Document:

Filed by Bowne Pure Compliance

 

Exhibit 10.25

* Portions omitted pursuant to a request for confidential treatment and filed separately

with the Securities and Exchange Commission.

First Amendment 

to the

Lump Sum Design-Build Agreement

between

Homeland Energy Solutions, LLC

and

Fagen, Inc.

dated July 6, 2007

This First Amendment (“Amendment) to the Lump Sum Design-Build Agreement dated July 6, 2007 (the
“Agreement”) is made and entered into by and between Homeland Energy Solutions LLC (“Owner”) and
Fagen, Inc. (“Design-Builder”) effective as of the Effective Date of the Agreement.

RECITALS:

	A.	 	Fagen and Owner desire to amend the Agreement to the benefit of each party.

	B.	 	In exchange for an increase in the Contract Price, Fagen agrees to accept Notice to Proceed
earlier than required per the terms of the Agreement.

NOW, THEREFORE, for good and valuable consideration, the parties agree as follows:

1. Section 6.2 of the Agreement is amended and restated in its entirety as follows:

6.2 Notice to Proceed; Commencement. The Work shall commence following Design-Builder’s
receipt of Owner’s written valid notice to proceed (“Notice to Proceed”) unless the Parties
mutually agree otherwise in writing. The Parties agree that a valid Owner’s Notice to Proceed
cannot be given until: (1) Owner has title to the real estate on which the Project will be
constructed; (2) Owner completes, to Design-Builder’s satisfaction, the Phase I Site work including
temporary power, potable water, ditches cut, and storm drains in, either fermentation or process
area must have geopiers installed, if required, tile must be put in as required, and parking lots,
grains areas, construction trailer areas, covered aggregate roads and laydown areas must be
provided per Design-Builder’s specifications, and redline drawings have been reviewed and deemed
adequate by Design-Builder; (3) Owner has executed side-letter agreements with
Design-Builder for the construction of the required water pre-treatment system and fire protection
system in accordance with Exhibit C; (4) the air permit(s) and/or other applicable local, state or
federal permits necessary so that construction can begin, as listed on Exhibit G, have been
obtained; (5) Owner has obtained Financial Closing and delivered a certificate of financial closing
executed by Owner and Lenders in the form attached hereto as Exhibit P pursuant to Section 4.3; (6)
if applicable, Owner has executed a sales tax exemption certificate and provided the same to
Design-Builder; (7) Owner has provided the name of its property/all-risk insurance carrier and the
specific

 

1

 

requirements for fire protection; (8) Owner has, in accordance with Section 17.4.5, provided
insurance certificates or copies of insurance policies demonstrating that Owner has obtained the
insurance policies required pursuant to Section 17.4 hereof and naming additional insureds and
protecting other interests as prescribed in Section 17.4, and (9) Design-Builder provides Owner
written notification of its acceptance of the Notice to Proceed. Owner and Design-Builder mutually
agree that time is of the essence with respect to the dates and times set forth in the Contract
Documents. Owner must complete the prerequisites to the issuance of a valid Notice to Proceed, as
listed in items number (1) through (8) of this Section 6.2 and submitted a Notice to Proceed, to
Design-Builder for Design-Builder’s acceptance by December 31, 2007; otherwise, this Agreement may
be terminated, at Design-Builder’s sole option. If Design-Builder chooses to terminate this
Agreement pursuant to its right under the immediately preceding sentence, then Design-Builder shall
have no further obligations hereunder.

2. Sections 9.1, 9.2, and 9.2.1 of the Agreement shall be deleted in their entirety and replaced
with the following 9.1, 9.2, 9.2.1., and 9.3:

9.1 Contract Price.

Subject to any adjustments as provided herein, as full consideration to Design-Builder for
full and complete performance of the Work and all costs incurred in connection therewith, Owner
shall pay Design-Builder in accordance with the terms of this Agreement, the sum of One Hundred
Twenty Million Dollars ($120,000,000.00) (“Contract Price”), subject to adjustments made in
accordance with this Agreement. The Contract Price does not include the water pre-treatment system
and the fire protection system which shall be provided by Design-Builder pursuant to a separate
side-letter agreement executed by Owner and Design-Builder at Design-Builder’s standard time plus
material rates during the relevant time period and at the relevant locale. Owner acknowledges that
it has taken no action which would impose a union labor or prevailing wage requirement on
Design-Builder, Owner or the Project. The Parties acknowledge and agree that if after the date
hereof, an Owner’s action, a change in Applicable Law, or a Governmental Authority acting pursuant
to a change in Applicable Law shall require Design-Builder to employ union labor or compensate
labor at prevailing wages, the Contract Price shall be adjusted upwards to include any increased
costs, of any kind or nature, associated with such labor or wages including but not limited to site
security and personnel costs. Such adjustments shall include, but not be limited to, increased
labor, subcontractor, and material and equipment costs resulting from any union or prevailing wage
requirement; provided, however, that if an option is made available to either employ union labor,
or to compensate labor at prevailing wages, such option shall be at Design-Builder’s sole
discretion and that if such option is executed by Owner without Design-Builder’s agreement,
Design-Builder shall have the right to terminate this agreement and shall be entitled to
compensation pursuant to Section 15.3.1 hereof.

9.2 Effect of Cost Increase on Contract Price.

The Contract Price shall be subject to adjustment by Design-Builder as follows:

 

2

 

9.2.1 Construction Cost Index Increase. The Baseline Index for this Agreement shall be
7540.38 (September 2005) (“Baseline Index”). The Baseline Index is based on the
Construction Cost Index published by Engineering News-Record Magazine (“CCI”). If valid
Notice to Proceed is given to Design-Builder on or prior to November 30, 2007, there shall be no
adjustment of the Contract Price pursuant to this Section 9.2. If, however, valid Notice to
Proceed is not given to Design-Builder on or before November 30, 2007, and between the Effective
Date and the date on which a valid Notice to Proceed is given to Design-Builder the CCI
increases over the Baseline Index, Design-Builder shall notify Owner in writing that it is
adjusting the Contract Price and the Contract Price shall be increased by a percentage amount equal
to the percentage increase in CCI.

9.3 Promissory Note. Design-Builder agrees to finance a portion of the Contract Price in the
form of a progress payment credit to Owner on an Application for Payment as set forth in this
Section 9.3 (hereinafter referred to as the “Progress Payment Credit”). The amount of the Progress
Payment Credit shall be equal to the sum of: (i) $1,800,000; plus (ii) any increase in the Contract
Price resulting from a change in the CCI should a valid Notice to Proceed be given after November
30, 2007. Owner agrees that all equity funds of Owner shall be utilized and paid towards
Design-Builder’s Applications for Payment prior to issuance of the Progress Payment Credit. Owner
shall provide written notice to Design-Builder when all equity funds of Owner have been utilized.
Upon receipt of such notice and the executed Note (as defined herein), Design-Builder shall
contemporaneously provide the Progress Payment Credit to the then unpaid balance of any issued
Application for Payment and any excess amount to the next Application(s) for Payment. The Progress
Payment Credit will be evidenced by a Subordinated Secured Promissory Note (the “Note”)
substantially in the form attached hereto as Exhibit 1, which Note shall be secured by that
Subordinated Mortgage substantially in the form attached hereto as Exhibit 2. Design-Builder
agrees that the Note shall be subordinate to that construction and working capital financing
obtained at Financial Closing and Design-Builder agrees to enter into a Subordination Agreement
with Owner’s lender(s) that will provide for such subordination. Owner and Design-Builder further
agree that Owner’s obligations under the Note shall be paid in full prior to any dividend or
distribution being made by Owner to any of its members (such restriction shall not prohibit Owner
from making regular debt service payments to Lender).

