Exhibit 10.2
THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF
THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE OR SUCH SHARES
UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO ABLE ENERGY, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.
CONVERTIBLE TERM NOTE
FOR VALUE RECEIVED, ABLE ENERGY, INC. a Delaware (the "COMPANY"),
promises to pay to LAURUS MASTER FUND, LTD., c/o M&C Corporate Services Limited,
P.O. Box 309 GT, ▇▇▇▇▇▇ House, South Church Street, ▇▇▇▇▇▇ Town, Grand Cayman,
Cayman Islands, Fax: ▇▇▇-▇▇▇-▇▇▇▇ (the "HOLDER") or its registered assigns or
successors in interest, the sum of One Million Dollars ($1,000,000), together
with any accrued and unpaid interest hereon, on June 30, 2009 (the "MATURITY
DATE") if not sooner paid.
Capitalized terms used herein without definition shall have the meanings
ascribed to such terms in that certain Securities Purchase Agreement dated as of
the date hereof by and between the Company and the Holder (as amended, modified
and/or supplemented from time to time, the "PURCHASE AGREEMENT").
The following terms shall apply to this Convertible Term Note
(this "NOTE"):
ARTICLE I
CONTRACT RATE AND AMORTIZATION\
1.1 CONTRACT RATE. Subject to Sections 4.2 and 5.10, interest payable on
the outstanding principal amount of this Note (the "PRINCIPAL AMOUNT") shall
accrue at a rate per annum equal to the "prime rate" published in THE WALL
STREET JOURNAL from time to time (the "PRIME RATE"), plus two percent (2.0%)
(the "CONTRACT RATE"). The Contract Rate shall be increased or decreased as the
case may be for each increase or decrease in the Prime Rate in an amount equal
to such increase or decrease in the Prime Rate; each change to be effective as
of the day of the change in the Prime Rate. Interest shall be (i) calculated on
the basis of a 360 day year, and (ii) payable monthly, in arrears, commencing on
August 1, 2006, on the first business day of each consecutive calendar month
thereafter through and including the Maturity Date, and on the Maturity Date,
whether by acceleration or otherwise.
1.2 CONTRACT RATE PAYMENTS. The Contract Rate shall be calculated on the
last business day of each calendar month hereafter (other than for increases or
decreases in the Prime Rate which shall be calculated and become effective in
accordance with the terms of Section 1.1) until the Maturity Date.
1.3 PRINCIPAL PAYMENTS. Amortizing payments of the aggregate principal
amount outstanding under this Note at any time (the "PRINCIPAL AMOUNT") shall be
made by the
Company on June 30, 2007 and on the first business day of each succeeding month
thereafter through and including the Maturity Date (each, an "AMORTIZATION
DATE"). Subject to Article III below, commencing on the first Amortization Date,
the Company shall make monthly payments to the Holder on each Amortization Date,
each such payment in the amount of $27,777.78 together with any accrued and
unpaid interest on such portion of the Principal Amount plus any and all other
unpaid amounts which are then owing under this Note, the Purchase Agreement
and/or any other Related Agreement (collectively, the "MONTHLY AMOUNT"). Any
outstanding Principal Amount together with any accrued and unpaid interest and
any and all other unpaid amounts which are then owing by the Company to the
Holder under this Note, the Purchase Agreement and/or any other Related
Agreement shall be due and payable on the Maturity Date.
