Members NASD, SIPC Investment Bankers / Brokers tcoffin@sourcegrp.com
Exhibit 10.1
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Members NASD, SIPC
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Investment Bankers / Brokers | xxxxxxx@xxxxxxxxx.xxx | ||
X. Xxxx Xxxxxx — Senior Managing Director |
November 22, 2010
Xx. Xxx Xxxxxxx
Clean Wind Energy Inc.
0000 Xxxxxxxxx Xxxxxxxx Xxxx.
Suite 300
Annapolis, MD 21401
Clean Wind Energy Inc.
0000 Xxxxxxxxx Xxxxxxxx Xxxx.
Suite 300
Annapolis, MD 21401
Dear Xx. Xxxxxxx:
The purpose of this letter is to confirm the understanding and agreement (the “Agreement”) between
Source Capital Group, Inc., (“SCG”) and Clean Wind Energy Inc. (or the “Company”) and its
affiliates, regarding the retention of SCG by the Company, as its exclusive financial advisor for
the purposes set forth herein.
Under this Agreement, SCG will provide financial advisory services to the Company as follows:
A) Raising of Capital. SCG shall use its best efforts to provide up to but not
limited to an initial $10,000,000.00 financing for the Company. Additional Financing shall
be contracted under separate economic consideration.
B) Fees, Commissions & Expenses. The Company agrees to pay the following fees to
SCG for its services.
SCG shall be compensated 7% cash and 7% cashless warrants on any equity
raised (this includes any cash in a shell company, equity derivative,
convertible preferred, convertible debt or bridge financing) up to $100MM.
SCG shall receive 3% cash fee and 3% cashless warrant coverage on any Debt
financing. The exercise price of the warrants shall be equal to the price of
the stock at the time of the sale and will be subject to adjustment in
accordance with the terms of any adjustment provided for in the Financing
document. Said warrants shall be exercisable for five (5) years from date
of issuance. The terms of said warrants shall include such piggyback
registration rights, anti-dilution rights, and the warrants shall be
“cashless” exercise provisions in the event of exercise by SCG. Such fees
shall be paid at the closing from an escrow account at the same time any new
investment is dispersed to the company. These fees shall be inclusive of
any project finance. Project finance and the balance of financing shall be
contracted under separate agreement.
000 Xxxx Xxxx Xxxx • Westport, CT 06880 • 000 000-0000 • 000 000-0000 • Fax 000 000-0000
| Source Capital Group, Inc. | Page 2 of 7 |
| * | Bridge financing of up to $300,000.00 may be raised directly by the
Company outside of the exclusive arrangement as the “Carve-out Provision”.
No fee will be due to SCG under the “Carve-out Provision”. |
| 1. | Retainer Fee SCG will receive a
$25,000.00 non-refundable, non-accountable retainer upon signing of
this agreement. An additional $25,000.00 shall be due upon completion
of an offering document and Power Point Presentation. |
| 2. | Though the retainer fee is non-accountable SCG
shall be providing the following services: |
Assisting with the public shell or entity
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Week 1-4 | |
Drafting of Offering Document
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Week 1-2 | |
Making a Market in the Companies stock |
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Road Show and Investor Tracker
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Week 3-6 | |
Closing Documents and Structure
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Week 4-8 |
| * | Filing of 15-C-211 shall come under separate agreement if needed. |
| 3. | Expenses. In addition to any fees that
may be payable to SCG under this Agreement, the Company agrees to
reimburse SCG for its reasonable out-of-pocket expenses incurred in
connection with the services rendered by SCG hereunder (including,
without limitation, travel and lodging, data and word processing,
graphics and communication charges, research costs, and courier
services and fees). Compensation for any additional professional
services (e.g. legal or consulting) contracted for by SCG, to be
performed for the benefit of the Company by outside parties, is the
responsibility of the Company and will be paid directly by the Company
to such party. SCG will not contract for such services without the
prior written approval of the Company with regard to both the nature of
the service and a reasonable estimate of the cost of such service. |
| 4. | All cash payments under this Agreement shall be
made in U.S. dollars and without withholding or deduction of any tax,
assessment or other governmental charges unless required by law. At
closing any and all fees associated with this transaction are to be
settled. Fees and retainers should be made payable and wired to: |
Source Capital Group, Inc.