 

3

 

3. Table 3 to Exhibit C of the Agreement is amended and replaced in its entirety with the
following:

Table 3 Owner’s Milestones

	 	 	 
	 	 	Number Of Days To Be Completed
	Owner’s Responsibilities	 	After Notice To Proceed
	Temporary Electrical Service In Place
	 	0
	Obtain Builder’s Risk policy in the
amount of the Contract Price, obtain
Boiler and Machinery Insurance, and
obtain Terrorism Coverage per TRIA as
long as it is required under Article 17
of the Agreement.
	 	0
	Phase II Owner Deliverables (as defined
in Exhibit L)
	 	30
	Storm Water Permits Complete: Modify the
existing storm water discharge permit to
reflect the ethanol plant, if required.
	 	60
	Natural Gas/Propane Transportation /
Storage Agreement Complete
	 	90
	Water Supply and Service Agreements
Complete
	 	90
	Electrical Service Arrangement
	 	90
	Wastewater Discharge System Complete
	 	180
	TTB Operating Permits Complete
	 	200
	Discharge Permits Complete
	 	200
	Pumphouse/Water System Complete
	 	305
	Fire Protection System Complete
	 	305
	Paving (Plant Roads) Complete
	 	90 days prior to SC
	Rail Spur Complete
	 	90 days prior to SC
	Permanent Electrical Service Complete
	 	60 days prior to SC
	Maintenance and Power Equipment Onsite
(Table 2)
	 	60 days prior to SC
	Employees Hired and Ready for Training
	 	60 days prior to SC
	Natural Gas Pipeline/Delivery System
Complete
	 	60 days prior to SC

//Remainder of page intentionally left blank.//

 

4

 

4. Exhibit E to the Agreement shall be amended and replaced in its entirety with the following
Schedule of Values:

EXHIBIT E

Schedule of Values

Schedule of Values for:

HOMELAND ENERGY SOLUTIONS

New Hampton, IA

100 MGY Dry Grind Ethanol Plant

	 	 	 	 	 	 	 	 	 
	 	 	 	 	DESCRIPTION
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	1	 	 	MOBILIZATION
	 	$	20,000,000	 
	 	2	 	 	ENGINEERING
	 	$	[*]	 
	 	3	 	 	GENERAL CONDITIONS
	 	$	[*]	 
	 	4	 	 	SITEWORK
	 	$	[*]	 
	 	5	 	 	CONCRETE
	 	$	[*]	 
	 	6	 	 	MASONRY / ARCHITECTURAL
	 	$	[*]	 
	 	7	 	 	STRUCTURAL STEEL — MISC. METALS
	 	$	[*]	 
	 	8	 	 	PRE-ENGINEERED BUILDINGS
	 	$	[*]	 
	 	9	 	 	GRAIN HANDLING SYSTEM
	 	$	[*]	 
	 	10	 	 	PROCESS TANKS & VESSELS
	 	$	[*]	 
	 	11	 	 	FIELD ERECTED TANKS
	 	$	[*]	 
	 	12	 	 	HEAT EXCHANGERS
	 	$	[*]	 
	 	13	 	 	PROCESS EQUIPMENT
	 	$	[*]	 
	 	14	 	 	CENTRIFUGES
	 	$	[*]	 
	 	15	 	 	CHILLER
	 	$	[*]	 
	 	16	 	 	TRUCK SCALES & PROBE
	 	$	[*]	 
	 	17	 	 	ETHANOL LOADOUT & FLARE SYSTEM
	 	$	[*]	 
	 	18	 	 	COOLING TOWER
	 	$	[*]	 
	 	19	 	 	DRYER SYSTEM
	 	$	[*]	 
	 	20	 	 	THERMAL OXIDIZER
	 	$	[*]	 
	 	21	 	 	METHANATOR
	 	$	[*]	 
	 	22	 	 	PROCESS PIPING & VALVES
	 	$	[*]	 
	 	23	 	 	PAINTING
	 	$	[*]	 
	 	24	 	 	INSULATION
	 	$	[*]	 
	 	25	 	 	PLUMBING & HVAC
	 	$	[*]	 
	 	26	 	 	ELECTRICAL
	 	$	[*]	 
	 	27	 	 	START-UP
	 	$	[*]	 
	 	28	 	 	DEMOBILIZATION
	 	$	[*]	 
	 	 	 	 	 
	 	$	-	 
	 	 	 	 	 
	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 
	 	 	 	 	TOTAL
	 	$	120,000,000	 

*Portion omitted pursuant to a request for confidential treatment and filed separately with

the Securities and Exchange Commission.

 

5

 

5. Exhibit J to the Agreement shall be amended and replaced in its entirety with the following Draw
Schedule:

Exhibit J

Draw Schedule

HOMELAND ENERGY SOLUTIONS

New Hampton, IA

Monthly Draw Schedule — 17 Month Project (515 Days)

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Previously	 	 	 	 
	Month #	 	This Month	 	 	Completed	 	 	Total	 
	1
	 	$	[*]	 	 	$	[*]	 	 	$	[*]	 
	2
	 	$	[*]	 	 	$	[*]	 	 	$	[*]	 
	3
	 	$	[*]	 	 	$	[*]	 	 	$	[*]	 
	4
	 	$	[*]	 	 	$	[*]	 	 	$	[*]	 
	5
	 	$	[*]	 	 	$	[*]	 	 	$	[*]	 
	6
	 	$	[*]	 	 	$	[*]	 	 	$	[*]	 
	7
	 	$	[*]	 	 	$	[*]	 	 	$	[*]	 
	8
	 	$	[*]	 	 	$	[*]	 	 	$	[*]	 
	9
	 	$	[*]	 	 	$	[*]	 	 	$	[*]	 
	10
	 	$	[*]	 	 	$	[*]	 	 	$	[*]	 
	11
	 	$	[*]	 	 	$	[*]	 	 	$	[*]	 
	12
	 	$	[*]	 	 	$	[*]	 	 	$	[*]	 
	13
	 	$	[*]	 	 	$	[*]	 	 	$	[*]	 
	14
	 	$	[*]	 	 	$	[*]	 	 	$	[*]	 
	15
	 	$	[*]	 	 	$	[*]	 	 	$	[*]	 
	16
	 	$	[*]	 	 	$	[*]	 	 	$	[*]	 
	17
	 	$	[*]	 	 	$	[*]	 	 	$	120,000,000	 
	 
	 	 	 	 	 	$	120,000,000	 	 	 	 	 

*** $20,000,000 Mobilization Fee included in 1st Billing
DISCLAIMER: This Draw (Payment) Schedule is an illustrative estimate only and is not
intended as actual payment amounts which will be based on Applications for Payment
issued pursuant to Article 10 of this Agreement.

*Portion omitted pursuant to a request for confidential treatment and filed separately with

the Securities and Exchange Commission.

 

6

 

This Amendment shall hereafter constitute part of the Contract Documents. All other terms and
conditions of the Contract Documents shall remain in full force and effect, except as specifically
modified by this Amendment. Any capitalized term not defined herein shall have the meaning set
forth in the Agreement.

IN WITNESS WHEREOF, the undersigned have entered into and agreed to the foregoing First
Amendment to the Lump Sum Design-Build Agreement as of the Amendment Effective Date set forth
above.

	 	 	 	 	 	 	 
	OWNER:	 	DESIGN-BUILDER:
	HOMELAND ENERGY SOLUTIONS
LLC	 	FAGEN, INC.
	 
	 	 	 	 	 	 
	By:

	 	/s/ Stephen K. Eastman
	 	By:
	 	/s/ Roland “Ron” Fagen
	 

	 	 
	 	 	 	 
	 

	 	Authorized Representative
	 	 	 	Authorized Representative
	 
	 	 	 	 	 	 
	Title:

	 	President
	 	Title:
	 	COO and Pres
	 

	 	 
	 	 	 	 

 

7

 

Exhibit 1

Promissory Note

*Exhibit 1 omitted pursuant to a request for confidential treatment and filed separately with the
Securities and Exchange Commission.

 

 

 

Exhibit 2

Mortgage

See attached.

 

9

 

WHEN RECORDED RETURN TO: Thomas D. Johnson, 666 Grand Avenue, Suite 2000, Des Moines, Iowa
50309, (515) 242-2400

SUBORDINATE MORTGAGE

FIXTURE FILING AND SECURITY AGREEMENT

THIS SUBORDINATE MORTGAGE, FIXTURE FILING AND SECURITY AGREEMENT (this “Mortgage” or
“Subordinate Mortgage”) is made as of                     , 2008, by and between Homeland Energy Solutions, LLC, an
Iowa limited liability company, whose address is 951 North Linn Avenue, New Hampton, Iowa 50659
(referred to herein as the “Mortgagor”), to FAGEN, INC., a Minnesota corporation, whose address is
501 W Highway 212, P.O. Box 159, Granite Falls, Minnesota 56241 (the “Mortgagee”), as the holder of
the Promissory Note dated                     , 2008, in the aggregate principal amount of One Million Eight Hundred
Thousand and 00/100ths Dollars ($1,800,000) (the “Note”) (The Mortgagor’s obligations under the
Mortgage and Note are collectively referred to as the “Obligations”).

