SUBORDINATED UNSECURED PROMISSORY NOTE DATED DECEMBER 28, 2007
EXHIBIT
10.1
DATED DECEMBER
28, 2007
THIS
SUBORDINATED UNSECURED PROMISSORY NOTE (THIS “NOTE”) AND THE INDEBTEDNESS
EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH
IN
THAT CERTAIN SUBORDINATION AGREEMENT DATED AS OF DECEMBER 28, 2007 (AS
AMENDED, RESTATED SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME, THE
“SUBORDINATION
AGREEMENT”) AMONG GALAXY ENERGY CORPORATION, THE SUBORDINATED CREDITORS
NAMED THEREIN, THE LENDERS NAMED THEREIN, AND PROMETHEAN ASSET MANAGEMENT
L.L.C., TO THE SENIOR INDEBTEDNESS (AS DEFINED IN THE SUBORDINATION AGREEMENT);
AND EACH HOLDER OF THIS PROMISSORY NOTE (EACH A “HOLDER”, AND COLLECTIVELY
THE
“HOLDERS”), BY ITS
ACCEPTANCE HEREOF, SHALL BE BOUND BY THE PROVISIONS OF THE SUBORDINATION
AGREEMENT.
This
Security has not been registered
under the Securities Act of 1933 (hereinafter the “1933 Act”) or under
applicable state securities law (hereinafter the “State Acts”) and may not be
sold, assigned, pledged, transferred or hypothecated, whether or not for
consideration, by the holder except upon issuance to the Company of a favorable
written opinion of Counsel for the Company or upon submission to the Company
of
such other evidence as may be satisfactory to counsel to the Company to the
effect that any such sale, assignment, pledge, transfer or hypothecation will
not be in violation of the 1933 Act or the State Acts.
GALAXY
ENERGY
CORPORATION
December
28, 2007
$600,000.00
Denver, Colorado
FOR
VALUE
RECEIVED, Galaxy Energy
Corporation, a Colorado corporation (hereinafter the “Company”) promises
to pay to the order of Partner
Marketing AG (hereinafter the “Holder”), the principal sum of Six
Hundred Thousand Dollars ($600,000.00), together with interest at the rate
of eight percent (8.0%) per annum (hereinafter “Interest”), such principal and
Interest to be payable ON THE LATER OF, (i) the date upon which all of the
Senior Indebtedness (as defined in the Subordination Agreement) has been
indefeasibly paid in full, and (ii) one hundred twenty (120) days from the
date
hereof, in each case, in lawful money of the United States of America, subject,
however, to the restrictions contained in the Subordination
Agreement. Holder shall advance the principal amount of this Note to
the Company in one or more advances and interest shall accrue from the date
of
each such advance.
1.
EVENTS OF DEFAULT.
If
one or more of the following events
(hereinafter “events of default”) shall occur:
(a)
default in the payment of any
principal of or interest on this Note and the continuation of such default
for a
period of 10 days;
(b)
breach of any covenant contained in
this Note and the continuation of such breach for a period of 30 days or more
after written notice thereof;
(c)
the
Company or any of its subsidiaries files or is served with any petition for
relief under the Bankruptcy Code or any similar federal or state statute (the
“Code”) or the entry by a court of competent jurisdiction of a decree or order
adjudging the company or the subsidiary, as the case may be, a bankrupt or
insolvent or approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company or the
subsidiary under the Code or appointing a receiver, trustee or other similar
official of the Company or the subsidiary or all or substantially all of its
assets or the subsidiary’s assets, or ordering the winding up or liquidation of
its affairs or the subsidiary’s affairs, and the continuation of such decree or
order unstayed and in effect for a period of 60 consecutive days;
(d)
the
institution by the Company or any of its subsidiaries or the consent to the
institution by the Company or its subsidiary of proceedings to adjudicate the
Company or its subsidiary a bankrupt or insolvent or the filing or consent
by
the Company or its subsidiary to the filing of a petition or answer seeking
reorganization or relief under the Code, the consent by the Company or its
subsidiary to the appointment of a receiver, trustee or other similar official
of the Company or its subsidiary or of any substantial part of its property
of
its subsidiary’s property, an assignment by the Company or its subsidiary for
the benefit of creditors or the admission by the Company or its subsidiary
in
writing of its inability to pay its debts generally as they become due;
or
(e)
a
default by the Company in any of its obligations under any other promissory
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 the Company
in
an amount exceeding $50,000, 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;
then,
subject to the terms, provisions and restrictions contained in the Subordination
Agreement, the Holder of this Note may, by written notice to the Company,
declare the entire unpaid principal of and accrued and unpaid Interest on this
Note to be due and payable and, upon such declaration, the same shall become
due
and payable forthwith without further demand or notice, the payment on such
declaration, however, being subject to the subordination provisions of this
Note.
2.
MISCELLANEOUS.
2.1.
All
powers and remedies given by this Note to the Holder hereof shall, to the extent
permitted by law, be deemed cumulative and not exclusive of any other power
or
remedy or of any other powers and remedies available to the Holder hereof,
by
judicial proceedings or otherwise, to enforce the performance or observance
of
the covenants and agreements contained in this Note. No delay or
omission of the Holder hereof to exercise any right or power accruing upon
any
default occurring and continuing as aforesaid shall impair any such right or
power or shall be construed to be a waiver of any such default or any
acquiescence therein. Every power and remedy given by this Note or by
law to the Holder hereof may be exercised from time to time, and as often as
shall be deemed expedient, by the Holder hereof, all subject, as hereinabove
provided, to the payment of the principal of and the interest on this Note
being
expressly subordinated in right of payment to the prior payment in full of
all
Senior Indebtedness.
2.2.
In addition to the payments
provided for above, subject to the terms, provisions and restrictions contained
in the Subordination Agreement, the Company agrees to pay all expenses incurred,
including reasonable attorneys’ fees, if this Note is placed in the hands of an
attorney for collection or if it is collected through bankruptcy or other
judicial proceedings.
2.3.
The Company, to the extent
permitted by law, waives notice, demand, presentment for payment, protest,
the
filing of suit or the taking of any other action by any Holder hereof for the
purpose of fixing its liability hereon.
2.4.
This Note has been executed and
delivered in and shall be governed by and construed in accordance with the
laws
of the State of Colorado.
IN
WITNESS WHEREOF, the Company has
executed this Note under seal on the day and year first above
written.
| GALAXY ENERGY CORPORATION | |||
|
|
By:
|
/s/ Xxxxxxxxxxx X. Xxxxxxxx | |
| Xxxxxxxxxxx X. Xxxxxxxx | |||
| Chief Financial Officer | |||
Galaxy
Energy Corporation Subordinated Promissory Note - Page
4 of 4
