Document:

Exhibit 10.13
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                                    MORTGAGE
                         THE IOWA STATE BAR ASSOCIATION
                              Official Form No. 128
                             Recorder's Cover Sheet

Preparer Information: (name, address and phone number)
Michael E. Gabor, 111 North Dodge Street, Algona, IA  50511,
                  Phone: (515) 295-3565

Taxpayer Information: (name and complete address)
Hydrogen Engine Center, Inc.
700 East Fair Street
Algona, IA  50511

Return Document To: (name and complete address)
Michael E. Gabor
111 North Dodge Street
Algona, IA  50511
Phone: (515) 295-3565

Grantors:
Hydrogen Engine Center, Inc.

Grantees:
Algona Area Economic Development Corporation (AAEDC)

Legal Description:  See Page 2

Document or instrument number of previously recorded documents:  _______________

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<PAGE>

                          Michael E. Gabor ISBA # 13151

                                    MORTGAGE

         THIS   MORTGAGE  is  made  between   Hydrogen   Engine   Center,   Inc.
("Mortgagors")  and  Algona  Area  Economic   Development   Corporation  (AAEDC)
("Mortgagee").

[X] If this box is  checked,  this  Mortgage  is a Purchase  Money  Mortgage  as
defined in the Iowa Code.

         1. Grant of Mortgage and  Security  Interest.  Mortgagors  hereby sell,
convey and mortgage unto Mortgagee,  and grant a security  interest to Mortgagee
in the following described property:
         a. Land and Buildings.  All of Mortgagors' right, title and interest in
     and to the following described real estate situated in Kossuth County, Iowa
     (the "Land");

         Lot (1) of Snap-On  Industrial Park as recorded in the Plat as Document
         No.  2002-1701,  located  in part  of the  West  Half of the  Northwest
         Fractional   Quarter   (W1/2NWfrl1/4)  of  Section  Six  (6),  Township
         Ninety-five (95) North,  Range Twenty-eight (28), West of the 5th P.M.,
         City of Algona, Kossuth County, Iowa.

     and all buildings,  structures and improvements now standing or at any time
     hereafter constructed or placed upon the Land (the "Buildings"),  including
     all  hereditament,   easements,  appurtenances,  riparian  rights,  mineral
     rights, water rights,  rights in and to the lands lying in streets,  alleys
     and roads adjoining the land, estates and other rights and interests now or
     hereafter belonging to or in any way pertaining to the Land.
         b.  Personal  Property.   All  fixtures  and  other  personal  property
     integrally belonging to, or hereafter becoming an integral part of the Land
     or Buildings.  whether attached or detached,  including but not limited to,
     light fixtures,  shades,  rods,  blinds,  Venetian blinds,  awnings,  storm
     windows,  screens,   linoleum,  water  softeners,   automatic  heating  and
     air-conditioning  equipment and all proceeds,  products,  increase,  issue,
     accessions,   attachments,    accessories,   parts,   additions,   repairs.
     replacements  and  substitutes of, to, and for the foregoing (the "Personal
     Property").
         c.  Revenues  and  Income.   All  rents,   issues,   profits,   leases,
     condemnation  awards and insurance  proceeds now or hereafter  arising from
     the  ownership,  occupancy  or use  of the  Land,  Buildings  and  Personal
     Property, or any part thereof (the "Revenues and Income").
         TO HAVE AND TO HOLD the Land, Buildings, Personal Property and Revenues
     and Income  (collectively called the "Mortgaged  Property"),  together with
     all privileges,  hereditament  thereunto now or hereafter belonging,  or in
     any way appertaining and the products and proceeds thereof, unto Mortgagee,
     its successors and assigns.
         2.  Obligations.  This  Mortgage  secures  the  following  (hereinafter
collectively  referred to as the "Obligations"):
          a. The  payment  of the loan  made by  Mortgagee  to  Hydrogen  Engine
     Center,  Inc. evidenced by a promissory note dated December 16, 2005 in the
     principal amount of $117,500 with a due date of July 1, 2017, any renewals,
     extensions,  modifications or refinancing  thereof and any promissory notes
     issued in substitution therefor; and

