Document:

Filed by Bowne Pure Compliance

	 	 	 	 	 

EXHIBIT
10.5

AMENDED AND RESTATED PROMISSORY NOTE

			
	 	 	 
	$110,000,000
	 	New York, New York
	 
	 	June 6, 2008

FOR VALUE RECEIVED PGRT ESH, INC., a Delaware corporation, as maker, having its principal
place of business at 77 West Wacker Drive, Suite 3900, Chicago, Illinois 60601
(“Borrower”), hereby unconditionally promises to pay to the order of Citicorp USA, Inc., a
Delaware corporation, having an address at 666 Fifth Avenue, New York, New York 10103
(“Lender”), or at such other place as the holder hereof may from time to time designate in
writing, the principal sum of ONE HUNDRED TEN MILLION AND 00/100 DOLLARS ($110,000,000), in lawful
money of the United States of America with interest thereon to be computed from the date of this
promissory note (as further amended, restated, replaced, supplemented or otherwise modified from
time to time in accordance with the terms of the Loan Agreement (as defined below), this
“Note”) at the Applicable Interest Rate (plus any additional interest as provided under the
Loan Agreement), and to be paid in accordance with the terms of this Note and that certain Amended
and Restated Loan Agreement dated the date hereof, between Borrower and Lender (as amended,
restated, replaced, supplemented or otherwise modified from time to time in accordance with the
terms thereof, the “Loan Agreement”). All capitalized terms not defined herein shall have
the respective meanings set forth in the Loan Agreement.

ARTICLE 1.

PAYMENT TERMS

Borrower agrees to pay the principal sum of this Note at the times, and interest on the unpaid
principal sum of this Note from time to time outstanding at the rates and at the times, specified
in Article II of the Loan Agreement, and the outstanding balance of the principal sum of this Note
and all accrued and unpaid interest thereon shall be due and payable on the Maturity Date.

ARTICLE 2.

DEFAULT AND ACCELERATION

The Debt shall without notice become immediately due and payable at the option of Lender if
this Note is not paid in full on the Maturity Date or on the happening of any other Event of
Default and in addition, upon the occurrence of either such event, Lender shall be entitled to
receive interest on the entire unpaid principal sum at the Default Rate pursuant to the terms of
the Loan Agreement. This Article 2, however, shall not be construed as an agreement or privilege
to extend the date of the payment of the Debt, nor as a waiver of any other right or remedy
accruing to Lender by reason of the occurrence of any Event of Default.

 

 

 

ARTICLE 3.

LOAN DOCUMENTS

This Note is secured by and entitled to the benefits of the Pledge Agreements, the Guaranties
and the other Loan Documents. All of the terms, covenants and conditions contained in the Loan
Agreement, the Pledge Agreements, the Guaranties and the other Loan Documents are hereby made part
of this Note to the same extent and with the same force as if they were fully set forth herein. In
the event of a conflict or inconsistency between the terms of this Note and the Loan Agreement, the
terms and provisions of the Loan Agreement shall govern.

ARTICLE 4.

SAVINGS CLAUSE

This Note and the Loan Agreement are subject to the express condition that at no time shall
Borrower be obligated or required to pay interest on the principal balance of the Loan at a rate
which could subject Lender to either civil or criminal liability as a result of being in excess of
the Maximum Legal Rate. If, by the terms of this Note, the Loan Agreement or the other Loan
Documents, Borrower is at any time required or obligated to pay interest on the principal balance
due hereunder at a rate in excess of the Maximum Legal Rate, the Applicable Interest Rate (plus any
additional interest as provided in the Loan Agreement) or the Default Rate, as the case may be,
shall be deemed to be immediately reduced to the Maximum Legal Rate and all previous payments in
excess of the Maximum Legal Rate shall be deemed to have been payments in reduction of principal
and not on account of the interest due hereunder. All sums paid or agreed to be paid to Lender for
the use, forbearance, or detention of the sums due under the Loan shall, to the extent permitted by
applicable law, be amortized, prorated, allocated, and spread throughout the full stated term of
the Loan until payment in full so that the rate or amount of interest on account of the Loan does
not exceed the Maximum Legal Rate of interest from time to time in effect and applicable to the
Loan for so long as the Loan is outstanding.

ARTICLE 5.

NO ORAL CHANGE

This Note may not be modified, amended, waived, extended, changed, discharged or terminated
orally or by any act or failure to act on the part of Borrower or Lender, but only by an agreement
in writing signed by the party against whom enforcement of any modification, amendment, waiver,
extension, change, discharge or termination is sought.

ARTICLE 6.

WAIVERS

Borrower and all others who may become liable for the payment of all or any part of the Debt
do hereby severally waive presentment and demand for payment, notice of dishonor, notice of
intention to accelerate, notice of acceleration, protest and notice of protest and non-payment and
all other notices of any kind, except as expressly provided to the contrary in any other Loan
Document. No release of any security for the Debt (including, without limitation, under the Pledge
Agreements) or extension of time for payment of this Note or any installment hereof, and no
alteration, amendment or waiver of any provision of this Note, the Loan Agreement or the other Loan
Documents made by agreement between Lender or any other Person shall release, modify, amend, waive,
extend, change, discharge, terminate or affect the liability of Borrower, or any other Person
(including, without limitation, Guarantors) who may become liable for the payment of all or any
part of the Debt, under this Note, the Loan Agreement or the other Loan Documents. No notice to or
demand on Borrower shall be deemed to be a waiver of the obligation of Borrower or of the right of
Lender to take further action without further notice or demand to the extent provided for in this
Note, the Loan Agreement or the other Loan Documents.

