<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 6, 1998
REGISTRATION NO. 333-59109
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT #1 TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ABLE ENERGY, INC.
(Name of Small Business Issuer as specified in its charter)
------------------------------
<TABLE>
<S> <C> <C>
DELAWARE 5983 22-3520840
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification
incorporation or organization) Classification Code Number) Number)
</TABLE>
344 ROUTE 46
ROCKAWAY, NJ 07866
(973) 625-1012
(Address and telephone number of principal executive offices)
------------------------------
TIMOTHY HARRINGTON, CHIEF EXECUTIVE OFFICER
ABLE ENERGY, INC.
344 ROUTE 46
ROCKAWAY, NJ 07866
(973) 625-1012
(Name, address and telephone number of agent for service)
------------------------------
COPIES OF ALL COMMUNICATIONS TO:
<TABLE>
<S> <C>
GREGORY SICHENZIA, ESQ. MITCHELL LAMPERT
SICHENZIA, ROSS & FRIEDMAN LLP LAMPERT, LAMPERT & FERENCE
135 WEST 50TH STREET, 20TH FLOOR 135 WEST 50TH STREET, 20TH FLOOR
NEW YORK, NEW YORK 10020 NEW YORK, NY 10020
TELEPHONE NO.: (212) 664-1200 TELEPHONE NO.: (212) 889-7300
FACSIMILE NO.: (212) 664-7329 FACSIMILE NO.: (212) 889-5732
</TABLE>
------------------------
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT
------------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------
THE REGISTRANT HEREBY AMENDS THE REGISTRATION STATEMENT ON SUCH DATE AND
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
MAXIMUM
MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PER SECURITY(1) PRICE(1) FEE
<S> <C> <C> <C> <C>
Units, each consisting of two
shares of Common Stock, $.001 par
value per share and one
Redeemable Common Stock Purchase
Warrant(2)....................... 1,006,250 $8.25 $8,301,562.50 $2,448.96
Common Stock underlying Units(3)... 2,012,500 -- -- --
Common Stock purchase warrants
underlying Units(4).............. 1,006,250 -- -- --
Common Stock underlying
warrants(5)...................... 1,006,250 $5.00 $5,031,250.00 $1,484.22
Underwriter's Warrant(6)........... 1 $10.00 $10.00 $(7)
Underwriter's Units(8)............. 87,500 $12.375 $1,082,812.50 $319.43
Common Stock underlying
Underwriters Units(9)............ 175,000 -- -- --
Common Stock purchase warrants
underlying Underwriters
Units(10)........................ 87,500 $7.50 $656,250 $193.59
Common Stock underlying
Underwriters Unit Warrants(11)... 150,000 -- -- --
Total.............................. $15,071,884 $4,446.20
</TABLE>
(1) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(a) of the Securities Act of 1933, as amended.
(2) Includes 131,250 Units subject to sale upon exercise of the Underwriter's
over-allotment option.
(3) Includes 262,500 shares of Common Stock subject to sale upon exercise of the
Underwriter's over-allotment option.
(4) Includes 131,250 common stock purchase warrants subject to sale upon
exercise of the Underwriter's over-allotment option.
(5) Issuable upon exercise of the Warrants, together with such indeterminate
number of securities as may be issuable by reason of anti-dilution
provisions contained therein.
(6) The Underwriter's Warrant is for the purchase of Units.
(7) No fee due pursuant to Rule 457(g).
(8) Consists of Units issuable upon the exercise of the Underwriter's Warrant.
(9) Consists of Common Stock included in the Units issuable upon the exercise of
the Underwriter's Warrant.
(10) Consists of Common Stock purchase warrants included in the Units issuable
upon the exercise of the Underwriter's Warrant.
(11) Consists of Common Stock issuable upon exercise of the Warrants included in
the Units issuable upon the exercise of the Underwriter's Warrant, together
with such indeterminate number of securities as may be issuable by reason of
anti-dilution provisions contained therein.
<PAGE>
ABLE ENERGY, INC.
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
FORM SB-2 ITEM NUMBER AND CAPTION CAPTIONS IN PROSPECTUS
- ---------------------------------------------------------------- -----------------------------------------------------
<C> <S> <C>
1. Front of Registration Statement and Outside Front
Cover of Prospectus................................ Cover Page
2. Inside Front and Outside Back Cover Pages
of Prospectus...................................... Cover Page, Inside Cover Page, Outside Back Page
3. Summary Information and Risk Factors................. Prospectus Summary, Risk Factors
4. Use of Proceeds...................................... Use of Proceeds
5. Determination of Offering Price...................... Cover Page, Underwriting
6. Dilution............................................. Dilution
7. Selling Securityholders.............................. Principal Stockholders and Selling Securityholders;
Alternate Pages for Selling Securityholder
Prospectus
8. Plan of Distribution................................. Prospectus Summary, Underwriting
9. Legal Proceedings.................................... Business
10. Directors, Executive Officers, Promoters and Control
Persons............................................ Management, Principal Stockholders
11. Security Ownership of Certain Beneficial Owners and
Management......................................... Principal Stockholders
12. Description of Securities............................ Description of Securities
13. Interest of Named Experts and Counsel................ *
14. Disclosure of Commission Position on Indemnification
for Securities Act
Liabilities........................................ Management
15. Organization Within Last Five Years.................. Prospectus Summary, Business
16. Description of Business.............................. Prospectus Summary, Business
17. Management's Discussion and Analysis or Plan of
Operation.......................................... Management's Discussion and Analysis of Financial
Condition and Results of Operations
18. Description of Property.............................. Business
19. Certain Relationships and Related
Transactions....................................... Certain Transactions
20. Market for Common Equity and RelatedShareholder
Matters............................................ Front Cover Page, Description of Securities
21. Executive Compensation............................... Management
22. Financial Statements................................. Financial Statements
23. Changes in and Disagreements with Accounts on
Accounting and Financial Disclosure................ *
</TABLE>
- ------------------------
* Not Applicable
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED NOVEMBER 6, 1998
PROSPECTUS
ABLE ENERGY, INC.
875,000 UNITS CONSISTING OF 1,750,000 SHARES OF COMMON STOCK
AND 875,000 REDEEMABLE COMMON STOCK PURCHASE WARRANTS.
Able Energy, Inc. (the "Company") is hereby offering to the public 875,000
units ("Units") consisting of 1,750,000 shares of common stock, $.001 par value
per share (the "Common Stock or the "Shares") and 875,000 Class A redeemable
common stock purchase warrants ("Warrants"). The initial public offering price
of the Units is $8.25 and has been determined by negotiations between the
Company and Kashner Davidson Securities Corp. as underwriter (the "Underwriter")
and do not necessarily bear any direct relationship to the Company's assets,
earnings, book value per share or other generally accepted criteria of value. Of
the $8.25 anticipated initial public offering price of the Unit, a $4.00 value
has been allocated to each share of Common Stock and a value of $.25 has been
allocated to each Warrant. For a discussion of the factors considered in
determining the offering price see "Underwriting." The Common Stock and the
Warrants will be immediately separately transferable. The Units, Common Stock
and Warrants are sometimes referred to as the "Securities. The offering of the
Units hereby is sometimes referred to as the "Offering" herein.
Each Warrant entitles the holder to purchase one share of Common Stock at an
exercise price of $5.00 per share, subject to adjustment in certain events which
include stock dividends, stock splits and recapitalizations, during the four
year period commencing one year from the date of this Prospectus (the "Effective
Date"). The Warrants are subject to redemption by the Company at $.10 per
Warrant, at any time commencing one year from the Effective Date (or earlier
with the consent of the Underwriters) and prior to their expiration, on not less
than 30 days' written notice to the holders of the Warrants, provided the
closing bid price per share of Common Stock if traded on the NASDAQ SmallCap
Market, or the last sales price per share if listed on the Nasdaq National
Market or a national exchange has been at least 200% ($10.00 per share) of the
then current Warrant exercise price, for a period of 10 consecutive business
days ending on the third day prior to the date upon which the notice of
redemption is given. The Warrants shall be exercisable until the close of
business on the date preceding the date fixed for redemption. See "Description
of Securities--Warrants."
Prior to the Offering, there has been no public market for the Company's
securities and there can be no assurance that a market will develop in the
future or that if developed, it will be sustained. The Company is applying for
listing and quotation of the Common Stock and Warrants on the Nasdaq SmallCap
Market under the symbols "ABLE" and "ABLEW", respectively, and for listing on
the Boston Stock Exchange under the symbols "ABL" and "ABLW", respectively. No
separate securities for the Units will be issued. The Units will not be listed
for trading on either the Nasdaq SmallCap Market or the Boston Stock Exchange,
and no separate trading market will exist for the Units.
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK AND IMMEDIATE AND SUBSTANTIAL DILUTION. SEE "RISK FACTORS" COMMENCING ON
PAGE 7 AND "DILUTION" ON PAGE 14.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
UNDERWRITING
DISCOUNTS AND PROCEEDS TO
PRICE TO PUBLIC COMMISSIONS(1) THE COMPANY(2)
<S> <C> <C> <C>
Per Unit................................................. $8.25 $.825 $7.425
Total (3)................................................ $7,218,750 $721,875 $6,496,875
</TABLE>
(1) Does not include additional consideration to be received by the Underwriter
in the form of (i) a non-accountable expense allowance equal to 3% of the
gross offering proceeds, (ii) any value attributable to the Underwriter's
Warrant entitling the Underwriter to purchase up to 87,500 Units at a price
per Unit equal to 150% of the initial public offering price per Unit
("Underwriter's Warrant"), and (iii) a financial consulting agreement with
the Underwriter for a period of two years for an aggregate consideration of
$166,000 payable in full on the closing of the Offering. In addition, the
Company has agreed to indemnify the Underwriter against certain liabilities
under the Securities Act of 1933, as amended (the "Act"). See
"Underwriting".
(2) After deducting discounts and commission payable to the Underwriter, but
before payment of the Underwriter's non-accountable expense allowance of
$216,562.5 (or $259,921.8 if the over-allotment option, defined below, is
exercised in full) and the other expenses of the Offering, estimated at
$461,562.50 payable by the Company. See "Underwriting."
(3) The Company has granted the Underwriter an option, exercisable for 45 days
after the effective date of the Offering (the "Effective Date") to purchase
up to an additional 131,250 Units consisting of 262,500 shares of Common
Stock from the Company (which include the Shareholder Shares, as defined
below) and 131,250 Warrants upon the same terms and conditions set forth
above, solely for the purpose of covering over-allotments, if any (the
"Over-Allotment Option"). In the event that the over-allotment option is
exercised by the Underwriter , the Underwriter has agreed to use its best
efforts to allow Timothy Harrington, the Chief Executive Officer of the
Company, to sell up to an aggregate of 50,000 shares of the Company's Common
Stock held by Mr. Harrington (the "Shareholder Shares"). All references and
calculations concerning the exercise of the Over-Allotment Option assume the
sale of the Shareholder Shares. If the Over-Allotment Option is exercised in
full, the total Price to the Public, Underwriting Discounts and Commissions,
Proceeds to the Company will be $8,301,562.5, $830,156.25 and $7,250,648.44
respectively. See "Underwriting."
Units being offered by this Prospectus are being offered by the Underwriter
on a "firm commitment" basis, when, as and if delivered to and accepted by the
Underwriter, subject to prior sale, and other conditions and legal matters. The
Underwriter reserves the right to withdraw, cancel or modify the Offering and to
reject orders, in whole or in part. It is expected that delivery of the
certificates representing the Common Stock and Warrants will be made against
payment therefor at the offices of the Underwriter, 90 Broad Street, New York,
New York 10004 on or about [ ], 1998.
KASHNER DAVIDSON SECURITIES CORP.
----------------
The date of this Prospectus is , 1998
<PAGE>
------------------------
CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK
OFFERED HEREBY, INCLUDING PURCHASES OF THE COMMON STOCK TO STABILIZE THEIR
MARKET PRICE, PURCHASES OF THE COMMON STOCK TO COVER SOME OR ALL OF A SHORT
POSITION IN THE COMMON STOCK MAINTAINED BY THE UNDERWRITER AND THE IMPOSITION OF
PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING".
FOR CALIFORNIA RESIDENTS
THE UNITS WILL BE SOLD TO CALIFORNIA RESIDENTS PURSUANT TO A LIMITED
OFFERING QUALIFICATION UNDER A SUITABILITY STANDARD OF A LIQUID NET WORTH OF NOT
LESS THAN $225,000 (A NET WORTH EXCLUSIVE OF HOME, HOME FURNISHINGS AND
AUTOMOBILES), PLUS $65,000 GROSS ANNUAL INCOME OR $500,000 LIQUID NET WORTH.
AFTER THE CLOSING OF THIS OFFERING THE UNDERWRITER MAY EFFECT TRANSACTIONS
WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES OF THE COMPANY AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN
CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS
(INCLUDING THE NOTES THERETO) APPEARING ELSEWHERE IN THIS PROSPECTUS. UNLESS THE
CONTEXT OTHERWISE REQUIRES, THE TERM "COMPANY" REFERS TO ABLE ENERGY, INC. AND
ITS WHOLLY-OWNED SUBSIDIARIES ABLE OIL, INC. ("ABLE OIL"), ABLE OIL MELBOURNE,
INC. ("ABLE MELBOURNE"), ABLE OIL COMPANY MONTGOMERY ("ABLE MONTGOMERY") AND A &
O ENVIRONMENTAL SERVICES, INC. ("A&O"), AND ITS 99% INTEREST IN ABLE PROPANE,
L.L.C. ("ABLE PROPANE"). EXCEPT AS OTHERWISE INDICATED HEREIN, THE INFORMATION
CONTAINED IN THIS PROSPECTUS GIVES NO EFFECT TO THE ISSUANCE OR EXERCISE OF (I)
THE OVER-ALLOTMENT OPTION, (II) THE UNDERWRITER'S WARRANT, AND (III) OPTIONS
ISSUABLE UNDER THE COMPANY'S STOCK OPTION PLAN. ALL PER SHARE INFORMATION IN
THIS PROSPECTUS HAS BEEN ADJUSTED TO REFLECT A ONE FOR 2,000 FORWARD STOCK SPLIT
OF THE COMPANY'S COMMON STOCK TO BE EFFECTED ON OR BEFORE THE EFFECTIVE DATE.
THE COMPANY
Able Energy was incorporated on March 13, 1997 in the state of Delaware, to
act as a holding company for five operating subsidiaries: Able Oil; Able
Propane; Able Melbourne; Able Montgomery and A&O.
The Company's operating entities are engaged in the retail distribution of,
and the provision of services relating to: (i) fuel oil, (ii) propane gas, and
(iii) natural gas through a marketing alliance with AllEnergy Marketing Company
LLC, a division of New England Electric Systems, Inc. In addition to selling
home energy products, the Company installs and repairs home heating equipment,
provides environmental services for residential and commercial customers and
also markets other petroleum products to commercial customers, including diesel
fuel, gasoline and lubricants. The Company considers the provision of service
and installation services to be an integral part of its basic fuel oil business.
For example, the Company provides home heating equipment repair service to its
customers on a twenty-four hours-a-day, seven days-a-week basis, generally
within two hours of request. Except in isolated instances, the Company does not
provide service to any person who is not a customer.
In fiscal year 1997, sales of home heating oil accounted for approximately
68% of the Company's revenues. The remaining 32% of revenues were from sales of
gasoline, diesel fuel, kerosine, propane, and environmental services and related
sales. For the three month period ended March 31, 1998, sales of home heating
oil accounted for 69% of the Company's revenues. The Company serves
approximately 25,000 home heating oil customers from four locations, of which
two are located in New Jersey, one is located in Pennsylvania and one is located
in Florida.
The Company employs a focus marketing strategy which the Company believes
has been the key to its success. The Company believes that it is able to obtain
new customers and maintain existing customers by offering its unique concept of
full service home energy products at discount prices, providing quick response
refueling and repair operations, providing automatic deliveries to customers by
monitoring historical use and weather patterns, and by providing customers a
variety of payment options. The Company regularly provides various service
incentives to obtain and retain customers. The Company aggressively promotes its
service through a variety of direct marketing media, including mail and
telemarketing campaigns, by providing discounts to customers who refer new
customers to the Company, and through an array of advertising, including
television advertisements and billboards, which aim to increase brand name
recognition.
The Company intends to use a substantial portion of the proceeds of this
offering to expand its operations. The Company's strategy to expand its
operations includes (i) the acquisition of select operators in the Company's
present markets as well as other markets; (ii) capturing market share from
competitors through increased advertising and other means; (iii) diversifying
its products; (iv) diversifying its customer base; and (iv) replicating its
marketing and service formula in new geographic areas either directly or
3
<PAGE>
through franchise arrangements. The Company may also enter into joint ventures
with other entities in product areas different than the Company's current
product mix.
The Company believes that it has established, albeit on a limited scale, a
brand name and a reputation for quality, volume and service. The Company
believes that it may be able to create a franchise operation to capitalize and
expand on its brand name recognition. The Company intends to operate its
franchise operations pursuant to franchise agreements with franchisees. Under
these franchise agreements, it is anticipated that franchisees will be required
to: (i) pay to the Company an initial franchise fee, annual fees of
approximately 5% of the franchisees gross sales, plus $.04 per gallon of fuel
sold; (ii) purchase insurance; (iii) purchase from the Company promotional
materials and energy products during the life of the franchise. In return, the
Company will provide franchisees with source of fuel supply, guidelines and
specifications for the operations of the franchise, initial training, licenses
for the use of other promotional techniques. As of the date of this prospectus,
no such franchises have been sold by the Company and there can be no assurance
that any will be sold in the future.
The Company believes that recent and anticipated deregulation of public
utility companies in the Company's markets has created a window of opportunity
for the Company to expand into new product areas, particularly the retail sale
of electricity and natural gas. The Company believes it can capitalize on these
opportunities through joint ventures with companies which have previously been
successful in such areas although there can be no assurance that the Company's
expansion into the retail sale of electricity and natural gas will be
successful.
The Company's principal offices are located at 344 Route 46, Rockaway, NJ
07866 and its telephone number is (973) 625-1012.
4
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Securities Offered................ 875,000 Units consisting of 1,750,000 shares of Common
Stock and 875,000 Warrants. The Common Stock and the
Warrants comprising the Units will be separately
transferable immediately upon issuance. See "Description
of Securities."
Description of Warrants
Exercise of Warrants............ Subject to redemption by the Company, the Warrants may
be exercised at any time during the four year period
commencing one year from the date of this prospectus at
an exercise price of $5.00 per share, subject to
adjustment in certain events which include stock
divideneds, stock splits and recapitalizations.
Redemption of Warrants............ The Warrants are redeemable by the Company commencing 12
months from the date of this prospectus, or earlier with
the consent of the Underwriter, at $.10 per Warrant, on
not less than 30 days prior written notice, provided
that the last sale price of the Common Stock is at least
$10.00 for at least 20 consecutive trading days ending
on the third day prior to the date of the Company's
notice of redemption, and provided further that the
underlying shares of common stock are subject to a
current registration statement allowing the resale
thereof. See "Description of Securities".
Common Stock Outstanding
Prior to Offering(1)............ 2,000,000
Common Stock to be Outstanding
After Offering(2)............... 3,775,000
Warrants Outstanding Prior to the
Offering........................ 0
Warrants to be outstanding After
the Offering.................... 875,000
Use of Proceeds................... The net proceeds to the Company from the sale of the
Securities are estimated to be approximately $5,818,750
after deducting commissions and expenses of the
Offering, which are estimated at $1,400,000. The Company
intends to use the net proceeds of this Offering for
acquisitions, new products and business lines, sales and
marketing, addition of new terminal space, computer
hardware and software and installation, purchase of real
property, hiring of additional personnel, and for
working capital and general corporate purposes. See "Use
of Proceeds."
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
Proposed Nasdaq SmallCap Symbol(3):
Common Stock...................... ABLE
Warrants.......................... ABLEW
Proposed Boston Stock Exchange Symbol (3):
Common Stock...................... ABL
Warrants.......................... ABLW
Risk Factors...................... The securities offered hereby are speculative, involve a
high degree of risk and immediate substantial dilution,
and should be considered only by investors who can
afford to sustain a loss of their entire investment. See
"Risk Factors" and "Dilution."
</TABLE>
- ------------------------
(1) Reflects issuance of 2,000,000 shares of Common Stock to Timothy Harrington
as founder's stock and in exchange for all of the common stock previously
held by him in the operating subsidiaries, and also gives effect to a
1-for-2000 stock split to be completed on or before the effective date of
the Offering.
(2) Reflects issuance of 25,000 shares of Common Stock to Sichenzia, Ross &
Friedman LLP, legal counsel to the Company. Does not include (i) 175,000
shares of Common Stock and 87,500 Warrants which may be issued upon exercise
of the Underwriter's Warrants; (ii) 262,500 shares of Common Stock and
131,250 Warrants which may be issued upon exercise of the Underwriter's
over-allotment option; and (iii) 500,000 shares of Common Stock reserved for
issuance under the Company's Stock Option Plan of which options to purchase
[ ] shares have been issued as of the date hereof. See "Management,"
"Description of Securities" and "Underwriting."
(3) Notwithstanding listing on the Boston Stock Exchange and Nasdaq SmallCap
Market, there can be no assurance that an active trading market for the
Company's securities will develop or, if developed, will be sustained.
6
<PAGE>
SUMMARY FINANCIAL INFORMATION
The following table sets forth summary historical financial data and other
operation information of the Company. The selected historical financial data in
the table for the years ended December 31, 1997 and 1996 is derived from the
audited financial statements of the Company. The selected financial data set
forth for the six month period ended June 30, 1997 and 1998 are derived from
unaudited financial information provided by the Company. The selected financial
data set forth below should be read in conjunction with the Company's financial
statements and notes thereto and with the section entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
STATEMENT OF INCOME DATA:
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
---------------------------- --------------------------
<S> <C> <C> <C> <C>
1997 1996 1998 1997
------------- ------------- ------------ ------------
Revenues............................................... $ 16,380,992 $ 12,981,457 $ 8,601,102 $ 8,770,173
Gross Profit........................................... 3,358,357 2,408,707 1,925,779 2,055,933
Income from operations................................. 217,588 256,411 416,765 503,318
Earnings (loss) per share(1)........................... .109 .128 .208 .252
Weighted average number of shares outstanding.......... 2,000,000 2,000,000 2,000,000 2,000,000
</TABLE>
BALANCE SHEET DATA:
<TABLE>
<CAPTION>
JUNE 30, 1998
DECEMBER 31, -----------------------------
1997 ACTUAL AS ADJUSTED(2)
------------- ------------- --------------
<S> <C> <C> <C>
Working capital(2)................................................. $ (761,188) $ (531,416) $ 5,287,334
Total assets(2)(3)................................................. 3,552,524 3,730,411 10,399,161
Long-term liabilities(3)........................................... 1,321,388 1,319,995 2,169,995
Total liabilities(3)............................................... 3,154,264 3,130,540 3,997,540
Total shareholders' equity(2)(3)................................... 398,260 599,871 6,401,621
</TABLE>
- ------------------------
(1) Net earnings per common share is based upon the weighted average number of
common shares outstanding for each period presented.
(2) As adjusted to reflect net proceeds of $5,818,750 from the sale by the
Company in this offering of 875,000 Units at the assumed public offering
price of $8.25 per Unit.
(3) Long-term liabilities and total liabilities have been adjusted to reflect an
$850,000 increase in debt projected to be incurred for the purchase of the
Company's headquarters in Rockaway, New Jersey, which the Company currently
leases. Total liabilities and shareholders' equity have been adjusted to
reflect a $17,000 increase in accrued interest on the $850,000 debt, based
on an interest rate of eight percent per annum, for the period October 1,
1998 to December 31, 1998. Total assets have also been increased by
$850,000, representing the purchase of the Company's headquarters.
7
<PAGE>
RISK FACTORS
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS, IN
ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, IN CONNECTION
WITH INVESTMENTS IN THE SECURITIES OFFERED HEREBY. THIS PROSPECTUS CONTAINS
CERTAIN FORWARD-LOOKING STATEMENTS WHICH INVOLVE RISKS AND UNCERTAINTIES. THE
COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THE
FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING THOSE SET
FORTH BELOW AND ELSEWHERE IN THIS PROSPECTUS. AN INVESTMENT IN THE SECURITIES
OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
This Prospectus contains certain forward-looking statements, including among
other things: (i) anticipated trends in the Company's financial condition and
results of operations; and (ii) the Company's business strategy for managing and
expanding its operations. These forward-looking statements are based largely on
the Company's current expectations and are subject to a number of risks and
uncertainties. Actual results could differ materially from these forward-looking
statements. In addition to other risks described elsewhere in this "Risk
Factors" discussion, important factors to consider in evaluating such
forward-looking statements include (i) changes in external competitive market
factors or trends in the Company's results of operation; (ii) unanticipated
working capital or other cash requirements; (iii) changes in the Company's
business strategy or an inability to execute its competitive factors that may
prevent the Company from competing successfully in the marketplace. In light of
these risks and uncertainties, many of which are described in greater detail
elsewhere in this "Risk Factors" discussion, there can be no assurance that the
events predicted in forward-looking statements contained in this Prospectus
will, in fact, transpire.
LIMITED OPERATING HISTORY; MANAGEMENT OF GROWTH; SUBSTANTIAL LONG-TERM
DEBT. The Company was incorporated in March 1997 to act as a holding company
for its five operating subsidiaries. Although the Company has only been in
operation for a limited time, Able Oil, the Company's major operating
subsidiary, has been in business since 1989 and currently accounts for
approximately 87% of the Company's total revenue. The Company's remaining
subsidiaries were each established within the past three years and, accordingly,
have limited operating histories upon which evaluation of its prospects can be
made. There can be no assurance that the subsidiaries, other than Able Oil, will
generate substantial revenues or attain profitable operations.
The Company plans to continue to pursue an aggressive growth strategy
through its operating subsidiaries, and anticipates significant change in its
business activities and operations. The Company's growth has required, and will
continue to require, increased investment in management personnel, financial and
management systems and controls and facilities. The Company's past expansion has
placed, and any future expansion would place, significant demands on the
Company's administrative, operational, financial and other resources. The
Company intends to continue to expand its business and operations, including
entry into new markets, that will place additional strain on the Company's
management and operations. The Company's future operating results will depend,
in part, on its ability to continue to broaden the Company's senior management
group and administrative infrastructure, and its ability to attract, hire and
retain skilled employees. The Company's success will also depend on the ability
of its officers and key employees to continue to implement and improve the
Company's operational and financial control systems and to expand, train and
manage its employee base. In addition, the Company's future operating results
will depend on its ability to expand its sales and marketing capabilities and
expand its customer support operations commensurate with its growth, should such
growth occur. If the Company's revenues do not increase in proportion to its
operating expenses, the Company's management systems do not expand to meet
increasing demands, the Company fails to attract, assimilate and retain
qualified personnel, or the Company's management otherwise fails to manage the
Company's expansion effectively, there would be a material adverse effect on the
Company's business, financial condition and operating results. See "Business."
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After giving effect to the proposed purchase by the Company of its facility
in Rockaway, New Jersey, as of June 30, 1998, the Company had long term
liabilities of $1,319,995. See "Capitalization" and Note 7 to the Company's
financial statements.
The Company's ability to satisfy such obligations will depend on the
Company's future operating performance, which will be affected by, among other
things, prevailing economic conditions and financial, business and other
factors, many of which are beyond the Company's control. There can be no
assurance that the Company will be able to service its indebtedness. If the
Company is unable to service its indebtedness, it will be forced to examine
alternative strategies that may include actions such as reducing or delaying
capital expenditures, restructuring or refinancing its indebtedness, or the sale
of assets or seeking additional equity and/or debt financing. There can be no
assurance that any of these strategies could be effected on satisfactory terms,
if at all. See "--Need for Additional Capital."
SEASONAL FACTORS. To date substantially all of the Company's revenues and
income have been derived from the home heating oil business. The Company's home
heating oil business is seasonal, as a substantial portion of its business is
conducted during the fall and winter months. Weather patterns during the winter
months can have a material adverse impact on its revenues. Although temperature
levels for the heating season have been relatively stable over time, variations
can occur from time to time, and warmer than normal winter weather will
adversely effect the results of the Company's fuel oil operations. See
"Business--Fundamental Characteristics of the Company's Business--Seasonality."
FUEL PRICING: EFFECT ON PROFITABILITY. Gasoline, Heating Oil and Diesel
Fuel are commodities and, as such, their wholesale prices are subject to changes
in supply or other market conditions over which the Company has no control.
While, in the past, the Company has been able to pass on any increases in
commodities prices to its customers, there can be no assurance that the Company
may be able to fully pass on future increases in the wholesale prices of these
commodities to its customers and still be competitive. Additionally,
approximately 5% of the Company's total sales are made to customers pursuant to
an agreement which pre-establishes the maximum sales price of fuel oil over a
twelve-month period. Such prices are renegotiated in April of each year and the
Company has historically purchased fuel oil for these customers in advance and
at a fixed cost. Should the Company be unable to make such advance purchases of
fuel oil, any future increase in wholesale fuel oil prices could have an adverse
affect on the Company. Because the Company sells fuel to its customers at fixed
amounts over its wholesale cost, the Company's gross profit as a percentage of
gross revenue may not fluctuate as a result of changes in the wholesale prices
of these goods. The Company does not engage in derivatives or futures trading to
hedge fuel price movements. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
DEPENDENCE UPON SUPPLY OF PETROLEUM PRODUCTS. Five major suppliers provide
the Company with its inventory requirements. One supplier Bayway Tosco Refining
Corp., located in Linden, New Jersey, provided approximately 30%, and Sun Oil
Company provided approximately 30%, of the Company's total Number 2 Heating Oil
requirements for the year ended December 31, 1997. For the six month period
ended June 30, 1998, Bayway Tosco Refining Corp., provided approximately 30% and
SunOil Company provided approximately 30% of such oil. The loss of either
supplier would not have a material adverse effect on the Company.
The Company has entered into a fuel oil storage agreement with Mieco Trading
Co. ("Mieco"), whereby the Company will store 1,500,000 gallons of Number 2
Heating Oil in the Company's facility in Rockaway, New Jersey. The Company has
entered into an additional agreement with Mieco whereby the Company will
purchase all of such oil during the months of November 1998 through March 1999.
Additional fuel oil purchases are made on a daily basis on the spot market by
electronic funds transfers.
Two major suppliers provide the Company with its propane product
requirements. Each of Ferrellgas Partners, L.P. and Propane Power, Inc. provided
the Company with approximately 50% of its propane
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requirements for the year ended December 31, 1997. The loss of either supplier
could have a material adverse effect on Able Propane.
The Company met substantially all of its gasoline and diesel product
requirements through Bayway Tosco Refining Corp. and Petron Oil Corporation for
the year ended December 31, 1997. Each of these entities supplied approximately
50% of such requirements during such period.
Notwithstanding the agreements with Mieco, the Company has not entered into
any agreements for the supply of Number 2 Heating Oil, propane or gasoline.
Management believes that if the Company's supply of any of the foregoing
products was interrupted, the Company would be able to secure adequate supplies
from other sources without a material disruption in its operations. However,
there can be no assurance that adequate supplies of such petroleum products will
be readily available in the future. See "Business--Fundamental Characteristics
of the Company's Business--Wholesale Suppliers."
GROWTH DEPENDENT UPON UNSPECIFIED ACQUISITIONS. The Company's growth
strategy includes the acquisition of existing fuel distributors. The Company
expects to allocate 48% ($2.5 million) of the net proceeds of this Offering for
such purposes. There can be no assurance that the Company will be able to
identify new acquisition candidates or, even if a candidates is identified, that
the Company will have access to the capital necessary to consummate such
acquisitions. Shareholders will not have an opportunity to vote on any
acquisition proposed by the Company, nor will shareholders have any opportunity
to review the financial status of such acquisition candidates. Furthermore, the
acquisition of additional companies involve a number of additional risks. These
risks include the diversion of Management's attention from the operations of the
Company, possible difficulties with the assimilation of personnel and operations
of acquired companies, the amortization of acquired intangible assets, and the
potential loss of key employees of acquired companies. The future success of the
Company's business will depend upon the Company's ability to manage its growth
through acquisitions. See "Business--Expansion--Acquisitions."
BROAD DISCRETION IN APPLICATION OF PROCEEDS BY MANAGEMENT. Approximately
49.8% of the net proceeds of this Offering will be applied towards unidentified
acquisitions, 16.6% for development of new products and business lines, and
32.22% of the net proceeds of this Offering will be applied to working capital
and general corporate purposes. Accordingly, Management will have broad
discretion over the use of proceeds. See "Use of Proceeds."
GOVERNMENT REGULATION. Federal, state and local laws, particularly laws
relating to the protection of the environment and worker safety, can materially
affect the Company's operations. The transportation of fuel oil, diesel fuel,
propane and gasoline is subject to regulation by various federal, state and
local agencies, including the U.S. Department of Transportation ("DOT"). These
regulatory authorities have broad powers and the Company is subject to
regulatory and legislative changes that can effect the economies of the industry
by requiring changes in operating practices or influencing demand for, and the
cost of providing, its services. Additionally, the Company is subject to random
DOT inspections. Any material violation of DOT rules or the Hazardous Materials
Transportation Act may result in citations
and/or fines upon the Company. In addition, the Company depends on the supply of
petroleum products from the oil and gas industry and, therefore, is affected by
changing taxes, price controls and other laws and regulations relating to the
oil and gas industry generally. The Company cannot determine the extent to which
future operations and earnings may be affected by new legislation, new
regulations or changes in existing regulations. See "Business--Government
Regulation."
POTENTIAL ENVIRONMENTAL LIABILITY. The Company's operations are subject to
all of the operating hazards and risks that are normally incidental to handling,
storing, transporting and delivering fuel oils, gasoline, diesel and propane,
which are classified as hazardous materials. The Company faces potential
liability for, among other things, fuel spills, gas leaks and negligence in
performing environmental clean-ups for its customers. Specifically, the Company
maintains fuel storage facilities on sites owned or leased by the Company, and
could incur significant liability to third parties or governmental entities for
damages,
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clean-up costs and/or penalties in the event of certain discharges into the
environment. Such liability can be extreme and could have a material adverse
effect on the Company's financial condition or results of operations.
Although the Company believes that it is in compliance with existing laws
and regulations, there can be no assurance that substantial costs for compliance
will not be incurred in the future. Any substantial violations of these rules
and regulations could have an adverse affect upon the Company's operations.
Moreover, it is possible that other developments, such as more stringent
environmental laws, regulations and enforcement policies thereunder, could
result in additional, presently unquantifiable, costs or liabilities to the
Company. See "Business--Environmental Considerations."
NO ASSURANCE OF ADEQUATE INSURANCE PROTECTION. The Company maintains
insurance policies in such amounts and with coverage and deductibles as the
Company' management ("Management") believes are reasonable and prudent. There
can be no assurance, however, that such insurance will be adequate to protect
the Company from liabilities and expenses that may arise from claims for
personal and property damage arising in the ordinary course of business or that
such levels of insurance will be maintained by the Company or will be available
at economic prices.
FRANCHISING. The Company intends to commence franchise arrangements to
expand its operations and revenue base. The Company's future growth may be
dependent upon new franchisees and the manner in which they operate and develop
their Able Energy locations to promote and develop the Company's concept and its
reputation for quality and value. Although the Company has established criteria
to evaluate prospective franchisees it has not yet had success attracting
franchisees, and there can be no assurance that franchisees will have the
business abilities or access to financial resources necessary to open Able
Energy locations or operate such locations in their franchise areas in a manner
consistent with the Company's concepts and standards. In addition, because the
Company believes that a potential franchisee's total estimated investment
relating to an Able Energy location is generally low, the Company may be more
likely to attract franchisees with limited franchise experience and limited
financial resources.
As a result of its intended franchising activity, the Company will be
subject to Federal Trade Commission ("FTC") regulation and various state laws
that govern the offer, sale and termination of, and refusal to renew,
franchises. Several state laws also regulate substantive aspects of the
franchisor-franchisee relationship. The FTC requires the Company to furnish
prospective franchisees a franchise offering circular containing prescribed
information. A number of states in which the Company might consider franchising
also regulate the sale of franchises and require registration of the franchise
offering circular with state authorities. Substantive state laws that regulate
the franchisor-franchisee relationship presently exist in substantial number of
states, and bills have been introduced in Congress from time to time which would
provide for federal regulation of the franchisor-franchisee relationship in
certain respects. The state laws often limit, among other things, the duration
and scope of non-competition provisions and the ability of a franchisor to
terminate or refuse to renew a franchise. See "Business-- Franchises and
Government Regulation."
TRADEMARKS AND SERVICE MARKS. The Company believes that its trademarks and
service marks have significant value and are important to the marketing of its
products and services, especially if the Company is successful in implementing
its franchise program. There can be no assurance, however, that the Company's
proprietary marks do not or will not violate the proprietary rights of others,
that the Company's marks would be upheld if challenged or that the Company would
not be prevented from using its marks, any of which could have an adverse effect
on the Company. In addition, there can be no assurance that the Company will
have the financial resources necessary to enforce or defend its trademarks and
service marks against infringement. See "Business--Patents and Trademarks."
COMPETITION FROM ALTERNATE ENERGY SOURCES. The Company is engaged primarily
in the retail home heating business and competes for customers with suppliers of
alternate energy products, principally
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natural gas and electricity. While the Company is now marketing regulated
natural gas, every year, a small percentage of the Company's oil customers
convert to other home heating sources, primarily natural gas. In addition, the
Company may lose additional customers due to conversions during periods in which
the cost of its services exceeds the cost of alternative energy sources. See
"Business--Conversion to Natural Gas and Competition."
COMPETITION FOR NEW CUSTOMERS. The Company's business is highly
competitive. In addition to competition from alternative energy sources, the
Company competes with distributors offering a broad range of services and
prices, from full service distributors similar to the Company, to those offering
delivery only. Competition with other companies in the retail home heating
industry is based primarily on customer service and price. Longstanding customer
relationships are typical in the industry. Many companies, including the
Company, deliver fuel to their customers based upon weather conditions and
historical consumption patterns without the customers making an affirmative
purchase decision each time fuel is needed. In addition, most companies,
including the Company, provide equipment repair service on a 24 hour a day
basis, which tends to build customer loyalty. The Company competes against
companies that may have greater financial resources than the Company. As a
result, the Company may experience difficulty in acquiring new retail customers
due to existing relationships between potential customers and other retail home
heating distributors. See "Business--Competition."
ABSENCE OF WRITTEN AGREEMENTS. Approximately 50% of the Company's customers
do not have written agreements with the Company and can terminate services at
any time, for any reason. Although the Company has never experienced a
significant loss of its customers, if the Company were to experience a high rate
of terminations, the Company's business and financial condition could be
adversely affected. See "Business--Retail Propane Distribution."
RELIANCE ON MAJOR CUSTOMERS. Able Melbourne had five major customers in
fiscal year 1997. These customers accounted for 11,7%, 12.3%, 8.9%, 6.1% and
5.9% of Able Melbourne's total sales in fiscal year 1997 and 14.5%, 12.1%,
11.5%, 5.6% and 4.4% of total sales for the three months ended June 30, 1998.
The loss of these customers could have a material adverse affect on the
financial condition of the Able Melbourne. While the loss of any of the above
customers is likely to have an adverse affect on the financial condition of the
individual operating subsidiary, it is not likely to impact the Company's
overall financial condition. See "Business--Retail Fuel Oil--Able Melbourne."
RISKS ASSOCIATED WITH EXPANSION INTO NEW MARKETS. A significant element of
the Company's future growth strategy involves the expansion of the Company's
business into new geographic and product markets. Expansion of the Company's
operations depend, among other things, the success of the Company's marketing
strategy in new markets, successfully establishing and operating new locations,
hiring and retaining qualified management and other personnel, and obtaining
adequate financing for vehicle and site purchases and working capital purposes.
See "Business--Expansion."
NEED FOR ADDITIONAL FINANCING. The Company believes that the proceeds of
the Offering, together with revenues from operations and capital available from
the Company's line of credit, will be sufficient to finance the Company's
working capital requirements for the foreseeable future following the completion
of the Offering. In addition, a part of the Company's growth strategy is to
expand its operations through the acquisition of existing fuel distributors. The
continued operation and expansion of the Company's business may be dependent
upon its ability to obtain additional financing to acquire new and existing
entities. There can be no assurance that additional financing will be available
on terms acceptable to the Company, or at all. In the event that the Company is
unable to obtain such additional financing as it becomes necessary, the Company
may not be able to achieve all of its business plans. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
CONTINUING INFLUENCE OF UNDERWRITER. The Underwriter may be able to exert
continuing influence on the Company in light of the fact that it has the right
to (i) appoint a board member for a five year period;
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(ii) receive warrants to purchase 87,500 Units, exclusive of the over-allotment
option; (iii) exercise its registration rights; (iv) act as financial consultant
to the Company for a two year period and receive a finders fee for the same
period; and (v) act as a warrant solicitation agent. In light of the forgoing,
the Underwriter may be, for the forseeable future, a dominating influence, and
thereafter, a factor of decreasing importance in the market for the Common Stock
and Warrants.
DEPENDENCE ON KEY PERSONNEL. The Company's future success will depend, to a
significant extent, on the efforts of key management personnel, including
Timothy Harrington, the Company's Chairman and Chief Executive Officer. The
Company will enter into employment agreements with Timothy Harrington and
Christopher Westad prior to the effective date of the Registration Statement.
The loss of one or more of these key employees could have a material adverse
effect on the Company's business. The Company will use its best efforts to
acquire key-person life insurance policies on Mr. Harrington in the amount of $3
million prior to the closing at this offering. In addition, the Company believes
that its future success will depend in large part upon its continued ability to
attract and retain highly qualified management, technical and sales personnel.
There can be no assurance that the Company will be able to attract and retain
the qualified personnel necessary for its business. See "Management."
CONTROL BY EXISTING STOCKHOLDERS. Upon the completion of this Offering, the
Company's management will collectively beneficially own approximately 52.9%
(48.8% if the Underwriter's Over-Allotment Option is exercised in full) of the
Company's outstanding Common Stock. Because of their beneficial stock ownership,
these stockholders will be in a position to continue to elect the majority
members of the Board of Directors and decide matters requiring stockholder
approval. See "Principal Stockholders."
NO PRIOR PUBLIC MARKET. Prior to this Offering, there has been no public
market for the Securities. Accordingly, there can be no assurance that an active
trading market will develop and be sustained upon the completion of this
Offering. The initial public offering price of the Securities has been
determined by negotiations between the Company and the Underwriter and does not
necessarily bear any relation to the Company's asset value, earnings or other
objective criteria. See "Underwriting." The stock market has, from time to time,
experienced extreme price and volume fluctuations which often have been
unrelated to the operating performance of particular companies. Although it has
no obligation to do so, the Underwriter intends to engage in market-making
activities or solicited brokerage activities with respect to the purchase or
sale of the Securities on the Nasdaq SmallCap Market. However, no assurance can
be given that the Underwriter will continue to participate as a market-maker in
the securities of the Company or that other broker-dealers will make a market in
such securities which may adversely impact the liquidity of the securities.
Regulatory developments and economic and other external factors, as well as
period-to-period fluctuations in financial results, may also have a significant
impact on the market price of such securities. See "Description of Securities."
IMMEDIATE AND SUBSTANTIAL DILUTION. This Offering involves an immediate and
substantial dilution to investors. Purchasers of Units in the Offering will
incur an immediate dilution of $2.34 per share of Common Stock in the net
tangible book value of their investment from the initial public offering price,
which dilution amounts to approximately 60% of the initial public offering price
per share of Common Stock. Investors in the Offering will pay $4.00 per share of
Common Stock, as compared with an average cash price of $.24 per share of Common
Stock paid by existing stockholders. See "Dilution."
ISSUANCE OF BLANK CHECK PREFERRED STOCK. The Board of Directors will have
the authority to issue up to 5,000,000 shares of preferred stock with
designations, rights and preferences determined from time to time by the Board
of Directors. Accordingly, the Board of Directors is empowered, without
stockholder approval, to issue classes of preferred stock with voting
liquidation, conversion or other rights that could adversely effect the holders
of the Common Stock in that the issuance of such preferred stock may adversely
dilute the proportionate equity interest and voting power of such holders.