This Mortgage is junior and subordinate to the mortgage dated                     , granted by the Mortgagor in
favor of                                         , given to secure a promissory note in the amount of $                     (the                     
note, mortgage and related
loan documents are collectively referred to as the “Senior Loan Documents”).

WITNESSETH:

Mortgagor will receive the benefit of the indebtedness herein recited, in that the proceeds of
said indebtedness will be used to finance or refinance the acquisition and construction of
improvements to the Property herein described which is owned by Mortgagor.

FOR GOOD AND VALUABLE CONSIDERATION, including securing payment of the Note in the principal
amount of $1,800,000 recited herein, the receipt of which is hereby acknowledged, Mortgagor hereby
irrevocably mortgages, assigns, conveys, warrants and grants a mortgage lien and security interest
to Mortgagee (subject to the lien created by the Senior Loan Documents), in and to all of the
following, whether now owned or held or subsequently acquired, created or arising:

GRANTING CLAUSE I: REAL PROPERTY

All present and future right, title, interest and estate of Mortgagor in and to that certain
real property situated near the City of New Hampton, Chickasaw County, Iowa (hereinafter the
“Property”) as more particularly described in Exhibit “A” attached hereto and incorporated
herein by this reference.

 

1

 

GRANTING CLAUSE II: BUILDINGS, IMPROVEMENTS AND INTERESTS

All right, title, interest and estate of Mortgagor now owned or hereafter acquired, in and to:

(1) All buildings, improvements, works, equipment, structures, facilities and fixtures,
including but not limited to, all plumbing, heating, ventilating, electrical and other
mechanical systems; water heaters and water systems; air conditioning units; sewage systems;
pipes, conduits, and wiring; all interior wall, floor, window and ceiling treatments and
coverings (including but not limited to any carpeting, tile, paneling, drapery or blinds);
and any future additions to and improvements and betterments now or hereafter constructed
upon, and all parts, accessories and accessions to and all renewals and replacements of, any
of the foregoing, which are now or hereafter shall be constructed or affixed or
constructively affixed to the Property or to any portion of the Property (hereinafter the
“Improvements”).

(2) All easements, licenses, streets, ways, alleys, roads, passages, rights-of-way,
zoning rights, strips and gores of land, waters, watercourses, and water rights (whether now
owned or hereafter acquired by Mortgagor and whether arising by virtue of land ownership,
contract or otherwise), of any kind and nature, relating to or in anyway appurtenant or
appertaining to the Property or to any portion of the Property.

(a) Mortgagor has good, indefeasible, marketable and record title to the Property
and the Improvements; and

(b) With the exception of the Permitted Encumbrances as more particularly described
in Exhibit B attached hereto and incorporated herein by reference, the lien created by
this Mortgage upon the Property and the Improvements and all other property included in
the Mortgaged Property is a first and prior lien, free and clear of all liens,
encumbrances, and exceptions.

0.1 Personalty. Mortgagor represents, warrants to and covenants with Mortgagee as
follows:

(a) Mortgagor is the owner, or upon acquisition thereof, will be the owner of the
personal property listed or referred to in the Granting Clauses of this Mortgage
(hereinafter the “Personalty”); and

(b) Mortgagor shall not change its name or principal place of business without giving
the Mortgagee at least thirty (30) days’ prior written notice thereof, which notice shall be
accompanied by new financing statements executed by Mortgagor in the same form as the
financing statements delivered to Mortgagee on the date hereof except for the change of name
and/or address. The chief executive office and principal place of business of Mortgagor is
450 North Linn Avenue, New Hampton, Iowa 50659, and Mortgagor will not move its chief
executive office or its principal place of business or operations except to such new
location as Mortgagor may establish in accordance with this section 2.2(d). The originals
of all documents evidencing any portion of the
Mortgaged Property and the only original books of account and records of Mortgagor
relating thereto are, and will continue to be, kept at such chief executive office or at
such new location as Mortgagor may establish in accordance with this Section 2.2(d).

 

2

 

ARTICLE 1: MAINTENANCE OF MORTGAGED PROPERTY 

1.1 General Maintenance. Mortgagor shall (a) maintain the Mortgaged Property at all
times in good condition and repair; (b) not commit any waste of the Mortgaged Property, or, except
as may be permitted by the Senior Loan Documents, remove, damage, demolish, or structurally alter
any of the Improvements without the consent of Mortgagee; (c) complete promptly and in good and
workmanlike manner any building, fixture, or improvement on the Property, or any portion of the
Property, which may for any reason be constructed; (d) except to the extent that insurance proceeds
are applied by Mortgagee to the satisfaction of the Obligations in accordance with the provisions
of Article 2, restore promptly and in good and workmanlike manner any of the Improvements or any
portion thereof which may for any reason be damaged or destroyed; (e) comply in all material
respects at all times with all laws, ordinances, regulations, covenants and restrictions in any
manner affecting the Mortgaged Property; (f) not commit or knowingly permit any act upon the
Mortgaged Property in violation of law; (g) do all acts which by reason of the character or use of
the Mortgaged Property may be reasonably necessary to maintain and care for the same, the specific
enumeration herein not excluding the general.

ARTICLE 2: INSURANCE

2.1 Insurance. The Mortgagor agrees to insure or cause to be insured the Property and
Improvements in the manner provided in the Senior Loan Documents and as per the Lump Sum
Design-Build Agreement dated July 6, 2007 entered into by and between Mortgagor and Mortgagee. All
proceeds of such insurance shall be applied as provided in the Senior Loan Documents.

2.2 Miscellaneous. Nothing in this paragraph shall prohibit Mortgagee from providing
insurance coverage if such payments are not made as provided herein.

ARTICLE 3:  OFF-SET

3.1 Off-Set. All sums payable by Mortgagor with respect to the Obligations shall be
paid without notices, demand, counterclaim, set-off, deduction or defense and without abatement,
suspension, deferment, diminution or reduction. The Obligations and liabilities of Mortgagor
hereunder shall in no way be released, discharged or otherwise affected (except as expressly
provided herein) by reason of: (a) any damage to or destruction of, or any condemnation or similar
taking of the Mortgaged Property or any part thereof; (b) any destruction or prevention of or
interference with any use of the Mortgaged Property or any part thereof; (c) any title defect or
encumbrance or any eviction from the Mortgaged Property or any part thereof by title paramount or
otherwise; (d) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,
liquidation or other like proceeding relating to Mortgagee, or any action taken with respect to
this Mortgage by any trustee or receiver of Mortgagee, or by any court, in any such proceeding; (e)
any claim which Mortgagor has or might have against

 

3

 

Mortgagee; (f) any default or failure on the part of Mortgagee to perform or comply with any
of the terms, covenants or conditions of this Mortgage or of any other agreement with Mortgagor; or
(g) any other occurrence whatsoever, whether similar or dissimilar to the foregoing. Except as
otherwise expressly set forth in this Section 5.1, nothing contained in this Section 5.1 shall
waive any claims or defenses of Mortgagor against any third parties. Nothing contained in this
Section 5.1 shall be construed as prohibiting Mortgagor from pursuing any rights or remedies it may
have against any person in a separate legal proceeding.

ARTICLE 4: TAXES AND IMPOSITIONS

4.1 Payment of Taxes and Impositions. Mortgagor shall pay, prior to delinquency, all
real property taxes and assessments, general and special, and all other taxes, assessments and
other governmental, municipal, or other charges or impositions of any kind or nature whatsoever
(including without limitation, charges and assessments on water or water stocks used on or with the
Property and levies or charges resulting from covenants, conditions and restrictions affecting the
Mortgaged Property) which are assessed or imposed upon the Mortgaged Property, or become due and
payable, and which create, may create, or appear to create, a lien upon the Mortgaged Property or
any portion of the Mortgaged Property, or upon any equipment or other facility of Mortgagor used in
the construction, operation or maintenance of the Mortgaged Property (all of which taxes,
assessments and other governmental charges of like nature are hereinafter referred to as
“Impositions”); provided, however, that if, by law, any such Imposition is payable, or may at the
election of the taxpayer be paid in installments, Mortgagor may pay the same together with any
accrued interest on the unpaid balance of such Imposition in installments as the same become due
and before any fine, penalty, interest or cost may be added thereto for the nonpayment of any such
installment and interest.