 

-2-

 

ARTICLE 7.

TRANSFER

Upon the transfer of this Note, Borrower hereby waiving notice of any such transfer, Lender
may deliver all the collateral mortgaged, granted, pledged or assigned pursuant to the Loan
Documents, or any part thereof, to the transferee who shall thereupon become vested with all the
rights herein and therein or under applicable law given to Lender with respect thereto, and Lender
shall thereafter forever be relieved and fully discharged from any liability or responsibility in
the matter; but Lender shall retain all rights hereby given to it with respect to any liabilities
and the collateral not so transferred.

ARTICLE 8.

GOVERNING LAW

This Note shall be governed in accordance with the terms and provisions of Section 8.3 of the
Loan Agreement.

ARTICLE 9.

NOTICES

All notices or other written communications hereunder shall be delivered in accordance with
Section 8.6 of the Loan Agreement.

ARTICLE 10.

LIMITED RECOURSE

Notwithstanding anything herein or in any other Loan Document to the contrary, Borrower shall
be fully liable for repayment of this Note and all the other Obligations, provided that
Lender agrees not to enforce any judgment it may obtain against Borrower with respect to this Note
or the other Obligations against any of Borrower’s assets other than the Collateral pledged by
Borrower. Lender further agrees that it shall not have or seek recourse to the PGRT Entities
(other than to realize on pledges of the equity interests in the REIT and Prime Group Realty, L.P.)
or their respective assets, other than to Borrower to the extent described in the previous sentence
as to the Collateral pledged by Borrower, for the payment of the Obligations. Lender’s recourse
against Guarantors under the Guaranties, and Lender’s rights and remedies against all other
Collateral Entities and all other Collateral, shall in no way be limited or otherwise be affected
hereby.

ARTICLE 11.

AMENDMENT AND RESTATEMENT

This Note (i) is issued in substitution and exchange for (but not in payment of) the
Promissory Note dated June 29, 2007 (the “Existing Note”) in the principal amount of
$120,000,000 made by Borrower in favor of Lender, and (ii) amends and restates the Existing Note in
its entirety.

[NO FURTHER TEXT ON THIS PAGE]

 

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IN WITNESS WHEREOF, Borrower has caused this Note to be executed by its duly authorized
officer as of the day and year first above written.

	 	 	 	 	 
	 	PGRT ESH, INC.

 	 
	 	By:  	/s/ David Lichtenstein
 	 
	 	 	Name:  	David Lichtenstein 	 
	 	 	Title:  	Chairman 	 
	 

 

-4-Filed by Bowne Pure Compliance

Exhibit 10.1

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

Securities and Exchange Commission.***

VBV ETHANOL MARKETING AGREEMENT

This
Ethanol Marketing Agreement (“Agreement”) is made and
entered into as of this 14th day of August, 2008 by and between Homeland Energy Solutions, LLC (“HES”), an Iowa Limited Liability
Company, and VBV, LLC., a Delaware Limited Liability Company (“VBV”) (each a “Party”, and
collectively the “Parties”).

In consideration of the mutual terms and conditions contained herein, the Parties agree as follows:

	1.	 	Term and Termination: The initial term of this Agreement (the “Initial Term”) shall
commence on the date hereof and shall continue for [*] from the first day of the first month
commencing after the date of the first Bill of Lading delivered hereunder and thereafter.
Following the Initial Term, this Agreement shall automatically renew for successive [*] terms
(each a “Renewal Term”), unless terminated on the expiration date of the Initial Term or any
Renewal Term, in each case by either Party with at least [*] days written notice prior to such
expiration date.

Notwithstanding the foregoing, in the event either Party is in material breach of any
material obligation under this Agreement (the “Breaching Party”), the other Party (the
“Non-Breaching Party”) shall have the right to terminate this Agreement by proceeding as
follows: The Non-Breaching Party shall provide written notice to the Breaching Party of
such breach of such obligation, which notice shall include a reasonable detailed description
of such breach of such obligation. The Breaching Party shall have thirty (30) days from
receipt of such notice to remedy such breach, or in the case of a breach involving a failure
to make any payments which are required by this Agreement by the due date, then the
Breaching Party will have three (3) days after receiving the written notice to cure the
breach (in either case, the “Cure Period”). If the Breaching Party remedies such breach
within the applicable Cure Period, this Agreement shall not terminate but rather shall
continue in full force and effect. If the Breaching Party does not remedy such breach
within the applicable Cure Period, this Agreement may, at the option of the Non-Breaching
Party, be immediately terminated at any time within the sixty (60) days following the end of
the applicable Cure Period, upon prior written notice from the Non-Breaching Party to the
Breaching Party. The failure of the Non-Breaching Party to so terminate this Agreement
within such sixty (60) day period shall be deemed a waiver of such termination option with
respect to the breach in question.