ARTICLE II
CONVERSION AND REDEMPTION
2.1 PAYMENT OF MONTHLY AMOUNT.
(a) PAYMENT IN CASH OR COMMON STOCK. If the Monthly Amount (or a portion
of such Monthly Amount if not all of the Monthly Amount may be converted into
shares of Common Stock pursuant to Section 3.2) is required to be paid in cash
pursuant to Section 2.1(b), then the Company shall pay the Holder an amount in
cash equal to 100% of the Monthly Amount (or such portion of such Monthly Amount
to be paid in cash) due and owing to the Holder on the Amortization Date. If the
Monthly Amount (or a portion of such Monthly Amount if not all of the Monthly
Amount may be converted into shares of Common Stock pursuant to Section 3.2) is
required to be paid in shares of Common Stock pursuant to Section 2.1(b), the
number of such shares to be issued by the Company to the Holder on such
Amortization Date (in respect of such portion of the Monthly Amount converted
into shares of Common Stock pursuant to Section 2.1(b)), shall be the number
determined by dividing (i) the portion of the Monthly Amount converted into
shares of Common Stock, by (ii) the then applicable Fixed Conversion Price. For
purposes hereof, subject to Section 3.6 hereof, the initial "FIXED CONVERSION
PRICE" means $6.50.
(b) MONTHLY AMOUNT CONVERSION CONDITIONS. Subject to Sections 2.1(a),
2.2, and 3.2 hereof, the Holder shall convert into shares of Common Stock all or
a portion of the Monthly Amount due on each Amortization Date if the following
conditions (the "CONVERSION CRITERIA") are satisfied: (i) the average closing
price of the Common Stock as reported by Bloomberg, L.P. on the Principal Market
for the five (5) trading days immediately preceding such Amortization Date shall
be greater than or equal to 120% of the Fixed Conversion Price and (ii) the
amount of such conversion does not exceed twenty five percent (25%) of the
aggregate dollar trading volume of the Common Stock for the period of twenty-two
(22) trading days immediately preceding such Amortization Date. If subsection
(i) of the Conversion Criteria is met but subsection (ii) of the Conversion
Criteria is not met as to the entire Monthly Amount, the Holder shall convert
only such part of the Monthly Amount that meets subsection (ii) of the
Conversion Criteria. Any portion of the Monthly Amount due on an Amortization
Date that the Holder has not been able to convert into shares of Common Stock
due to the failure to meet the Conversion Criteria, shall be paid in cash by the
Company at the rate of 100% of the Monthly Amount otherwise due on such
Amortization Date, within three (3) business days of such Amortization Date.
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2.2 NO EFFECTIVE REGISTRATION. Notwithstanding anything to the contrary
herein, none of the Company's obligations to the Holder may be converted into
Common Stock unless (a) either (i) an effective current Registration Statement
(as defined in the Registration Rights Agreement) covering the shares of Common
Stock to be issued in connection with satisfaction of such obligations exists or
(ii) an exemption from registration for resale of all of the Common Stock issued
and issuable is available pursuant to Rule 144 of the Securities Act and (b) no
Event of Default (as hereinafter defined) exists and is continuing, unless such
Event of Default is cured within any applicable cure period or otherwise waived
in writing by the Holder.
2.3 OPTIONAL REDEMPTION IN CASH. The Company may prepay this Note
("OPTIONAL REDEMPTION") by paying to the Holder a sum of money equal to one
hundred percent (100%) of the Principal Amount outstanding at such time together
with accrued but unpaid interest thereon and any and all other sums due, accrued
or payable to the Holder arising under this Note, the Purchase Agreement or any
other Related Agreement (the "REDEMPTION AMOUNT") outstanding on the Redemption
Payment Date (as defined below). The Company shall deliver to the Holder a
written notice of redemption (the "NOTICE OF REDEMPTION") specifying the date
for such Optional Redemption (the "REDEMPTION PAYMENT DATE"), which date shall
be seven (7) business days after the date of the Notice of Redemption (the
"REDEMPTION PERIOD"). A Notice of Redemption shall not be effective with respect
to any portion of this Note for which the Holder has previously delivered a
Notice of Conversion (as hereinafter defined) or for conversions elected to be
made by the Holder pursuant to Article III during the Redemption Period. The
Redemption Amount shall be determined as if the Holder's conversion elections
had been completed immediately prior to the date of the Notice of Redemption. On
the Redemption Payment Date, the Redemption Amount must be paid in good funds to
the Holder. In the event the Company fails to pay the Redemption Amount on the
Redemption Payment Date as set forth herein, then such Redemption Notice will be
null and void.
