Exhibit 10.4
THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF
THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO NEW CENTURY ENERGY CORP. THAT SUCH REGISTRATION IS NOT REQUIRED.
AMENDED AND RESTATED
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SECURED CONVERTIBLE TERM NOTE
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FOR VALUE RECEIVED, NEW CENTURY ENERGY CORP., a Colorado corporation (the
"COMPANY"), promises to pay to LAURUS MASTER FUND, LTD., c/o M&C Corporate
Services Limited, P.O. Box 309 GT, ▇▇▇▇▇▇ House, South Church Street, ▇▇▇▇▇▇
Town, Grand Cayman, Cayman Islands, Fax: ▇▇▇-▇▇▇-▇▇▇▇ (the "HOLDER") or its
registered assigns or successors in interest, the sum of Fifteen Million Dollars
($15,000,000), together with any accrued and unpaid interest hereon, on June 30,
2008 (the "MATURITY DATE") if not sooner paid.
Capitalized terms used herein without definition shall have the meanings
ascribed to such terms in that certain Securities Purchase Agreement dated as of
the date hereof by and between the Company and the Holder (as amended, modified
and/or supplemented from time to time, the "PURCHASE AGREEMENT").
The following terms shall apply to this Amended and Restated Secured
Convertible Term Note (this "NOTE"):
ARTICLE I
CONTRACT RATE AND AMORTIZATION
1.1 Contract Rate. Subject to Sections 4.2 and 5.10, interest payable on
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the outstanding principal amount of this Note (the "PRINCIPAL AMOUNT") shall
accrue at a rate per annum equal to the "prime rate" published in The Wall
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Street Journal from time to time (the "PRIME RATE"), plus two percent (2%) (the
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"CONTRACT RATE"). The Contract Rate shall be increased or decreased as the case
may be for each increase or decrease in the Prime Rate in an amount equal to
such increase or decrease in the Prime Rate; each change to be effective as of
the day of the change in the Prime Rate. Subject to Section 1.2, the Contract
Rate shall not at any time be less than seven percent (7%). Interest shall be
(i) calculated on the basis of a 360 day year, and (ii) payable monthly, in
arrears, commencing on September 1, 2005, on the first business day of each
consecutive calendar month thereafter through and including the Maturity Date,
and on the Maturity Date, whether by acceleration or otherwise.
1.2 Contract Rate Adjustments and Payments. The Contract Rate shall be
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calculated on the last business day of each calendar month hereafter (other than
for increases or decreases in the Prime Rate which shall be calculated and
become effective in accordance with the terms of Section 1.1) until the Maturity
Date (each a "DETERMINATION DATE") and shall be subject to adjustment as set
forth herein. If (i) the Company shall have registered the shares of the Common
Stock underlying the conversion of this Note and each Warrant on a registration
statement declared effective by the Securities and Exchange Commission (the
"SEC"), and (ii) the market price (the "MARKET PRICE") of the Common Stock as
reported by Bloomberg, L.P. on the Principal Market for the five (5) trading
days immediately preceding a Determination Date exceeds the then applicable
Fixed Conversion Price by at least twenty-five percent (25%), the Contract Rate
for the succeeding calendar month shall automatically be reduced by 100 basis
points (100 b.p.) (1%) for each incremental twenty-five percent (25%) increase
in the Market Price of the Common Stock above the then applicable Fixed
Conversion Price. Notwithstanding the foregoing (and anything to the contrary
contained herein), in no event shall the Contract Rate at any time be less than
zero percent (0%).