Bank of America
Westport, CT
ABA# 000000000
Acct# 93618 82644
Bank of America
Westport, CT
ABA# 000000000
Acct# 93618 82644
000 Xxxx Xxxx Xxxx • Westport, CT 06880 • 000 000-0000 • 000 000-0000 • Fax 000 000-0000
| Source Capital Group, Inc. | Page 3 of 7 |
C) Mergers, Acquisitions, Joint Venture (“MA&JV”). The Company may at its discretion and
on a case-by-case basis engage SCG to assist the Company in its discussions with potential MA&JV
candidates, which will include directly negotiating on the Company’s behalf and the rendering
independent opinions as to valuation and formulae, among other things. The Company will pay SCG
a closing fee equal to 3.00% of the amount paid or received in kind (PIK) in any transaction by
and or between the Company, the MA&JV candidate and or the surviving company (the “M&A Fee”).
Any potential MA&JV candidate introduced by SCG with which the Company enters into a letter of
intent, will fall under the M&A engagement. This fee shall apply to any strategic partnerships
as well as a Special Purpose Vehicle (SPV) or an asset purchases.
D) Information. The Company will furnish or cause to be furnished to SCG, such
information, as SCG believes appropriate to its assignment (all such information so furnished
being the “Information”). The Company recognizes and confirms that SCG (a) will use and rely
primarily on the Information and on information available from generally recognized public
sources in performing the services contemplated by this Agreement without having independently
verified the same, (b) does not assume responsibility for the accuracy or completeness of the
Information and such other information, (c) is entitled to rely upon the Information without
independent verification and (d) will not make an appraisal of any assets in connection with its
assignment
E) Exclusivity. The Company’s relationship with SCG will be exclusive for 120 days upon
signing of this agreement. However, upon successful completion of $10 million aggregate gross
financing within 90 days, SCG shall retain the “right of refusal” on any additional equity
financing or debt financing within 12 months from the termination of the Agreement. However, if
the Company enters into a Firm Underwriting Commitment Engagement for a public offering, then
the Refusal Right Period will automatically terminate, however SCG shall retain a “.
F) Confidentiality. Except as contemplated by the terms hereof or as required by
applicable law or legal process, SCG shall keep confidential all non-public information provided
to it by or at the request of the Company, and shall not disclose such information to any third
party or to any of its employees or advisors except to those persons who have a need to know
such information in connection with SCG’s performance of its responsibilities hereunder. The
Company understands that any documents, presentations or analyses prepared by SCG are
proprietary and SCG is under no obligation to provide (by e-mail or otherwise) either the
Company or its assigns with the computer files of such work product. Except as required by
applicable law, any advice to be provided by SCG under this Agreement shall not be disclosed
publicly or made available to third parties without the prior written consent of SCG. In
addition, SCG may not be otherwise publicly referred to without its prior written consent. All
services, advice and information and reports provided by SCG to the Company in connection with
this assignment shall be for the sole benefit of the Company and shall not be relied upon by any
other person.
G) Indemnity. The Company acknowledges and agrees that SCG has been retained to act
solely as financial advisor to the Company. In such capacity, SCG shall act as an independent
contractor, and any duties of SCG arising out of its engagement pursuant to this Agreement shall
be owed solely to the Company. The Company agrees to indemnify SCG in accordance with the
indemnification agreement attached as Exhibit A.
