Term Loan Agreement

LETTERHEAD OF PNC BANK]



June 11, 1998



Mr. Timothy Harrington Able Oil Company 344 Route 46 East Rockaway, New Jersey 07366



Re: $675,000 Term Loan



Dear Mr. Harrington:



We are pleased to inform you that PNC Bank, National Association (the "Bank"), has approved your request for a term loan to ABLE OIL COMPANY (the "Borrower"). We look forward to this opportunity to help you meet the financing needs of your business. As your primary bank, we want to supply all your banking needs.



All the details regarding your loan are outlined in the following sections of this letter. If these terms are satisfactory, please follow the instructions for proceeding with your loan provided at the end of this letter.



1. Type of Facility and Use of Proceeds. This is a term loan in the amount of

$675,000 (the "Term Loan"). The proceeds of the Term Loan shall be used to

refinance existing term debt and to term out a portion of the Borrower's

working capital facility outstanding at PNC Bank.



2. Interest Rate. Interest on the unpaid balance of the Term Loan will be

charged at a rate per annum which is at all times equal to the sum of the

rate of interest publicly announced by the Bank from time to time as its

prime rate (the "Prime Rate") plus one percent (1%) OR fixed at 225 basis

points over the Bank's fully absorbed cost of funds rate. The Borrower

will have the option to enter into an interest rate protection agreement

for the Facility. The agreement can be structured as swaps, caps, collars

or other types of financial instruments which hedge the Borrower's

exposure to interest rate fluctuations.



3. Repayment. The principal amount of the Term Loan shall be paid in

consecutive monthly installments over three years. Interest shall be paid

in arrears at the same time as the principal installments. Interest will

be due and payable on a monthly basis, and will be computed on the basis

of a year of 360 days and paid on the actual number of days elapsed.









4. Note. The obligation of the Borrower to repay the Term Loan shall be

evidenced by a promissory note (the "Note") in form and content

satisfactory to the Bank. If the Borrower elects the fixed rate option,

the Note will also contain a prepayment cost recovery provision requiring

a payment to the Bank equal to the losses incurred by the Bank as a result

of said prepayment.



5. Security. The Borrower must cause the following to be executed and

delivered to the Bank in form and content satisfactory to the Bank as

security for the Term Loan:



(X) a guaranty and suretyship agreement, under which Timothy Harrington;

Able Energy, Inc.; Able Oil Melbourne, Inc.; Able Oil Montgomery,

Inc.; Able Propane, LLC and A & O Environmental Services, Inc.

(individually or collectively, the "Guarantor") will unconditionally

jointly and severally guarantee the due and punctual payment of all

indebtedness owed to the Bank by the Borrower.



(X) a security agreement granting the Bank a first priority perfected

lien on the existing and future accounts, inventory, equipment,

general intangibles, chattel paper, documents and instruments of

Able Oil Melbourne, Inc.; Able Oil Montgomery, Inc.; Able Propane,

LLC and A & O Environmental Services, Inc. (the "Guarantor").



(X) a pledge agreement by Able Energy, Inc. granting the Bank a first

priority perfected lien on ten shares of the stock of Able Oil

Company and on the Membership Certificates evidencing the ownership

interest as a Member of Able Propane, LLC all of which are owned by

Able Energy, Inc.



(X) a pledge agreement by Timothy Harrington granting the Bank a first

priority perfected lien on 1,000 shares of the stock of Able Energy,



(X) an assignment to the Bank of a life insurance policy in the face

amount of $500,000 inuring the life of Timothy Harrington.



Hazard insurance must be maintained on inventory and equipment in such

amounts and with such coverages as are acceptable to the Bank, containing

a standard lender loss payable or mortgagee clause in favor of the Bank.



6. Covenants. Unless compliance is waived in writing by the Bank or until

payment in full of the Term Loan:



(a) The Borrower will promptly submit to the Bank such information

relating to the Borrower's affairs (including but not limited to

annual financial statements and tax

returns for the Borrower and any guarantor) or any security for the

Term Loan as the Bank may reasonably request.



(b) The Borrower will not make or permit any change in the nature of its

business as carried on as of the date of this letter or in its

senior management or equity ownership.



(c) The Borrower and the Guarantor will comply with the financial and

other covenants included in Exhibit "A" hereto.



7. Representations and Warranties. To induce the Bank to extend the Term

Loan, the Borrower represents and warrants as follows:



(a) The Borrower's latest financial statements provided to the Bank are

true, complete and accurate in all material respects and fairly

present the financial condition, assets and liabilities, whether

accrued, absolute, contingent or otherwise and the results of the

Borrower's operations for the period specified therein. The

Borrower's financial statements have been prepared in accordance

with generally accepted accounting principles consistently applied

from period to period subject in the case of interim statements to

normal year-end adjustments. Since the date of the latest financial

statements provided to the Bank, the Borrower has not suffered any

damage, destruction or loss which has materially adversely affected

its business, assets, operations, financial condition or result of



(b) There are no actions, suits, proceedings or governmental

investigations pending or, to the knowledge of the Borrower,

threatened against the Borrower which could result in a material

adverse change in its business, assets, operations, financial

condition or results of operations and there is no basis known to

the Borrower or its officers, directors or shareholders for any such

action, suit, proceedings or investigation.



(c) The Borrower has filed all returns and reports that are required to

be filed by it in connection with any federal, state or local tax,

duty or charge levied, assessed or imposed upon the Borrower or its

property, including unemployment, social security and similar taxes

and all of such taxes have been either paid or adequate reserve or

other provision has been made therefor.



(d) The Borrower is duly organized, validly existing and in good

standing under the laws of the state of its incorporation or

organization and has the power and authority to own and operate its

assets and to conduct its business in all jurisdictions where its

ownership of property or the nature of its business requires such

qualification or licensing.



(e) The Borrower has full power and authority to enter into the

transactions provided for in this Letter Agreement and has been duly

authorized to do so by all necessary and appropriate action and when

executed and delivered by the Borrower, this Letter Agreement and

the other loan documents executed and delivered pursuant hereto will

constitute the legal, valid and binding obligations of the Borrower

enforceable in accordance with their terms.



(f) There does not exist any default or violation by the Borrower of or

under any of the terms, conditions or obligations of: (i) its

organizational documents; (ii) any indenture, mortgage, deed of

trust, franchise, permit, contract, agreement, or other instrument

to which it is a party or by which it is bound; or (iii) any law,

regulation, ruling, order, injunction, decree, condition or other

requirement applicable to or imposed upon the Borrower by any law or

by any governmental authority, court or agency.



(g) Year 2000. The Borrower and its Subsidiaries have reviewed the areas

within their business and operations which could be adversely

affected by, and have developed or are developing a program to

address on a timely basis, the risk that certain computer

applications used by the Borrower or its Subsidiaries (or any of

their respective material suppliers, customers or vendors) may be

unable to recognize and perform properly date-sensitive functions

involving dates prior to and after December 31, 1999 (the "Year 2000

Problem"). The Year 2000 Problem will not result, and is not

reasonably expected to result, in any material adverse effect on the

business, properties, assets, financial condition, results of

operations or prospects of the Borrower or its subsidiaries, or the

ability of the Borrower or its subsidiaries to duly and punctually

pay or perform its obligations hereunder and under the other Loan



Material Adverse Change shall mean any set of circumstances or

events which (a) has or could reasonably be expected to have any

material adverse effect whatsoever upon the validity or

enforceability of this Agreement or any other Loan Document, (b) is

or could reasonably be expected to be material and adverse to the

business, properties, assets, financial condition, results of

operations or prospects of the Loan Parties taken as a whole, (c)

impairs materially or could reasonably be expected to impair

materially the ability of the Loan Parties taken as a whole to duly

and punctually pay or perform its indebtedness, or (d) impairs

materially or could reasonably be expected to impair materially the

ability of the Bank, to the extent permitted, to enforce its legal

remedies pursuant to this Agreement or any other Loan Document.