However, no such preferred stock may issued by the Company without the
Underwriter's consent for a period of 24 months following the effective date.
See "Description of Securities; Preferred Stock."
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SHARES ELIGIBLE FOR FUTURE SALE. Of the 3,775,000 shares of Common Stock of
the Company to be outstanding upon completion of this Offering, 2,025,000 shares
shall be "restricted securities," of which 2,000,000 shares are owned by
"affiliates" of the Company (assuming none of the Shareholder Shares are sold in
the Over-Allotment), as those terms are defined in Rule 144 promulgated under
the Act. Absent registration under the Act, the sale of such shares is subject
to Rule 144, as promulgated under the Act. All of the "restricted securities"
are eligible for resale under Rule 144. In general, under Rule 144, subject to
the satisfaction of certain other conditions, a person, including an affiliate
of the Company, who has beneficially owned restricted shares of Common Stock for
at least one year is permitted to sell in a brokerage transaction, within any
three-month period, a number of shares that does not exceed the greater of 1% of
the total number of outstanding shares of the same class, or if the Common Stock
is quoted on Nasdaq or a stock exchange, the average weekly trading volume
during the four calendar weeks preceding the sale. Rule 144 also permits a
person who presently is not and who has not been an affiliate of the Company for
at least three months immediately preceding the sale and who has beneficially
owned the shares of Common Stock for at least two years to sell such shares
without regard to any of the volume limitations as described above. Holders of
2,000,000 shares of Common Stock are affiliates of the Company. All of the
Company's shareholders who are affiliates, and legal counsel to the Company,
who, subsequent to the closing of the Offering, will own 25,000 shares of Common
Stock of the Company, have agreed not to sell or otherwise dispose of any of
their shares of Common Stock now owned or issuable upon the exercise of any
option for a period of 24 months from the Effective Date, without the prior
written consent of the Underwriter. No prediction can be made as to the effect,
if any, that sales of shares of Common Stock or the availability of such shares
for sale will have on the market prices of the Company's securities prevailing
from time to time. The possibility that substantial amounts of Common Stock may
be sold under Rule 144 into the public market may adversely affect prevailing
market prices for the Common Stock and could impair the Company's ability to
raise capital in the future through the sale of equity securities. See "Shares
Eligible for Future Sale."
NO DIVIDENDS AND NONE ANTICIPATED. To date, no dividends have been declared
or paid on the Common Stock, and the Company does not anticipate declaring or
paying any dividends in the foreseeable future, but rather intends to reinvest
profits, if any, in its business. Investors should, therefore, be aware that it
is unlikely that any dividends will be paid on the Common Stock in the
foreseeable future. See "Dividends."
POSSIBLE ADVERSE EFFECT OF PENNY STOCK REGULATIONS ON THE LIQUIDITY OF THE
COMPANY'S SECURITIES. The Company intends to apply for listing of the Common
Stock and Warrants on the Nasdaq SmallCap Market and the Boston Stock Exchange.
In the absence of the Common Stock being quoted on Nasdaq and if the Common
Stock is not listed on another exchange, trading in the Common Stock would be
covered by Rule 15g-9 promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") if the Common Stock is a "penny stock." Under such
rule, broker-dealers who recommend such securities to persons other than
established customers and accredited investors must make a special written
suitability determination for the purchaser and receive the purchaser's written
agreement to a transaction prior to sale. Securities are exempt from this rule
if the market price is at least $5.00 per share.
The Commission adopted regulations that generally define a penny stock to be
any equity security that has a market price of less than $5.00 per share,
subject to certain exceptions. Such exceptions include an equity security listed
on Nasdaq, and an equity security issued by an issuer that has (i) net tangible
assets of at least $2,000,000, if such issuer has been in continuous operation
for three years, (ii) net tangible assets of at least $5,000,000, if such issuer
has been in continuous operation for less than three years, or (iii) average
revenue of at least $6,000,000 for the preceding three years. Unless an
exception is available, the regulations require the delivery, prior to any
transaction involving a penny stock, of a disclosure schedule explaining the
penny stock market and the risks associated therewith.
If the Company's securities were to become subject to the regulations
applicable to penny stocks, the market liquidity for the securities would be
severely affected, limiting the ability of broker-dealers to sell
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the securities and the ability of purchasers in this Offering to sell their
securities in the secondary market. There can be no assurance that trading in
the securities will not be subject to these or other regulations that would
adversely affect the market for such securities.
NASDAQ ELIGIBILITY AND MAINTENANCE REQUIREMENTS; POSSIBLE DELISTING OF
COMMON STOCK FROM NASDAQ SMALLCAP MARKET. Prior to this Offering, there has
been no established public trading market for the Company's Common Stock or
Warrants and there is no assurance that a public trading market for the
Company's securities will develop after the completion of this Offering. If a
trading market does in fact develop for the securities offered hereby, there can
be no assurance that it will be sustained.
The Commission has recently approved new rules imposing criteria for listing
of securities on the Nasdaq SmallCap Market, including standards for maintenance
of such listing. In order to qualify for initial quotation of securities on the
Nasdaq SmallCap Market, an issuer, among other things, must have at least
$4,000,000 in net tangible assets, $5,000,000 in market value of the public
float and a minimum bid price of $4.00 per share. For continued listing, an
issuer, among other things, must have $2,000,000 in net tangible assets,
$1,000,000 in market value of securities in the public float and a minimum bid
price of $1.00 per share. If the Company is unable to satisfy the Nasdaq
SmallCap Market's maintenance criteria in the future, its Common Stock and
Warrants may be delisted from the Nasdaq SmallCap Market. In such event,
trading, if any, in the Company's Common Stock or Warrants, would thereafter be
conducted in the over-the-counter market in the so-called "pink sheets" or the
NASD's "Electronic Bulletin Board." As a consequence of such delisting, an
investor would likely find it more difficult to dispose of, or to obtain
quotations as to, the price of the Company's Common Stock or Warrants.
UNDERWRITER'S INFLUENCE ON THE MARKET. A significant amount of the Units,
Common Stock and Warrants offered may be sold to customers of the Underwriter.
Such customers subsequently may engage in transactions for the sale or purchase
of such securities and may otherwise effect transactions in such securities. If
they participate in the market, the Underwriter may exert substantial influence
on the market, if one develops, for the Units, Common Stock and Warrants. Such
market-making activity may be discontinued at any time. The price and liquidity
of the Units, Common Stock and Warrants may be significantly affected by the
degree, if any, of the Underwriter's participation in such market. See
"Underwriting."
YEAR 2000 EFFECT. While the Company believes that its own operating systems
are year 2000 compliant, there can be no assurance until such time that all
systems will then function adequately. Approximately 50% of the Company's
customers receive their home heating oil pursuant to an automatic delivery
system whereby deliveries are scheduled by computer, based on each computer's
historical consumption patterns and prevailing weather conditions. In the event
that the Company does have Year 2000 problems, failures and interruptions
resulting from the computing system problems could have a material adverse
effect on the Company's results of operations. There can be no assurance that
the Year 2000 issue can be resolved prior to the upcoming change in the century.
15
<PAGE>
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of securities
offered hereby at public offering prices of $8.25 per share of Unit, after
deducting underwriting commissions and offering expenses estimated to be
$1,400,000 to be paid by the Company, is estimated to be $5,818,750. The Company
expects to apply the net proceeds of the Offering as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF NET
APPLICATION OF PROCEEDS APPROXIMATE AMOUNT PROCEEDS
- -------------------------------------------------------------------------- ------------------- -----------------
<S> <C> <C>
Acquisitions of home energy product companies, and other energy related
entities (1)............................................................ $ 2,800,000 48%
Development of new product and business lines(2).......................... 1,000,000 17%
Sales & Marketing(3)...................................................... 515,000 9%
Terminal space(4)......................................................... 300,000 5.2%
Hardware, software and installation cost of information system(5)......... 250,000 4.3%
Acquisition of real property (6).......................................... 150,000 2.6%
Addition of personnel(7).................................................. 50,000 0.9%
General Corporate and Working Capital..................................... 753,750 13%
Total..................................................................... $ 5,818,750 100%
------------------- -----
------------------- -----
</TABLE>
- ------------------------
(1) The Company plans to acquire certain assets or the securities of other home
energy product companies and other energy related entities.
(2) The net proceeds allocated to development of new product and business lines
are expected to be applied to new operating subsidiaries including, but not
limited to, a subsidiary for the Company's franchising operation, subsidiary
for the retail sale of electrical power and a subsidiary for a joint venture
for the retail sale of natural gas. See "Business."
(3) The net proceeds allocated to marketing and sales are expected to be applied
towards the promotion of the Company's service in its current markets and
expansion of the Company's markets. The proceeds are expected to be applied
to advertising, distributor incentive programs and sales person incentive
programs.
(4) The net proceeds will be allocated to the rental of additional terminal
space for the storage of home heating oil.
(5) Represents cost of the hardware, software and the installation costs
associated with the upgraded information system the Company plans to
install.
(6) Represents downpayment for purchase of the Company's headquarters currently
leased by the Company in Rockaway, New Jersey. Although no formal agreement
has been consummated, the Company is currently in negotiation to purchase
the property for an aggregate purchase price of approximately $1 million.
The purchase of this property is contingent upon the property meeting all
applicable environmental rules and regulations prior to purchase.
(7) The Company anticipates hiring additional sales and operations employees and
has allocated these net proceeds to fund these additions.
The foregoing represents the Company's estimate of the allocation of the net
proceeds of the Offering, based upon the current status of its operations and
anticipated business needs. It is possible, however, that the application of
funds will differ considerably from the estimates set forth herein due to
changes in the economic climate and/or the Company's planned business operations
or unanticipated complications, delays and expenses, as well as any potential
acquisitions that the Company may consummate, although no specific acquisition
has been identified. See "Management's Discussion and Analysis of
16
<PAGE>
Financial Condition and Results of Operations." Any reallocation of the net
proceeds will be at the discretion of the Board of Directors of the Company.
Any additional net proceeds realized from the exercise of the Over-Allotment
Option (up to approximately $753,774) will be added to the Company's working
capital.
Pending application, the net proceeds will be invested principally in
short-term certificates of deposit, money market funds or other short-term
interest-bearing investments.
DIVIDEND POLICY
The Company has never paid or declared dividends on its Common Stock. The
payment of cash dividends, if any, in the future is within the discretion of the
Board of Directors and will depend upon the Company's earnings, its capital
requirements, financial condition and other relevant factors. The Company
intends, for the foreseeable future, to retain future earnings for use in the
Company's business.
17
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of June
30, 1998 and as adjusted to reflect the sale of 875,000 Units, offered hereby.
The information provided below should be read in conjunction with the Financial
Statements and the other financial information included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
JUNE 30, 1998
----------------------------
<S> <C> <C>
ACTUAL AS ADJUSTED
------------ --------------
Long-term liabilities, less current maturities(1)................................... $ 1,319,995 $ 2,169,995
------------ --------------
------------ --------------
Shareholders' equity: 20,000,000 Capital Stock, shares authorized: 2,000,000 issued
and outstanding(2); and 3,775,000 issued and outstanding as adjusted (3).......... 1 3,775
Retained earning.................................................................. 343,879 575,870
Paid in Surplus................................................................... 322,198 5,821,976
------------ --------------
Total shareholders' equity........................................................ 666,078 6,401,621
------------ --------------
------------ --------------
</TABLE>
- ------------------------
(1) Long-term liabilities have been adjusted to reflect an $850,000 increase in
debt projected to be incurred for the purchase of the Company's headquarters
in Rockaway, New Jersey, which the Company currently leases. Retained
earnings have been adjusted to reflect a $17,000 increase in accrued
interest on the $850,000 debt, based on an interest rate of eight percent
per annum, for the period October 1, 1998 to December 31, 1998.
(2) Does not include 375,000 shares of Common Stock provided for issuance under
the Company's Stock Option Plan.
(3) Reflects the issuance of 1,750,000 shares of Common Stock by the Company in
connection with this Offering and 25,000 shares to Sichenzia, Ross &
Friedman LLP, legal counsel to the Company. Does not include 375,000 shares
of Common Stock provided for issuance under the Company's Stock Option Plan.
18
<PAGE>
DILUTION
Dilution represents the difference between the initial public offering price
paid by the purchasers in the Offering and the net tangible book value per share
immediately after completion of the Offering. Net tangible book value per Share
represents the amount of the Company's total assets minus the amount of its
liabilities and intangible assets divided by the number of shares outstanding.
As of June 30, 1998, the net tangible book value of the Company's Common Stock
was ($73,268) or ($.04) per share. Without taking into account any changes in
net tangible book value after December 31, 1997, other than to give effect to
the sale of the Units offered hereby and the receipt of the net proceeds of this
Offering, the pro forma net tangible book value of the Company as of June 30,
1998 would have been $5,745,482 or $1.52 per share. Consequently, there will be
an immediate increase in net tangible book value of $1.56 per Share to the
existing shareholders and an immediate substantial dilution (i.e. the difference
between the assumed offering price of $4.00 per share (the Warrants which are
being offered as part of the Unit have been given as assumed offering price of
$.25 per Warrant) and the pro forma net tangible book value per Share after the
Offering) of $2.48 or 62% to new investors purchasing the Shares offered hereby.
The following table illustrates, as of June 30, 1998, this per share
dilution:
<TABLE>
<S> <C> <C>
Assumed public offering price per Share of Common Stock.... $ 4.00
Net tangible book value per share before Offering...... $ (.04)
Increase per Share attributable to new investors....... $ 1.56
Pro forma net tangible book value per Share after
Offering................................................. $ 1.52
---------
Dilution per Share to new investors........................ $ 2.48
---------
---------
</TABLE>
The following table summarizes, as of June 30, 1998, the total number of
shares of Common Stock purchased from the Company, the total consideration paid,
and the average price per share paid by the existing shareholders and by new
investors who purchase Units pursuant to this Offering.
<TABLE>
<CAPTION>
PERCENTAGE
SHARES PERCENTAGE AGGREGATE OF TOTAL AVERAGE PRICE
PURCHASED(1) OF TOTAL SHARES CONSIDERATION CONSIDERATION PER SHARE
------------ ----------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Existing Shareholders................. 2,000,000 52.9% $ 480,760 6.4% $ 0.24
New Investors(2)...................... 1,775,000 47.1% $ 7,000,000 93.6% 4.00
------------ --- ------------- ---
Total........................... 3,775,000 100% $ 7,480,760 100%
------------ --- ------------- ---
------------ --- ------------- ---
</TABLE>
- ------------------------
(1) This information does not reflect 375,000 Shares that may be issued under
the Company's Stock Option Plan.
(2) Includes 25,000 shares of Common Stock to be issued to Sichenzia, Ross &
Friedman LLP subsequent to the closing of the Offering.
19
<PAGE>
SELECTED FINANCIAL DATA
The following table sets forth selected historical financial data and other
operation information of the Company. The selected historical financial data in
the table for the years ended December 31, 1997 and 1996 is derived from the
audited financial statements of the Company. The selected financial data set
forth for the six month period ended June 30, 1997 and 1998 are derived from
unaudited financial information provided by the Company, which in the opinion of
Management have been prepared on the same basis as the audited financial
statements and contain all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the results of operations for
such periods. The results of operations for the six months ended June 30, 1998,
are not necessarily indicative of results to be expected for the full fiscal
year. The selected financial data set forth below should be read in conjunction
with the Company's financial statements and notes thereto and with the section
entitled "Management's Discussion and Analysis of Financial Condition and
Results of Operations" appearing elsewhere in this Prospectus.
STATEMENT OF OPERATIONS DATA:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
---------------------------- --------------------------
<S> <C> <C> <C> <C>
1996 1997 1998 1997
------------- ------------- ------------ ------------
Total revenues......................................... $ 12,981,457 $ 16,380,992 $ 8,601,102 $ 8,770,173
Total costs and expenses............................... 12,753,861 16,304,931 8,399,491 8,504,900
Net income (loss)...................................... 227,596 76,061 201,611 265,273
Net income(loss) per common share(1)................... .1138 .038 .1001 .1326
Weighted average common shares
outstanding.......................................... 2,000,000 2,000,000 2,000,000 2,000,000
</TABLE>
BALANCE SHEET DATA:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30, 1998
-------------------------- ----------------------------
<S> <C> <C> <C> <C>
1996 1997 ACTUAL AS ADJUSTED(2)
------------ ------------ ------------ --------------
Working capital......................................... $ (662,036) $ (761,188) $ (531,410) $ 5,287,334
Total assets(2)......................................... 3,403,950 3,552,524 3,730,411 10,399,161
Total liabilities(2).................................... 3,082,751 3,154,264 3,130,540 3,997,540
Total stockholders' equity(2)(3)........................ 321,199 398,260 599,871 6,401,621
</TABLE>
- ------------------------
(1) Net earnings per common share is based upon the weighted average number of
common shares outstanding for each period presented.
(2) Total liabilities have been adjusted to reflect an $850,000 increase in debt
projected to be incurred for the purchase of the Company's headquarters in
Rockaway, New Jersey, which the Company currently leases. Total liabilities
and shareholders' equity have been adjusted to reflect a $17,000 increase in
accrued interest on the $850,000 debt, based on an interest rate of eight
percent per annum, for the period October 1, 1998 to December 31, 1998.
Total assets have also been increased by $850,000 representing the purchase
of the Company's headquarters.
(3) As adjusted to reflect net proceeds of $5,818,750 from the sale by the
Company in this offering of 875,000 Units at the assumed public offering
price of $8.25 per Unit.
20
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The statements contained in this Prospectus that are not historical are
forward looking statements, including statements regarding the Company's
expectations, intentions, beliefs or strategies regarding the future. Forward
looking statements include the Company's statements regarding liquidity,
anticipated cash needs and availability and anticipated expense levels. All
forward looking statements included in this prospectus are based on information
available to the Company on the date hereof and the Company assumes no
obligation to update any such forward looking statements. It is important to
note that the Company's actual results could differ materially from those in
such forward looking statements. Among the factors that could cause actual
results to differ materially are the factors detailed in the risks discussed in
the " Risk Factors" section included in this Prospectus at page 8.
The home heating and home energy market is highly competitive and
fragmented, in both the heating oil and alternative energy markets, and consists
of suppliers most of whom are larger and with greater resources than the
Company. The diverse distribution channels in which the Company markets its
products involve different competitive factors, and the ability to provide
specialized customer services at discounted prices is important to mass market
the Company's products. See "Business -- Competition".
The Company's future success as a retailer of energy related products will
be influenced by several factors including the ability of the Company to
efficiently meet customer demand and develop a larger customer base,
management's ability to evaluate the public's home energy requirements and to
achieve market acceptance of new energy related products. With respect to
achieving market acceptance of new energy related products, the Company has
entered into a marketing agreement with AllEnergy where the Company will market
and sell natural gas to residential and commercial customers in New Jersey. The
Company will receive a commission equal to 35% of the gross profit margin for
sales generated by the Company. Further factors impacting the Company's
operations are increases in expenses associated with continued sales growth, the
ability of the Company to control costs, to offer products with satisfactory
profit margins and the ability to develop and manage the introduction of new
products and competition. Quality control as well as customer satisfaction are
also essential to the Company's success.
REVENUE RECOGNITION
Sales of fuel oil and heating equipment are recognized at the time of
delivery of the product to the customer and sales of equipment are recognized at
the time of installation. Revenue from repairs and maintenance service is
recognized upon completion of the service. Payments received from customers for
heating equipment service contracts are deferred and amortized into income over
the terms of the respective service contracts, on a straightline basis, which
generally do not exceed one year.
RESULTS OF OPERATIONS
Since the Company was only incorporated in March 1997, the financial data
for the fiscal year ended December 31, 1996 represents solely the results of
operations of Able Oil and related entities which, in 1997, are subsidiaries of
the Company, and, as such, are the same operating entities in 1997 and 1996.
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997.
The Company reported revenues of $8,601,102 for the six months ended June
30, 1998, a decrease of 1.93% over the prior year's revenues of $8,770,173 for
the same six month period. This decline can be attributed to the 16.2% decline
in the average price of product sold from $.99 per gallon to $.83 per gallon
resulting from the unusually warm winter in the Northeast occasioned by abnormal
Pacific weather patterns. Despite the 15.0% decrease in heating degree days, the
Company has built a customer base of
21
<PAGE>
16,350 accounts and increased the sale of products from 8,839,058 gallons for
the six months ended June 30, 1997 to 10,002,418 gallons for the same six month
period ended June 30, 1998.
Gross profit margin, as a percentage of revenues, for the six months ended
June 30, 1998, remained relatively constant. The Company experienced a decline
of no more than 1.05% in gross profit margin from 23.44% one year ago to 22.39%
in 1998 as a result of purchasing inventory, setting product sale's prices, and
managing operations based on an unchanging gross profit margin.
Selling, General and Administrative expenses decreased by $18,392 or 1.38%
from $1,332,598 for the six months ended June 30, 1997, to $1,314,206 for the
six months ended June 30, 1998. This decrease was primarily attributable to
enhanced operational efficiency. Total costs and expenses moderately decreased
by $21,168 in the six months ended June 30, 1998.
Operating income for the six months ended June 30, 1998 was $416,965, a
decrease of 17.16% under the Company's income of $503,318 for the six months
ended June 30, 1997. This was the result of lower sales due to lower prices and
adherence to constant gross profit margins. There were also operating
efficiencies in lower Selling, General and Administrative costs which held the
decrease in operating income to a minimum.
Net Income for the six months ended June 30, 1998, decreased by $63,662 to
$201,611 as compared to the previous year. This decrease in net income also was
a result of lower sales due to lower sales prices and adherence to constant
gross profit margins. The June 30, 1997 net income included $39,762 gain on the
sale of equipment.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996.
The financial data for the fiscal year ending December 31, 1996, represents
the operations of Able Oil Company and related entities. Pursuant to Regulation
S-B these entities in aggregate were considered the predecessor of Able Energy,
Inc. and Subsidiaries. in order to have a proper comparison of Fiscal 1996 and
1997, the December 31, 1996 financial statements were retroactively restated to
include Able Oil Company and related entities.
Revenues for the year ended December 31, 1997 were $16,308,992, a 25.6%
increase over the prior year revenues of $12,981,457. The increase in revenue
for the year ended December 1997 was due in part to the October 1996 acquisition
of Connell's Fuel Co., in Newton, New Jersey. The Company also increased its
customer base through intensive marketing and advertising promotions offering
the Company's full home heating services at discounted prices. In addition, the
revenue for 1997 reflects the added revenue of the Company's affiliates, Able
Propane, A&O Environmental, Able Melbourne and Able Montgomery. Although these
affiliates were established in or about July 1996, the revenue generated by
these entities is most apparent in the financial statements for the subsequent
twelve month period ended December 31, 1997.
The Company's gross profit margin for the year ended December 31, 1997 was
20.5% of sales, an improvement over the 18.5% margin for the comparable period
ended December 31, 1996. This positive change can be attributed to a 4.2%
decrease in the cost of inventory sold.
Selling General & Administration for the Company increased by 45.3% from
$1,889,905 to $2,745,963 for the year ended December 31, 1997 as compared to
December 31, 1996. This increase is attributable to the acquisition of Connell's
Fuel in Newton, New Jersey which incurred expenses of $828,622, as well as the
start-up costs associated with the establishment of Able Propane and Able
Montgomery which were in operation for a full year in 1997.
Operating income for the year ended December 31, 1997 was $217,588 a
decrease of 15.1% over the Company's operating income for the previous year
ended December 31, 1996 of $256,411. This decrease in income from operations is
directly related to the organizational and start-up costs associated with the
22
<PAGE>
addition of the aforementioned start-up entities, which had an operating loss of
$181,389. Further costs were incurred in establishing the Company's franchising
program, as well as investments in the Company's infrastructure.
Net income for the year ended December 31, 1997 was $76,061 as compared to
$227,596 for the year ending December 31, 1996. This decrease in net income is
primarily attributable to the additions of the start-up entities, in addition,
to a lessor extent, the acquisition of Connell's Fuel Co., which increased
Selling General and Administrative expenses.
Amortization relates to the amortization of customer lists, being amortized
over 15 years and a Non-Compete Agreement amortized over 5 years, per the
agreement. These relate to the acquisition of Connell's Fuel Co. in October
1996. The amortization of the customer list is a non-cash expense. The
amortization expense for the year ended December 31, 1997 was $74,780, as
compared to $12,463 for two months in the year ended December 31, 1996.
Depreciation expense for the year ended December 31, 1997 was $320,026 which
is a 28.1% increase over the prior year's $249,928. This was due to the October
1996 acquisition of Connell's Fuel Co., and a full year of the above referenced
start -up companies which resulted in an aggregate expense of $69,934, and the
purchase of additional trucks and other equipment.
Interest expense for the year ended December 31, 1997 was $211,133 as
compared to $80,586 for the year ended December 31, 1996. This increase was due
to the October 1996 acquisition of Connell's Fuel Co. and the costs associated
with the start-up entities.
During the year ended December 31, 1997, the Company sold three trucks for a
total selling price of $114,490. The book value of these trucks was $42,386,
resulting in a gain on sales of equipment of $72,104. The terms of sale were
cash.
CONCENTRATION OF REVENUE WITH GUARANTEED MAXIMUM PRICE CUSTOMERS
Approximately 5% of the Company's heating oil volume is sold to individual
customers under an agreement pre-establishing the maximum sales price of oil
over a twelve month period. The maximum price at which oil is sold to these
capped-price customers is renegotiated in each Spring to reflect the current
market conditions. The Company currently enters into forward purchase contract
for a substantial majority of the oil it sells to these capped-price customers
in advance and at a fixed cost. Should events occur after a capped-sales price
is established that increases the cost of oil above the amount anticipated,
margins for the capped-price customer whose oil was not purchased in advance
would be lower than expected, while those customers whose oil was purchased in
advance would be unaffected. Conversely, should events occur during this period
that decrease the cost of oil below the amount anticipated, margins for the
capped-price customers whose oil was purchased in advance could be higher than
expected, while those customers whose oil was not purchased in advance would be
unaffected or higher than expected. The capped-price customers payments are
received in advance and are shown on the balance sheet as customer deposits
current liabilities.
LIQUIDITY AND CAPITAL RESOURCES
For the six month period ended June 30, 1998, compared to the six months
ended June 30, 1997, the Company's cash position increased by $157,603, or
38.66%, from June 30, 1997 balance of $407,637 to June 30, 1998 balance of
$565,240. For the six months ended June 30, 1998, cash was generated through
operations and collection of accounts receivables. For the six months ended June
30, 1997, cash was generated through operations, net income and a collection of
accounts receivable.
For the year ended December 31, 1997 compared to the year ended December 31,
1996 cash increased $9,062 (6.2%), from $146,842 at December 31, 1996 to
$155,904 at December 31, 1997. For the year ended December 31, 1997 cash was
generated through operations, principally from customer advance
23
<PAGE>
payments and net income. For the year ended December 31, 1996 cash was generated
through operations and net income. In 1996, there was an increase in borrowings
which were used principally in the acquisition of a fuel company in October
1996.
The increase in cash from December 31, 1997 to June 30, 1998 was $409,336,
and from December 31, 1996 to June 30, 1997 was $247,598. This was due to
seasonal fluctuations with greater sales and net income realized during the
first six months of the year.
As a result of a refinancing with its primary financial institution, the
Company has access to $500,000 of credit line funds. The Company's credit line
had been increased from $350,000 to $500,000 at 1/2% above prime and its current
outstanding credit line and other debt with the bank has been rolled into a 3
year term loan in the principal amount of $675,000 bearing interest at a rate of
approximately 8 1/2% per annum. As of July 2, 1998, $200,000 of this line had
been used by the Company.
The Company will receive net proceeds from this Offering in an amount
estimated to be $5,818,750. The Company believes that the net proceeds of the
Offering, coupled with the refinancing and income from operations, will fulfill
the Company's working capital needs for the next 24 months. As the Company
continues to grow, bank borrowings, or other debt placements and equity
offerings may be considered, in part, or in combination, as the situation
warrants.
On the Effective Date, Timothy Harrington and Christopher P. Westad will
enter into three year employment agreements with the Company. Timothy Harrington
will be retained as Chief Executive Officer of the Company at an annual salary
of $225,000. Christopher Westad will be retained as President of the Company at
an annual salary of $100,000. Each of the Messrs. Harrington and Westad are
entitled to bonuses pursuant to their employment agreements if the Company meets
certain financial targets based on sales, profitability and good management
goals as predetermined by the Board of Directors or compensation committee and
other subjective criteria as determined by the Board of Directors or
compensation committee. " See Management; Employment Agreements."
SEASONALITY
The Company's operations are subject to seasonal fluctuations with a
majority of the Company's business occurring in the late Fall and Winter months.
Approximately 70% of the Company's revenues are earned and received from October
through March, and the overwhelming majority of such revenues are derived from
the sale of home heating oil. However, the seasonality of the Company's business
is offset, in part, by the increase in revenues from the sale of diesel and
gasoline fuels during the spring and summer months due to the increased use of
automobiles and construction apparatus.
From May through September, Able Oil and Able Montgomery experience
considerable reduction of retail heating oil sales. Similarly, Able Propane can
experience up to 80% decrease in heating related propane sales during the months
of April to September, which is offset somewhat by an increase of pool heating
and cooking fuel.
A & O's revenues coincide with home sales in the northeastern United States.
Since most home sales occur between March and November, demand for tank testing,
tank replacement, and Phase I site surveys performed in connection with home
sales increases during this period.
Over 90% of Able Melbourne's revenues are derived from the sale of diesel
fuel for construction vehicles, and commercial and recreational sea-going
vessels during Florida fishing season, which begins in April and ends in
November. Only a small percentage of Able Melbourne's revenues are derived from
the sale of home heating fuel. Most of these sale occur from December through
March, Florida's cooler months.
24
<PAGE>
BUSINESS
GENERAL
Able Energy was incorporated on March 13, 1997 in the state of Delaware, to
act as a holding company for five operating subsidiaries: Able Oil; Able
Propane; Able Melbourne; Able Montgomery and A&O.
The Company's operating entities are engaged in the retail distribution of,
and the provision of services relating to, (i) fuel oil, (ii) propane gas, and
(iii) natural gas through a marketing alliance agreement with AllEnergy
Marketing Company LLC, a division of New England Electric Systems, Inc. In
addition to selling home energy products, the Company installs and repairs home
heating equipment, provides environmental services for residential and
commercial customers and also markets other petroleum products to commercial
customers, including diesel fuel, gasoline and lubricants.
In fiscal year 1997, sales of home heating oil accounted for approximately
68% of the Company's revenues. The remaining 32% of revenues were from sales of
gasoline, diesel fuel, kerosine, propane, and environmental services and related
sales. For the six month period ended June 1998, sales of home heating oil
accounted for 69% of the Company's revenues. The Company serves approximately
25,000 home heating oil customers from four locations, of which two are located
in New Jersey, one is located in Pennsylvania and one is located in Florida.
The Company also provides installation and repair of heating equipment as a
service to its customers. The Company considers the provision of service and
installation services to be an integral part of its basic fuel oil business.
Accordingly, the Company regularly provides various service incentives to obtain
and retain customers. The Company provides home heating equipment repair service
on a twenty-four hours-a-day, seven days-a-week basis, generally within two
hours of request. Except in isolated instances, the Company does not provide
service to any person who is not a customer.
The Company employs a focus marketing strategy which the Company believes
has been the key to its success. The Company believes that it is able to obtain
new customers and maintain existing customers by offering its concept of full
service home energy products at discount prices, providing quick response
refueling and repair operations, providing automatic deliveries to customers by
monitoring historical use and weather patterns, and by providing customers a
variety of payment options. The Company regularly provides various service
incentives to obtain and retain customers. The Company aggressively promotes its
service through a variety of direct marketing media, including mail and
telemarketing campaigns, by providing discounts to customers who refer new
customers to the Company, and through an array of advertising, including
television advertisements and billboards, which aim to increase brand name
recognition.
The Company intends to use a substantial portion of the proceeds of this
offering to expand its operations. The Company's strategy to expand its
operations includes (i) the acquisition of select operators in the Company's
present markets as well as other markets; (ii) capturing market share from
competitors through increased advertising and other means; (iii) diversifying
its products; (iv) diversifying its customer base; and (iv) replicating its
marketing and service formula in new geographic areas either directly or through
franchise arrangements. The Company may also enter into marketing alliances with
other entities in product areas different than the Company's current product
mix.
RETAIL FUEL OIL
The Company's retail fuel oil distribution business is conducted through its
subsidiaries Able Oil, Able Melbourne and Able Montgomery. The Company serves
both residential and commercial fuel oil accounts. The Company sells premium
quality home heating oil to its residential customers offering delivery seven
days a week. To its commercial customers, in addition to selling home heating
oil, the Company sells diesel fuel, gasoline and kerosene. The Company also
provides an oil burner service that is available 24 hours a
25
<PAGE>
day for the maintenance, repair and installation of oil burners. These services
are performed on an as needed basis. Customers are not required to enter into
service contracts to utilize the Company's service department.
Approximately 50% of the Company's customers receive their home heating oil
pursuant to an automatic delivery system without the customer having to make an
affirmative purchase decision. These deliveries are scheduled by computer, based
on each customer's historical consumption patterns and prevailing weather
conditions. The Company delivers home heating oil approximately six times each
year to the average customer. The Company's bills customers promptly upon
delivery or receives payment upon delivery. The Company's customers can pay for
fuel deliveries with cash or with their credit card. Customer may also apply for
an Able Oil credit card offered through Beneficial Finance Company which permits
the customer to pay his or her balance within 60 days of purchase without
accruing finance charges. The Company receives its payment from credit card
companies within two days, less a processing charge of 2% of the payment amount.
Approximately 1,500 customers have the Able Oil credit card.
In addition, approximately 5% of the Company's total sales are made to
customers pursuant to an agreement which pre-establishes the maximum annual
sales price of fuel oil and is paid by customers over a ten month period in
equal monthly installments. Such prices are renegotiated in April of each year
and the Company has historically purchased fuel oil for these customers in
advance and at a fixed cost.
The Company delivers fuel with its own fleet of 18 custom fuel oil trucks
and four owner-operator fuel oil delivery trucks. The Company's fuel trucks have
fuel capacities ranging from 3,000 to 8,000 gallons. Each vehicle is assigned to
a specific delivery route, and services between 4 and 40 customer locations per
day depending on market density and customers' fuel requirements. The Company
also operates seven Company owned service vans and four owner-operated service
vans, which are equipped with state of the art diagnostic equipment necessary to
repair and/or install heating equipment. One Company owned van is equipped to
perform environmental testing of underground tanks for its customers. The number
of customers each van serves mostly depends upon the number of service calls
received on any given day.
ABLE OIL
Able Oil was established in 1989 and is the Company's largest subsidiary,
accounting for approximately 87% of the Company's total revenues in 1997. Able
Oil is located in Rockaway, New Jersey, and serves just under 22,000 oil
customer accounts throughout northern New Jersey, mostly in Morris, Sussex,
Warren, Passaic and Essex counties, from its distribution locations in Rockaway
and Newton, New Jersey. Of these accounts, approximately 90% are residential
customers and 10% are commercial customers.
Generally, 18 of the Company's fuel oil trucks are reserved for use by Able
Oil, of which nine trucks operate from the Rockaway facility and six trucks
operate from the Newton facility. In addition, Able Oil utilizes the services of
four owner-operated trucks. Each owner operator is under contract; they are
responsible for all of the vehicle operating expenses including insurance
coverage. All of the trucks have the Company's logo on them.
Able Oil's 18 fuel oil delivery trucks, and the four owner-operator trucks,
acquire fuel inventory at the Company's facilities in Rockaway and Newton.
Dispatch of fuel oil trucks is conducted at both the Rockaway and Newton
facilities. Billing is conducted from Able Oil's corporate headquarters in
Rockaway.
The Rockaway and Newton facilities have the capacity to store 1.5 million
gallons and 200,000 gallons of fuel, respectively. During seasons where demand
for heating oil is higher, or when wholesale oil prices are favorable, a
slightly larger inventory is kept on hand. However, Management generally
believes that short inventory life and high inventory turnover enables the
Company to rapidly respond to changes in market prices. Thus, Management employs
"just in time" inventory practices and rarely stores fuel to capacity levels.
However, in June of 1998, oil prices have reached a historic low and the Company
has entered into an in-tank storage agreement with Mieko Trading Co., to store
1.5 million gallons of fuel oil at
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the Company's facility in Rockaway, New Jersey. The Company has entered into an
agreement with Mieco to purchase all of such fuel oil from November 1998 through
March 1999. Additional fuel oil purchases are made daily on the spot market
using electronic funds transfers. Able Oil carts its fuel purchases from
wholesale purchase sites to the Rockaway and Newton facilities with two
tractor-trailer tankers owned by the Company, and by two owner-operated
tractor-trailer tankers that are used on an as needed basis. These two
owner-operated tankers are under contract and bear the Able logo or name.
Able Oil's oil burner service operates exclusively out of the Newton
facility. Able Oil dispatches a total of eleven service vans, four of which are
subcontracted from owner-operators.
ABLE MONTGOMERY
Able Montgomery was established in July 1996 as part of the Company's
strategy to expand into nearby markets. Able Montgomery is located in Horsham,
Pennsylvania, and serves approximately 1,200 fuel oil accounts in Montgomery and
Bucks counties. In 1997, revenues generated by Able Montgomery accounted for
approximately 3% of the Company's total revenues. Able Montgomery provides 24
hour oil burner service for its customers through a subcontracting agreement it
has with Home Comfort Mechanical, Inc.
Able Montgomery serves its customers with one fuel delivery truck with the
capacity to store 3,000 gallons of fuel oil. Because it has no storage capacity,
Able Montgomery purchases oil on the spot market at local facilities which is
paid by electronic fund transfers from the Company's headquarters in Rockaway,
NJ. The only fuel oil inventory maintained by Able Montgomery is what is stored
in its fuel oil truck.
ABLE MELBOURNE
Able Melbourne was established in July of 1996, and is located in Cape
Canaveral Florida. Presently, revenues from Able Melbourne account for
approximately 5.3% of the Company's total revenues. Able Melbourne is engaged
primarily in the sale of diesel fuel for commercial fleet fueling and other
on-road vehicles, and dyed diesel fuel, which is used for off-road vehicles and
purposes, including commercial and recreational fishing vessels, heating oil and
generator fuel. Additionally, a small portion of Able Melbourne's revenues are
generated from the sale of home heating oil, lubricants and lubricant products.
Able Melbourne serves approximately 300 customer accounts in Brevard County,
Florida, primarily in the Cape Canaveral Area. In 1997, six of Able Melbourne's
customers, Beyel Brothers Crane Service, Beyel Marind, Diamond Royale, Frank-lin
Excavating, Inc., CG Reed, S&S Seafood and ABC Landclearing Development,
individually, accounted for more than five percent of Able Melbourne's annual
revenues.
Able Melbourne delivers fuel with two fuel delivery trucks which are capable
of storing 6,000 gallons of fuel in aggregate. Because Able Melbourne's peak
season is at the opposite time of the year than the rest of the Company, during
this season, Able Melbourne uses one of Able Oil's trucks to meet its demand.
Currently, Able Melbourne does not have facilities to store fuel oil beyond what
is held on its trucks, and thus, purchases fuel inventory from local refineries.
However, since Able Melbourne is located only three miles from port storage, the
lack of inventory capacity is not material to the Company's operations or
revenue.
RETAIL PROPANE DISTRIBUTION
The Company is engaged in the retail distribution of liquid propane gas and
propane equipment, and provides services related thereto through its subsidiary
Able Propane. Able Propane, based in Rockaway, New Jersey, was established 1996
as part of the Company's efforts to increase market penetration through
diversification. Able Propane serves approximately 1,100 accounts, the majority
of which are located in northern New Jersey.
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Although propane can be used for virtually all household and business
utility applications, of Able Propane's customers, approximately 60% use propane
for hot water heating and cooking; approximately 10% use propane for pool
heating; and approximately 30% use propane for home heating. Although burned as
a gas, propane is transported as a liquid and stored in tanks that vaporize the
liquid for use. Able Propane provides its customers with such tanks at no
charge, and by doing so, remains such customer's exclusive supplier of propane.
Able Propane employs a delivery system similar to the Company's retail oil
distribution business, whereby customers receive propane deliveries pursuant to
an automatic delivery system without the customer having to make an affirmative
purchase decision. These deliveries are scheduled by computer, based on each
customer's historical consumption patterns and prevailing weather conditions.
With an increased marketing effort, the Company believes that Able Propane
has the opportunity to gain a larger share of the New Jersey energy market by
converting electricity and fuel oil users to propane, and by encouraging owners
of newly-constructed buildings to select propane as their buildings' energy
source. The Company also believes that the use of propane as an alternate fuel
for cars, trucks and public transportation to meet clean air requirements, poses
a great opportunity for future growth.
Able Propane's base of operations is located in Rockaway, New Jersey, at the
Company's headquarters. Currently, Able Propane has no propane storage
facilities, and its only investment in propane inventory is what can be stored
on its one propane delivery truck. The delivery truck has the capacity to
deliver 3,000 gallons of propane, and can service approximately 35 customers per
day. Able Propane purchases wholesale propane on the spot market at local
facilities. The Company is considering plans to lease or build a facility that
would enable Able Propane to store approximately 30,000 gallons of propane.
ENVIRONMENTAL CONSULTING AND ENGINEERING
The Company engages in the business of environmental consulting and
engineering through its subsidiary, A & O. A & O, located in Rockaway, New
Jersey, was established in 1995 to capitalize on opportunities created by
increased environmental regulation in the commercial and industrial real estate
market. The Company believes A & O complements the business activities of its
other operating subsidiaries.
A & O specializes in fuel tank testing and remediation. Its services include
primarily: (i) tank testing which includes any tank which stores any kind of
hazardous material through a number of methods, including automated precision
testing, perimeter soil testing, tracer tight tank testing, and petro-tite
testing; (ii) tank installation, cleaning and removal; (iii) Phase I
(evaluation) and Phase II (remediation) assessments; (iv) soil and water
sampling, removal and disposal; and (v) full remediation service for home
heating, gasoline and diesel tanks.
A & O's operations and dispatch are conducted through Company's headquarters
in Rockaway. A & O owns one service van specially equipped with high-tech tools
necessary for on-site environmental testing and evaluation, one dump truck and
trailer, one backhoe, two utility vehicles and one pump-out tank truck to
conduct oil removal, excavation and tank installation operations.
FUNDAMENTAL CHARACTERISTICS OF THE COMPANY'S BUSINESS
UNAFFECTED BY GENERAL ECONOMY
The Company's business is relatively unaffected by business cycles. Because
fuel oil, propane and gasoline are such basic necessities, variations in the
amount purchased as a result of general economic conditions are limited.
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CUSTOMER STABILITY
The Company has a relatively stable customer base due to the tendency of
homeowners to remain with their traditional distributors. In addition, a
majority of the home buyers tend to remain with the previous owner's
distributor. As a result, the Company's customer base each year includes most
customers retained from the prior year, or home buyers who have purchased from
such customers. Like many other companies in the industry, the Company delivers
fuel oil and propane to each of its customers an average of approximately six
times during the year, depending upon weather conditions and historical
consumption patterns. Most of the Company's customers receive their deliveries
pursuant to an automatic delivery system, without the customer having to make an
affirmative purchase decision each time home heating oil or propane is needed.
In addition, the Company provides home heating equipment repair service on a
seven-days-a-week basis.
No single customer accounts for 10% or more of the Company's consolidated
revenues.
CONVERSION TO NATURAL GAS
The rate of conversion from the use of home heating oil to natural gas is
primarily affected by the relative prices of the two products, and the cost of
replacing oil fired heating systems with one that uses natural gas. The Company
believes that approximately 1% of its customer base annually converts from home
heating oil to natural gas. Even when natural gas had a significant price
advantage over home heating oil, such as in 1980 and 1981 when there were
government controls on natural gas prices or during the Persian Gulf Crisis in
1990 and 1991, the Company's customers converted to natural gas at only a 2%
annual rate. During the latter part of 1991 and through 1995, natural gas
conversions have returned to their 1% historical annual rate as the prices for
the two products have been at parity.
