Exhibit 10.10


	
  

 	
  

 
	
 June 11, 2012

 	
 CONFIDENTIAL

 






	
  

 
	
 Methes Energies Canada Inc.

 
	
 4170 Sladeview Crescent

 
	
 Units 3 & 5

 
	
 Mississauga, Ontario

 
	
 L5L 0A1

 



Attention:
Nicholas Ng, President


Dear Sir:


Re: Terms Letter 


Based on your representations and the information provided to us, TCE
Capital Corporation (“TCE”) is
pleased to outline the terms of a Term Loan Facility that TCE would be willing
to extend to Methes Energies Canada Inc.


	
  

 	
  

 	
  

 	
  

 
	
 1.

 	
 BORROWER:

 	
 Methes
 Energies Canada Inc. (“Borrower”)

 
	
  

 	
  

 	
  

 	
  

 
	
 2.

 	
 GUARANTOR:

 	
 Methes Energies
 International Ltd. (“Guarantor”)

 
	
  

 	
  

 	
  

 	
  

 
	
 3.

 	
 TYPE OF FACILITY:

 	
 Term Loan (“TL”) Facility
 in the maximum amount of CAD$1,500,000 (or US$ equivalent).

 
	
  

 	
  

 	
  

 	
  

 
	
 4.

 	
 INTEREST RATE:

 	
 23% per annum on daily
 balance outstanding under the TL Facility. Interest shall be calculated
 monthly in arrears, both before and after maturity, default and judgment,
 with interest on overdue interest at the same rate as on principal, computed
 on the daily balance outstanding at the aforementioned rates based on the
 actual number of days lapsed divided by 365, and shall be payable as herein
 set forth.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Interest
 shall be payable monthly, due on the last business day of each calendar month
 on the balance outstanding under the TL Facility and on any other monies due
 and payable hereunder, both before and after maturity, default or judgment at
 the interest rate set forth herein. The first payment on account of interest
 shall be on the last business day of the month of the advance under the TL
 Facility.

 
	
  

 	
  

 	
  

 	
  

 
	
 5.

 	
 TERM:

 	
 Twelve (12) months, full
 utilization. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 The TL
 Facility herein can be repaid in full, without penalty after the twelve (12)
 months of the term herein, provided that a 30-day written notice is given to
 TCE.

 









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 The
 availability of the TL Facility herein shall be reviewed by TCE after the
 twelve (12) months term defined above.

 
	
  

 	
  

 	
  

 	
  

 
	
 6.

 	
 PREPAYMENT:

 	
 Prepayment
 of the TL Facility herein after the first six (6) months of the term defined
 above shall be permitted and shall be subject to a prepayment penalty of one
 (1) month’s interest of $28,750.

 
	
  

 	
  

 	
  

 	
  

 
	
 7.

 	
 COVENANTS:

 	
 Borrower
 agrees:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (a)

 	
 To pay
 all sums of money when due under this Terms Letter and the Security;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b)

 	
 To give
 TCE 30 days prior notice in writing of any intended change in the ownership
 of its shares; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (c)

 	
 To file
 all material tax returns which are or will be required to be filed, to pay or
 make provision for payment of all material taxes (including interest and
 penalties) and other Potential Preferred Claims which are or will become due
 and payable and to provide adequate reserves for the payment of any tax, the
 payment of which is being contested;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (d)

 	
 Not to
 make any capital expenditures, acquisitions or incur additional debt in
 excess of $2,000,000 without prior written consent of TCE; for greater
 clarity, TCE is advised and hereby acknowledges that some $1,500,000 of the
 proceeds of the Guarantor’s IPO shall be injected into Borrower and shall be
 used to purchase production and storage equipment and rail truck upgrades;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (e)

 	
 Not to
 make any intercompany transfers or loans outside the ordinary course of
 business without prior written consent from TCE;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (f)

 	
 Existing
 short term and long term loans not to reduce without TCE’s prior written
 consent;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (g)

 	
 Effective
 October 1, 2012 additional operating losses of Borrower to be financed by
 shareholder’s resources or fresh equity funding;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (h)

 	
 Not to
 change its name, ownership structure or merge, amalgamate or consolidate with
 any other corporation without the prior written consent of TCE;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (i)

 	
 To give
 TCE prompt notice of any Event of Default or any event which with notice or
 lapse of time or both would constitute an Event of Default.

 
	
  

 	
  

 	
  

 	
  

 
	
 8.

 	
 STANDBY FEE:

 	
 Commencing
 July 1, 2012, for each calendar month in which the TL Facility herein is
 available and not utilized, the Borrower shall pay a stand-by fee of $1,500.
 Said stand-by fee shall be payable monthly, at the end of each respective
 calendar month.

 










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 9.

