SECURED PROMISSORY NOTE
$[___________ January 13, 2006
FOR VALUE RECEIVED, Consolidated Energy, Inc., a Wyoming corporation,
having a principal place of business at 00 Xxxxxx Xxxx, Xxxxx Xxxxx, Xxxxxxxx
00000 (the "Maker"), promises to pay to the order of [_________________, or its
registered assigns (the "Payee"), upon the terms set forth below, the principal
sum of $[_______________ plus interest on the unpaid principal sum outstanding
at the rate of 3% per annum, compounded annually.
1. Payments.
(a) The full amount of principal and accrued interest under this Note
shall be due on June 30, 2008 (the "Maturity Date"), unless due earlier
in accordance with the terms of this Note.
(b) Maker may prepay the principal sum and interest under this Note in
whole or in part until the Maturity Date or such earlier time as the
principal sum and interest become due in accordance with the terms of
this Note.
(c) Maker shall pay interest on the outstanding principal balance of
this Note at the rate of 3% per annum, compounded annually, on the
Maturity Date.
2. Secured Obligation. As security for the payment in full of principal,
interest and performance under this Note and of all other liabilities and
obligations of the Maker to the Payee, Maker hereby grants to the Payee a
general security interest in all assets of the Maker as set forth in that
certain Amended and Restated Security Agreement, of even date herewith, between
the Maker and Gryphon Master Fund, L.P., as Collateral Agent (the "Security
Agreement").
3. Events of Default.
(a) "Event of Default", wherever used herein, means any one of the
following events (whatever the reason and whether it shall be voluntary
or involuntary or effected by operation of law or pursuant to any
judgment, decree or order of any court, or any order, rule or regulation
of any administrative or governmental body):
(i) any default in the payment of the principal of, or the
interest on, this Note, as and when the same shall become due
and payable;
(ii) Maker shall fail to observe or perform any obligation or
shall breach any term or provision of this Note and such failure
or breach shall not have been remedied within five days after
the date on which notice of such failure or breach shall have
been delivered;
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(iii) Maker or any of its subsidiaries shall fail to observe or
perform any of their respective obligations owed to Payee or any
other covenant, agreement, representation or warranty contained
in, or otherwise commit any breach hereunder, under the Security
Agreement or in any other agreement executed in connection
herewith or therewith;
(iv) Maker or any of its subsidiaries shall commence, or there
shall be commenced against Maker or any subsidiary a case under
any applicable bankruptcy or insolvency laws as now or hereafter
in effect or any successor thereto, or Maker or any subsidiary
commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to Maker or any
subsidiary, or there is commenced against Maker or any
subsidiary any such bankruptcy, insolvency or other proceeding
which remains undismissed for a period of 60 days; or Maker or
any subsidiary is adjudicated insolvent or bankrupt; or any
order of relief or other order approving any such case or
proceeding is entered; or Maker or any subsidiary suffers any
appointment of any custodian or the like for it or any
substantial part of its property which continues undischarged or
unstayed for a period of 60 days; or Maker or any subsidiary
makes a general assignment for the benefit of creditors; or
Maker or any subsidiary shall fail to pay, or shall state that
it is unable to pay, or shall be unable to pay, its debts
generally as they become due; or Maker or any subsidiary shall
call a meeting of its creditors with a view to arranging a
composition, adjustment or restructuring of its debts; or Maker
or any subsidiary shall by any act or failure to act expressly
indicate its consent to, approval of or acquiescence in any of
the foregoing; or any corporate or other action is taken by
Maker or any subsidiary for the purpose of effecting any of the
foregoing;
(v) Maker shall (a) be a party to any Change of Control
Transaction (as defined below), (b) agree to sell or dispose all
or in excess of 40% of its assets in one or more transactions
(whether or not such sale would constitute a Change of Control
Transaction), (c) redeem or repurchase more than a de minimis
number of shares of Common Stock or other equity securities of
Maker, or (d) make any distribution or declare or pay any
dividends (in cash or other property, other than common stock)
on, or purchase, acquire, redeem, or retire any of Maker's
capital stock, of any class, whether now or hereafter
outstanding. "Change of Control Transaction" means the
occurrence of any of: (i) an acquisition after the date hereof
by an individual or legal entity or "group" (as described in