1.3 Principal Payments. Amortizing payments of the aggregate principal
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amount outstanding under this Note at any time (the "PRINCIPAL AMOUNT") shall be
made by the Company on July 1, 2006 and on the first business day of each
succeeding month thereafter through and including the Maturity Date (each, an
"AMORTIZATION DATE"). Subject to Article III below, commencing on the first
Amortization Date, the Company shall make monthly payments to the Holder on each
Repayment Date, each such payment in the amount of $250,000 together with any
accrued and unpaid interest on such portion of the Principal Amount plus any and
all other unpaid amounts which are then owing under this Note, the Purchase
Agreement and/or any other Related Agreement (collectively, the "MONTHLY
AMOUNT"). Any outstanding Principal Amount together with any accrued and unpaid
interest and any and all other unpaid amounts which are then owing by the
Company to the Holder under this Note, the Purchase Agreement and/or any other
Related Agreement shall be due and payable on the Maturity Date.
ARTICLE II
CONVERSION AND REDEMPTION
2.1 Payment of Monthly Amount.
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(a) Payment in Cash or Common Stock. If the Monthly Amount (or a
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portion of such Monthly Amount if not all of the Monthly Amount may be
converted into shares of Common Stock pursuant to Section 3.2) is required
to be paid in cash pursuant to Section 2.1(b), then the Company shall pay
the Holder an amount in cash equal to 102% of the Monthly Amount (or such
portion of such Monthly Amount to be paid in cash) due and owing to the
Holder on the Amortization Date. If the Monthly Amount (or a portion of
such Monthly Amount if not all of the Monthly Amount may be converted into
shares of Common Stock pursuant to Section 3.2) is required to be paid in
shares of Common Stock pursuant to Section 2.1(b), the number of such
shares to be issued by the Company to the Holder on such Amortization Date
(in respect of such portion of the Monthly Amount converted into shares of
Common Stock pursuant to Section 2.1(b)), shall be the number determined by
dividing (i) the portion of the Monthly Amount converted into shares of
Common Stock, by (ii) the then applicable Fixed Conversion Price. For
purposes hereof, subject to Section 3.6 hereof, the initial "FIXED
CONVERSION PRICE" means $0.62.
(b) Monthly Amount Conversion Conditions. Subject to Sections 2.1(a),
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2.2, and 3.2 hereof, the Holder shall convert into shares of Common Stock
all or a portion of the Monthly Amount due on each Amortization Date if the
following conditions (the "CONVERSION CRITERIA") are satisfied: (i) the
average closing price of the Common Stock as reported by Bloomberg, L.P. on
the Principal Market for the five (5) trading days immediately preceding
such Amortization Date shall be greater than or equal to 110% of the Fixed
Conversion Price and (ii) the amount of such conversion does not exceed
twenty five percent (25%) of the aggregate dollar trading volume of the
Common Stock for the period of twenty-two (22) trading days immediately
preceding such Amortization Date. If subsection (i) of the Conversion
Criteria is met but subsection (ii) of the Conversion Criteria is not met
as to the entire Monthly Amount, the Holder shall convert only such part of
the Monthly Amount that meets subsection (ii) of the Conversion Criteria.
Any portion of the Monthly Amount due on an Amortization Date that the
Holder has not been able to convert into shares of Common Stock due to the
failure to meet the Conversion Criteria, shall be paid in cash by the
Company at the rate of 102% of the Monthly Amount otherwise due on such
Amortization Date, within three (3) business days of such Amortization
Date.
2.2 No Effective Registration. Notwithstanding anything to the contrary
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herein, none of the Company's obligations to the Holder may be converted into
Common Stock unless (a) either (i) an effective current Registration Statement
(as defined in the Registration Rights Agreement) covering the shares of Common
Stock to be issued in connection with satisfaction of such obligations exists or
(ii) an exemption from registration for resale of all of the Common Stock issued
and issuable is available pursuant to Rule 144 of the Securities Act and (b) no
Event of Default (as hereinafter defined) exists and is continuing, unless such
Event of Default is cured within any applicable cure period or otherwise waived
in writing by the Holder.