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

 

 

 

In addition to the foregoing, this Agreement may be terminated under the following
circumstances: (a) if either party engages in willful misconduct reasonably likely to
resulting significant adverse consequences to the other party, the party harmed or likely to
be harmed by the misconduct may immediately terminate this Agreement upon written notice to
the party engaging in the misconduct; [*].

	2.	 	Quantity and Quality:

	 	A.	 	HES shall sell exclusively to VBV and VBV shall purchase from HES the total
output of fuel grade ethanol (“Ethanol”) produced at HES’s New Hampton, Iowa facility
(“Plant”), currently anticipated being one-hundred and ten (110) million gallons per
year. Ethanol shall be delivered FOB the Plant, and title shall pass at the Title
Transfer Point (as defined in Section 5.C.). Ethanol produced for the intended use as
an alternative or racing fuel shall not be excluded from this Agreement.

	 	B.	 	Such Ethanol shall meet or exceed the quality specifications set forth in ASTM
4806 for Fuel Grade ethanol or changes as promulgated on the industry. The ASTM 4806
specifications are attached hereto and made a part hereof as Exhibit “A”. VBV shall
have the right to change such quality specifications from time to time in order to meet
industry standards. VBV shall have the right to reject any Ethanol which does not meet
such specifications.

	3.	 	VBV shall:

	 	A.	 	Market all of the Ethanol produced by HES at the Plant, at the price outlined
in Section 5;

	 	B.	 	Remit payment to HES for the Ethanol as provided in Section 5; and

	 	C.	 	Be responsible for all transportation of the Ethanol including, without
limitation, the scheduling all shipments of Ethanol with HES.

	4.	 	HES shall:

	 	A.	 	Provide to VBV on a timely basis annual production forecasts, monthly updates
to the rolling twelve month production forecasts, monthly updates, daily plant
inventory balances and shipment information, and other information reasonably requested
by VBV; HES shall use its commercially reasonable efforts to meet the monthly
production targets reflected in the then-current annual production forecast;

	 	B.	 	Notify VBV promptly of any material unscheduled shut-down, suspension or
significant decrease in production at the Plant that was not reported in the rolling
twelve month production forecasts or monthly updates provided under Section 4.A. above;

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

 

2

 

	 	C.	 	Provide to VBV specifications and certificates of analysis of the Ethanol sold
to VBV that are consistent with the specifications referred to in Section 2.B. above;
HES shall, at its expense, provide or cause to be provided all testing and related test
equipment at or in the vicinity of the Plant to determine compliance with such
specifications and VBV or its representative shall, at VBV’S expense, have the right to
perform periodic tests to determine compliance with such specifications.

	 	D.	 	Be responsible for compliance with all federal, state and local rules,
regulations and requirements regarding the shipment of Ethanol from the Plant,
including but not limited to, all U.S. Department of Transportation (“DOT”)
requirements relating to shipment of hazardous materials (e.g. proper paperwork,
railcars meeting DOT requirements, etc.).

	 	E.	 	Provide for a minimum of [*] days storage based on nameplate capacity of 110
MGPY on HES’s premises;

	 	F.	 	For all gallons sold to VBV, use certified meters or weight-scales that provide
both gross and net 60° Fahrenheit temperature compensated gallons; and

	 	G.	 	Provide any of the information to be provided by HES pursuant to this Section 4
to VBV electronically in data form, if such information is available in such form.

	5.	 	Marketing/Pricing/Risk of loss/Payment

	 	A.	 	Marketing: Since VBV shall have the exclusive rights to market all
of the fuel grade Ethanol produced by HES, VBV agrees to use its commercially
reasonable efforts to market all such fuel grade Ethanol and be totally responsible
for the marketing, sale and delivery of all the production from HES’s facility during
the term of this agreement, including, but not limited to:

	 	•	 	Obtaining and scheduling sufficient railcar, tank trucks and other
transport as may be needed to handle said production;

	 	•	 	Negotiating the rates and tariffs to be charged for delivery of such
production to the customer;

	 	•	 	Promoting and advertising the sale of fuel grade ethanol as appropriate;

	 	•	 	Ascertaining that such production is delivered where contracted and
intended;

	 	•	 	Handling all purchase agreements with consumers and any complaints in
connection therewith; and

	 	•	 	Collecting all accounts and undertaking any legal collection procedures
as may be necessary.

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

 

3

 

	 	B.	 	Sales Price: VBV will use its commercially reasonable efforts to
obtain the best price for all fuel grade ethanol offered to be bought and reported to
the designated person within HES in a timely manner such intent to buy. VBV agrees to
use its commercially reasonable efforts to communicate with HES the terms and
conditions of all bids for the ethanol associated with this production facility prior
to the entering of any contracts obligating HES to such contract, provided that HES has
given its consent, written or verbal, to enter into such contract. To the extent HES
does not agree to any bids presented by VBV, VBV shall be relieved of any obligations
hereunder to market such Ethanol. The per gallon price HES shall receive for the
Ethanol sold to VBV under this Agreement shall be based on the Net Selling Price. Net
Selling Price for each gallon sold is (the “Netback”): the contract selling price less
all direct costs (on a per gallon basis) incurred by VBV in conjunction with the
handling, movement and sale of such ethanol, including but not limited to terminal
lease charges, throughput charges, terminal shrinkage costs, freight charges, tariffs,
costs of leasing railcars, trucks, river barges and ocean going vessels (all at cost),
government taxes and assessments, insurance, inspection fees, and working capital
carrying costs (to be shown as a separate line item on the end of month calculation for
the Equalized Netback), costs of purchasing and delivering replacement ethanol due to
lost or interrupted ethanol production and other costs. VBV and HES shall jointly
determine the estimated monthly Netback (on a per gallon basis) (the “Estimated Monthly
Netback”) for each month. The establishment of the Estimated Monthly Netback will be
on the first business day of the month with the intention being to establish the
Estimated Monthly Netback to be within $.05 of the final actual Netback (on a per
gallon basis) for the Month (the “Equalized Netback”). This value will enable the
payment of HES prior to the final Equalized Netback value determined at the end of the
month.