ARTICLE III
HOLDER'S CONVERSION RIGHTS
3.1 OPTIONAL CONVERSION. Subject to the terms set forth in this Article
III, the Holder shall have the right, but not the obligation, to convert all or
any portion of the issued and outstanding Principal Amount and/or accrued
interest and fees due and payable into fully paid and nonassessable shares of
Common Stock at the Fixed Conversion Price. The shares of Common Stock to be
issued upon such conversion are herein referred to as, the "CONVERSION SHARES."
3.2 CONVERSION LIMITATION. Notwithstanding anything herein to the
contrary, in no event shall the Holder be entitled to convert any portion of
this Note in excess of that portion of this Note upon conversion of which the
sum of (1) the number of shares of Common Stock beneficially owned by the Holder
and its Affiliates (other than shares of Common Stock which may be deemed
beneficially owned through the ownership of the unconverted portion of the Note
or the unexercised or unconverted portion of any other security of the Holder
subject to a limitation on conversion analogous to the limitations contained
herein) and (2) the number of shares of Common Stock issuable upon the
conversion of the portion of this Note with respect to
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which the determination of this proviso is being made, would result in
beneficial ownership by the Holder and its Affiliates of any amount greater than
4.99% of the then outstanding shares of Common Stock (whether or not, at the
time of such exercise, the Holder and its Affiliates beneficially own more than
4.99% of the then outstanding shares of Common Stock). As used herein, the term
"AFFILIATE" means any person or entity that, directly or indirectly through one
or more intermediaries, controls or is controlled by or is under common control
with a person or entity, as such terms are used in and construed under Rule 144
under the Securities Act. For purposes of the proviso to the second preceding
sentence, beneficial ownership shall be determined in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended, and Regulations 13D-G
thereunder, except as otherwise provided in clause (1) of such proviso. The
limitations set forth herein (x) may be waived by the Holder upon provision of
no less than sixty-one (61) days prior notice to the Company and (y) shall
automatically become null and void (i) following notice to the Company upon the
occurrence and during the continuance of an Event of Default, or (ii) upon
receipt by the Holder of a Notice of Redemption, except that at no time shall
the number of shares of Common Stock beneficially owned by the Holder exceed
19.99% of the outstanding shares of Common Stock. Notwithstanding anything
contained herein to the contrary, the number of shares of Common Stock issuable
by the Company and acquirable by the Holder at a price below $5.05 per share
pursuant to the terms of this Note, the Purchase Agreement dated as of the date
hereof among the Holder and the Company (as amended, modified, restated and/or
supplemented from time to time, the "PURCHASE AGREEMENT")), any Related
Agreement (as defined in the Purchase Agreement) or otherwise, shall not exceed
an aggregate of 625,471 shares of Common Stock (subject to appropriate
adjustment for stock splits, stock dividends, or other similar recapitalizations
affecting the Common Stock) (the "MAXIMUM COMMON STOCK ISSUANCE"), unless the
issuance of Common Shares hereunder in excess of the Maximum Common Stock
Issuance shall first be approved by the Company's shareholders. If at any point
in time and from time to time the number of shares of Common Stock issued
pursuant to the terms of this Note, the Purchase Agreement, any Related
Agreement (as defined in the Purchase Agreement) or otherwise, together with the
number of shares of Common Stock that would then be issuable by the Company to
the Holder in the event of a conversion pursuant to the terms of this Note, the
Purchase Agreement, any Related Agreement (as defined in the Purchase Agreement)
or otherwise, would exceed the Maximum Common Stock Issuance but for this
Section 3.2, the Company shall within thirty (30) days thereof call a
shareholders meeting to solicit shareholder approval for the issuance of the
shares of Common Stock hereunder in excess of the Maximum Common Stock Issuance.