2.3 Optional Redemption in Cash. The Company may prepay this Note
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("OPTIONAL REDEMPTION") by paying to the Holder a sum of money equal to the
Applicable Principal Amount (as defined below) together with accrued but unpaid
interest thereon and any and all other sums due, accrued or payable to the
Holder arising under this Note, the Purchase Agreement or any other Related
Agreement (the "REDEMPTION AMOUNT") outstanding on the Redemption Payment Date
(as defined below). The Company shall deliver to the Holder a written notice of
redemption (the "NOTICE OF REDEMPTION") specifying the date for such Optional
Redemption (the "REDEMPTION PAYMENT DATE"), which date shall be seven (7)
business days after the date of the Notice of Redemption (the "REDEMPTION
PERIOD"). A Notice of Redemption shall not be effective with respect to any
portion of this Note for which the Holder has previously delivered a Notice of
Conversion (as hereinafter defined) or for conversions elected to be made by the
Holder pursuant to Section 3.3 during the Redemption Period. The Redemption
Amount shall be determined as if the Holder's conversion elections had been
completed immediately prior to the date of the Notice of Redemption. On the
Redemption Payment Date, the Redemption Amount must be paid in good funds to the
Holder. In the event the Company fails to pay the Redemption Amount on the
Redemption Payment Date as set forth herein, then such Redemption Notice will be
null and void. For purposes of this Section 2.3, the "APPLICABLE PRINCIPAL
AMOUNT" shall mean (a) during the period commencing on the effective date hereof
and ending on the date immediately preceding the first anniversary of the
effective date hereof, 125% of the Principal Amount outstanding at the time of
such prepayment, (b) during the period commencing on the first anniversary of
the effective date hereof and ending on the date immediately preceding the
second anniversary of the date hereof, 120% of the Principal Amount outstanding
at the time of such prepayment and (c) during the period commencing on the
second anniversary of the effective date hereof and ending on the Maturity Date,
115% of the Principal Amount outstanding at the time of such prepayment.
ARTICLE III
HOLDER'S CONVERSION RIGHTS
3.1 Optional Conversion. Subject to the terms set forth in this Article
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III, the Holder shall have the right, but not the obligation, to convert all or
any portion of the issued and outstanding Principal Amount and/or accrued
interest and fees due and payable into fully paid and nonassessable shares of
Common Stock at the Fixed Conversion Price. The shares of Common Stock to be
issued upon such conversion are herein referred to as, the "CONVERSION SHARES."
3.2 Conversion Limitation. Notwithstanding anything contained herein to the
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contrary, the Holder shall not be entitled to convert pursuant to the terms of
this Note an amount that would be convertible into that number of Conversion
Shares which would exceed the difference between (i) 9.99% of the outstanding
shares of Common Stock and (ii) the number of shares of Common Stock
beneficially owned by the Holder. For purposes of the immediately preceding
sentence, beneficial ownership shall be determined in accordance with Section
13(d) of the Exchange Act and Regulation 13d-3 thereunder. The Conversion Shares
limitation described in this Section 3.2 shall automatically become null and
void following notice to any Company upon the occurrence and during the
continuance of an Event of Default, or upon 75 days prior notice to the Company.
Notwithstanding anything contained herein to the contrary, the provisions of
this Section 3.2 are irrevocable and may not be waived by the Holder or any
Company.