	 	C.	 	Risk of loss: Except as otherwise provided in this Agreement, VBV will
bear all sales, marketing, logistics services/management costs and collection costs
after the Ethanol produced at the Facility passes across the inlet flange into rail
cars or tank trucks at the Facility (“Title Transfer Point”). Title and Risk of loss to
the Ethanol shall transfer from HES to VBV at the Title Transfer Point. Until such
time, Producer shall be deemed to be in control of and in possession of and shall have
title to and risk in the Ethanol. VBV is responsible for (i) all billing in regard to
the sale of Ethanol from the Plant, (ii) collection of all account receivables, and
(iii) all bad accounts. All risks associated with account receivables shall be borne
by VBV.

	 	D.	 	Commission: For each gallon of Ethanol sold to VBV under this
Agreement in any month, VBV shall invoice HES separately $[*] per gallon delivered in
any calendar month. Invoice will be due by the [*] business day of the following
month. If VBV markets in excess of 130 million gallons in a calendar year for HES the
commission rate will revert to $[*]/gallon back to gallon one in the calendar year,
with rebate for the excess commission payment to be payable to HES on the next payment
schedule to HES.

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

 

4

 

	 	E.	 	Payment: For all quantities of Ethanol purchased by VBV from HES and
shipped from the Plant during a one-week period beginning on Monday and ending on the
following Sunday, VBV shall pay the Estimated Monthly Netback referred to in this
Section 5.B. by ACH or wire no later than [*] days following the end of said one-week
period. If at calendar month’s end, the Equalized Netback exceeds the estimated
Monthly Netback, VBV shall pay HES on or before the [*] day of the following calendar
month an amount equal to the product of (x) the difference between the Estimated
Monthly Netback and Equalized Netback, and (y) the aggregate quantity (on a gallon
basis) of Ethanol purchased by VBV from HES during such month. If the Equalized
Netback is less than the Monthly Estimated Netback, HES shall pay VBV on or before the
[*] day of the following calendar month (and VBV shall have the right to withhold and
set off from future payments to HES), an amount equal to the product of (x) the
difference between the Equalized Netback and the Estimated Monthly Netback, and (y) the
aggregate quantity (on a gallon basis) of Ethanol purchased by VBV from HES under this
Agreement during such month. Within [*] days of the end of a month, VBV shall provide
to HES all information necessary to calculate the Equalized Netback and determine the
payment between the parties under this Section 5.E.

	 	F.	 	Supporting Records: VBV shall keep a set of books and records in
accordance with generally accepting accounting principles with respect to all sales of
Ethanol hereunder and all costs and commissions associated therewith, and shall make
such books and records reasonably available to HES’s independent outside accounting
representatives (upon execution by such independent outside accounting representative
of a mutually agreeable confidentiality agreement) at VBV’s office at any time by
appointment during normal business hours upon at least five (5) business days prior
written notice; provided that HES shall be entitled to no more than two (2) such visit
in any year and HES ‘s independent outside accounting representatives shall be
permitted to disclose to HES only aggregate summary information of the results of its
review, and not any contract or customer specific information. In addition, VBV shall
provide HES by e-mail or fax with supporting documentation regarding the Equalized
Netback value. If HES’ independent outside accounting representatives discover any
discrepancy in VBV’s accounting records resulting in an underpayment or overpayment of
the actual Equalized Netback to HES, VBV shall pay the underpayment to HES within five
days of written notice to VBV, and HES shall pay the overpayment to VBV within five
days of it learning of the overpayment from it independent outside accounting
representative. In the event the underpayment is in excess of one percent (1%) of the
Equalized Netback for the [*] month period ending on the last month of the period
reviewed, VBV shall pay HES’s audit expenses. Any amount of underpayment or
overpayment shall accrue interest at the verified cost of HES money for their revolving
bank line of credit per annum from the date that the payment should have originally
been made until the date payment in full has been received by the party entitled to
such payment.

