Exhibit 10.9


LETTER OF INTENT


 


	
  Date:

  	
   

  	
  April 6,
  2005

  
	
   

  	
   

  	
   

  
	
  Parties:

  	
   

  	
  Fagen, Inc., a Minnesota Corporation, of
  Granite Falls, MN (“Fagen”) and Ethanol
  Grain Processors of Milan, Tennessee (“Owner”)

  



 


 


WHEREAS, Owner is an
entity organized to facilitate the development and building of a locally-owned
50 MGY coal-fired fuel ethanol plant in Tennessee (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
the Letters of Intent dated December 7, 2004, and March 24, 2005, 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 $79,849,800.00,
which assumes the use of Wyoming/Montana-sourced coal (Powder River Coal
Company’s North Antelope Mine, located in Gillette, Cambell County, Wyoming) as
the energy source for the Facility.  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,
so long as the Project has 5% or less dilution.


 


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.


 


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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.


 


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.


 


 


	
  Ethanol Grain Processors

  	
  Fagen, Inc.

  
	
   

  
	
  By:

  	
      / Alvin D. Escue /

  	
   

  	
  By:

  	
              /Wayne
  Mitchell /

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
    General Mgr./CEO

  	
   

  	
  Its:

  	
           Sr.
  V.P.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
      4-8-05

  	
   

  	
  Date:

  	
                   4-15-05

  	
   

  
							



 


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AMENDMENT NUMBER ONE


to


LETTER OF INTENT (“LOI”)


DATED APRIL 6, 2005


which replaced


LETTERS OF INTENT


DATED MARCH 24, 2005


and


DECEMBER 7, 2004


by and between


FAGEN, INC. (“FAGEN”)


and


ETHANOL GRAIN PROCESSORS, LLC (“OWNER”)


 


This Amendment
Number One is entered into this 29th day of November, 2005, by and
between Fagen, Inc., a Minnesota Corporation (“Fagen”) and Ethanol Grain
Processors, LLC, a Tennessee Limited Liability Company (“Owner”).


 


Anything to the contrary
contained in the LOI dated April 6, 2005, between the parties hereto, and in
consideration of the mutual promises, covenants, and conditions contained in
such LOI and contained herein, and for other good valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
covenant and agree that the terms and conditions of this Amendment Number One
shall prevail.


 


The parties hereto agree as
follows:


 


1.     The
first paragraph of the LOI is amended and replaced as follows:


 


WHEREAS, Owner is an entity organized to
facilitate the development and building of a locally-owned 100 MGY gas-fired
fuel ethanol plant in Obion, Tennessee (the “Facility” or “Project”).


 


2.     Section
1 of the LOI is amended by adding the following to the last sentence of the
first paragraph of Section 1:


 


...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.


 


3.     Section
3 of the LOI is amended and replaced as follows:


 


Fagen agrees to Design-Build the Facility,
utilizing ICM, Inc. technology in the plant process, for a lump sum price (“Lump
Sum Price”) of $114,344,882.  The Lump
Sum Price includes the adders of $2,500,000 for additional corn storage (i.e.,
additional one million bushels of grain storage with upright concrete 


 


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storage bins) and $540,000 for unit train unloading capacity in the
grain system (i.e, the grain handling upgrade). 
The Lump Sum Price does not include
any allowance for a water pre-treatment system, which system the parties agree
will be designed and constructed by Fagen on a time and materials basis.  Fagen shall recover costs for the design and
construction of such system from the allowance on a time plus material
basis.  While Fagen will make best
efforts to minimize its costs in the design and construction of the water
pre-treatment system, Owner is advised and acknowledges that the cost of such
system may be up to or exceed $2,500,000.


 


If, as of the date a Notice to Proceed is given, the Construction Cost
Index published by Engineering News-Record Magazine (“CCI”) for the month in
which the Notice to Proceed is issued, has increased over the CCI published in
the Engineering New Record for September 2005 (CCI as of September 2005 =
7540.38), the Lump Sum Price will be increased by an equal percentage
amount.  The costs for the design and
construction of the water pre-treatment system will be reflected in the time
and materials charges and therefore are not subject to the CCI escalation
provision.


 


In addition, the Lump Sum Price referred to above assumes the use of
non-union labor.  Owner acknowledges that
it has taken no action which would impose a union labor or prevailing wage
requirement on Fagen, Owner or the Project. 
The parties acknowledge and agree that if after the date hereof, a
change in applicable law, or a governmental authority acting pursuant to a
change in applicable law, or an action by the Owner shall require Fagen to
employ union labor or compensate labor at prevailing wages, the Lump Sum Price
shall be adjusted upwards to include any increased costs associated with such
labor or wages.


 


4.     Section
5 of the LOI is amended by adding the following sentence:


 


In addition, pro forma projections shall be
greater than 20% ROI by year five.


 


5.     Section
7 of the LOI is amended and replaced as follows:


 


This Letter of Intent shall terminate on
December 31, 2006 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, 2007 unless financing for the
Facility has been secured.  Either of the
aforementioned dates may be extended upon mutual written agreement of the
Parties.


 


6.     Section
8 of the LOI is amended by adding the following to the end of the first
sentence of Section 8:


 


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. . . , provided that the Parties agree that
the contract price and related provisions of the design-build agreement shall
incorporate the provisions of paragraph 3 of this Amendment Number One to
Letter of Intent.


 


The other provisions of the LOI
(dated April 6, 2005) shall remain unchanged and in full force and effect.


 


IN WITNESS WHEREOF, the parties
hereto have executed this Amendment Number One on the date set forth above.


 


	
  FAGEN, INC.

  	
  ETHANOL
  GRAIN PROCESSORS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
  By 

  	
    /
  Wayne Mitchell /

  	
   

  	
  By

  	
    /
  James K. Patterson / 

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title 

  	
     Sr.
  V.P.

  	
   

  	
  Title

  	
    Chief
  Executive Officer

  	
   

  
								



 


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