Rule 13d-5(b)(1) promulgated under the Securities Exchange Act
of 1934, as amended) of effective control (whether through legal
or beneficial ownership of capital stock of Maker, by contract
or otherwise) of in excess of 40% of the voting securities of
Maker, (ii) a replacement at one time or over time of more than
one-half of the members of Maker's board of directors which is
not approved by a majority of those individuals who are members
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of the board of directors on the date hereof (or by those
individuals who are serving as members of the board of directors
on any date whose nomination to the board of directors was
approved by a majority of the members of the board of directors
who are members on the date hereof), (iii) the merger of Maker
with or into another entity that is not wholly-owned by Maker,
consolidation or sale of 40% or more of the assets of Maker in
one or a series of related transactions, or (iv) the execution
by Maker of an agreement to which Maker is a party or by which
it is bound, providing for any of the events set forth above in
(i), (ii) or (iii); or
(vi) Maker or any subsidiary shall default or an event of
default shall exist in any of its respective obligations under
any other note or any mortgage, credit agreement or other
facility, indenture agreement, factoring agreement or other
instrument under which there may be issued, or by which there
may be secured or evidenced any indebtedness for borrowed money
or money due under any long term leasing or factoring
arrangement of Maker or any subsidiary, whether such
indebtedness now exists or shall hereafter be created and such
default shall result in such indebtedness becoming or being
declared due and payable prior to the date on which it would
otherwise become due and payable, including without limitation,
any other notes of the Maker in favor of the payee hereunder.
(b) If any Event of Default occurs, the full principal amount of this
Note, together with all accrued interest thereon, shall become, at the
Payee's election, immediately due and payable in cash. Commencing 5 days
after the occurrence of any Event of Default that results in the
acceleration of this Note, the interest rate on this Note shall accrue
at the rate of 18% per annum, or such lower maximum amount of interest
permitted to be charged under applicable law. The Payee need not provide
and Maker hereby waives any presentment, demand, protest or other notice
of any kind, and the Payee may immediately and without expiration of any
grace period enforce any and all of its rights and remedies hereunder
and all other remedies available to it under applicable law. Such
declaration may be rescinded and annulled by Xxxxx at any time prior to
payment hereunder. No such rescission or annulment shall affect any
subsequent Event of Default or impair any right consequent thereon.
4. No Waiver of Payee's Rights. All payments of principal and interest shall be
made without setoff, deduction or counterclaim. No delay or failure on the part
of the Payee in exercising any of its options, powers or rights, nor any partial
or single exercise of its options, powers or rights shall constitute a waiver
thereof or of any other option, power or right, and no waiver on the part of the
Payee of any of its options, powers or rights shall constitute a waiver of any
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other option, power or right. Maker hereby waives presentment of payment,
protest, and all notices or demands in connection with the delivery, acceptance,
performance, default or endorsement of this Note. Acceptance by the Payee of
less than the full amount due and payable hereunder shall in no way limit the
right of the Payee to require full payment of all sums due and payable hereunder
in accordance with the terms hereof.
5. Modifications. No term or provision contained herein may be modified, amended
or waived except by written agreement or consent signed by the party to be bound
thereby.
6. Cumulative Rights and Remedies; Usury. The rights and remedies of Payee
expressed herein are cumulative and not exclusive of any rights and remedies
otherwise available under this Note, the Security Agreement, or applicable law
(including at equity). The election of Payee to avail itself of any one or more
remedies shall not be a bar to any other available remedies, which Maker agrees
Payee may take from time to time. If it shall be found that any interest or
other amount deemed interest due hereunder shall violate applicable laws
governing usury, the applicable rate of interest due hereunder shall be reduced
to the maximum permitted rate of interest under such law.
7. Collection Expenses. If Payee shall commence an action or proceeding to
enforce this Note, then Maker shall reimburse Payee for its costs of collection
and reasonable attorneys fees incurred with the investigation, preparation and
prosecution of such action or proceeding.