In an effort to insulate itself against natural gas conversions and as part
of the Company's efforts to expand its product line, the Company, pursuant to a
marketing alliance with AllEnergy, now provides natural gas service as an option
to its customers (See Business-Expansion and Acquisitions). AllEnergy is a
subsidiary of New England Electric Systems, Inc. ("NEES"), a utility company
listed on the New York Stock Exchange. Recently, the New Jersey Board of Public
Utilities deregulated the sale and supply of natural gas to residential and
commercial customers. Natural gas customers can now choose from different
providers of natural gas. Natural gas providers, such as the Company, will
deliver the gas through the existing network of underground gas pipes owed and
maintained by the local gas utility.
OIL PRICE VOLATILITY
Although prices of energy sources have been volatile, historically, this has
not affected the performance of the Company because it has been able to pass
substantially all wholesale cost increases along to its customers. While
fluctuations in wholesale prices have not significantly affected demand to date,
it is possible that significant wholesale price increase could have the effect
of encouraging conservation of energy resources. If demand was reduced and the
Company was unable to increase its gross profit margin or reduce its operating
expenses, the effect of such decrease in demand would be a reduction of net
income.
SEASONALITY
The Company's business is directly related to the heating needs of its
customers. Accordingly, the weather can have a material effect on the Company's
sales in any particular year. Generally, however, the temperatures in the past
thirty years have been relatively stable, and as a result, have not had a
significant impact on the Company's performance, except on a short-term basis.
In 1997 "El Nino" caused one of the warmest winters on record which impacted
home heating oil sales during the 1997-1998 winter.
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Approximately 70% of the Company's revenues are earned and received from
October through March, and the overwhelming majority of such revenues are
derived from the sale of home heating oil. During the spring and summer months,
revenues from the sale of diesel and gasoline fuels increase due to the
increased use of automobiles and construction apparatus.
Each of the Company's divisions are seasonal. From May through September,
Able Oil and Able Montgomery experience considerable reduction of retail heating
oil sales.
Able Propane can experience up to 80% decrease in heating related propane
sales during the months of April to September, which is offset somewhat by an
increase of pool heating and cooking fuel.
A & O's revenues coincide with home sales in the northeastern United States.
Since most home sales occur between March and November, demand for tank testing,
tank replacement, and Phase I site surveys performed in connection with home
sales increases during this period.
Over 90% of Able Melbourne's revenues are derived from the sale of diesel
fuel for construction vehicles, and commercial and recreational sea-going
vessels during Florida fishing season, which begins in April and ends in
November. Only a small percentage of Able Melbourne's revenues are derived from
the sale of home heating fuel. Most of these sales occur from December through
March, Florida's cooler months.
WHOLESALE SUPPLIERS
Notwithstanding the agreement between the Company and Mieco for the supply
of Number 2 Heating Oil, the Company does not have agreements or contracts for
the supply of fuel. The Company purchases its fuel on the spot market. The
Company satisfies its inventory requirements with nine different suppliers, the
majority of which have significant domestic fuel sources, and many of which have
been suppliers to the Company for over 5 years. The Company's current suppliers
are Ameranda Hess Corporation, Bayway Refining Co., Petron Oil Corporation, Star
Enterprises, Louis Dreyfus Energy, Koch Industries, Co., Valero Marketing and
Supply Co., and Sun Co., Inc. (R&M). The Company monitors the market each day
and determines when to purchase its oil inventory and from whom. As of June
1998, the Company began storing supplies of fuel equal to a month's sales of
fuel because of unusually low fuel prices.
Two of these suppliers provided Able Oil with approximately 60% of its
heating oil requirements for the year ended December 31, 1997.
Sun Oil Company provided Able Montgomery with approximately 100% of its
heating oil requirements for the year ended December 31, 1997. Coastal Refining
& Marketing, Inc., provided Able Melbourne with approximately 99% of its diesel
fuel product requirements for the year ended December 31, 1997. Two major
suppliers provided Able Melbourne with 67% and 33%, respectively, of its
lubricant and related product requirements for the year ended December 31, 1997.
Two major suppliers, Ferrellgas Partners, L.P. and Propane Power, provided Able
Propane with approximately 50% each, of its propane requirements for the year
ended December 31, 1997.
Management believes that if the Company's supply of any of the foregoing
products was interrupted, the Company would be able to secure adequate supplies
from other sources without a material disruption in its operations. However,
there can be no assurance that adequate supplies of such products will be
readily available in the future.
TRUCK PURCHASES AND MAINTENANCE
The Company presently orders and purchases its fuel oil trucks from two
companies which manufacture trucks suitable for the Company's operations. The
Company has the option to purchase or lease standard equipment fuel trucks. The
typical configuration of the Company's fuel trucks is a Freightliner with a
3,000 gallon multi-compartment aluminum tank, a vapor recovery system and a
device that records
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fuel flow from the storage compartments. Each truck carries the Company's
registered logo emblazoned on its side.
Service and environmental testing vehicles are standard commercial vans
which are obtained from a number of sources. These vehicles also carry the
Company logo.
Generally, the Company relies upon equipment warranties, fixed fee service
contracts and on-site repairs for the maintenance of the Company's fleet of
vehicles. To date, the Company has not experienced significant downtime on the
any of its fuel trucks.
COMPETITION
The Company's business is highly competitive. In addition to competition
from alternative energy sources, the Company competes with distributors offering
a broad range of services and prices, from full service distributors similar to
the Company, to those offering delivery only. Competition with other companies
in the propane industry is based primarily on customer service and price.
Longstanding customer relationships are typical in the retail home heating oil
and propane industry. Many companies in the industry, including the Company,
deliver fuel oil or propane to their customers based upon weather conditions and
historical consumption patterns without the customers having to make an
affirmative purchase decision each time fuel oil or propane is needed. In
addition, most companies, including the Company, provide equipment repair
service on a twenty-four hours-a-day basis, which tends to build customer
loyalty. As a result, the Company may experience difficulty in acquiring new
retail customers due to existing relationships between potential customers and
other fuel oil or propane distributors.
MARKETING
The Company employs a dynamic marketing strategy which the Company believes
has been the key to its success. The Company believes that it is able to obtain
new customers and maintain existing customers by offering its full service home
energy products at discount prices, providing quick response refueling and
repair operations, providing automatic deliveries to customers by monitoring
historical use and weather patterns, and by providing customers a variety of
payment options. To expand its customer base and aggressively promote its
service, the Company engages in direct marketing campaigns, advertises regularly
and encourages referrals.
The Company has successfully expanded its customer base by employing a
variety of direct marketing tactics, including telemarketing campaigns, mass and
direct mailings, and by distributing hand-bills and promotional items, such as
refrigerator magnets, sweatshirts and hats. Additionally, the Company's delivery
personnel is an integral part of the Company's direct marketing activities.
While in the field, drivers isolate potential new customers by taking note of
where the Company is not servicing accounts, and act as salespersons for the
Company. The Company offers its drivers an incentive payment of $.0025 per
gallon of oil delivered to new customers obtained by the driver, plus $20 for
each new automatic delivery customer and $10 for each conversion of an existing
customer to automatic delivery.
The Company uses advertising campaigns to increase brand recognition and
expand its customer base, including radio and television advertisements,
billboards, and newsprint and telephone directory advertisements. Additionally,
the Company utilizes its fleet of fuel delivery trucks and service vans as
moving advertisements by emblazoning them with the Company's logo.
Historically, referrals have been an important part of the Company's efforts
to expand its business and the Company offers incentives to customers who refer
business. Customers who refer business receive either $30 or 25 gallons of
heating oil at no charge for each new customer referred. The Company also
encourages civic and religious organizations to refer business to the Company.
As an incentive, the Company pays such organizations a donation for each of its
members who become customers and a stipend based upon the members' fuel
consumption.
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EXPANSION AND ACQUISITIONS
Currently, the majority of the Company's revenues are generated from the
Company's retail fuel oil division. While the Company intends to expand its
retail fuel oil operations, the Company goal is to operate as a total energy
provider and has plans to expand its operations into the sale and distribution
of additional energy sources. It is anticipated that initial acquisitions will
be made in the Company's current geographic area (the Northeast United States);
however, the Company would consider acquisitions in other geographic areas if
worthwile acquisition candidates present themselves.
The Company intends to use a substantial portion of the proceeds of this
offering to expand its operations. The Company's strategy to expand its
operations includes (i) the acquisition of select operators in the Company's
present markets as well as other markets; (ii) capturing market share from
competitors through increased advertising and other means; (iii) diversifying
its products; (iv) diversifying its customer base; and (iv) replicating its
marketing and service formula in new geographic areas either directly or through
franchise arrangements. The Company may also enter into joint ventures with
other entities in product areas different than the Company's current product
mix.
The Company has developed a strategy to capture market share and diversify
its customer base and product line through the acquisition and integration of
businesses in the Company's existing markets or in new markets. The Company
believes that many of the proprietors of businesses which compete with the
Company's operating divisions are in established family businesses and may be
receptive to selling their operations. Another potential source of acquisitions
are companies which are owned by entrepreneurs who find expansion within the
petroleum products industry difficult, either operationally or financially, or
who have other investment opportunities.
More specifically, the Company intends to acquire two types of distributors.
The first type are relatively small distributors which management believes could
be easily integrated into the Company's operations. Management believes that
such distributors could benefit from significant economies of scale created by
the centralization of purchasing, marketing, credit, data processing and other
administrative functions. The second type of distributor consists of larger,
stand-alone businesses which could not be integrated but would most likely be
located in new markets or distribute product lines not offered by the Company.
The Company expects that acquisitions of these businesses would provide not only
attractive investment returns, but also provide hubs for future expansion.
The Company also intends to diversify its customer base and expand its
operations by replicating its marketing formula in new geographic areas by
franchising its delivery system and techniques. The Company will operate its
franchise operations pursuant to franchise agreements with franchisees. Under
these franchise agreements, generally, franchisees will be required to: (i) pay
to the Company an initial franchise fee, annual fees consisting of a percentage
of gross sales and/or gallons of fuel sold; (ii) purchase insurance; (iii)
purchase from the Company promotional materials and energy products during the
life of the franchise. In return, the Company will provide franchisees with
guidelines and specifications for the operations of the franchise, initial
training, licenses for the use of the Company's name, service marks and
propriety marks, assistance with site location, and advice on advertising and
other promotional techniques. As of the date of this prospectus, no such
franchises have been sold by the Company and there can be no assurance that any
will be sold in the future. See "Business---Franchises."
The Company believes that recent and anticipated deregulation of public
utility companies in the Company's markets has created a window of opportunity
for the Company to expand into new product areas, particularly the retail sale
of electricity and natural gas. The Company believes it can capitalize on these
opportunities through joint ventures with companies which have previously been
successful in such areas although there can be no assurance that the Company's
expansion into the retail sale of electricity and natural gas will be
successful.
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In March 1998, the Company entered into a 36 month marketing alliance
agreement (the "Marketing Agreement") with AllEnergy Marketing Company, LLC
("AllEnergy"), a limited liability company organized under the laws of the state
of Massachusetts. Under the Marketing Agreement, the Company will market and
sell natural gas to residential and commercial customers in New Jersey. The
Company will receive from AllEnergy a percentage of the gross profit margin for
sales generated by the Company. Also, pursuant to the Marketing Agreement,
should the New Jersey Board of Public Utilities approve a program for the retail
sale of electricity, the Company has the option to market and sell electrical
service under similar terms and conditions. There can be no assurance that the
Company will generate or receive any revenues from this agreement. The agreement
does not have any minimum purchase requirements and may be terminated by either
party at any time.
EMPLOYEES
From October through March, the Company's peak season, the Company employs
approximately 63 persons. From April through September, the Company employs
approximately 44 persons. Currently, there are no organized labor unions
representing any of the employees of Company or any of its related companies.
Currently the Company employs 44 full time employees and 13 part time employees.
PATENTS AND TRADEMARKS
Able Oil owns the exclusive right and license to use, and to license others
to use, the proprietary marks, including the service mark "Able Oil
- -Registered Trademark-" (and design) ("Proprietary Marks"). The "Able Oil
- -Registered Trademark-" service mark and design was registered under Classes 37
and 39 of the Principal Register of the U.S. Patent & Trademark Office ("USPTO")
on April 30, 1996 (registration No. 1,971,758). In addition, Able Oil
established certain common law rights to the Proprietary Marks through its
continuous, exclusive and extensive public use and advertising. The Proprietary
Marks are not registered in any state.
Presently there is no effective determination by the USPTO, Trademark Trial
and Appeal Board, the trademark administrator of any state, or court regarding
the Proprietary Marks, nor is there any pending interference, opposition or
cancellation proceeding or any pending litigation involving the Proprietary
Marks or the trade names, logotypes, or other commercial symbols of Able Oil.
There are no agreements currently in effect that significantly limit the rights
of Able Oil to use or license the use of the Proprietary Marks.
PROPERTIES AND FACILITIES
The Company's corporate headquarters are located in a 4,000 square foot
facility in Rockaway, New Jersey. This facility accommodates the Company's
corporate, administrative, marketing and sales personnel as well as truck yard
space and oil storage space for Able Oil. The lease expires July 31, 1999 and
the annual rent is $14,400 plus $.01 per gallon of throughput at the facility up
to 10,000,000 gallons. After throughput exceeds 10,000,000 gallons the rent is
calculated as $.007 per gallon of throughput. The Company is currently in
negotiations with the owner to purchase the property. While the landlord has
agreed to indemnify the Company from environmental violations prior to the
Company's occupancy, the Company is responsible for maintaining the facilities
in compliance with all environmental rules and laws. The Company also owns two
buildings, totaling 4,512 square feet, consisting of wood frame facilities
located at 38 Diller Avenue, Newton, New Jersey that serves as a supply depot,
storage area administrative offices and service facility.
Able Montgomery leases a 275 square foot facility that serves as a storage
facility and administrative offices located at 1250 Easton Road, Horsham Road,
Pennsylvania, and is governed by a lease with annual rent of $5,576.04. The
Company does not store fuel oil at this location with the exception of what is
kept in the delivery trucks. The office is conveniently located within three
miles of the wholesale supplier. The
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Company is responsible for maintaining the facilities in compliance with all
environmental rules and regulations.
Able Melbourne leases a 4,000 square foot concrete and aluminum facility
that serves as a storage facility, a service facility and administrative
offices, located at 735 Snapper Road, Cape Canaveral, Florida and is governed by
an oral, month-to-month lease with annual rent of $2,862. The Company does not
store fuel oil at this location with the exception of that which is kept in the
delivery trucks. This facility is conveniently located within three miles of its
wholesale supplier. The Company is responsible for maintaining the facilities in
compliance with all environmental rules and laws.
Able Propane leases a 619 square foot facility, located at 318 Route 46,
Dover, New Jersey, which houses its administrative offices. No propane is stored
at this facility. The lease expires September 14, 1999, and the annual rent is
$8,851.80 for the period of September 14, 1997 to September 14, 1998, and
$9,736.80 for the period of September 15, 1998 to September 14, 1999. In
addition, the Company must pay 20.89% of the costs of refuse collection, common
area maintenance and insurance. The Company is responsible for maintaining the
facilities in compliance with all environmental rules and laws. The Company
intends to relocate the propane division to the Company's existing facilities in
Rockaway, New Jersey that will house not only administrative offices but also
service and supply facilities.
ENVIRONMENTAL CONSIDERATIONS AND REGULATION
The Company has implemented environmental programs and policies designed to
avoid potential liability under applicable environmental laws. The Company has
not incurred any significant environmental compliance cost, and compliance with
environmental regulations has not had a material effect on the Company's
operating or financial condition. This is primarily due to the Company's general
policies of not owning or operating fuel oil terminals and of closely monitoring
its compliance with all environmental laws. In the future, the Company does not
expect environmental compliance to have a material effect on its operations and
financial condition. The Company's policy for determining the timing and amount
of any environmental cost is to reflect an expense as and when the cost becomes
probable and reasonably capable of estimation.
On January 31, 1997, Able Oil submitted to the New Jersey Department of
Environmental Protection a revised Discharge Prevention Containment and
Countermeasure plan ("DPCC") and Discharge, Cleanup and Removal plan ("DCR") for
the facility at 344 Route 46 East in Rockaway, New Jersey. The State of New
Jersey requires companies which operate fuel storage facilities to prepare such
plans, as proof that such companies are capable of, and have planned for, an
event that might be deemed by the State to be hazardous to the environment. In
addition to these plans, Able Oil has this facility monitored by A & O
Environmental on an ongoing basis to ensure that the facility meets or exceeds
all standards required by the State
The Company experienced no spill events that would warrant investigation by
state or other environmental regulatory agencies. All locations are prepared to
deal with such an event should one occur. Additionally, A & O would be utilized
to clean any spills or contamination that an operating subsidiary could not
handle by themselves.
GOVERNMENT REGULATIONS
Numerous federal, state and local laws, including those relating to
protection of the environment and worker safety, effect the Company's
operations. The transportation of fuel oil, diesel fuel, propane and gasoline is
subject to regulation by various federal, state and local agencies including the
U.S. Department of Transportation ("DOT"). These regulatory authorities have
broad powers, and the Company is subject to regulatory and legislative changes
that can effect the economies of the industry by requiring changes in operating
practices or influencing demand for, and the cost of providing, its services.
The regulations provide that, among other things, the Company's drivers must
possess a commercial driver's licence with a
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hazardous materials endorsement. The Company is also subject to the rules and
regulations concerning Hazardous Materials Transportation Act. For example, the
Company's drivers and their equipment must comply with the DOT's pre-trip
inspection rules, documentation regulations concerning hazardous materials (i.e.
certificates of shipments which describe the type, and amount of product
transported), and limitations on the amount of fuel transported, as well as
driver time limitations. Additionally, the Company is subject to DOT inspections
that occur at random intervals. Any material violation of DOT rules or the
Hazardous Materials Transportation Act may result in citations and/or fines upon
the Company. In addition, the Company depends upon the supply of petroleum
products from the oil and gas industry and, therefore, is affected by changing
taxes, price controls and other laws and regulations relating to the oil and gas
industry generally. The Company cannot determine the extent to which future
operations and earnings may be affected by new legislation, new regulations and
changes in existing regulations.
The technical requirements of these laws and regulations are becoming
increasingly expensive, complex and stringent. These laws may impose penalties
or sanctions for damages to natural resources or threats to public health and
safety. Such laws and regulations may also expose the Company to liability for
the conduct or conditions caused by others, or for acts of the Company that were
in compliance with all applicable laws at the time such acts were performed.
Sanctions for noncompliance may include revocation of permits, corrective action
orders, administrative or civil penalties and criminal prosecution. Certain
environmental laws provide for joint and several liabilities for remediation of
spills and releases of hazardous substances. In addition, companies may be
subject to claims alleging personal injury or property damages as a result of
alleged exposure to hazardous substances, as well as damage to natural
resources.
Although the Company believes that it is in compliance with existing laws
and regulations and carries adequate insurance coverage for environmental and
other liabilities, there can be no assurance that substantial costs for
compliance will not be incurred in the future or that the insurance coverage in
place will be adequate to cover future liabilities. There could be an adverse
affect upon the Company's operations if there were any substantial violations of
these rules and regulations. Moreover, it is possible that other developments,
such as more stringent environmental laws, regulations and enforcement policies
thereunder, could result in additional, presently unquantifiable, costs or
liabilities to the Company.
LEGAL PROCEEDINGS
The Company is not currently involved in any legal proceeding that could
have a material adverse effect on the results of operations or the financial
condition of the Company. From time to time, the Company may become a party to
litigation incidental to its business. There can be no assurance that any future
legal proceedings will not have a material adverse affect on the Company.
35
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information concerning the Directors
and Executive Officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
Timothy Harrington................................... 30 Chief Executive Officer, Chairman of the Board and
Secretary
Christopher P. Westad................................ 44 President, Chief Financial Officer and Director
James Purcaro........................................ 36 Director (as of the Effective Date)
</TABLE>
Set forth below is a biographical description of each director and executive
officer of the Company based on information supplied by each of them.
TIMOTHY HARRINGTON, as of the Effective Date of the Offering, will serve as
the Company's Chief Executive Officer, Chairman of the Board, and Secretary. In
1989, Mr. Harrington founded Able Oil Company, Inc., and since that time, has
served as Able Oil's President, Chief Executive Officer and Chairman of the
Board. Mr. Harrington has also served as the Chief Executive Officer and
Chairman of the Board of Directors of Able Energy, Able Montgomery, Able
Melbourne, Able Propane and A & O since their respective inception.
CHRISTOPHER P. WESTAD, as of the Effective Date, will serve as the
President, Chief Financial Officer and a Director of the Company. Since
September 1996, Mr. Westad has served as the President of Able Energy and Able
Propane. From 1991 through 1996, Mr. Westad was a market Manager for Ferrellgas
Partners, L.P., a company engaged in the retail distribution of liquefied
petroleum gas. From 1977 through 1991, Mr. Westad served in a number of
management positions with RJR Nabisco. In 1975, Mr. Westad received a Bachelor
of Arts in Business and Public Management from Long Island
University--Southampton.
JAMES PURCARO, has agreed to serve as a director following the completion of
the offering. Since 1986, Mr. Purcaro has served as the president and chief
executive officer of Kingsland Trade Print Group, Inc., a commercial printing
company.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors intends to establish a Compensation Committee and an
Audit Committee on or before the Effective Date. The Compensation Committee and
the Audit Committee will consist of at least two directors who are not salaried
officers of the Company. Presently, there is only one of such independent
directors; however, the Company has undertaken to appoint an additional two
independent directors on or before the Effective Date.
The purpose of the Compensation Committee is to review the Company's
compensation of its executives, to make determinations relative thereto and to
submit recommendations to the Board of Directors with respect thereto. The
Compensation Committee will also select the persons to whom options to purchase
shares of the Company's Common Stock under the 1998 Stock Option Plan will be
granted and to make various other determinations with respect to such Plan.
The purpose of the Audit Committee is to provide general oversight of audit,
legal compliance and potential conflict of interest matters.
COMPENSATION OF DIRECTORS
The Company has not paid compensation to any director for acting in such
capacity. The Company is currently reviewing its policy on compensation of
outside directors and may pay outside directors in the future.
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<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding compensation
paid by the Company during each of the last two fiscal years to the Company's
Chief Executive Officer and to each of the Company's executive officers who
earned in excess of $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-----------------------------------------------
OTHER
SALARY ANNUAL COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) BONUS ($) ($)
- ------------------------------------------------------------- --------- --------- ----------- -----------------------
<S> <C> <C> <C> <C>
Timothy Harrington(1)........................................ 1997 100,000 80,000 833
Chief Executive Officer 1996 80,000 100,000 719
1995 80,000 50,000 380
</TABLE>
- ------------------------
(1) Reflects total compensation received from the Company's operating
subsidiaries.
EMPLOYMENT AGREEMENTS
On the Effective Date, Timothy Harrington and Christopher P. Westad will
enter into three year employment agreements with the Company. Timothy Harrington
will be retained as Chief Executive Officer of the Company at an annual salary
of $225,000. Christopher Westad will be retained as President of the Company at
an annual salary of $100,000. Each of the Messrs. Harrington and Westad are
entitled to bonuses pursuant to their employment agreements if the Company meets
certain financial targets based on sales, profitability and good management
goals as predetermined by the Board of Directors or compensation committee and
other subjective criteria as determined by the Board of Directors or
compensation committee. Such bonuses shall equal up to 5% of the Company's
earnings before taxes, depreciation and amortization ("EBITDA") for 1998,
provided the Company achieves at least $800,000 in EBITDA, 10% of EBITDA for
1999 and 2000, provided the Company achieves at least $3,000,000 and $5,000,000,
respectively, of EBITDA in each of such years. The employment agreements shall
also provide for reimbursement of reasonable business expenses. Timothy
Harrington shall also receive additional compensation including Company
automobile, insurance and retirement savings matched contributions by the
Company and such other perquisites as are customary.
In the event that there is a change in control of the Company, through an
acquisition where any person acquires more than 50% of the shares of the
Company, a consolidation or merger with another corporation resulting in at
least 50% of the voting shares of the surviving corporation being controlled by
a new acquirer or the sale directly or otherwise of all of the assets of the
Company to a third party in a non-distress situation, then the Company shall pay
to Timothy Harrington a lump sum payment equal to one year's salary.
EMPLOYEE BONUS POOL
The Company has adopted an Employee Bonus Pool, pursuant to which Management
may, at its own discretion, award employees for exemplary performance. The
Company has allocated $25,000, $40,000 and $50,000 for the years 1999, 2000 and
2001, respectively, for such purposes. Management may not, however, award
employees bonuses from the Employee Bonus Pool (i) if such bonuses would result
in negative earning before taxes for the year in which such bonuses are to be
granted, or (ii) if the Company does not have net profits in such year.
37
<PAGE>
STOCK OPTION PLAN
The Company has adopted a Stock Option Plan (the "1998 Plan"), pursuant to
which 500,000 shares of Common Stock are reserved for issuance.
The 1998 Plan will be administered by the board of directors, or by a
committee with at least two directors as delegated by the board of directors who
determine among other things, those individuals who shall receive options, the
time period during which the options may be partially or fully exercised, the
number of shares of Common Stock issuable upon the exercise of the options and
the option exercise price.
The 1998 Plan will be for a period of ten years. Options under the 1998 Plan
must be issued within ten years from the effective date of the 1998 Plan.
Options may be granted to officers, directors, consultants, key employees,
advisors and similar parties who provide their skills and expertise to the
Company. Options granted under the 1998 Plan may be exercisable for up to ten
years, may require vesting, and shall be at an exercise price all as determined
by the board. Options will be non-transferable except to an option holder's
personal holding company or registered retirement savings plan and except by the
laws of descent and distribution or a change in control of the Company, as
defined in the 1998 Plan, and are exercisable only by the participant during his
or her lifetime. Change in control includes (i) the sale of substantially all of
the assets of the Company and merger or consolidation with another, or (ii) a
majority of the board changes other than by election by the shareholders
pursuant to board solicitation or by vacancies filled by the board caused by
death or resignation of such person.
If a participant ceases affiliation with the Company by reason of death,
permanent disability or the retirement of an Optionee either pursuant to a
pension or retirement plan adopted by the Company or on the normal retirement
date prescribed from time to time by the Company, the option remains exercisable
for three months from such occurrence but not beyond the option's expiration
date. Other termination gives the participant three months to exercise, except
for termination for cause which results in immediate termination of the option.
Options granted under the 1998 Plan, at the discretion of the compensation
committee or the board, may be exercised either with cash, by certified check or
bank cashier's check, Common Stock having a fair market equal to the cash
exercise price, the participant's promissory note, or with an assignment to the
Company of sufficient proceeds from the sale of the Common Stock acquired upon
exercise of the Options with an authorization to the broker or selling agent to
pay that amount to the Company, or any combination of the above.
The exercise price of an option may not be less than the fair market value
per share of Common Stock on the date that the option is granted in order to
receive certain tax benefits under the Income Tax Act of United States (the
"ITA"). The exercise price of all future options will be at least 100% of the
fair market value of the Common Stock on the date of grant of the options. A
benefit equal to the amount by which the fair market value of the shares at the
time the employee acquires them exceeds the total of the amount paid for the
shares or the amount paid for the right to acquire the shares shall be deemed to
be received by the employee in the year the shares are acquired pursuant to
paragraph 7(1) of the ITA. Where the exercise price of the option is equal to
the fair market value of the shares at the time the option is granted, paragraph
110(1)(d) of the ITA allows a deduction from income equal to one quarter of the
benefit as calculated above. If the exercise price of the option is less than
the fair market value at the time it is granted, no deduction under paragraph
110(1)(d) is permitted. Options granted to any non-employees, whether directors
or consultants or otherwise will confer a tax benefit in contemplation of the
person becoming a shareholder pursuant to subsection 15(1) of the ITA.
Any unexercised options that expire or that terminate upon an employee's
ceasing to be employed by the Company become available again for issuance under
the 1998 Plan.
38
<PAGE>
The 1998 Plan may be terminated or amended at any time by the board of
directors, except that the number of shares of Common Stock reserved for
issuance upon the exercise of options granted under the 1998 Plan may not be
increased without the consent of the shareholders of the Company.
INDEMNIFICATION OF DIRECTORS
The Company's Certificate of Incorporation eliminates, to the fullest extent
permitted by law, the liability of its directors to the Company and its
stockholders for monetary damages for breach of the directors' fiduciary duty.
This provision is intended to afford the Company's directors the benefit of the
Delaware General Corporation Law, which provides that directors of Delaware
corporations may be relieved of monetary liability for breach of their fiduciary
duty of care, except under certain circumstances involving breach of a
director's duty of loyalty, acts or omissions not in good faith or involving
intentional misconduct or a knowing violation of law or any transaction from
which the director derived an improper personal benefit.
The By-laws of the Company provide that the Company shall indemnify to the
fullest extent permitted by Delaware law directors and officers (and former
officers and directors) of the Company. Such indemnification includes all costs
and expenses and charges reasonably incurred in connection with the defense of
any civil, criminal or administrative action or proceeding to which such person
is made a party by reason of being or having been an officer or director of the
Company if such person was substantially successful on the merits in his or her
defense of the action and he or she acted honestly and in good faith with a view
to the best interests of the Company, and if a criminal or administrative action
that is enforced by a monetary penalty, such person had reasonable grounds to
believe his or her conduct was lawful.
The Underwriting Agreement provides for reciprocal indemnification between
the Company and the Underwriter against certain liabilities in connection with
this Offering, including liabilities under the Securities Act.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
and the Underwriter pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses,
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person or by the Underwriter in connection with
the securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question of whether such indemnification by it
is against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
39
<PAGE>
PRINCIPAL STOCKHOLDERS AND SELLING SECURITYHOLDERS
The following table sets forth certain information, as of the date hereof,
and as adjusted to give effect to the sale of 1,750,000 Shares of Common Stock
by the Company with respect to the beneficial ownership of the Common Stock by
each beneficial owner of more than 5% of the outstanding shares thereof, by each
director, each nominee to become a director and each executive named in the
Summary Compensation Table and by all executive officers, directors and nominees
to become directors of the Company as a group, both before and after giving
effect to the Offering.
PERCENTAGE OF OUTSTANDING COMMON STOCK BENEFICIALLY OWNED
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK
BENEFICIALLY PERCENT OWNERSHIP AFTER
NAME AND ADDRESS OF BENEFICIAL OWNER(1) OWNED BEFORE OFFERING OFFERING(2)
- ---------------------------------------------------------- ----------------- --------------------- -------------------
<S> <C> <C> <C>
Timothy Harrington........................................ 2,000,000 100% 52.2%
All Executive Officers and Directors
as a Group (1 person)................................... 2,000,000 100% 52.2%
</TABLE>
- ------------------------
(1) Unless otherwise indicated, the address is c/o Able Energy, Inc., 344 Route
46, Rockaway, New Jersey 7866.
(2) Includes 25,000 shares of Common Stock to be issued to Sichenzia, Ross &
Friedman LLP, subsequent to the closing of this offering.
CERTAIN TRANSACTIONS
In March 1997, Timothy Harrington exchanged his shares in the operating
subsidiaries for 1,000 shares of the Company's Common Stock. On or before the
effective date of the Offering, the Company will effectuate a 1-for-2,000 stock
split resulting in Mr. Harrington's ownership of 2,000,000 shares of the
Company's Common Stock.
All future transactions and loans between the Company and its officers,
directors and 5% shareholders will be on terms no less favorable than could be
obtained from unaffiliated third parties and will be approved by a majority of
the independent, disinterested directors of the Company who will have access to
counsel to the Company at the Company's cost.
40
<PAGE>
DESCRIPTION OF SECURITIES
The total authorized capital stock of the Company consists of 20,000,000
shares of Common Stock, $.001 par value, and 10,000,000 shares of Preferred
Stock, $.001 par value per share. The following descriptions contain all
material terms and features of the Securities of the Company, are qualified in
all respects by reference to the Certificate of Incorporation and By-laws of the
Company, copies of which are filed as Exhibits to the Registration Statement of
which this Prospectus is a part.
COMMON STOCK
The Company is authorized to issue 20,000,000 shares of Common Stock, $.001
par value per share, of which as of the date of this Prospectus 2,000,000 shares
of Common Stock are outstanding, not including the shares of Common Stock
offered herein.
The holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of shareholders. Holders of Common
Stock are entitled to receive ratably dividends as may be declared by the board
of directors out of funds legally available therefor. In the event of a
liquidation, dissolution or winding up of the Company, holders of the Common
Stock are entitled to share ratably in all assets remaining, if any, after
payment of liabilities. Holders of Common Stock have no preemptive rights and
have no rights to convert their Common Stock into any other securities.
CLASS A REDEEMABLE WARRANTS
Warrants will be issued as part of the Unit pursuant to a Warrant Agreement
between the Company and Continental Stock Transfer & Trust Company (the
"Transfer and Warrant Agent") and will be in registered form. The Company has
authorized the issuance of Warrants to purchase an aggregate of 875,000 shares
of Common Stock (exclusive of 131,250 Warrants issuable upon exercise of the
Underwriters' Over-Allotment Option and 87,500 Warrants underlying the
Underwriters' Warrants). Each Warrant entitles its holder to purchase, at any
time from the date of this Prospectus through the fifth anniversary date of this
Prospectus, one share of Common Stock at an exercise price of $5.00 per share,
subject to adjustment in accordance with the anti-dilution and other provisions
referred to below.
The Warrants offered hereby are not exercisable unless, at the time of
exercise, (i) there is a current prospectus relating to the Common Stock
issuable upon the exercise of the Warrants under an effective registration
statement filed with the Securities and Exchange Commission, and (ii) such
Common Stock is then qualified for sale or exempt therefrom under applicable
state securities laws in the jurisdiction in which the various holders of
Warrants reside.
The Warrants may be redeemed by the Company at any time commencing one year
from the date of this Prospectus (or earlier with the prior written consent of
the Underwriter) and prior to their expiration, at a redemption price of $.10
per Warrant, on not less than 30 days' prior written notice to the holders of
such Warrants, provided that the last sales price of the Common Stock on NASDAQ
is at least 200% ($10.00 per share, subject to adjustment) of the exercise price
of the Warrants for a period of 20 consecutive trading days ending on the third
day prior to the date the notice of redemption is given. Holders of Warrants
shall have exercise rights until the close of the business day preceding the
date fixed for redemption. The exercise price of the Warrants should in no event
be regarded as an indication of any future market price of the securities
offered hereby.
The exercise price and the number of shares of Common Stock purchasable upon
the exercise of the Warrants are subject to adjustment upon the occurrence of
certain events, including stock dividends, stock splits, combinations or
reclassification of the Common Stock. The Warrants do not confer upon holders
any voting or any other rights as stockholders of the Company.
Subject to the rules and regulations of the NASD, the Underwriter shall be
entitled to act as the warrant solicitation agent for the solicitation of the
Warrants for a period of five years after the date
41
<PAGE>
hereof, commencing one year after the date hereof and receive a warrant
solicitation fee of five percent (5%) of the exercise price for each Warrant
exercised during the period commencing one year after the date hereof.
The Company is required to have a current Registration Statement on file
with the Commission and to effect appropriate qualifications under the laws and
regulations of the states in which the holders of Warrants reside in order to
comply with applicable laws in connection with the exercise of Warrants and the
sale of the Common Stock issued upon such exercise. The Company, therefore, will
be required to file post-effective amendments to its Registration Statement when
subsequent events require such amendments in order to continue the registration
of the Common Stock underlying the Warrants and to take appropriate action under
state securities laws. There can be no assurance that the Company will be able
to keep its Registration Statement current or to effect appropriate action under
applicable state securities laws. Its failure to do so may restrict the ability
of the Warrant holders to exercise the Warrants and resell or otherwise dispose
of the underlying Common Stock, whether pursuant to redemption of the Warrants
or otherwise.
PREFERRED STOCK
The Certificate of Incorporation authorizes the issuance of 5,000,000 shares
of Preferred Stock with designations, rights and preferences determined from
time to time by its Board of Directors. Accordingly, the Company's Board of
Directors is empowered, without stockholder approval, to issue classes of
Preferred Stock with voting, liquidation, conversion, or other rights that could
adversely affect the rights of the holders of the Common Stock. Although the
Company has no present intention to issue any shares of its Preferred Stock
there can be no assurance that it will not do so in the future. No Preferred
Stock may be issued by the Company without the Underwriter's consent for a
period of 24 months following the Effective Date. Furthermore, no Preferred
Stock may be issued by the Company unless such issue is approved by the
Company's independent directors.
CERTAIN ANTI-TAKEOVER DEVICES
The Company is subject to Section 203 of the Delaware General Corporation
Law ("Section 203"), which restricts certain transactions and business
combinations between a corporation and an "Interested Stockholder" owning 15% or
more of the corporation's outstanding voting stock for a periods of three years
from the date the stockholder becomes an Interested Stockholder. Subject to
certain exceptions, unless the transaction is approved by the Board of Directors
and the holders of at least 66-2/3% of the outstanding voting stock of the
corporation (excluding shares held by the Interested Stockholder), Section 203
prohibits significant business transactions such as a merger with, disposition
of assets to, or receipt of disproportionate financial benefits by the
Interested Stockholder, or any other transaction that would increase the
Interested Stockholder's proportionate ownership of any class or series of the
corporation's stock. The statutory ban does not apply if, upon consummation of
the transaction in which any person becomes an Interested Stockholder, the
Interested Stockholder owns at least 85% of the outstanding voting stock of the
corporation (excluding shares held by persons who are both directors and
officers or by certain stock plans).
TRANSFER AGENT AND REGISTRAR
Continental Transfer & Trust Company has been appointed as the transfer
agent and registrar for the Company's Common Stock. Its address is 2 Broadway,
New York, New York 10004 and its telephone number is (212) 509-4000.
SHARES ELIGIBLE FOR FUTURE SALE
Upon the consummation of this Offering, the Company will have 3,775,000
shares of Common Stock outstanding. In addition, the Company has reserved for
issuance 375,000 shares upon the exercise of
42
<PAGE>
options eligible for grant under the 1998 Plan. Of the shares to be issued and
outstanding after this Offering, the 1,750,000 Shares offered hereby (plus any
additional Shares sold upon exercise of the Over-Allotment Option) will be
freely tradeable without restriction or further registration under the Act,
except for any shares purchased or held by an "affiliate" of the Company (in
general, a person who has a control relationship with the Company) which will be
subject to the limitations of Rule 144 adopted under the Act ("Rule 144"). In
general, under Rule 144, subject to the satisfaction of certain other
conditions, a person, including an affiliate of the Company, who has
beneficially owned restricted shares of Common Stock for at least one year is
permitted to sell in a brokerage transaction, within any three-month period, a
number of shares that does not exceed the greater of 1% of the total number of
outstanding shares of the same class, or if the Common Stock is quoted on Nasdaq
or a stock exchange, the average weekly trading volume during the four calendar
weeks preceding the sale. Rule 144 also permits a person who presently is not
and who has not been an affiliate of the Company for at least three months
immediately preceding the sale and who has beneficially owned the shares of
Common Stock for at least two years to sell such shares without regard to any of
the volume limitations as described above. The remaining 2,025,000 shares of
Common Stock are "restricted securities" as that term is defined under Rule 144,
and may not be sold unless registered under the Act or exempted therefrom. Of
such shares, 2,000,000 shares of Common Stock outstanding are eligible for
resale under Rule 144 on March 1, 1999, and 25,000 shares would be eligible for
resale under Rule 144 on or about October 1999. All 2,025,000 such shares are
subject to a 24 month lock up during which such shares may not be sold without
the prior written consent of the Underwriter.
Sales of the Company's Common Stock by certain of the present stockholders
in the future, under Rule 144, may have a depressive effect on the price of the
Company's Common Stock.
UNDERWRITING
The Company has agreed to sell, and the Underwriter has agreed, subject to
the time and conditions of the Underwriting Agreement, to purchase from the
Company on a firm commitment basis, an aggregate of 875,000 Units, at the
initial public offering price less the underwriting discounts and commissions
set forth on the cover page of this Prospectus. The Underwriter has advised the
Company that it proposes to offer the Units to the public at the public offering
price set forth on the cover page of this Prospectus and that they may allow to
selected dealers who are members of the NASD, concessions of not in excess of
$. Unit, of which not more than $. per Unit may be re-allowed to
certain other dealers who are members of the National Association of Securities
Dealers, Inc. After completion of the public offering, the public prices,
concessions and reallowances may be changed by the Underwriter.
The Underwriting Agreement further provides that the Underwriter will
receive from the Company a non-accountable expense allowance of 3% of the
aggregate public offering price of the Units sold (including any Units sold
pursuant to the Underwriters' Over-Allotment Option), which allowance amounts to
$216,562.50 (or $249,046.87 if the Underwriter's Over-Allotment Option is
exercised in full).
The Company has granted to the Underwriter the Over-Allotment Option, which
is exercisable for a period of 45 days after the Closing, to purchase up to an
aggregate of 168,750 additional Units (up to 15% of the Units being offered) at
the public offering price, less underwriting discounts and commissions, solely
to cover over-allotments, if any.
The Underwriter has informed the Company that the Underwriter will not make
sales of the Units offered by this Prospectus to accounts over which they
exercise discretionary authority.
The Company has agreed to sell to the Underwriter at a price of $.0001 per
warrant, Underwriter's Warrants to purchase 87,500 Units, exclusive of the
Over-Allotment Option. The Underwriter's Warrants will be nonexercisable for one
year after the date of this Prospectus. Thereafter, for a period of four years,
the Underwriter's Warrants will be exercisable at $12.375 per Unit. The
Underwriter's Warrants are not transferable for a period of one year after the
date of this Prospectus, except to officers and stockholders of the Underwriter
and to members of the selling group and their officers and partners. The Company
has agreed to file, during the five (5) year period commencing on the date of
this Prospectus, on one occasion
43
<PAGE>
at the Company's cost, at the request of the holders of a majority of the
Underwriter's Warrants and the underlying shares of Common Stock and Warrants,
and to use its best efforts to cause to become effective, a post-effective
amendment to the Registration Statement or a new registration statement under
the Securities Act, as required to permit the public sale of Common Stock and
Warrants issued or issuable upon exercise of the Underwriter's Warrants. In
addition, the Company has agreed to give advance notice to holders of the
Underwriter's Warrants of its intention to file certain registration statements
commencing on the date of this Prospectus and ending seven (7) years after the
date of this prospectus, and in such case, holders of such Underwriter's
Warrants or underlying shares of Common Stock shall have the right to require
the Company to include all or part of such shares of Common Stock and Warrants
underlying such Underwriter's Warrants in such registration statement at the
Company's expense.
For the life of the Underwriter's Warrants, the holders thereof are given,
at nominal costs, the opportunity to profit from a rise in the market price of
the Company's securities with a resulting dilution in the interest of other
shareholders. Further, the holders may be expected to exercise the Underwriters'
Option at a time when the Company would in all likelihood be able to obtain
equity capital on terms more favorable than those provided in the Underwriters'
Option.
The Company has agreed that upon closing of this Offering, it will for a
period of not less than five years, to nominate and support the election of one
designee of the Underwriter as a member of the Board of Directors or
alternatively to have the Underwriter designate an advisor to the Board of
Directors. The Underwriter has not yet exercised its right to nominate someone
the Company's Board of Directors or to designate an advisor to the Board of
Directors.
The Company has agreed to retain the Underwriter as a financial consultant
for a period of two years to commence on the closing of this Offering, at a fee
of $166,000 all of which shall be payable in advance on the closing of the
Offering. Pursuant to this agreement, the Underwriter will be obligated to
provide general financial advisory services to the Company on an "as needed"
basis with respect to possible future financing or acquisitions by the Company
and related matters. The agreement does not require the Underwriter to provide
any minimum number of hours of consulting services to the Company. The agreement
further provides that the Underwriter may act as a finder for certain business
transactions. Under this arrangement, the Company shall pay the Underwriter a
fee equal to 5% of the first $1 million, 4% of the next $1 million, 3% of the
next $1 million, 2% of the next $1 million, and 1% thereafter of the
consideration involved in any non-financing related transactions (including
mergers, acquisitions, joint ventures and other business transactions)
consummated by the Company with a party introduced to the Company by Walsh.