 	
 SECURITY AND DOCUMENTATION:

 	
 
The
 liability and obligations herein and any future obligations of any nature and
 kind of Borrower and Guarantor shall be evidenced, governed and secured, as
 the case may be, by the following documents (collectively, the “Security”) completed in form and manner
 satisfactory to TCE’s lawyers:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (a)

 	
 General
 Security Agreement of Borrower providing TCE with security interest in all
 assets of Borrower; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b)

 	
 General
 Assignment of Accounts of Borrower;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (c)

 	
 Guarantee and Postponement of Claim by
 Guarantor in favour of TCE; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (d)

 	
 General Security Agreement or jurisdictional
 equivalent of Guarantor registered under UCC behind existing secured
 creditors of Guarantor;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (e)

 	
 Promissory
 Note in the amount of the TL Facility herein; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (f)

 	
 Subordination
 or Postponement Agreement (as applicable) with existing secured creditor(s)
 of Borrower (including, but not limited to, American Railcar Leasing LLC)
 allowing TCE a prior charge in respect to all assets of Borrower, except for
 financed equipment to the extent such secured creditors have validly
 perfected first priority purchase-money security interests in such equipment;
 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (g)

 	
 Postponement
 of shareholder (Methes Energies International Ltd.), third parties (World
 Asset Management, Inc., Softdiffusion SA) and related parties (Michel
 Laporte) loans to Borrower; for greater clarity, TCE is advised and hereby
 acknowledges that, upon completion of the Guarantor’s initial public offering
 (“IPO”),
 loans from World Asset Management, Inc., Softdiffusion, SA and Michel
 Laporte, in combined amount of $550,000 will be repaid to such parties;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (h)

 	
 TCE to
 be provided with satisfactory Fire and Liability Insurance certificate on the
 business of Borrower, including their inventory, confirming adequate coverage
 with loss payable to TCE, in first position;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (i)

 	
 CRA
 Business Consent Form (Form RC59 (1)) for Borrower to be obtained, held and
 used by TCE, at its sole discretion;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (j)

 	
 TCE to
 be provided with a first collateral mortgage in the amount of $1,500,000
 against the commercial property at 224 Holt Line West, Sombra, Ontario (the “Property”),
 having a value of minimum $2,350,000, as per Broker Opinion of Value Letter
 dated April 17, 2012 by DTZ Barnicke London Windsor Sarnia Ltd.; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (k)

 	
 TCE to be provided with satisfactory Fire and Liability Insurance
 certificate on the Property, confirming adequate coverage with loss payable
 to TCE, in first position;

 











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 (l)

 	
 All supporting authorizations, certificates, acknowledgements, and
 legal opinions as TCE may reasonably require including, without limitation,
 satisfactory legal opinion(s) of TCE’s lawyers relating to the incorporation,
 organization and corporate powers of Borrower and Guarantor, and to the
 enforceability and priority of the Security.

 
	
  

 	
  

 	
  

 
	
 10.

 	
 CONDITIONS:

 	
 The obligation of TCE to make
 the TL Facility available is subject to and conditional upon each of the
 following:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (a)

 	
 acceptance
 by Borrower and Guarantor of this Terms Letter and receipt by TCE of the
 Processing Fee (receipt of which is hereby acknowledged) and legal retainer
 as provided for below;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b)

 	
 delivery and registration of the Security, in
 all relevant jurisdictions, in form acceptable to TCE and its legal counsel;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (c)

 	
 TCE’s
 security interests under the Security ranking first with respect to all
 assets of Borrower, except for financed machinery and equipment to the extent
 such secured creditors have validly perfected first priority purchase-money
 security interests in such machinery and equipment;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (d)

 	
 Borrower
 agrees to furnish all assistance and information, to perform such acts as TCE
 may reasonably request, and to grant to TCE or its authorized agents, not
 acting unreasonably, access to Borrower’s premises and to all places where
 assets may be located, during normal business hours, to verify the accounts
 receivable, inventory and fixed assets and the general condition of the
 business of the Borrower.

 
	
  

 	
  

 	
  

 	
  

 
	
 11.

 	
 ONGOING
REPORTING:

 	
 
Borrower and Guarantor (as
 applicable) to provide such financial and other information as TCE may
 request, from time to time, and at the minimum the following:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (a)

 	
 monthly aged listings of
 Accounts Receivable and Accounts Payable, within 30 days of month end;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b)

 	
 copy of monthly bank statements,
 within 30 days of month end;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (c)

 	
 monthly internally prepared
 financial statements consisting of balance sheet and income statement
 (year-to-date as well as monthly report), within 30 days of month end;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (d)

 	
 monthly evidence of payments of
 all government priority payables [i.e. payroll, EHT, HST, WSIB, corporate
 taxes], within 30 days of month end;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (e)

 	
 monthly listing of inventory,
 with breakdown by category, within 30 days of month end;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (f)

 	
 evidence of payment of property
 taxes on the Property identified above, annually by January 31;

 










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 (g)

 	
 copy of mortgage statement on
 the Property, annually by January 31;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (h)

 	
 Evidence of payment of premiums
 on fire insurance on the Property, annually by January 31;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (i)

 	
 fiscal year end financial
 statements, accountant prepared, within 90 days of fiscal year end, for
 Borrower and Guarantor.

 
	
  

 	
  

 
	
 12.

 	
 LATE REPORTING
FEE:

 	
 
For
 each month or part thereof where financial reporting is late, a fee of $250
 will be levied.