3.3 Mechanics of ▇▇▇▇▇▇'s Conversion. In the event that the Holder elects
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to convert this Note into Common Stock, the Holder shall give notice of such
election by delivering an executed and completed notice of conversion in
substantially the form of Exhibit A hereto (appropriate completed) ("NOTICE OF
CONVERSION") to the Company and such Notice of Conversion shall provide a
breakdown in reasonable detail of the Principal Amount, accrued interest and
fees that are being converted. On each Conversion Date (as hereinafter defined)
and in accordance with its Notice of Conversion, the Holder shall make the
appropriate reduction to the Principal Amount, accrued interest and fees as
entered in its records and shall provide written notice thereof to the Company
within two (2) business days after the Conversion Date. Each date on which a
Notice of Conversion is delivered or telecopied to the Company in accordance
with the provisions hereof shall be deemed a Conversion Date (the "CONVERSION
DATE"). Pursuant to the terms of the Notice of Conversion, the Company will
issue instructions to the transfer agent accompanied by an opinion of counsel
within one (1) business day of the date of the delivery to the Company of the
Notice of Conversion and shall cause the transfer agent to transmit the
certificates representing the Conversion Shares to the Holder by crediting the
account of the Holder's designated broker with the Depository Trust Corporation
("DTC") through its Deposit Withdrawal Agent Commission ("DWAC") system within
three (3) business days after receipt by the Company of the Notice of Conversion
(the "DELIVERY DATE"). In the case of the exercise of the conversion rights set
forth herein the conversion privilege shall be deemed to have been exercised and
the Conversion Shares issuable upon such conversion shall be deemed to have been
issued upon the date of receipt by the Company of the Notice of Conversion. The
Holder shall be treated for all purposes as the record holder of the Conversion
Shares, unless the Holder provides the Company written instructions to the
contrary.
3.4 Late Payments. The Company understands that a delay in the delivery of
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the Conversion Shares in the form required pursuant to this Article beyond the
Delivery Date could result in economic loss to the Holder. As compensation to
the Holder for such loss, in addition to all other rights and remedies which the
Holder may have under this Note, applicable law or otherwise, the Company shall
pay late payments to the Holder for any late issuance of Conversion Shares in
the form required pursuant to this Article II upon conversion of this Note, in
the amount equal to $200 per business day after the Delivery Date. The Company
shall make any payments incurred under this Section in immediately available
funds upon demand.
3.5 Conversion Mechanics. The number of shares of Common Stock to be issued
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upon each conversion of this Note shall be determined by dividing that portion
of the principal and interest and fees to be converted, if any, by the then
applicable Fixed Conversion Price. In the event of any conversions of a portion
of the outstanding Principal Amount pursuant to this Article III, such
conversions shall be deemed to constitute conversions of the outstanding
Principal Amount applying to Monthly Amounts for the remaining Amortization
Dates in chronological order.
3.6 Adjustment Provisions. The Fixed Conversion Price and number and kind
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of shares or other securities to be issued upon conversion determined pursuant
to this Note shall be subject to adjustment from time to time upon the
occurrence of certain events during the period that this conversion right
remains outstanding, as follows:
(a) Reclassification. If the Company at any time shall, by
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reclassification or otherwise, change the Common Stock into the same or a
different number of securities of any class or classes, this Note, as to
the unpaid Principal Amount and accrued interest thereon, shall thereafter
be deemed to evidence the right to purchase an adjusted number of such
securities and kind of securities as would have been issuable as the result
of such change with respect to the Common Stock (i) immediately prior to or
(ii) immediately after, such reclassification or other change at the sole
election of the Holder.
(b) Stock Splits, Combinations and Dividends. If the shares of Common
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Stock are subdivided or combined into a greater or smaller number of shares
of Common Stock, or if a dividend is paid on the Common Stock or any
preferred stock issued by the Company in shares of Common Stock, the Fixed
Conversion Price shall be proportionately reduced in case of subdivision of
shares or stock dividend or proportionately increased in the case of
combination of shares, in each such case by the ratio which the total
number of shares of Common Stock outstanding immediately after such event
bears to the total number of shares of Common Stock outstanding immediately
prior to such event.
