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Exhibit 10.3
SECURED NON-CONVERTIBLE TERM NOTE
FOR VALUE RECEIVED, each of GREENMAN TECHNOLOGIES, INC., a
Delaware
corporation (the "Parent") and the other companies listed on
Exhibit A attached
hereto (such other companies together with the Parent, each a
"Company" and
collectively, the "Companies"), jointly and severally promises to
pay to LAURUS
MASTER FUND, LTD., c/o M&C Corporate Services Limited, P.O. Box
309 GT, Ugland
House, South Church Street, George Town, Grand Cayman, Cayman
Islands, Fax:
345-949-8080 (the "Holder") or its registered assigns or successors
in interest,
the sum of Eleven Million Dollars ($11,000,000), 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 Amended and Restated
Security and
Purchase Agreement dated as June 30, 2004 and amended and restated
as of the
date hereof by and among the Companies and the Holder (as amended,
modified
and/or supplemented from time to time, the "Purchase
Agreement").
The following terms shall apply to this Secured Non-Convertible
Term Note
(this "Note"):
ARTICLE I
CONTRACT RATE, AMORTIZATION AND OTHER REQUIRED REPAYMENTS
1.1 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 the "prime rate" published in
The Wall
Street Journal from time to time (the "Prime Rate"), plus two
percent (2%) (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. The Contract Rate shall
not at any time
be less than eight percent (8%). 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 Companies beginning on July 2, 2007 and on the first
business day of
each succeeding month thereafter through and including the Maturity
Date (each,
an "Amortization Date"). For (i) the period commencing on the first
Amortization
<PAGE>
Date (which occurs on July 2, 2007) through and including the
Amortization Date
occurring in June 2008, the Companies shall make payments in the
amount of One
Hundred Fifty Thousand Dollars ($150,000) to the Holder, (ii) the
period
commencing on the Amortization Date occurring in July 2008 through
and including
the Amortization Date occurring in June 2009, the Companies shall
make payments
in the amount of Four Hundred Thousand Dollars ($400,000) to the
Holder and
(iii) on the Maturity Date, the Companies shall repay the
outstanding Principal
Amount at such time (the foregoing clauses (i) through (iii),
inclusive,
collectively, the "Monthly Principal Amount"), each case 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 Ancillary 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
Companies to the Holder under this Note, the Purchase Agreement
and/or any other
Ancillary Agreement shall be due and payable on the Maturity
Date.
1.4 Excess Cash Flow Repayment. The Companies hereby agree to, no
later
than ninety five (95) days following the end of each fiscal year of
the Parent
beginning with the fiscal quarter of the Parent ending on September
30, 2007,
make a payment equal to 50% of (A) the aggregate net operating cash
flow
generated by the Companies for such fiscal year (calculated (1) in
accordance
with US GAAP, (2) in a manner consistent with prior fiscal periods,
(3) in a
manner reasonably acceptable to Laurus and, for greater certainty,
(4) without
deduction for capital expenditures) less (B) aggregate capital
expenditures made
by the Companies in such fiscal year (up to a maximum of 25% of the
net
operating cash flow calculated in accordance with clause (A)).
ARTICLE II
REDEMPTION
2.1 Optional Redemption in Cash. The Companies 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 Ancillary Agreement (the "Redemption Amount") outstanding on
the
Redemption Payment Date (as defined below). The Parent 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"). On the Redemption Payment Date, the
Redemption Amount
must be paid in good funds to the Holder. In the event the
Companies fail 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
EVENTS OF DEFAULT
3.1 Events of Default. The occurrence of an Event of Default under
the
Security Agreement shall constitute an event of default ("Event of
Default")
hereunder.
2
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3.2 Default Interest. Following the occurrence and during the
continuance
of an Event of Default, the Companies shall jointly and severally
pay additional
interest on this Note in an amount equal to ten percent (10%) per
annum, and all
outstanding obligations under this Note, the Purchase Agreement and
each other
Ancillary Agreement, including unpaid interest, shall continue to
accrue
interest at such additional interest rate from the date of such
Even
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