AMENDED AND RESTATED SECURED TERM NOTE
EXHIBIT
4.1
AMENDED
AND RESTATED SECURED TERM NOTE
TRUE
NORTH ENERGY CORPORATION, a Nevada corporation (“TNEC”),
and
ICF ENERGY CORPORATION, a Texas corporation (“ICF”,
and
together with TNEC, each a “Company”
and
collectively the “Companies”),
executed and delivered a secured term note (the “Existing
Note”)
pursuant to that certain Securities Purchase Agreement dated as of September
18,
2007 (as amended, modified and/or supplemented from time to time, the
“Purchase
Agreement”),
among
Companies, the Holder (as defined below), any other Purchasers thereunder and
the Holder,
as agent
for the Purchasers.
The
Companies and the Holder have agreed to amend and restate the Existing Note
on
the terms and conditions set forth herein.
AMENDMENT
AND RESTATEMENT
As
of the
date of this Amended and Restated Secured Term Note (this “Note”),
the
terms, conditions, covenants, agreements, representations and warranties
contained in the Existing Note shall be deemed amended and restated in their
entirety as follows and the Existing Note shall be consolidated with and into
and superseded by this Note provided, however, that nothing contained in this
Note shall impair, limit or affect the liens or security interest heretofore
granted, pledged and/or assigned as security for Borrower’s obligations under
the Existing Note or Purchase Agreement.
This
Note
is executed and delivered under and pursuant to the terms of the Purchase
Agreement.
FOR
VALUE
RECEIVED, each of the Companies hereby jointly and severally, promises to pay
to
Valens Offshore SPV II, Corp. c/o Valens Capital Management, LLC, 000 Xxxxxxx
Xxxxxx, 00xx
Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Fax: 000-000-0000 (the “Holder”)
or its
registered assigns or successors in interest, the sum of One Million Nine
Hundred Sixty-Four Thousand One Hundred Ninety-Five Dollars and Eighty Cents
($1,964,195.80), together with any accrued and unpaid interest hereon, on
September 18, 2010 (the “Maturity
Date”)
if not
indefeasibly sooner paid in full.
Capitalized
terms used herein without definition shall have the meanings ascribed to such
terms in the Purchase Agreement.
The
following terms shall apply to this Note:
ARTICLE
I.
CONTRACT
RATE AND AMORTIZATION
Section
1.01 Contract
Rate.
Subject
to Sections 3.2 and 4.10, interest payable on the outstanding principal amount
of this Note (the “Principal
Amount”)
shall
accrue at a rate per annum equal to thirteen percent (13.0%) (the “Contract
Rate”).
Interest shall be (i) calculated on the basis of a 360 day year, and (ii)
payable monthly, in arrears, commencing on October 1, 2007, 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.
Section
1.02 Contract
Rate Payments.
The
Contract Rate shall be calculated on the last business day of each calendar
month hereafter until the Maturity Date and shall be subject to adjustment
as
set forth herein.
Section
1.03 Principal
Payments.
Amortizing payments of the Principal Amount shall be jointly and severally
made
by the Companies on October 1, 2007 and on the first business day of each
succeeding month thereafter through and including the Maturity Date (each,
an
“Amortization
Date”).
Commencing on the first Amortization Date, the Companies shall, jointly and
severally, make monthly payments to the Holder on each Amortization Date in
an
amount equal to the applicable Amortization Amount (which shall include 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 any 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. For purposes of this
Section, the term “Amortization
Amount”
shall
mean (a) for each Amortization Date during the period commencing on the date
hereof and ending on the one-year anniversary of the date hereof (the
“Anniversary
Date”),
an
amount equal to the greater of (i) $49,989.23 and (ii) the product of (A) 0.4999
times (B) sixty percent (60%) of the Net Revenue (the “Net
Revenue Amount”)
relating to all oil and gas properties of ICF (collectively, the “Oil
and Gas Properties”)
for
the calendar month immediately preceding the applicable Amortization Date and
(b) for each Amortization Date thereafter, an amount equal to the greater of
(i)
$49,989.23 and (ii) the product of (A) 0.4999 times (B) eighty percent (80%)
of
the Net Revenue Amount relating to the Oil and Gas Properties for the calendar
month immediately preceding the applicable Amortization Date, provided,
however,
such
percentage shall increase to the product of (A) 0.4999 times (B) one hundred
percent (100%) upon the occurrence and during the continuance of an Event of
Default. The term “Net
Revenue”
shall
mean the gross proceeds paid to ICF in respect of oil, gas and/or other
hydrocarbon production in which it has an interest whether or not such proceeds
are remitted to the lockbox account and/or any other blocked account established
by any Company in connection with the transactions contemplated hereby net
of,
in each case, with respect to the period for which such Net Revenue relates,
the
reasonable ordinary day to day expenses associated with ICF’s operation of the
leases, xxxxx and equipment, including pumping fuel, lube, water, chemicals,
materials, wireline, labor, maintenance, routine production equipment
replacement, repairs, routine workover costs to maintain production from an
existing completed well, royalty, overriding royalty, insurance, third-party
engineering, salt water disposal, processing fees, environmental and disposal,
transportation, government regulations, supplies, severance tax, outside
operating expenditures and ad valorem tax, to the extent, and only the extent,
properly allocated to the operation of the Oil and Gas Properties and chargeable
to ICF or TNEC under the accounting procedures contained in applicable operating
agreements, excluding, however, any capital expenditures, in each case using
accounting practices and procedures ordinary and customary in the oil and gas
industry, all of which shall be subject to the Holder’s approval which shall be
provided in the exercise of the Holder’s reasonable discretion based on such
supporting documentation from the Companies as the Holder shall reasonably
request. Once the Amortization Amount has been paid on each Amortization Date,
the balance of the Net Revenue Amount relating to the Oil and Gas Properties
for
the calendar month immediately preceding the applicable Amortization Date shall
be available to ICF and/or TNEC.