8. Severability. If any provision of this Note is declared by a court of
competent jurisdiction to be in any way invalid, illegal or unenforceable, the
balance of this Note shall remain in effect, and if any provision is
inapplicable to any person or circumstance, it shall nevertheless remain
applicable to all other persons and circumstances.
9. Successors and Assigns. This Note shall be binding upon Maker and its
successors and shall inure to the benefit of the Payee and its successors and
assigns. The term "Payee" as used herein, shall also include any endorsee,
assignee or other holder of this Note.
10. Lost or Stolen Promissory Note. If this Note is lost, stolen, mutilated or
otherwise destroyed, Maker shall execute and deliver to the Payee a new
promissory note containing the same terms, and in the same form, as this Note.
In such event, Maker may require the Payee to deliver to Maker an affidavit of
lost instrument and customary indemnity in respect thereof as a condition to the
delivery of any such new promissory note.
11. Due Authorization. This Note has been duly authorized, executed and
delivered by Maker and is the legal obligation of Maker, enforceable against
Maker in accordance with its terms. No consent of any other party and no
consent, license, approval or authorization of, or registration or declaration
with, any governmental authority, bureau or agency is required in connection
with the execution, delivery or performance by the Maker, or the validity or
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enforceability of this Note other than such as have been met or obtained. The
execution, delivery and performance of this Note and all other agreements and
instruments executed and delivered or to be executed and delivered pursuant
hereto or thereto will not violate any provision of any existing law or
regulation or any order or decree of any court, regulatory body or
administrative agency or the certificate of incorporation or by-laws of the
Maker or any mortgage, indenture, contract or other agreement to which the Maker
is a party or by which the Maker or any property or assets of the Maker may be
bound.
12. Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Note shall be governed by and construed
and enforced in accordance with the internal laws of the State of Texas, without
regard to the principles of conflicts of law thereof. Each of Maker and Payee
agree that all legal proceedings concerning the interpretations, enforcement and
defense of this Note shall be commenced in the United States District Court
sitting in the Northern District of Texas and the courts of the State of Texas
located in Dallas, Texas (the "Dallas Courts"). Each of Maker and Payee hereby
irrevocably submit to the exclusive jurisdiction of the Dallas Courts for the
adjudication of any dispute hereunder (including with respect to the enforcement
of this Note), and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is
improper. Each of Maker and Payee hereby irrevocably waive personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to the other at the address in
effect for notices to it under this Note and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. Each of Maker and Payee hereby irrevocably
waive, to the fullest extent permitted by applicable law, any and all right to
trial by jury in any legal proceeding arising out of or relating to this Note or
the transactions contemplated hereby.
13. Notice. Any and all notices or other communications or deliveries to be
provided by the Payee hereunder, including, without limitation, any conversion
notice, shall be in writing and delivered personally, by facsimile, sent by a
nationally recognized overnight courier service or sent by certified or
registered mail, postage prepaid, addressed to the Maker, at the address set
forth above, facsimile number (000) 000-0000, or such other address or facsimile
number as the Maker may specify for such purposes by notice to the Payee
delivered in accordance with this paragraph. Any and all notices or other
communications or deliveries to be provided by the Maker hereunder shall be in
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writing and delivered personally, by facsimile, sent by a nationally recognized
overnight courier service or sent by certified or registered mail, postage
prepaid, addressed to the Payee at the address of the Payee appearing on the
books of the Maker, or if no such address appears, at the principal place of
business of the Payee. Any notice or other communication or deliveries hereunder
shall be deemed given and effective on the earliest of (i) the date of
transmission if delivered by hand or by telecopy that has been confirmed as
received by 5:00 P.M. on a business day, (ii) one business day after being sent
by nationally recognized overnight courier or received by telecopy after 5:00
P.M. on any day, or (iii) five business days after being sent by certified or
registered mail, postage and charges prepaid, return receipt requested.
The undersigned signs this Note as a maker and not as a surety or guarantor
or in any other capacity.
CONSOLIDATED ENERGY, INC.
By:
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Name:
Title:
