exv10w1



 












Exhibit 10.1




Agreement for Phase 1 Services



and



Statement of Intent



between



Victory Renewable Fuels



and



Renewable Energy Group, LLC



WHEREAS, Victory Renewable Fuels (“Victory Renewable Fuels”) has made a commitment to develop
a Biodiesel Plant and is diligently developing a business plan that will move this project forward,
and will be able to select the vendor to complete the business plan that will move this project
forward, and



WHEREAS, Renewable Energy Group, LLC (“REG”) was formed to provide turn-key engineering and
construction (design-build) services for biodiesel facilities,



WHEREAS, REG has met with Victory Renewable Fuels to discuss ways in which the two companies can
work together cooperatively to support the development of a biodiesel
plant in Larchwood, Iowa.


NOW THEREFORE, IT IS AGREED by and between Victory Renewable Fuels and REG as follows:





	1.	 	In recognition of REG’s expertise and technical assistance capabilities, Victory Renewable
Fuels will retain REG to assist in developing and finalizing a business plan, including
assistance in development of the following:






	 	A.	 	Preliminary engineering design services including:






	 	•	 	Site plan — discuss and evaluate potential sites as to
infrastructure availability:






	 	1.	 	Rail service and access to national rail networks.
	 
	 	2.	 	Utility requirements (gas, electric, water, sewer, etc.).
	 
	 	3.	 	Roads and access to interstate highways.
	 
	 	4.	 	Storm water runoff and drainage requirements.
	 
	 	5.	 	Site grading,
subsurface conditions, and availability of suitable
soils.
	 
	 	6.	 	Other infrastructure
issues that become important to this project.






	 	•	 	Process flow diagrams






	 	1.	 	Generic flow diagram
illustrating the REG continuous transesterification
process.
	 
	 	2.	 	Generic flow diagrams
illustrating the REG pretreatment processes for high
phosphorous (soybean oil) and high FFA (animal fat)
feedstocks.






	 	•	 	Floor plan illustrating a typical REG biodiesel process building.





					
	 	 	 	 	 
	
	 	 	 	406 First Street
	
	 	 	 	PO Box 68
	Page 1 of 5
	 	[Stamped: CONFIDENTIAL]
	 	Ralston, IA 51459
	 
	 	 	 	(712) 667-3500
	 
	 	 	 	Fax(712) 667-3599
	 
	 	 	 	www.renewable-energy-group.com






 









 












	 	•	 	Elevation illustrating a typical REG biodiesel process building.
	 
	 	•	 	Project timetable with milestones addressing permits, fundraising,
engineering construction and start-up/commissioning.
	 
	 	•	 	Turnkey capital cost estimate (plus or minus 10%)
	 
	 	•	 	Permitting requirements including a “permitting matrix” that will address
permits affecting this project.






	 	B.	 	Technology and description






	 	•	 	A general discussion explaining the REG continuous transesterification and
pre-treatment processes.
	 
	 	•	 	What raw materials are necessary to make biodiesel.
	 
	 	•	 	How to change raw material inputs into biodiesel.
	 
	 	•	 	What equipment is necessary to perform this task.
	 
	 	•	 	Flow diagram
	 
	 	•	 	Visuals of the plant
	 
	 	•	 	Plant layout form input storage to final load out.






	 	C.	 	Staffing requirements






	 	•	 	What skill sets are required to make the operation a success?






	 	1.	 	Managerial
	 
	 	2.	 	Financial
	 
	 	3.	 	Mechanical
	 
	 	4.	 	Operational






	 	•	 	Where to find these skilled individuals.






	 	D.	 	Market analysis including competitor analysis






	 	•	 	Who is buying biodiesel
	 
	 	•	 	Where to sell the co-products (glycerin, fatty acids)






	 	E.	 	Marketing strategies & support






	 	•	 	Where the biodiesel industry is going into the future.
	 
	 	•	 	How West Central views the future of product marketing.
	 
	 	•	 	Distribution techniques






	 	F.	 	Customer analysis and discussion of front-loading sales for plant






	 	•	 	Partnering with West Central to sell biodiesel into an established
marketplace.
	 
	 	•	 	Develop new large scale uses in new areas






	 	1.	 	Home heating
	 
	 	2.	 	Underground mining
	 
	 	3.	 	other





					
	 	 	 	 	 
	
	 	 	 	406 First Street
	
	 	 	 	PO Box 68
	Page 2 of 5
	 	[Stamped: CONFIDENTIAL]
	 	Ralston, IA 51459
	 
	 	 	 	(712) 667-3500
	 
	 	 	 	Fax(712) 667-3599
	 
	 	 	 	www.renewable-energy-group.com






 









 