4.2 Evidence of Payment. Mortgagor shall, upon request, furnish Mortgagee, within ten
(10) days after either (i) the date upon which such Imposition is due and payable by Mortgagor or
(ii) the last date upon which installments of such Imposition may be paid by Mortgagor before any
fine, penalty, interest or cost may be added thereto for nonpayment, official receipts of the
appropriate taxing authority, or other proof satisfactory to Mortgagee, evidencing the payments
thereof.

4.3 Right to Contest. Mortgagor shall have the right before any delinquency occurs to
contest or object to the amount or validity of any Imposition by appropriate legal proceedings, but
such contest shall not be deemed or construed in any way as relieving, modifying or extending
Mortgagor’s covenant to pay any such Imposition at the time and in the manner provided in Section
6.1 hereof, unless Mortgagor has given prior written notice to Mortgagee of Mortgagor’s intent to
so contest or object to an Imposition, and unless, at Mortgagee’s option (a) Mortgagor shall
demonstrate to Mortgagee’s satisfaction that the legal proceedings shall conclusively operate to
prevent the sale of the Mortgaged Property, or any part thereof, to satisfy such Imposition prior
to final determination of such proceedings; or (b) Mortgagor shall furnish a good and sufficient
undertaking and sureties as may be required or permitted by law to accomplish a stay of such
proceedings.

 

4

 

ARTICLE 5: ADDITIONAL COVENANTS

5.1 Payment of Utilities and other Expenses. Mortgagor shall pay when due all utility
charges incurred by Mortgagor for the benefit of the Mortgaged Property or which may become a
charge or lien against the Mortgaged Property for gas, electricity, water or sewer services
furnished to the Mortgaged Property and all assessments or charges of a similar nature, whether
public or private, affecting the Mortgaged Property or any portion thereof, whether or not such
assessments or charges are or may become liens thereon. The Mortgagor shall pay when due all
expenses of the operation and maintenance of the Mortgaged Property including, but without
limitation, insurance thereon and insurance against all liability for injury to persons or property
arising from the operation thereof.

5.2 Defense of Title. Mortgagor has and shall preserve good and marketable fee title
to the Property.

5.3 Performance in Mortgagor’s Stead. Should Mortgagor fail to make any payment or to
do any act as provided in this Mortgage, then Mortgagee, but without any obligation to do so, and
without notice to or demand upon Mortgagor and without releasing Mortgagor from any obligation
hereof, may: Make or do the same in such manner and to such extent as either may deem necessary to
protect the security hereof (Mortgagee being authorized to enter upon the Mortgaged Property for
such purposes); commence, appear in and defend any action or proceeding purporting to affect the
security hereof or the rights or powers of Mortgagee; pay, purchase, contest, or compromise any
encumbrance, charge or lien which in the judgment of either appears to be superior to the lien of
this Mortgage; and in exercising any such powers, incur any liability, expend such reasonable
amounts as Mortgagee may deem necessary therefor, including cost of evidence of title, employment
of attorneys, and payment of attorney fees and costs.

5.4 No Removal of Fixtures. Mortgagor shall not, during the existence of this
Mortgage and without the written consent of Mortgagee, remove from the Property or the
Improvements, any fixture, structure, or other improvement at any time affixed or constructively
affixed to the Property or the Improvements or any portion thereof, or any Personalty, except in
the ordinary course of Mortgagor’s business which does not diminish the value or operation of the
Property.

ARTICLE 6: CONDEMNATION AWARDS

If the Mortgaged Property or any portion thereof should be taken or damaged by
reason of any public improvement or condemnation proceeding, or in any purchase in lieu thereof,
Mortgagee or Mortgagor shall be entitled to all compensation, awards, and other payments or relief
therefor payable to Mortgagor as provided in the Senior Loan Documents. Mortgagor shall promptly
give notice to Mortgagee of any condemnation proceeding or any taking for public improvement.

ARTICLE 7: DUE ON SALE

7.1 Right to Accelerate. Notwithstanding anything to the contrary in Section 9.1
hereof, in the event the Mortgagor shall either sell, convey or alienate the Mortgaged Property, or
any part thereof, or any interest therein, in any manner, whether voluntarily or involuntarily, in
each case without the express written permission of Mortgagee first had and obtained, then
such transfer shall be an Event of Default, and all obligations secured by this Mortgage,
irrespective of the maturity date, at the option of Mortgagee and without demand or notice, shall
immediately become due and payable.

 

5

 

ARTICLE 8: GENERAL PROVISIONS

8.1 Notices. All notices, certificates or other communications hereunder shall be
given to all parties identified below, shall be in writing (except as otherwise expressly provided
herein) and shall be sufficiently given and shall be deemed given when delivered by hand delivery,
telegram or facsimile or served by depositing the same with the United States Postal Service, or
any official successor thereto, designated as Registered or Certified Mail, Return Receipt
Requested, bearing adequate postage, or delivery by reputable private courier such as Federal
Express, Airborne, DHL or similar overnight delivery service, and addressed as hereinafter
provided. Notices shall be deemed given when mailed as provided herein; provided, notices to the
Mortgagee shall be effective only upon receipt. All parties identified below may, by written
notice given by each to the others, designate any address or addresses to which notices,
certificates or other communications to them shall be sent when required as contemplated by this
Mortgage. Any notice, certificate, report, financial statement or other communication properly
provided by legal counsel on behalf of any party hereunder shall be deemed properly provided by the
party represented by such counsel. Until otherwise provided by the respective parties, all
notices, certificates and communications to each of them shall be addressed as follows:

	 	 	 
	          If to Mortgagor:

	 	Homeland Energy Solutions, LLC

Attn: Stephen Eastman

951 North Linn Avenue

New Hampton, Iowa 50659
	 
	 	 
	          with a copy to:

	 	Thomas D. Johnson

666 Grand Avenue, Suite 2000

Des Moines, Iowa, 50309
	 
	 	 
	          If to Mortgagee:

	 	Fagen, Inc.

Attn: Jennifer Johnson

501 W Highway 212

P.O. Box 159

Granite Falls, Minnesota 56241

8.2 Severability. If any provision of this Mortgage shall be held or deemed to be or
shall, in fact, be illegal, inoperative, or unenforceable, the same shall not affect any other
provision or provisions contained in this Mortgage or render the same invalid, inoperative, or
unenforceable to any extent whatever.

8.3 Amendments, Changes, and Modifications. This Mortgage may not be amended,
changed, modified, altered, or terminated without the written consent of Mortgagee.

 

6

 

8.4 Governing Law. This Mortgage shall be governed exclusively by and construed in
accordance with the applicable laws of the State of Iowa, without giving effect to its conflict of
laws principles.

8.5 Interpretation. Whenever the context shall include the singular, the whole shall
include any part thereof, and any gender shall include both other genders. The section headings
contained in this Mortgage are for purposes of reference only and shall not limit, expand, or
otherwise affect the construction of any provisions hereof.

8.6 Binding Effect. This Mortgage shall be binding upon Mortgagor and its successors
and assigns. This Mortgage shall inure to the benefit of Mortgagee, and Mortgagee’s successors and
assigns.

8.7 Access. Mortgagee’s authorized agents and representatives, are hereby authorized
and shall have the right, at all reasonable times during the existence of this Mortgage and upon
reasonable notice to Mortgagor which need not be in writing and need not be given in the event of
an emergency or if there exists an Event of Default, to enter upon the Mortgaged Property or any
portion of the Mortgaged Property for the purpose of inspecting the Mortgaged Property or for the
purpose of performing any of the acts that Mortgagee is authorized under this Mortgage to perform.

8.8 Heirs, Successors, Etc., Definitions. This Mortgage shall apply to, inure to the
benefit of, and bind all parties hereto, their heirs, legatees, devisees, administrators,
executors, successors and assigns. All obligations of Mortgagor hereunder are joint and several.
In this Mortgage, whenever the context so requires, the masculine gender includes both the feminine
and neuter, and the singular number includes the plural.

8.9 Agricultural Purposes; Homestead Waiver. The Property is not used for
agricultural purposes as defined in Section 535.13 Iowa Code. The Property is not a homestead, and
Mortgagor waives any homestead rights now or hereafter accruing in the Property.