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<PAGE>

         b. All other  obligations  of Mortgagors to Mortgagee,  now existing or
     hereafter arising,  whether direct or indirect,  contingent or absolute and
     whether as maker or surety,  including, but not limited to, future advances
     and amounts  advanced and expenses  incurred by Mortgagee  pursuant to this
     Mortgage.
         c.  3.   Representations  and  Warranties  of  Mortgagors.   Mortgagors
     represent, warrant and covenant to Mortgagee that (i) Mortgagors hold clear
     title to the Mortgaged  Property and title in fee simple in the Land;  (ii)
     Mortgagors have the right, power and authority to execute this Mortgage and
     to mortgage, and grant a security interest in the Mortgaged Property; (iii)
     the  Mortgaged  Property  is free and clear of all liens and  encumbrances,
     except for real estate  taxes not yet  delinquent  and except as  otherwise
     stated in subparagraph 1a. herein;  (iv) Mortgagors will warrant and defend
     title to the Mortgaged  Property and the lien and priority of this Mortgage
     against all claims and  demands of all  persons,  whether  now  existing or
     hereafter arising;  and (v) all buildings and improvements now or hereafter
     located on the Land are, or will be, located entirely within the boundaries
     of the Land.
         4. Payment and Performance of the Obligations.  Mortgagors will pay all
     amounts  payable under the  Obligations in accordance with the terms of the
     Obligations  when and as due and will timely perform all other  obligations
     of Mortgagors under the Obligations.  The provisions of the Obligations are
     hereby  incorporated  by reference into this Mortgage as if fully set forth
     herein.
         5.  Taxes.  Mortgagors  shall  pay each  installment  of all  taxes and
     special  assessments  of every kind,  now or hereafter  levied  against the
     Mortgaged  Property  before the same become  delinquent,  without notice or
     demand, and shall deliver to Mortgagee proof of such payment within fifteen
     (15)  days  after  the  date  in  which  such  tax  or  assessment  becomes
     delinquent.
         6. Liens.  Mortgagors  shall not  create,  incur or suffer to exist any
     lien, encumbrance, security interest or charge on the Mortgaged Property or
     any part  thereof  which might or could be held to be equal or prior to the
     lien of this Mortgage, other than the lien of current real estate taxes and
     installments of special assessments with respect to which no penalty is yet
     payable.  Mortgagors  shall  pay,  when  due,  the  claims  of all  persons
     supplying  labor  or  materials  to or in  connection  with  the  Mortgaged
     Property.
         7. Compliance with Laws.  Mortgagors  shall comply with all present and
     future statutes, laws, rules, orders,  regulations and ordinances affecting
     the Mortgaged Property, any part thereof or the use thereof.
         8. Permitted Contests.  Mortgagors shall not be required to (i) pay any
     tax,  assessment  or other charge  referred to in paragraph 5 hereof,  (ii)
     discharge  or  remove  any  lien,  encumbrance  or  charge  referred  to in
     paragraph 6 hereof, or (iii) comply with any statute, law, rule, regulation
     or ordinance referred to in paragraph 7 hereof, so long as mortgagors shall
     contest, in good faith, the existence,  amount or the validity thereof, the
     amount of damages  caused  thereby or the extent of  Mortgagors'  liability
     therefor,  by  appropriate  proceedings  which  shall  operate  during  the
     pendency  thereof to prevent (A) the  collection  of, or other  realization
     upon  the tax,  assessment,  charge  or lien,  encumbrances  or  charge  so
     contested,  (B) the sale,  forfeiture or loss of the Mortgaged  Property or
     any part thereof, and (C) any interference with the use or occupancy of the
     Mortgaged  Property  or any part  thereof.  Mortgagors  shall  give  prompt
     written notice to Mortgagee of the  commencement of any contest referred to
     in this paragraph 8.
         9. Care of Property.  Mortgagors  shall take good care of the Mortgaged
     Property;  shall keep the  Buildings  and  Personal  Property  now or later
     placed upon the Mortgaged  Property in good and reasonable repair and shall
     not injure,  destroy or remove  either the  Buildings or Personal  Property