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

 

5

 

	6.	 	Responsibility for Dedicated Railcars: HES acknowledges that VBV will enter into
leases or other arrangements intended to secure the availability of sufficient railcars to
ship the Ethanol produced at the Plant as contemplated by this Agreement (“Dedicated
Railcars”). VBV and HES shall agree to the number and term of such arrangements for rail cars
prior to entering into said agreements. In the event HES or VBV terminates this Agreement and
VBV’s commitments with respect to the Dedicated Railcars allocated to the HES New Hampton, IA
plant which are the subject of such termination continue past the date of such termination,
HES shall be responsible for all of VBV’s costs and expenses (including without limitation
lease payments, carrying costs and finance charges) related to such Dedicated Railcars after
the date of such termination. VBV and HES shall cooperate in good faith to minimize the
amount of any such costs and expenses, including, using commercially reasonable efforts to
assign VBV’s rights and obligations with respect to the Dedicated Railcars to HES. Subject to
the foregoing, HES will have the right to receive an assignment of VBV’s rights and
obligations with respect to the Dedicated Railcars so that HES may use such Dedicated
Railcars, in the event this Agreement is terminated. In the event that the Plant does not
start up or fails to provide substantially the contemplated volumes of Product, any costs
incurred for such Dedicated Railcars not so utilized shall be incurred by HES.

	7.	 	Indemnity: VBV shall indemnify, defend, and hold HES and its affiliates,
subsidiaries, parents, and its and their respective directors, officers, stockholders,
employees, and agents (collectively, the HES Indemnified Persons) harmless from and against
any and all claims, losses, awards, judgments, settlements, fines, penalties, liabilities,
damages, costs or expenses (including reasonable out-of-pocket Attorney’s fees and expenses)
(collectively, “Losses”) incurred on account of any injury or death of persons or damages to
property to the extent caused by or arising out of the negligence or willful misconduct of
VBV, its officers, employees, or agents in performing VBV’s obligations under this Agreement.
In addition, VBV shall indemnify and hold the HES Indemnified Persons harmless from and
against any and all Losses to the extent caused by or arising out of (i) any breach of any
provision of this Agreement by VBV, (ii) any claims resulting from VBV’s marketing activities
on behalf of HES, and (iii) noncompliance with applicable federal, state or local rules,
regulations or requirements regarding shipment of Ethanol from the Plant (accept to the extent
it is an obligation of HES as set forth in section 4D above).

HES shall indemnify, defend, and hold VBV and its affiliates, subsidiaries, parents, and its
and their respective directors, officers, stockholders, employees, and agents (collectively,
the “VBV Indemnified Persons”) harmless from and against any and all Losses incurred on
account of any injury to or death of persons or damages to property to the extent caused by
or arising out of the negligence or willful misconduct of HES, its officers, employees, or
agents in performing HES’s obligations under this Agreement. In addition, HES shall
indemnify and hold the VBV Indemnified Persons harmless from and against any and all Losses
to the extent caused by or arising out of (i) any defects in, or otherwise relating to the
quality or condition of, the Ethanol supplied by HES, (ii) any breach of any provision of
this Agreement by HES, and (iii) noncompliance with applicable federal, state or local
rules, regulations or requirements regarding shipment of Ethanol from the Plant as more
fully set forth in Section 4.D above.

 

6

 

	8.	 	Force Majeure:

	 	A.	 	In the event either Party is rendered unable, wholly or in part, by Force
Majeure to carry out its obligations under this Agreement, it is agreed that on such
Party’s giving notice in writing, or by telephone and confirmed in writing, to the
other Party as soon as possible after the commencement of such Force Majeure event, the
obligations of the Party giving such notice, so far as and to the extent they are
affected by such Force Majeure, shall be suspended from the commencement of such Force
Majeure and during the remaining period of such Force Majeure, but for no longer
period, and such Force Majeure shall so far as possible remedied with all reasonable
dispatch; provided, however, the obligation to make payments then accrued hereunder
prior to the occurrence of such Force Majeure shall not be suspended.

	 	B.	 	The term “Force Majeure” as used in this Agreement shall mean strikes, lockouts
or industrial disturbances; riots or civil disturbances; interference by civil or
military authorities; wars, blockades, insurrection, or acts of other public enemy or
acts of terrorism; epidemics, landslides, lightning, earthquakes, fires, storms,
floods, washouts or other acts of God; arrests or restraints of governments and people;
compliance with federal, state or local laws, rules or regulations, acts, orders,
directives, requisitions or requests of any official or agency of federal, state or
local governments; fires, explosions, freezing, failures, disruptions, breakdowns or
accidents to transportation equipment or facilities; prorationing by transporters; the
necessity of testing, making repairs, alterations or enlargements to transportation
equipment or facilities; embargoes, priorities, expropriation or condemnation by
government or governmental authorities; and any other cause which is not reasonably
within the control of the Party claiming suspension.

	9.	 	Limitation of Damages: NEITHER PARTY SHALL BE LIABLE OR OTHERWISE RESPONSIBLE TO THE
OTHER PARTY HEREUNDER FOR CONSEQUENTIAL, EXEMPLARY, SPECIAL, INCIDENTAL OR PUNITIVE DAMAGES AS
TO ANY ACTION OR OMISSION, WHETHER CHARACTERIZED AS A CONTRACT BREACH OR TORT OR OTHERWISE
THAT ARISES OUT OF OR RELATES TO THIS AGREEMENT OR ITS PERFORMANCE EXCEPT FOR ANY SUCH AMOUNTS
PAID BY A PARTY TO A NON-AFFILIATE THIRD PARTY, WHICH WOULD THEREFORE BE CONSIDERED ACTUAL
DAMAGES INCURRED BY SUCH PARTY.