ARTICLE 9: EVENTS OF DEFAULT AND REMEDIES

9.1 Events of Default. The occurrence and continuance of any one of the following
shall constitute an event of default (herein referred to as an “Event of Default”):

(a) Except as provided otherwise in Section 9.1(b), failure by Mortgagor to observe and
perform any of the terms, covenants, or conditions to be observed or performed by Mortgagor
contained in this Mortgage for a period of thirty (30) days after written notice, by
registered or certified mail, specifying such failure and requesting that it be remedied,
given to Mortgagor by Mortgagee, or for such longer period as the Mortgagor and Mortgagee
may agree to in writing; provided that if the failure is other than the payment of money, is
of such nature that it can be corrected but not within the applicable day period and any
extension of such cure period shall not adversely effect the Mortgagee, such failure shall
not constitute an Event of Default so long as Mortgagor institutes curative action within
the applicable period and diligently pursues such action to completion within sixty (60)
days after written notice;

 

7

 

(b) If Mortgagor shall fail to make any payment due and payable under the terms of the
Mortgage and such failure should continue for a period of more than ten (10) Business Days;

(c) Any representation or warranty of Mortgagor contained in this Mortgage shall prove
at any time to be, in any material respect, incorrect or misleading as of the date made.

9.2 Acceleration; Notice. Time is of the essence hereof. Upon the occurrence of any
Event of Default under this Mortgage, at Mortgagee’s option and in addition to any other remedy
Mortgagee may have under this Mortgage, Mortgagee may declare all sums secured hereby immediately
due and payable and elect its remedies hereunder.

9.3 Remedies. Upon an Event of Default, Mortgagee, may institute foreclosure
proceedings or take any other action at law or in equity to enforce this Mortgage and realize on
the security provided hereby.

9.4 Surrender of Possession. Mortgagor shall surrender possession of the Mortgaged
Property to the purchaser immediately after foreclosure, sheriff’s sale, and the expiration of any
applicable redemption period provided for under the laws of the State of Iowa, in the event such
possession has not previously been surrendered by Mortgagor.

9.5 Fixture Filing. Upon its recording in the real property records, this Mortgage
shall be effective as a financing statement filed as a fixture filing. The Mortgagor is the record
owner of the real estate covered by such fixture filing. In addition, a carbon, photographic or
other reproduced copy of this Mortgage and/or any financing statement relating hereto shall be
sufficient for filing and/or recording as a financing statement. The filing of any other financing
statement relating to any personal property, rights or interests described herein shall not be
construed to diminish any right or priority hereunder. Certain UCC-1 financing statement
information is set forth on Exhibit “C” attached hereto and incorporated herein.

9.6 Appointing a Receiver.

(a) If an Event of Default has occurred and is continuing, regardless of the adequacy
of Mortgagee’s security, without regard to Mortgagor’s solvency and without the necessity of
giving prior notice (oral or written) to Mortgagor, Mortgagee may apply to any court having
jurisdiction for the appointment of a receiver for the Mortgaged Property. If Mortgagee
elects to seek the appointment of a receiver for the Mortgaged Property at any time after an
Event of Default has occurred and is continuing, Mortgagor, by its execution of this
Mortgage, expressly and irrevocably consents to the appointment of such receiver.

(b) Any entering upon and taking of control of the Mortgaged Property by the receiver,
shall not cure or waive any Event of Default or invalidate any other right or remedy of
Mortgagee under applicable law or provided for in this Mortgage.

 

8

 

9.8 No Remedy Exclusive. No remedy conferred upon or reserved to Mortgagee under this
Mortgage shall be exclusive of any other available remedy or remedies, but each and every such
remedy shall be cumulative and shall be in addition to every other remedy given under this Mortgage
now or hereafter existing at law or in equity or by statute. No delay or failure to exercise any
right or power accruing upon any Event of Default shall impair any such right or power or shall be
construed to be a waiver thereof, but any such right and power may be exercised from time to time
and as often as may be deemed expedient.

9.7 Rights Upon Default. In entering into the transactions contemplated by this
Mortgage, Mortgagee has relied upon the rights available to Mortgagee under this Mortgage upon the
occurrence of an Event of Default, including, but not limited to, the rights to accelerate the
payment of any and all amounts secured by this Mortgage, and the right to foreclose this Mortgage.

9.8 Partial Release of Property. Mortgagee may release from the lien of this Mortgage
portions of the Property without affecting the lien of this Mortgage on the remaining Property.

IN WITNESS WHEREOF, this Mortgage has been executed the date and year first above written.

	 	 	 	 	 
	 	MORTGAGOR:

HOMELAND ENERGY SOLUTIONS, LLC an Iowa limited

liability company

 	 
	 	By:  	 	 
	 	 	Stephen Eastman, President 	 
	 	 	 	 
	 

 

9

 

	 	 	 	 	 	 	 	 	 
	STATE OF IOWA

	 	 	 	 	)	 	 	:ss.
	COUNTY OF

	 	 	 	 	)	 	 	 
	 

	 	 	 	 	 	 	 	 

On this       day of                     , 2008, before me, the undersigned, a Notary Public in and
for the State of Iowa, personally appeared Stephen Eastman, to me personally known, who being by me
duly sworn did say that the person is the president of Homeland Energy Solutions, LLC, an Iowa
limited liability company, executing the foregoing instrument, that the instrument was signed on
behalf of the limited liability company by authority of the limited liability company’s members;
and that Stephen Eastman as that officer acknowledged execution of the instrument to be the
voluntary act and deed of the limited liability company and limited partnership by it and by the
officer voluntarily executed.

	 	 	 
	 

	 	 
	 

	 	NOTARY PUBLIC

 

10

 

EXHIBIT “A”

REAL PROPERTY DESCRIPTION

See attached

 

A-1

 

EXHIBIT “B”

PERMITTED ENCUMBRANCES

	1.	 	Mortgage dated                      granted by the Mortgagor in favor of                     , securing indebtedness in the amount of $                                         .

	 
	2.	 	Easements and restrictive covenants of record.

	 
	3.	 	Taxes and Special Assessments.

	 
	4.	 	Zoning restrictions, ordinances and governmental restrictions.

[Additional items to be added per title commitment]

 

B-1

 

EXHIBIT “C”

FINANCING STATEMENT INFORMATION

	 	 	 
	The Secured Party is:

	 	Fagen, Inc.
	 

	 	501 W. Highway 212
	 

	 	P.O. Box 159
	 

	 	Granite Falls, Minnesota 56241
	 
	 	 
	The Debtor is:

	 	Homeland Energy Solutions, LLC
	 

	 	951 North Linn Avenue
	 

	 	New Hampton, Iowa 50659

The Collateral is the Personal Property (including all fixtures) described in the Granting Clauses
set forth in the body of the Mortgage.

 

C-1Filed by Bowne Pure Compliance

 

Exhibit 10.24

PATENT AND TECHNOLOGY LICENSING AGREEMENT

by and between

ECONO-POWER INTERNATIONAL CORPORATION,

as Licensor

and

HOMELAND ENERGY SOLUTIONS,

as Licensee

Dated as of July 26, 2007

* Portions omitted pursuant to a request for confidential treatment and filed separately with the

Securities and Exchange Commission.

 

 

 

Table of Contents

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 	 	 	 	 
	 	 	 	 
	 	1.	 	 	Definitions

	 	 	3	 
	 	2.	 	 	Licensed Technology

	 	 	4	 
	 	3.	 	 	Grant of License

	 	 	5	 
	 	4.	 	 	No Sublicensing; Reservation of Rights; No Assignment

	 	 	5	 
	 	5.	 	 	Payments

	 	 	5	 
	 	6.	 	 	Improvements to Licensed Technology

	 	 	6	 
	 	7.	 	 	Third Party Technology

	 	 	7	 
	 	8.	 	 	Representations and Warranties

	 	 	7	 
	 	9.	 	 	Certain Covenants

	 	 	8	 
	 	10.	 	 	Confidentiality

	 	 	8	 
	 	11.	 	 	Conditions Precedent, Term; Termination and Default

	 	 	9	 
	 	12.	 	 	GOVERNING LAW; JURISDICTION

	 	 	10	 
	 	13.	 	 	Promotional Access

	 	 	11	 
	 	14.	 	 	LIMITATION OF LIABILITY

	 	 	12	 
	 	15.	 	 	Notices

	 	 	12	 
	 	16.	 	 	Waiver

	 	 	13	 
	 	17.	 	 	Entire Agreement

	 	 	14	 
	 	18.	 	 	Multiple Counterparts

	 	 	14	 
	 	19.	 	 	Successors and Assigns

	 	 	14	 

Annexes

Annex A — To Be Determined

 

 

 

PATENT AND TECHNOLOGY LICENSING AGREEMENT

This PATENT AND TECHNOLOGY LICENSING AGREEMENT (this “Agreement”) dated as of July 26,
2007 is by and between Econo-Power International Corporation, a corporation organized under the
laws of the State of Nevada (“EPIC”), and Homeland Energy Solutions, LLC, a limited
liability company organized under the laws of the State of Iowa (“Licensee”) (each of EPIC
and Licensee a “Party”, and together the “Parties”).

