Letter Agreement between AAB, Inc. and W2 Energy, Inc.
EXHIBIT
10.3
Letter
Agreement between AAB, Inc. and W2 Energy, Inc.
Xxxxxxx
X. Xxxxxxxx
Vice
President and Director
ABB
Inc.
000
Xxxxxxx 0
Xxxxxxx,
XX 00000
Xxxxxxx
XxXxxxx
President,
Chief Executive Officer
00
Xxxxxxx Xxx.
Xxxxxxx,
Xxxxxxx
Xxxxxx
X0X 0X0
Dear
Xx.
XxXxxxx:
By
this
letter agreement (the "W2 Energy Inc. Financial Arranger Contract ", or the
“Contract”), W2 Energy Inc. and its affiliates, including management and
controlling stockholders (“Client" or “W2”), hereby engages ABB Inc. (“Arranger”
or “ABB”), upon the terms and subject to the conditions set forth herein, and
Arranger agrees to be so engaged, to assist Client, as requested in the
arranging of debt and/or equity financing for the Biomass to Liquid
Transportation Fuels and Electricity Co-generation Project to be located in
Guelph Ontario Canada the ("Project”).
I. Tasks
and Obligations of Arranger
As
financial advisor, ABB will advise the Client on options for the financial
structure of the Project, potential sources of financing, and certain project
negotiations.
Specifically,
ABB will provide W2 the following services:
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a)
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Assisting
W2 in the development of a financing plan for the
Project;
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b)
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Assisting
and maintaining with W2 a financial model specifically tailored to
the
Project, and suitable for presentation;
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c)
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Identifying
with W2 the critical financing issues and developing mitigants, as
necessary;
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1
| d) |
Assisting
W2 with certain discussions and negotiations with the various relevant
parties involved in agreements relating to the Project including,
but not
limited to
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| 1. |
financial
agreements, supply agreements, offtake agreements, and the EPC
contract;
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2.
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Assisting
in the preparation of descriptive materials including an information
memorandum, offering documents and term sheets, and any other documents
and agreements to be used in connection with a financing of the
Project;
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3.
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Assisting
in identifying potential lenders and/or equity participants, presenting
the financial structure of the Project to them, and coordinating
with them
as necessary;
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4.
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Advising
on structuring, negotiating, and closing the financing for the Project;
and
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5.
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Assisting
in the implementation of the financing for the Project in co-ordination
with all relevant parties.
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II. ABB
Organization
For
the
Project, Xxxxxxx X. Xxxxxxxx shall lead ABB’s effort, and he shall act as the
primary contact for W2 within the ABB organization. Support may be provided
by
ABB’s world-wide project and trade finance network as required.
III. Fees
and Payment
For
the
foregoing services, W2 agrees to pay ABB the following amounts:
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a)
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A
success fee (the "Success Fee") equal to .75% of the Total Project
Financing per Project. "Total Project Financing" means:
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1.
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all
debt financing arranged by ABB, of whatever kind and from whatever
source,
provided to or used by or for the benefit of the Project; and
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2.
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such
equity capital as ABB may have assisted in arranging for the
Project.
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W2
shall
pay 100% of the Success Fee:
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a)
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Upon
financial closing of the financing for the Project, or
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b)
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If
the Project secures such financing as described in Section III a)
above
from sources other than those arranged by XXX, X0 will pay ABB a
reduced
Success Fee equal to .375% of the financing ABB was looking to raise
for
the Project, or
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c)
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If
no project financing has occurred by October 24, 2006, and to the
extent
that ABB has diligently performed its tasks and obligations as arranger,
W2 shall pay ABB $50,000 before April 24, 2007.
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Either
fee in Section 3 b) or C) above shall be referred to as the “Reduced Success
Fee”.
2
W2
agrees
to pay ABB the Success Fee or Reduced Success Fee, as appropriate, within 10
(ten) days of Financial Closing. "Financial Closing" means the earlier of (i)
such date on which the principal loan(s) or similar agreements covering the
debt
financing for any Project are executed by the debt providers (or if debt
financing is not used, the date on which the principal agreements for equity
or
other financing arrangements are executed) and (ii) the date on which the
Project is closed without financing arranged by ABB.
