exh10-1_note.htm


     

    
      

      

    

     

     

     

     

     

    EXHIBIT
      10.1

     

    SUBORDINATED
      UNSECURED PROMISSORY NOTE

    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

     

    Subordinated
      Unsecured Promissory
      Note

    


    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.

    


    


    
      
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          Energy Corporation Subordinated Promissory Note -
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    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.

     

     

    
 

    
      
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          Energy Corporation Subordinated Promissory Note -
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    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.

    



    
      
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          Energy Corporation Subordinated Promissory Note -
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    IN
      WITNESS WHEREOF, the Company has
      executed this Note under seal on the day and year first above
      written.

    


     

    
      	 	GALAXY
              ENERGY
              CORPORATION	 
	 	 	 	 
	
               

            	
              By:
                

            	/s/    
              Christopher S. Hardesty	 
	 	 	Christopher
              S.
              Hardesty 	 
	 	 	Chief
              Financial Officer	 
	 	 	 	 


    

    


    


     

     

     

     

     

     

     

     

     

     

     

     

     

     

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      Energy Corporation Subordinated Promissory Note - Page
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