3.3 MECHANICS OF HOLDER'S CONVERSION. In the event that the Holder
elects to convert this Note into Common Stock, the Holder shall give notice of
such election by delivering an executed and completed notice of conversion in
substantially the form of Exhibit A hereto (appropriate completed) ("NOTICE OF
CONVERSION") to the Company and such Notice of Conversion shall provide a
breakdown in reasonable detail of the Principal Amount, accrued interest and
fees that are being converted. On each Conversion Date (as hereinafter defined)
and in accordance with its Notice of Conversion, the Holder shall make the
appropriate reduction to the Principal Amount, accrued interest and fees as
entered in its records and shall provide written notice thereof to the Company
within two (2) business days after the Conversion Date. Each date on which a
Notice of Conversion is delivered or telecopied to the Company in accordance
with the provisions hereof shall be deemed a Conversion Date (the "CONVERSION
DATE").
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Pursuant to the terms of the Notice of Conversion, the Company will issue
instructions to the transfer agent accompanied by an opinion of counsel within
one (1) business day of the date of the delivery to the Company of the Notice of
Conversion and shall cause the transfer agent to transmit the certificates
representing the Conversion Shares to the Holder by crediting the account of the
Holder's designated broker with the Depository Trust Corporation ("DTC") through
its Deposit Withdrawal Agent Commission ("DWAC") system within three (3)
business days after receipt by the Company of the Notice of Conversion (the
"DELIVERY DATE"). In the case of the exercise of the conversion rights set forth
herein the conversion privilege shall be deemed to have been exercised and the
Conversion Shares issuable upon such conversion shall be deemed to have been
issued upon the date of receipt by the Company of the Notice of Conversion. The
Holder shall be treated for all purposes as the record holder of the Conversion
Shares, unless the Holder provides the Company written instructions to the
contrary.
3.4 LATE PAYMENTS. The Company understands that a delay in the delivery
of the Conversion Shares in the form required pursuant to this Article beyond
the Delivery Date could result in economic loss to the Holder. As compensation
to the Holder for such loss, in addition to all other rights and remedies which
the Holder may have under this Note, applicable law or otherwise, the Company
shall pay late payments to the Holder for any late issuance of Conversion Shares
in the form required pursuant to this Article II upon conversion of this Note,
in the amount equal to $500 per business day after the Delivery Date. The
Company shall make any payments incurred under this Section in immediately
available funds upon demand.
3.5 CONVERSION MECHANICS. The number of shares of Common Stock to be
issued upon each conversion of this Note shall be determined by dividing that
portion of the principal and interest and fees to be converted, if any, by the
then applicable Fixed Conversion Price. In the event of any conversions of a
portion of the outstanding Principal Amount pursuant to this Article III, such
conversions shall be deemed to constitute conversions of the outstanding
Principal Amount applying to Monthly Amounts for the remaining Amortization
Dates in chronological order.
3.6 ADJUSTMENT PROVISIONS. The Fixed Conversion Price and number and
kind of shares or other securities to be issued upon conversion determined
pursuant to this Note shall be subject to adjustment from time to time upon the
occurrence of certain events during the period that this conversion right
remains outstanding, as follows:
(a) RECLASSIFICATION. If the Company at any time shall, by
reclassification or otherwise, change the Common Stock into the same or a
different number of securities of any class or classes, this Note, as to the
unpaid Principal Amount and accrued interest thereon, shall thereafter be deemed
to evidence the right to purchase an adjusted number of such securities and kind
of securities as would have been issuable as the result of such change with
respect to the Common Stock (i) immediately prior to or (ii) immediately after,
such reclassification or other change at the sole election of the Holder.
