTRUCTIONS (EARNEST MONEY)

	
  ESCROW TRUST NO.:

  	
  DATE:

  

 

To:         Chicago Title and Trust Company, Escrow
Trustee:

Customer
Identification:

	
  Seller:

  	
  L&L Properties, LLC, an Illinois limited
  liability company, and Shipyard Industrial Park, Inc., an Illinois
  corporation

  
	
   

  	
   

  
	
  Purchaser:

  	
  Nova Biofuels Seneca, LLC. a Delaware limited
  liability company

  
	
   

  	
   

  
	
  Property
  Address:

  	
  Lot 1. Shipyard Industrial Park, Seneca, Illinois

  
	
   

  	
   

  
	
  Project
  Reference:

  	
  Nova Energy

  
	
   

  	
   

  
	
  Proposed
  Disbursement Date:

  	
  On or before February 2007

  

 

Deposits:

1.            The sum of $50,000.00 by certified
check or wire transfer representing the Initial Earnest Money deposited pursuant
to the Purchase and Sale Agreement between Seller and Purchaser dated June      ,
2006 (the “Purchase Agreement”).

2.             If Purchaser elects to extend the
Binding Date pursuant to the Purchase Agreement, Purchaser shall make up to
five Additional Deposits of $25,000.00 each, by certifed check or wire transfer
representing “Additional Earnest Money”, to be deposited each time the
Purchaser elects to extend the Binding Date.

Delivery of Deposits:

The Initial Earnest Money is
deposited with the escrow trustee to be delivered by it upon the receipt of a
strict order of the Purchaser or its respective legal representatives or
assigns: provided that such a sole order is received by the escrow trustee
prior to 5:00 pm CST on                     the
Binding Date as defined in the Purchase Agreement.

At or after 5:00 pm CST on                          the
Initial Earnest Money and any Additional Earnest Money shall be delivered by
the escrow trustee only upon the receipt of a joint order of the undersigned or
their respective legal representatives or assigns.

In no case shall the
above-mentioned deposits be surrendered except upon the receipt of an order, as
specified above, or in obedience to the court order described below.

 

Billing Instructions:

Escrow
trust fee will be billed as follows: 50% to Seller and 50% to Purchaser;
however if the final deed and money escrow closing takes place through Chicago
Title and Trust Co., the Joint Order Escrow fee will be waived.

An annual maintenance fee, as
determined by the then current rate schedule, will commence: n/a

PLEASE
NOTE: The escrow trust fee for these joint order escrow trust instructions is
due and payable within 30 days from the projected disbursement date (which may
be amended by joint written direction of the parties hereto). In the event no
projected disbursement date is ascertainable, said escrow trust fee is to be
billed at acceptance and is due and payable within 30 days from the billing
date. Chicago Title and Trust Company, at its sole discretion, may reduce or
waive the escrow trust fee for these joint order escrow instructions in the
event the funds on deposit herein are transferred to or disbursed in connection
with sale escrow trust instructions or an agency closing transaction
established at Chicago Title.

Investment:

Deposits
made pursuant to these instructions may be invested on behalf of any party or
parties hereto; provided that any direction to escrow trustee for such
investment shall be expressed in writing and contain the consent of all other
parties to this escrow, and also provided that escrow trustee is in receipt of
the taxpayer’s identification number and investment forms as required. Escrow
trustee will, upon request, furnish information concerning its procedures and
fee schedules for investment.

Commingle:

Except
as to deposits of funds for which escrow trustee has received express written
direction concerning investment or other handling, the parties hereto agree
that the escrow trustee shall be under no duty to invest or reinvest any
deposits at any time held by it hereunder; and, further, that escrow trustee
may commingle such deposits with other deposits or with its own funds in the
manner provided for the administration of funds under Section 2-8 of the
Corporate Fiduciary Act (205 ILCS 620/2-8) and may use any part or all such
funds for its own benefit without obligation to any party for interest or
earnings derived thereby, if any. Provided, however, nothing herein shall
diminish escrow trustee’s obligation to apply the full amount of the deposits
in accordance with the terms of these escrow instructions.

In
the event the escrow trustee is requested to invest deposits hereunder, Chicago
Title and Trust Company is not to be held responsible for any loss of principal
or interest which may be incurred as a result of making the investments or
redeeming said investment for the purposes of these escrow trust instructions.