 
	
  

 	
  

 	
  

 	
  

 
	
 13.

 	
 EVENTS OF
DEFAULT:

 	
 
Each of the following is an
 event of default (“Event of Default”)
 under this Terms Letter and the TL Facility:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (a)

 	
 Non-payment of interest or other
 amounts owing to TCE when due;

 
	
  

 	
  

 	
 (b)

 	
 Any default under any of the
 Security;

 
	
  

 	
  

 	
 (c)

 	
 Any default under third party
 obligations;

 
	
  

 	
  

 	
 (d)

 	
 Material adverse change in the
 financial condition, operations, or ownership of Borrower;

 
	
  

 	
  

 	
 (e)

 	
 Non-compliance with covenants
 and conditions provided for in this Terms Letter.

 
	
  

 	
  

 	
  

 	
  

 
	
 14.

 	
 REVIEW:

 	
 TCE reserves the right to review
 the TL Facility at any time and, at a minimum, on an annual basis. Borrower
 shall be responsible for expenses and disbursements in connection with the
 review by TCE of the TL Facility.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 The cost for a routine review
 shall be subject to a per diem rate of $1,000.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Out of pocket expenses for
 completion by TCE of its routine review (i.e. travel, etc.) are separate and
 payable by Borrower on a flow-through basis.

 
	
  

 	
  

 	
  

 	
  

 
	
 15.

 	
 PROCESSING FEE:

 	
 Borrower shall pay to TCE upon
 acceptance of this Terms Letter a non-refundable processing and due diligence
 fee of $10,500 (receipt of which is hereby acknowledged).

 
	
  

 	
  

 	
  

 	
  

 
	
 16.

 	
 EXPENSES:

 	
 All reasonable costs incurred by
 TCE, including legal fees, professional fees, search and registration fees,
 etc. in implementing or attempting to implement this TL Facility, any ongoing
 charges incurred in maintaining or reviewing this TL Facility or the security
 requirements of TCE, plus any costs of subsequent discharges are for the
 account of Borrower.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 An initial retainer of $4,500 is
 to be paid to Hughes, Dorsch, Garland, Coles LLP, in Trust, TCE’s lawyers.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Appraisal Fees (if required) are
 separate and for the account of Borrower.

 
	
  

 	
  

 	
  

 
	
 17.

 	
 CANCELLATION:

 	
 If not
 drawn down by August 31, 2012, the TL Facility herein is cancelled.

 
	
  

 	
  

 	
  

 
	
 18.

 	
 REFERRAL FEE:

 	
 Referral fee to 7 Park Avenue
 Financial to be paid by TCE upon draw
 down of the TL Facility.

 
	
  

 	
  

 	
  

 
	
 19.

 	
 CONFIDENTIALITY:

 	
 It is agreed that this Terms
 Letter is confidential to Borrower, Guarantor and 

 










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 their legal advisors and
 accounting professionals, and may not be copied to other parties without
 TCE’s prior written consent.

 
	
  

 	
  

 	
  

 
	
 20.

 	
 FACSIMILE:

 	
 Facsimile documents pertaining
 to this transaction are to be considered and treated the same as original
 documents.

 
	
  

 	
  

 	
  

 
	
 21.

 	
 ACCEPTANCE:

 	
 If these terms and conditions
 are acceptable, Borrower and Guarantor must sign and return this Terms Letter
 by fax to TCE before 5:00 p.m. E.S.T. on June 18, 2012 failing which this
 Terms Letter is of no force and effect.

 



Yours
truly,


TCE
Capital Corporation

per: 


	
  

 	
  

 
	
 /s/ Gus Baril

 	
 /s/ Glen Dalzell

 
	
 Gus Baril 

 	
 Glen Dalzell 

 
	
 President

 	
 Vice President, Sales and
 Marketing

 


Borrower hereby accepts the terms and conditions of this Terms Letter,
agrees to be bound thereby and will provide the Security. Our cheque in the
amount of $4,500 payable to “Hughes, Dorsch, Garland, Coles LLP, in Trust” is
enclosed.


DATED at
Mississauga this 12 day of June, 2012.


	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Methes Energies Canada Inc.

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Print Name:

 	
   Nicholas Ng

 	
  

 
	
  

 	
  

 	

 


 	
  

 
	
  

 	
  

 	
 (I am authorized
 to bind the corporation)

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Signature:

 	
 /s/
 Nicholas Ng

 	
  

 
	
  

 	
  

 	

 


 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Title:

 	
   President

 	
  

 
	
  

 	
  

 	

 


 	
  

 



We, Methes
Energies International Ltd., the Guarantor, hereby agree to provide the
Security as outlined above.


	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Methes Energies International Ltd.

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Print Name:

 	
   Michel G. Laporte

 	
  

 
	
  

 	
  

 	

 


 	
  

 
	
  

 	
  

 	
 (I am
 authorized to bind the corporation)

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Signature:

 	
   /s/
 Michel G. Laporte

 	
  

 
	
  

 	
  

 	

 


 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Title:

 	
   CEO