8. Fees. The Borrower will reimburse the Bank for the Bank's out-of-pocket

expenses incurred or to be incurred in conducting UCC, title and other

public record searches, and in filing and recording documents in the

public records to perfect the Bank's liens and security interests.



9. Depository. The Borrower will maintain at the Bank the Borrower's primary

depository accounts.



10. Additional Provisions. Before the disbursement of the Term Loan, the

Borrower agrees to sign and deliver to the Bank the Note and other

required documents and such other instruments and documents as the Bank

may reasonably request, such as certified resolutions, incumbency

certificates or other evidence of authority.



Prior to execution of the final documents, the Bank may terminate this letter if a material adverse change occurs with respect to the Borrower, any guarantor, any collateral for the Term Loan or any other person or entity connected in any way with the Term Loan, or if the Borrower fails to comply with any of the terms and conditions of this letter, or if the Bank reasonably determines that any of the conditions cannot be met.



This letter is governed by the laws of New Jersey. No modification or waiver of any of the terms of this letter will be valid and binding unless agreed to in writing by the Bank. When accepted, this letter and the other documents described herein will constitute the entire agreement between the Bank and the Borrower concerning the Term Loan, and shall replace all prior understandings, statements, negotiations and written materials relating to the Term Loan.



To accept these terms, please sign the enclosed copy of this letter as set forth below and return it to the Bank within ten (10) days from the date of this letter. If accepted, the final documents must be executed within ten (10) days from the date of this letter, or this letter may be terminated at the Bank's option without liability or further obligation of the Bank.

Thank you for giving PNC Bank this opportunity to work with your business. We look forward to other ways in which we may be of service to your business or to you personally.



Sincerely,



PNC BANK, NATIONAL ASSOCIATION





/s/ J. Richard Bishop



J. Richard Bishop Vice President



JRB/ch Enclosure



With the intent to be legally bound hereby, the above terms and conditions are hereby agreed to and accepted this day 12 of June, 98.



BORROWER:



ABLE OIL COMPANY





By: /s/ Timothy Harrington

-------------------------

(SEAL) Title: CEO

----------------------



GUARANTOR:



ABLE OIL MONTGOMERY, INC.





By: /s/ Timothy Harrington

-------------------------

(SEAL) Title: CEO

----------------------



A & O ENVIRONMENTAL SERVICES, INC.





By: /s/ Timothy Harrington

-------------------------

(SEAL) Title: CEO

----------------------

ABLE OIL MELBOURNE, INC.





By: /s/ Timothy Harrington

-------------------------

(SEAL) Title: CEO

----------------------



ABLE PROPANE, LLC





By: /s/ Timothy Harrington

-------------------------

(SEAL) Title: CEO

----------------------



ABLE ENERGY, INC.





By: /s/ Timothy Harrington

-------------------------

(SEAL) Title: CEO

----------------------





/s/ Timothy Harrington - ----------------------------- Timothy Harrington

EXHIBIT A



FINANCIAL REPORTING COVENANTS:



(X) The Borrower will deliver to the Bank:



(X) Financial Statements for each fiscal quarter, except the fourth

quarter, within forty-five (45) days after the quarter end, together with

year-to-date and comparative figures for the corresponding periods of the

prior year, certified as true and correct by its chief financial officer.



(X) With each delivery of Financial Statements, the Borrower's chief

financial officer shall also deliver a certificate as to the Borrower's

compliance with the financial covenants for the period then ended and

whether any Event of Default (as defined in the Note) exists, and, if so,

the nature thereof and the corrective measures the Borrower proposes to



(X) The Guarantor, Able Energy, Inc., will deliver to the Bank:



(X) Financial Statements for its fiscal year, within one hundred twenty (120)

days after fiscal year end, audited and certified without qualification by

a certified public accountant acceptable to the Bank.



(X) With each delivery of Financial Statements, the Guarantor's chief

financial officer shall also deliver a certificate as to the Borrower's

compliance with the financial covenants for the period then ended and

whether any Event of Default (as defined in the Note) exists, and, if so,

the nature thereof and the corrective measures the Borrower proposes to



(X) The Corporate Guarantors will deliver to the Bank:



(X) Financial Statements for each fiscal quarter, except the fourth quarter,

within forty-five (45) days after the quarter end, together with

year-to-date and comparative figures for the corresponding periods of the

prior year, certified as true and correct by its chief financial officer.