2
ARTICLE
II.
OPTIONAL
PREPAYMENT
Section
2.01The
Companies may, jointly and severally, prepay this Note at any time, in whole
or
in part, without any prepayment penalty. The Note may be prepaid in full by
paying to the Holder a sum of money equal to one hundred percent (100%) of
the
unpaid Principal Amount of the Note, together with accrued but unpaid interest
thereon and any and all other sums due, accrued or payable to the Holder arising
under the Note, the Purchase Agreement or any other Related Agreement. This
Note
may be prepaid in part by paying to the Holder a sum of money equal to the
portion of the Note to be prepaid, which prepayment shall be applied to the
unpaid Principal Amount of the Note, accrued but unpaid interest thereon or
to
other sums due to Holder arising under the Note, the Purchase Agreement or
any
other Related Agreement, as directed by Holder.
ARTICLE
III.
EVENTS
OF DEFAULT
Section
3.01 Events
of Default.
The
occurrence of any of the following events set forth in this Section 3.1 shall
constitute an event of default (“Event
of Default”)
hereunder:
(a)
Failure
to Pay.
Any
Company fails to pay when due any installment of principal, interest or other
fees hereon in accordance herewith, or any Company fails to pay any of the
other
Obligations (under and as defined in any Security Document) 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.
Any
Company or any of its Subsidiaries 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 any Company or any
of
its Subsidiaries in this Note, the Purchase Agreement or any other Related
Agreement 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.
The
occurrence of any default (or similar term) in the observance or performance
of
any other agreement or condition relating to any indebtedness or contingent
obligation, of any Company or any of its Subsidiaries (including, without
limitation, the indebtedness evidenced by the Subordinated Debt Documentation)
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;
3
(e)
Material
Adverse Effect.
Any
change or the occurrence of any event which could reasonably be expected to
have
a Material Adverse Effect;
(f)
Bankruptcy.
Any
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 thirty (30) 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 $75,000 in the aggregate are made upon any
Company’s or any of its Subsidiaries’ assets or a judgment is rendered against
any Company’s or any Company’s Subsidiary’s property involving a liability of
more than $75,000 which shall not have been vacated, discharged, stayed or
bonded within thirty (30) days from the entry thereof;
(h)
Insolvency.
Any
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.
A
Change of Control (as defined below) shall occur with respect to any 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 any Company (other than a “Person”
or
“group”
that
beneficially owns 35% or more of such outstanding voting equity interests of
such Company on the date hereof), (ii) the Board of Directors of any Company
shall cease to consist of a majority of such 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) any 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;
(j)
Indictment;
Proceedings.
The
indictment or threatened indictment of any Company or any of its Subsidiaries
or
any executive officer of any Company or any of its Subsidiaries under any
criminal statute, or commencement or threatened commencement of criminal or
civil proceeding against any Company, any Subsidiary of any Company or any
executive officer of any 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 any Company or any of its Subsidiaries;
or
4
(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) any Company or any of its Subsidiary 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)
any Company or any of its Subsidiary attempts to terminate, challenges the
validity of, or its liability under, the Purchase Agreement or any Related
Agreement, (iv) any proceeding shall be brought by any Person other than the
Holder 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 any Company or
any
of its Subsidiary (to the extent such persons or entities are a party
thereto).
Section
3.02 Default
Interest.
Following the occurrence and during the continuance of an Event of Default,
the
Companies shall, jointly and severally, pay additional interest on the
outstanding principal balance of this Note in an amount equal to two percent
(2%) 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.