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<PAGE>

     during the term of this  Mortgage.  Mortgagors  shall not make any material
     alteration to the Mortgaged  Property  without the prior written consent of
     Mortgagee.
         10. Insurance.
         a. Risks to be  Insured.  Mortgagors,  at their sole cost and  expense,
     shall  maintain  insurance  on the  Buildings  and other  improvements  now
     existing  or  hereafter  erected on the Land and on the  Personal  Property
     included in the Mortgaged Property against loss by fire,  extended coverage
     perils and such other  hazards as Mortgagee  may from time to time require,
     such insurance to have a "Replacement  Cost" endorsement  attached thereto,
     with the  amount of the  insurance  at least  equal to the  balance  of the
     Obligations.  At  Mortgagors'  option,  such policy may have a  coinsurance
     clause  of not less  than  90% of  replacement  cost  provided  the  policy
     contains an appropriate  form of cost  escalation  endorsement.  Mortgagors
     will at their sole cost and expense,  from time to time, and at any time at
     the request of Mortgagee,  provide Mortgagee with evidence  satisfactory to
     Mortgagee of the replacement  cost of Mortgaged  Property.  Mortgagors will
     maintain such other insurance as Mortgagee may reasonably require.
         b. Policy  Provisions.  All  insurance  policies and  renewals  thereof
     maintained by Mortgagors  pursuant to this Mortgage  shall be written by an
     insurance carrier  satisfactory to Mortgagee,  be payable to the parties as
     their  interest may appear,  contain a standard or union-type  loss payable
     clause in favor of  Mortgagee,  contain an agreement of the insurer that it
     will not amend,  modify or cancel the policy  except after thirty (30) days
     prior  written  notice to  Mortgagee,  and be  reasonably  satisfactory  to
     Mortgagee in all other respects.
         c.  Delivery  of Policy or  Certificate.  If  requested  by  Mortgagee,
     Mortgagors  will deliver to Mortgagee  original  policies  satisfactory  to
     Mortgagee  evidencing the insurance  which is required under this Mortgage,
     and Mortgagors shall promptly furnish to Mortgagee all renewal notices and,
     upon request of Mortgagee,  evidence of payment thereof.  At least ten (10)
     days prior to the expiration date of a required  policy,  Mortgagors  shall
     deliver to Mortgagee a renewal policy in form satisfactory to Mortgagee.
         d.  Assignment  of  Policy.  If the  Mortgaged  Property  is  sold at a
     foreclosure  sale or if  Mortgagee  shall  acquire  title to the  Mortgaged
     Property,  Mortgagee  shall have all of the right,  title and  interest  of
     Mortgagors in and to any insurance  policies  required  hereunder,  and the
     unearned  premiums  thereon,  and in and to the proceeds thereof  resulting
     from  any  damage  to  the  Mortgaged   Property  prior  to  such  sale  or
     acquisition.
         e. Notice of Damage or  Destruction;  Adjusting  Loss. If the Mortgaged
     Property or any part thereof shall be damaged or destroyed by fire or other
     casualty,  Mortgagors  will,  within  five  (5)  calendar  days  after  the
     occurrence of such damage or  destruction,  give written  notice thereof to
     the  insurance  carrier and to Mortgagee  and will not adjust any damage or
     loss which is  estimated  by  Mortgagors  in good  faith to exceed  $25,000
     unless  Mortgagee  shall have joined in or concurred with such  adjustment;
     but if there has been no  adjustment of any such damage or loss within four
     (4) months from the date of  occurrence  thereof and if an Event of Default
     shall  exist  at the end of such  four  (4)  month  period  or at any  time
     thereafter,  Mortgagee may alone make proof of loss,  adjust and compromise
     any claim  under the  policies,  and  appear in and  prosecute  any  action
     arising from such policies. In connection  therewith,  Mortgagors do hereby
     irrevocably  authorize,  empower and appoint Mortgagee as  attorney-in-fact
     for Mortgagor (which appointment is coupled with an interest) to do any and
     all of the foregoing in the name and on behalf of Mortgagors.

