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Exhibit 10.5
LETTER OF INTENT
Date: March 24, 2005
Parties: Fagen, Inc., a Minnesota Corporation, of Granite Falls, MN ("Fagen")
and Advanced BioEnergy, LLC, a Delaware limited liability company
("Owner")
WHEREAS, Owner is an entity organized to facilitate the development and
building of a 100 MGY gas-fired fuel ethanol plant near Fairmont, Nebraska (the
"Facility" or "Project");
WHEREAS, Fagen is an engineering and construction firm capable of providing
development assistance, as well as designing and constructing the Facility being
considered by Owner; and
WHEREAS, this Letter of Intent supercedes and replaces any prior Letter of
Intent between Fagen and Owner relating to the Project.
NOW, THEREFORE, in consideration of the promises and mutual covenants set forth
herein, Owner and Fagen agree to use 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. Should Owner choose to develop or pursue a relationship with
a company other than Fagen to provide the preliminary engineering or
design-build services for the project, then Owner shall reimburse
Fagen for all expenses Fagen has incurred in connection with the
Project based upon Fagen's standard rate schedule plus all third party
costs incurred from the date of this Letter of Intent. Such expenses
include, but are not limited to, labor rates and reimbursable expenses
such as legal charges for document review and preparation, travel
expenses, reproduction costs, long distance phone cost, and postage.
In the event Fagen's services are terminated by Owner, title to the
technical data, which may include preliminary engineering drawings and
layouts and proprietary process related information, shall remain with
Fagen; however, Owner shall, upon payment of the foregoing expenses,
have the limited license to use the above described technical data,
excluding proprietary process related information, for construction,
operation, repair and maintenance of the Project.
If Fagen intentionally or by gross negligence fails or refuses to
comply with its commitments contained in this Letter of Intent, Fagen
shall absorb all of its own expenses, and Owner shall have the right
to terminate the Letter of Intent immediately upon written notice to
Fagen, and Owner shall be released from its obligations to pay or
reimburse Fagen as described above.
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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.
Fagen assumes no risk or liability of representation or advice to Owner by
assisting in evaluating the above. All decisions made regarding
feasibility, financing, and business risks are the Owner's responsibility
and liability.
3. Fagen agrees to design-build the Facility, utilizing ICM, Inc.
technology in the plant process, for a lump sum price of $98,000,000.00.
This lump sum price shall remain firm by Fagen to Owner until December 31,
2005, and may be subject to revision by Fagen after such date.
4. Fagen will. assist Owner in locating appropriate 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.
6. During the term of this Letter of Intent the Owner agrees that
Fagen will be the exclusive Developer and Design-Builder for the Owner in
connection with matters covered by this Letter of Intent, and Owner shall
not disclose any information related to this Letter of Intent to a
competitor or prospective competitor of Fagen.
7. This Letter of Intent shall terminate on December 31, 2005 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 December 31, 2006
unless financing for the Facility has been secured. Either of the
aforementioned dates may be extended upon mutual written agreement of the
Parties.
8. Fagen and Owner agree to negotiate in good faith and enter into a
definitive lump sum design-build agreement, including Exhibits thereto,
acceptable to the Parties. Upon execution of such agreement, this Letter of
Intent becomes null and void.
9. The Parties will jointly agree on the timing and content of any
public disclosure, including, but not limited to, press releases, relating
to Fagen's involvement in Owner's Project, and no such disclosure shall be
made without mutual consent and approval, except as may be required by
applicable law.
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10. The Parties agree that this Letter of Intent may be modified only
by written agreement by the Parties.
11. This Letter of Intent may be executed in one or more
counterparts, each of which when so executed and delivered shall be deemed
an original, but all of which taken together constitute one and the same
instrument. Signatures which have been affixed and transmitted by facsimile
shall be binding to the same extent as an original signature, although the
Parties contemplate that a fully executed counterpart with original
signatures will be delivered to each Party.
ADVANCED BIOENERGY, LLC FAGEN, INC.
By: /s/Revis L. Stephenson By: /s/O. Wayne Mitchell
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Its: Chairman Its: Sr. V.P.
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Date: 3/24/05 Date: 3/28/05
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