The public offering price of the Units offered hereby and the exercise price
of the Warrants, have been determined by negotiation between the Company and the
Underwriter. Factors considered in determining the offering price of the Units
offered hereby included the business in which the Company is engaged, the
Company's financial condition, an assessment of the Company's management, the
general condition of the securities markets and the demand for similar
securities of comparable companies.
Except for certain circumstances provided for in the Underwriting Agreement,
the Company has agreed, for a period of one year from the date of this
Prospectus not to issue any shares of Common Stock, warrants or any options or
other rights to purchase Common Stock without the prior written consent of the
Underwriter.
In connection with this Offering, the Underwriter and selling group members
and their respective affiliates may engage in transactions that stabilize,
maintain or otherwise affect the market price of the Units, Common Stock and
Warrants. Such transactions may include stabilization transactions effected in
accordance with Rule 104 of Regulation M, pursuant to which such persons may bid
for or purchase Common Stock for the purpose of stabilizing the market price.
The Underwriter also may create a short position for the account of the
Underwriter by selling more Units in connection with the Offering than they are
committed to purchase from the Company, and in such case may purchase Units,
Common Stock
44
<PAGE>
or Warrants in the open market following completion of the Offering to cover all
or a portion of such short position. The Underwriter may also cover all or a
portion of such short position by exercising the Over-Allotment Option. In
addition, the Underwriter may impose "penalty bids" under contractual
arrangements with the Underwriter whereby it may reclaim from an Underwriter (or
dealer participating in the Offering) for the account of other Underwriter, the
selling concession with respect to Units that are distributed in the Offering
but subsequently purchased for the account of the Underwriter in the open
market. Any of the transactions described in this paragraph may result in the
maintenance of the price of the Units, Common Stock and Warrants at a level
above that which might otherwise prevail in the open market. None of the
transactions described in this paragraph is required, and, if they are
undertaken they may be discontinued at any time.
The Underwriting Agreement provides for reciprocal indemnification between
the Company and the Underwriter against certain liabilities in connection with
this Offering, including liabilities under the Securities Act.
The foregoing is a summary of the material terms of the Underwriting
Agreement, the Underwriter's Warrant Agreement and the Consulting Agreement.
Reference is made to the copies of the Underwriting Agreement, the Underwriter's
Warrant Agreement and the Consulting Agreement, which are filed as exhibits to
the Registration Statement of which this Prospectus forms a part.
LEGAL MATTERS
Certain legal matters in connection with the Offering will be passed upon
for the Company by its counsel, Sichenzia, Ross & Friedman LLP, 135 West 50th
Street, 20th Floor, New York, New York, 10020. Sichenzia, Ross & Friedman LLP
will be issued 25,000 shares of Common Stock of the Company for past legal
services.
Certain legal matters will be passed upon for the Underwriter by Goldstein &
DiGioia LLP, 369 Lexington Avenue, New York, New York 10017.
EXPERTS
The financial statements of the Company at December 31, 1997, and for each
of the two fiscal years in the period ended December 31, 1997 and 1996,
appearing in this Prospectus and Registration Statement have been audited by
Simontacchi & Co. LLP, Certified Public Accountants, as set forth in their
reports thereon appearing elsewhere herein and in the Registration Statement,
and are included in reliance upon such reports given upon the authority of such
firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement under the
Act with respect to the Securities offered hereby. This Prospectus omits certain
information contained in the Registration Statement and the exhibits thereto,
and reference is made to the Registration Statement and the exhibits thereto for
further information with respect to the Company and the Securities offered
hereby. Each such statement is qualified in its entirety by such reference. The
Registration Statement, including exhibits and schedules filed therewith, may be
inspected without charge at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549 and at the regional offices of the Commission located at 7 World
Trade Center, Suite 1300, New York, New York 10048, and Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. At the
effective date of this Offering, the Company will be required to file reports
pursuant to the Securities Exchange Act of 1934. Copies of such materials may be
obtained from the Public Reference Section of the Commission, Judiciary Plaza,
450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and its public
reference facilities in New York, New York and Chicago, Illinois upon payment of
the prescribed fees. Electronic registration statements filed through the
Electronic Data Gathering, Analysis, and Retrieval System are publicly available
through the Commission's Website (http://www.sec.gov). Following the Effective
Date hereof, the Company intends to be a reporting company under the Securities
Exchange Act of 1934, as amended.
45
<PAGE>
ABLE ENERGY, INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Independent Auditors' Report (December 31, 1997)........................................................ F-2
FINANCIAL STATEMENTS:
Consolidated Balance Sheets as of December 31, 1997 and June 30, 1998 (Unaudited)....................... F 3-4
Consolidated Statements of Income and Retained Earnings for the years ended December 31, 1997 and 1996
(Restated) and the six months ended June 30, 1997 and June 30, 1998 (Unaudited)....................... F-5
Consolidated Statements of Cash Flows for the years ended December 31, 1997 and 1996 (Restated) and the
six months ended June 30, 1998 and 1997 (Unaudited)................................................... F-6
Notes to Financial Statements (December 31, 1997)....................................................... F 7-15
</TABLE>
F-1
<PAGE>
To The Shareholder
Able Energy, Inc.
Rockaway, New Jersey 07866
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying consolidated balance sheet of Able Energy,
Inc. and subsidiaries as of December 31, 1997, and the related consolidated
statements of income and retained earnings, and cash flows for the period ended
December 31, 1997 and 1996. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, based on our audit the consolidated financial statements
referred to above present fairly, in all material respects, the financial
position of Able Energy, Inc. and subsidiaries as of December 31, 1997, and the
results of their operations and their cash flows for the period ended December
31, 1997 and 1996 in conformity with generally accepted accounting principles.
Simontacchi & Company, LLP
Fairfield, New Jersey
March 5, 1998, as to 1997
July 7, 1998 as to 1996 retroactively restated
August 24, 1998 as to Note 15 and Note 16
F-2
<PAGE>
ABLE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997 AND JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1997 1998
------------ ------------
<S> <C> <C>
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash............................................................................... $ 155,904 $ 565,240
Accounts Receivable (Less Allowance for Doubtful Accounts of $52,584 at December
31, 1997 and June 30, 1998)...................................................... 647,731 478,949
Inventory.......................................................................... 184,655 153,110
Prepaid Expense.................................................................... 14,589 47,277
Due From Officers.................................................................. 42,527 7,835
Due From Employees................................................................. -- 10,023
Other Receivables.................................................................. 9,587 --
Prepaid Income Taxes............................................................... 16,695 16,695
------------ ------------
TOTAL CURRENT ASSETS............................................................. 1,071,688 1,279,129
------------ ------------
PROPERTY AND EQUIPMENT:
Land............................................................................... 90,800 90,800
Building........................................................................... 150,000 157,367
Trucks............................................................................. 1,478,466 1,499,443
Fuel Tanks......................................................................... 329,761 386,911
Machinery and Equipment............................................................ 124,928 130,463
Leasehold Improvements............................................................. 114,182 124,122
Cylinders.......................................................................... 123,718 179,605
Computers and Office Equipment..................................................... 79,502 93,110
------------ ------------
2,491,357 2,661,821
Less: Accumulated depreciation..................................................... (720,074) (890,233)
------------ ------------
NET PROPERTY AND EQUIPMENT....................................................... 1,771,283 1,771,588
------------ ------------
OTHER ASSETS:
Deposit............................................................................ 1,796 1,796
Customer List (Less Amortization of $47,805 and $67,506 at December 31, 1997 and
June 30, 1998, respectively)..................................................... 543,195 523,494
Covenant Not to Compete (Less Amortization of $43,076 and $54,087 at December 31,
1997 and June 30, 1998, respectively)............................................ 162,490 149,645
Note Receivable.................................................................... 2,072 4,759
------------ ------------
TOTAL OTHER ASSETS............................................................... 709,553 679,694
------------ ------------
TOTAL ASSETS..................................................................... $3,552,524 $ 3,730,411
------------ ------------
------------ ------------
See Accompanying Notes
</TABLE>
F-3
<PAGE>
ABLE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997 AND JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1997 1998
------------ ------------
(UNAUDITED)
<S> <C> <C>
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable................................................................... $ 496,170 $ 399,132
Note Payable--Bank................................................................. 277,066 228,902
Current Portion of Long-Term Debt.................................................. 518,693 627,126
Covenant Not To Compete............................................................ 36,714 36,714
Accrued Expenses................................................................... 84,140 99,614
Deposits........................................................................... 801 801
Taxes Payable...................................................................... 13,848 10,717
Customer Advance Payments.......................................................... 303,194 214,644
Income Taxes Payable--Current...................................................... 13,190 100,390
Income Taxes Payable--Prior........................................................ 73,960 63,960
Escrow Deposits.................................................................... 15,100 15,000
Due to Employee.................................................................... -- 13,545
------------ ------------
TOTAL CURRENT LIABILITIES........................................................ 1,832,876 1,810,545
DEFERRED INCOME TAXES................................................................ 18,825 23,075
COVENANT NOT TO COMPETE: less current portion........................................ 104,020 85,664
LONG TERM DEBT: less current portion................................................. 1,198,543 1,211,256
------------ ------------
TOTAL LIABILITIES................................................................ 3,154,264 3,130,540
------------ ------------
STOCKHOLDERS' EQUITY:
Common Stock
Authorized 10,000 Shares, Par Value $.001 per share Issued and Outstanding 1,000
shares........................................................................... 1 1
Paid in Surplus.................................................................... 322,198 7,000
Retained Earnings.................................................................. 76,061 592,870
------------ ------------
TOTAL STOCKHOLDERS' EQUITY....................................................... 398,260 599,871
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY....................................... $3,552,524 $ 3,730,411
------------ ------------
------------ ------------
</TABLE>
See Accompanying Notes
F-4
<PAGE>
ABLE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996(RESTATED) AND
THE SIX MONTHS ENDED JUNE 30, 1997 AND 1998 (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
YEARS ENDED DECEMBER 31,
---------------------------- --------------------------
<S> <C> <C> <C> <C>
RESTATED
1997 1996 1998 1997
------------- ------------- ------------ ------------
<CAPTION>
UNAUDITED
<S> <C> <C> <C> <C>
NET SALES............................................ $ 16,380,992 $ 12,981,457 $ 8,601,102 $ 8,770,173
COST OF SALES........................................ 13,022,635 10,572,750 6,675,323 6,714,240
------------- ------------- ------------ ------------
GROSS PROFIT....................................... 3,358,357 2,408,707 1,925,779 2,055,933
------------- ------------- ------------ ------------
EXPENSES
Selling, General and Administrative
Expenses......................................... 2,745,963 1,889,905 1,314,206 1,332,598
------------- ------------- ------------ ------------
Depreciation and Amortization Expense.............. 394,806 262,391 194,608 220,017
------------- ------------- ------------ ------------
TOTAL EXPENSES................................... 3,140,769 2,152,296 1,508,814 1,552,615
INCOME FROM OPERATIONS 217,588 256,411 416,965 503,318
OTHER INCOME (EXPENSES):.............................
Insurance Proceeds................................. 2,285 34,086 -- 2,286
Interest Income.................................... 4,910 17,906 6,295 1,841
Gain on Sale of Equipment.......................... 72,104 -- -- 39,762
Leasing Income..................................... 26,574 -- -- 9,612
Miscellaneous Income............................... 13,078 6,328 3,330 3,728
------------- ------------- ------------ ------------
Interest Expense................................... (211,133) (80,586) (86,729) (111,700)
------------- ------------- ------------ ------------
TOTAL OTHER INCOME (EXPENSES).................... (92,182) (22,266) (77,104) (54,471)
INCOME BEFORE PROVISION FOR INCOME TAXES 125,406 234,145 339,861 448,847
------------- ------------- ------------ ------------
PROVISION FOR INCOME TAXES........................... 49,345 6,549 138,250 183,574
NET INCOME......................................... 76,061 227,596 201,611 265,273
------------- ------------- ------------ ------------
RETAINED EARNINGS--BEGINNING OF YEAR................. 0 87,603 391,259 315,198
------------- ------------- ------------ ------------
------------- ------------- ------------ ------------
RETAINED EARNINGS--END OF YEAR....................... $ 76,061 $ 315,199 $ 592,870 $ 580,471
NET INCOME PER SHARE................................. .038 .114 $ .100 $ .133
------------- ------------- ------------ ------------
------------- ------------- ------------ ------------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING........................................ 2,000,000 2,000,000 2,000,000 2,000,000
</TABLE>
NOTE: THE DECEMBER 31, 1996 STATEMENT OF INCOME AND RETAINED EARNINGS HAS BEEN
RETROACTIVELY RESTATED TO REFLECT THE OPERATIONS OF ABLE OIL COMPANY AND
RELATED ENTITIES. ABLE ENERGY, INC. WAS INCORPORATED MARCH 13, 1997 AND
ACQUIRED THE STOCK OF ABLE OIL COMPANY AND RELATED ENTITIES. WEIGHTED
AVERAGE SHARES HAVE BEEN RESTATED TO REFLECT THE 2,000-FOR-1 STOCK SPLIT
TO BE EFFECTUATED BY THE COMPANY.
See Accompanying Notes
F-5
<PAGE>
ABLE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996 (RESTATED) AND
THE SIX MONTHS ENDED JUNE 30, 1997 AND 1998 (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
YEARS ENDED DECEMBER 31, UNAUDITED
-------------------------- ------------------------
<S> <C> <C> <C> <C>
RESTATED
1997 1996 1998 1997
----------- ------------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income............................................... $ 76,061 $ 227,596 $ 201,611 $ 265,273
Adjustments to Reconcile Net Income to Cash used by
Operating Activities:
Depreciation and Amortization.......................... 394,806 262,391 194,608 220,017
Gain on Sale of Equipment.............................. (72,104) -- -- (39,762)
(Increase) Decrease in:
Accounts Receivable.................................. (156,298) (279,255) 168,782 55,534
Inventory............................................ 8,906 (71,773) 31,545 71,220
Prepaid Expenses..................................... 82,091 (113,375) (32,688) 49,817
Deposits............................................. 3,975 (5,771) -- 5,100
Increase (Decrease) in:
Accounts Payable..................................... 199,910 24,200 (97,038) (32,801)
Accrued Expenses..................................... (319,389) 312,478 15,474 (289,893)
Other Taxes Payable.................................. (1,723) (43,391) (3,131) (7,813)
Customer Advance Payments............................ 303,194 -- (88,550) --
Income Taxes Payable................................. 10,455 2,735 77,200 154,599
Deferred income Taxes................................ 12,850 4,387 4,250 5,800
Escrow Deposit....................................... -- 15,100 (100) --
----------- ------------- ----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES.......... 542,734 335,322 471,963 457,091
----------- ------------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Sale of Equipment........................................ 114,490 -- -- 78,500
Purchase of Property and Equipment....................... (497,609) (1,144,074) (162,367) (115,523)
Purchase of Intangibles.................................. (42,000) (754,567) -- --
Decrease in Shareholder's Loan........................... 23,692 2,632 34,692 12,521
Other Receivables........................................ (11,659) -- (3,123) (6,686)
----------- ------------- ----------- -----------
NET CASH USED BY INVESTING ACTIVITIES.............. (413,086) (1,896,009) (130,798) (31,188)
----------- ------------- ----------- -----------
Cash Flows From Financing Activities.......................
Increase in Notes Payable................................ 814,317 1,946,850 1,022,822 --
Decrease in Notes Payable................................ (948,100) (260,082) (968,196) (178,305)
Loan From Employee....................................... -- -- 13,545 --
----------- ------------- ----------- -----------
NET CASH (USED) PROVIDED BY FINANCING ACTIVITIES... (133,783) 1,686,768 68,171 (178,305)
----------- ------------- ----------- -----------
NET INCREASE (DECREASE) IN CASH............................ (4,135) 126,081 409,336 247,598
Cash--Beginning of Year.................................... 160,039 33,958 155,904 160,039
----------- ------------- ----------- -----------
Cash--End of Year.......................................... $ 155,904 $ 160,039 $ 565,240 $ 407,637
----------- ------------- ----------- -----------
----------- ------------- ----------- -----------
The Company had Interest Cash Expenditures of:............. $ 211,133 $ 80,586 $ 86,729 $ 111,700
The Company had Tax Cash Expenditures of:.................. $ 43,680 $ -- $ 50,650 $ 26,240
</TABLE>
NOTE: THE DECEMBER 31, 1996 STATEMENT OF CASH FLOWS HAS BEEN RETROACTIVELY
RESTATED TO REFLECT THE OPERATIONS OF ABLE OIL COMPANY AND RELATED
ENTITIES. ABLE ENERGY, INC. WAS INCORPORATED MARCH 13, 1997 AND ACQUIRED
THE STOCK OF ABLE OIL COMPANY AND RELATED ENTIEIES.
See Accompanying Notes
F-6
<PAGE>
ABLE ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENT
DECEMBER 31, 1997
NOTE 1 BASIS OF PRESENTATION
Able Energy, Inc. was incorporated in the state of Delaware on March 13,
1997. Mr. Timothy Harrington exchanged his stock in the following companies:
Able Oil Company (a New Jersey corporation), Able Oil Company Montgomery, Inc.
(a Pennsylvania corporation), A & O Environmental Services, Inc. (a New Jersey
corporation), Able Oil Melbourne, Inc. (a Florida corporation) and his 99%
interest in Able Propane, LLC for 1,000 shares of Able Energy, Inc.and became
the sole shareholder.
The combination was accounted for as an exchange between entities under
common control. The assets and liabilities so transferred were accounted for at
historical cost in a manner similar to a pooling of interest accounting (see
Note 16).
Able Energy, Inc. is a holding company with no operations, the subsidiaries
which were in operation the entire year of 1997 are being presented in the
accompanying financial statements.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
Able Oil Company, Able Montgomery and Able Melbourne are full service oil
companies that market and distribute home heating oil, diesel fuel and kerosene
to residential and commercial customers operating in the northern New Jersey,
Montgomery, Pennsylvania and Melbourne, Florida. A & O Environmental Services
provides environment cleanup and related services in New Jersey and parts of
Pennsylvania and New York. Able Propane, which was incorporated in July 1996,
installs propane tanks which are owned by the company and sells propane for
heating and cooking. Able Propane has been in the start-up phase of operation
through 1997.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements included the accounts of Able Energy,
Inc. and its subsidiaries. The minority interest of 1% in Able Propane, LLC is
immaterial and has not been shown separately. All material intercompany balances
and transactions were eliminated in consolidation.
INVENTORIES
Inventories are valued at the lower of cost (first in, first out method) or
market.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation.
Depreciation is provided by using the straight-line method based upon the
estimated useful lives of the assets (5 to 40 years) as follows:
<TABLE>
<CAPTION>
USEFUL
ITEM LIVES
- --------------------------------------------------------------------------------- -----------
<S> <C>
Building......................................................................... 40
Trucks........................................................................... 5
Fuel Tanks....................................................................... 12
Machinery & Equipment............................................................ 5
Leasehold Improvements........................................................... 31-39
Cylinders........................................................................ 20
Computers and Office Equipment................................................... 5
</TABLE>
For income tax basis, depreciation is calculated by a combination of the
straight-line and modified accelerated cost recovery systems established by the
Tax Reform Act of 1986.
F-7
<PAGE>
ABLE ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENT (CONTINUED)
DECEMBER 31, 1997
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Expenditures for maintenance and repairs are charged to expense as incurred
whereas expenditures for renewals and betterments are capitalized.
The cost and related accumulated depreciation of assets sold or otherwise
disposed of during the period are removed from the accounts. Any gain or loss is
reflected in the year of disposal.
INTANGIBLE ASSETS
Intangibles were amortized as follows:
Customer Lists of $571,000 and Covenant Not To Compete of $183,567 related
to the Connell's Fuel Oil Company acquisition on October 28, 1996, by Able Oil
Company are being amortized over a straight-line period of 15 and 5 years,
respectively.
Customer lists of $20,000 and Covenant Not To Compete of $22,000 related to
the McGuigan acquisition on November 6, 1997, by Able Oil Company Montgomery,
Inc. are being amortized over a straight line period of 15 and 3 years,
respectively.
For income tax basis, the Customer Lists and the Covenant Not To Compete are
being amortized over a straight-line method of 15 years as per the Tax Reform
Act of 1993.
Amortization expense was $75,245 in 1997.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Although these estimates are based on management's knowledge
of current events and actions it may undertake in the future, they may
ultimately differ from actual results.
INCOME TAXES
Effective January 1, 1997, all the subsidiaries, which were S-Corporations,
terminated their S-Corporation elections. The subsidiaries will be filing a
consolidated tax return with Able Energy, Inc.
Effective January 1, 1997, the company has elected to provide for income
taxes based on the provisions of Financial Accounting Standards Board ("FASB")
Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for
Income Taxes", which requires recognition of deferred tax assets and liabilities
for the expected future tax consequences of events that have been included in
the financial statements and tax returns in different years. Under this method,
deferred income tax assets and liabilities are determined based on the
difference between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.
CONCENTRATIONS OF CREDIT RISK
The Company performs on-going credit evaluations of its customers' financial
conditions and requires no collateral from its customers.
Financial instruments which potentially subject the Company to
concentrations of credit risk consists of checking accounts with a financial
institution in excess of insured limits. The Company does not anticipate
non-performance by the financial institution.
F-8
<PAGE>
ABLE ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENT (CONTINUED)
DECEMBER 31, 1997
NOTE 3 INVENTORIES
<TABLE>
<CAPTION>
ITEMS DECEMBER 31, 1997
- --------------------------------------------------------------------------- -----------------
<S> <C>
Heating Oil................................................................ $ 111,262
Diesel Fuel................................................................ 13,065
Kerosene................................................................... 965
Propane.................................................................... 2,273
Parts and Supplies......................................................... 57,090
--------
Total.................................................................... $ 184,655
--------
--------
</TABLE>
NOTE 4 ESCROW DEPOSIT
The Escrow Deposit of $15,000 consists of $10,000 for removing contaminated
soil and 55-gallon drums containing waste; and for grading the soil at the site
of the Real Property. The remaining $5,000 is for any unpaid tax liability that
may be owed to the State of New Jersey Division of Taxation. This was deposited
in conjunction with the purchase by Able Oil Company of Connell's Fuel Oil
Company in Newton, New Jersey on October 28, 1996.
NOTE 5 ACQUISITIONS
On October 28, 1996, the Company purchased Connell's Fuel Oil Company of
Newton, New Jersey. The acquisition was recorded under the purchase method. The
acquisition has enabled the Company to expand its operations to the growing
Sussex County and Northwestern areas of the State of New Jersey. The operations
of this new division of the Company from October 28, 1996 through December 31,
1996 are included in the Statement of Income.
The acquisition consisted of the following:
<TABLE>
<S> <C>
ASSETS & EXPENSES
Land.......................................................... $ 90,800
Building...................................................... 150,000
Fuel Tanks.................................................... 179,200
Trucks........................................................ 60,000
Machinery and Equipment....................................... 45,000
Customer Lists................................................ 571,000
Covenant Not to Compete....................................... 183,566
Fuel Oil Purchase............................................. 29,779
---------
TOTAL....................................................... $1,309,345
---------
---------
LIABILITIES AND CREDITS
Note Payable--PNC Bank........................................ $ 586,210
Credit Line--PNC Bank......................................... 42,942
Note Payable--Connell's Fuel Oil Co........................... 479,152
Covenant Not to Compete....................................... 183,566
Escrow Deposit................................................ 15,000
Real Estate Taxes............................................. 2,475
---------
TOTAL....................................................... $1,309,345
---------
---------
</TABLE>
F-9
<PAGE>
ABLE ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENT (CONTINUED)
DECEMBER 31, 1997
NOTE 5 ACQUISITIONS (CONTINUED)
The Escrow Deposit of $15,000 consists of $10,000 for removing contaminated
soil and 55-gallon drums containing waste; and for grading the soil at the site
of the Real Property. The remaining $5,000 is for any unpaid tax liability that
may be owed to the State of New Jersey Division of Taxation.
NOTE 6 NOTE PAYABLE--BANK
Note Payable to PNC Bank (Credit Line) at an interest rate of Prime plus
1/2%. The Credit Line originated on October 28, 1996 and matures on October 15,
1998. The Credit Line is collateralized by all personal property of the Able Oil
Company. The Credit Line is guaranteed by the sole Shareholder of the Company.
<TABLE>
<S> <C>
Credit Line Balance............................................... $ 277,066
</TABLE>
NOTE 7 LONG TERM DEBT
Notes Payable to Orix Credit Alliance, Inc. at a range of interest rates
from 9.00% to 11.25% with an average monthly payment of $3,132.35. The earliest
of theses Notes; originated on October 1, 1993 and the last Note matures on
August 24, 2001. The Notes are collateralized by various fuel oil trucks.
<TABLE>
<S> <C>
Notes Balance..................................................... $ 403,412
</TABLE>
Note Payable to Chrysler Financial at an interest rate of 8.5% with a
monthly payment of $612.91. The Note originated on May 16, 1996 and matures on
May 17, 2001. This Note is collateralized by a 1996 Jeep Grand Cherokee.
<TABLE>
<S> <C>
Note Balance....................................................... $ 21,284
</TABLE>
Note Payable to PNC Bank at an interest rate of 8.3% with a monthly payment
of $356.87. The note originated on May 28, 1995 and matures on May 28, 1999. The
Note is secured by a 1995 Dodge Truck.
<TABLE>
<S> <C>
Note Balance........................................................ $ 6,022
</TABLE>
Note Payable to World Omni at an interest rate of 8.869% with a monthly
payment of $234.99. The Note originated November 21, 1997 and matures December
21, 2000. The Note is collateralized by a Ford F-150 Pick-up Truck.
<TABLE>
<S> <C>
Note Balance....................................................... $ 17,873
</TABLE>
Note Payable to Orix Leasing Corp. At an interest rate of 9.111% with a
monthly payment of $4,846. The Note originated on March 19, 1997 and matures on
March 19, 2001. The Note is collateralized by 254 propane cylinders and 2
propane delivery trucks.
<TABLE>
<S> <C>
Note Balance...................................................... $ 124,883
</TABLE>
Note Payable to Summit Leasing Corp. At an interest rate of 8.50% with a
monthly payment of $1,124.52. The Note originated on November 10, 1997 and
matures on November 10, 2001. The Notes are collateralized by a 1998
Freightliner fuel oil truck.
<TABLE>
<S> <C>
Note Balance....................................................... $ 44,011
</TABLE>
F-10
<PAGE>
ABLE ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENT (CONTINUED)
DECEMBER 31, 1997
NOTE 7 LONG TERM DEBT (CONTINUED)
Note Payable to Case Credit at an interest rate of 7.9% with a monthly
payment of $1,157.83. The Note originated on May 20, 1995 and matures May 20,
1999. The Note is Collateralized by a backhoe.
<TABLE>
<S> <C>
Note Balance....................................................... $ 18,615
</TABLE>
Note Payable to Valley National Bank at an interest rate of 8.25% with a
monthly payment of $296.79. The Note originated on June 6, 1995 and matures on
June 6, 1999. The Note is collateralized by a 1995 Ford pick-up truck.
<TABLE>
<S> <C>
Note Balance........................................................ $ 4,958
</TABLE>
Note Payable to PNC Bank with a monthly payment of $1,250 plus interest at
1%, plus Prime. The Note originated on November 6, 1997 and matures October 30,
2000. Proceeds of the Note were used to buy two used oil trucks, a customer list
and to fund a non-compete payout to the seller of these assets.
<TABLE>
<S> <C>
Note Balance....................................................... $ 43,984
</TABLE>
Notes Payable to Ford Credit at interest rates of 9.5% with an average
monthly payment of $430.47. The Notes originated on October 27, 1995 and mature
on November 17, 1999. The Notes are collateralized by two 1995 Ford Vans.
<TABLE>
<S> <C>
Notes Balance...................................................... $ 16,894
</TABLE>
Notes Payable to Greentree Consumer Discount Company at an interest rate of
8.95% with an average monthly payment of $1,322.37. The Note originated on
October 1, 1996 and December 10, 1996 and matures on October 1, and December 10,
2000. The Notes are collateralized by two 1997 Freightliner Oil Trucks.
<TABLE>
<S> <C>
Note Balance....................................................... $ 81,477
</TABLE>
Note Payable to Connell's Fuel Oil Company at an interest rate of 8.5% with
a monthly payment of $9,839.82. The Note originated on October 28, 1996 and
matures on November 1, 2001. The Note is collateralized by the real property and
the improvements at 38 Diller Avenue, Newton, New Jersey. The Note is guaranteed
by the sole Shareholder of the Company.
<TABLE>
<S> <C>
Note Balance...................................................... $ 385,135
</TABLE>
Note Payable to PNC Bank at an interest rate of Prime plus 1% with a monthly
principal payment of $12,212.70. The Note originated on October 28, 1996. The
Note is collateralized by all personal property of the Company. The Note is
guaranteed by the sole Shareholder of the Company.
<TABLE>
<S> <C>
Note Balance...................................................... $ 415,232
</TABLE>
Line of Credit to American Equipment Leasing with a maximum credit
availability of $150,000. At December 31, 1997 the Company had not yet commenced
repaying the line of credit, which totaled $133,456. It is anticipated that the
Company will start repaying the line of credit in May of 1998 with a monthly
payment of $4,775. The Note bears interest at approximately Prime plus 1.25%.
<TABLE>
<S> <C>
Note Balance...................................................... $ 133,456
</TABLE>
F-11
<PAGE>
ABLE ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENT (CONTINUED)
DECEMBER 31, 1997
NOTE 7 LONG TERM DEBT (CONTINUED)
The Note and Credit Line payable to PNC Bank contains the following
financial covenants and conditions:
- Minimum Debt Service Ratio (defined as pretax profit interest expense plus
depreciation and amortization divided by mandatory principal and interest
payments for all debt plus capital expenditures) of 1.5:1. This ratio will
be calculated quarterly for the preceding twelve (12) months.
- Maximum Total Funded Debt to Tangible Net Worth plus subordinated debt
(tangible net worth to include customer list) of 3.0:1 at 12/31/96 and
thereafter, and 2.5:1 at 9/30/97 and thereafter.
- Maintain minimum Tangible Net Worth to include customer list of Northwest
plus subordinated debt, of $500,000 until 9/30/97, and $700,000 at 10/1/97
and thereafter.
- Inventory and accounts receivable excluding accounts with invoices unpaid
in excess of 60 days past due will not be less than 125% in the aggregate
of amounts drawn on the working capital line.
- Loans and advances to affiliates, subsidiaries, and to officers in excess
of $250,000 are to be deducted in a calculation of net worth. No other
debt permitted except the "seller" note and equipment purchases financed
with purchase money notes.
- No other liens permitted on assets pledged to PNC Bank.
- A thirty (30) day continuous annual clean-up of the Working Capital Line
of Credit.
The Company has either met or received a written waiver from PNC Bank on
these financial covenants. There are no restrictions on dividend distribution or
on distributions by the operating subsidiaries to the holding company.
Maturities on the Notes Payable subsequent to December 31, 1997 are as
follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDING PRINCIPAL
DECEMBER 31, AMOUNT
- -------------------------------------------------------------------------------- ------------
<S> <C>
1998............................................................................ $ 518,693
1999............................................................................ 520,490
2000............................................................................ 503,671
2001............................................................................ 174,382
------------
$ 1,717,236
------------
------------
</TABLE>
NOTE 8 COVENANT NOT TO COMPETE
On October 28, 1996, a Covenant Not To Compete was originated by the Able
Oil Company, Connell's Fuel Oil Company and William Toriello. The Covenant will
last 5 years from the date of inception with a monthly installment of $3,059.44
starting December 1, 1996.
<TABLE>
<S> <C>
Covenant Balance.................................................. $ 140,734
Current Liability................................................. 36,714
---------
Due After One Year................................................ $ 104,020
---------
---------
</TABLE>
F-12
<PAGE>
ABLE ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENT (CONTINUED)
DECEMBER 31, 1997
NOTE 9 OPERATING LEASES
Able Oil Company has an operating lease for its Rockaway, New Jersey
premises through August 30, 1999. The lease provides for a monthly payment of
$1,200 plus a one cent per gallon throughput, as per a monthly rack meter
reading.
Rent Expense for the current period was.....................................
$101,510
Estimated future rents are $14,400 per year, plus the one cent per gallon
through- put charges per the monthly rack meter readings.
The following summarizes the month to month operating leases for the other
subsidiaries:
<TABLE>
<S> <C>
Able Propane, LLC...................... $737.65, plus an escalation on
expenses
Total 1997 rent expense, $9,493
Able Oil Montgomery.................... $454.67, per month
Total 1997 rent expense, $5,525
Able Oil Melbourne..................... $238.50, per month
Total 1997 rent expense, $2,624
</TABLE>
NOTE 10 RELATED PARTY TRANSACTIONS
$45,527 is due from the sole Shareholder of the Company. This amount is
evidenced by a Note bearing interest at a rate of 8 1/2% between the sole
Shareholder and the Company.
NOTE 11 INCOME TAXES PAYABLE--PRIOR
Able Oil Company's tax returns have been examined by the Internal Revenue
Service for the years ending December 31, 1992, 1993, 1994 and 1995. The Company
has been assessed the following liabilities including interest and penalties:
<TABLE>
<S> <C>
1992 and 1993...................................................... $ 52,005
PAID............................................................. (5,000)
1994 and 1995...................................................... 6,805
---------
TOTAL DUE........................................................ $ 53,810
---------
---------
</TABLE>
The State of New Jersey, Division of Taxation has billed the Company based
upon information received from the Internal Revenue Service for the years 1992
and 1993, approximately $20,150. The above amounts are included on the balance
sheet in Income Taxes Payable--Prior.
<TABLE>
<S> <C>
Total.............................................................. $ 73,960
---------
---------
</TABLE>
The above assessed income taxes resulted for years prior to the formation of
Able Energy, Inc. and has been charged to income tax expense on Able Oil Company
in prior years.
NOTE 12 INCOME TAXES
Effective January 1, 1997 the Company adopted Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes.
F-13
<PAGE>
ABLE ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENT (CONTINUED)
DECEMBER 31, 1997
NOTE 12 INCOME TAXES (CONTINUED)
The differences between the statutory Federal Income Tax and Income Taxes is
accounted for as follows:
<TABLE>
<CAPTION>
PERCENT OF
PRETAX
AMOUNT INCOME
--------- -------------
<S> <C> <C>
Statutory Federal Income Tax...................................................... $ 34,295 34.0%
Increase resulting from State Income Tax, net of Federal Tax benefit.............. 15,050 5.9%
--------- ---
Income Taxes...................................................................... 49,345 39.9%
--------- ---
--------- ---
Income Taxes consist of:
Current......................................................................... 47,215
Deferred........................................................................ 2,130
---------
TOTAL......................................................................... $ 49,345
---------
---------
</TABLE>
The types of temporary differences between the tax bases of assets and
liabilities and their financial reporting amounts that give rise to a
significant portion of the deferred tax liability and deferred tax asset and
their approximate tax effects are as follows at December 31, 1997.
<TABLE>
<CAPTION>
TEMPORARY TAX
DIFFERENCE EFFECT
----------- ----------
<S> <C> <C>
Depreciation.................................................................... $ (59,314) $ (18,825)
Allowance for Doubtful Accounts................................................. 52,584 16,695
</TABLE>
NOTE 13 PROFIT SHARING PLAN
Effective January 1, 1997, Able Oil Company established a Qualified Profit
Sharing Plan under Internal Revenue Code Section 401-K. The Company matches 25%
of qualified employee contributions. The expense for 1997 was $8,239.
NOTE 14 COMMITMENTS AND CONTINGENCIES
The Company is subject to laws and regulations relating to the protection of
the environment. While it is not possible to quantify with certainty the
potential impact of actions regarding environmental matters, in the opinion of
management, compliance with the present environmental protection laws will not
have a material adverse effect on the financial condition, competitive position,
or capital expenditures of the Company.
Able Oil Company has been examined by the Internal Revenue Service through
the year ended December 31, 1995 (see Note 10). The only open year for Able Oil
Company is December 31, 1996.
NOTE 15 SUBSEQUENT EVENTS
MARKETING AGREEMENT
In April 1998, the Company entered into a marketing alliance agreement (the
"Marketing Agreement") with AllEnergy, LLC, a limited liability company
organized under the laws of the State of Massachusetts. Under the Marketing
Agreement, the Company will market and sell natural gas to residential and
commercial customers in New Jersey. The Company will receive from AllEnergy a
F-14
<PAGE>
ABLE ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENT (CONTINUED)
DECEMBER 31, 1997
NOTE 15 SUBSEQUENT EVENTS (CONTINUED)
commission equal to 35% of the gross profit margin for sales generated by the
Company. Also, pursuant to the Marketing Agreement, should the New Jersey Board
of Public Utilities approve a program for the retail sale of electricity, the
Company has the option to market and sell electrical service under similar terms
and conditions. There can be no assurance that the Company will generate or
receive any revenues from this agreement. The agreement does not have any
minimum purchase requirements and may be terminated by either party at any time.
EMPLOYMENT AGREEMENTS
On the Effective Date of the Public Issue of the Company Stock, Timothy
Harrington and Christopher P. Westad will enter into three year employment
agreements with the Company. Timothy Harrington will be retained as Chairman of
the Board, Chief Executive Officer and Secretary of the Company at an annual
salary of $225,000. Christopher Westad will be retained as President of the
Company at an annual salary of $100,000. Each of the Messrs. Harrington and
Westad are entitled to bonuses pursuant to their employment agreements as set
forth below:
"THE BOARD OF DIRECTORS WILL FIX THE BONUS PAYABLE UNDER EACH EMPLOYMENT
CONTRACT AT THE END OF EACH YEAR; PROVIDED SUCH BONUSES, PLUS ALL OTHER BONUSES
PAYABLE TO EXECUTIVE MANAGEMENT, SHALL NOT EXCEED, IN THE AGGREGATE, A "BONUS
POOL". THE BONUS POOL SHALL EQUAL UP TO 5% OF EARNINGS BEFORE TAXES DEPRECIATION
AND AMORTIZATION ("EBITDA") FOR 1998, PROVIDED THE COMPANY ACHIEVES AT LEAST
$800,000 IN EBT, 10% OF EBT FOR 1999 AND 2000, PROVIDED THE COMPANY ACHIEVES AT
LEAST $3,000,000 AND $5,000,000, RESPECTIVELY, OF EBT IN EACH OF SUCH YEARS.
THESE AGREEMENTS WILL NOT BE SUBJECT TO AMENDMENT DURING THEIR TERM WITHOUT THE
CONSENT OF THE UNDERWRITER."
PER SHARE INFORMATION
Per Share information has been computed based on the weighted average number
of shares. The shares give effect to a 2000 for 1 stock split to be effectuated
by the Company.
NOTE 16 RESTATEMENT OF FINANCIAL STATEMENTS
The following items on the December 31, 1997 financial statements have been
restated in relation to the combination of entities under common control (see
Note 1).
<TABLE>
<CAPTION>
ORIGINALLY
STATED RESTATED
---------- ----------
<S> <C> <C>
CONSOLIDATED BALANCE SHEET
Paid in Surplus....................................................... $ 322,198 $ 7,000
Retained Earnings..................................................... 76,061 391,259
---------- ----------
TOTAL............................................................... $ 398,259 $ 398,259
---------- ----------
---------- ----------
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
Retained Earnings--Beginning of Year.................................. $ 0 $ 315,198
Retained Earnings--End of Year........................................ 76,061 391,259
</TABLE>
F-15
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED IN CONNECTION
WITH THIS OFFERING TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER
THAN THOSE CONTAINED IN THIS PROSPECTUS. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER OR A SOLICITATION IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE CIRCUMSTANCES OF THE COMPANY OR
THE FACTS HEREIN SET FORTH SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................
Risk Factors..............................................................
Use of Proceeds...........................................................
Capitalization............................................................
Dilution..................................................................
Selected Financial Data...................................................
Management's Discussion and Analysis of Financial Condition and Results of
Operations..............................................................
Business..................................................................
Management................................................................
Principal Stockholders....................................................
Certain Transactions......................................................
Description of Securities.................................................
Investment Canada Act.....................................................
Underwriting..............................................................
Legal Matters.............................................................
Experts...................................................................
Additional Information....................................................
Financial Statements......................................................
</TABLE>
UNTIL , 1998 (25 DAYS AFTER THE DATE OF THE PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
[LOGO]
ABLE ENERGY, INC.
875,000 UNITS, CONSISTING OF
1,750,000 SHARES OF
COMMON STOCK AND
875,000 COMMON
STOCK PURCHASE WARRANTS
---------------------
PROSPECTUS
---------------------
FIRST PROVIDENCE FINANCIAL GROUP
INCORPORATED
, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The by-laws of the Company provide that the Company shall indemnify
directors and officers of the Company. The pertinent section of Delaware
Corporation Law regarding indemnification of officers and directors is set forth
below. In addition, upon effectiveness of this registration statement,
management intends to obtain officers and directors liability insurance.
See the second and third paragraphs of Item 28 below for information
regarding the position of the Securities and Exchange Commission (the
"Commission") with respect to the effect of any indemnification for liabilities
arising under the Securities Act of 1933, as amended (the "Securities Act").
Section 102(b) (7) of the Delaware General Corporation Law permits a
corporation to provide in its certificate of incorporation that a director of
the corporation shall not be personally liable to the corporation or its
shareholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any brach of the director's duty of loyalty to the
corporatin or its shareholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) for
payments of unlawful dividends or unlawful stock repurchase or redemption, or
(iv) for any transaction from which the director derived an improper personal
benefit. The Company's Certificate of Incorpration contains such a provision.
The Company's Certificate of Incorporation provides, pursuant to the
authority granted by Seciton 145 of the Delaware General Corporation Law, that
the Company indemnify directors and officers against expenses (including
attorneys' fees) judgments, fines and suits or proceedings, whther civil,
criminal, administrative or investigative, if they acted in good faith and in a
manner they reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. Whle the statue provides
that it is not exclusive of other indemnification that may be granted by a
corporation's charter, by-laws, disinterested director vote, shareholder vote,
agreement or otherwise, neither the Company's Certificate of Incorporation nor
Bylaws nor any other agreement contains additional indemnification provisions.
(1) INDEMNIFICATION OF DIRECTORS--A corporation may indemnify a director or
officer of the corporation, a former director or officer of the corporation or a
person who acts or acted at the corporation's request as a director or officer
of a body corporate of which the corporation is or was a shareholder or
creditor, and his or her heirs and legal representatives, against all costs,
charges and expenses, including an amount paid to settle an action or satisfy a
judgment, reasonably incurred by him or her in respect of any civil, criminal or
administrative action or proceeding to which he or she is a party by reason of
being or having been a director or officer of such corporation or body
corporate, if,
(a) he or she acted honestly and in good faith with a view to the best
interests of the corporation; and
(b) in the case of a criminal or administrative action or proceeding
that is enforced by a monetary penalty, he or she has reasonable grounds for
believing that his or her conduct was lawful.
II-1
<PAGE>
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses in connection with the
issuance and distribution of the securities offered hereby.
<TABLE>
<S> <C>
SEC registration fee............................................ $4,446.20
NASD registration fee........................................... 2,007.19
Nasdaq SmallCap Market listing fee.............................. 15,000.00
Boston Stock Exchange listing fee............................... 7,500.00
Printing and engraving.......................................... 55,000.00
Accountants' fees and expenses.................................. 25,000.00
Legal fees...................................................... 100,000.00
Transfer agent's and warrant agent's fees and expenses.......... 5,000.00
Blue Sky fees and expenses...................................... 50,000.00
Underwriter's non-accountable expense allowance................. 216,562.50
Underwriter's consulting agreement.............................. 166,000.00
Miscellaneous................................................... 31,609.11
---------
Total....................................................... 678,125.00
---------
---------
</TABLE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
In the past three years the Company has issued securities to a limited
number of persons as described below. Except as indicated, there were no
underwriters involved in the transactions and there were no underwriting
discounts or commissions paid in connection therewith:
The Company will issue an aggregate of 25,000 shares of its common stock to
Sichenzia, Ross & Friedman LLP in consideration for legal services rendered
during the previous twelve months. These shares will be issued pursuant to
Section 4(2) of the Securities Act. The value of these legal services was
determined to be $25,000.