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         f. Application of Insurance Proceeds. All sums paid under any insurance
     policy  required by this Mortgage shall be paid to Mortgagee,  which shall,
     at its option, apply the same (after first deducting therefrom  Mortgagee's
     expenses  incurred  in  collecting  the same  including  but not limited to
     reasonable  attorney's  fees) to the reduction of the Obligations or to the
     payment of the restoration,  repair, replacement or rebuilding of Mortgaged
     Property  that is damaged or destroyed  in such manner as  Mortgagee  shall
     determine and secondly to the reduction of the Obligations. Any application
     of insurance  proceeds to principal of the Obligations  shall not extend or
     postpone the due date of the installments  payable under the Obligations or
     change the amount of such installments.
         g.  Reimbursement  of Mortgagee's  Expenses.  Mortgagors shall promptly
     reimburse Mortgagee upon demand for all of Mortgagee's expenses incurred in
     connection with the collection of the insurance proceeds, including but not
     limited  to  reasonable  attorneys  fees,  and all such  expenses  shall be
     additional amounts secured by this Mortgage.
         11. Inspection.  Mortgagee, and its agents, shall have the right at all
reasonable  times,  to enter  upon the  Mortgaged  Property  for the  purpose of
inspecting the Mortgaged Property or any part thereof. Mortgagee shall, however,
have no duty to make such inspection.  Any inspection of the Mortgaged  Property
by Mortgagee  shall be entirely for its benefit and  Mortgagors  shall in no way
rely or claim reliance thereon.
         12.  Protection  of  Mortgagee's  Security.  Subject  to the  rights of
Mortgagors  under  paragraph 8 hereof,  if Mortgagors fail to perform any of the
covenants  and  agreements  contained  in  this  Mortgage  or if any  action  or
proceeding is commenced which affects the Mortgaged  Property or the interest of
the Mortgagee  therein,  or the title thereto,  then  Mortgagee,  at Mortgagee's
option, may perform such covenants and agreements, defend against or investigate
such  action or  proceeding,  and take such  other  action  as  Mortgagee  deems
necessary to protect Mortgagee's interest.  Any amounts or expenses disbursed or
incurred by Mortgagee in good faith  pursuant to this paragraph 12 with interest
thereon at the rate of 10% per annum,  shall become an  Obligation of Mortgagors
secured by this  Mortgage.  Such  amounts  advanced or  disbursed  by  Mortgagee
hereunder shall be immediately due and payable by Mortgagors  unless  Mortgagors
and Mortgagee agree in writing to other terms of repayment.  Mortgagee shall, at
its option,  be subrogated to the lien of any mortgage or other lien  discharged
in whole or in part by the  Obligations  or by  Mortgagee  under the  provisions
hereof,  and any such  subrogation  rights shall be  additional  and  cumulative
security for this Mortgage.  Nothing  contained in this paragraph  shall require
Mortgagee to incur any expense or do any act hereunder,  and Mortgagee shall not
be liable to Mortgagors  for any damage or claims arising out of action taken by
Mortgagee pursuant to this paragraph.
         13. Condemnation.  Mortgagors shall give Mortgagee prompt notice of any
action,  actual or  threatened,  in  condemnation  or eminent  domain and hereby
assign,  transfer and set over to Mortgagee the entire  proceeds of any award or
claim for damages for all or any part of the Mortgaged Property taken or damaged
under  the  power  of  eminent  domain  or  condemnation.  Mortgagee  is  hereby
authorized  to  intervene  in any such  action  in the names of  Mortgagors,  to
compromise and settle any such action or claim,  and to collect and receive from
the condemning  authorities and give proper receipts and  acquittances  for such
proceeds.  Any expenses  incurred by Mortgagee in  intervening in such action or
compromising  and settling  such action or claim,  or  collecting  such proceeds
shall be  reimbursed  to  Mortgagee  first out of the  proceeds.  The  remaining
proceeds or any part  thereof  shall be applied to  reduction of that portion of
the  Obligations  then most  remotely to be paid,  whether due or not, or to the
restoration or repair of the Mortgaged Property, the choice of application to be
solely at the discretion of Mortgagee.