Compliance With Court Order:

The
undersigned authorize and direct the escrow trustee to disregard any and all
notices, warnings or demands given or made by the undersigned (other than such
notices referenced in these strict joint escrow instructions) or by any other
person. The said undersigned also hereby authorize and direct the escrow
trustee to accept, comply with, and obey any and all writs, orders, judgments
or decrees entered or issued by any court with or without jurisdiction; and in
case the said escrow trustee obeys or complies with any such writ: order,
judgment or decree of any court, it shall not be liable to any of the parties
hereto or any other person, by reason of such compliance, notwithstanding any
such writ, order, judgment or decree be entered without jurisdiction or be
subsequently reversed, modified, annulled, set aside or vacated. In case the
escrow trustee is made a party defendant to any suit or proceedings regarding
this escrow trust, the undersigned, for themselves, their heirs, personal
representatives, successors, and assigns, jointly and severally, agree to pay
to said escrow trustee, upon written demand, all costs, attorney’s fees, and
expenses incurred with respect thereto. The escrow trustee shall have a lien on
the deposits(s) herein for any and all such costs, fees and expenses. If said
costs, fees and expenses are not paid, then the escrow trustee shall have the
right to reimburse itself out of the said deposit(s).

Execution:

These
escrow trust instructions are governed by and are to be construed under the
laws of the State of Illinois. The escrow trust instructions, amendments or
supplemental instructions hereto, may be executed in counterparts, each of
which shall be deemed an original and all such counterparts together shall
constitute one and the same instrument.

	
  For Purchaser:

  	
  For Seller:

  
	
   

  	
   

  
	
  Name:

  	
  Shipyard Industrial Park, Inc.

  	
  Name:

  	
  Nova Biofuels Seneca, LLC.

  
	
   

  	
  L&L Properties LLC

  	
  By:

  	
  Christopher L. Kopecky, Its Attorney

  
	
  By:

  	
  Paul Root, Its Attorney

  	
  Address:

  	
  One Prudential Plaza

  
	
   

  	
   

  	
   

  	
  130 East Randolph Drive

  
	
  Address:

  	
  P.O. Box 688

  	
   

  	
  Chicago, IL 60601

  
	
   

  	
  Morris, Illinois 60450

  	
  Telephone:

  	
  (312)861-7976

  
	
  Telephone:

  	
  (312) 255-8752

  	
  Facsimile:

  	
  (312)698-2337

  
	
  Facsimile:

  	
  (312) 255-8762

  	
  Email:

  	
  christopher.l.kopecky@bakernet.com

  
	
  Email:

  	
  N/A

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Signature:

  	
   

  	
   

  	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Accepted: Chicago Title and Trust Company, as Escrow
  Trustee

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
										

 

EXHIBIT
C

SCHEDULE
OF PROPERTY DOCUMENTS

Part 1 - Documents Which Have Been Delivered:                      -NONE-

Part 2 - Documents To Be Delivered (to the extent
within Seller’s possession or control):

1.             Plans and specifications for the Building.

2.             Insurance records pertaining to the Building.

3.             Reports, if any, of any building code violation and
reports of any action taken in respect thereto -NONE-

4.             Insurance policy in force for the Premises and invoices
therefor or other evidence of the costs and coverages thereof.

5.             Existing title policies and survey.

6.             Geo-technical information                     -NONE-

7.             Original soil borings                      -NONE-

8.             Physical reports pertaining to the property.

Part 3 - Documents Which the Purchaser Shall Have
Access to at Seller’s Office/Property:

1.             Existing environmental studies.

EXHIBIT E

SCHEDULE OF TITLE INSURANCE
ENDORSEMENTS

 

1.             Extended Coverage Endorsement deleting Schedule B
General Exceptions numbered 1 through 5, inclusive.

2.             Real Estate Property Tax
Index Number Endorsement.

3.             A 3.1 Zoning Endorsement (to include parking) showing
that the use of the Property for industrial/office purposes is designated as a
permitted use under the applicable zoning ordinance (and that such use is not a
special use or a non-conforming qualified permitted use), and that said
municipality is the governmental entity having zoning jurisdiction over such
Property.

4.             Restrictions Endorsement 1 insuring against loss by
reason of violation of any covenant, restriction or plat building line shown in
Schedule B to the Title Commitment.

5.             An Endorsement deleting from the Exclusions from
Coverage item no. 4 - the so called “Creditors Rights Exclusion.”

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}]]