	10.	 	Independent Contractor: It is expressly understood that the relationship of VBV to
HES is that of an independent contractor and nothing contained herein shall be construed to
create any partnership, agency, or employer/employee relationship. VBV may freely choose the
customers from whom business shall be solicited and the time and place for solicitation.

 

7

 

	11.	 	Notices: Any notices required to be given under this Agreement shall be in writing
and be sufficiently given when delivered in person or deposited in the U.S. mail (registered
or certified), postage prepaid, addressed as follows:

	 	 	 	 	 
	 

	 	HES:
	 	Homeland Energy Solutions, LLC
	 

	 	 	 	106 West Main
	 

	 	 	 	P.O. Box C
	 

	 	 	 	Riceville, IA 50466
	 

	 	 	 	Attn: Steve Eastman
	 
	 	 	 	 
	 

	 	VBV:
	 	VBV LLC
	 

	 	 	 	1 S. Dearborn Street, #800
	 

	 	 	 	Chicago, IL 60603
	 

	 	 	 	Attn: Todd Becker

	12.	 	Insurance: During the entire term of this agreement, HES will maintain insurance
coverage that is customary for a company of its type and size that is engaged in the
production and selling of ethanol. At a minimum, HES’s insurance coverage must include:

	 	a.	 	Comprehensive general product and public liability insurance,
with liability limits of at least $5 million in the aggregate.

	 	b.	 	Property and casualty insurance adequately insuring its
production facilities and its other assets against theft, damage and
destruction on a replacement cost basis.

	 	c.	 	VBV shall be added as an additional insured under the
comprehensive general product and public liability insurance policy and the
property and casualty insurance policy.

	 	d.	 	Workers’ compensation insurance to the extent required by
law.

HES will not change its insurance coverage during the term of this agreement,
except to increase it or enhance it, without the prior written consent of VBV which
consent will not be unreasonably withheld.

During the term of this agreement, VBV will maintain insurance coverage that is customary
for a company marketing and handling the transportation of ethanol. At a minimum, VBV’s
insurance coverage must include:

	 	a.	 	Comprehensive general product and public liability insurance, with liability
limits of at least $5 million in the aggregate.

	 	b.	 	HES shall be added as an additional insured under the
comprehensive general product and public liability insurance policy.

	 	c.	 	Workers’ compensation insurance to the extent required by
law.

VBV will not change its insurance coverage during the term of this agreement, except to
increase it or enhance it, without the prior written consent of HES which consent will not
be unreasonably withheld

	13.	 	Entire Agreement: This Agreement contains the entire agreement between the Parties
and supersedes all previous agreements, either oral or written, between the Parties. The
language of this Agreement shall not be construed in favor of or against either Party, but
shall be construed as if; the language was drafted mutually by both Parties. No modifications
hereof shall be valid unless made in writing and signed by both Parties.

 

8

 

	14.	 	Waiver: The failure of either Party to enforce any of its rights hereunder on any
particular occasion shall not constitute a waiver of such rights on any subsequent occasion.

	15.	 	Assignment: This Agreement may not be assigned by either Party without the prior
written consent of the other Party, which consent shall not be unreasonably withheld.

	16.	 	Headings: Any paragraph headings are used for convenience only and are not intended
and shall not be used in interpreting any provisions of this Agreement.

	17.	 	No Third Party Beneficiary: Except as otherwise provided herein, nothing contained in
this Agreement shall be considered or construed as conferring any right or benefit on a person
not a Party to this Agreement and neither this Agreement nor the performance hereunder shall
be deemed to have created a joint venture or partnership between the Parties.

	18.	 	Governing Law: This Agreement shall be governed by the laws of the State of Iowa
without regard to the conflict of laws provisions thereof.

	19.	 	Arbitration: Any dispute arising out of or in connection with this Agreement shall be
submitted to arbitration. The arbitration shall be conducted according to the Commercial
Arbitration Rules of the American Arbitration Association. The place of arbitration shall be
Des Moines, Iowa or such other place as may be agreed upon by the Parties. Both Parties shall
attempt to agree upon one arbitrator, but if they are unable to agree, each shall appoint an
arbitrator and these two shall appoint a third arbitrator. Expenses of the arbitrator(s)
shall be divided equally between the Parties. Judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof, and shall be
enforceable against the Parties.

	20.	 	Severability: If any term or provision of this Agreement is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms and
provisions of this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially adverse to a Party.
Upon such determination, the Parties shall negotiate in good faith to modify this Agreement so
as to affect the original intent of the Parties as closely as possible in an acceptable manner
so that the transactions contemplated hereby are consummated as originally contemplated to the
fullest extent possible.

	21.	 	Good and Marketable Title. HES represents that it will have good and marketable
title to all of the ethanol marketed for it by VBV and that said ethanol will be free and
clear of all liens and encumbrances.

	22.	 	Separate Entities. The parties hereto are separate entities and nothing in this
agreement or otherwise shall be construed to create any rights or liabilities of either party
to this agreement with regard to any rights, privileges, duties or liabilities of any other
party to this agreement.

 

9

 

	23.	 	No “Take or Pay.” The parties agree that this is not a “take or pay contract” and
that VBV’s liability is limited to ethanol passing custody at HES’s facility; provided,
however, VBV is obligated under this agreement to purchase all of the Ethanol output at the
Plant pursuant to contracts it presents to and are accepted by HES pursuant to Section 5.B of
this agreement.