H) Arbitration. Any and all disputes, demands, claims or controversies hereto arising
out of or relating to this agreement or the breach thereof, shall be settled by binding
arbitration in accordance with the rules of the American Arbitration Association (“AAA”). The
arbitration shall be conducted in New York City under the rules of the AAA. Any judgment upon
the award rendered by the arbitrator may be entered into any court or administrative tribunal
having jurisdiction thereof. Costs
associated with the arbitration, including reasonable attorney’s fees, shall be borne by
whichever parties the arbitrators shall deem just and fair.”
000 Xxxx Xxxx Xxxx • Westport, CT 06880 • 000 000-0000 • 000 000-0000 • Fax 000 000-0000
| Source Capital Group, Inc. | Page 4 of 7 |
I) Term & Termination. The term of SCG’s engagement hereunder shall extend from the
date hereof through to 90 days from signing (the “Expiration Date”) and will be automatically
renewed on a monthly basis until canceled in writing by either party. SCG’s engagement
hereunder may be terminated upon 60 days written notice without cause by either the Company or
SCG at any time before the Expiration Date. Notwithstanding the foregoing, the provisions
relating to the payment of fees and expenses accrued through the date of termination, the status
of SCG as an independent contractor and the limitation on to whom SCG shall owe any duties will
survive any such termination, and any such termination shall not affect the Company’s
obligations under the indemnification agreement.
SCG will be entitled to the fees set forth above in the event that at any time prior to the
earlier of the termination of this letter and the expiration of SCG’s engagement hereunder a
Financing is consummated and the investor is on a list of potential investors provided to the
Company by SCG at the time of termination or expiration and SCG had made efforts that led to an
investment on behalf of the Company with respect to such investor(s) prior to termination or
expiration, as appropriate. Further, in the event that a Financing or M&A transaction is
completed with an investor, on the list described above, with respect to which SCG had made
efforts that led directly to an investment or other substantive effort before such termination
or expiration, whichever is earlier, SCG will be entitled to the full fees, on those investors,
as outlined in paragraph 1 (but only for the amount purchased by such investors) for a period of
24 months after the termination or expiration date, as applicable, calculated in accordance with
Section B of this Agreement. On the termination or expiration date, as applicable, SCG will
provide the Company an updated Exhibit B for purposes of this paragraph. If a term sheet
is produced during the engagement period and SCG is terminated prior to the Expiration Date than
SCG shall be entitled to a 1% break-up fee of the total amount of any financing.
J) Rights of First Refusal. Upon successful completion of $10 million financing, SCG
shall retain the right of first refusal for any additional private financing. This right shall
be carried for 12 months from termination.
K) Advertisements. The Company acknowledges that SCG may, at its option and expense,
place an announcement in such newspapers and periodicals as it may choose, stating that SCG has
acted as the financial advisor to the Company. SCG agrees that the Company will have the right
to approve the form of such announcement.
This Agreement (including the attached indemnification) embodies the entire agreement and
understanding between the parties hereto and supersedes all prior agreements and understandings
relating to the subject matter hereof. If any provision of this Agreement is determined to be
invalid or unenforceable in any respect, such determination will not affect such provision in any
other respect, which will remain in full force and effect. No waiver, amendment or other
modification of this Agreement shall be effective unless in writing and signed by each party to be
bound thereby. This Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York applicable to contracts executed in and to be performed in that state.
000 Xxxx Xxxx Xxxx • Westport, CT 06880 • 000 000-0000 • 000 000-0000 • Fax 000 000-0000
| Source Capital Group, Inc. | Page 5 of 7 |
This Agreement sets forth the entire agreement with respect to the engagement of SCG by the
Company, including the fees and warrants payable as a result of such engagement.
Please confirm that the foregoing correctly sets forth our agreement by signing and returning to
SCG the duplicate copy of this Agreement, the indemnification agreement attached hereto as
Exhibit A.
