EXHIBIT 10.5
[BIODIESEL INDUSTRIES, INC. LOGO]
BIODIESEL PRODUCTION UNIT PROPOSAL
This proposal is made in conjunction with the terms of the attached
Preferred Distributor Agreement and describes the intended use of a funding
level $300,000. Said funding to be provided by Western States Oil, Inc. ("WSO")
as a convertible loan, the terms of which provide for repayment of the loan plus
interest from projects generated b the unit to be constructed and which allows,
at WSO's discretion, for the unpaid balance of the loan and accrued interest to
be converted to shares of stock in Biodiesel Industries, Inc. ("BI") upon the
same terms and conditions as the offering described in the Private Placement
Memorandum (PPM). BI of San Jose, CA will be operated as a subsidiary division
of BI, and will be directed by a divisional board of directors upon which WSO
may designate a director until such time as the loan is repaid or the loan is
converted to shares of stock in BI. The convertible loan will be repaid, in
monthly payments, from 50% of the net projects from the operation of the
biodiesel production unit described in this proposal, with simple annual
interest at the rate of 8%. The net profits remaining, after principal and
interest payments, will be divided 49% to XXX and 51% to BI, until the loan is
repaid in full or converted to shares in BI.
OBJECTIVE: To build and operate a biodiesel production facility at
WSO's location in the Bay Area which will be capable of profitably producing
1,000,000 gallons of biodiesel per year from used cooking oil, commonly know as
the Modular Production Unit ("MPU") and described in the attached specification
sheet. It is the intention of BI to expand its operations to their full
potential as described in the PPM in the attached Preferred Distributor
Agreement. The MPU will remain the property of BI, but will be subject to a
UCC-1 lien held by WSO until the loan is repaid in full or converted to shares
in BI.
FUNDAMENTALS: Construction of the MPU will be undertaken by BI
commencing with the execution of this Proposal, and the deposit of the first
progress payment of $50,000. The unit will be designed to produce a minimum of
1,000,000 gallons of biodiesel per year utilizing used cooking oil as a
feedstock. Cost of construction and placement at WSO's Location is $300,000, to
be paid in mutually agreed upon progress payments of $50,000, with final payment
due upon successful demonstration of the unit's design capabilities. Estimated
construction time is 90-120 days.
BI will be responsible for the day-to-day operation of the MPU and the
hiring and training of all personnel, although it may be agreed by the Parties
that the personnel may be employees of WSO.
Site preparation will consist of providing a graded paved area
approximately 70'x60' with waste water drain, fresh water, suitable electrical
power and possible containment if required by permitting. Providing the location
and permitting for the operation and placement of the MPU shall be the
responsibility of WSO, with cooperation in providing required information by BI.
This Proposal, to be accepted, must be signed and returned to BI no
later than August 21, 2001.
Submitted by, Xxxxxx 2nd day of October, 2001 this to by,
/S/ XXXXXXX XXXXX /S/ X X XXXXX
Xxxxxxx Xxxxx, President
on behalf of BI on behalf of WSO