(b) STOCK SPLITS, COMBINATIONS AND DIVIDENDS. If the shares of
Common Stock are subdivided or combined into a greater or smaller number of
shares of Common Stock, or if a dividend is paid on the Common Stock or any
preferred stock issued by the Company in shares of Common Stock, the Fixed
Conversion Price shall be proportionately
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reduced in case of subdivision of shares or stock dividend or proportionately
increased in the case of combination of shares, in each such case by the ratio
which the total number of shares of Common Stock outstanding immediately after
such event bears to the total number of shares of Common Stock outstanding
immediately prior to such event.
3.7 RESERVATION OF SHARES. During the period the conversion right
exists, the Company will reserve from its authorized and unissued Common Stock a
sufficient number of shares to provide for the issuance of Conversion Shares
upon the full conversion of this Note and the Warrant. The Company represents
that upon issuance, the Conversion Shares will be duly and validly issued, fully
paid and non-assessable. The Company agrees that its issuance of this Note shall
constitute full authority to its officers, agents, and transfer agents who are
charged with the duty of executing and issuing stock certificates to execute and
issue the necessary certificates for the Conversion Shares upon the conversion
of this Note.
3.8 REGISTRATION RIGHTS. The Holder has been granted registration rights
with respect to the Conversion Shares as set forth in the Registration Rights
Agreement.
3.9 ISSUANCE OF NEW NOTE. Upon any partial conversion of this Note, a
new Note containing the same date and provisions of this Note shall, at the
request of the Holder, be issued by the Company to the Holder for the principal
balance of this Note and interest which shall not have been converted or paid.
Subject to the provisions of Article IV of this Note, the Company shall not pay
any costs, fees or any other consideration to the Holder for the production and
issuance of a new Note. ARTICLE IV EVENTS OF DEFAULT 4.1 EVENTS OF DEFAULT. The
occurrence of any of the following events set forth in this Section
4.1 shall constitute an event of default ("EVENT OF DEFAULT") hereunder:
(a) FAILURE TO PAY. The Company fails to pay when due any
installment of principal, interest or other fees hereon in accordance herewith,
or the Company fails to pay any of the other Obligations when due, and, in any
such case, such failure shall continue for a period of three (3) days following
the date upon which any such payment was due.
(b) BREACH OF COVENANT. The Company breaches any covenant or any
other term or condition of this Note in any material respect and such breach, if
subject to cure, continues for a period of fifteen (15) days after the
occurrence thereof.
(c) BREACH OF REPRESENTATIONS AND WARRANTIES. Any
representation, warranty or statement made or furnished by the Company in this
Note, the Purchase Agreement or any other Related Agreement, or by the
Subsidiaries in the Guarantees, or by ▇▇▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇▇▇▇▇ in either of
the individual guarantees provided by each of them on the date hereof (each, as
amended, modified or supplemented, the "Individual Guarantees"), shall at any
time be false or misleading in any material respect on the date as of which made
or deemed made.
(d) DEFAULT UNDER OTHER AGREEMENTS. Except with respect to the
Company's obligations to Lilac Ventures, LLC, the occurrence of any default (or
similar term) in
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the observance or performance of any other agreement or condition relating to
any indebtedness or contingent obligation of the Company or any of its
Subsidiaries beyond the period of grace (if any), the effect of which default is
to cause, or permit the holder or holders of such indebtedness or beneficiary or
beneficiaries of such contingent obligation to cause, such indebtedness to
become due prior to its stated maturity or such contingent obligation to become
payable;
(e) MATERIAL ADVERSE EFFECT. Any change or the occurrence of any
event prior to the payment in full of this Note and all obligations under the
Purchase Agreement and the Related Agreements which could reasonably be expected
to have a Material Adverse Effect;
(f) BANKRUPTCY. The Company or any of its Subsidiaries shall (i)
apply for, consent to or suffer to exist the appointment of, or the taking of
possession by, a receiver, custodian, trustee or liquidator of itself or of all
or a substantial part of its property, (ii) make a general assignment for the
benefit of creditors, (iii) commence a voluntary case under the federal