	 	G.	 	Discussion of raw material inputs and costing






	 	•	 	Materials specification
	 
	 	•	 	Vendor selection
	 
	 	•	 	Transportation
	 
	 	•	 	Receiving and on site storage
	 
	 	•	 	Aggregate purchasing






	 	H.	 	Assistance in developing capital requirements (construction,
working capital, etc.)






	 	•	 	Construction
	 
	 	•	 	Working capital
	 
	 	•	 	Escrow






	 	I.	 	Detailing of state and federal incentives to assist plant






	 	•	 	Federal programs to assist in construction
	 
	 	•	 	Federal excise tax credit
	 
	 	•	 	State incentives
	 
	 	•	 	State and Federal mandates






	 	J.	 	Discussion of risk






	 	•	 	Finances
	 
	 	•	 	Raw material supplies
	 
	 	•	 	Site locations
	 
	 	•	 	Marketing
	 
	 	•	 	Unreliability of government subsidies
	 
	 	•	 	Environmental
	 
	 	•	 	Inexperience
	 
	 	•	 	Quality issues






	 	K.	 	Review of financial data and projections






	 	•	 	Current assets and liabilities
	 
	 	•	 	Future return on investment
	 
	 	•	 	Discussion with lenders






	 	L.	 	Assistance in development of organizational structure for new venture






	 	•	 	Cooperative
	 
	 	•	 	Limited Liability Corporation
	 
	 	•	 	Corporation






	 	M.	 	Assistance in the presentation of the completed plan to potential
investors and lenders.






	 	2.	 	In consideration of REG’s agreement to provide the foregoing services,
Victory Renewable Fuels agrees to pay the sum of $50,000 to REG upon
signature of this agreement. If Victory Renewable Fuels proceeds with the
construction of a biodiesel facility with REG as stated in paragraph 5, REG
agrees that the foregoing $50,000 payment shall be credited against the cost
of such facilities. If, for any reason, Victory Renewable Fuels does not
build a biodiesel facility, REG shall retain the $50,000 payment for services
rendered in aiding in the development of a business plan. If REG fails
through no fault of Victory Renewable Fuels to provide the services outlined
above, REG shall refund any unearned portion of such payment to Victory
Renewable Fuels. Travel and subcontractor expenses that are incurred in order
to complete this Agreement will be treated as reimbursable expenses and
billed separately.





					
	 	 	 	 	 
	
	 	 	 	406 First Street
	
	 	 	 	PO Box 68
	Page 3 of 5
	 	[Stamped: CONFIDENTIAL]
	 	Ralston, IA 51459
	 
	 	 	 	(712) 667-3500
	 
	 	 	 	Fax(712) 667-3599
	 
	 	 	 	www.renewable-energy-group.com






 









 












	 	3.	 	While REG agrees to work with Victory Renewable Fuels in the development of
information for a business plan as set out above, by the very nature of the
project being discussed such work at times involves “predicting” the future,
including with respect to costs of construction, production expenses, marketing
prices, factors which may depend upon the passage, existence, or repeal of
governmental programs, the existence as well as location and strength of
competition, and the possible emergence of new and as of yet unknown
competition. As a result of these and other factors, REG cannot guarantee the
achievement of any projected level of business, income, or return on
investment.
	 
	 	4.	 	The foregoing sets out the agreement with respect to Phase 1 Services
to be provided by REG to Victory Renewable Fuels. Phase 2 of the project would
be preparation of general drawings, permitting, development of contract
documents, and determination of final contract price. Phase 3 of the project
would be final design and construction. If the outcome of Phase 1 justifies the
continuation to Phases 2 and 3, it is Victory Renewable Fuels’s intent that the
services to be rendered under Phases 2 and 3 be awarded to REG, the parties
agreeing in good faith to negotiate, agree to and execute definitive agreements
and contracts relating to the engineering and construction of a biodiesel
facility. If the biodiesel facility is constructed, it is furthermore Victory
Renewable Fuels’s intent to enter into a Management and Operations Services
Agreement with West Central Cooperative.
	 
	 	5.	 	It is understood that any and all designs, plans, specifications,
processes and other engineering or technical information or data which are
delivered to Victory Renewable Fuels in connection with this agreement
(“Confidential Information”) are confidential and proprietary to REG and shall
at all times remain the sole and exclusive property of REG. Victory Renewable
Fuels shall not directly or indirectly be permitted, nor shall Victory
Renewable Fuels permit any other party, to use, transfer, assign, disclose,
divulge or publish any such Confidential Information to any third party for any
reason or purpose whatsoever without the prior written consent of REG. Victory
Renewable Fuels may disseminate Confidential Information to such of its
employees, agents and representatives (“Consultants”) as may need to know to
aid Victory Renewable Fuels in analyzing for the purposes as set out above, but
not until such Consultants are aware of these provisions with respect to
confidentiality, the need to prevent further dissemination of Confidential
Information, and at the request of REG have signed a written agreement to such
effect. All such Confidential Information shall be returned to REG at its
request. This agreement shall not be construed to convey any rights in REG’s
intellectual properties, including intellectual properties included in or
related to the Confidential Information. Victory Renewable Fuels may acquire
only such rights in these intellectual properties as may be conveyed under the
terms of further construction agreements entered into between the parties, if
any.





					
	 	 	 	 	 
	
	 	 	 	406 First Street
	
	 	 	 	PO Box 68
	Page 4 of 5
	 	[Stamped: CONFIDENTIAL]
	 	Ralston, IA 51459
	 
	 	 	 	(712) 667-3500
	 
	 	 	 	Fax(712) 667-3599
	 
	 	 	 	www.renewable-energy-group.com






 









 











     Entered into as of the 10th day of May, 2005.



	 	 	 	 	 	 	 	 	 	 	 
	CUSTOMER:	 	 	 	DESIGN-BUILD SERVICES PROVIDER:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	VICTORY RENEWABLE FUELS	 	 	 	RENEWABLE ENERGY GROUP, LLC	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By

	 	/s/ Allen L. Blauwet
 

/s/ Lance T. Boer
	 	 	 	By
	 	/s/ Nile D. Ramsbottom
 

	 	 
	Print Name
Allen
L.Blauwet                               	 	 	 	Print Name   Nile D. Ramsbottom	 	 
	 

	 	             Lance T. Boer	 	 	 	 	 	 	 	 
	Print Title
Chairman            	 	 	 	Print Title   President	 	 
	 

	 	            Secretary	 	 	 	 	 	 	 	 






					
	 	 	 	 	 
	
	 	 	 	406 First Street
	
	 	 	 	PO Box 68
	Page 5 of 5
	 	[Stamped: CONFIDENTIAL]
	 	Ralston, IA 51459
	 
	 	 	 	(712) 667-3500
	 
	 	 	 	Fax(712) 667-3599
	 
	 	 	 	www.renewable-energy-group.com