In
addition to the pricing arrangements detailed above, W2 agrees to reimburse
ABB
monthly for reasonable Out-of-Pocket Expenses which ABB incurs in connection
with providing services to W2. "Out-of-Pocket Expenses" include (i) travel
and
related expenses and other disbursements made by ABB in connection with
providing W2 the services hereunder and (ii) any fees and expenses related
to
agents, consultants and tax and legal advisors which ABB deems advisable to
use.
ABB will seek W2’s approval in advance for any individual expense expected to
exceed USD 10,000.
Other
than as provided elsewhere in this Agreement, W2 agrees to pay all amounts
due
to ABB in USD within thirty (30) days of W2’s receipt of ABB’s
invoice.
The
Client authorizes ABB to send all invoices for amounts due to ABB under this
Agreement to W2
Energy
Inc., 00 Xxxxxxx Xxx. Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0.
IV.
Other
As
W2’s
financial advisor, ABB will take (and the client hereby so authorize us to
take)
such actions in W2’s name as ABB deems reasonably necessary to provide the
services itemized hereunder, including contacting potential providers of funds,
government agencies, and others. If ABB deems it necessary, W2 agrees to provide
ABB with a power of attorney or similar document to help ABB carry out such
actions on W2’s behalf.
As
partial consideration of ABB’s services to X0, X0 agrees to the indemnification
and other terms of the General Terms and Conditions to Engagement Agreements
that form part of this Engagement. References to "Agreement" shall mean this
letter and such General Terms and Conditions. Any reference to the term of
this
Agreement shall include any extensions hereof. Client acknowledges and consents
that ABB may have relationships with other parties involved in any Project,
such
as suppliers, developers, and providers of funds.
Each
party and each individual signing below on its behalf represents and warrants
that such individual is authorized to do so and that his/her signature is
sufficient to make this Agreement legal, valid and binding on such party. The
Client represents and warrants that W2 is not using, and shall not use during
the course of this Engagement, any other financial or similar advisor in
connection with the Project, without ABB’s prior written consent.
V. Termination;
Agreement to Comply.
This
Agreement is effective as of the date first written above. Either party may
terminate it with or without Cause at any time with 30 days' written notice.
"Cause" for purposes of this Part V shall mean the gross negligence or willful
misconduct of the other party.
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At
termination of this Agreement the Client agrees to pay ABB all amounts due
hereunder that have not been paid as of the date of such termination. This
will
include any amounts outstanding hereunder and for reimbursement of Out-of-Pocket
Expenses. The Client agrees to pay, if not already paid, the Success Fee or
any
applicable Reduced Success Fee (i) at such date of termination, if Financial
Closing has occurred, or (ii) otherwise on the date of Financial Closing that
occurs within one year of the date of such termination, if ABB has terminated
this Agreement without Cause.
Kindly
confirm W-2’s agreement with the foregoing terms by signing where indicated
below on this letter. Please return one signed copy to ABB.
We
are
delighted to have this opportunity to work together with W-2’s.
Yours
sincerely,
/s/Xxxxxxx
X. Xxxxxxxx
Vice
President & Director
ABB
Inc.
ACCEPTED
AND AGREED:
_____________________________
___________
/s/Xxxxxxx
XxXxxxx Date
Chief
Executive Officer
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GENERAL
TERMS AND CONDITIONS TO ENGAGEMENT AGREEMENTS
| 1. |
Client
agrees (i) to provide ABB with all information related to the Project
in
Client’s possession or control or which Client could reasonably obtain,
(ii) to inform ABB timely of developments concerning the Project
or the
financing, (iii) to make available to ABB sufficient of Client’s personnel
and their time, (iv) to assist ABB in obtaining such consents, approvals,
meetings and authorizations as ABB may deem necessary for the fulfillment
of its services and (v) to be responsible for making its own evaluation
and determination in relation to the Project and any transactions
entered
into in connection therewith.