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<PAGE>
         14. Fixture Filing. From the date of its recording, this Mortgage shall
be effective as a financing  statement filed as a fixture filing with respect to
the Personal Property and for this purpose the name and address of the debtor is
the name and address of  Mortgagors  as set forth in paragraph 20 herein and the
name and address of the secured  party is the name and address of the  Mortgagee
as set forth in paragraph 20 herein.
         15.  Events  of  Default.  Each  of  the  following  occurrences  shall
constitute an event of default hereunder ("Event of Default"):
         a. Mortgagors  shall default in the due observance or performance of or
     breach its  agreement  contained in paragraph 4 hereof or shall  default in
     the  due  observance  or  performance  of or  breach  any  other  covenant,
     condition or agreement on its part to be observed or performed  pursuant to
     the terms of this Mortgage.
         b.  Mortgagors  shall  make  an  assignment  for  the  benefits  of its
     creditors,  or a petition shall be filed by or against Mortgagors under the
     United States  Bankruptcy  Code or  Mortgagors  shall seek or consent to or
     acquiesce in the  appointment  of any trustee,  receiver or liquidator of a
     material part of its properties or of the Mortgaged  Property or shall not,
     within  thirty (30) days after the  appointment  of a trustee,  receiver or
     liquidator  of any  material  part of its  properties  or of the  Mortgaged
     Property, have such appointment vacated.
         c. A judgment,  writ or warrant of attachment or execution,  or similar
     process  shall be  entered  and  become a lien on or be  issued  or  levied
     against the  Mortgaged  Property or any part thereof which is not released,
     vacated or fully bonded within  thirty (30) days after its entry,  issue or
     levy.
         d. An event of default,  however  defined,  shall occur under any other
     mortgage,  assignment or other security document constituting a lien on the
     Mortgaged Property or any part thereof.
         16.  Acceleration;  Foreclosure.  Upon the  occurrence  of any Event of
Default and at any time thereafter while such Event of Default exists, Mortgagee
may, at its option, after such notice as may be required by law, exercise one or
more of the  following  rights and  remedies  (and any other rights and remedies
available to it):
         a. Mortgagee may declare  immediately  due and payable all  Obligations
     secured by this Mortgage,  and the same shall  thereupon be immediately due
     and payable, without further notice or demand.
         b.  Mortgagee  shall have and may exercise with respect to the Personal
     Property,  all the rights and remedies  accorded  upon default to a secured
     party under the Iowa Uniform  Commercial  Code.  If notice to Mortgagors of
     intended  disposition  of such  property is required by law in a particular
     instance,  such notice shall be deemed commercially  reasonable if given to
     Mortgagors   at  least  ten  (10)  days  prior  to  the  date  of  intended
     disposition.
         c. Mortgagee may (and is hereby  authorized and empowered to) foreclose
     this Mortgage in accordance  with the law of the State of Iowa,  and at any
     time  after the  commencement  of an action in  foreclosure,  or during the
     period of redemption,  the court having  jurisdiction  of the case shall at
     the request of Mortgagee appoint a receiver to take immediate possession of
     the Mortgaged  Property and of the Revenues and Income accruing  therefrom,
     and to rent or  cultivate  the same as he may deem best for the interest of
     all  parties  concerned,  and such  receiver  shall be liable to account to
     Mortgagors only for the net profits, after application of rents, issues and
     profits upon the costs and expenses of the receivership and foreclosure and
     upon the Obligations.
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<PAGE>