WHEREAS, Licensee is taking steps to commence the establishment of a coal gasification SynGas
production system (the “System”) at Licensee’s Ethanol Facility (the “Plant”)
located near New Hampton, Iowa;

WHEREAS, in connection with the establishment of the System, Licensee desires to have
non-exclusive use of the EPIC Licensed Technology; and

WHEREAS, EPIC agrees to grant to Licensee a non-exclusive license to use the EPIC Licensed
Technology on the terms and conditions set forth in this Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Parties agree as follows:

1. Definitions. When used in this Agreement, each of the capitalized terms
set forth in this Section 1 shall have the meaning ascribed to such term in this
Section 1.

“Agreement” has the meaning set forth in the preamble.

“BTU” means British thermal unit, or the quantity of heat required to raise 1
pound of water by 1 degree Fahrenheit.

“Burns & McDonnell Agreement” means an agreement between EPIC and Burns & McDonnell
in which EPIC will supply EPIC Licensed Technology to be incorporated into the construction
of the System.

“Burns & McDonnell” means that company with offices located at 9400 Ward Parkway
Kansas City, Missouri 64114.

“Confidential Information” has the meaning set forth in Section 10(a).

“Default Rate” means the lesser of (i) fifteen percent (15%) and (ii) the maximum
rate permitted by applicable law.

“Effective Date” has the meaning as set forth in the preamble.

“EPC Contract” means a contract between Homeland Energy Solutions and Burns &
McDonnell which contains the contractual terms and conditions under which Burns & McDonnell
would construct, test and commission the System for Homeland Energy Solutions.

 

 

 

“EPIC” has the meaning set forth in the preamble.

“EPIC Licensed Technology” has the meaning set forth in Section 2.

“Financing Agreement” means an agreement between Licensee and a financial
institution for partial funding of the construction and commercial operation of the System.

“Improvement” has the meaning set forth in Section 6(a).

“License Fee” has the meaning set forth in Section 5(a).

“Licensee” has the meaning set forth in the preamble.

“Metering Point” means the point at which SynGas output is measured for purposes of
determining the Royalty Fee as described in Section 5(a)

“MMBTU” means million BTUs.

“Party” or “Parties” has the meaning set forth in the preamble.

“Patents” has the meaning set forth in Section 2(a).

“Plant” has the meaning set forth in the recitals.

“Receiving Party” has the meaning set forth in Section 10(a).

“Royalty Fee” has the meaning set forth in Section 5(b)

“Sub licensee” has the meaning set forth in Section 7(c).

“Sub licensor” has the meaning set forth in Section 7(c).

“SynGas” means fuel gas that is produced by the System.

“SynGas Metering Equipment” means that equipment used to measure SynGas output at
the Metering Point.

“System” has the meaning set forth in the recitals.

“Technical Information” has the meaning set forth in Section 2(b).

2. Licensed Technology. The term “EPIC Licensed Technology” shall
mean Patents and Technical Information relating to the apparatus and methods for converting coal to
fuel gas, including, but not limited to: coal feed systems, gasifiers, ash and liquid removal
equipment, and sulfur removal equipment.

 

4

 

(a) Patents. The term “Patents” shall mean any patent and any pending patent
applications or patentable inventions currently assigned to EPIC or currently under an obligation
to assign to EPIC including without limitation the following United States patents and/or patent
applications, and any patents issued pursuant thereto, including any divisionals, continuations,
continuations-in-part, reissues, reexamination certificates, substitutes, extensions, and foreign
counterparts thereof:

United States Patent Applications No. 10/191,617; 11/382,077; 60/810,119; 60/835,714 and
11-299,061.

The term “Patents” shall also include any patents and/or patent applications, and any
patents issued pursuant thereto, including any divisionals, continuations, continuations-in-part,
reissues, reexamination certificates, substitutes, extensions, and foreign counterparts thereof
relating to any and all improvements to EPIC Licensed Technology made from time to time by EPIC
during the term of this Agreement (including but not limited to Improvements that are considered
for all purposes to be the property of EPIC in accordance with Section 6).

(b) Technical Information. The term “Technical Information” shall mean any
and all research and development information, unpatented inventions, know-how, trade secrets, and
technical data in the possession of EPIC at the Effective Date, which are needed to develop,
implement, and/or commercialize the System at the Plant. The term Technical Information shall also
include any and all research and development information, unpatented inventions, know-how, trade
secrets, and technical data discovered by or developed by EPIC relating to the development,
implementation and commercialization of the System at the Plant during the term of this Agreement.

3. Grant of License. EPIC hereby grants to Licensee a non-exclusive perpetual
license to use the EPIC Licensed Technology for the development, implementation, commercialization,
operation and maintenance of the System at the Plant. This license shall be non-transferable by
Licensee except as otherwise expressly provided herein.

4. No Sublicensing; Reservation of Rights; No Assignment. Licensee shall not
sublicense the EPIC Licensed Technology without the prior written consent of EPIC, which shall not
be unreasonably withheld, and any such sublicense shall be on terms to be agreed upon by the
Parties at the time of the proposed sublicense. Subject to the terms and conditions set forth
herein, EPIC shall retain all rights not expressly granted hereunder, including the rights to use,
or to license to others the use of, the EPIC Licensed Technology for any purpose whatsoever.
Licensee further acknowledges and agrees that it may not sell, transfer or assign this Agreement,
nor any right, title or interest in this Agreement or in the EPIC Licensed Technology, nor delegate
any of Licensee’s duties, liabilities, obligations or responsibilities hereunder, without the prior
written consent of EPIC, which shall not be unreasonably withheld.

 

5

 

5. Payments. In partial consideration of the granting of the license described
herein, Licensee shall make payments to EPIC as follows:

(a) License Fee. That fee charged as described in the Burns & McDonnell
Agreement for the use, by Homeland Energy Solutions, of EPIC Licensed Technology
for the System constructed under the terms of the EPC Contract at the Plant. This
fee is incorporated into the EPC Contract and the Parties agree that no payment is due
EPIC for a License Fee under this Agreement.

(b) Royalty Fee. 

(i) On the fifth business day of each calendar month during the term of this
Agreement, Licensee shall pay to EPIC a royalty fee in an amount equal to [*] for each
MMBTU of SynGas produced by the System as measured at the Metering Point during the
preceding calendar month; provided, however, the royalty fee shall not be charged on any
MMBTU in excess of Five Hundred Forty (540) MMTBU per hour of operational time by the
System. Within the first five business days of each calendar month Licensee shall
determine the aggregate number of hours of production run time for the System during the
preceding calendar month. The number of hours of production run time shall be multiplied
by 540 MMBTU (the “Maximum MMBTU Amount”). A royalty fee shall not be charged or paid by
Licensee for any actual MMBTU produced by the System during the preceding calendar month
in excess of the Maximum MMBTU Amount. Licensee shall at all times keep and maintain
complete and accurate records regarding the operation of the System and its capacity, and
the amount of SynGas produced, and shall permit EPIC and its agents and representatives to
examine all of such records as shall be relevant to verify Licensee’s compliance with this
Agreement. The volume of SynGas produced by the System shall be measured on a continuous
basis at the Metering Point by SynGas Metering Equipment installed and owned by Licensee.

(ii) Licensee further agrees to deliver to EPIC a monthly statement containing the
following information:

(A) The hourly and daily output of the System; and

(B) The total output of the System during the statement period.

(c) Payment Defaults. Any amounts payable to EPIC under this Agreement which are not
paid when due shall accrue interest at the Default Rate, compounded monthly, from the date on which
payment becomes due until the date such payment is made with any payments received being applied
first to accrued interest, and then to the remaining principle amounts which have been outstanding
for the longest period.