(c) Share Issuances. Subject to the provisions of this Section 3.6, if
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the Company shall at any time prior to the conversion or repayment in full
of the Principal Amount issue any shares of Common Stock or securities
convertible into Common Stock to a Person other than the Holder (except (i)
pursuant to Sections 3.6(a) or (b) above; (ii) pursuant to options,
warrants, or other obligations to issue shares outstanding on the date
hereof as disclosed to the Holder in writing; (iii) pursuant to options
and/or shares that may be issued under any employee incentive stock option
and/or any qualified stock option plan adopted by the Company, or (iv)
pursuant to the issuance of restricted shares to vendors for goods received
and/or services rendered to the Company in an amount not to exceed an
aggregate of 1,000,000 shares which, unless the Holder otherwise consents
in writing, shares may not be sold until the earlier of (A) three years
from the date hereof or (B) the date all of the obligations and liabilities
of the Company to the Holder under the Purchase Agreement are paid in full)
for a consideration per share (the "OFFER PRICE") less than the Fixed
Conversion Price in effect at the time of such issuance, then the Fixed
Conversion Price shall be immediately reset to such lower Offer Price. For
purposes hereof, the issuance of any security of the Company convertible
into or exercisable or exchangeable for Common Stock shall result in an
adjustment to the Fixed Conversion Price upon the issuance of such
securities.
(d) Computation of Consideration. For purposes of any computation
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respecting consideration received pursuant to Section 3.6(c) above, the
following shall apply:
(i) in the case of the issuance of shares of Common Stock for
cash, the consideration shall be the amount of such cash, provided
that in no case shall any deduction be made for any commissions,
discounts or other expenses incurred by the Company for any
underwriting of the issue or otherwise in connection therewith;
(ii) in the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair market value thereof as
determined in good faith by the Board of Directors of the Company
(irrespective of the accounting treatment thereof); and
(iii) upon any such exercise, the aggregate consideration
received for such securities shall be deemed to be the consideration
received by the Company for the issuance of such securities plus the
additional minimum consideration, if any, to be received by the
Company upon the conversion or exchange thereof (the consideration in
each case to be determined in the same manner as provided in
subsections (i) and (ii) of this Section 3.6(d)).
3.7 Reservation of Shares. During the period the conversion right exists,
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the Company will reserve from its authorized and unissued Common Stock a
sufficient number of shares to provide for the issuance of Conversion Shares
upon the full conversion of this Note and the Warrant. The Company represents
that upon issuance, the Conversion Shares will be duly and validly issued, fully
paid and non-assessable. The Company agrees that its issuance of this Note shall
constitute full authority to its officers, agents, and transfer agents who are
charged with the duty of executing and issuing stock certificates to execute and
issue the necessary certificates for the Conversion Shares upon the conversion
of this Note.
3.8 Registration Rights. The Holder has been granted registration rights
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with respect to the Conversion Shares as set forth in the Registration Rights
Agreement.
3.9 Issuance of New Note. Upon any partial conversion of this Note, a new
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Note containing the same date and provisions of this Note shall, at the request
of the Holder, be issued by the Company to the Holder for the principal balance
of this Note and interest which shall not have been converted or paid. Subject
to the provisions of Article IV of this Note, the Company shall not pay any
costs, fees or any other consideration to the Holder for the production and
issuance of a new Note.
ARTICLE IV
EVENTS OF DEFAULT
4.1 Events of Default. The occurrence of any of the following events set
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forth in this Section 4.1 shall constitute an event of default ("EVENT OF
DEFAULT") hereunder:
(a) Failure to Pay. The Company fails to pay when due any installment
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of principal, interest or other fees hereon in accordance herewith, or the
Company fails to pay any of the other Obligations (under and as defined in
the Master Security Agreement) when due, and, in any such case, such
failure shall continue for a period of three (3) days following the date
upon which any such payment was due.
(b) Breach of Covenant. The Company or any of its Subsidiaries
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breaches any covenant or any other term or condition of this Note in any
material respect and such breach, if subject to cure, continues for a
period of fifteen (15) days after the occurrence thereof.
(c) Breach of Representations and Warranties. Any representation,
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warranty or statement made or furnished by the Company or any of its
Subsidiaries in this Note, the Purchase Agreement or any other Related
Agreement shall at any time be false or misleading in any material respect
on the date as of which made or deemed made.