By:
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/s/ Xxxxxx Xxxxxxx | By: | /s/ Xxxx Xxxxxx | |||||||
| Clean Wind Energy Inc. | Source Capital Group | |||||||||
By:
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/s/ X. Xxxx Xxxxxx | By: | /s/ Xxxxxxx X. Xxxxxx | |||||||
| Senior Managing Director | Senior Managing Director | |||||||||
| Source Capital Group | Source Capital Group |
000 Xxxx Xxxx Xxxx • Westport, CT 06880 • 000 000-0000 • 000 000-0000 • Fax 000 000-0000
| Source Capital Group, Inc. | Page 6 of 7 |
This Exhibit A is a part of and is incorporated into that certain letter agreement, November 22,
2010, (the “Agreement”), by and between Clean Wind Energy Inc., a
_____
(State of Incorporation)
and Source Capital Group, Inc. (the “Placement Agent”). Capitalized terms used herein and not
otherwise defined shall have the respective meanings provided in the Agreement.
The Company agrees to indemnify and hold harmless the Placement Agent, its affiliates and each
person controlling the Placement Agent and the Placement Agent agrees to indemnify and hold
harmless The Company (within the meaning of Section 15 of the Securities Act), and the directors,
officers, agents and employees of the Placement Agent, its affiliates and each such controlling
person (the Placement Agent, and each such entity or person. an “Indemnified Person”) from and
against any losses, claims, damages, judgments, assessments, costs and other liabilities
(collectively, the “Liabilities”), and shall reimburse each Indemnified Person for all fees and
expenses (including the reasonable fees and expenses of one counsel for all Indemnified Persons,
except as otherwise expressly provided herein) (collectively, the “Expenses”) as they are incurred
by an Indemnified Person in investigating, preparing, pursuing or defending any claim, action,
proceeding or investigation, whether or not any Indemnified Person is a party thereto
(collectively, the “Actions”), (i) caused by, or arising out of or in connection with, any untrue
statement or alleged untrue statement of a material fact contained in any offering documents
prepared by the Company (including any amendments thereof and supplements thereto) (the “Offer
Documents”) or by any omission or alleged omission to state therein a material fact necessary to
make the statements therein, in light of the circumstances under which they were made, not
misleading (other than untrue statements or alleged untrue statements in, or omissions or alleged
omissions from, information relating to an Indemnified Person furnished in writing by or on behalf
of such Indemnified Person expressly for use in the Offer Documents) or (ii) otherwise arising out
of or in connection with advice or services rendered or to be rendered by any Indemnified Person
pursuant to the Agreement, the transactions contemplated thereby or any Indemnified Person’s
actions or inactions in connection with any such advice, services or transactions; provided,
however, that, in the case of clause (ii) only, the Company shall not be responsible for any
Liabilities or Expenses of any Indemnified Person that have resulted primarily from such
Indemnified Person’s (x) gross negligence, bad faith or willful misconduct in connection with any
of the advice, actions, inactions or services referred to above or (y) use of any offering
materials or information concerning the Company in connection with the offer or sale of the
Securities in the Transaction which were not authorized for such use by the Company and which use
constitutes negligence, bad faith or willful misconduct. The Company also agrees to reimburse each
Indemnified Person for all Expenses as they are incurred in connection with enforcing such
Indemnified Person’s rights under the Agreement, which includes this Exhibit A.