bankruptcy laws (as now or hereafter in effect), (iv) be adjudicated a bankrupt
or insolvent, (v) file a petition seeking to take advantage of any other law
providing for the relief of debtors, (vi) acquiesce to, without challenge within
ten (10) days of the filing thereof, or failure to have dismissed, within sixty
(60) days, any petition filed against it in any involuntary case under such
bankruptcy laws, or (vii) take any action for the purpose of effecting any of
the foregoing;
(g) JUDGMENTS. Attachments or levies in excess of $250,000 in
the aggregate are made upon the Company or any of its Subsidiary's assets or a
judgment is rendered against the Company's property involving a liability of
more than $50,000 which shall not have been vacated, discharged, stayed or
bonded within thirty (30) days from the entry thereof;
(h) INSOLVENCY. The Company or any of its Subsidiaries shall
admit in writing its inability, or be generally unable, to pay its debts as they
become due or cease operations of its present business;
(i) CHANGE OF CONTROL. Except for the Company's proposed
transaction with All American Plazas, Inc., a Change of Control (as defined
below) shall occur with respect to the Company, unless Holder shall have
expressly consented to such Change of Control in writing. A "Change of Control"
shall mean any event or circumstance as a result of which (i) any "Person" or
"group" (as such terms are defined in Sections 13(d) and 14(d) of the Exchange
Act, as in effect on the date hereof), other than the Holder, is or becomes the
"beneficial owner" (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange
Act), directly or indirectly, of 35% or more on a fully diluted basis of the
then outstanding voting equity interest of the Company (other than a "Person" or
"group" that beneficially owns 35% or more of such outstanding voting equity
interests of the Company on the date hereof), (ii) the Board of Directors of the
Company shall cease to consist of a majority of the Company's board of directors
on the date hereof (or directors appointed by a majority of the board of
directors in effect immediately prior to such appointment) or (iii) the Company
or any of its Subsidiaries merges or consolidates with, or sells all or
substantially all of its assets to, any other person or entity;
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(j) INDICTMENT; PROCEEDINGS. The indictment of the Company or
any of its Subsidiaries or any executive officer of the Company or any of its
Subsidiaries under any criminal statute, or commencement or threatened
commencement of criminal or civil proceeding against the Company or any of its
Subsidiaries or any executive officer of the Company or any of its Subsidiaries
pursuant to which statute or proceeding penalties or remedies sought or
available include forfeiture of any of the property of the Company or any of its
Subsidiaries;
(k) THE PURCHASE AGREEMENT AND RELATED AGREEMENTS. (i) An Event
of Default shall occur under and as defined in the Purchase Agreement or any
other Related Agreement, (ii) the Company or any of its Subsidiaries shall
breach any term or provision of the Purchase Agreement or any other Related
Agreement in any material respect and such breach, if capable of cure, continues
unremedied for a period of fifteen (15) days after the occurrence thereof, (iii)
the Company or any of its Subsidiaries attempts to terminate, challenges the
validity of, or its liability under, the Purchase Agreement or any Related
Agreement, (iv) any proceeding shall be brought to challenge the validity,
binding effect of the Purchase Agreement or any Related Agreement or (v) the
Purchase Agreement or any Related Agreement ceases to be a valid, binding and
enforceable obligation of the Company or any of its Subsidiaries (to the extent
such persons or entities are a party thereto);
(l) STOP TRADE. An SEC stop trade order or Principal Market
trading suspension of the Common Stock shall be in effect for five (5)
consecutive days or five (5) days during a period of ten (10) consecutive days,
excluding in all cases a suspension of all trading on a Principal Market,
provided that the Company shall not have been able to cure such trading
suspension within thirty (30) days of the notice thereof or list the Common
Stock on another Principal Market within sixty (60) days of such notice; or
(m) FAILURE TO DELIVER COMMON STOCK OR REPLACEMENT NOTE. The
Company's failure to deliver Common Stock to the Holder pursuant to and in the
form required by this Note and the Purchase Agreement and, if such failure to
deliver Common Stock shall not be cured within two (2) business days or the
Company is required to issue a replacement Note to the Holder and the Company
shall fail to deliver such replacement Note within seven (7) business days.