(X) With each delivery of Financial Statements, the Guarantor's chief

financial office shall also deliver a certificate as to the Borrowers

compliance with the financial covenants for the period then ended and

whether any Event of Default (as defined in the Note) exists, and, if so,

the nature thereof and the corrective measures the Borrower proposes to



(X) The individual Guarantor will deliver to the Bank:



(X) Personal financial statement concurrent with submission of Borrower's fiscal financial statement and federal income tax returns for each calendar year within fifteen (15) days of filing.



"Financial Statements" means the consolidated and consolidating balance sheet and statements of income and cash flows prepared in accordance with generally accepted accounting principles in effect from time to time ("GAAP") applied on a consistent basis (subject in the case of interim statements to normal year-end adjustments).

FINANCIAL COVENANTS:



(X) The Borrower will maintain at all times a minimum Net Worth of $750,000. "Net Worth" to include the value of customer list minus any amounts due from officer and affiliated company(s) in excess of $250,000.



(X) Maximum leverage: total debt divided by the adjusted tangible net worth (defined above) plus subordinated debt shall not exceed a ratio of 4 to 1.



(X) Minimum debt service coverage ratio (expenses before interest, taxes, depreciation and amortization minus dividends minus capital expenditures divided by current portion of long term debt plus interest) shall not be less than 1.5 to 1.



NEGATIVE COVENANTS:



(X) The Borrower will not create, assume, incur or suffer to exist any mortgage, pledge, encumbrance, security interest, lien or charge of any kind upon any of its property, now owned or hereafter acquired, which is pledged to Bank as security for repayment of this Note or any other obligation from Borrower to Bank, except for a subordinated security interest in favor of Connell's Fuel Oil t/a Northwest Petroleum, C.B. Fuel Co., Inc. and William Toriello given in connection with the Borrower's acquisition of Northwest Petroleum.



(X) The Borrower will not create, incur, guarantee, endorse (except endorsements in the course of collection), assume or suffer to exist any indebtedness, except (i) indebtedness to the Bank, (ii) the note to Connell's Fuel Oil t/a Northwest Petroleum, or (iii) equipment purchases financed with purchase money notes.



(X) The Borrower will not make or permit any change in the nature of its business as carried on as of the date of this Note or in its senior management, and Timothy Harrington shall continue to own a 100% interest in Able Energy, Inc. which shall continue to own 100% interest in the Borrower and all corporate Guarantors.

PNC BANK



Term / Time Note



$675,000.00 June 12, 1998



FOR VALUE RECEIVED, ABLE OIL COMPANY (the "Borrower"), with an address at 344 Route 46 East, Rockaway, New Jersey 07866, promises to pay to the order of PNC BANK, NATIONAL ASSOCIATION (the "Bank"), in lawful money of the United States of America in immediately available funds at its offices located at One Garret Mountain Plaza, West Paterson, New Jersey 07424, or at such other location as the Bank may designate from time to time, the principal sum of SIX HUNDRED SEVENTY-FIVE THOUSAND DOLLARS ($675,000.00), together with interest accruing on the outstanding principal balance from the date hereof as provided below:



1. Rate of Interest. Amounts outstanding under this Note will bear interest as follows (check one):



___ A. A rate per annum ("Floating Rate") which is at all times one

percentage points (1%) in excess of the Prime Rate.



X B. 225 basis points over the Bank's fully absorbed cost of funds - --- ("Fixed Rate").



___ C. A rate per annum ("Floating Rate") which is at all times

_____________ percentage points (____%) in excess of the Prime Rate;

provided, that Borrower shall have the option, from time to time, to

covert from the Floating Rate and fix the interest at a rate per

annum offered by the Bank in its sole discretion ("Fixed Rate") for

a term of not less than _______ ("Fixed Rate") each as agreed upon

in writing between the Borrower and the Bank. At the end of any

Fixed Rate Period, interest shall revert to the Floating Rate,

unless and until the Borrower and the Bank agree to another Fixed

Rate and Fixed Rate Period.