         17. Redemption. It is agreed that if this Mortgage covers less than ten
(10) acres of land,  and in the event of the  foreclosure  of this  Mortgage and
sale of the property by sheriff's sale in such foreclosure proceedings, the time
of one year for  redemption  from said sale provided by the statues of the State
of Iowa  shall be  reduced to six (6) months  provided  the  Mortgagee,  in such
action files an election to waive any  deficiency  judgment  against  Mortgagors
which may arise out of the  foreclosure  proceedings;  all to be consistent with
the provisions of Chapter 628 of the Iowa Code. If the  redemption  period is so
reduced,  for the first  three (3) months  after  sale such right of  redemption
shall be exclusive  to the  Mortgagor,  and the time periods in Sections  628.5,
628.15 and 628.16 of the Iowa Code shall be reduced to four (4) months.
         It is further agreed that the period of redemption  after a foreclosure
of this  Mortgage  shall be  reduced  to  sixty  (60)  days if all of the  three
following contingencies develop: (1) The real estate is less than ten (10) acres
in size;  (2) the Court finds  affirmatively  that the said real estate has been
abandoned by the owners and those persons  personally liable under this Mortgage
at the time of such  foreclosure;  and (3)  Mortgagee  in such  action  files an
election to waive any deficiency judgment against Mortgagors or their successors
in interest in such action. If the redemption  period is so reduced,  Mortgagors
or their  successors in interest or the owner shall have the exclusive  right to
redeem for the first thirty (30) days after such sale, and the time provided for
redemption by creditors as provided in Sections 628.5,  628.15 and 628.16 of the
Iowa Code shall be reduced to forty (40) days.  Entry of  appearance by pleading
or docket entry by or on behalf of Mortgagors  shall be a  presumption  that the
property is not abandoned.  Any such redemption  period shall be consistent with
all of the provisions of Chapter 628 of the Iowa Code.  This paragraph shall not
be  construed  to limit or  otherwise  affect  any other  redemption  provisions
contained in Chapter 628 of the Iowa Code.
         18.  Attorneys'  Fees.  Mortgagors  shall pay on  demand  all costs and
expenses  incurred  by  Mortgagee  in  enforcing  or  protecting  its rights and
remedies hereunder,  including,  but not limited to, reasonable  attorneys' fees
and legal expenses.
         19. Forbearance not a Waiver, Rights and Remedies Cumulative.  No delay
by  Mortgagee in  exercising  any right or remedy  provided  herein or otherwise
afforded by law or equity  shall be deemed a waiver of or preclude  the exercise
of such right or remedy, and no waiver by Mortgagee of any particular provisions
of this  Mortgage  shall  be  deemed  effective  unless  in  writing  signed  by
Mortgagee.  All such rights and remedies  provided for herein or which Mortgagee
or the holder of the Obligations may have otherwise,  at law or in equity, shall
be  distinct,  separate  and  cumulative  and  may  be  exercised  concurrently,
independently  or  successively  in any  order  whatsoever,  and as often as the
occasion therefor arises.
         20.  Notices.  All notices  required to be given  hereunder shall be in
writing and deemed  given when  personally  delivered or deposited in the United
States  mail,  postage  prepaid,  sent  certified  or  registered,  addressed as
follows:

           a. If to Mortgagors, to:
                  Hydrogen Engine Center, Inc.,
                  700 East Fair Street,
                  Algona, IA  50511

           b. If to Mortgagee, to:
                  Algona Area Economic Development Corporation (AAEDC),
                  123 East State Street,
                  Algona, IA  50511

                                      -7-
<PAGE>

or to such other  address or person as  hereafter  designated  in writing by the
applicable  party in the manner  provided  in this  paragraph  for the giving of
notices.
         21. Severability.  In the event any portion of this Mortgage shall, for
any reason, be held to be invalid, illegal or unenforceable in whole or in part,
the remaining  provisions shall not be affected thereby and shall continue to be
valid and enforceable  and if, for any reason,  a court finds that any provision
of this Mortgage is invalid,  illegal, or unenforceable as written,  but that by
limiting such provision it would become valid,  legal and enforceable  then such
provision shall be deemed to be written, construed and enforced as so limited.
         22. Further Assurances. At any time and from time to time until payment
in full of the  Obligations,  Mortgagors  will,  at the  request  of  Mortgagee,
promptly execute and deliver to Mortgagee such additional  instruments as may be
reasonably required to further evidence the lien of this Mortgage and to further
protect  the  security  interest  of  Mortgagee  with  respect to the  Mortgaged
Property,  including,  but  not  limited  to,  additional  security  agreements,
financing  statements  and  continuation  statements.  Any expenses  incurred by
Mortgagee in  connection  with the  recordation  of any such  instruments  shall
become  additional  Obligations  of Mortgagors  secured by this  Mortgage.  Such
amounts shall be immediately due and payable by Mortgagors to Mortgagee.
         23. Successors and Assigns bound; Number; Gender; Agents; Captions. The
rights,  covenants  and  agreements  contained  herein shall be binding upon and
inure to the benefit of the  respective  legal  representatives,  successors and
assigns  of  the  parties.   Words  and  phrases  contained  herein,   including
acknowledgment  hereof,  shall be construed as in the singular or plural number,
and as  masculine,  feminine or neuter  gender  according to the  contexts.  The
captions and headings of the  paragraphs  of this  Mortgage are for  convenience
only and are not to be used to interpret or define the provisions hereof.
         24.  Governing Law. This Mortgage shall be governed by and construed in
accordance  with the laws of the State of Iowa.  25. Release of Rights of Dower,
Homestead and Distributive  Share. Each of the undersigned  hereby  relinquishes
all rights of dower,  homestead and  distributive  share in and to the Mortgaged
Property and waives all rights of exemption as to any of the Mortgaged Property.
         26. Acknowledgment of Receipt of Copies of Debt Instrument.  Mortgagors
hereby  acknowledge the receipt of a copy of this Mortgage  together with a copy
of each promissory note secured hereby.
         27.  Additional  Provisions.  This  Mortgage  shall  be  secondary  and
subordinate  to a first mortgage by Mortgagor in favor of Iowa State Bank in the
amount of Five Hundred Thousand Dollars ($500,000.00).