In March 1997, Timothy Harrington received 1,000 shares of the Company's
Common Stock in consideration for his active participation in the founding of
the Company.
ITEM 27. EXHIBITS
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement***
3.1 Articles of Incorporation of Registrant**
3.2 By-Laws of Registrant**
4.1 Form of Underwriters' Purchase Option***
4.2 Form of Warrant Agreement between the Company and Continental Stock Transfer & Trust
Company***
4.3 Specimen Common Stock Certificate***
4.4 Specimen Redeemable Common Stock Purchase Warrant***
5.1 Opinion of Sichenzia, Ross & Friedman LLP*
10.1 Form of Consulting Agreement with Underwriter***
10.2 1998 Stock Option Plan***
10.3 Lease of Company's Facility at 344 Route 46, Rockaway, New Jersey**
10.4 Form of employment agreement between the Company and Timothy Harrington, to be
executed on or before the Effective Date***
10.5 Form of employment agreement between the Company and Christopher P. Wested, to be
executed on or before the Effective Date***
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
10.6 $600,000 Revolving Credit Facility and $350,000 Line of Credit with PNC Bank,
National Association dated October 23, 1996, and amendment thereto, dated June 12,
1998, extending the Line of Credit to $500,000**
10.7 $675,000 Term Loan Agreement dated June 11, 1998 by and between the Company and PNC
Bank, National Association and exhibits thereto, including Pledge Agreement by and
between Timothy Harrington and PNC Bank, Guaranty and Suretyship Agreement by and
between the Company and PNC Bank, and Pledge Agreement by and between the Company and
PNC Bank**
10.8 Marketing Alliance Agreement, dated March 1, 1998, between the Company and AllEnergy
Marketing Company, L.L.C., wherby the Company obtained the exclusive right to market
natural gas supplied by AllEnergy in specified areas*
10.9 In Tank agreement between the Company and Mieco, Inc., dated May 11, 1998, for the
storage of the Mieco's petroleum products in the Company's tank facilities.*
10.10 Form of Company's Pre-Purchase Enrollment Form***
10.11 Oil Supply Agreement between the Company and Mieco, Inc., dated May 19, 1998*
10.12 Letter agreement, dated July 3, 1998, between the Company and Mieco, Inc. modifying
the Oil Supply Agreement, dated May 19, 1998, whereby the Company agreed to increase
the amount of oil purchased from Mieco*
10.13 Oil Supply Agreement between the Company and Amarada Hess Corporation, dated July 30,
1998*
10.14 Oil Supply Agreement between the Company and Bayway (TOSCO) Refining Company, dated
March 27, 1998*
10.15 Oil Supply Agreement between the Company and Koch Refining Company, L.P., dated March
17, 1998*
10.16 Fuel Purchase Agreement (Natural Gas) between the Company and Ferrellgas, dated
September 3, 1996*
10.17 Fuel Purchase Agreement (Propane) between the Company and Keystone Propane Service,
Inc., dated July 28, 1998*
10.18 Lease between the Company and Summit Leasing Corporation ("Summit"), dated December
3, 1997*
21.1 List of Subsidiaries of Registrant**
23.1 Consent of Simontacchi & Company LLP, the Company's Independent Auditors*
23.2 Consent of Sichenzia, Ross & Friedman LLP (incorporated in to Exhibit 5.1)***
23.3 Consent of James Purcaro to act as Director as of the Effective Date of the
Registration Statement**
27.1 Financial Data Schedule*
</TABLE>
- ------------------------
(*) Filed herewith
(**) Previously filed
(***) To be filed by amendment
ITEM 28. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the small business
issuer pursuant to any charter provision, by-law, contract arrangements,
statute, or otherwise, the registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the small business issuer in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered,
II-3
<PAGE>
the small business issuer will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned small business issuer hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement: (i) To include
any Prospectus required by section 10(a)(3) of the Act; (ii) To reflect in
the Prospectus any facts or events arising after the effective date of the
registration statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in
the information set forth in the registration statement; (iii) To include
any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to
such information in the registration statement.
(2) That, for the purpose of determining any liability under the Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the Offering of
such securities at that time shall be deemed to be the initial bona fide
Offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the Offering.
(4) For determining any liability under the Act, treat the information
omitted from the form of Prospectus filed as part of this registration
statement in reliance upon Rule 430A and contained in a form of Prospectus
filed by the small business issuer under Rule 424(b)(1), or (4) or 497(h),
under the Act as part of this registration statement as of the time the
Commission declared it effective.
(5) For determining any liability under the Act, treat each
post-effective amendment that contains a form of Prospectus as a new
registration statement at that time as the initial bona fide Offering of
those securities.
(6) To provide to the Underwriter at the closing, as specified in the
underwriting agreement, certificates in such denominations and registered in
such names as required by the Underwriter to permit prompt delivery to each
purchaser.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Act, the Registrant certifies that it
has reasonable grounds to believe that it meets all of the requirement for
filing on Form SB-2 and has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the State of New
Jersey on November 6, 1998.
ABLE ENERGY, INC.
/s/ TIMOTHY HARRINGTON /s/ CHRISTOPHER WESTAD
------------------------------ -----------------------------------
Timothy Harrington, Chief Christopher Westad, President
Executive Officer
By: By:
Pursuant to the requirements of the Act, this Registration Statement has
been signed by the following persons in the capacities and on the dates
indicated.
We, the undersigned officers and directors of ABLE ENERGY, INC. hereby
severally constitute and appoint Timothy Harrington and Christopher Westad, our
true and lawful attorneys-in-fact and agents with full power of substitution for
us and in our stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement and all
documents relating thereto, and to file the same, with all exhibits thereto and
other documents in connection therewith with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing necessary or advisable
to be done in and about the premises, as fully to all intents and purposes as
they might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or their substitutes, may lawfully do or cause to
be done by virtue hereof.
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
/s/ TIMOTHY HARRINGTON Chairman of the Board of
- ------------------------------ Directors, Chief Executive November 6, 1998
Timothy Harrington Officer and Secretary
/s/ CHRISTOPHER WESTAD President, Chief Financial
- ------------------------------ Officer and Director November 6, 1998
Christopher Westad
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
- --------- --------------------------------------------------------------------------------------------------- -----
<C> <S> <C>
1.1 Form of Underwriting Agreement***
3.1 Articles of Incorporation of Registrant**
3.2 By-Laws of Registrant**
4.1 Form of Underwriters' Purchase Option***
4.2 Form of Warrant Agreement between the Company and Continental Stock Transfer & Trust Company**
4.3 Specimen Common Stock Certificate***
4.4 Specimen Redeemable Common Stock Purchase Warrant***
5.1 Opinion of Sichenzia, Ross & Friedman LLP*
10.1 Form of Consulting Agreement with Underwriter***
10.2 1998 Stock Option Plan***
10.3 Lease of Company's Facility at 344 Route 46, Rockaway, New Jersey**
10.4 Form of employment agreement between the Company and Timothy Harrington, to be executed on or
before the Effective Date***
10.5 Form of employment agreement between the Company and Christopher P. Wested, to be executed on or
before the Effective Date***
10.6 $600,000 Revolving Credit Facility and $350,000 Line of Credit with PNC Bank, National Association
dated October 23, 1996, and amendment thereto, dated June 12, 1998, extending the Line of Credit to
$500,000**
10.7 $675,000 Term Loan Agreement dated June 11, 1998 by and between the Company and PNC Bank, National
Association and exhibits thereto, including Pledge Agreement by and between Timothy Harrington and
PNC Bank, Guaranty and Suretyship Agreement by and between the Company and PNC Bank, and Pledge
Agreement by and between the Company and PNC Bank**
10.8 Marketing Alliance Agreement, dated March 1, 1998, between the Company and AllEnergy Marketing
Company, L.L.C., wherby the Company obtained the exclusive right to market natural gas supplied by
AllEnergy in specified areas*
10.9 In Tank agreement between the Company and Mieco, Inc., dated May 11, 1998, for the storage of the
Mieco's petroleum products in the Company's tank facilities.*
10.10 Form of Company's Pre-Purchase Enrollment Form***
10.11 Oil Supply Agreement between the Company and Mieco, Inc., dated May 19, 1998*
10.12 Letter agreement, dated July 3, 1998, between the Company and Mieco, Inc. modifying the Oil Supply
Agreement, dated May 19, 1998, whereby the Company agreed to increase the amount of oil purchased
from Mieco*
10.13 Oil Supply Agreement between the Company and Amarada Hess Corporation, dated July 30, 1998*
10.14 Oil Supply Agreement between the Company and Bayway (TOSCO) Refining Company, dated March 27, 1998*
10.15 Oil Supply Agreement between the Company and Koch Refining Company, L.P., dated March 17, 1998*
10.16 Fuel Purchase Agreement (Natural Gas) between the Company and Ferrellgas, dated September 3, 1996*
10.17 Fuel Purchase Agreement (Propane) between the Company and Keystone Propane Service, Inc., dated
July 28, 1998*
10.18 Lease between the Company and Summit Leasing Corporation ("Summit"), dated December 3, 1997*
21.1 List of Subsidiaries of Registrant**
23.1 Consent of Simontacchi & Company LLP, the Company's Independent Auditors*
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
23.2 Consent of Sichenzia, Ross & Friedman LLP (incorporated in to Exhibit 5.1)*
23.3 Consent of James Purcaro to act as Director as of the Effective Date of the Registration
Statement**
27.1 Financial Data Schedule
</TABLE>
- ------------------------
(*) Filed herewith
(**) Previously filed
(***) To be filed by amendment
<PAGE>
Exhibit 5.1
SICHENZIA, ROSS & FRIEDMAN LLP
ATTORNEYS AT LAW
135 West 50th Street, 20th Floor
New York, New York 10020
------------------------
Telephone: (212) 664-1200
Facsimile: (212) 664-7329
E-Mail: [email protected]
November 6, 1998
VIA ELECTRONIC TRANSMISSION
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, CC 20549
Re: ABLE ENERGY, INC.
SEC File No. 333-59109
Ladies and Gentlemen:
We refer to the above-captioned registration statement on Form SB-2 (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Act"), filed by Able Energy, Inc., a Delaware corporation (the "Company"), with
the Securities and Exchange Commission.
We have examined the originals, photocopies, certified copies or other
evidence of such records of the Company, certificates of officers of the Company
and public officials, and other documents as we have deemed relevant and
necessary as a basis for the opinion hereinafter expressed. In such examination,
we have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as certified copies or photocopies and the
authenticity of the originals of such latter documents.
Based on our examination mentioned above, we are of the opinion that the
securities being registered to be sold pursuant to the Registration Statement
are duly authorized and will be, when sold in the manner described in the
Registration Statement, legally and validly issued, and fully paid and
nonassessable.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to our firm under "Legal Matters" in
the related Prospectus. In giving the foregoing consent, we do not hereby admit
that we are in the category of persons whose consent is required under Section 7
of the Act, or the rules and regulations of the Securities and Exchange
Commission.
Very truly yours,
/s/ Sichenzia, Ross & Friedman, LLP
--------------------------------------
Sichenzia, Ross & Friedman, LLP
<PAGE>
Exhibit 10.8
MARKETING ALLIANCE AGREEMENT
This Marketing Alliance Agreement (the "Agreement") is entered into on March
1, 1998, by and between AllEnergy Marketing Company, L.L.C. ("AllEnergy"). a
Massachusetts limited liability company located at Three University Office
Park, 95 Sawyer Road, Waltham, MA 02154, and Able Energy Company ("Able"),
located at 344 Route 46, Rockaway, NJ 07866. AllEnergy and Able may
hereinafter be referred to individually as "Party" or collectively as
"Parties".
1. Exclusivity
Able agrees that during the term of this agreement, it shall market natural
gas exclusively on behalf of AllEnergy in the regions where AllEnergy is
conducting business. AllEnergy will utilize Able exclusively to market and
sell to residential customers in the NJ Natural Gas Company's franchise
territory. Able reserves the right to market natural gas accounts, rejected
by AllEnergy, with other gas marketers. AllEnergy shall be responsible for
the coordination of the sales activities of the Parties.
2. Status As Independent Contractor
Able shall at all times remain an independent contractor and under no
circumstances shall be considered an employee of AllEnergy.
3. Market Segments
Able may sell natural gas to commercial and industrial customers that consume
annually less than 10,000 dth per Customer location. Able may also on a
preapproved basis by AllEnergy solicit and sell natural gas to other
commercial and industrial Customers that consume more than 10,000 dth
annually.
4. Price and Term of Customer Orders
Able shall solicit and take orders from Customers for natural gas according
to the pricing methodology specified by AllEnergy. AllEnergy's current
standard terms and conditions are set fourth in its Natural Gas Sales
Agreement, which is attached hereto as Exhibit A. The terms and conditions
set fourth in this Agreement are subject to change by AllEnergy at its sole
discretion.
5. Acceptance and Continuation of Accounts
AllEnergy shall at times retain the sole and exclusive discretion to decline
or accept any Customer order. AllEnergy shall not be responsible for any
commitments made by Able unless such commitments are accepted by AllEnergy.
AllEnergy will use its best to continually coordinate with Able concerning
acceptance criteria for natural gas accounts.
6. Assistance in Presentation of Sales / Promotional Materials
Able shall be provided directly with necessary marketing assistance and
materials deemed necessary by AllEnergy to effectively execute this
engagement, and except for these materials, AllEnergy shall not be liable
for, nor shall it reimburse Able for any expenses.
Able shall submit all sales communications and promotional materials to be
used by Able to sell natural gas for written approval in advance of the
implementation or use of the same, and AllEnergy shall provide a written
response within ten (10) days of receipt of same either approving, modifying
or rejecting any materials so submitted to it.
<PAGE>
7. Payment of Commission
Unless otherwise agreed to, Able's commission on new sales and renewals shall
be determined by and equal to 35% of the gross margin for sales generated by
Able.
The commission will be paid monthly, based on the sales volumes as estimated
by AllEnergy, and spread equally over the life of the contract beginning in
the first month of deliveries. Payment shall be made to:
Able Energy Company
344 Route 46
Rockaway, NJ 07866
Attn: Tim Harrington
It is expressly understood that Able's right to commission is based upon the
ability of AllEnergy to collect the proceeds represented by these sales in a
timely manner. Under extreme circumstances, such as, but not limited to,
chronic non-payment of AllEnergy invoices, early termination of sales
agreement(s), facility shutdowns, etc., AllEnergy in its reasonable
discretion may elect to adjust and/or recover commissions paid.
8. Electric
Should an economically feasible electric retail sales program
be approved by the Board of Public Utilities then Able will be given the
opportunity to sell electric for AllEnergy to all natural gas Customers
originally sold by Able and accepted by AllEnergy. Commission on these
accounts will be 35% of the gross margin and all other terms of this
Agreement will apply. AllEnergy is not, however, obligated to become an
electric supplier if, at their sole discretion, it is not in their best
interest to do so. If an electric retail sales program opens behind any
utility in an area where Able and AllEnergy are currently conducting business
and AllEnergy is not prepared to execute sales agreements with Customers
within 180 days of the opening of such program then Able reserves the right
to market electric to these Customers through another marketer.
9. Term
This Agreement shall become effective on March 1, 1998 and shall continue,
unless sooner terminated pursuant to its terms, for thirty-six (36) months.
After the initial term of thirty-six (36) months this Agreement shall
continue in effect thereafter from year to year, terminable in writing by
either Party upon sixty (60) days written prior notice to the beginning of
any subsequent renewal period.
10. Terminination
This Agreement shall immediately terminate upon written notice by one Party
to the other, without the necessity of prior notice, in the event of (i) the
filing of a voluntary or involuntary petition under a bankruptcy law, or any
other law for the relief of debtors, or other law similar in purpose or
effect, the effect of which is to cause the notified Party to have its
business discontinued; (ii) the notified Party making an assignment for the
benefit of creditors, or (iii) the notified Party becoming insolvent.
In addition, AllEnergy retains the right to terminate this Agreement in the
event Able is convicted of a crime of moral turpitude or Able engages in
continuous conduct detrimental to the economic interest of AllEnergy.
Upon termination of this Agreement all Customers must fulfill the
outstanding terms and conditions of their Natural Gas Sales Agreement with
AllEnergy. Upon termination, AllEnergy will not remunerate Able for any
future renewals of their existing business, thus providing Able the option to
solicit, take away, or call on any of the accounts that ABLE had delivered to
AllEnergy prior to the termination date.
2
<PAGE>
11. Audit
Each of the Parties hereto agree that determination of gross margin by
AllEnergy is final and binding in all transactions. It is further agreed that
neither Party has the right to audit the books and records of the other Party
pertaining to invoices, statements, and/or commission payments. AllEnergy
will, however, be obligated to provide Able with a detailed commission
statement for each contract within thirty (30) days of same being executed by
AllEnergy.
12. Confidentiality
As used herein, the term "Confidential Information" means information which
is (a) proprietary and not generally available to the public or trade and (b)
identified by the providing Party in the form given (either orally or in
writing) as being Confidential Information under this Agreement.
All Confidential Information exchanged pursuant to this Agreement shall remain
the exclusive property of the providing Party. The Party receiving the
Confidential Information shall keep such information confidential, and shall
not disclose such information to any person except its employees, directors,
agents, advisors or representatives thereof (collectively,
"Representatives") who have agreed to be bound by this Article and to whom
disclosure is necessary to enable the receiving Party to perform its
obligations under this Agreement. Further, neither the receiving Party nor
its representatives shall use Confidential Information for any purpose other
than to assist or enable the receiving Party in the performance of its
obligations under this Agreement. The provisions of this Article will survive
the termination or cancellation of this Agreement. However, the obligation
not to use or disclose Confidential Information shall end three (3) years
after the date of receipt of such information.
The Parties agree that, notwithstanding the foregoing, neither Party shall
have any liability for any disclosure or use of any information communicated
by the other Party if
1. such information was known by the receiving Party prior to its
receipt from the providing Party; or
2. such use or disclosure occurs after such information becomes public
knowledge through no wrongful act of the receiving Party; or
3. such use or disclosure occurs after such information is rightfully
received by the receiving Party from a source other than the providing
Party; or
4. such use or disclosure occurs after such information is independently
developed by the receiving Party and such independent development can be
shown by documentary evidence.
All materials delivered or communicated during the operation of this
Agreement will remain the property of the providing Party. Upon request of
the providing Party, the receiving Party shall promptly return to the
providing Party all materials received under this Agreement and any copies
thereof or, if the providing Party so requests, the receiving Party shall
destroy all materials and provide the providing Party with a written
certification of such destruction.
The providing Party makes no representation or warranty as to the accuracy or
completeness of the information provided hereunder, and neither it nor its
Representatives shall have any liability to the receiving Party resulting
from its use by the receiving Party or its Representatives.
As the injury for unauthorized disclosure of Confidential Information is
impossible to calculate, the Parties agrees
3
<PAGE>
that the providing Party is entitled to specific performance to enforce this
Article, in addition to any other remedy available at law or in equity.
In the event that a Party is requested or required (pursuant to any judicial
proceeding, civil discovery demand, criminal investigation, agency inquiry or
other similar legal process) to disclose any Confidential Information, the
Parties agree that the Party that receives such a request will provide the
other Party with prompt notice of that request prior to complying therewith
so that the other Party may seek an appropriate order and/or waive compliance
with this Agreement. If, in the absence of a protective order, or receipt of
a waiver hereunder, a Party is nonetheless legally compelled to disclose
Confidential Information, that Party may make such disclosure without
liability hereunder.
13. Notices
Whenever under the terms of this Agreement any notice is required or
permitted to be given by one Party to the other, such notice will be given in
writing and will be deemed to have been sufficiently given for all purposes
hereof if given by telegram, facsimile or mail, postage prepaid to the
Parties at the addresses set forth below, or at such other address as the
Parties may direct from time to time:
To AllEnergy: AllEnergy Marketing Company, LLC
476 Union Avenue
Middlesex, NJ 08846
Attn: Scott K. Fawcett
Phone: 908-356-2580
Fax: 908-356-2757
To ABLE: Able Energy Company
344 Route 46
Rockaway, NY 07866
Attn: Tim Harrington
Phone: (973) 625-1012
Fax: (973) 625-9298
14. Limitation of Liability
The exclusive measure of damages recoverable from claims arising from,
under, or in connection with this agreement or for any failure of performance
related hereto, whether arising, by negligence, willful misconduct or
otherwise, will be limited to direct damages only and such damages will be
the sole and exclusive remedy hereunder and all other remedies or damages are
waived. In no event will any party be liable for any lost or prospective
profits or any other incidental, consequential, punitive, exemplary, or
indirect losses or damages in tort, contract, or otherwise.
15. Indemnification
AllEnergy and Able, respectively, shall each defend, indemnify and hold
harmless the other, its representatives, officers, directors, agents, and
employees from and against all claims, damage, losses and expenses including
attorney fees, for injury to or death of, persons or damage to or loss of
property, arising out of or resulting from the acts of the indemnifying Party
or its Representative, in the performance of its obligations under this
Agreement. However, neither Party shall be liable to the other for loss or
damage caused by the negligence of the other Party or such other Party's
Representatives. This obligation shall survive the termination of this
Agreement.
4
<PAGE>
16. Assignment
Neither Party shall assign this Agreement without the prior written consent
of the other. Any Party's transfer in violation of this paragraph will be
void.
17. Choice of Law
This Agreement shall be governed and construed under the laws of the State of
New Jersey, without regard to conflicts of laws rules or principles.
18. No Waiver
No failure on the part of either Party to exercise and no delay in exercising
any right, privilege or power under this Agreement shall operate as a waiver
or relinquishment, nor shall any single or partial exercise by either Party
preclude any other or further exercise of any other, right, privilege or
power.
19. Severability
The provisions of this Agreement are separate and divisible and if any court
shall determine any provision of this Agreement is void and/or unenforceable,
the remaining provision or provisions shall remain in force.
20. Entire Agreement
This Agreement contains the entire agreement and understanding between the
Parties and supercedes all prior agreements and understandings.
21. Modification
Modifications may be incorporated into the Agreement in one or more written
amendments, and shall be effective when signed by a duly authorized
representative of each Party.
Intending to be legally bound, the Parties have caused this Agreement to be
executed by their duly authorized representatives on the date first noted
above.
ALLENERGY MARKETING COMPANY, LLC ABLE ENERGY COMPANY
/S/ JOSEPH L. SANTO /S/ TIMOTHY HARRINGTON
By: ____________________________ By: ____________________________
Name: Joseph L. Santo Name: Timothy Harrington
Title: Director - Sales Title: President
Date: 3/4/98 Date: 3/2/98
5
<PAGE>
NON-DISCLOSURE AGREEMENT
AGREEMENT dated as of June 30, 1998, between ABLE ENERGY, INC. "ABLE", and
ALLENERGY MARKETING COMPANY, L.L.C. ("ALLENERGY"), each, individually, a
"Party" and, collectively, the "Parties".
WHEREAS, the Parties possess certain confidential and proprietary
Information (as such term is defined below); and
WHEREAS, the Parties are interested in conducting discussions in connection
with the possible acquisition by AllEnergy, or its designee, of all or part
of Able's energy business (the "Discussions"); and
WHEREAS, the Parties are willing to disclose Information to each other,
subject to the terms and conditions of this Agreement, in connection with the
Discussions;
NOW, THEREFORE, the Parties mutually agree as follows:
1. (i) The term "Information" means all financial, technical and other
non-public or proprietary information which is furnished or disclosed
by the Disclosing Party or its affiliates (or its or its affiliates'
agents, servants, representatives, or employees) to the recipient in
connection herewith and which, if disclosed in tangible form, is
marked with the words "Confidential" or "Proprietary" or
markings of similar import and, if disclosed orally,
is identified as confidential by the Disclosing Party at the time
of disclosure and is later identified as confidential
in a written memorandum delivered to Recipient promptly following
such oral disclosure.
(ii) The term "Recipient" shall mean a Party to whom the other Party
discloses Information in its possession.
(iii) The term "Disclosing Party" shall mean the Party disclosing
Information in its possession to a Recipient.
2. Recipient shall receive all Information in strict confidence, shall
exercise reasonable care to maintain the confidentiality and secrecy of the
Information, and shall not divulge Information to any unaffiliated third party
without the prior written consent of the Disclosing Party. The foregoing
notwithstanding, the Recipient may disclose Information to its and its
affiliates' officers, directors, employees, or representatives to the extent
each such officer, director, employee, or representative has a need to know
such Information for the purpose contemplated by this Agreement and is
obligated to maintain the confidentiality of such Information. The Recipient
shall be responsible hereunder for any breach of the terms of this Agreement
caused by its or its affiliates' officers, directors, employees or other
representatives.
Recipient shall not acquire any rights in Information by virtue of its
disclosure hereunder. No license to Recipient, under any trademark, patent,
or other intellectual property right, is either granted or implied by the
conveying of Information to the Recipient.
6
<PAGE>
3. (i) This Agreement shall not apply to Information which,
(a) at the time of disclosure to the Recipient, is in
the public domain, or thereafter enters the public
domain without any action or omission by the Recipient
or its affiliates,
(b) is rightfully in possession or knowledge of Recipient (or
its affiliates) prior to its disclosure by the Disclosing
Party to Recipient hereunder (as shown by written records),
or
(c) is rightfully acquired by recipient from a third party who
is not under any obligation of confidence with respect to
such information.
(ii) Anything in this Agreement to the contrary notwithstanding,
Recipient may disclose Information to the extent it is required to do so by
law, by a court or by other governmental or regulatory authorities; provided
however, that Recipient, when possible, shall give the Disclosing Party
written notice of such a required disclosure prior to making such disclosure
so that the Disclosing Party may seek a protective order with respect to such
information.
4. Recipient shall use Information disclosed to it by the Disclosing
Party solely in connection with the Discussions between the Disclosing Party
(including its affiliates) and Recipient (including its affiliates) and shall
not use, directly or indirectly, any such Information for any other purpose
without the Disclosing Party's prior written consent.
5. Recipient shall return and deliver to the Disclosing Party, or destroy
and certify such destruction of, all tangible Information of such Disclosing
Party, including copies and abstracts thereof, within 30 days of a written
request by the Disclosing Party.
6. Nothing contained herein shall bind, require, or otherwise commit a
Party (or any affiliate thereof) to proceed with any sale, acquisition or
other transaction of or with the other Party or any other entity.
7. Recipient's duties of confidentiality as set forth herein shall have a
term of three (3) years from the date as of which this Agreement is executed.
Either Party may terminate this Agreement by written notice to the other
Party. Notwithstanding any such termination, all rights and obligations
hereunder shall survive with respect to Information disclosed prior to such
termination for the term provided in this Section 7.
8. The Parties acknowledge that a breach of this Agreement by Recipient
would cause irreparable harm to the Disclosing Party and/or its affiliates
for which money damages would be inadequate and would entitle the Disclosing
Party to injunctive relief and to such other remedies as may be provided
by law.
9. This Agreement shall be governed and construed in accordance with the
laws of The Commonwealth of Massachusetts without regard to the principles of
the conflict of laws contained therein.
7
<PAGE>
10. This Agreement may be modified only by an instrument in writing
signed by authorized representatives of both Parties to this Agreement.
11. This Agreement may not be assigned without the express prior written
consent of both Parties hereto; provided, however, that either Party may
assign this Agreement to an affiliate of such Party without the other Party's
consent.
12. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision hereof shall be prohibited by, or determined to be
invalid under, applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement. All
obligations and rights of the Parties expressed herein shall be in addition
to, and not in limitation of, those provided by applicable law.
(Signatures are on following page)
8
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by authorized
representatives of the Parties as of the date first above written.
ABLE ENERGY, INC.
By: /s/ Timothy Harrington
------------------------------
Name: Timothy Harrington
Title:
ALLENERGY MARKETING COMPANY, L.L.C.
By: /s/ W.H. Heil
------------------------------
Name: W.H. Heil
Title: CEO
9
<PAGE>
Exhibit 10.9
MIECO INC. Four Greenspoint Plaza, 16945 Northchase Drive, Suite 1640,
Houston, TX 77060
- -------------------------------------------------------------------------------
Tel: (281) 775-8900 Telex: 765265 MIECO HOU Twx: 9108810067 MIECO HU
FAX: (281) 775-8933
STORAGE/THROUGHPUT AGREEMENT
This Agreement made and entered into by and between Able Oil Company
hereinafter referred to as "Able Oil" and,
NAME: MIECO INC.
hereinafter referred to as "CUSTOMER"
WHEREAS, Customer desires to enter into this Agreement hereinafter referred
to as "Agreement" under which Able Oil will provide storage, load and unload
petroleum products for Customer as hereinafter provided.
NOW, THEREFORE, it is hereby agreed by and between Able Oil and Customer
hereto as follows:
1. TERM OF AGREEMENT: Beginning Date: May 11, 1998
Ending Date: May 31, 1999
2. APPROXIMATE VOLUME: Approximately 12,000 Barrels of No. 2 heating
oil Nymex summer grade specifications.
3. LOCATION: Able Oil Company
344 Route 46 East
Rockaway, NJ 07866
4. PRODUCT: No. 2 heating oil Nymex summer grade
5. THROUGHPUT CHARGE ($/GAL): $.0060 for any volume sold out of tankage to
any party other than Able Oil. Payable upon movement of the product from
storage.
6. MOVEMENTS: Movements into and out of Able Oil will be by Exchange,
Pipeline, tank truck, tank car, and/or storage transfer or barge.
7. PARTIES ADDRESS INFORMATION: CUSTOMER:
MIECO INC.
16945 Northchase Dr., #1640
Houston, Tx 77060
<PAGE>
8. DEFINITIONS: - In this Agreement the following words will have the
meaning herein set forth:
(a) "Product" will mean No. 2 heating oil Nymex grade summer
specifications.
(b) "Barrel" will mean forty-two (42) U.S. gallons.
(c) "Terminal" or Terminal premises will mean Able Oil Terminals located
at the various locations listed in paragraph 3 which include land, storage
tanks, truck loading racks, pipes, offices - and related facilities, together
with modifications or additions thereto.
(d) Throughput Services will mean the acceptance of Product tendered by
Customer at the Terminal for the account of Customer, interim storage of the
product, and re-delivery of Product via Customer's designated receiving
equipment for the account of Customer, (as specified in paragraph 6) together
with all necessary recordkeeping.
9. SERVICES AND FACILITIES
Able Oil, at its own expense, will maintain and make such repairs as are
necessary to keep the Terminal in operating condition and in compliance with
all applicable laws and ordinances.
10. OPERATIONS
10.1 Able Oil, shall use its best efforts to accommodate and arrange
delivery of product to and from storage on a first-come first-served basis
with advance nomination schedules arranged through Customer with Able Oil on
behalf of the owner or charterer of such vessel/barge and/or common carrier
pipeline.
10.2 Customer understands and agrees that a positive inventory position will
be maintained on every Product held in storage.
10.3 Able Oil agrees to hold Customer's inventory for the Customer's
account. Able Oil will not draw upon the Customer's inventory unless advance
notification and mutually agreeable terms are negotiated between the Customer
and Able Oil in writing.
10.4 Upon written request and instructions provided by Customer, Able Oil
will transfer inventory held in storage for its Customer to another party
maintaining a storage account with Able Oil.
11. QUANTITY
11.1 The quantity of Product received into storage at the terminal shall be
determined as follows:
(a) If by book transfer, quantity is determined as mutually agreed between
parties.
(b) If by pipeline, the quantity received into storage shall be determined
by pipeline meter tickets adjusted to 60 degrees F at inventory Terminal
Locations.
(c) If by barge, quantity determined on shore tank receipt at discharge
inventory Terminal adj. To 60 degrees F.
(d) If via exchange agreement, FOB loading trucks rack meter tickets at
Amoco Carteret loadport, as mutually agreed to apply as inventory total
barrels at Able Oil Terminal, New Jersey adjust to 60 degrees farenheit.
2
<PAGE>
11.2 The quantity of Product delivered from the Terminal storage will be as
follows:
(a) Deliveries into Customer designated trucks will be determined by truck
rack meter reading.
(b) Otherwise all deliveries from customers account will be stock transferred
to in 1,000 bbls increments.
11.3 All quantity determinations herein will be corrected to sixty (60)
degrees Fahrenheit based on a United States gallon of 231 cubic inches and 42
gallons to the Barrel, in accordance with the latest supplement or amendment
to ASTM-IP petroleum measurement tables (ASTM designation D 1250) Table 6(b).
All quantity determinations for barge receipts shall be made basis static
shore tanks.
12. TERMINAL LOSSES/BALANCES
12.1 Able Oil agrees to guarantee customer that all barrels received in
storage under Paragraph 11.1 will be available to customer at all times.
Customer will experience no gains or losses.
13. QUALITY
13.1 The quality of Products received into Commingled storage by Able Oil
for Customer's account will meet or exceed Able Oil's minimum product
specifications for such Products. Product quality will be verified by
independent inspectors analysis prior to discharge into Able Oil Terminals.
13.2 Customer may request a sample of Product held in storage at the
Terminal during normal business hours to satisfy themselves that the Product
specifications existing on receipt by Able Oil are maintained. If such a
sample indicates the presence of Product which does not meet or exceed such
Product specification, the Terminal Manager is to be informed immediately. If
the presence in storage of off-specification Product is determined,
Customer's account will be credited with a like amount of on specification
Product at Able Oil's sole expense. Upon delivery of Product to Customer's
account, all Product samplings of such delivered Product will be final and in
compliance with all applicable Product specifications.
13.3 If any of Customer's product delivered to the facility does not meet
the specifications, then Able Oil shall promptly notify Customer before
permitting any of Customer's product to be placed in the tanks. If Able Oil
fails to test the Customer's product or permits any of Customer's product
that does not meet the specifications to be commingled with other product in
the tanks, then Customer shall bear no responsibility for, and Able Oil will
hold Customer harmless from, any claims that result from the commingling of
Customer's product with other products.
13.4 Able Oil, according to normal terminal operating procedures will make
every effort to assure that its lines are packed before receiving Customer's
product into tankage.
14. TITLE & CUSTODY
14.1 Title to Customer's Product stored at Able Oil Terminal shall remain in
Customer's name.
14.2 Able Oil will be deemed to have custody of Product delivered by
Customer at the time it passes through the flange connection between the
delivery line and Able Oil delivery line. Delivery of such Product by Able
Oil to Customer for its account will occur when: (i) in all deliveries, Able
Oil shall be responsible for received Product until such Products have passed
the terminal's receiving Pipeline flange.
3
<PAGE>
15. CERTIFICATIONS
15.1 Customer certifies that none of the Product covered by this Agreement
was produced or withdrawn from storage in violation of any federal, state, or
other governmental law, or in violation of any rule, regulation, or order
promulgated by any governmental agency having, or presuming to have,
jurisdiction.
15.2 Customer certifies that the Product covered by this Agreement
complies with all applicable Product quality or composition specifications
established by any federal, state, or local authority.
15.3 Customer will indemnify, defend and hold harmless Able Oil from any
claims, penalties or liabilities imposed by any governmental agency having
jurisdiction for the failure of any Customer Product, designated truck,
barge, or vessel to comply with any applicable governmental rule or
regulation.
16. TAXES
All taxes, fees, and dues, now or hereafter imposed by federal, state
or local governments, in respect to or measured by the products delivered
hereunder or the manufacture, storage, delivery, receipt, exchange or
inspection thereof, shall be for the account of Customer. Parties each
respectively warrant that they are properly licensed to buy / sell this
product in the state of title transfer exempt of tax, and if required, shall
furnish the proper federal and state license and / or registration number to
the requesting party.
17. INDEMNITY
Each party shall defend and indemify the other party against all
claims, demands or liabilities (including reasonable attorney's fees), from
any cause whatsoever, for the injury or the death of any and all persons or
the damage to any property caused by or arising out of or connected in any
manner with the performance of each party's obligations under this Agreement,
except for such claims, demands or liabilities that result from the active
negligence of the other.
18. ASSIGNABILITY
18.1 This Agreement will be binding upon and shall inure to the benefit of
the successors and assigns of the parties hereto. Neither party will assign
its interest in this Agreement without the prior written consent of other.
18.2 Any attempted assignment prohibited by Paragraph 18.1 above will be
void and without effect. This Agreement will not become as asset in any
bankruptcy or receivership proceedings.
19. FORCE MAJEURE
Neither party will be responsible for damages caused by delay or
failure to perform in whole or in part hereunder, if such delay or failure
is attributable to storms, floods, and other act of God, strikes, differences
with workers, lockouts, riots, civil disorders, explosions, fires, acts of or
compliance with requests or rules or regulations of any governmental
authority or conditions, sabotage, accidents, breakdowns, delay in
transportation, or other cause beyond the control of the affected party
whether or not similar to those enumerated above, all of which will be
considered events of force of majeure. It is understood and agreed that the
settlement of strikes, lockouts, or differences with workers will be entirely
within the discretion of the party having the difficulty.
4
<PAGE>
20. POLLUTION AVOIDANCE
Able Oil hereby indemnifies Customer from and against all losses,
claims or pollution incidents rising out of or resulting from all inherent
defects contained in any and all equipment or property owned or leased by
Able Oil or Able Oil agents as pertains to this Agreement.
21. WAIVER & TERMINATION
21.1 The following will be deemed Events of Default hereunder:
(a) Failure to comply fully with any of the terms herein;
(b) If either Party, (i) files, or consents by answer or otherwise to the
filing against it of, any petition or case seeking relief under any Federal,
state or foreign bankruptcy, insolvency or similar law (collectively,
"Bankruptcy Laws":), (ii) makes a general assignment for the benefit of its
creditors, (iii) applies for or consents to the appointment of a custodian,
receiver, trustee, conservator or other officer with similar powers over it
or over any substantial part of its property ("Custodian") or (iv) takes
corporate action for the purpose of any of the foregoing (v) is dissolved;
(vi) becomes insolvent or is unable or admits in writing its inability
generally to pay debts as they become due; (vii) or is unable to provide
adequate assurances to the other party of its continued ability to perform; or
(c) A court or governmental authority, agency, instrumentality or official
of competent jurisdiction enters or issues an order or decree with respect to
the defaulting party (i) appointing a Custodian, (ii) constituting an order
for relief under, or approving a petition or case for relief of
reorganization or any other petition or case to take advantage of, any
Bankruptcy Laws or (iii) ordering its dissolution, winding-up or liquidation;
or
21.2 In the Event of Default under 21.1(a), the defaulting party will have
ten (10) days to cure the default following receipt of a "Notice of Default"
from the non-defaulting party. If the default is not cured within said ten
(10) days, the non-defaulting party will have the right to terminate this
Agreement effective thirty (30) days from default date.
21.3 In the Event of Default other than 21.1(a), the non-defaulting party
may take whatever action it deems necessary to secure its product.
21.4 In the event of termination by either party for any reason, or
expiration of this Agreement, Customer will remove all of its Product at the
Terminal on or before the effective date of termination or expiration.
21.5 In the event of non-performance, breach of contract, insolvency or
bankruptcy by Able Oil, Customer shall have the right to terminate this
Agreement and secure and/or sell all Product in Able Oil Storage in any
manner whatsoever, including but not limited to rack sales, and to seek any
and all remedies and damages allowed by law.
22. INVENTORY CONTROL AND RECORDS
Able Oil will maintain, during the term of this Agreement, books and
records that clearly show Customer's inventory at all times. Able Oil will
provide written reports to Customer on a monthly basis which set forth the
quantities, types and locations of all Customer's physical inventory stored
on Able Oil premises. Able Oil will complete and deliver to Customer copies
of such records, including delivery tickets and inventory forms, as are
required for the proper accounting of Product handled under the terms of this
Agreement. Customer will have the right to audit, at its cost and expense and
during ordinary business
5
<PAGE>
hours, the accounting records and other pertinent documents which relate to
receipts, storage or delivery of Customer's product handled under this
Agreement and to take physical inventory as may be required in Customer's
opinion to verify the related inventory records.
23. CONFLICT-OF-INTEREST CLAUSE
Each party shall exercise reasonable care and diligence to prevent any
illegal or unethical actions or conditions which could result in a conflict
with the other's best interest.
24. LAWS TO GOVERN
The laws of the State of New York shall govern this contract and
performance thereunder, excluding its choice-of-law rules.
25. MODIFICATION
This Agreement may be modified by the parties only by an amendment in
writing to such effect.
26. WHOLE AGREEMENT
This Agreement, including all attachments, or amendments embodies the
whole Agreement of the parties.
Accepted and Agreed to this , 19
---------- --
Able Oil Company MIECO INC.
BY: BY: /s/Illegible
------------------------ ------------------------
TITLE: TITLE: GENERAL MANAGER
---------------------
DATE: DATE: 5-27-1998
---------------------- ----------------------
6
<PAGE>
Exhibit 10.11
[LETTERHEAD]
TO: ABLE OIL CO.
ATTN: TIM HARRINGTON
CC: MIECO INC - LONG BEACH
MIECO INC - NEWARK
FROM: MIECO INC.
FAX NBR: 281-775-8933
CONTRACT NUMBER: 80896
DATE: MAY 19, 1998
WE ARE PLEASED TO CONFIRM A SALE AGREEMENT REACHED MAY 11, 1998 BETWEEN MIECO
INC,. HEREIN AFTER CALLED "SELLER" AND ABLE OIL CO., HEREINAFTER CALLED
"BUYER" UNDER THE FOLLOWING TERMS AND CONDITIONS. IN ANY FUTURE
CORRESPONDENCE CONCERNING THIS AGREEMENT, PLEASE REFER TO MIECO CONTRACT
NUMBER ABOVE.
SELLER: MIECO INC. (MIECO)
FOUR GREENSPOINT PLAZA
16945 NORTHCHASE DR, SUITE 1640
HOUSTON, TX 77060
BUYER: ABLE OIL CO.
344 ROUTE 46 EAST
ROCKAWAY, NJ 07866
PRODUCT:
NO. 2 HEATING OIL MEETING NYMEX GRADE SUMMER SPECIFICATIONS.
1
<PAGE>
QUANTITY:
APPROXIMATELY: 12,000 BARRELS ADJUSTED TO 60 DEGREES F.
LOCATION:
FOR ABLE OIL TERMINAL, ROCKAWAY NJ
DELIVERY TIMING: DURING MAY AND JUNE , 1998 AS MUTUALLY SCHEDULED.
SALES SCHEDULE: BUYER AGREES TO PURCHASE PRODUCT ACCORDING TO THE FOLLOWING
SCHEDULE.
<TABLE>
<CAPTION>
MONTH BARRELS
------ -------
<S> <C>
NOV '98 1,000
DEC '98 3,000
JAN '99 4,000
FEB '99 4,000
------
12,000
</TABLE>
PRICE:
THE PURCHASE PRICE FOR DELIVERED BASIS BUYER'S TERMINALS LISTED IN THE
DELIVERY CLAUSE HEREIN SHALL BE SET WHEN BUYER NOTIFIES MIECO BY PHONE ON A
BUSINESS DAY DURING NORMAL NYMEX TRADING HOURS (9:50AM - 3:10PM) TO PURCHASE,
IN MINIMUM 1,000 BARREL INCREMENTS, THE DELIVERY MONTH NYMEX HEATING OIL
CONTRACT PRIOR TO ITS EXPIRATION WILL BE USED. THIS PRICE MINUS THE
DIFFERENTIAL OF USD .0200 PER GALLON SHALL BE THE ESTABLISHED PRICE FOR THIS
CONTRACT FOR ALL BARRELS DELIVERED IN ACCORDANCE WITH THE SCHEDULE BELOW.
BUYER HAS THE OPTION TO PURCHASE AND LIFT BARRELS PRIOR TO THE DELIVERY MONTH
LISTED BELOW, PROVIDED THAT THE QUANTITIES, AS BROKEN DOWN BELOW, ARE PRICED
BASED ON THE CORRESPONDING NYMEX DELIVERY MONTH LISTED BELOW, AND THAT THE
PRODUCT IS AVAILABLE.