4.2 DEFAULT INTEREST. Following the occurrence and during the
continuance of an Event of Default, the Company shall pay additional interest on
this Note in an amount equal to one and a half percent ( 1.5%) per month, and
all outstanding obligations under this Note, the Purchase Agreement and each
other Related Agreement, including unpaid interest, shall continue to accrue
interest at such additional interest rate from the date of such Event of Default
until the date such Event of Default is cured or waived.
4.3 DEFAULT PAYMENT. Following the occurrence and during the continuance
of an Event of Default, the Holder, at its option, may demand repayment in full
of all obligations and liabilities owing by Company to the Holder under this
Note, the Purchase Agreement and/or any other Related Agreement and/or may
elect, in addition to all rights and remedies of the Holder under the Purchase
Agreement and the other Related Agreements and all obligations and liabilities
of the Company under the Purchase Agreement and the other Related Agreements, to
require the Company to make a Default Payment ("DEFAULT PAYMENT"). The Default
Payment
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shall be 115% of the outstanding principal amount of the Note, plus accrued but
unpaid interest, all other fees then remaining unpaid, and all other amounts
payable hereunder. The Default Payment shall be applied first to any fees due
and payable to the Holder pursuant to this Note, the Purchase Agreement, and/or
the other Related Agreements, then to accrued and unpaid interest due on this
Note and then to the outstanding principal balance of this Note. The Default
Payment shall be due and payable immediately on the date that the Holder has
exercised its rights pursuant to this Section 4.3.
ARTICLE V
MISCELLANEOUS
5.1 CONVERSION PRIVILEGES. The conversion privileges set forth in
Article III shall remain in full force and effect immediately from the date
hereof until the date this Note is indefeasibly paid in full and irrevocably
terminated.
5.2 CUMULATIVE REMEDIES. The remedies under this Note shall be
cumulative.
5.3 FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part of
the Holder hereof in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other right, power or privilege. All rights and remedies existing
hereunder are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
5.4 NOTICES. Any notice herein required or permitted to be given shall
be in writing and shall be deemed effectively given: (a) upon personal delivery
to the party notified, (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day, (c) five days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the Company
at the address provided in the Purchase Agreement executed in connection
herewith, and to the Holder at the address provided in the Purchase Agreement
for such Holder, with a copy to ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ number (▇▇▇) ▇▇▇-▇▇▇▇, or at such
other address as the Company or the Holder may designate by ten days advance
written notice to the other parties hereto. A Notice of Conversion shall be
deemed given when made to the Company pursuant to the Purchase Agreement.
5.5 AMENDMENT PROVISION. The term "Note" and all references thereto, as
used throughout this instrument, shall mean this instrument as originally
executed, or if later amended or supplemented, then as so amended or
supplemented, and any successor instrument as such successor instrument may be
amended or supplemented.
5.6 ASSIGNABILITY. This Note shall be binding upon the Company and its
successors and assigns, and shall inure to the benefit of the Holder and its
successors and assigns, and may be assigned by the Holder in accordance with the
requirements of the Purchase Agreement. The Company may not assign any of its
obligations under this Note without the
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prior written consent of the Holder, any such purported assignment without such
consent being null and void.
5.7 COST OF COLLECTION. In case of any Event of Default under this Note,
the Company shall pay the Holder reasonable costs of collection, including
reasonable attorneys' fees.