Section
3.03 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 each 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 each Company under
the
Purchase Agreement and the other Related Agreements, to require the Companies,
jointly and severally, to make a Default Payment (“Default
Payment”).
The
Default Payment shall be one hundred twenty-five percent (125%) 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 pro rata,
based on outstanding Principal Amounts, to the Holder and the other Purchasers
pursuant to the Notes, 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 the Notes. The Default Payment shall be due
and
payable immediately on the date that the Holder has demanded payment of the
Default Payment pursuant to this Section 3.3.
ARTICLE
IV.
MISCELLANEOUS
Section
4.01 Issuance
of New Note.
Upon
any partial redemption 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
Companies to the Holder for the principal balance of this Note and interest
which shall not have been paid as of such date. Subject to the provisions of
Article III of this Note, the Companies shall not pay any costs, fees or any
other consideration to the Holder for the production and issuance of a new
Note.
5
Section
4.02 Cumulative
Remedies.
The
remedies under this Note shall be cumulative.
Section
4.03 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.
Section
4.04 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 Companies at the address
provided for such Company in the Purchase Agreement executed in connection
herewith, and to the Holder at the address provided in the Purchase Agreement
for the Holder, with a copy to Valens Capital Management, LLC, Attn: Portfolio
Services, 000 Xxxxxxx Xxxxxx, 00xx
Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, facsimile number (000) 000-0000, or at such other
address as any Company or the Holder may designate by ten days advance written
notice to the other parties hereto.
Section
4.05 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.
Section
4.06 Assignability.
This
Note shall be jointly and severally binding upon the Companies and their
respective 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. No Company may assign any
of
its obligations under this Note without the prior written consent of the Holder,
any such purported assignment without such consent being null and
void.
Section
4.07 Cost
of Collection.
In case
of any Event of Default under this Note, the Companies shall, jointly and
severally, pay to the Holder the Holder’s reasonable costs of collection,
including reasonable attorneys’ fees.
Section
4.08 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.
6
(b)
EACH
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 SUCH 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
EACH 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. EACH COMPANY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH COMPANY
HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM
NON CONVENIENS.
EACH
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 SUCH COMPANY AT THE ADDRESS SET FORTH IN THE PURCHASE AGREEMENT
AND
THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH
COMPANY’S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S.
MAILS, PROPER POSTAGE PREPAID.
(c)
EACH
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, EACH 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 HOLDER AND/OR SUCH
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.
Section
4.09 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.
Section
4.10 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 Companies
to
the Holder and thus refunded to the Companies.
11
Section
4.11 Security
Interest and Mortgages.
The
Holder has been granted a security interest (a) in certain assets of the
Companies as more fully described in the Security Documents, (b) in the equity
interests of TNEC in ICF pursuant to the Stock Pledge Agreement and (c) certain
oil and gas properties pursuant to one or more mortgages dated as of the date
hereof.
Section
4.12 Construction;
Counterparts.
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. This
Note may be executed in one or more counterparts, each of which shall be deemed
an original and all of which together shall be deemed to constitute one
agreement. It is understood and agreed that if facsimile copies of this Note
bearing facsimile signatures are exchanged between the parties hereto, such
copies shall in all respects have the same weight, force and legal effect and
shall be fully as valid, binding, and enforceable as if such signed facsimile
copies were original documents bearing original signature.
Section
4.13 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 Companies (or their 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 (a) surrender of this Note and either the reissuance by the
Companies of this Note to the new holder or the issuance by the Companies of
a
new instrument to the new holder, or (b) transfer through a book entry system
maintained by the Companies (or their agent), within the meaning of Treasury
Regulation Section 1.871-14(c)(1)(i)(B).
Section
4.14 Right
to Xxx.
The
Companies are each personally obligated and fully liable for the amounts due
under this Note. The Holder has the right to xxx the Companies on this Note
and
obtain a personal judgment against the Companies for the satisfaction of the
amount due under this Note, either before or after judicial foreclosure of
any
Deed of Trust which is security for this Note under, among other things, A.S.
Sections 09.45.170 - 09.45.220.
[Signatures
Follow This Page]
12
IN
WITNESS WHEREOF, the Companies have caused this Amended and Restated Secured
Term Note to be signed in their respective names effective as of this
31st
day of
March 2008.
|
By:
|
/s/
Xxxx X. Folnovic
|
|
Name:
Xxxx X. Folnovic
|
|
|
Title:
President and CEO
|
|
|
ICF
ENERGY CORPORATION
|
|
|
By:
|
/s/
Xxxx X. Folnovic
|
|
Name:
Xxxx X. Folnovic
|
|
|
Title:
President and CEO
|
|
|
WITNESS:
|
|
|