PRICING/SALES SCHEDULE:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DELIVERY NYMEX CONTRACT FIXED
MONTH PRICING MONTH DIFF/$GAL QUANTITY (BBLS)
----- ------------- --------- ---------------
NOV '98 NOV '98 -.0200 1,000
DEC '98 DEC '98 -.0200 3,000
JAN '99 JAN '99 -.0200 4,000
FEB '99 FEB '99 -.0200 4,000
</TABLE>
2
<PAGE>
BUYER HAS THE OPTION TO SET PRICES BEYOND THE CURRENT DELIVERY MONTH SUBJECT
TO THE MAXIMUM EXPOSURE HEREUNDER. IF, ON A MARK-TO-MARKET BASIS, SELLER'S
TOTAL EXPOSURE ON THE FORWARD-PRICED BARRELS PLUS ACCOUNTS RECEIVABLE EXCEEDS
THE CREDIT LIMIT BUYER SHALL, WITHIN TWO (2) BUSINESS DAYS OF MIECO'S WRITTEN
REQUEST, EITHER PREPAY, OPEN AN IRREVOCABLE LETTER OF CREDIT ACCEPTABLE TO
SELLER OR DEPOSIT WITH MIECO SUCH COLLATERAL AS MIECO MAY REQUEST AS SECURITY
FOR THE PAYMENT OF AMOUNTS DUE OR THAT MAY BECOME DUE BY BUYER TO MIECO UNDER
THIS AGREEMENT.
BUYER IS REQUIRED TO PURCHASE AT LEAST THE MINIMUM MONTHLY QUANTITIES LISTED
ABOVE. THEREFORE, ANY BARRELS NOT PREVIOUSLY PRICED AND INVOICED WILL BE
PRICED ON THE SETTLEMENT PRICE ON THE LAST TRADING DAY AT THE EXPIRATION OF
THE RELEVANT DELIVERY MONTH CONTRACT ON THE NEW YORK MERCANTILE EXCHANGE
PLUS THE FIXED DIFFERENTIAL.
ROLLING OPTION:
UNPURCHASED BARRELS MAY BE ROLLED TO THE FOLLOWING MONTH. A TIME VALUE OF MONEY
CHARGE OF $.0045 PER GALLON PLUS THE GAIN OR LOSS ON THE NYMEX ROLL WILL BE
ADDED TO THE DIFFERENTIAL.
DELIVERY:
F.O.B. DELIVERED INTO BUYER'S STOCK INVENTORY AT ABLE OIL TERMINAL IN
ROCKAWAY NJ PER THE SCHEDULE SHOWN, IN THE PRICE CLAUSE HEREIN. PRIOR TO SALE
PRODUCT WILL BE STORED UNDER THE TERMS OF THE THROUGHPUT/STORAGE AGREEMENT
BETWEEN ABLE OIL AND MIECO.
UPON COMPLETION OF DELIVERY OF MIECO'S PRODUCT INTO BUYERS STORAGE TERMINAL
PER THE TERMS OF THE ABOVE REFERENCED THROUGHPUT/STORAGE AGREEMENT, THE
VOLUMES DELIVERED INTO THE TERMINAL WILL BE CONFIRMED IN WRITING BY TELEX OR
TELECOPY BY SELLER TO BUYER AND THIS CONFIRMATION WILL SERVE TO IDENTIFY THE
QUANTITIES SOLD UNDER THE TERMS OF THIS SALES AGREEMENT.
INSPECTION:
LOADING RACK METER TICKET AT AMOCO CARTERET NJ TRUCK RACK TO ABLE OIL TRUCKS.
TITLE:
TITLE TO THE OIL DELIVERED HEREUNDER SHALL PASS TO BUYER ON EFFECTIVE DATE OF
THE IN-TANK STOCK TRANSFER RELEASE.
ALL PRODUCT VOLUMES DELIVERED INTO BUYERS TERMINAL AND TO BE PURCHASED BY
BUYER BASED ON AS DETERMINED BY RACK METER TICKET AND ADJUSTED TO 60
DEGREES F.
3
<PAGE>
PAYMENT:
AS PER PREPAYMENT TERMS. PAYMENT DUE PRIOR TO RELEASE OF PRODUCT.
FOR VOLUMES BEING PRICED IN THE CURRENT DELIVERY MONTH:
WITHIN ONE (1) WORKING DAY OF THE TIME PRODUCT IS PRICED, SELLER WILL TELEFAX
INVOICE TO BUYER. PAYMENT IS DUE IN U.S. DOLLARS PROMPT UPON RECEIPT OF
INVOICE.
FOR VOLUMES PRICED IN PREVIOUS MONTHS:
ON THE FIRST WORKING DAY OF THE DELIVERY MONTH, SELLER WILL INVOICE
PRE-PRICED BARRELS WITH PAYMENT DUE PROMPT UPON RECEIPT OF INVOICE.
FOR ANY MISCELLANEOUS CHARGES, OTHER THAN PRODUCT INVOICES, PAYMENT SHALL BE
PAID PROMPT UPON RECEIPT OF INVOICE.
SHOULD BUYER LIFT ANY PRODUCT PRIOR TO REACHING PRICE AGREEMENT WITH SELLER,
IT WILL BE CONSIDERED BREACH OF CONTRACT AND ALL FUNDS DUE HEREUNDER SHALL
BECOME IMMEDIATELY DUE AND PAYABLE.
PAYMENT WITHOUT DEDUCTION, OFFSET, OR COUNTERCLAIM, IS TO BE MADE BY
TELEGRAPHIC TRANSFER, FREE OF ALL CHARGES IN ORDER THAT SELLER'S ACCOUNT IS
CREDITED IN SAME DAY (USABLE) FUNDS TO:
PAYMENT INSTRUCTIONS: BANK OF AMERICA NT & SA
CONCORD, CA
ABA NBR: 121-000-358
FOR CREDIT TO MIECO INC.
A/C NBR 12573-54052
CREDIT:
BUYER TO SATISFY MIECO'S CREDIT REQUIREMENTS AS PER PRICE CLAUSE ABOVE. BUYER
TO HAVE OPEN CREDIT UNLESS NOTIFIED BY SELLER UPON MIECO'S CREDIT DEPARTMENTS
REVIEW THAT BUYER SHALL EITHER PREPAY OR ESTABLISH A LETTER OF CREDIT
ACCEPTABLE TO SELLER.
FORCE MAJEURE:
SELLER SHALL NOT BE OBLIGATED TO DELIVER OR BUYER OBLIGATED TO RECEIVE
PRODUCT HEREUNDER WHEN, WHILE AND TO THE EXTENT THAT SELLER IS PREVENTED FROM
OBTAINING OR MAKING DELIVERIES OR BUYER IS PREVENTED FROM RECEIVING IT IN THE
CUSTOMARY MANNER, DUE TO EVENTS CAUSED BY ACTS OF GOD; FIRES, STRIKES, OR
OTHER LABOR DISTURBANCES; WAR; DECLARED OR UNDECLARED, EMBARGOES; PERILS OF
THE SEA; ACCIDENT; ACTS, REQUESTS OR ORDERS OF CIVIL OR MILITARY AUTHORITIES;
OR ANY CAUSE WHATSOEVER BEYOND THE CONTROL OF SELLER OR BUYER, WHETHER OR NOT
SIMILAR TO THE CAUSES HEREIN SPECIFIED.
WHERE THE SHIPMENT IS BY PIPELINE, SELLER SHALL ALSO HAVE THE SAME RIGHTS
UNDER FORCE MAJEURE AS GRANTED TO THE PIPELINE CARRIER BY THE RELEVANT
4
<PAGE>
TARIFF, IF ANY. IN ANY EVENT, IF THE GOODS ARE LOST IN-TRANSIT, SELLER SHALL
BE ENTITLED TO ALLOCATE THE VOLUME REMAINING AMONG ALL CUSTOMERS ON A
PRO-RATA BASIS.
NOTWITHSTANDING THE FOREGOING PROVISIONS, BUYER SHALL NOT BE RELIEVED OF
ANY OBLIGATION TO MAKE PAYMENTS, IN U.S. DOLLARS, FOR THE OIL/PRODUCT
DELIVERED HEREUNDER OR ANY OTHER PAYMENT OBLIGATIONS ALREADY INCURRED.
ARBITRATION:
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK. ANY CLAIM OR CONTROVERSY BETWEEN THE PARTIES HERETO
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE BREACH THEREOF SHALL BE
SETTLED BY ARBITRATION IN THE CITY OR NEW YORK IN ACCORDANCE WITH U.S.
ARBITRATION ACT OR FAILING FEDERAL JURISDICTION, THE LAWS OF THE STATE OF NEW
YORK, BEFORE ONE NEUTRAL ARBITRATOR WHO SHALL BE A PRACTICING ATTORNEY
MUTUALLY APPPOINTED BY THE PARTIES, OR FAILING AGREEMENT, BY ANY COURT OF
COMPETENT JURISDICTION. THE ARBITRATION AWARD SHALL BE FINAL AND BINDING, AND
MAY INCLUDE COSTS, INCLUDING REASONABLE ATTORNEY FEES. JUDGMENT UPON ANY
AWARD MAY BE ENTERED IN ANY COURT OF COMPETENT JURISDICTION.
JURISDICTION:
EACH PARTY EXPRESSLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS
OF THE STATE OF NEW YORK, USA AND THE FEDERAL COURTS SITUATED IN NEW YORK AND
TO SERVICE OF PROCESS BY CERTIFIED MAIL.
TAXES:
ALL TAXES, FEES, AND DUES (EXCEPT FOR NEW YORK STATE SPILL TAX), NOW OR
HEREAFTER IMPOSED BY FEDERAL, STATE OR LOCAL GOVERNMENTS, IN RESPECT TO OR
MEASURED BY THE PRODUCTS DELIVERED HEREUNDER OR THE MANUFACTURE, STORAGE,
DELIVERY, RECEIPT, EXCHANGE OR INSPECTION THEREOF, SHALL BE FOR THE ACCOUNT
OF BUYER. UPON RECEIPT OF INOVICE THEREOF, BUYER SHALL REIMBURSE SELLER FOR
ANY SUCH TAXES, FEES OR DUES LEGALLY REQUIRED TO BE PAID. EACH PARTY
RESPECTIVELY WARRANTS THAT HE IS PROPERLY LICENSED TO BUYER/SELL THIS PRODUCT
IN THE STATE OF TITLE TRANSFER EXEMPT OF TAX AND, IF REQUIRED, SHALL FURNISH A
VALID FEDERAL AND STATE LICENSE AND/OR REGISTRATION NUMBER TO THE
REQUESTING PARTY.
IF THIS TRANSACTION RESULTS IN PAYMENT OF NEW YORK, CONNECTICUT, OR NEW
JERSEY GROSS RECEIPT TAXES OR ANY OTHER STATE TAXES BY SUPPLIER, THEN THESE
TAXES SHALL APPEAR AS A SEPARATE LINE ITEM ON THE INVOICE AND WILL BE DUE AND
PAYABLE TO SUPPLIER IN ACCORDANCE WITH THE PAYMENT TERMS OF THIS CONTRACT.
LIQUIDATION CLAUSE:
WITHOUT LIMITING ANY OTHER RIGHTS THAT MAY BE AVAILABLE TO THE LIQUIDATING
PARTY, IN THE EVENT THAT A PARTY HERETO (THE DEFAULTING PARTY) SHALL (A)
BECOME BANKRUPT OR INSOLVENT. HOWEVER EVIDENCED, OR (B) FILE A PETITION OR
OTHERWISE COMMENCE A PROCEEDING UNDER ANY BANKRUPTCY, INSOLVENCY OR SIMILAR
LAW, OR HAVE ANY SUCH PETITION FILED OR PROCEEDING COMMENCED
5
<PAGE>
AGAINST IT , OR (C) HAVE A LIQUIDATOR, ADMINISTRATOR, RECEIVER OR TRUSTEE
APPOINTED WITH RESPECT TO IT OR ANY SUBSTANTIAL PORTION OF ITS PROPERTY OR
ASSETS OR, (D) FAIL TO GIVE ADEQUATE SECURITY FOR, OR ASSURANCES OF ITS
ABILITY TO PERFORM, ITS OBLIGATIONS - THEN IN ANY SUCH EVENT THE PERFORMING
PARTY SHALL HAVE THE RIGHT TO LIQUIDATE ANY OR ALL FORWARD CONTRACTS WHEN
OUTSTANDING AT ANY TIME OR FROM TIME TO TIME THEREAFTER BY DECLARING ANY AND
ALL SUCH CONTRACTS TERMINATED (WHEREUPON THEY SHALL AUTOMATICALLY BE
TERMINATED, EXCEPT FOR THE PAYMENT OBLIGATION REFERRED TO BELOW), CALCULATING
THE DIFFERENCE, IF ANY, BETWEEN THE PRICE SPECIFIED THEREIN AND THE MARKET
PRICE FOR RELEVANT COMMODITY (AS DETERMINED BY THE LIQUIDATING PARTY IN A
COMMERCIALLY REASONABLE MANNER AT A TIME OR TIMES REASONABLY DETERMINED BY
THE LIQUIDATING PARTY), AND AGGREGATING OR NETTING SUCH MARKET DAMAGES TO A
SINGLE LIQUIDATED SETTLEMENT PAYMENT THAT WILL BE DUE AND PAYABLE UPON DEMAND
THEREOF. THE NON-PERFORMING PARTY SHALL INDEMNIFY AND HOLD THE PERFORMING
PARTY HARMLESS FROM ALL COSTS AND EXPENSES OF COLLECTION, INCLUDING
REASONABLE ATTORNEYS FEES, INCURRED IN THE EXERCISE OF ANY REMEDIES
HEREUNDER. THE PARTIES HERETO ACKNOWLEDGE THAT THIS CONTRACT CONSTITUTES A
FORWARD CONTRACT FOR PURPOSES OF SECTION 556 OF THE U.S.A. BANKRUPTCY CODE.
ASSIGNMENT:
NEITHER SELLER NOR BUYERS SHALL ASSIGN THE WHOLE OR ANY PART OF ITS RIGHTS
AND OBLIGATIONS HEREUNDER DIRECTLY OR INDIRECTLY WITHOUT PRIOR WRITTEN
CONSENT OF THE OTHER PARTY. ASSIGNOR REMAINS RESPONSIBLE FOR NON-PERFORMANCE.
OTHER:
- - BUYER WILL GIVE MIECO A NO COST THROUGHPUT AGREEMENT AT INVENTORY TERMINAL
LOCATIONS.
- - MIECO WILL FILE UCC-1'S FOR PRODUCT STORED AT INVENTORY TERMINALS.
- - MIECO WILL SUPPLY BARRELS AT AMOCO, CARTERET NJ TRUCK RACK. ABLE OIL WILL
TRUCK PRODUCT TO ABLE TERMINAL, ROCKAWAY NJ. MIECO AND ABLE WILL ENTER INTO
AN EXCHANGE AGREEMENT WHEREBY ABLE GIVES MIECO THE FOB LOAD QUANTITY/QUALITY
AT ABLE INVENTORY LOCATION THAT MIECO SUPPLIES AT AMOCO RACK.
- - AT MIECO'S EXPENSE, INDEPENDENT INSPECTORS WILL BE ALLOWED TO GAUGE THE
INVENTORY AT ABLE OIL TERMINAL.
THERE ARE NO GUARANTEES OR WARRANTIES, EXPRESS OR IMPLIED, OF
MERCHANTABILITY, FITNESS, SUITABILITY OF THE OIL/PRODUCT FOR ANY PARTICULAR
PURPOSE, OR OTHERWISE, WHICH EXTEND BEYOND THE DESCRIPTION OF THE FACE
HEREOF. UNDER NO CONDITIONS SHALL ANY CLAIM BE MADE UNDER THIS CONTRACT FOR
PROSPECTIVE PROFITS OR SPECIAL, INDIRECT, OR CONSEQUENTIAL DAMAGES
RESULTING FROM A BREACH OF WARRANTY HEREIN. THE FOREGOING LIMITATIONS ON
DAMAGES SHALL NOT APPLY TO CLAIMS OF PROPERTY DAMAGE, DEATH, OR PERSONAL
INJURY.
6
<PAGE>
OUR COORDINATOR IS: VALONDA DANN 281-775-8900
OUR FINANCIAL CONTACT IS: JOYCE DUVAL 562-435-0085
PLEASE SEND ALL CONTRACT FAXES TO CONTRACT ADMINISTRATOR:
SHAWNA LEACH
FAX: 281-775-5933
THIS INSTRUMENT CONTAINS THE COMPLETE AGREEMENT OF BOTH PARTIES AND CANNOT
BE MODIFIED UNLESS IN WRITING. ANY OTHER AMENDMENTS RECEIVED SHALL BE DEEMED
PROPOSALS TO THIS CONTRACT UNLESS CONFIRMED IN WRITING BY SELLER.
ABLE OIL COMPANY MIECO INC.
BY: BY: /s/ Illegible
---------------------- ----------------
TITLE: TITLE: General Manager
------------------- ----------------
DATE: DATE: 5-27-1998
-------------------- --------------
7
<PAGE>
Exhibit 10.12
[Letterhead]
JULY 2, 1998
Mr. Tim Harrington
Able Oil Co.
344 Route 46 East
Rockaway, New Jersey 07866
Dear Tim:
Thank you for the order you placed today increasing the volume of our #2 oil
storage deal. Please accept this letter as a summary of the transaction.
Revised spreadsheet prices to follow.
- - Quality and Quantity: Approximately 24,000 barrels (1,008,000 gal.) of
NYMEX grade heating oil, summer specifications. All quantity measurements
are on a net basis. (adjusted to 60 deg.F.)
- - Location: FOR Able's terminal
- - Delivery timing: Barrels to be lifted at AMOCO, Carteret by Able's trucks
during July.
- - Sales timing and price: Able will purchase the oil during the delivery
month on the following schedule:
<TABLE>
<S> <C>
Nov. 3,000 Bbls.
Dec. 5,000 Bbls.
Jan. 6,000 Bbls.
Feb. 6,000 Bbls.
March 4,000 Bbls.
24,000 Bbls.
</TABLE>
- - Price: The price will be $.0325 under the delivery month. As an example,
the oil you purchase for November, will be $.0325 under the November NYMEX
print.
- - Credit: Prepay, EFT. For barrels priced prior to the delivery month, an
invoice will be issued on the first business day of the delivery month.
For barrels priced during the delivery month, an invoice will be issued
the day the barrels are priced. Upon receipt of funds, barrels will be
book transferred to Able.
- - MIECO will make the oil available at the rack at Amoco, Carteret, and Able
will do the trucking to the terminal. MIECO and Able will enter into an
exchange agreement where Able gives MIECO the same quantity and quality of
oil in their tanks that MIECO gives at the truck rack.
- - Able will give MIECO a no cost throughput at their terminal, and MIECO
will file a UCC-1 on the inventory.
- - MIECO, at its expense, will be allowed to send independent inspectors to
the terminal to gauge the tanks.
I appreciate the opportunity to quote on this business.
Sincerely yours,
/s/ Bruce Shapiro
Bruce Shapiro
<PAGE>
ABLE OIL
ABLE Oil
#2 OIL INTANK CONTRACT #80896
4,000 BBLS. FOR MARCH 1999 DELIVERY
<TABLE>
Caption>
DATE VOL MERC MERC$ DIFFERENTIALS FINAL INVENTORY
MONTH CONTRACT SPOT TVM ROLL PRICE
- ---- --- --------- ----- -------- ------ ------ ------ ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2-Jul -4 MARCH
- --------------------------------
2-Jul 4 MARCH $.4695 ($.0325) $.4370
0 CONTRACTS LEFT TO PRICE WTD AVG $.4370
</TABLE>
2
<PAGE>
ABLE OIL
ABLE OIL
#2 OIL INTANK CONTRACT #80896
10,000 BBLS. FOR FEBRUARY 1999 DELIVERY
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
DATE VOL MERC MERC$ DIFFERENTIALS FINAL INVENTORY
MONTH CONTRACT SPOT TVM ROLL PRICE
-4 FEB ($.0200)
16-Jun 2 FEB $.4715 ($.0200) $.4515
24-Jun 2 FEB $.4840 ($.0200) $.4640
2-Jul -6 CONTRACT CHANGE
2-Jul 6 FEB $.4670 ($.0325) $.4345
0 CONTRACTS LEFT TO PRICE WTD AVG $.4438
</TABLE>
3
<PAGE>
ABLE OIL
<TABLE>
<CAPTION>
ABLE Oil
#2 OIL INTANK CONTRACT # 80896
10,000 BBLS. FOR JANUARY 1999 DELIVERY
DATE VOL MERC MERC$ DIFERENTIALS FINAL INVENTORY
MONTH CONTRACT SPOT TVM ROLL PRICE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-4 JAN ($.0200)
16-Jun 2 JAN $.4615 ($.0200) $.4415
24-Jun 2 JAN $.4760 ($.0200) $.4560
2-Jul -6 CONTRACT CHANGE
2-Jul 6 JAN $.4610 ($.0325) $.4285
0 CONTRACTS LEFT TO PRICE WTD AVG $.4366
</TABLE>
4
<PAGE>
ABLE OIL
<TABLE>
<CAPTION>
ABLE OIL
#2 OIL INTANK CONTRACT#80896
8,000 BBLS. FOR DECEMBER DELIVERY
DATE VOL MERC MERC$ DIFFERENTIALS FINAL INVENTORY
MONTH CONTRACT SPOT TVM ROLL PRICE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-3 DEC ($0.200)
16-Jun 2 DEC $.4485 ($.0200) $.4285
24-Jun 1 DEC $.4660 ($.0200) $.4460
2-Jul -5 CONTRACT CHANGE
2-Jul 5 DEC $.4510 ($.0325) $.4185
CONTRACTS LEFT TO PRICE
0 WTD AVG $.4244 *
</TABLE>
5
<PAGE>
ABLE OIL
<TABLE>
<CAPTION>
ABLE OIL
#2 OIL INTANK CONTRACT# 80896
4,000 BBLS. FOR NOVEMBER DELIVERY
DATE VOL MERC MERC$ DIFFERENTIALS FINAL INVENTORY
MONTH CONTRACT SPOT TVM ROLL PRICE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-1 NOV ($0.200)
16-Jun 2 NOV $.4340 ($.0200) $.4140
2-Jul -3 CONTRACT CHANGE
2-Jul 3 NOV $.4375 ($.0325) $.4050
0 CONTRACTS LEFT TO PRICE WTD AVG $.4050 *
</TABLE>
6
<PAGE>
Exhibit 10.13
AMERADA HESS CORPORATION
STEPHEN C. SCHWERDEL 1 Hess Plaza
Distributor Sales Manager Woodbridge, NJ 07095
1-800-367-4377 732-750-6519
May 1998
ABLE OIL COMPANY
ATTN: MR. STEVE KEPLER
344 ROUTE 46
ROCKAWAY, NJ 07866-3815
DEAR MR. KEPLER:
Thank you for signing our Supply Contract(s) covering your requirements
for the 1998-1999 season. A fully executed copy of the contract(s) has been
enclosed for your records and future reference.
We appreciate the confidence you have expressed in our Company. Please
call upon us whenever we can be of service.
Very truly yours,
/s/ Stephen C. Schwerdel
------------------------
Stephen C. Schwerdel
Distributor Sales Manager
SS/ms
Enclosure
<PAGE>
AMERADA HESS CORPORATION NO. 2 OIL
PETROLEUM PRODUCT SALE AGREEMENT PREMIUM DIESEL
K-1 KEROSENE
PARTICULAR CONDITIONS OF SALE
AGREEMENT made this 30th day of July, 1998 between AMERADA HESS CORPORATION,
a Delaware corporation, located at 1 Hess Plaza, Woodbridge, New Jersey 07095
(hereinafter called "Seller") and the below named account (hereinafter called
"Buyer").
CUSTOMER NAME ABLE OIL CORPORATION CONTRACT NUMBER 82612
346 ROUTE 66 EXPIRATION DATE MAY 31, 9999
ROCKAWAY NJ 07366-3815 PRODUCT NO. 2 OIL
PRODUCT PREMIUM DIESEL
PRODUCT K-1 KEROSENE
TERMINAL 51ST STREET
Seller and Buyer hereby agree as follows:
A. PARTICULAR CONDITIONS OF SALE. Seller hereby agrees to sell to Buyer,
and Buyer hereby agrees to purchase, receive and pay for the product named
above (hereinafter called "No 2. Oil", "Premium Diesel", and/or "K-1
Kerosene") in accordance with the provisions set forth in this Agreement.
1) QUANTITY (IN (000) GALLONS).
<TABLE>
<CAPTION>
NO. 2 OIL PREMIUM DIESEL K-1 KEROSENE
1998-1999 1998-1999 1998-1999
----------- ---------------- --------------
<S> <C> <C> <C>
JUNE 6 0 0
JULY 6 0 0
AUGUST 6 0 0
SEPTEMBER 6 0 0
OCTOBER 6 0 0
NOVEMBER 6 0 0
DECEMBER 6 0 0
JANUARY 6 0 0
FEBRUARY 6 0 0
MARCH 6 0 0
APRIL 6 0 0
MAY 6 0 0
ANNUAL TOTAL 72 0 0
</TABLE>
Quantities set forth above shall be subject to adjustment as provided in
Paragraph 2 of the General Conditions of Sale.
2. PRICE. The price per gallon of No. 2 Oil, Premium Diesel and K-1
Kerosene shall be Seller's applicable Terminal Reseller Tank Car
prices in effect on date of each lifting. All prices are
exclusive of applicable taxes of any kind (including federal,
state and local use, sales, excise, mercantile and gross receipts
or earnings taxes), inspection fees or other charges, all of
which shall be borne by Buyer. Any taxes, fees or other
charges which Seller is required to pay or collect with respect
to the No. 2 Oil, Premium Diesel or K-1 Kerosene or on the
production, manufacture, sale, transportation or delivery thereof
shall be added to the price stipulated above and paid by Buyer.
3. METHOD OF DELIVERY. F.O.B. Buyer's transportation equipment at Seller's
terminal(s).
4. PAYMENT. Seller's standard payment terms are 1% 12 days, Electronic
Funds Transfer.
5. APPROVAL. Neither this Agreement nor any subsequent Agreement amending or
supplementing this Agreement (including any purchase order or
other document issued by Buyer) shall be effective or binding
on Seller unless signed by Buyer and Seller.
B. GENERAL CONDITIONS OF SALE. All terms and conditions will be as set
forth in Seller's General Conditions of Sale dated April, 1994, which shall
apply to all products.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
BUYER: ABLE OIL SELLER: AMERADA HESS CORPORATION
---------------------------- -------------------------------
BY: /s/ Steve Kepler BY: /s/ Stephen Schwerdel
------------------------------- ------------------------------------
TITLE: [ILLEGIBLE ] TITLE: MANAGER, DISTRIBUTOR SALES
---------------------------- --------------------------------
2
<PAGE>
AMERADA HESS CORPORATION
PETROLEUM PRODUCT SALES AGREEMENT PREMIUM DIESEL
K-1 KEROSENE
PARTICULAR CONDITIONS OF SALE
AGREEMENT made this 30th day of July, 1998 between AMERADA HESS CORPORATION,
a Delaware corporation, located at 1 Hess Plaza, Woodbridge, New Jersey 07095
(hereinafter called "Seller") and the below named account (hereinafter called
"Buyer").
<TABLE>
<S> <C> <C> <C>
CUSTOMER NAME ABLE OIL CORPORATION CONTRACT NUMBER 82011
344 ROUTE 46 EXPIRATION DATE MAY 31, 1999
ROCKAWAY, NJ 07866-3815 PRODUCT NO. 2 OIL
PRODUCT PREMIUM DIESEL
PRODUCT K-1 KEROSENE
TERMINAL NEWARK-DELANCY
</TABLE>
Seller and Buyer hereby agree as follows:
A. PARTICULAR CONDITIONS OF SALE. Seller hereby agrees to sell to Buyer, and
Buyer hereby agrees to purchase, receive and pay for the product named above
(hereinafter called "No. 2 Oil", "Premium Diesel", and/or "K-1 Kerosene") in
accordance with the provisions set forth in this Agreement.
(1) QUANTITY (IN (000) GALLONS).
<TABLE>
<CAPTION>
NO. 2 OIL PREMIUM DIESEL K-1 KEROSENE
1998-1999 1998-1999 1998-1999
--------- -------------- ------------
<S> <C> <C> <C>
JUNE 62 37 0
JULY 46 8 0
AUGUST 20 18 0
SEPTEMBER 32 24 0
OCTOBER 41 30 0
NOVEMBER 31 3 0
DECEMBER 40 25 2
JANUARY 40 9 0
FEBRUARY 40 24 0
MARCH 18 14 0
APRIL 50 41 0
MAY 34 41 0
ANNUAL TOTAL 543 274 2
</TABLE>
Quantities set forth above shall be subject to adjustment as provided in
Paragraph 2 of the General Conditions of Sale.
(2) PRICE. The price per gallon of No. 2 Oil, Premium Diesel and K-1 Kerosene
shall be Seller's applicable Terminal Reseller Tank Car prices in
effect on date of each lifting. All prices are exclusive of
applicable taxes of any kind (including federal, state and local
use, sales, excise, mercantile and gross receipts or earnings
taxes), inspection fees or other charges, all of which shall be
borne by Buyer. Any taxes, fees or other charges which Seller is
required to pay or collect with respect to the No. 2 Oil, Premium
Diesel or K-1 Kerosene or on the production, manufacture, sale,
transportation or delivery thereof shall be added to the price
stipulated above and paid by Buyer.
(3) METHOD OF DELIVERY. F.O.B. Buyer's transportation equipment at Seller's
terminal(s).
(4) PAYMENT. Seller's standard payment terms are 1% 12 days, Electronic
Funds Transfer.
(5) APPROVAL. Neither this Agreement nor any subsequent Agreement amending
or supplementing this Agreement (including any purchase order
or other document issued by Buyer) shall be effective or
binding on Seller unless signed by Buyer and Seller.
B. GENERAL CONDITIONS OF SALE. All terms and conditions will be as set
forth in Seller's General Conditions of Sale dated April, 1994, which shall
apply to all products.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
BUYER: /s/ ABLE OIL CO SELLER: AMERADA HESS CORPORATION
-------------------------------
BY: /s/ STEVE KEPLER BY: /s/ STEPHEN SCHWERDEL
---------------------------------- ---------------------------------
TITLE: /s/ illegible TITLE: MANAGER, DISTRIBUTOR SALES
------------------------------ ------------------------------
3
<PAGE>
Exhibit 10.14
EASYLINK 9996115L001 30MAR98 18:08/18:08EST
FROM: 62632992
-(CRN: 137317)
TO: 9736259298
COMETS
CRN: 137317
BAYWAY REFINING COMPANY
PETROLEUM PRODUCTS SALES AGREEMENT
SELLER: BAYWAY REFINING COMPANY
1400 PARK AVENUE
LINDEN, NJ 07036
BUYER: ABLE OIL COMPANY
344 ROUTE #46
ROCKAWAY, NJ 07866
FAX: 1973 625-9298
ATTENTION: TIMMOTHY HARRINGTON
1. CONTRACT DATE: MARCH 27, 1998
2. CONTRACT NUMBER: 137317
QUANTITY: 6000 U.S. BARREL
3. PRICE:
PRODUCT: NO. 2 HEATING OIL-NON HWY-DYED
DELIVERY MONTH: OCTOBER 01, 1998 TO MARCH 31, 1999
PRICE:
THE PRICE FROM 01-MAR-99 TO 31-MAR-99 FOR 1000 BBL
HAS A FIXED PRICE OF 0.5400 USD PER GAL
THE PRICE FROM 01-FEB-99 TO 28-FEB-99 FOR 1000 BBL
HAS A FIXED PRICE OF 0.5460 USD PER GAL
THE PRICE FROM 01-JAN-99 TO 31-JAN-99 FOR 1000 BBL
HAS A FIXED PRICE OF 0.5440 USD PER GAL
THE PRICE FROM 01-DEC-98 TO 31-DEC-98 FOR 1000 BBL
HAS A FIXED PRICE OF 0.5380 USD PER GAL
THE PRICE FROM 01-NOV-98 TO 30-NOV-98 FOR 1000 BBL
HAS A FIXED PRICE OF 0.5300 USD PER GAL
THE PRICE FROM 01-OCT-98 TO 31-OCT-98 FOR 1000 BBL
HAS A FIXED PRICE OF 0.5195 USD PER GAL
CONTRACT PRICES ARE VALID THROUGH THE LAST TICKET IN WHICH CONTRACT QUANTITY
IS FULFILLED. ANY ADDITIONAL VOLUME WILL BE BILLED AT THE POSTED RACK PRICE.
CONTRACT(S) IS TO BE LIFTED RATEABLY EACH MONTH.
4. TERM: THIS AGREEMENT WILL COMMENCE ON OCTOBER 01, 1998 AND END ON MARCH
31, 1999.
5. DELIVERY: FOB BAYWAY REINING COMPANY LINDEN, NJ (TOSCO).
<PAGE>
IF, FOR ANY REASON, BUYER FAILS TO TAKE OR SCHEDULE DELIVERY OF ITS AGGREGATE
MONTHLY LOADING QUANTITY, SELLER, AT ITS DISCRETION AND WITHOUT PREJUDICE TO
ANY OTHER RIGHTS OR REMEDIES WHICH SELLER MAY HAVE, WILL BE ENTITLED TO
INVOICE BUYER, AND BUYER WILL PAY, AS LIQUIDATED DAMAGES AND NOT AS A
PENALTY, THE PRODUCT PRICE PER GALLON FOR THE QUANTITY NOT LIFTED.
6. SCHEDULING: DURING THE TERM OF ANY CONTRACT WITH SELLER, ALL BUYER'S
LIFTINGS AT THE DESIGNATED TERMINAL OR TERMINALS SPECIFIED WILL BE INVOICED
AT THE CONTRACT PRICE UNTIL ALL CONTRACTS HAVE BEEN COMPLETED. IN THE EVENT
THAT ONE OR MORE CONTRACT LIFTING PERIODS OVERLAP, THE CONTRACT WITH THE
EARLIEST START DATE SPECIFIED IN THE TERM MUST BE COMPLETED FIRST. SHOULD TWO
OR MORE CONTRACTS HAVE EXACTLY THE SAME PERIOD OF DELIVERY, THE CONTRACTS
MUST BE COMPLETED IN THE ORDER OF THE CONTRACT DATES.
BUYER MAY REQUEST THE ABILITY TO PURCHASE PRODUCT AT THE POSTED RACK PRICE
FROM SELLER DURING THE TERM OF A CONTRACT. IF THE REQUEST IS GRANTED BY
SELLER, BUYER AGREES TO INFORM SELLER 24 HOURS IN ADVANCE OF SPECIFIC POSTED
RACK PURCHASES AND TO COMMUNICATE ACTUAL LIFTING INFORMATION TO SELLER IN
ACCORDANCE WITH SELLER'S INSTRUCTIONS WHEN THE REQUEST IS GRANTED.
CONTRACTS MAY NOT BE SPLIT LOADED WITH ANOTHER CONTRACT OR POSTED RACK PRICE
PURCHASE IN ANY CASE. ALL LIFTINGS WILL BE EFFECTED DURING THE NORMAL
BUSINESS HOURS OF SELLER'S DESIGNATED TERMINAL OR TERMINALS OR AS OTHERWISE
MUTUALLY AGREED UPON BY THE PARTIES.
7. PAYMENT: NET 10 CALENDAR DAYS FROM BILL OF LADING DATE (B/L = 1) VIA
ELECTRONIC FUNDS TRANSFER (EFT)
8. MEASUREMENT AND INSPECTION: QUANTITY AND QUALITY WILL BE DETERMINED BY
SELLER IN ACCORDANCE WITH INDUSTRY PRACTICE FOR THE PRODUCT. BUYER WILL
HAVE THE RIGHT TO HAVE ITS OWN PERSONNEL OR INSPECTOR AVAILABLE TO WITNESS
ANY SUCH DETERMINATION. ALL COSTS OF SUCH PERSONNEL OR INSPECTORS WILL BE
BORNE BY BUYER.
9. TITLE AND RISK OF LOSS: TITLE AND RISK OF LOSS WILL PASS FROM SELLER TO
BUYER AS THE PRODUCT PASSES THE LOADING ARM FLANGE OF SELLER'S DESIGNATED
TERMINAL FACILITY.
10. WARRANTIES: EXCEPT FOR THE WARRANTY OF TITLE, NO WARRANTY, EXPRESSED OR
IMPLIED, OF MERCHANTABILITY, FITNESS OR SUITABILITY OF THE PRODUCT FOR ANY
PARTICULAR PURPOSE OR OTHERWISE, IS MADE BY SELLER.
11. LIABILITIES: IN NO EVENT WILL EITHER PARTY BE LIABLE FOR INDIRECT OR
CONSEQUENTIAL DAMAGES OR FOR SPECIFIC PERFORMANCE.
12. ASSIGNMENTS: NEITHER SELLER NOR BUYER MAY ASSIGN THE WHOLE OR ANY PART
OF ITS RIGHTS AND OBLIGATIONS HEREUNDER DIRECTLY OR INDIRECTLY WITHOUT THE
PRIOR WRITTEN CONSENT OF THE OTHER PARTY, PROVIDED, HOWEVER, THAT SELLER MAY
ASSIGN ALL OR ANY OF ITS RIGHTS HEREUNDER TO ANY AFFILIATE COMPANY UPON
GIVING NOTICE.
13. TAXES: BUYER WILL PAY SELLER THE AMOUNT OF ALL EXCISE, FEDERAL, STATE
AND LOCAL GROSS RECEIPTS, IMPORT, MOTOR FUEL, SUPERFUND, COASTAL PROTECTION
AND SPILL TAXES, AND ALL OTHER FEDERAL, STATE AND LOCAL TAXES HOWEVER
DESIGNATED (OTHER THAN TAXES ON INCOME) PAID, OR INCURRED BY SELLER, DIRECTLY
OR INDIRECTLY WITH RESPECT TO THE PRODUCT, ITS TRANSPORTATION OR STORAGE
AND/OR ON THE VALUE THEREOF.
14. MATERIAL SAFETY DATA SHEETS: SELLER REPRESENTS THAT IT HAS PROVIDED OR
WILL PROVIDE BUYER WITH AN APPROPRIATE MATERIAL SAFETY DATA SHEET (""MSDS""),
2
<PAGE>
LABELS, AND ANY UPDATED INFORMATION FOR THE PRODUCT IN ACCORDANCE WITH THE
APPLICABLE REQUIREMENTS OF THE OCCUPATIONAL SAFETY AND HEALTH ADMINISTRATION
AT OR PRIOR TO THE TIME OF DELIVERY.
BUYER ACKNOWLEDGES RECEIPT OF SELLER'S MSDS AND ACKNOWLEDGES THE HAZARDS AND
RISKS IN HANDLING AND USING THE PRODUCT. BUYER WILL READ THE MSDS AND ADVISE
ITS EMPLOYEES, ITS AFFILIATES AND THIRD PARTIES WHO MAY PURCHASE OR COME IN
CONTACT WITH THE PRODUCT, ABOUT THE HAZARDS OF THE PRODUCT, AS WELL AS THE
PRECAUTIONARY PROCEDURES FOR HANDLING THE PRODUCT, WHICH ARE SET FORTH IN
SUCH MSDS AND ANY SUPPLEMENTARY MSDS OR WRITTEN WARNINGS(S) WHICH SELLER MAY
PROVIDE TO BUYER FROM TIME TO TIME.
15. GOVERNMENTAL OR JUDICIAL ACTION: IN THE EVENT THAT ANY ACTION OR
DECISION SHALL HAVE BEEN TAKEN OR STATUTE, RULE, REGULATION, ORDER OR DECREE
ENACTED, PROMULGATED OR DEEMED APPLICABLE TO THE PURCHASE, SALE,
TRANSPORTATION OR STORAGE OF PRODUCT BY ANY FEDERAL, STATE OR LOCAL GOVERNMENT
OR GOVERNMENTAL AGENCY OR INSTRUMENTALITY THAT MATERIALLY AND ADVERSELY
AFFECTS THE ABILITY OF SELLER TO CONTINUE TO PERFORM ITS OBLIGATIONS UNDER THIS
AGREEMENT, SELLER WILL HAVE THE RIGHT IN ITS DISCRETION EITHER TO (I)
TERMINATE THIS AGREEMENT UPON THIRTY (30) DAYS NOTICE TO BUYER OR (II)
REQUEST AN INCREASE IN THE PRICE OF THE PRODUCT UNDER THIS AGREEMENT FOR THE
DURATION OF THE TERM OF THIS AGREEMENT BY ADVISING BUYER OF THE NEW PRICE FOR
THE BALANCE OF THE TERM. BUYER WILL HAVE THE RIGHT TO ACCEPT SUCH PRICE
INCREASE OR TERMINATE THIS AGREEMENT BY NOTICE GIVEN TO SELLER WITHIN THIRTY
(30) DAYS AFTER RECEIPT OF SELLER'S PRICE INCREASE NOTICE.
16. COMPLIANCE WITH LAWS: BUYER WILL COMPLY WITH ALL LAWS AND REGULATIONS
APPLICABLE TO THE RECEIPT AND STORAGE OF THE PRODUCT INCLUDING WITHOUT
LIMITATION ANY APPLICABLE UNDERGROUND STORAGE TANK LAWS AND REGULATIONS.
17. CREDIT: IF BUYER EXCEEDS THE CREDIT LINE ESTABLISHED BY SELLER FROM
TIME TO TIME, BUYER SHALL PREPAY THE EXCESS AMOUNT, OPEN A LETTER OF CREDIT
IN FORM AND SUBSTANCE AND WITH A BANK ACCEPTABLE TO SELLER OR PROVIDE SELLER
WITH SUCH OTHER COLLATERAL IN SUCH FORM AND AMOUNT AS MAY BE ACCEPTABLE TO
SELLER.
18. LIQUIDATION: WITHOUT LIMITING ANY OTHER RIGHTS THAT MAY BE AVAILABLE TO
THE SELLER IN THE EVENT THAT BUYER IS THE SUBJECT OF A BANKRUPTCY, INSOLVENCY
OR OTHER SIMILAR PROCEEDING OR FAILS TO PAY ITS DEBTS GENERALLY AS THEY
BECOME DUE, SELLER SHALL HAVE THE RIGHT, EXERCISABLE IN ITS SOLE DISCRETION
AND AT ANY TIME, TO LIQUIDATE THIS AND ANY OR ALL OTHER CONTRACTS (EXCEPT
CONTRACTS COVERED BY A MASTER ENERGY PRICE SWAP AGREEMENT OR ANY OTHER MASTER
AGREEMENT BETWEEN THE PARTIES TO THE AGREEMENT), THEN OUTSTANDING BETWEEN THE
PARTIES (WHETHER THE SELLER IS THE SELLER OR BUYER THEREUNDER) BY DECLARING
ANY OR ALL SUCH CONTRACTS TERMINATED (WHEREUPON THEY SHALL AUTOMATICALLY BE
TERMINATED, EXCEPT FOR THE FOLLOWING PAYMENT OBLIGATION), CALCULATING THE
DIFFERENCE, IF ANY, BETWEEN THE PRICE SPECIFIED THEREIN AND THE MARKET PRICE
FOR THE RELEVANT COMMODITY AS DETERMINED BY THE SELLER AND AGGREGATING OR
NETTING SUCH MARKET DAMAGES TO A SINGLE LIQUIDATED SETTLEMENT PAYMENT THAT
WILL BE DUE AND PAYABLE UPON DEMAND THEREFORE.
19. GOVERNING LAW AND JURISDICTION: THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT
REFERENCE TO ANY CONFLICT OF LAW RULES) AND WITHOUT RECOURSE TO ARBITRATION.
EACH PARTY EXPRESSLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS
SITUATED IN NEW YORK, NEW YORK AND TO SERVICE OF PROCESS BY CERTIFIED MAIL.