	24.	 	Working Relationship. Because the parties hereto have not done business together in
the past in the manner described in this agreement, they have not yet attempted to develop
efficient and effective procedures related to ordering, delivering ethanol and shipping
ethanol and, therefore, agree to work together promptly and in good faith to develop effective
and efficient policies and procedures to cover these matters.

	25.	 	Survival of Terms/Dispute Resolution. All representations, warranties and agreements
made in connection with this agreement will survive the termination of this agreement. The
parties will, therefore, be able to pursue claims related to those representations, warranties
and agreements after the termination of this agreement, unless those claims are barred by the
applicable statute of limitations. Similarly, any claims that the parties have against each
other that arise out of actions or omissions that take place while this agreement is in effect
will survive the termination of this agreement. This means that the parties may pursue those
claims even after the termination of this agreement, unless applicable statutes of limitation
bar those claims.

	26.	 	Confidentiality: The parties acknowledge that they will be exchanging information
about their businesses under this Agreement which is confidential and proprietary, and the
parties agree to handle that confidential and proprietary information in the manner described
in this Section 11.

(a)  Definition of Confidential Information. For purposes of this
Agreement, the term “Confidential Information” means information related to the
business operations of HES or VBV that meets all of the following criteria:

(i) The information must not be generally known to the public,
and must not be a part of the public domain.

(ii) The information must belong to the party claiming it is
confidential, and must be in that party’s possession.

(iii) The information must have been protected and safeguarded by
the party claiming it is confidential by measures that were
reasonable under the circumstances before the information was
disclosed to the other party.

(iv) Written information must be clearly designated in writing as
“Confidential Information” by the party claiming it is confidential
before it is disclosed to the other party, except that all
information about parties’ production, costs and prices will always
be considered Confidential Information under this Agreement, without
the need for specifically designating it as such.

(v) Verbal Confidential Information which is disclosed to the
other party must be summarized in writing, designated in writing
as “Confidential Information,” and transmitted to the other party
within ten (10) days of the verbal disclosure.

 

10

 

(b)  Limitations on the Use of Confidential Information. Each party
agrees that it will not use any Confidential Information that it obtains about the
other party for any purpose, other than to perform its obligations under this
Agreement.

(c)  The Duty not to Disclose Confidential Information. The parties
agree that they will not disclose any Confidential information about each other to
any person or organization, other than their respective legal counsel and
accountants, without first getting written consent to do so from the other party.
Notwithstanding the foregoing, if a party or anyone to whom such party transmits
Confidential Information in accordance with this Agreement is requested or required
(by deposition, interrogatories, requests for information or documents in legal
proceedings, subpoenas, civil investigative demand or similar process, SEC filings
or administrative proceedings) in connection with any proceeding, to disclose any
Confidential Information, such party will give the disclosing party prompt written
notice of such request or requirement so that the disclosing party may seek an
appropriate protective order or other remedy and/or waive compliance with the
provisions of this Agreement, and the receiving party will cooperate with the
disclosing party to obtain such protective order. The fees and costs of obtaining
such protective order, including payment of reasonable attorney’s fees, shall be
paid for by the disclosing party. If such protective order or other remedy is not
obtained or the disclosing party waives compliance with the relevant provisions of
this Agreement, the receiving party (or such other persons to whom such request is
directed) will furnish only that portion of the Confidential Information which, in
the opinion of legal counsel, is legally required to be disclosed, and upon the
disclosing party’s request, use commercially reasonable efforts to obtain assurances
that the confidential treatment will be accorded to such information. This will be
the case both while this Agreement is in effect and for a period of five (5) years
after it has been terminated.

(d)  The Duty to Notify the Other Party in Cases of Improper Use or
Disclosure. Each party agrees to immediately notify the other party if either
party becomes aware of any improper use of or any improper disclosure of the
Confidential Information of the other party at any time while this Agreement is in
effect, and for a period of five (5) years after it has been terminated.

(e)  Protection of the Confidential Information. Each party agrees to
develop effective procedures for protecting the Confidential Information that it
obtains from the other party, and to implement those procedures with the same degree
of care that it uses in protecting its own Confidential Information.

(f)  Return of the Confidential Information. Immediately upon the
termination of this Agreement, each party agrees to return to the other party all of
the other party’s Confidential Information that is in its possession or under its
control.”

(g) Disclosure in SEC Filings. Notwithstanding any other provision contained
in this agreement, VBV acknowledges and agrees that the disclosure of this agreement
and the transactions contemplated hereby by HES (i) on a Form 8-K or
other report filed with the Securities and Exchange Commission at any time after the
date hereof, or (ii) in a customary press release or on a customary analyst call,
will not be violation of this Section 25. HES will cooperate with any reasonable
requests of VBV to request confidential treatment concerning sensitive/confidential
items.

 

11

 

In WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed as of
the date first written above.

