EXHIBIT 10.13(a)
U.S. ENERGY SYSTEMS, INC.
000 X. Xxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxxx, Xxxxxxx 00000
September 25, 1996
Far West Capital, Inc.
000 Xxxxxxxxx Xxxx Xxxxx
Xxxx Xxxx Xxxx, XX 00000
Attention: Xx. Xxx Xxxxx, President
RE: Acquisition of Steamboat 1 and 1A
---------------------------------
Dear Sir:
This letter agreement sets forth our understanding regarding the
amendment to our acquisition of Steamboat 1 and 1A as follows:
U.S. Energy Systems, Inc. (formerly U.S. Envirosystems, Inc.) ("USE")
will form a new company, Steamboat LLC, which will acquire 100% of Steamboat 1
and 1A in accordance with the contracts and operating agreements, together with
all exhibits and schedules thereto (the "Agreements"), which have already been
agreed to by the various parties and were outlined in the Proxy Statement filed
by Far West Electric Energy Fund LP and approved by its limited partners. Under
the Agreements, Far West Capital, Inc. ("FWC") would receive a 50% equity
interests in Steamboat LLC. FWC hereby agrees to reduce its participation to a
5% equity interest in Steamboat LLC, and USE will thereby hold a 95% equity
interest in Steamboat LLC.
In consideration for the above, USE will pay, or cause Steamboat LLC
to pay, to FWC an amount equal to 55% (fifty-five percent) of the net income of
Steamboat 1 and 1A in excess of $1,800,000 (one million eight hundred thousand
dollars) on an annual basis for each of five years commencing with the first
year of ownership by USE following closing. These payments will be based on
annual net earnings and will not be cumulative.
Additionally, the Agreements are hereby amended as follows: (i) new
Articles of Organization of Steamboat LLC, or any other form necessary to create
Steamboat LLC, along with any related documents, will be drafted and filed in
order to create Steamboat LLC in the state of USE's choice and with terms and
conditions proposed by USE; (ii) mediation and arbitration under the Agreements,
if any, will go forward in the state of New York, or any other state of USE's
choice; and (iii) a cash amount equal to the accrual and unpaid
Xx. Xxx Xxxxx
September 25, 1996
Page 2
interest and principal accruals on debt owed by Steamboat 1 and Steamboat 1A in
connection with the Westinghouse loan position will be pro rated by the Seller
to the date of closing.
In addition to the Agreements already agreed to, which will remain in
force and effect, as amended by this letter agreement and with any amendments or
restated agreements which may be required to accomplish the intent of this
letter agreement, USE and FWC will incorporate the following in the closing
documents:
1. A mutual resource exploitation agreement, which will in essence
set forth that (i) neither USE nor FWC will operate its projects (Steamboat 1
and 1A in the case of USE and Steamboat 2 and 3 in the case of FWC) in any
manner which would diminish the value of the other's projects and (ii) the
parties will cooperate to maximize the utilization of the resource.
2. A mutual Right of First Refusal stating that should USE sell
Steamboat 1 and 1A or any parts thereof, it will grant FWC a right of first
refusal to acquire the projects or parts thereof, and that should FWC and/or
Steamboat Development Corp. sell Steamboat 2 and 3 or any parts thereof, it will
grant USE a right of first refusal to acquire the projects or parts thereof. It
is understood by the parties to this letter agreement that Sierra Pacific Power
Company and General Electric Capital Corporation presently hold certain rights
of first refusal which may be senior to any such right contemplated by this
letter agreement.
3. USE agrees to retain SBGEO as the operator of the Project for as
long as its operation and maintenance of the Project meets industry standards
for similar power plants and its rate is competitive.
Xx. Xxx Xxxxx
September 25, 1996
Page 3
4. This letter agreement will be void if the purchase of Steamboat 1
and 1A is not made by USE.
Sincerely,
/s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx, President
U.S. Energy Systems, Inc.
AGREED:
/s/ Xxx Xxxxx
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Xxx Xxxxx, President
Far West Capital, Inc.
as owner of Steamboat 1A and Steamboat Development Corp.
and as General Partner of Far West Electric Energy Fund L.P.