20. FORCE MAJEURE: SELLER WILL NOT BE LIABLE FOR DAMAGES OR OTHERWISE FOR
3
<PAGE>
FAILURE OR DELAY IN PERFORMANCE OF ANY OBLIGATION HEREUNDER WHERE SUCH FAILURE
OR DELAY IS CAUSED BY FORCE MAJEURE, BEING ANY EVENT, OCCURRENCE OR
CIRCUMSTANCE REASONABLY BEYOND THE CONTROL OF SELLER, INCLUDING WITHOUT
PREJUDICE TO THE GENERALITY OF THE FOREGOING, FAILURE OR DELAY CAUSED BY OR
RESULTED FROM ACTS OF GOD, STRIKES, FIRES, FLOODS, WARS (WHETHER DECLARED OR
UNDECLARED), RIOTS, DESTRUCTION OF THE PRODUCT DELAYS OF CARRIERS DUE TO
BREAKDOWN OR ADVERSE WEATHER, EMBARGOES, ACCIDENTS, DISRUPTION OR BREAKDOWNS
OF PRODUCTIONS OF REFINERY FACILITIES, OR PREVENT OR DELAY IN LOADING OR
DISCHARGING OF TANK CARS DUE TO SUCH DISRUPTIONS OR BREAKDOWN, RESTRICTIONS
IMPOSED BY ANY GOVERNMENTAL AUTHORITY (INCLUDING ALLOCATIONS, PRIORITIES,
REQUISITION, QUOTAS AND PRICE CONTROLS).
THE TIME OF SELLER TO MAKE DELIVERY HEREUNDER SHALL BE EXTENDED DURING ANY
PERIOD IN WHICH DELIVERY SHALL BE DELAYS OR PREVENTED BY REASON OF ANY OF THE
FOREGOING CAUSES UP TO A TOTAL OF THIRTY (30) DAYS. IF ANY DELIVERY
HEREUNDER SHALL BE SO DELAYED OR PREVENTED FOR MORE THAN THIRTY (30) DAYS
SELLER MAY TERMINATE THIS AGREEMENT WITH RESPECT TO SUCH DELIVERY UPON
WRITTEN NOTICE TO THE OTHER PARTY.
21. ADJUSTMENTS TO PLACEMENT COSTS: SELLER WILL HAVE THE RIGHT TO ADJUST
THE PRICE AND/OR THE PLACEMENT DIFFERENTIAL(S) TO REFLECT ACTUAL INCREASES IN
SELLER'S COST OF MAKING PRODUCT AVAILABLE. IN SUCH CASE, SELLER WILL PROVIDE
APPROPRIATE DOCUMENTATION TO BUYER AS TO SUCH INCREASE.
22. SEVERABILITY: ANY PROVISION OF THIS AGREEMENT WHICH IS PROHIBITED,
UNENFORCEABLE OR NOT AUTHORIZED IN ANY JURISDICTION SHALL, AS TO SUCH
JURISDICTION, BE INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION,
UNENFORCEABILITY OR NON-AUTHORIZATION WITHOUT INVALIDATING THE REMAINING
PROVISIONS HEREOF OR AFFECTING THE VALIDITY, ENFORCEABILITY OR LEGALITY OF
SUCH PROVISION IN ANY OTHER JURISDICTION.
THIS AGREEMENT IS EXECUTED AS OF THE DATE FIRST HEREIN ABOVE WRITTEN.
ABLE OIL COMPANY: BAYWAY REFINING COMPANY
A SUBSIDIARY OF TOSCO CORP:
BY: /s/ Timothy Harrington
----------------------------
BY: ROBERT J. LUBY
----------------------------
TITLE: WHOLESALE MANAGER
-------------------------
PLEASE SIGN AND FAX TO BOB LUBY AT (203) 977-1044
4
<PAGE>
EASYLINK 2493151L001 18MAR98 12:54/12:54 EST
FROM: 62632992
- (CRN: 135083)
TO: 9736259298
COMETS
CRN: 135083
BAYWAY FEFINING COMPANY
PETROLEUM PRODUCTS SALES AGREEMENT
SELLER: BAYWAY REFINING COMPANY
1400 PARK AVENUE
LINDEN, NJ 07036
BUYER: ABLE OIL COMPANY
344 ROUTE #46
ROCKAWAY, NJ 07866
FAX: 1973 625-9298
ATTENTION: TIMMOTHY HARRINGTON
1. CONTRACT DATE: MARCH 12, 1998
2. CONTRACT NUMBER: 135083
QUANTITY: 5000 U.S. BARREL
3. PRICE:
PRODUCT: NO. 2 HEATING OIL-NON HYW-DYED
DELIVERY MONTH: OCTOBER 01, 1998 TO MARCH 31, 1999
PRICE:
THE PRICE FROM 01-MAR-99 TO 31-MAR-99 FOR 1000 BBL
HAS A FIXED PRICE OF 0.5070 USD PER GAL
THE PRICE FROM 01-FEB-99 TO 28-FEB-99 FOR 1000 BBL
HAS A FIXED PRICE OF 0.5100 USD PER GAL
THE PRICE FROM 01-JAN-99 TO 31-JAN-99 FOR 1000 BBL
HAS A FIXED PRICE OF 0.5080 USD PER GAL
THE PRICE FROM 01-DEC-98 TO 31-DEC-98 FOR 1000 BBL
HAS A FIXED PRICE OF 0.5015 USD PER GAL
THE PRICE FROM 01-NOV-98 TO 30-NOV-98 FOR 1000 BBL
HAS A FIXED PRICE OF 0.4915 USD PER GAL
THE PRICE FROM 01-OCT-98 TO 31-OCT-98 FOR 1000 BBL
HAS A FIXED PRICE OF 0.4785 USD PER GAL
CONTRACT PRICES ARE VALID THROUGH THE LAST TICKET IN WHICH
CONTRACT QUANTITY IS FULFILLED. ANY ADDITIONAL VOLUME WILL BE BILLED AT THE
POSTED RACK PRICE. CONTRACT(S) IS TO BE LIFTED RATEABLY EACH MONTH.
4. TERM: THIS AGREEMENT WILL COMMENCE ON OCTOBER 01, 1998 AND END ON
MARCH 31, 1999.
5. DELIVERY: FOB BAYWAY REFINING COMPANY LINDEN, NJ (TOSCO).
5
<PAGE>
EASYLINK 2493151L001 18MAR98 12:54/12:54 EST
FROM: 62632992
- (CRN: 135083)
TO: 9736259298
COMETS
CRN: 135083
BAYWAY REFINING COMPANY
PETROLEUM PRODUCTS SALES AGREEMENT
SELLER: BAYWAY REFINING COMPANY
1400 PARK AVENUE
LINDEN, NJ 07036
BUYER: ABLE OIL COMPANY
344 ROUTE #46
ROCKAWAY, NJ 07866
FAX: 1973 625-9298
ATTENTION: TIMMOTHY HARRINGTON
1. CONTRACT DATE: MARCH 12, 1998
2. CONTRACT NUMBER: 135083
QUANTITY: 6000 U.S. BARREL
3. PRICE:
PRODUCT: NO. 2 HEATING OIL-NON HWY-DYED
DELIVERY MONTH: OCTOBER 01, 1998 TO MARCH 31, 1999
PRICE:
THE PRICE FROM 01-MAR-99 TO 31-MAR-99 FOR 1000 BBL
HAS A FIXED PRICE OF 0.5070 USD PER GAL
THE PRICE FROM 01-FEB-99 TO 28-FEB-99 FOR 1000 BBL
HAS A FIXED PRICE OF 0.5100 USD PER GAL
THE PRICE FROM 01-JAN-99 TO 31-JAN-99 FOR 1000 BBL
HAS A FIXED PRICE OF 0.5080 USD PER GAL
THE PRICE FROM 01-DEC-98 TO 31-DEC-98 FOR 1000 BBL
HAS A FIXED PRICE OF 0.5015 USD PER GAL
THE PRICE FROM 01-NOV-98 TO 30-NOV-98 FOR 1000 BBL
HAS A FIXED PRICE OF 0.4915 USD PER GAL
THE PRICE FROM 01-OCT-98 TO 31-OCT-98 FOR 1000 BBL
HAS A FIXED PRICE OF 0.4785 USD PER GAL
CONTRACT PRICES ARE VALID THROUGH THE LAST TICKET IN WHICH CONTRACT QUANTITY
IS FULFILLED. ANY ADDITIONAL VOLUME WILL BE BILLED AT THE POSTED RACK PRICE.
CONTRACT(S) IS TO BE LIFTED RATEABLY EACH MONTH.
4. TERM: THIS AGREEMENT WILL COMMENCE ON OCTOBER 01, 1998 AND END ON
MARCH 31, 1999.
5. DELIVERY: FOB BAYWAY REFINING COMPANY LINDEN, NJ (TOSCO).
6
<PAGE>
IF, FOR ANY REASON, BUYER FAILS TO TAKE OR SCHEDULE DELIVERY OF ITS
AGGREGATE MONTHLY LOADING QUANTITY, SELLER, AT ITS DISCRETION AND WITHOUT
PREJUDICE TO ANY OTHER RIGHTS OR REMEDIES WHICH SELLER MAY HAVE, WILL BE
ENTITLED TO INVOICE BUYER, AND BUYER WILL PAY, AS LIQUIDATED DAMAGES AND NOT
AS A PENALTY, THE PRODUCT PRICE PER GALLON FOR THE QUANTITY NOT LIFTED.
5. SCHEDULING: DURING THE TERM OF ANY CONTRACT WITH SELLER, ALL BUYER'S
LIFTINGS AT THE DESIGNATED TERMINAL OR TERMINALS SPECIFIED WILL BE INVOICED
AT THE CONTRACT PRICE UNTIL ALL CONTRACTS HAVE BEEN COMPLETED. IN THE EVENT
THAT ONE OR MORE CONTRACT LIFTING PERIODS OVERLAP, THE CONTRACT WITH THE
EARLIEST START DATE SPECIFIED IN THE TERM MUST BE COMPLETED FIRST. SHOULD TWO
OR MORE CONTRACTS HAVE EXACTLY THE SAME PERIOD OF DELIVERY, THE CONTRACTS
MUST BE COMPLETED IN THE ORDER OF THE CONTRACT DATES.
BUYER MAY REQUEST THE ABILITY TO PURCHASE PRODUCT AT THE POSTED RACK PRICE
FROM SELLER DURING THE TERM OF A CONTRACT. IF THE REQUEST IS GRANTED BY
SELLER, BUYER AGREES TO INFORM SELLER 24 HOURS IN ADVANCE OF SPECIFIC POSTED
RACK PURCHASES AND TO COMMUNICATE ACTUAL LIFTING INFORMATION TO SELLER IN
ACCORDANCE WITH SELLER'S INSTRUCTIONS WHEN THE REQUEST IS GRANTED.
CONTRACTS MAY NOT BE SPLIT LOADED WITH ANOTHER CONTRACT OR POSTED RACK PRICE
PURCHASE IN ANY CASE. ALL LISTINGS WILL BE EFFECTED DURING THE NORMAL
BUSINESS HOURS OF SELLER'S DESIGNATED TERMINAL OR TERMINALS OR AS OTHERWISE
MUTUALLY AGREED UPON BY THE PARTIES.
7. PAYMENT: NET 10 CALENDAR DAYS FROM BILL OF LADING (B/L = 1) VIA
ELECTRONIC FUNDS TRANSFER (EFT)
8. MEASUREMENT AND INSPECTION: QUANTITY AND QUALITY WILL BE DETERMINED BY
SELLER IN ACCORDANCE WITH INDUSTRY PRACTICE FOR THE PRODUCT. BUYER WILL HAVE
THE RIGHT TO HAVE ITS OWN PERSONNEL OR INSPECTOR AVAILABLE TO WITNESS ANY
SUCH DETERMINATION. ALL COSTS OF SUCH PERSONNEL OR INSPECTORS WILL BE BORNE
BY BUYER.
9. TITLE AND RISK OF LOSS: TITLE AND RISK OF LOSS WILL PASS FROM SELLER TO
BUYER AS THE PRODUCT PASSES THE LOADING ARM FLANGE OF SELLER'S DESIGNATED
TERMINAL FACILITY.
10. WARRANTIES: EXCEPT FOR THE WARRANTY OF TITLE, NO WARRANTY, EXPRESSED OR
IMPLIED, OR MERCHANTABILITY, FITNESS OR SUITABILITY OF THE PRODUCT FOR ANY
PARTICULAR PURPOSE OR OTHERWISE, IS MADE BY SELLER.
11. LIABILITIES: IN NO EVENT WILL EITHER PARTY BE LIABLE FOR INDIRECT OR
CONSEQUENTIAL DAMAGES OR FOR SPECIFIC PERFORMANCE.
12. ASSIGNMENTS: NEITHER SELLER NOR BUYER MAY ASSIGN THE WHOLE OR ANY PART OF
ITS RIGHTS AND OBLIGATIONS HEREUNDER DIRECTLY OR INDIRECTLY WITHOUT THE PRIOR
WRITTEN CONSENT OF THE OTHER PARTY, PROVIDED, HOWEVER, THAT SELLER MAY ASSIGN
ALL OR ANY OF ITS RIGHTS HEREUNDER TO ANY AFFILIATE COMPANY UPON GIVING
NOTICE.
13. TAXES: BUYER WILL PAY SELLER THE AMOUNT OF ALL EXCISE, FEDERAL, STATE AND
LOCAL GROSS RECEIPTS, IMPORT, MOTOR FUEL, SUPERFUND, COASTAL PROTECTION AND
SPILL TAXES, AND ALL OTHER FEDERAL, STATE AND LOCAL TAXES HOWEVER DESIGNATED
(OTHER THAN TAXES ON INCOME) PAID, OR INCURRED BY SELLER, DIRECTLY OR
INDIRECTLY WITH RESPECT TO THE PRODUCT, ITS TRANSPORTATION OR STORAGE AND/OR
ON THE VALUE THEREOF.
14. MATERIAL SAFETY DATA SHEETS: SELLER REPRESENTS THAT IT HAS PROVIDED OR
WILL PROVIDE BUYER WITH AN APPROPRIATE MATERIAL SAFETY DATA SHEET (""MSDS""),
7
<PAGE>
LABELS, AND ANY UPDATED INFORMATION FOR THE PRODUCT IN ACCORDANCE WITH THE
APPLICABLE REQUIREMENTS OF THE OCCUPATIONAL SAFETY AND HEALTH ADMINISTRATION
AT OR PRIOR TO THE TIME OF DELIVERY.
BUYER ACKNOWLEDGES RECEIPT OF SELLER'S MSDS AND ACKNOWLEDGES THE HAZARDS AND
RISKS IN HANDLING AND USING THE PRODUCT. BUYER WILL READ THE MSDS AND ADVISE
ITS EMPLOYEES, ITS AFFILIATES AND THIRD PARTIES WHO MAY PURCHASE OR COME IN
CONTACT WITH THE PRODUCT, ABOUT THE HAZARDS OF THE PRODUCT, AS WELL AS THE
PRECAUTIONARY PROCEDURES FOR HANDLING THE PRODUCT, WHICH ARE SET FOURTH IN
SUCH MSDS AND ANY SUPPLEMENTARY MSDS OR WRITTEN WARNING(S) WHICH SELLER MAY
PROVIDE TO BUYER FROM TIME TO TIME.
15. GOVERNMENTAL OR JUDICIAL ACTION: IN THE EVENT THAT ANY ACTION OR
DECISION SHALL HAVE BEEN TAKEN OR STATUTE, RULE, REGULATION, ORDER OR DECREE
ENACTED, PROMULGATED OR DEEMED APPLICABLE TO THE PURCHASE, SALE,
TRANSPORTATION OR STORAGE OF PRODUCT BY ANY FEDERAL, STATE OR LOCAL
GOVERNMENT OR GOVERNMENTAL AGENCY OR INSTRUMENTALITY THAT MATERIALLY AND
ADVERSELY AFFECTS THE ABILITY OF SELLER TO CONTINUE TO PERFORM ITS
OBLIGATIONS UNDER THIS AGREEMENT, SELLER WILL HAVE THE RIGHT IN ITS
DISCRETION EITHER TO (I) TERMINATE THIS AGREEMENT UPON THIRTY (30)
DAYS NOTICE TO BUYER OR (II) REQUEST AN INCREASE IN THE PRICE OF THE PRODUCT
UNDER THIS AGREEMENT FOR THE DURATION OF THE TERM OF THIS AGREEMENT BY
ADVISING BUYER OF THE NEW PRICE FOR THE BALANCE OF THE TERM. BUYER WILL HAVE
THE RIGHT TO ACCEPT SUCH PRICE INCREASE OR TERMINATE THIS AGREEMENT BY NOTICE
GIVEN TO SELLER WITHIN THIRTY (30) DAYS AFTER RECEIPT OF SELLER'S PRICE
INCREASE NOTICE.
16. COMPLIANCE WITH LAWS: BUYER WILL COMPLY WITH ALL LAWS AND REGULATIONS
APPLICABLE TO THE RECEIPT AND STORAGE OF THE PRODUCT INCLUDING WITHOUT
LIMITATION ANY APPLICABLE UNDERGROUND STORAGE TANK LAWS AND REGULATIONS.
17. CREDIT: IF BUYER EXCEEDS THE CREDIT LINE ESTABLISHED BY SELLER FROM
TIME TO TIME, BUYER SHALL PREPAY THE EXCESS AMOUNT, OPEN A LETTER OF CREDIT
IN FORM AND SUBSTANCE AND WITH A BANK ACCEPTABLE TO SELLER OR PROVIDE SELLER
WITH SUCH OTHER COLLATERAL IN SUCH FORM AND AMOUNT AS MAY BE ACCEPTABLE TO
SELLER.
18. LIQUIDATION: WITHOUT LIMITING ANY OTHER RIGHTS THAT MAY BE AVAILABLE TO
THE SELLER IN THE EVENT THAT BUYER IS THE SUBJECT OF A BANKRUPTCY, INSOLVENCY
OR OTHER SIMILAR PROCEEDING OR FAILS TO PAY ITS DEBTS GENERALLY AS THEY
BECOME DUE, SELLER SHALL HAVE THE RIGHT, EXERCISABLE IN ITS SOLE DISCRETION
AND AT ANY TIME, TO LIQUIDATE THIS AND ANY OR ALL OTHER CONTRACTS (EXCEPT
CONTRACTS COVERED BY A MASTER ENERGY PRICE SWAP AGREEMENT OR ANY OTHER MASTER
AGREEMENT BETWEEN THE PARTIES TO THE AGREEMENT), THEN OUTSTANDING BETWEEN THE
PARTIES (WHETHER THE SELLER IS THE SELLER OR THE BUYER THEREUNDER) BY
DECLARING ANY OR ALL SUCH CONTRACTS TERMINATED (WHEREUPON THEY SHALL
AUTOMATICALLY BE TERMINATED, EXCEPT FOR THE FOLLOWING PAYMENT OBLIGATION),
CALCULATING THE DIFFERENCE, IF ANY, BETWEEN THE PRICE SPECIFIED THEREIN AND
THE MARKET PRICE FOR THE RELEVANT COMMODITY AS DETERMINED BY THE SELLER AND
AGGREGATING OR NETTING SUCH MARKET DAMAGES TO A SINGLE LIQUIDATED SETTLEMENT
PAYMENT THAT WILL BE DUE AND PAYABLE UPON DEMAND THEREFORE.
19. GOVERNING LAW AND JURISDICTION: THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT
REFERENCE TO ANY CONFLICT OF LAW RULES) AND WITHOUT RECOURSE TO ARBITRATION.
EACH PARTY EXPRESSLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS
SITUATED IN NEW YORK, NEW YORK AND TO SERVICE OF PROCESS BY CERTIFIED MAIL.
20. FORCE MAJEURE: SELLER WILL NOT BE LIABLE FOR DAMAGES OR OTHERWISE FOR
8
<PAGE>
FAILURE OR DELAY IN PERFORMANCE OF ANY OBLIGATION HEREUNDER WHERE SUCH
FAILURE OR DELAY IS CAUSED BY FORCE MAJEURE, BEING ANY EVENT, OCCURRENCE OR
CIRCUMSTANCE REASONABLY BEYOND THE CONTROL OF SELLER, INCLUDING WITHOUT
PREJUDICE TO THE GENERALITY OF THE FOREGOING, FAILURE OR DELAY CAUSED BY OR
RESULTED FROM ACTS OF GOD, STRIKES, FIRES, FLOODS, WARS (WHETHER DECLARED OR
UNDECLARED), RIOTS, DESTRUCTION OF THE PRODUCT DELAYS OF CARRIERS DUE TO
BREAKDOWN OR ADVERSE WEATHER, EMBARGOES, ACCIDENTS, DISRUPTION OR BREAKDOWNS
OF PRODUCTIONS OF REFINERY FACILITIES, OR PREVENT OR DELAY IN LOADING OR
DISCHARGING OF TANK CARS DUE TO SUCH DISRUPTIONS OR BREAKDOWN, RESTRICTIONS
IMPOSED BY ANY GOVERNMENTAL AUTHORITY (INCLUDING ALLOCATIONS, PRIORITIES,
REQUISITION, QUOTAS AND PRICE CONTROLS).
THE TIME OF SELLER TO MAKE DELIVERY HEREUNDER SHALL BE EXTENDED DURING ANY
PERIOD IN WHICH DELIVERY SHALL BE DELAYS OR PREVENTED BY REASON OF ANY OF THE
FOREGOING CAUSES UP TO A TOTAL OF THIRTY (30) DAYS. IF ANY DELIVERY HEREUNDER
SHALL BE SO DELAYED OR PREVENTED FOR MORE THAN THIRTY (30) DAYS SELLER MAY
TERMINATE THIS AGREEMENT WITH RESPECT TO SUCH DELIVERY UPON WRITTEN NOTICE TO
THE OTHER PARTY.
21. ADJUSTMENTS TO PLACEMENT COSTS: SELLER WILL HAVE THE RIGHT TO ADJUST THE
PRICE AND/OR THE PLACEMENT DIFFERENTIAL(S) TO REFLECT ACTUAL INCREASES IN
SELLER'S COST OF MAKING PRODUCT AVAILABLE. IN SUCH CASE, SELLER WILL PROVIDE
APPROPRIATE DOCUMENTATION TO BUYER AS TO SUCH INCREASE.
22. SEVERABILITY: ANY PROVISION OF THIS AGREEMENT WHICH IS PROHIBITED,
UNENFORCEABLE OR NOT AUTHORIZED IN ANY JURISDICTION SHALL, AS TO SUCH
JURISDICTION, BE INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION,
UNENFORCEABILITY OR NON-AUTHORIZATION WITHOUT INVALIDATING THE REMAINING
PROVISIONS HEREOF OR AFFECTING THE VALIDITY, ENFORCEABILITY OR LEGALITY OF
SUCH PROVISION IN ANY OTHER JURISDICTION.
THIS AGREEMENT IS EXECUTED AS OF THE DATE FIRST HEREIN ABOVE WRITTEN.
ABLE OIL COMPANY: BAYWAY REFINING COMPANY
A SUBSIDIARY OF TOSCO CORP:
BY: /s/ Timothy Harrington
----------------------------
BY: Timothy Harrington ROBERT J. LUBY
----------------------------
TITLE: President & CEO WHOLESALE MANAGER
-------------------------
PLEASE SIGN AND FAX TO BOB LUBY AT (203) 977-1044
9
<PAGE>
KOCH Exhibit 10.15
- -------------------------------------------------------------------------------
KOCH REFINING COMPANY, L.P.
SALES AGREEMENT
DATE: March 17, 1998 (Customer #71061)
TERMS: Net 10 days Sold to:
Able Oil Co.
344 Route 46
Rockaway, NJ 07866
We hereby acknowledge sale
Confirming: Phone X Wire Letter SALES NO.
Mr. C. Gusty and Mr. Tim Herrington SA981385
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
PRODUCT: #2 Fuel Oil meeting Colonial 86 grade specifications
QUANTITY: Approximately 504,000 gallons pulled ratably
(42,000 gallons per month)
PRICE: See attachment
PERIOD OF April 1, 1998 through March 31, 1998
DELIVERY
F.O.B.: Koch thru-put
Newark, NJ
TO BE Able Oil Co.
SHIPPED TO:
SHIPPED BY: Buyer's trucks
REMARKS: 1) Quantity to be determined by Meter Ticket at point of
loading, gross gallons.
2) Customer agrees to comply with Koch's credit terms and
allocation of credit limits.
3) BE27171.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Accepted Accepted
A & S Fuel Co., Inc. KOCH REFINING COMPANY, L.P.
KRC/GP, Inc. General Partner
BY BY /s/ CHRIS GUSTY
----------------------------------- -----------------------------------
Chris Gusty
Senior Account Manager
- -------------------------------------- Northeast Region
Title
Subject to Terms and Conditions
<PAGE>
Koch Refining Company L.P.
<TABLE>
<CAPTION>
Delivery Schedule
SA981385
Able Oil Company
Date Price
---------------------
<S> <C>
April $.3975
May $.4045
June $.4135
July $.4235
August $.4350
September $.4466
October $.4605
November $.4710
December $.4800
January $.4865
February $.4890
March $.4850
</TABLE>
Accepted--Able Oil Co. Accepted--Koch Refining Company, L.P.
/s/ Chris Gusty
- ----------------------------l.s. ----------------------------l.s.
Chris Gusty
Senior Account Manager
Northeast Region
2
<PAGE>
KOCH REFINING COMPANY, L.P.
STANDARD PRODUCT SALES TERMS AND CONDITIONS
1. TITLE: On sales FOB Koch's location, title and risk of loss shall
pass to Buyer as product passes through the flange connection between the
delivery line and Buyer's receiving line. On sales FOB Buyer's location,
title and risk of loss shall pass to Buyer as product leaves delivery vessel.
2. TAXES: Buyer shall pay, or reimburse Seller for all taxes, duties
and other governmental charges of whatever kind (except for income taxes)
imposed on any transaction of product sold hereunder. Without limitation on
the foregoing, Buyer shall bear the effect of all Federal Goods and Services
Tax on or with respect to this contract or the transactions or products
hereunder.
3. MARINE: (a) Notices--Notice of estimated time of arrival (ETA) and
name of vessel or barge tow shall be given to receiving or loading party a
reasonable time before arrival at port. Any change in ETA shall be reported
promptly. If a berth is not available for the latest ETA, a berth will be
scheduled for the next earliest time a berth is open on the dock's schedule.
Upon arrival in port, notice of readiness to load or discharge shall be
given, with allowed free time being three hours for barge tows and six hours
for vessels. Laytime shall commence at the earlier of becoming all fast at
berth or at expiration of the three or six hour period, as appropriate.
(b) Berth--Barge tow or vessel shall not exceed the maximum draft or
length allowed by dock operator. Receiving or loading party shall provide a
berth that tow or vessel may safely proceed to, lie at always afloat, and
safely depart from. Receiving or loading shall be done within the time, or at
the rate, agreed to by the parties. Seller shall pay wharfage fee, if any.
Buyer shall pay all fees or charges assessed against a vessel or barge.
(c) Demurrage--Seller shall be liable for demurrage directly caused by
Seller's sole fault. Buyer shall be liable for all other demurrage.
4. QUANTITY: All quantities shall be measured according to then
prevailing practices and methods generally used by Seller at its locations.
Each party may have its representative observe all measurements, sample
taking and testing.
5. SCHEDULING: (a) Cooperation--To the extent flexibility is allowed
by this contract for time or size of deliveries, the parties shall cooperate
to the extent reasonable to coordinate period(s) and time(s) for deliveries
hereunder; and Buyer shall give reasonable prior notice as to quantities and
scheduling desired.
(b) Lots--Seller may deliver in lots. Failure of Seller to deliver shall
not relieve Buyer from accepting and paying for conforming lots tendered.
6. CREDIT: Seller's duty to perform, and Buyer's right to purchase,
hereunder are at all times subject to approval, and continuing approval, of
Buyer's credit by Seller. No assurance or guarantee is made of, or of
continuation of, any particular credit; and Seller without limitation
reserves the right to sell on pre-paid, COD, standby letter of credit, or
other secured or collaterally assured basis acceptable to Seller. Unless
credit is approved and arranged by Buyer with Seller payment shall be due in
full in cash prior to loading of product. Without limitation on Seller's
rights and remedies on credit issues or any other causes(s), if Buyer fails
to pay any amount promptly when due hereunder or if Seller needs assurance,
or further assurance, of Buyer's credit worthiness, Seller may cancel this
contract, demand different payment terms, suspend or recall deliveries or
shipments, impose different credit terms, or impose different requirements
for collateral assurance of payment. ANY SUCH DEMAND MAY BE MADE ORALLY AT
SELLER'S ELECTION. Seller is hereby given an express right to set-off against
any amount whatsoever owing or becoming due to Buyer, any amount owing by or
becoming due from Seller or any company that is directly or indirectly
subsidiary to, parent of, or affiliated with Seller.
7. WARRANTIES AND LIMITATIONS: Seller warrants only that--(a) content
of product shall conform at the time of loading to Seller's then current,
standard specification therefor, and (b) Seller has good title to the product
at the time of loading transfer hereunder.
ALL OTHER WARRANTIES OF SELLER, EXPRESSED OR IMPLIED, AND ALL
REPRESENTATIONS, GUARANTEES, INSTRUCTIONS, PROMISES, DESCRIPTIONS AND SAMPLES
FROM SELLER OF, OR PERTAINING TO, PRODUCT QUALITY, COMPOSITION,
CHARACTERISTICS, ENVIRONMENTAL OR HUMAN SAFETY OR HAZARD OR HEALTH AFFECTS,
PERFORMANCE, OR LIKE MATTERS ARE EXCLUDED. WITHOUT LIMITATION ON THE
FOREGOING SENTENCE, ALL IMPLIED WARRANTIES OF FITNESS FOR PURPOSE AND OF
MERCHANTABILITY AND ALL WARRANTIES OF SELLER OF FREEDOM FROM PATENT
INFRINGEMENT ARE EXCLUDED.
8. ACCEPTANCE: All quantities of product shall, unless otherwise
agreed, be determined in accordance with the following and adjusted to a
standard temperature of sixty (60) degrees Fahrenheit in compliance with
applicable A.S.T.M. methods. Quantities delivered to vessels shall be
determined by shore tank measurements at the point of delivery or receipt or,
if unavailable, by vessel loaded or discharge figures as adjusted by the
appropriate vessel experience factor as determined by an independent
petroleum inspector. Quantities delivered into or by pipelines shall be
determined by meter. The term "barrel" as used herein shall mean forty two
(42) U.S. gallons. The term "gallon" as used herein shall mean a U.S. gallon
of two hundred thirty one (231) cubic inches. All quality determinations
shall be made by an independent inspector to be employed at the equally
shared expense of the parties. Acceptance shall be deemed to have irrevocably
occurred when the governing sample of the product for purpose of quality
determination has been found by the independent inspector to conform to the
specification required hereby.
9. EXCUSED PERFORMANCE: (a) Beyond Reasonable Control--The parties
shall be excused from their respective performances hereunder if performance
has been prohibited or delayed by any foreseeable or unforeseeable causes(s)
beyond the reasonable control of the party claiming excuse. Such shall
include without limitation any failure of mechanical or chemical function or
equipment normally used by Seller for manufacturing, handling or delivering
of product covered hereby. Promptly after a party determines to claim excuse
of performance, the party shall notify the other of the circumstances and
consequences claimed and shall use reasonable means to remove the cause(s) in
question. But in no event shall either party be obligated to settle any
demands of, or disputes with, laborers; nor shall either party be excused
from paying monies due or complying with credit terms of Seller. Quantities
affected by such causes(s) shall be dropped from this contract, but this
contract shall otherwise continue in force and effect. In periods of shortage
of product due to such cause(s), Seller shall be entitled to allocate
available supply among itself and its affiliated, subsidiary and parent
companies and customers, Buyer included.
(b) Impracticability--Seller shall have the right to cancel this
contract without liability to Seller if for any reason Seller shuts down the
unit(s) in, or the plant at, which the product is made or if a change in
circumstances (whether foreseeable or unforeseeable) causes Seller to incur a
loss on a full cost basis at any time on the sale of product hereunder.
<PAGE>
(c) Alternate Supply--Under no circumstances shall Seller be obligated to
obtain product for delivery hereunder from any person or entity that is not
an affiliate, subsidiary or parent company of Seller.
10. LIMITED REMEDIES: Seller's liability, and Buyer's exclusive remedy,
for any cause of action (whether in contract, warranty, guarantee, failure of
essential purpose, tort [including but not limited to negligence], violation
of law, strict liability or otherwise) arising out of or related to this
contract is expressly limited at Seller's option to--(a) replacement of a
nonconforming product FOB Seller's point of delivery; or (b) payment not to
exceed the purchase price for shipment which is the subject of the claim or
cause of action.
WITHOUT LIMITATION ON THE FOREGOING, SELLER SHALL NOT BE OBLIGATED FOR
LOST PROFITS, ECONOMIC LOSS, OR ANY OTHER SPECIAL, CONSEQUENTIAL OR
INCIDENTAL DAMAGES WHETHER ARISING UNDER WARRANTY, FAILURE OF ESSENTIAL
PURPOSE, CONTRACT, GUARANTEE, TORT (INCLUDING BUT NOT LIMITED TO NEGLIGENCE),
STRICT LIABILITY, VIOLATION OF LAW, OR OTHERWISE.
Solely as a means of early identification of any possible problems or
disputes and not by way of limitation of Seller's rights hereunder nor in
mitigation of acceptance hereunder, on each shipment Buyer shall sample and
test such prior to use or resale or other transfer thereof by Buyer in order
to independently determine conformity at as early a time as possible; and if
Buyer determines or suspects nonconformity, Buyer shall not use or resell or
otherwise transfer the same unless Seller gives Buyer written notice to
proceed with use or resale. Seller shall be reasonably prompt in giving any
instruction to Buyer concerning such.
11. INDEMNITY: Buyer shall indemnify and defend and hold harmless
Seller as to any breach of this contract by Buyer and from any liability
and/or remedy, of whatever nature or kind, to which Seller might become
subject directly or indirectly resulting from Buyer's sole negligence or
willful misconduct. Buyer agrees without limitation to promptly and properly
provide to its employees, customers and community representatives, as
appropriate, any information provided by Seller relating to human health or
human or environmental safety on the product sold hereunder.
12. LAW AND JURISDICTION: This contract shall be governed by the laws
of the State of Kansas, excluding rules of conflict of law, and by applicable
United States federal law and by INCOTERMS.
13. COMPLIANCE WITH LAW: Vessels shall fully comply (or hold necessary
waivers if not in compliance) with all applicable U.S. Coast Guard
regulations in effect as of the date vessel berths. Vessels shall comply with
all local, state, and federal environmental laws and regulations while
berthed at the terminal, including the U.S. Federal Water Pollution Control
Act, as amended, and shall have secured and carry aboard the vessel a current
U.S. Coast Guard Certificate of Financial Responsibility (Water Pollution)
(The "Certificate"). Terminal shall not be liable for demurrage or other
expenses during any time lost as a result of failure to obtain or maintain
the Certificate. If any vessel fails to comply with such laws and
regulations, the vessel may be required to leave the terminal. Any vessel
delay time caused by the vessel's failure to meet such laws and regulations
shall not count as used laytime.
14. OIL POLLUTION AVOIDANCE: In the event of an escape or discharge of
oily water, oil ballast, or oil in any form occurring at the Terminal
(regardless of cause), Seller shall immediately notify Buyer and shall
cooperate with Buyer in jointly effecting a cleanup, or other resolution to
the spill and necessary notifications. Buyer agrees to keep Seller advised of
the nature and extent of the measures to be undertaken by it. Any of the
aforementioned measures undertaken shall be at the expense of the party
causing the discharge. The above shall not be considered to be inderogation
of any other such right as Buyer or Seller may have or acquire by law or
international convention.
15. WAIVERS: Waivers by Seller or Buyer of a breach by the other party
of any provision of this contract shall not be deemed a waiver of future
compliance therewith. No delay or failure on Seller's or Buyer's part to
enforce any right or claim which it may have hereunder shall constitute a
waiver on Seller's or Buyer's part of such right or claim.
16. EXPORT/IMPORT: Buyer shall be the exporter and importer of record
with respect hereto and shall have the duty and risk of determining and
complying with all export and import laws.
17. ASSIGNMENT: Buyer shall not assign this contract or any part hereof
except upon, and according to, such prior, written consent as Seller may
choose to give in its sole discretion.
18. MISCELLANEOUS: These sale terms constitute the entire agreement and
contract of the parties and shall control over any other terms except that,
to the limited extent that any separate writing of the parties--(i) relates
expressly and directly hereto; (ii) is mutually executed by respective
officers of Seller and Buyer; and (iii) is intended by the parties to
replace or supersede, rather than to supplement, a specific portion of these
sales terms, then such specific replacing or superseding term shall control
over the term hereof in question but not otherwise.
THESE STANDARD TERMS AND CONDITIONS OF SALE ARE DEEMED AN OFFER FOR SALE
BY SELLER. IF BUYER DOES NOT ACCEPT THIS OFFER BY EXECUTION HEREON OR
OTHERWISE IN WRITING WITHOUT ALTERATION HEREOF OR ADDITION HERETO, BUYER
SHALL BE DEEMED TO HAVE ACCEPTED THIS OFFER BY PURCHASING, OR TAKING DELIVERY
OF, PRODUCT FROM SELLER. ANY ACCEPTANCE IS EXPRESSLY LIMITED TO THESE TERMS
AND CONDITIONS EXCEPT SUCH AS MEETS THE REQUIREMENTS OF THE FIRST PARAGRAPH
OF THIS SECTION 19. Without limitation on Seller's rights, no term in Buyer's
purchase order or any other document, correspondence or communication from
Buyer which conflicts with the terms of this contract is, or shall be,
accepted by Seller except in a separate writing executed by an officer of
Seller. Headings are provided for convenience, and are not part of the
contract of the parties. Seller's rights and remedies hereunder are in
addition to, and not in lieu of, Seller's other rights and remedies.
August, 1995
2
<PAGE>
[LETTERHEAD]
August 19, 1998
To Whom It May Concern:
Re: Able Oil Company
344 Rt 46
Rockaway, New Jersey 07866
The above referred to company has established credit with Koch Refining
Company L. P, currently pulling product from us at Newark Stratus and Newark
Star Terminals in New Jersey.
/s/ Victor Mims
--------------------------------
Victor Mims
Marketing Representative
Northwest Region
VM:bd
<PAGE>
Exhibit 10.16
FUEL PURCHASE AGREEMENT
THIS AGREEMENT, entered into this 3rd day of September 1996, by and between
FERRELLGAS hereinafter called the "COMPANY", and ABLE OIL COMPANY,
hereinafter called the "CUSTOMER," whose mailing address is 318 Route 46,
Dover, New Jersey 07801.
1. It is expressly agreed between the parties that this contract is for the
purchase of Liquefied Petroleum Gas (L.P.G.) only and does not include
any lease or rental equipment.
2. The Company agrees to sell and the Customer agrees to buy L.P. Gas for
use by the Customer. The Customer agrees to pay the Company for the
same at the time of delivery, or in accordance with prearranged terms
established between the Company and the Customer.
3. The L.P. Gas may be picked up by the Customer at the Company's location
in Franklin, New Jersey. The Customer will give at least six (6) business
hours notice. The Customer will be responsible for notifying the Company
of the Customer's intention to purchase L.P. Gas. If the Company is
unable to supply L.P. Gas at the Company's location in Franklin, New
Jersey the Company will notify and make available, L.P. Gas at the
Company's Three Company's Three Bridges, New Jersey location. It is
understood that the Company's Franklin, New Jersey location will be the
primary point of purchase for L.P. Gas under this agreement, and the
Three Bridges location will only be necessary when business conditions do
not permit purchase from the Franklin location.
4. The price for L.P. Gas purchased by the Customer from either the
Franklin, New Jersey location or the Three Bridges, New Jersey will be
The Company's "Laid-In" cost of product + (plus) .05 (five cents) per
gallon. "Laid-In" cost will be determined by the cost of product from the
Hess Port Reading facility in New Jersey as listed in the most recent BPN
Weekly Newsletter + (plus) transportation which is currently .0280 per
gallon.
5. L.P. Gas may also be delivered directly to the Customer's Dispenser in
Rockaway, New jersey at the Customer's request. The price for such a
delivery will be "Lain-In" cost of product + (plus) .20 (twenty cents)
per gallon. Delivery will be made in a reasonable amount of time.
6. L.P. Gas may be filled into D.O.T. cylinders (such as the typical 20#
grill type cylinder), when brought to the Company's Franklin, New Jersey
location by the Customer. The cost for this will be "Laid-In" cost of
product + (plus) .27 (twenty seven cents) per gallon. This price will
include purging and recertification when necessary.
7. Both parties agree that this agreement shall renew yearly & be in effect
until cancelled according to the terms herein. Either party may cancel
this agreement at any time with 60 (sixty) days written notice.
For "Ferrellgas" (The Company) For "Able Oil Co" (The Customer)
47 Church Street, Franklin, N.J. 318 Route 46 Dover, New Jersey
/s/ ILLEGIBLE /s/ ILLEGIBLE
------------------------------ -------------------------------
Accepted at Franklin, N.J. Date 09-05-96
- --------------------------------- -----------------------------------
<PAGE>
Exhibit 10.17
FAX COVER SHEET
TO: ABLE PROPANE CO INC. DATE: 7-28-98
--------------------- ---------
ATTENTION: CHRIS WESTAD PAGE: 1 OF 5 [KEYSTONE PROPANE LOGO]
--------------- ---------
FROM: BOB WEHRMANN
--------------------
SUBJECT: PROPANE PRICES
MESSAGE: THE PRICE FOR PROPANE FROM OUR TERMINAL WILL BE: .35 PER GALLON.
THE PRICE FOR PROPANE DELIVERED WILL BE:______ PER GALLON.
- THIS PRICE WILL BE EFFECTIVE FROM 7-28-98 TO 8-07-98.
- IF YOU HAVE ANY QUESTIONS OR COMMENTS PLEASE CONTACT ME AT.
TOBYHANNA OFFICE: PHONE# 717-894-8229
FAX # 717-894-9507
- OUR SUMMER HOURS ARE: MONDAY-FRIDAY 8:30A.M. TO 5:00P.M.
SATURDAY 9:00A.M. TO 12:00P.M.
(IF FOR SOME REASON YOU NEED TO MAKE OTHER ARRANGEMENTS PLEASE CALL
THE OFFICE AT TOBYHANNA 717-894-8229)
THANK YOU,
/S/ ROBERT E. WEHRMANN
-------------------------
ROBERT E. WEHRMANN
KEYSTONE PROPANE SERVICE INC.
CHRIS,
HERE IS PRICE QUOTE FOR THE WEEK, WE WILL SEND A
QUOTE TO YOUR OFFICE ON A WEEKLY BASIS (UNLESS TOLD TO DO OTHERWISE).
I'VE INCLUDED APPLICATION TO OPEN ACCT. ETC... WITH US.
WE CAN LOAD A TYPICAL BOBTAIL (2200 GALS OF PRODUCT) IN ABOUT 11 MINS HERE
AT THE FACILITY. IF YOU HAVE ANY QUESTIONS/CONCERNS, PLEASE CALL ME HERE AT
THE TERMINAL.
THANK YOU
BOB WEHRMANN
1 717 894 8229
<PAGE>
Exhibit 10.18
[SUMMIT Leasing Logo]
SCHEDULE NO. 001
To Master Lease No. 60060
dated as of December 3, 1997
between Summit Leasing Corporation, as Lessor
and ABLE OIL COMPANY, as Lessee
1. COMMENCEMENT DATE OF SCHEDULE LEASE TERM: The Commencement Date of this
Schedule shall be the earlier of (a) the first date on which any Equipment
under this Schedule to this Master Lease is delivered to Lessee or Lessee's
agent or consigned to a carrier for shipment to Lessee or Lessee's agent,
or (b) December 10, 1997. Said Commencement Date for this Schedule is
December 10, 1997.
