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Exhibit 10.1
LETTER OF INTENT
DATE: 7/23/01
PARTIES: FAGEN, INC. of Granite Falls, MN and EAST KANSAS AGRI ENERGY of
(Owner) Garnett, KS
Owner is a committee of farmers and business people formed to facilitate
the development and building of a locally-owned 20 MGY ethanol plant in
Kansas (the facility).
Fagen, Inc. is an engineering and construction firm capable of providing
development assistance, as well as constructing the Facility being
considered by Owner.
ICM, Inc. is a leader in ethanol plant process technology. ICM, Inc. also
provides state of the art grain drying and wastewater treatment
equipment.
Owner, and Fagen, Inc. (Fagen) agree to using best efforts in jointly
developing this project under the following terms:
1. Owner agrees that Fagen will Design/Build the Facility if
determined by Owner to be feasible and if adequate financing
is obtained.
2. Fagen will provide Owner with assistance in evaluating, from
both a technical and business perspective
- Owner organizational options,
- The appropriate location of the proposed Facility, and
- Business Plan development
3. Fagen agrees to Design/Build the Facility at a capital cost as
shown on the attached Exhibit 1.
4. Fagen shall assist Owner in locating appropriate management
personnel and/or supply contract management for the Facility.
5. Fagen will assist Owner in presenting information to potential
investors, potential lenders, and various entities or agencies
that may provide project development assistance. We have a
long working relationship with an investment banking firm that
specializes in agricultural related project financing.
6. This Letter of Intent shall terminate on July 31, 2002 unless
the basic size and design of the Facility have been determined
and mutually agreed upon, and a specific site or sites have
been determined and mutually agreed upon, and at least 10% of
the necessary equity has been raised. Furthermore, this Letter
of Intent shall terminate on July 31, 2003 unless total
financing for the Facility has been secured. Either of the
aforementioned dates may be extended upon mutual agreement of
the parties.
Letter of Intent Page 1 of 3
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East Kansas Agri Energy
By:
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Its:
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Date:
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Fagen, Inc.
By:
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Its:
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Date:
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Letter of Intent Page 2 of 3
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FAGEN INC.
July 23, 2001
ESTIMATED SOURCES AND USES OF FUNDS STATEMENT*
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SOURCES OF FUNDS
Equity 40%
Cash & Equity Equivalents $ 13,120,000
Long Term Debt $ 19,680,000
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TOTAL SOURCES OF FUNDS $ 32,800,000
USES OF FUNDS
DESIGN CONSTRUCTION & STARTUP
Plant Construction (GMP) $ 28,000,000
Land & Site - Developmental Cost (Est.) $ 950,000
Startup Costs
Corn (10 days @ $2.25) $ 450,000
Enzymes, Chemicals and other $ 250,000
Other Startup Costs $ 650,000
SUBTOTAL $ 1,350,000
ORGANIZATIONAL & FINANCING
Financing Costs $ 1,300,000
Organizational Costs $ 350,000
Miscellaneous Costs $ 250,000
Owners Contingency $ 600,000
SUBTOTAL $ 2,500,000
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TOTAL USES OF FUNDS $ 32,800,000
Options:
Thermal Oxidizer $ 250,000
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* General Assumptions: Land & site development, startup, and organizational &
financing costs are estimated. Owner provides all access roads including the
plant perimeter road, rail systems, substation if required, electrical
distribution/transformers, gas line(s), water supply/pretreatment to & waste
water systems (septic) from the designated areas within the plant site. Assumes
non-winter conditions for earthwork, concrete & building erection. Other
conditions may apply in the definitive construction agreement.
Letter of Intent Page 3 of 3