exv10w1



 







EXHIBIT 10.1




LETTER OF INTENT




	 	 	 
	Date:

	 	September 12, 2005
	 
	 	 
	Parties:

	 	Fagen, Inc., a Minnesota Corporation, of Granite Falls, MN (“Fagen”)
and Nek-Sen Energy Partners, of Sabetha, Kansas (“Owner”)





WHEREAS, Owner is an entity organized to facilitate the development and building of a 50 MGY
gas-fired fuel ethanol plant near Sabetha, Kansas (the “Facility” or “Project”); and



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



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 costs, 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 completing
documentation required for construction, operation, repair and maintenance of the Project,
at Owner’s sole risk.




     Owner acknowledges that the technical data provided by Fagen under this Letter of
Intent shall be preliminary and may not be suitable for construction and agrees that any
use of such technical data without Fagen’s involvement shall be at Owner’s sole risk.




     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



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immediately upon written notice to Fagen, and Owner shall be released from its
obligations to pay or reimburse Fagen as described above.




     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 sole responsibility and liability. In addition, Owner shall utilize
project consultants recommended by Fagen and obtain traditional financing from financial
institutions recommended by Fagen that have successfully financed previous Fagen projects.




     3. Fagen agrees to Design-Build the Facility, utilizing ICM, Inc. technology in the
plant process, for a lump sum price of $61,240,000. This lump sum price shall remain firm
by Fagen to Owner until March 12, 2006, and may be subject to revision and/or escalation by
Fagen after such date. The lump sum price assumes the use of non-union labor. If Fagen is
required to employ union labor, excluding union labor for the grain system and energy
center, an additional amount of $9,000,000 will be added to the lump sum price. If Fagen
is required to employ union labor for the entire Project, an additional amount of
$18,000,000 will be added to the lump sum price.




     4. Fagen will assist Owner in locating appropriate management for the Facility.




     5. Fagen is requiring representation of 10 counties located within Nebraska and Kansas
on the Board of Directors, and Owner shall provide to Fagen a list of the names, addresses
(residential), and phone numbers of such Directors.




     6. Fagen will assist Owner in presenting information to potential investors, potential
lenders, and various entities or agencies that may provide project development assistance,
so long as the Project has 5% or less dilution. In addition, pro forma projections shall
be greater than 20% ROI by year five.




     7. 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 competition of Fagen.



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     8. This Letter of Intent shall terminate on December 31, 2007 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, 2008 unless financing for the Facility has been secured. Either of the
aforementioned dates may be extended upon mutual written agreement of the Parties.




     9. 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.




     10. 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.




     11. The Parties agree that this Letter of Intent may be modified only by written
agreement by the Parties.




     12. The 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 signature will be
delivered to each Party.



	 	 	 	 	 	 	 	 	 
	Nek-Sen Energy Partners	 	 	 	Fagen, Inc.
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Gary Edelman
	 	 	 	By:
	 	/s/ O. Wayne Mitchell
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Its:

	 	President
	 	 	 	Its:
	 	Senior Vice President
	 
	 	 	 	 	 	 	 	 
	Date:

	 	9/12/05
	 	 	 	Date:
	 	9/14/05







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