Interest will be calculated on the basis of a year of 360 days for the actual number of days in each interest period. As used herein, "Prime Rate" shall mean the rate publicly announced by the Bank from time to time as its prime rate. The Prime Rate is not tied to any external rate or index and does not necessarily reflect the lowest rate of interest actually charged by the Bank to any particular class or category of customers. If and when the Prime Rate changes, the Floating Rate will change automatically without notice to the Borrower, effective on the date of any such change. In no event will the rate of interest hereunder exceed the maximum rate allowed by law.



2. Payment Terms. Principal and interest will be payable as provided below (check one):



___ A. Level Payments: Payments of principal together with interest in the

amount of $____ SHALL BE DUE AND payable commencing on ______ ____,

____, and continuing on the ____ day of each ____ thereafter until

the indebtedness evidenced hereby has been paid in full. Any

outstanding principal and accrued interest shall be due and payable

in full on ______ ____, ____. The Borrower acknowledges that the

level payment amount is calculated on the assumption that each

periodic payment will be made on the date when due, and if there is

any variation in the actual payment dates, there may be an

additional amount due upon maturity of this Note. The Borrower

agrees and acknowledges that any amortization schedule which may

have been provided to Borrower is only an estimate, and is

superseded by the terms of this Note regarding the accrual and

payment of interest.



X B. Fixed Principal Payment Plus Interest: Principal shall be due and - --- payable in thirty-six (36) equal consecutive monthly installments in

the amount of $18,750.00 each, commencing on ______ ____, ____, and

continuing on the ________ day of each month thereafter to and

including ______ ____, ____, and a final installment of $18,750.00

on ______ ____, ____. Interest shall be payable at the same times as

the principal payments. Any outstanding principal and accrued

interest shall be due and payable in full on ______ ____, ____.



___ C. Interest Only With Principal At Maturity: Interest shall be due and

payable commencing on ______ ____, ____, and continuing on the _____

day of each _____ thereafter until ______ ____, ____, on which date

all outstanding principal and accrued interest shall be due and

payable in full.



___ D. For Floating Rate Loans with Option to Convert to Fixed Rate:

Commencing on ______ ____, ____, principal and interest shall be

paid as follows: (1) While the Floating Rate is in effect, principal

shall be payable in consecutive equal monthly installments of

$______ each. Interest shall be payable at the same times as the

principal payments. (2) During any Fixed Rate Period, principal and

interest shall be payable in equal monthly installments in an amount

sufficient to amortize the face amount of this Note over a ____ year

term. (3) The balances of principal and interest shall be due and

payable on ______ ____, ____.



If any payment under this Note shall become due on a Saturday, Sunday or public holiday under the laws of the State where the Bank's office indicated above is located, such payment shall be made on the next succeeding business day and such extension of time shall be included in computing interest in connection with such payment. The Borrower hereby authorizes the Bank to charge the Borrower's deposit account at the Bank for any payment when due hereunder. Payments received will be applied to charges, fees and expenses (including attorneys' fees), accrued interest and principal in any order the Bank may choose, in its sole discretion.



3. Late Payments; Default Rate. If the Borrower fails to make any payment of principal, interest or other amount coming due pursuant to the provisions of this Note within ten (10) calendar days of the date due and payable, the Borrower also shall pay to the Bank a late charge equal to the lesser of five percent (5%) of the amount of such payment or $N/A. Such ten (10) day period shall not be construed in any way to extend the due date of any such payment. The late charge is imposed for the purpose of defraying the Bank's expenses incident to the handling of delinquent payments and is in addition to, and not in lieu of, the exercise by the Bank of any rights and remedies hereunder, under the other Loan Documents or under applicable laws, and any fees and expenses of any agents or attorneys which the Bank may employ. Upon maturity, whether by acceleration, demand or otherwise, and at the option of the Bank upon the occurrence of any Event of Default (as hereinaf ...