 

*Portion omitted pursuant to a request for confidential treatment and filed separately with the

Securities and Exchange Commission.

 

6

 

6. Improvements to Licensed Technology. The parties acknowledge that Licensee
may, during the term of this Agreement, develop or create new technology related to the coal
gasification SynGas production system (System) licensed herein or make refinements or modifications
relating to the System (collectively “System Improvements”). Further, the parties acknowledge that
the System does not include the Plant, the Plant’s technology or the technology
(including mechanical or processes) by which raw materials are provided to the System or by
which by-products and products are removed and transported out of the System.

	 	a)	 	Ownership of System Improvement. In the event that Licensee develops or creates
any System Improvements including technical information pertaining thereto, EPIC shall
exclusively own all right, title and interest in, to and under such System
Improvements. Licensee shall undertake all reasonable efforts to ensure that its
employees are required to assign Improvements to Licensee, which shall in turn assign
such System Improvements to EPIC. Any and all System Improvements shall be considered,
for purposes of this Agreement, to have been created or made by EPIC, and Licensee
shall take all actions requested by EPIC in order to give effect to the foregoing.

	 
	 	b)	 	Grant back of License for System Improvements. EPIC hereby grants a perpetual,
worldwide, royalty-free license to Licensee for the use, modification, or refinement of
any System Improvements.

7. Third Party Technology.

(a) In the event that EPIC obtains from any third party the right to use any
technology which could be used in connection with the development, implementation and
commercialization of the System, EPIC shall make all commercially reasonable efforts to
obtain for Licensee the right to use such technology in the development, implementation
and commercialization of the System.

(b) Any technology provided by one Party (the “Sub licensor”) to the other
Party (the “Sub licensee”) under this Section 7 shall be made available to
the Sub licensee on a royalty-free basis except for (i) that which is sublicensed and for
which the Sub licensor must pay a royalty, in which case the Sub licensee shall pay the
amount of such royalty to the Sub licensor, and (ii) that with respect to which the
Parties agree otherwise.

8. Representations and Warranties.

(a) Each Party hereby represents and warrants for itself as follows:

(i) it is duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation;

(ii) it has the power and authority to own its assets, carry on its business and
execute and deliver this Agreement and to perform its obligations hereunder;

(iii) it has taken all appropriate and necessary action to authorize the execution,
delivery and performance of this Agreement;

 

7

 

(iv) to its knowledge, all consents, approvals, licenses and authorizations of, and
all filings and registrations with, any governmental or regulatory authority or other
third party necessary for the due execution, delivery and performance of this Agreement,
have been obtained and are in full force and effect (although the Parties acknowledge that
no patent covering the EPIC Licensed Technology has been issued to EPIC to date);

(v) this Agreement constitutes a legal, valid and binding obligation of such Party,
enforceable against such Party in accordance with its terms; and

(vi) the execution, delivery and performance of this Agreement will not violate any
provision of any laws or regulations applicable to it.

(b) EPIC hereby represents and warrants that:

(i) to the present knowledge of EPIC, no element of the EPIC Licensed Technology
violates or infringes any patent, copyright, trademark, trade secret or other proprietary
right of any third party;

(ii) it has not previously assigned, pledged or otherwise encumbered any rights to
the EPIC Licensed Technology in a manner that conflicts with the rights granted herein;
and

(iii) there are no judgments, orders, injunctions, decrees, awards or settlements
outstanding (whether rendered by a court, tribunal, administrative agency or arbitral
tribunal) against EPIC which affect the EPIC Licensed Technology or the use of the EPIC
Licensed Technology in any manner material to the transactions contemplated hereby; and
there is no litigation, judicial or arbitral action or claim involving the EPIC Licensed
Technology or the transaction contemplated by this Agreement which is pending or, to the
knowledge of EPIC, threatened against EPIC.

THE PARTIES ACKNOWLEDGE THAT THE WARRANTIES EXPRESSED HEREIN ARE THE SOLE WARRANTIES AND ARE IN
LIEU OF ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WHICH ARE HEREBY EXPRESSLY DISCLAIMED.
EXCEPT AS OTHERWISE PROVIDED HEREIN, THE ENTIRE RISK AS TO THE QUALITY AND THE PERFORMANCE OF THE
SYSTEM SHALL BE WITH LICENSEE.

9. Certain Covenants. EPIC agrees to use reasonable efforts to inform Licensee
promptly of the existence of any technology or improvement referred to in Section 6 of
which it becomes aware which could be used in connection with the development, implementation and
commercialization of the System. EPIC agrees to make available to Licensee any detailed
specifications reasonably required for Licensee to make use of the technology licensed hereunder.

 

8

 

10. Confidentiality.

(a) Confidential Information. The Parties recognize that in the course of performance
of this Agreement, either of them may disclose to the other information about the disclosing
Party’s technology (including the EPIC Licensed Technology), business or activities which such
Party considers proprietary and confidential including, without limitation, trade secrets,
marketing and business plans, customer lists, and information concerning the operations of such
Party (all of such proprietary and confidential information is hereinafter referred to as the
“Confidential Information”). The Party who receives any Confidential Information (the
“Receiving Party”) agrees to maintain a confidential status for such Confidential
Information, to treat such Confidential Information in the same manner as it treats its own
Confidential Information, not to use any such Confidential Information for any purpose other than
the purpose for which it was originally disclosed to the Receiving Party, and not to disclose any
of such Confidential Information to any third party, except to such vendors, consultants and other
parties necessary for such Receiving Party to conduct its business, or unless such information:
(i) is or has become available to the public from a source other than the Receiving Party; (ii) was
already known to the Receiving Party from sources other than the other Party at the time it was
disclosed to the Receiving Party; (iii) is disclosed to the Receiving Party by a third party who is
not under any legal obligation prohibiting such disclosure; or (iv) is required to be disclosed by
law.

(b) Disclosure Required by Applicable Law. If a Receiving Party is required by
applicable law to disclose any Confidential Information, such Receiving Party shall immediately
give the other Party written notice of any such disclosure, which notice shall specify the
circumstances and substance of the disclosure. The Party making such a disclosure shall use its
best efforts to minimize the amount of Confidential Information disclosed and shall take all
reasonable steps to prevent further disclosure of such Confidential Information. The Party
disclosing such Confidential Information shall use reasonable efforts to obtain proprietary or
confidential treatment of such information by the third party to whom the Confidential Information
is disclosed and shall, to the extent such remedies are available, seek protective orders limiting
dissemination and use of the Confidential Information. This Agreement does not alter the rights of
either Party to challenge any applicable law requiring the disclosure.

(c) Survival. The provisions of this Section 10 shall survive the termination
of this Agreement for any reason whatsoever. Upon such termination, the Parties shall return or
destroy any Confidential Information which may have been transmitted by the other Party, as well as
any copy or other reproduction, including without limitation, electronic data reproductions or
representations. If the Confidential Information has been destroyed then the Party responsible for
such destruction shall provide written verification of same.

(d) Press Releases. The Parties shall cooperate in drafting a press release
reasonably acceptable to each Party.

11. Conditions Precedent, Term; Termination and Default.

(a) Conditions Precedent. Each Party agrees to use commercially reasonable efforts to
promptly satisfy each of the conditions precedent set forth below. Each Party agrees to promptly
notify the other Party after the satisfaction of such condition precedent after any condition
precedent set forth in this Section 10(a) has been satisfied, but in no event later than
three (3) Days. Neither Party shall have any obligation under this Agreement (except
for its obligations under this Section 10(a) and Articles 7, 9,11, 13, 14, 15, 16, 17, and
18, all of which shall be binding as of the Effective Date) unless and until:

 

9

 

(i) execution of Licensee’s Financing Agreement; and

(ii) execution of the Licensee’s EPC Contract for the System; and

(iii) execution by EPIC of the Burns & McDonnell Agreement.

(b) Term. The term of this Agreement shall commence on the Effective Date and
shall continue for a term of fifteen (15) years from the date of the first Royalty Fee
payment provided that all annual royalty fees are paid unless sooner terminated in
accordance with this Section 11. Notwithstanding the termination of this
Agreement on the expiration of the fifteen (15) year term, Licensee shall continue to have
a perpetual license to use the EPIC Licensed Technology for the commercialization,
operation and maintenance of the System at the Plant.