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| 2. |
Client
agrees that it will provide information that is true, accurate and
complete to the best of its knowledge, that ABB will be entitled
to rely
upon it without independent verification, and that Client will be
liable
for such information and any reliance thereon by any
party.
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| 3. |
Should
Client have any complaint or dissatisfaction with any aspect
of ABB
services, Client agrees to so notify ABB in writing as soon as
possible
but no later than 30 days after the occurrence of the event giving
rise
thereto.
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| 4. |
Each
party represents and agrees that no party not a signatory hereto
has or
shall have any privity, interest in or rights in respect of this
Agreement. Client represents and warrants that this Agreement does
not
breach any agreement it has with any other party. Client agrees that
ABB
has not made any commitments or representations with regard to the
provision of funds, any provider of funds, or any other party. Fees
payable to any arranger or provider of funds in connection with the
Project are in addition to the fees payable under this
Agreement.
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| 5. |
Client
will have no obligation to indemnify ABB in respect of any loss,
claim,
liability, or expense ("Liability") if caused directly by the gross
negligence or intentional wrongdoing of ABB. In all other cases,
Client
agrees to indemnify ABB, and its affiliates, employees and officers,
and
hold them harmless, in respect of any Liability relating to or arising
out
of this Agreement, the Project, or the services hereunder. ABB shall
only
be liable in relation to this Agreement for its gross negligence
and
willful misconduct and such liability shall always be limited to
the
amounts it has received from Client under this Agreement. Notwithstanding
anything in this Agreement to the contrary, neither party shall be
liable
for special, indirect, punitive, or consequential damages or losses
including, without limitation, damages or losses of any of the following
types: (i) which do not flow directly and immediately from such party's
actions or omissions; (ii) which represent lost profits or lost
opportunities; (iii) which arise from the intervention of circumstances
even if such circumstances were contemplated by the parties at the
time
this Agreement was signed; or (iv) which are not reasonably foreseeable
or
a natural consequence of such party's actions or omissions.
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| 6. |
ABB
will be entitled to suspend its services so long as any amount due
from
Client hereunder remains unpaid. Any applicable project retainer
fee will
be payable in its entirety in advance for each month this Agreement
is in
effect. All amounts due from Client under this Agreement are payable
to
such ABB account in such country as ABB shall specify, in immediately
available funds, and free and clear of any taxes, withholding or
deduction. Fees and expenses paid hereunder are
non-refundable.
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| 7. |
Any
opinion, advice, analysis or summary ABB provides Client orally or
in
writing is for Client’s exclusive and confidential use in connection with
the Project and no other person may use it or rely on it.
Client agrees not to disclose the same to any party without ABB’s prior
written consent. Any financial model and other materials developed
by ABB
(the "Materials") will remain ABB’s property. However, so long as Client
remains in compliance with this Agreement, Client may use the Materials
for Client’s own use in connection with the Project or its business, but
it may not disclose the Materials to any party without ABB’s prior written
consent. The parties agree to keep this Agreement and the terms hereof
confidential.
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| 8. |
No
party may assign this Agreement or any of the rights or obligations
hereunder to any other party without the prior written consent of
the
other party or parties hereto, which shall not be unreasonably
withheld.
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| 9. |
This
Agreement shall be governed by the laws of New York, without giving
affect
to any provision thereof that would require application of the laws
of any
other jurisdiction. Any dispute arising in connection with this Agreement
shall be finally settled under the Rules of Conciliation and Arbitration
of the International Chamber of Commerce by one arbitrator appointed
in
accordance with said Rules. The place of the arbitration shall be
New
York, NY and the language of the arbitration shall be English. Client
waives any immunity or right to claim immunity that it now has or
may
later acquire.
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| 10. |
This
Agreement represents the entire understanding between the parties
on the
subject matter hereof and replaces and overrides any previous agreement,
understanding, and discussions between them thereon. No modification
or
amendment of this Agreement is valid if not in writing and signed
by
authorized representatives of each party. Paragraphs 2, 5, 6, 7,
9 and 10
hereof and any payment obligation of a party, not satisfied as of
termination, shall survive termination of this
Agreement.
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