Upon receipt by an Indemnified Person of actual notice of an Action against such Indemnified Person
with respect to which indemnity may be sought under the Agreement, such Indemnified Person shall
promptly notify the Company in writing; provided that failure by any Indemnified Person so to
notify the Company shall not relieve the Company from any liability which the Company may have on
account of this indemnity or otherwise to such Indemnified Person, except to the extent the Company
shall have been prejudiced by such failure. The Company shall, if requested by the Placement Agent,
assume the defense of any such Action including the employment of counsel reasonably satisfactory
to the Placement Agent, which counsel may also be counsel to the Company. Any Indemnified Person
shall have the right to employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified
Person unless: (i) the Company has failed promptly to assume the defense and employ counsel or (ii)
the named parties to any such Action (including any impeded parties) include such Indemnified
Person and the Company, and such Indemnified Person shall have been advised in the reasonable
opinion of counsel that there is an actual conflict of interest that prevents the counsel selected
by the Company from representing both the Company (or another client of such counsel) and any
Indemnified Person; provided that the Company shall not in such event be responsible hereunder for
the fees and expenses of more than one firm of separate counsel for all Indemnified Persons in
connection with any Action or related Actions, in addition to any local counsel. The Company shall
not be liable for any settlement of any Action effected without its written consent (which shall
not be unreasonably withheld). In addition, the Company shall not, without the prior written
consent of the Placement Agent (which shall not be unreasonably withheld), settle, compromise or
consent to the entry of any judgment in or otherwise seek to terminate any pending or threatened
Action in respect of which indemnification or contribution may be sought hereunder (whether or not
such Indemnified Person is a party thereto) unless such settlement, compromise, consent or
termination includes an unconditional release of each Indemnified Person from all Liabilities
arising
out of such Action for which indemnification or contribution may be sought hereunder. The
indemnification required hereby shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as such expense, loss, damage or liability is incurred and
is due and payable.
000 Xxxx Xxxx Xxxx • Westport, CT 06880 • 000 000-0000 • 000 000-0000 • Fax 000 000-0000
| Source Capital Group, Inc. | Page 7 of 7 |
In the event that the foregoing indemnity is unavailable to an Indemnified Person other than in
accordance with the Agreement, the Company shall contribute to the Liabilities and Expenses paid or
payable by such Indemnified Person in such proportion as is appropriate to reflect (i) the relative
benefits to the Company, on the one hand, and to the Placement Agent and any other Indemnified
Person, on the other hand, of the matters contemplated by the Agreement or (ii) if the allocation
provided by the immediately preceding clause is not permitted by applicable law, not only such
relative benefits but also the relative fault of the Company, on the one hand, and the Placement
Agent and any other Indemnified Person, on the other hand, in connection with the matters as to
which such Liabilities or Expenses relate, as well as any other relevant equitable considerations;
provided that in no event shall the Company contribute less than the amount necessary to ensure
that all Indemnified Persons, in the aggregate, are not liable for any Liabilities and Expenses in
excess of the amount of fees actually received by the Placement Agent pursuant to the Agreement.
For purposes of this paragraph, the relative benefits to the Company, on the one hand, and to the
Placement Agent on the other hand, of the matters contemplated by the Agreement shall be deemed to
be in the same proportion as (a) the total value paid or contemplated to be paid to or received or
contemplated to be received by the Company in the transaction or transactions that are within the
scope of the Agreement, whether or not any such transaction is consummated, bears to (b) the fees
paid to the Placement Agent under the Agreement. Notwithstanding the above, no person guilty of
fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act of 1933, as
amended, shall be entitled to contribution from a party who was not guilty of fraudulent
misrepresentation.
The Company also agrees that no Indemnified Person shall have any liability (whether direct or
indirect, in contract or tort or otherwise) to the Company for or in connection with advice or
services rendered or to be rendered by any Indemnified Person pursuant to the Agreement, the
transactions contemplated thereby or any Indemnified Person’s actions or inactions in connection
with any such advice, services or transactions except for Liabilities (and related Expenses) of the
Company that have resulted primarily from such Indemnified Person’s gross negligence, bad faith or
willful misconduct in connection with any such advice, actions, inactions or services.
The reimbursement, indemnity and contribution obligations of the Company set forth herein shall
apply to any modification of the Agreement and shall remain in full force and effect regardless of
any termination of, or the completion of any Indemnified Person’s services under or in connection
with, the Agreement.
000 Xxxx Xxxx Xxxx • Westport, CT 06880 • 000 000-0000 • 000 000-0000 • Fax 000 000-0000