(c) Termination for Failure to Satisfy Conditions Precedent. If a condition
precedent set forth in Section 11(a) above is not satisfied for any reason or no reason on
or before December 31, 2007, then either Party may terminate this Agreement with ten (10) Days
written notice to the other Party, whereupon the Parties shall have no further liability or
obligation to each other hereunder, except for obligations or duties that expressly survive the
termination of this Agreement or that occurred prior to such termination.

(d) If:

(i) either Party shall breach any of the terms and conditions of this Agreement, and
shall fail to remedy such breach within ninety (90) days after written notice thereof;

(ii) Licensee shall become insolvent or go into liquidation or receivership or be
admitted to the benefits of any procedures for the settlement or postponement of debts or
be declared bankrupt;

(iii) Licensee shall become a party to dissolution proceedings; or

(iv) Licensee shall be acquired by or otherwise come under the control of, a person
or entity engaged (or an affiliate of which is engaged) in licensing coal gasification
technology similar to that of EPIC;

then (except as otherwise expressly provided herein), by providing written notice, (A) Licensee may
terminate this Agreement to the extent EPIC is the subject of any matter covered by subsection (i)
above; or (B) EPIC may terminate this Agreement to the extent Licensee is the subject of any matter
covered by subsection (i), (ii), (iii) or (iv) above.

(e) After termination of this Agreement, Licensee shall return all documents (and
copies thereof) and other embodiments of the EPIC Licensed Technology to EPIC, as
appropriate, or shall certify that such documents have been destroyed and shall comply
with the terms of Section 10(c).

 

10

 

12. GOVERNING LAW; JURISDICTION. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO THE CONFLICTS OR
CHOICE OF LAWS PROVISIONS THEREOF.

(a) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN
THE COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF TEXAS, AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HEREBY ACCEPTS FOR ITSELF AND (TO THE
EXTENT PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURT. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.

(b) EACH PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE
AFOREMENTIONED COURT IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT THE ADDRESS SPECIFIED IN
SECTION 15 OR SUCH OTHER ADDRESS AS IS SPECIFIED PURSUANT TO SECTION 15,
SUCH SERVICE TO BECOME EFFECTIVE TEN (10) DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF A PARTY TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

(c) EACH PARTY HEREBY (i) IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN; (ii) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT
NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION
ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES; (iii) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE
OR AGENT OF COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR
IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVERS; AND (iv) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION 12.

 

11

 

13. Promotional Access. Upon the prior written consent of Licensee, which consent
shall not be unreasonably withheld, EPIC’s representatives, alone or with licensees or
potential licensees of EPIC, shall have access to the System during normal business hours. Such
access shall include, but not be limited to, accessibility by EPIC and its representatives,
licensees and potential licensees to System operations and operating and maintenance data for the
purposes of evaluating System performance. Any representative, licensee or potential licensee of
EPIC shall enter into a confidentiality agreement with Licensee, in the form attached hereto as
Appendix A, prior to access to the System.

14. LIMITATION OF LIABILITY.

(a) NEITHER PARTY HERETO, NOR ANY DIRECTOR, OFFICER, EMPLOYEE, AGENT, INDEPENDENT
CONTRACTOR, PARTNER OR STOCKHOLDER OF EITHER PARTY, SHALL BE LIABLE TO THE OTHER PARTY
HERETO FOR ANY LOSS OR DAMAGE WHATSOEVER (INCLUDING ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL LOSS OR DAMAGE) ARISING FROM THIS AGREEMENT, WHETHER IN CONTRACT, TORT OR
OTHERWISE, UNLESS

(i) ARISING FROM THE WILLFUL MISCONDUCT OF SUCH PARTY, OR

(ii) ARISING FROM A BREACH OR DEFAULT OF SUCH PARTY’S OBLIGATIONS HEREUNDER, OR THE
NEGLIGENCE OF SUCH PARTY, IN WHICH CASE SUCH LIABILITY SHALL BE LIMITED TO LOSSES OR DAMAGES
OTHER THAN SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL LOSSES OR LOST PROFITS. EPIC
EXPRESSLY DISCLAIMS ANY LIABILITY FOR SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL LOSSES
OR LOST PROFITS ARISING FROM ANY DOWNTIME OF THE SYSTEM, OR ANY FAILURE OF THE SYSTEM TO
PERFORM.

(b) In the event of a claim of infringement of a third party’s intellectual property
rights arising from the EPIC Licensed Technology, EPIC shall indemnify, hold harmless and
defend Licensee from and against all damages, losses, costs, injuries, liabilities,
claims, demands, penalties, interest and expenses (including attorneys fees);
provided, however, that EPIC’s obligation under this subsection (b) is
subject to the requirement that Licensee shall give EPIC prompt written notice of any such
claim of infringement. EPIC shall indemnify and hold harmless Licensee from and against
all damages and costs (including attorney’s fees and expenses awarded against Licensee) in
any such action or proceeding. If Licensee is enjoined from the operation or use of the
EPIC Licensed Technology or any part thereof, EPIC shall at its sole expense take
reasonable steps to procure the right for Licensee to operate and use the EPIC Licensed
Technology.

15. Notices. Any and all notices or other communications or deliveries required or
permitted to be given pursuant to any of the provisions of this Agreement shall be deemed to have
been duly given for all purposes if sent by certified or registered mail, return receipt requested
and postage prepaid, hand delivered or sent by a nationally recognized
overnight courier to the address listed below or at such other address as any Party may specify by
notice given to the other Party in accordance with this Section 15.

 

12

 

Notices to Licensee shall be sent to:

Homeland Energy Solutions, LLC

106 West Main

P.O. Box C

Riceville, IA 50466

Attn: Steve Eastman

with a copy to;

Brown, Winick, Graves, Gross, Baskerville and Schoenebaum, P.L.C.

666 Grand Avenue, Suite 2000

Des Moines, IA 50309

Attention: Thomas D. Johnson

Telephone: (515) 242-2400

Facsimile: (515) 323-8514

Notices to EPIC should be sent to:

Econo-Power International Corporation

1502 Augusta, Suite 100, Houston, TX 77057

Attn: Chief Financial Officer

Telephone: 713-979-5311

Facsimile: 713-979-5322

with a copy to:

Pillsbury Winthrop Shaw Pittman LLP

2 Houston Center

909 Fannin, Suite 2000

Houston, Texas 77010-1018

Attn: J. Todd Culwell

Telephone: 713-276-7600

Facsimile: 713-276-7673

The date of giving of any such notice shall be the date of delivery when delivered by hand or by
overnight courier, or three (3) days following the posting of the mail.

16. Waiver. No failure or delay by a Party at any time to enforce one or more of
the terms, conditions or obligations of this Agreement shall constitute a waiver of such terms,
conditions or obligations or shall preclude such Party from requiring performance by the other
Party at any time. No waiver of the provisions hereof shall be effective unless in writing and
signed by the Party to be charged with such waiver. No waiver shall be deemed a continuing
waiver or waiver in respect of any subsequent breach or default, either of similar or different
nature, unless expressly so stated in writing.

 

13

 

17. Entire Agreement. This Agreement contains the entire understanding of the
Parties with respect to the subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the Parties with respect to such subject.

18. Multiple Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall have the force and effect of an original, and all of which
together shall constitute but one and the same agreement. For purposes of this Agreement,
facsimile signatures shall be deemed to be original signatures. In addition, if a Party executes
facsimile copies of this Agreement, such copies shall be deemed originals.

19. Successors and Assigns. This Agreement shall benefit and be binding upon the
respective Parties and their respective successors and assigns; provided, however, that Licensee
shall not assign any of the rights and privileges herein granted or be relieved of its obligations
hereunder without the prior written consent of EPIC.

	 	 	 	 	 
	 	ECONO-POWER INTERNATIONAL CORPORATION

 	 
	 	By:  	/s/ David W. Wakefield
 	 
	 	 	Name:  	David W. Wakefield 	 
	 	 	Title:  	President 	 
	 
	 	HOMELAND ENERGY SOLUTIONS, LLC

 	 
	 	By:  	/s/ Stephen K. Eastman
 	 
	 	 	Name:  	Stephen K. Eastman 	 
	 	 	Title:  	President 	 
	 

 

14

 

Annex A

Any entries to this annex to be determined

 

15

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