         Dated: ____December 16, 2005________________________

                   HYDROGEN ENGINE CENTER, INC.

                   By: /s/  Michael A Schiltz 12/16/05
                       -----------------------------------
                       Michael Schiltz, Secretary and
                       Duly Authorized Corporate Representative, Mortgagor

                                      -8-
<PAGE>

I UNDERSTAND THAT HOMESTEAD  PROPERTY IS IN MANY CASES PROTECTED FROM THE CLAIMS
OF CREDITORS AND EXEMPT FROM JUDICIAL SALE; AND THAT BY SIGNING THIS MORTGAGE, I
VOLUNTARILY GIVE UP MY RIGHT TO THIS PROTECTION FOR THIS MORTGAGED PROPERTY WITH
RESPECT TO CLAIMS BASED UPON THIS MORTGAGE.

Dated:  12/16/05
        --------

                     HYDROGEN ENGINE CENTER, INC.

                     By: /s/ Michael A. Schiltz
                         ---------------------------------------------------
                         Michael Schiltz, Secretary and
                         Duly Authorized Corporate Representative, Mortgagor

STATE OF IOWA, COUNTY OF KOSSUTH

This  instrument  was  acknowledged  before me on December 16, 2005,  by Michael
Schiltz,  Secretary and Duly  Authorized  Corporate  Representative  of Hydrogen
Engine Company, Inc.

                          /s/ Michael E. Gabor
                          ---------------------------------------------------
                          Michael E. Gabor, Notary Public

My commission expires 8-10-07

                                      -9-Exhibit 10.1

 

EXHIBIT 10.1

SECOND AMENDMENT TO

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     THIS SECOND AMENDMENT TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this
“Amendment”) is entered into effective as of March 27, 2006, by and between CancerVax
Corporation, a Delaware corporation (the “Company”), and David F. Hale
(“Executive”).

     WHEREAS, the Company and Executive desire to amend that certain Amended and Restated
Employment Agreement dated as of November 15, 2004, between the Company and Executive (as amended
to date, the “Original Agreement”) on the terms and conditions set forth herein.

     NOW, THEREFORE, in consideration of the various covenants and agreements hereinafter set
forth, the parties hereto agree as follows:

     1. Amendment to Section 4(g)(vi). A new sentence is added at the end of Section
4(g)(vi) of the Original Agreement to read as follows:

                  “Notwithstanding the foregoing, none of the Stock Awards granted to Executive on March 20,
2006 shall accelerate pursuant to clauses (i), (ii), (iii), (iv) or (v) of this Section
4(g).”

     2. No Other Amendments. Except as expressly provided for in this Amendment, no other
term or provision of the Original Agreement is amended or modified in any respect.

(Signature Page Follows)

 

 

     IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first set forth
above.

	 	 	 	 	 
	 	 	CANCERVAX CORPORATION
	 
	 	 	 	 
	 

	 	By:
	 	/s/ William R. LaRue
	 

	 	 	 	 
	 

	 	Name:
	 	William R. LaRue
	 

	 	 	 	 
	 

	 	Title:
	 	Senior Vice President and Chief Financial Officer
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	/s/ David F. Hale
	 	 	 
	 	 	David F. Hale

[SIGNATURE PAGE TO SECOND AMENDMENT TO

AMENDED AND RESTATED EMPLOYMENT AGREEMENT]

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