	 	 	 	 	 	 	 
	VBV, LLC

	 	 	 	Homeland Energy Solutions, LLC	 	 
	 
	 	 	 	 	 	 
	By: /s/ Todd Becker

	 	 	 	By: /s/ Steve Eastman	 	 
	 

Todd Becker, CEO

	 	 	 	 

Steve Eastman, President

	 	 
	 
	 	 	 	 	 	 
	Date:
8-14-08

	 	 	 	Date: 8-8-08	 	 
	 

	 	 	 	 

	 	 

 

12

 

EXHIBIT A

VBV, LLC

FUEL-GRADE ETHANOL

SPECIFICATIONS

(DENATURED)

Ethanol shall meet or exceed all industry standards, including ASTM D.4806
specifications and Magellan Pipeline specifications for E-Grade Denatured Fuel Ethanol or
customer’s specifications as required, as well as the following specifications.

	 	 	 	 	 
	 	 	NON-DETERGENT	 	 
	TEST	 	GRADE	 	METHOD OF TEST
	Apparent Proof — 60°F

	 	200 minimum

203 maximum
	 	ASTM D-4052 / 

Conversion Table
	 
	 	 	 	 
	Specific Gravity, 60/60°F

	 	0.7870 -

0.7950
	 	ASTM D-4052
	 
	 	 	 	 
	Water, Mass Percent

	 	0.50 nominal

0.82 maximum
	 	ASTM E-203
	 
	 	 	 	 
	Ethanol Content,
Volume Percent

	 	92.1 minimum
	 	Gas Chromatography

ASTM D-5501
	 
	 	 	 	 
	Methanol, (vol. %)

	 	0.50 maximum
	 	ASTM D-5501
	 
	 	 	 	 
	Non-Volatile Matter,
mg/100 mL

	 	5 maximum
	 	ASTM D-1353
	 
	 	 	 	 
	Sulfur, Mass Percent

	 	0.0010 maximum
	 	ASTM D-5453
	 
	 	 	 	 
	Benzene, (vol. %)

	 	0.06 maximum
	 	ASTM D-3606
	 
	 	 	 	 
	Olefins, (vol. %)

	 	0.50 maximum
	 	ASTM D-1319
	 
	 	 	 	 
	Aromatics, (vol. %)

	 	1.70 maximum
	 	ASTM D-1319
	 
	 	 	 	 
	Chloride Ion Content,
mg/L

	 	32 maximum
	 	ASTM D-512, Meth. C

Modified Note (1)
	 
	 	 	 	 
	Copper Content, mg/kg

	 	0.08 maximum
	 	ASTM D-1688, Meth.D

Modified Note (2)
	 
	 	 	 	 
	Acidity (as acetic acid
CH3C00H), 

mass %

	 	0.0070 maximum 

0.0042 maximum
	 	ASTM D-1613

(Shipments to Canada)
	 
	 	 	 	 
	Appearance

	 	Clear and Bright, visibly

free of suspended and/or

settled contaminants.
	 	Visual
	 
	 	 	 	 
	Color, Platinum — Cobalt

	 	50.0 maximum
	 	ASTM D-1209
	 
	 	 	 	 
	Hydrocarbon Denaturant
gal/100 gal.

	 	5.00 maximum

2.0 minimum
	 	Gas Chromatography

ASTM D-4806
	 
	 	 	 	 
	pHe

	 	6.5 minimum

9.0 maximum
	 	ASTM D-6423 (3)
	 
	 	 	 	 
	Sulfate-mg/kg

	 	4.0 maximum
	 	-No official

ASTM Method

 

13

 

(NOTES)

	 	 	 
	Note 1:

	 	The modification of Test Method D-512, Procedure C, consists of
using 5 mL of sample diluted with 20 mL of distilled water instead
of the 25 mL sample specified in the standard procedure. The
volume of the sample prepared by this modification will be
slightly more than 25 mL. To allow for the dilution factor,
report the chloride ion present in the fuel ethanol sample as 5
times that determined in the sample.

	 
	Note 2:

	 	The modification of Test Method D-1688, Procedure D, consists of
mixing reagent grade ethanol (which may be denatured according to
BATF Formula 3A or 3O) in place of water as the solvent or diluent
for the preparation of reagents and standard solutions. However,
this must not be done to prepare the stock copper solution
descr
 _____ 
d in 39.1 of D-1688. Because a violent reaction may occur
between the acid and the ethanol, use water as specified in the
acid solution part of the procedure to prepare the stock copper
solution. Use ethanol for the rinse and final dilution only.

	 
	Note 3:

	 	The only denaturants shall be natural gasoline, gasoline
components, or unleaded gasoline at a minimum concentration of 2
parts by volume per 100 parts by volume. Hydrocarbons, with an
end boiling point higher than 437°F as determined by ASTM Method
D-86, shall not be used.

	 
	Note 4:

	 	All fuel ethanol will contain a minimum of one of the following
corrosion inhibitors:

a) 20 pounds per 1,000 barrels of Octel Starreon DCI-11

b) 20 pounds per 1,000 barrels of Petrolite Tolad 3222

c) 13 pounds per 1,000 barrels of Petrolite Tolad 3224

d) 20 pounds per 1,000 barrels of Nalco 5403

e) 20 pounds per 1,000 barrels of Endcor FE-9730 (1)

f) 20 pounds per 1,000 barrels of MidContinental MCC5011E

g) 27 pounds per 1,000 barrels of MidContinental MCC5011EW

h) 13 pounds per 1,000 barrels of US Water Services Corrpro 654

	 	 	 
	(1)	 	Formerly Betz CAN 13

 

14

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