2. DESCRIPTION OF THE EQUIPMENT:
(a) Nature of Equipment: The Equipment will consist generally of the
following: (1) ONE NEW 1998 FREIGHTLINER MODEL FL80 TRUCK
---------------------------------------------
VIN #: 1FY6JFBB2WH955440.
- ------------------------
A complete list of the Equipment including Serial #s is attached as Annex A.
(b) Seller:
--------------------------
(c) Total Capitalized Cost: $ 45,619.28
---------
3. EQUIPMENT LOCATION: The above Equipment is to be located and delivered to
Lessee's premises at 344 Route 46, Rockaway, NJ 07866.
--------------------------------
Phone No. at Location: 201-625-1012.
------------
4. LEASE TERM: The term of this Schedule (the "Lease Term") shall be 48
months and -0- additional days, commencing on the Commencement Date.
5. ADVANCE PAYMENT: A payment in the amount of $1,224.52 shall be due and
payable by Lessee upon Lessor's acceptance of the Master Lease and this
Schedule. Such amount shall be the sum of $100.00 for Lessor's expenses
related to the transaction contemplated by this Schedule (including but not
limited to UCC search and filing fees) and $1,124.52 for advance rent
("Advance Rent"), Advance Rent (X) has ( ) has not been applied to the first
Rent Payment
6. RENT PAYMENTS: For all items of Equipment covered in this Schedule, Rent
Payments shall be paid monthly, the first Rent Payment payable in advance to
be due on Dec. 10, 1997, ("First Rent Date"), and thereafter on Jan. 10,
1998, and on the 10th day of each month (the "Rent Period") thereafter until all
Rent is paid in full through and including Nov. 10, 2001. Each Rent Payment
is in an amount equal to 2.465% of the Total Capitalized Cost or shall be in
the amount of $1,124.52 plus, in either event, (unless a valid tax exemption
certificate is presented
<PAGE>
to Lessor and filed) sales and use tax in the amount of $ -0- making a total
Rent Payment of $1,124.52 per month. Additional Rent of $ -0- per day for
each day Lessee has possession of the Equipment subsequent to the
Commencement Date and prior to the First Rent Date shall be due on the First
Rent Date.
7. BROKER'S COMMISSIONS: Any claim which may be made for commissions in
regard to this transaction shall be the sole responsibility of the Lessee.
8. ADDITIONAL INFORMATION: If such information is unavailable on the date
this Schedule is executed, Lessor is authorized to supply and complete the
Commencement Date (#1), Rent Payment dates and amount of Additional Rent
(contained in #6), the number of additional days in the Lease Term (#4) and
information pertaining to the Description of Equipment (Annex A), based upon
information supplied to Lessor by Seller. In such event, Lessor shall provide
Lessee with an additional true copy of this Schedule immediately upon its
completion.
9. INSURANCE:
(a) Public Liability: $1,000,000 total liability, $1,000,000 per
occurrence.
(b) Casualty and Property Damage: An amount equal to the higher of the
Stipulated Loss Value (as set forth on Annex D-1 hereto) or the full
replacement cost of the Equipment. The amount of Insurance during first year
of the Lease Term shall be not less than the Total Capitalized Cost of the
Equipment:
(c) Medical Malpractice (if applicable): $__________ total, liability,
$________ per occurrence.
10. TAX ID NUMBER: The federal tax identification number (or Social Security
number) of the Lessee is _____________.
11. STIPULATED LOSS AND TERMINATION VALUES:
(a) If, with respect to any of the Equipment, Lessee is required for any
reason whatsoever to pay to Lessor a stipulated loss value (the "Stipulated
Loss Value" or "SLV") or a termination value (the "Termination Value" or
"TV"), Lessee shall pay to Lessor a Stipulated Loss Value or Termination
Value, as the case may be, equal to the sum of the following:
I.a In the case of the SLV, the amount set forth in the attached SLV
Table as of the first day of the Rent Period of the Lease Term of this
Schedule in which there occurs an event of loss, damage or destruction of
any of the Equipment (an "Event of Loss"), multiplied by the Total
Capitalized Cost of the Equipment to which the Event of Loss relates; or
2
<PAGE>
I.b In the case of the TV, the amount set forth in the attached TV
Table as of the first day of the Rent Period of the Lease Term of this
Schedule in which there occurs (i) a termination of the Schedule or a
demand by Lessor for payment of the TV (a "Termination"), multiplied by
the Total Capitalized Cost of the Equipment to which the Termination
relates; and
II. All Rent Payments, Additional Rent and reimbursement due Lessor
and all federal, state and Local Taxes, costs and expenses incurred by
Lessor on account of the Event of Loss or the Termination, as the case
may be; and
III. All sums due Lessor under Sections 6 and 9 of the Master Lease.
(b) Rent and Additional Rent shall continue to accrue on the affected
Equipment until Lessor has received the SLV or TV, as the case may be, in
immediately available funds.
(c) The Indemnities set forth in Sections 6 and 9 of the Master Lease
shall terminate with respect to such Equipment for which the Lessor receives
the timely payment in full of the SLV or TV, as the case may be, but only with
respect to Local Taxes applicable to tax periods subsequent to the tax period
in which the SLV or TV is paid. Said indemnities shall continue in full force
and effect with respect to Local Taxes applicable to tax periods prior to and
including the tax period in which the SLV or TV is paid.
12. ADDITIONAL PROVISIONS:
(a) Lessee certifies that:
I. there is no error, misstatement or omission in the
representations, warranties and covenants made and/or agreed to by the
Lessee in the Master Lease designated above or in any certificate of any
officer of the Lessee given to the Lessor pursuant thereto, and all the
terms and conditions of the Master Lease designated above to be complied
with and performed by the Lessee on or before the Closing Date have been
complied with and performed; and
II. all other representations and warranties made by the Lessee in
the Master Lease are true and correct on the date hereof with the same
force and effect as if made on the date hereof.
(b) Lessee represents and warrants that Lessee has consulted with its
counsel, accountants and such other professionals as it deems appropriate in
regard in the terms of and prior to its execution of the Master Lease and all
Schedules thereto.
3
<PAGE>
(c) Lessee acknowledges that:
I. Lessor has not made any representation to Lessee of the
accounting or tax treatment to be afforded Lessor to Lessee pursuant to
any federal, state or local law or regulation or upon the Master Lease or
any Schedule thereunder; and
II. Lessee intends to claim all tax benefits to an owner of the
Equipment and agrees that Lessor shall have no duty to file for or claim
the same.
Except as expressly modified hereby, all terms and provisions of the Master
Lease shall remain in full force and effect. Defined terms used but not
defined herein shall have the same meaning as in the Master Lease. This
Schedule is not binding or effective with respect to the Master Lease or
Equipment until executed on behalf of Lessor and Lessee by authorized
representatives of Lessor and Lessee, respectively.
This Schedule No. 001 includes the following annexes and attachments [List
all applicable annexes and attachments]:
ANNEX A
ANNEX E
Dated: Dec 3, 1997 Accepted Dec 3, 1997
LESSEE:
ABLE OIL COMPANY SUMMIT LEASING CORPORATION
- --------------------------------
By: /s/ Timothy Harrington By: /s/ Charles M. Fiumefreddo
----------------------------- -----------------------------------
Name: Timothy Harrington Name: Charles M. Fiumefreddo
--------------------------- ---------------------------------
Title: President Title: Vice President
-------------------------- --------------------------------
4
<PAGE>
LESSEE: ABLE OIL COMPANY No. 60060
ADDRESS: 344 ROUTE 46
ROCKAWAY, NJ 07866
MASTER LEASE
Dated as of Dec. 3, 1997
SUMMIT LEASING CORPORATION, a New Jersey corporation, together with all
assigns, successors and Affiliates ("Lessor") hereby agrees to lease to
Lessee, and will hereby agree to hire and rent from Lessor, solely for use in
Lessee's business, all equipment and other personal property, together with
all replacements, repairs, attachments, accessories, tools, parts, xxxxxxx,
substitutions and additions thereto or used therewith (the "Equipment")
described in each schedule hereto (each a "Schedule"); subject to the terms
and conditions of this Master Lease and each Schedule (together, the
"Lease"). Each Schedule incorporates the terms and conditions of this Master
Lease and shall constitute a separate lease between Lessor and Lessee.
Defined terms shall have the meanings set forth herein, in the Schedules and
in any annexes thereto.
1. TERM AND RENT. The term of this Master Lease shall commence as of the
date set forth above and shall continue until the obligations of Lessee under
this Master Lease and all Schedules shall have been fully performed. The
Lease Term of each Schedule shall begin on the commencement date set forth on
such Schedule ("Commencement Date") and shall continue until all the
obligations of the Lessee have been fully performed to regard to all
Equipment set forth in the applicable Schedule. The installments of rent
(each a "Rent Payment") shall be payable periodically and shall be received
by Lessor on the dates, in the amounts, for the Rent Periods over the Lease
Term indicated in the Schedule without deduction, offset or abatement of any
kind until the balance of all the Rent Payments and all Additional Rent and
all expenses chargeable to Lessee (collectively, "Rent") under this Master
Lease and such Schedule shall have been paid in full. Additional Rent shall
include, without limitation, all costs and expenses incurred by Lessor in
performance by it (in its sole discretion and without implying any obligation
to do so) of any duty of Lessee hereunder relating to the Equipment, the
Master lease and each Schedule hereto, together with all items of Additional
Rent and Advance Rent specified herein and in the Schedule. Advance Rent in
the amount set forth in each Schedule shall be due and payable upon Lessor's
acceptance of such Sehedule and shall be applied as set forth in the
Schedule. Advance Rent shall not be returned to the Lessee under any
circumstances but may be credited to the Termination Value in Lessor's sole
discretion. Additional Rent shall be payable on the earlier of demand or with
the next regularly scheduled Rent Payment. All Rent shall be received by
Lessor in immediately available funds during regular business hours on or
before the date due.
2. TITLE. Lessor shall at all times own and retain title to the
Equipment, subject to its right to pledge, sell or assign its interests as
hereinafter provided. Lessee shall acquire no rights therein except as a
lessee hereunder. All documents of title and evidence of delivery, including
but not limited to all bills of sale, invoices and purchase orders shall be
delivered to the Lessor. Lessee will not place upon, change or remove any
labels, plates, insignia, or lettering on the Equipment except that at any
time during the Lease Term, and upon request of Lessor, Lessee will affix to
the Equipment, in a prominent place, labels, plates, or other markings
supplied by Lessor indicating Lessor's ownership of the Equipment. Lessee
shall at all times keep the Equipment free from any legal process or
encumbrance whatsoever, including but not limited to all liens, attachments,
levies and executions, and shall give Lessor immediate written notice
thereof, post such bonds and sureties when and as Lessor may request against
the same and shall indemnify and hold harmless Lessor from any loss
(including, without limitation, all reasonable attorneys' fees, costs and
disbursements) caused or occasioned thereby. Lessee shall not affix or permit
the Equipment to be affixed to realty so as to change its nature to real
property; Lessee agrees that the Equipment shall remain personal property at
all times regardless of how attached or installed.
3. NO TRANSFER BY LESSEE. WITHOUT THE LESSOR'S PRIOR WRITTEN CONSENT,
LESSEE MAY NOT, BY OPERATION OF LAW OR OTHERWISE, (a) ASSIGN, TRANSFER,
PLEDGE, HYPOTHECATE OR OTHERWISE DISPOSE OF THIS MASTER LEASE OR ANY SCHEDULE
OR ANY INTEREST IN EITHER, OR (b) TRANSFER, ASSIGN, SELL, SUBLET, LICENSE,
LEND OR OTHERWISE DISPOSE OF THE EQUIPMENT OR PERMIT SAME TO BE USED BY
ANYONE OTHER THAN LESSEE OR LESSEE'S EMPLOYEES. ANY ATTEMPT OF ANY SUCH
DISPOSITION SHALL BE NULL AND VOID AND OF NO EFFECT.
4. PURCHASE AND ACCEPTANCE; NO WARRANTIES BY LESSOR. Lessee requests
Lessor to purchase the Equipment from the manufacturer or supplier ("Seller")
of the Equipment identified in each Schedule and arrange for delivery to
Lessee at Lessee's expense. Lessor shall have no responsibility for delay or
failure of Seller to deliver the Equipment. LESSEE ACKNOWLEDGES THAT LESSEE
HAS INDEPENDENTLY SELECTED THE EQUIPMENT LEASED HEREUNDER PRIOR TO HAVING
REQUESTED THE LESSOR TO PURCHASE THE SAME AND THAT LESSOR IS NOT THE
MANUFACTURER OR SUPPLIER OF THE EQUIPMENT OR THE AGENT OF EITHER. LESSOR HAS
MADE AND MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE,
DIRECTLY OR INDIRECTLY, EXPRESSED OR IMPLIED, AS TO ANY MATTER WHATSOEVER,
INCLUDING THE DESIGN OR SUITABILITY OF SUCH EQUIPMENT, ITS DURABILITY, ITS
FITNESS FOR ANY PARTICULAR PURPOSE, ITS MERCHANTABILITY, ITS CONDITION,
CAPACITY AND/OR ITS QUALITY. THE WORKMANSHIP IN THE EQUIPMENT OR IN
CONNECTION WITH THE INSTALLATION THEREOF, THE EQUIPMENT'S COMPLIANCE WITH THE
REQUIREMENTS OF ANY LAW, RULE, SPECIFICATION OR CONTRACT PERTAINING THERETO,
AND AS BETWEEN LESSEE AND LESSOR, LESSEE LEASES THE EQUIPMENT "AS IS".
NEITHER LESSOR, ITS ASSIGNS NOR AFFILIATES SHALL BE LIABLE TO LESSEE FOR ANY
LOSS, DAMAGE OR EXPENSE OF ANY KIND OR NATURE CAUSED DIRECTLY OR INDIRECTLY
BY THE EQUIPMENT OR ANY ADJUSTMENT THERETO, OR BY ANY INTERRUPTION OF SERVICE
OR LOSS OF USE THEREOF OR FOR ANY LOSS OF BUSINESS OR DAMAGE WHATSOEVER, AND
THERE SHALL BE NO ABATEMENT OR APPORTIONMENT OF ANY OF THE RENT PAYMENTS BY
REASON OF ANY FAILURE OR DEFECT IN THE EQUIPMENT OR ANY LOSS OF USE OF THE
EQUIPMENT. NO REPRESENTATION OR WARRANTY AS TO THE EQUIPMENT OR ANY OTHER
MATTER MADE BY SELLER OR ITS AGENTS TO THE LESSEE SHALL BE BINDING ON LESSOR
NOR SHALL ANY BREACH BY SELLER RELIEVE LESSEE OF, OR IN ANY WAY REDUCE OR
POSTPONE ANY OF LESSEE'S OBLIGATIONS TO LESSOR AS SET FORTH HEREIN. WITHOUT
LIMITING THE FOREGOING, AND REGARDLESS OF CAUSE, LESSEE WILL NOT ASSERT ANY
CLAIM WHATSOEVER AGAINST LESSOR OR ITS ASSIGNS OR AFFILIATES FOR LOSS OF
PROFITS OR ANTICIPATORY PROFITS OR ANY OTHER DIRECT, INDIRECT, SPECIAL OR
CONSEQUENTIAL DAMAGES, NOR SHALL LESSOR OR LESSOR'S AGENTS, ASSIGNS OR
AFFILIATES BE RESPONSIBLE FOR ANY DAMAGES OR COSTS WHICH MAY BE ASSESSED
AGAINST LESSEE IN ANY ACTION WHATSOEVER INCLUDING, WITHOUT LIMITATION, FOR
INFRINGEMENT OF ANY LETTERS PATENT, TRADEMARK OR COPYRIGHT OR OTHER
PROPRIETARY RIGHTS. LESSOR MAKES NO WARRANTY AS TO THE TREATMENT OF THIS
LEASE FOR TAX OR ACCOUNTING PURPOSES. Lessee shall timely pay all Rent when
due hereunder without reduction, offset or credit of any kind. Lessee shall
promptly make all claims relating to or pertaining to the Equipment solely
against the Seller. Lessor hereby assigns to Lessee during the Lease Term,
solely for the purpose of making and prosecuting any such claim and to the
extent assignable, any rights it may have against Seller under any written
warranty and for breach of warranty or representation respecting the
Equipment. Lessee acknowledges that Lessor has informed Lessee in writing,
either previously ??? this Lease, of the following: (a) the identity of the
Seller, (b) that the Lessee is entitled to the promises and warranties
provided to Lessor by the Seller in connection with the Equipment, and (c)
Lessee may communicate with Seller to receive a complete statement of any
such written promise or warranty including any disclaimers of ???. This
assignment by Lessor to Lessee shall continue only so long as Lessee is not
in default hereunder. Notwithstanding any statement that may be made by Seller
<PAGE>
or Seller's agents, or any broker, or any payment made to any of the above.
Lessee understands and agrees that Seller, any broker and any agent of
either, are not agents of Lessor and that none of the above are authorized to
bind Lessor or to waive or alter any term or condition of this Master Lease
or any Schedule.
5. TERMINATION BEFORE EQUIPMENT ACCEPTANCE. If all the Equipment has
not been delivered, installed and accepted in writing by Lessee (in form
satisfactory to Lessor) on or before the Commencement Date, Lessor may, at
its sole option, on written notice to Lessee, terminate this Master Lease in
respect to all its obligations to Lessee with respect to the affected
Schedule(s).
6. NET LEASE; TAXES. (a) Taxes Other Than Income Tax. Lessee hereby
assumes liability for, shall indemnify and defend Lessor against, and shall
pay an Additional Rent when due, all fees, taxes and governmental charges
(including without limitation, all license and registration fees and all
sales, use, ad valorem, personal property, ???, gross receipts, franchise,
??? or other taxes, imports, duties and charges, together with all penalties,
fines or interest thereon) of every kind and nature ("Local Taxes") whenever
imposed upon or in any way relating to (i) Lessor in its capacity as Lessor
or in its capacity as owner of any Equipment, (ii) Lessee, (iii) the
Equipment (including without limitation the manufacture, purchase, ownership,
shipment, transportation, delivery, installation, leasing, possession, use,
operation, storage and return of the same) or (iv) this Master Lease and each
Schedule or (v) any permitted sublease(s). Lessee shall, at its expense,
promptly pay, report and file when due for the appropriate parties, with the
appropriate authorities, any and all Local Taxes and all returns and reports
required to be filed with respect to all Local Taxes (with copies to Lessor)
showing Lessor as owner of the Equipment. Upon Lessor's request, Lessee shall
notify Lessor of all applicable taxes and all such requirements and furnish
Lessor in writing with all information and pay to Lessor all sums required
for Lessor to effect such filings and pay all Local Taxes not less than sixty
(60) days prior to the last date such filing may be made without extensions
and without the payment of any fine, penalty or interest. Upon notice of any
Determination that any Local Taxes are due, Lessee shall promptly pay Lessor
as Additional Rent an amount sufficient to pay all such Local Taxes
(including without limitation all penalties and interest due thereupon) in
full.
(b) Income Tax. The obligation, if any, of Lessee to indemnify
Lessor for income taxes is set forth in the Schedule and incorporated by
reference herein.
(c) Determination. For purposes of this Master Lease, a
Determination shall mean and shall be deemed to have been made upon Lessor's
receipt from any applicable taxing authority of a demand for payment of tax,
a notice of disallowance of deduction, exemption or tax credit or similar
notice or a notice of any tax increase or additional Local Taxes or Income
Tax. Lessor shall have no obligation and Lessee shall have no right to
contest any Determination beyond the level of the auditing agent.
(d) Tax Indemnification. Lessee intends the Rent paid hereunder to
be absolutely net to Lessor, and Lessee shall indemnify, defend, protect and
keep harmless Lessor and all respective agents, employees, officers,
directors thereof, from and against any and all liabilities, obligations,
losses, damages, claims, demands, penalties, actions, costs and expenses
(including without limitation all reasonable attorneys' and other
professional fees, costs and disbursements) arising out of, relating or
pertaining to any such Local Taxes and Income Taxes (if applicable, under one
or more Schedules). For the purpose of this Section 6 and each Schedule,
"Lessor" shall include any member of an affiliated group, within the meaning
of Section 1504 of the Code.
(e) Survival of Obligations in Respect of Taxes. The indemnities,
promises, duties and obligations of the Lessee under this Section 6 and each
Schedule are in addition to and shall not limit the indemnities set forth in
Section 9, below, and, notwithstanding the expiration or other termination of
this Master Lease and all Schedules, shall survive and continue in full force
and effect until the expiration of the time(s) permitted by law, as extended
by the Lessor, for each taxing authority to examine, assess, collect or
impose any return, report, tax or penalty in respect of, due to or relating
to the Equipment.
7. CARE, USE AND LOCATION. Lessee, at its own cost and expense, shall
maintain and keep the Equipment in good repair, condition and working order,
and in such condition as will maintain its eligibility for the manufacturer's
maintenance agreement, and shall use the Equipment solely in compliance with
applicable laws and regulations and with any and all manufacturer's and
seller's licenses, recommendations, instructions and warranties. The
Equipment shall not be augmented, altered or removed from the Equipment
location shown on the Schedule without Lessor's prior written consent. Lessor
shall have the right to inspect the Equipment, without notice, at all
reasonable times.
8. OTHER COVENANTS AND WARRANTIES OF LESSEE. Lessee agrees that its
obligations under this Master Lease and each Schedule are absolute and shall
continue in full force and effect regardless of any disability of Lessee to
use the Equipment or any part thereof for any reason including, but not
limited to, war, act of God, provisions or operation of applicable law or
regulation, strike, loss, damage, destruction, obsolescence, failure of or
any delay in delivery, failure of the Equipment to properly operate, or any
other cause. Lessee agrees, upon request, to procure such estoppel
certificates, landlord's and mortgagee's waivers and other similar documents.
Lessee agrees to promptly furnish and cause its accountants to furnish Lessor
with audited annual financial statements of Lessee, prepared by an
independent certified public accountant acceptable to Lessor, in accordance
with generally accepted accounting principles consistently applied, and such
interim financial and operating statements as Lessor may require. Lessee
represents and warrants that (a) it is not in the business of selling
equipment similar to the Equipment and does not hold the Equipment or any
similar items as inventory, and (b) it is in compliance with all laws,
regulations and ordinances applicable to its business, including but not
limited to all federal, state and local environmental laws and regulations.
9. INDEMNIFICATION. Lessee assumes liability for, and hereby agrees to
indemnify, defend, protect and keep harmless Lessor and all respective
agents, employees, officers, directors thereof, from and against any and all
liabilities, obligations, losses, damages, injuries, claims, demands,
penalties, actions, costs and expenses, of any kind whatsoever (including
without limitation all reasonable attorneys' and other professional fees,
costs and disbursements) arising out of the use, condition (including, but
not limited to, latent and other defects and whether or not discoverable by
Lessee or Lessor), operation, ownership, selection, delivery, leasing or
return of any items of Equipment, regardless of where, how and by whom
operated, or any failure on the part of Lessee to perform or comply with any
conditions of this Master Lease. Lessor shall have the right to select
counsel and direct the conduct of the litigation in any such section. The
indemnities provided for herein shall continue in full force and effect
notwithstanding the expiration or other termination of this Master Lease or any
Schedule or the assumption by Lessee of the control of such litigation.
Lessee is an obligor of Lessor and nothing contained in this Lease shall
authorize Lessee or any other person to operate any items of Equipment so as
to incur or impose any liability or obligation for or on behalf of Lessor
whatsoever. The indemnities provided in this Section 9 are in addition to and
shall not limit the indemnities set forth in Section 6 of this Master Lease
or under any Schedule.
10. PERFORMANCE BY LESSOR OF LESSEE'S OBLIGATIONS. In the event Lessee
fails to comply with any provision of this Lease, Lessor may, in its sole
discretion, effect such compliance on behalf of Lessee upon five (5) days
prior written notice to Lessee. In such event, all expenses of Lessor in
effecting such compliance shall be paid by Lessee to Lessor as Additional
Rent.
11. SECURITY AGREEMENT. The parties agree that it is their intent to
create a true lease of the Equipment. Notwithstanding the foregoing, however,
and to protect Lessor's interests in the Equipment, Lessee herewith grants
Lessor and all Affiliates, a first, purchase money security interest in and to
this Master Lease, each Schedule and all the Equipment as security for all
obligations due Lessor. In addition, Lessee, as security for all existing and
future obligations due Lessor and each Affiliate, hereby grants to Lessor and
each Affiliate a first priority lien on and security interest in (a) any
property in which Lessee has granted or in the future grants to any of Summit
Leasing Corporation, Summit Bancorp., any Summit Bank or any other entity
owned, in whole or in part by any of them (or any successor to any of them)
directly or through such
2
<PAGE>
other entities (in each case and including Summit Leasing Corporation, Summit
Bancorp. and each Summit Bank, each an "Affiliate") to secure any existing or
future obligations of Lessee to Lessor; and (b) any property of Lessee
(including without limitation cash accounts and deposits) now or hereafter
held, or any obligation now or hereafter owing Lessee, by Lessor or any
Affiliate; provided, however, if any Schedule is assigned by Lessor is an
entity other than an Affiliate, the lien and security interest granted in
this section shall cease upon such assignment, unless otherwise specified in
the instrument of assignment. Lessor is hereby authorized by Lessee, at
Lessee's expense, to cause this Master Lease, each Schedule and/or any
financing statements or other documents in respect thereto or to any items of
additional collateral in which Lessor has been or may be granted any lien or
security interest, to be filed, recorded, refiled and re-recorded and to
execute, on Lessee's behalf, and deliver any statement or document for such
purpose. Lessee agrees promptly to execute, deliver and record any such
statements or additional documents requested by Lessor and to pay or
reimburse Lessor, as Additional Rent for any searches, filings, recordings or
stamp fees or taxes arising therefrom.
12. RISK OF LOSS. Lessee hereby assumes the entire risk of loss, damage
or destruction of the Equipment from any and every cause whatsoever upon the
earlier of delivery to Lessee or consignment to a carrier for shipment to
Lessee. In the event of loss, damage or destruction of any item of Equipment,
Lessee at its own expense and at Lessor's sole option, shall, within thirty
(30) days of such event, either (a) repair such items, returning each to its
previous condition, or replace such items with a like item acceptable to
Lessor and in good condition and of equivalent value, which shall become the
property of Lessor and included within the term "Equipment", or (b) pay
Lessor the Stipulated Loss Value (the "SLV") set forth in the Schedule for
all Equipment covered by such Schedule. Lessor shall apply any proceeds of
insurance received as a result of such loss, damage, or destruction prior to
the expiration of said thirty (30) day period to the obligations under this
Section 12, but the existence of such insurance and any claims thereunder
shall not excuse Lessee's timely payment and performance of all obligations
under the Lease. Upon replacement as provided for in clause (a) or payment of
the SLV provided to clause (b) of this Section 12, this Master Lease and the
applicable Schedule shall terminate with respect to the items of Equipment so
paid for or replaced and Lessee shall take title to same on an as-is,
where-is basis. Any proceeds of insurance received by Lessor in excess of the
sums due from Lessee hereunder shall be promptly paid to Lessee. Lessee
hereby waives all rights conferred by statute or otherwise to terminate
(except as herein expressly provided) or surrender this Master Lease or any
Schedule or the Equipment and to any abatement or reduction of the monthly
rentals on account of any damage to or loss or destruction of the Equipment
or any other event or condition.
13. INSURANCE. Lessee shall keep the Equipment insured against all risks
of loss or damage from every cause whatsoever for not less than the full
replacement value of the Equipment. The amount of such insurance shall at all
times be sufficient so that neither Lessor nor Lessee shall be considered a
co-insurer. Lessee shall also carry public liability insurance for both
personal injury and property damage covering the Equipment and the use
thereof, and medical malpractice insurance, if applicable. All such
insurance shall be in such amounts, form and with companies satisfactory to
Lessor and licensed to do business in all states in which the Equipment is
located. All insurance for loss or damages shall provide that losses shall
be payable directly to Lessor as Loss Payee and as additional insured. Lessee
shall furnish Lessor with certificates of insurance (or at Lessor's option
the original insurance policy(ies)) or other evidence satisfactory to Lessor
of the insurance coverage hereunder, along with evidence of payment of
premiums therefor. Each insurer shall agree, by endorsement upon the policy
or policies issued by it, certificate of insurance or by independent
instrument furnished to Lessor, that it will give Lessor not less than thirty
(30) days prior written notice of the effective date of any alteration,
non-renewal or cancellation of such policy, that such insurance shall be
primary without any right of contribution from any other insurance carrier
that the Lessor may have, that any duty imposed on the insured(s) or loss
payee(s) shall be solely the duties and obligations of the Lessee and not the
Lessor, that such insurance and the coverage of the Lessor under such policy
shall not be invalidated or impaired as to Lessor by any breach of warranty
or of the policy, act, omission or neglect by the Lessee. Lessee hereby
irrevocably appoints Lessor as Lessee's attorney-in-fact to make claim for,
receive payment of and execute and endorse all documents, checks, or drafts
received in payment for loss or damage under each such insurance policy.
14. DEFAULT. Each of the following events (each an "Event of Default")
shall constitute an Event of Default hereunder: (a) Lessee shall default in
(i) the payment of any Rent or any other amount due hereunder, (ii) the
payment when due of any other indebtedness to the Lessor or an Affiliate, or
(iii) the performance of any other provision hereunder or under any note,
icon, contract or agreement with Lessor or an Affiliate, or (b) any warranty,
representation or statement made by Lessee herein, in any Schedule or in any
application, financial statement or other information furnished in writing to
the Lessor or any Affiliate shall prove to be false or misleading in any
respect, or (c) Lessee becomes insolvent or makes an assignment for the
benefit of creditors, or (d) upon the making of any levy, seizure or
attachment of any Equipment or the attempted assignment of or sublease by
Lessee of this Master Lease or any Schedule or its interest herein or therein
or the existence of any lien or charge on such interest; or (e) dissolution
or termination of existence of Lessee or discontinuance of its business, or
(f) Lessee applies for or consents to the appointment of a receiver, trustee,
conservator, or liquidator or any of the foregoing is appointed without the
application or consent of Lessee, or (g) a petition is filed by or against
Lessee under the Bankruptcy Code or any amendment thereto (including without
limitation a petition for reorganization, arrangement or extension) or under
any other insolvency law or laws providing for the relief of debtors, or (h)
the occurrence of an event of default under any other document or instrument
securing or guaranteeing the obligations of Lessee, or (i) Lessee shall
suffer, in the sole, reasonable judgment of Lessor, a material adverse change
in its financial or operating condition.
15. REMEDIES. If an Event of Default shall occur, Lessor shall have the
right to exercise any one or more of the following remedies, at its option,
at any time, without notice, and subject to applicable law: (a) terminate
this Master Lease and any or all Schedules, (b) declare the entire amount of
unpaid Rent for the balance of the term of this Master Lease and the Lease
Term of each Schedule immediately due and payable, whereupon Lessee shall
become obligated to pay to Lessor forthwith the Termination Value (the "TV")
set forth in each Schedule plus all indemnities set forth in Sections 6 and 9
and each Schedule, (c) without further demand or legal process enter into the
premises where the Equipment may be found and take possession of and remove
the Equipment, without liability for suit, action or other proceedings,
against which liability Lessee hereby agrees to indemnify Lessor, and all
rights of Lessee in the Equipment so repossessed or removed shall terminate
absolutely, and/or (d) cause Lessee, at Lessee's expense to promptly return
the Equipment to Lessor and in the condition required hereunder. Lessee
hereby waives notice of, the posting of any bond in regard to, and hearing
with regard to, such retaking. Lessor, at its option, may use, ship, store,
repair or lease all Equipment repossessed and sell, re-lease or otherwise
dispose of any such Equipment at Lessee's location without any obligation to
pay rent or any other charge, or elsewhere, and at private or public sale,
Lessee shall be liable for and shall pay to Lessor as Additional Rent all
expenses incurred by Lessor in connection with the enforcement of any of
Lessor's remedies, including, without limitation (i) all expenses of
repossessing, storing, shipping, repairing and re-leasing or selling the
Equipment, and (ii) Lessor's reasonable attorneys' and professionals' fees,
costs and disbursements, Lessor and Lessee acknowledge the difficulty in
establishing a value for the unexpired Lease Terms and owing to such
difficulty agree that the TV set forth in each Schedule and the provisions of
this section represent an agreed measure of liquidated damages and are not to
be deemed a forfeiture or penalty. In the event Lessor takes possession of
the Equipment, the TV shall be reduced by any sums as and when received by
Lessor from the sale or re-lease of the Equipment after deduction of the
expense of retaking, reselling or re-leasing the Equipment, all attorneys'
and professionals' fees and costs incurred, and Lessor's residual interest in
the Equipment.
Whenever any payment of Rent or other charge is not received by Lessor in
cash when due hereunder, Lessee agrees to pay the Lessor (as an
administrative charge, occasioned by such delay), not later than the first day
of the following calendar month, an amount calculated at the rate of five
cents (5c) per one dollar ($1.00) of each such delayed payment, but such
charge shall not exceed the maximum allowed by law. Subsequent to declaration
of an Event of Default and acceleration of Rent by Lessor, Lessee agrees to
pay Lessor interest on all sums due Lessor (other than those attributable to
late charges and interest, if any) at the rate of two percent (2%) per month
but not to exceed the maximum rate provided by law. Such amounts shall be
payable in addition to all amounts payable by Lessee as a result of exercise
of any one or more of the remedies herein provided.
3
<PAGE>
All remedies of Lessor hereunder are cumulative, are in addition to any other
remedies provided for by law or in equity, and, to the extent permitted by
law or in equity, may be exercised concurrently or separately. The exercise
of any one remedy shall not be deemed to be an election of such remedy or to
preclude the exercise of any other remedy at a later time. No failure on the
part of the Lessor to exercise, and no delay in exercising, any right or
remedy shall operate as a waiver thereof or modify the terms of this Lease.
The waiver of any Event of Default shall not be a waiver of any other or
subsequent Event of Default. In the event this Master Lease and/or any
Schedule is determined to be a security agreement, Lessor's recovery shall in
no event exceed the maximum permitted by law.
16. ALTERATIONS AND ATTACHMENTS. At any time during the term of this
Master Lease and any applicable Schedule, upon prior written consent of
Lessor, Lessee may add additional equipment, features or options ("Additional
Equipment"), supplied by any reputable manufacturer or supplier, to the
Equipment subject to the applicable Schedule, so long as (a) the performance
or usefulness of the Equipment is not reduced thereby, (b) the addition of
such Additional Equipment does not give the manufacturer or supplier the
right to cancel or limit any warranty or maintenance agreement with respect
to the Equipment, and (c) such Additional Equipment is "plug compatible" and
can be easily and readily removed from the Equipment without impairing the
appearance, operation, value, performance or usefulness of the Equipment.
Such Additional Equipment shall be, at Lessor's sole option: (x) acquired
directly by Lessee, or (y) leased to Lessee by Lessor under a separate
Schedule. Any Additional Equipment not in compliance with this Section 16
shall be conclusively deemed the property of Lessor.
17. ASSIGNMENT BY LESSOR. LESSEE ACKNOWLEDGES LESSOR'S RIGHT TO ASSIGN
THIS LEASE, ANY SCHEDULE AND/OR THE RENT DUE HEREUNDER AND CREATE A SECURITY
INTEREST IN ANY OF THE EQUIPMENT. NO ASSIGNEE OF LESSOR SHALL BE BOUND TO
PERFORM ANY DUTY, COVENANT OR CONDITION OR WARRANT (EXPRESSED OR IMPLIED)
ATTRIBUTABLE TO LESSOR. Lessee and each guarantor, surety and co-obligor
thereof, upon being notified of the assignment by Lessor, shall
unconditionally pay directly to the assignee (or as directed by it) all Rent
and other sums due or to become due under the Schedules assigned. For the
purpose of determining the assignee's rights hereunder, the term "Lessor"
shall include the assignee after such assignment.
18. REDELIVERY. Upon expiration or earlier termination of this Master
Lease or any Schedule, Lessee shall return all the Equipment listed in each
Schedule, freight and insurance prepaid, to such location as Lessor may
designate in the continental United States, in good repair, condition and
working order, ordinary wear and tear from permitted use excepted, in a
manner reasonably designated by Lessor. Lessee shall provide Lessor with the
applicable manufacturer's certification that the Equipment is eligible for
maintenance under the manufacturer's standard maintenance agreement. Absent
an Event of Default hereunder, if Lessee does not timely either return all
the Equipment listed in the applicable Schedule to Lessor or exercise any
renewal options available to it, if any, under such Schedule, the Equipment
shall continue to be held and leased hereunder, and the Lease Term shall
thereupon be extended indefinitely on a month-to-month basis as to said
Schedule, with rent payable in advance on the same terms and in the same
amount applicable during the Lease Term. Lessee or Lessor may terminate the
resulting month-to-month lease upon ninety (90) days' written notice,
whereupon Lessee shall forthwith deliver the Equipment to Lessor as set forth
in this Section 18.
19. AMENDMENTS. This Master Lease and all Schedule(s) hereto TH CF.
contain the entire agreement between the parties with respect to the --------
Equipment, and may not be modified or rescinded except by a writing
signed by both parties. No representation, modification, rescission, TH CF.
warranty, waiver or collateral agreement by whomsoever made, whether --------
expressed or implied, affecting, modifying, or varying any term or
condition of this Master Lease or any Schedule shall be binding upon the
Lessor unless signed by an authorized officer of Lessor.
20. LAW APPLICABLE. This Master Lease shall be binding when accepted by
Lessor in New Jersey and except for local recording acts, shall be governed
by the laws of New Jersey. Lessee agrees that the negotiation and acceptance
hereof have taken place in New Jersey and that by entering into this Master
Lease, Lessee hereby consents to the personal and subject matter jurisdiction
of Federal and State courts located in New Jersey, for all actions arising
out of this Master Lease and designates either the County of Hudson or Bergen
as Lessor may select in its sole discretion as the proper venue for any such
action in State court, and the County of Essex as the proper venue for any
such action in Federal court. To the extent permitted by law, Lessee waives
trial by jury in any action between the parties.
21. GENERAL. Any provision of this Master Lease which is deemed
unenforceable in any jurisdiction shall be ineffective, solely as to such
jurisdiction, to the extent of such unenforceability without invalidating
the remaining provisions thereof. This Master Lease inures to the benefit of
and is binding upon the heirs, legatees, personal representatives, successors
and assigns of the parties hereto. If there is more than one signatory
hereto as lessee, each shall be deemed a Lessee hereunder and the obligations
of each shall be joint and several.
22. NOTICE. All notices, reports and other documents provided for under
this Master Lease shall be in writing, and shall be effective five (5) days
after being sent, postage paid, certified mail or registered mail, return
receipt requested, addressed to Lessor or Lessee at the address set forth
below their respective signatures or to such other address and/or person as
each may designate for such purpose in writing to each other upon fifteen
(15) days prior notice from time to time. Notwithstanding the foregoing,
Lessor may give notice to Lessee by personal delivery to the notice address
set forth below, which notice shall be effective upon delivery to such
address.
23. ACKNOWLEDGMENTS. Lessee hereby acknowledges: (a) that Lessee has
received an executed and true copy of this Master Lease; (b) that Lessee has
read and understands the restrictions on transfer and disclaimers of
warranties contained in paragraphs 3, 4, and 17 herein; and (d) that the
Equipment is non-consumer, business equipment leased by Lessee solely for
business purposes and will not be employed for personal, family or household
use.
IN WITNESS WHEREOF, the Lessor and Lessee have each caused this Master
Lease to be duly executed the date first above written.
LESSEE: ABLE OIL COMPANY SUMMIT LEASING CORPORATION
-------------------
By: Timothy Harrington By: Charles Fiumefreddo
---------------------------- -------------------------
Name: Timothy Harrington Name: Charles M. Fiumefreddo
---------------------------- ------------------------
Title: CEO Title: VICE PRESIDENT
--------- ------------------
- ---------------------
* PARAGRAPH 19 MUST BE INDEPENDENTLY INITIALED BY LESSEE AND LESSOR
4
<PAGE>
ANNEX A
to Schedule No. 001
to Master Lease Agreement No. 60060
Dated as of December 3, 1997
Description of Equipment
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Serial Type and Model Number of Cost
Manufacturer Numbers of Equipment Units Per Units
- ------------ ------- --------------- ---------- ---------
Freightliner #1FY6JFBB2WH955440 FL80 Truck 1 $45,619.28
</TABLE>
All invoices, bills of sale, and contracts to purchase the Equipment are
attached hereto.
Dated: December 3, 1997 Dated: December 10, 1997
LESSEE:
ABLE OIL COMPANY SUMMIT LEASING CORPORATION
By: /s/ Timothy Harrington By: /s/ Charles M. Fiumefreddo
---------------------- ----------------------------
Name: Timothy Harrington Name: Charles H. Fiumefreddo
Title: President Title: Vice President
<PAGE>
[SUMMIT LEASING LOGO]
ANNEX E
to Schedule No. 001
to Master Lease Agreement No. 60060
Dated as of December 3, 1997
PURCHASE OPTION
Provided that the Schedule has not been terminated and provided further
that there has not occurred and is then continuing an Event of Default under
the Master Lease or any Schedule thereunder, or any event which with the
giving of notice and/or the passage of time would become an Event of Default,
Lessee shall have the option to purchase all (but not less than all) the
Equipment set forth in the Schedule at the end of the Lease Term upon payment
of all Rent, Additional Rent and other charges then due, plus the sum of One
Dollar ($1.00). If Lessee purchases the Equipment, Lessee shall be
responsible for all applicable sales, use, transfer, ad valorem, excise,
stamp, and other transfer taxes and Local Taxes due upon the transaction.
ANY SALE BY LESSOR HEREUNDER SHALL BE AS-IS, WHERE-IS AND WITHOUT WARRANTY OF
ANY KIND. This option may be exercised only by the Lessee giving the Lessor
written notice of the Lessee's election to exercise this option at least
ninety (90) days before the expiration of the then effective original Lease
Term or Renewal Term, as the case may be. This Purchase Option si not
binding or effective with respect to the Master Lease or Equipment until
executed on behalf of Lessor and Lessee by authorized representatives of
Lessor and Lessee, respectively.
LESSEE:
ABLE OIL COMPANY SUMMIT LEASING CORPORATION
By: /s/ Timothy Harrington By: /s/ Charles Fiumefreddo
---------------------------- ----------------------------
Name: Timothy Harrington Name: Charles M. Fiumefreddo
Title: Pres Title: Vice President
Dated: 12-03-97 Dated: December 10, 1997
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to our firm under the Caption "Experts" and to
the use of our reports dated July 1, 1998, April 25, in the Registration
Statement on Form SB-2 and related prospectus of Able Energy, Inc. for the
registration of 875,000 of its units, each unit consisting of two shares of
common stock and one common stock purchase warrant.
/s/ Simontacci & Company LLP
______________________________________
Simontacci & Company LLP
November 6, 1998
Fairfield, New Jersey
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ABLE ENERGY
INC AND SUBSIDIARIES DECEMBER 31, 1997 AND JUNE 30, 1998.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR 6-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1998
<PERIOD-START> JAN-01-1997 JAN-01-1998
<PERIOD-END> DEC-31-1997 JUN-30-1998
<CASH> 156 565
<SECURITIES> 0 0
<RECEIVABLES> 648 479
<ALLOWANCES> 53 53
<INVENTORY> 185 153
<CURRENT-ASSETS> 1072 1279
<PP&E> 2491 2662
<DEPRECIATION> 720 890
<TOTAL-ASSETS> 3553 3730
<CURRENT-LIABILITIES> 1833 1810
<BONDS> 0 0
0 0
0 0
<COMMON> 1 1
<OTHER-SE> 398 599
<TOTAL-LIABILITY-AND-EQUITY> 3553 3730
<SALES> 16381 8601
<TOTAL-REVENUES> 16381 8601
<CGS> 13023 6675
<TOTAL-COSTS> 3141 1509
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 49 0
<INTEREST-EXPENSE> 211 87
<INCOME-PRETAX> 125 340
<INCOME-TAX> 49 138
<INCOME-CONTINUING> 76 202
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 76 202
<EPS-PRIMARY> .038 .100
<EPS-DILUTED> .038 .100
</TABLE>