5.8 GOVERNING LAW, JURISDICTION AND WAIVER OF JURY TRIAL.
(a) THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
(b) THE COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR
FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE
EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE
COMPANY, ON THE ONE HAND, AND THE HOLDER, ON THE OTHER HAND, PERTAINING TO THIS
NOTE OR ANY OF THE OTHER RELATED AGREEMENTS OR TO ANY MATTER ARISING OUT OF OR
RELATED TO THIS NOTE OR ANY OF THE RELATED AGREEMENTS; PROVIDED, THAT THE
COMPANY ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY
A COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF NEW YORK; AND
FURTHER PROVIDED, THAT NOTHING IN THIS NOTE SHALL BE DEEMED OR OPERATE TO
PRECLUDE THE HOLDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER
JURISDICTION TO COLLECT THE OBLIGATIONS, TO REALIZE ON THE COLLATERAL OR ANY
OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT
ORDER IN FAVOR OF THE HOLDER. THE COMPANY EXPRESSLY SUBMITS AND CONSENTS IN
ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT,
AND THE COMPANY HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF
PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. THE COMPANY
HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS
ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,
COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO THE COMPANY AT THE ADDRESS SET FORTH IN THE PURCHASE AGREEMENT AND
THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF THE COMPANY'S
ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER
POSTAGE PREPAID.
(c) THE COMPANY DESIRES THAT ITS DISPUTES BE RESOLVED BY A JUDGE
APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE
BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE COMPANY HERETO WAIVES
ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO
RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN THE
10
HOLDER AND THE COMPANY ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS NOTE, ANY
OTHER RELATED AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO.
5.9 SEVERABILITY. In the event that any provision of this Note is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision of this
Note.
5.10 MAXIMUM PAYMENTS. Nothing contained herein shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law. In the event that the rate of
interest required to be paid or other charges hereunder exceed the maximum rate
permitted by such law, any payments in excess of such maximum rate shall be
credited against amounts owed by the Company to the Holder and thus refunded to
the Company.
5.11 GUARANTEES. The obligations of the Company under this Note are
guaranteed by certain individuals, each to a threshold of $425,000, pursuant to
the terms of the Individual Guarantiesand by certain Subsidiaries of the Company
pursuant to the Subsidiary Guaranty dated as of the date hereof.
5.12 CONSTRUCTION. Each party acknowledges that its legal counsel
participated in the preparation of this Note and, therefore, stipulates that the
rule of construction that ambiguities are to be resolved against the drafting
party shall not be applied in the interpretation of this Note to favor any party
against the other.
5.13 REGISTERED OBLIGATION. This Note is intended to be a registered
obligation within the meaning of Treasury Regulation Section 1.871-14(c)(1)(i)
and the Company (or its agent) shall register this Note (and thereafter shall
maintain such registration) as to both principal and any stated interest.
Notwithstanding any document, instrument or agreement relating to this Note to
the contrary, transfer of this Note (or the right to any payments of principal
or stated interest thereunder) may only be effected by (i) surrender of this
Note and either the reissuance by the Company of this Note to the new holder or
the issuance by the Company of a new instrument to the new holder, or (ii)
transfer through a book entry system maintained by the Company (or its agent),
within the meaning of Treasury Regulation Section 1.871-14(c)(1)(i)(B).
[Balance of page intentionally left blank; signature page follows]
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IN WITNESS WHEREOF, the Company has caused this Convertible Term Note to
be signed in its name effective as of this 30 day of June, 2006.
ABLE ENERGY, INC.
By: s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer
WITNESS:
s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------
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EXHIBIT A
NOTICE OF CONVERSION
(To be executed by the Holder in order to convert all or part of
the Convertible Term Note into Common Stock)
[Name and Address of Company]
The undersigned hereby converts $_________ of the principal due on
[specify applicable Repayment Date] under the Convertible Term Note dated as of
_________, 200__ (the "NOTE") issued by [Newco] (the "COMPANY") by delivery of
shares of Common Stock of the Company ("SHARES") on and subject to the
conditions set forth in the Note.
1. Date of Conversion _______________________
2. Shares To Be Delivered: _______________________
[HOLDER]
By:_______________________________
Name:_____________________________
Title:____________________________