(d) Default Under Other Agreements. The occurrence of any default (or
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similar term) in the observance or performance of any other agreement or
condition relating to any indebtedness or contingent obligation of the
Company or any of its Subsidiaries beyond the period of grace (if any), the
effect of which default is to cause, or permit the holder or holders of
such indebtedness or beneficiary or beneficiaries of such contingent
obligation to cause, such indebtedness to become due prior to its stated
maturity or such contingent obligation to become payable;
(e) Material Adverse Effect. Any change or the occurrence of any event
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which could reasonably be expected to have a Material Adverse Effect;
(f) Bankruptcy. The Company or any of its Subsidiaries shall (i) apply
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for, consent to or suffer to exist the appointment of, or the taking of
possession by, a receiver, custodian, trustee or liquidator of itself or of
all or a substantial part of its property, (ii) make a general assignment
for the benefit of creditors, (iii) commence a voluntary case under the
federal bankruptcy laws (as now or hereafter in effect), (iv) be
adjudicated a bankrupt or insolvent, (v) file a petition seeking to take
advantage of any other law providing for the relief of debtors, (vi)
acquiesce to, without challenge within ten (10) days of the filing thereof,
or failure to have dismissed, within thirty (30) days, any petition filed
against it in any involuntary case under such bankruptcy laws, or (vii)
take any action for the purpose of effecting any of the foregoing;
(g) Judgments. Attachments or levies in excess of $100,000 in the
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aggregate are made upon the Company or any of its Subsidiary's assets or a
judgment is rendered against the Company's property involving a liability
of more than $100,000 which shall not have been vacated, discharged, stayed
or bonded within thirty (30) days from the entry thereof;
(h) Insolvency. The Company or any of its Subsidiaries shall admit in
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writing its inability, or be generally unable, to pay its debts as they
become due or cease operations of its present business;
(i) Change in Control. A Change in Control shall occur. A "Change in
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Control" shall arise when any "Person" or "group" (as such terms are
defined in Sections 13(d) and 14(d) of the Exchange Act, as in effect on
the date hereof) is or becomes the "beneficial owner" (as defined in Rules
13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of 35%
or more on a fully diluted basis of the then outstanding voting equity
interest of the Parent (other than a "Person" or "group" that beneficially
owns 35% or more of such outstanding voting equity interests of the Parent
on the date hereof) or (ii) the Board of Directors of the Parent shall
cease to consist of a majority of the Parent's board of directors on the
date hereof (or directors appointed by a majority of the board of directors
in effect immediately prior to such appointment);
(j) Indictment; Proceedings. The indictment or threatened indictment
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of the Company or any of its Subsidiaries or any executive officer of the
Company or any of its Subsidiaries under any criminal statute, or
commencement or threatened commencement of criminal or civil proceeding
against the Company or any of its Subsidiaries or any executive officer of
the Company or any of its Subsidiaries pursuant to which statute or
proceeding penalties or remedies sought or available include forfeiture of
any of the property of the Company or any of its Subsidiaries;
(k) The Purchase Agreement, Related Agreements, the September 2005
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Purchase Agreement and the September 2005 Related Agreements. (i) An Event
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of Default shall occur under and as defined in the Purchase Agreement, any
Related Agreement, the Securities Purchase Agreement dated as of September
19, 2005 by and between the Holder and the Company (as amended, modified
and supplemented from time to time, the "September 2005 Purchase
Agreement") and/or any other document, instrument or agreement entered into
in connection with the transactions contemplated by the September 2005
Purchase Agreement (as amended, modified and supplemented from time to
time, the "September 2005 Related Agreements"), (ii) the Company or any of
its Subsidiaries shall breach any term or provision of the Purchase
Agreement, any Related Agreement, the September 2005 Purchase Agreement or
any September 2005 Related Agreement in any material respect and such
breach, if capable of cure, continues unremedied for a period of fifteen
(15) days after the occurrence thereof, (iii) the Company or any of its
Subsidiaries attempts to terminate, challenges the validity of, or its
liability under, the Purchase Agreement, any Related Agreement, the
September 2005 Purchase Agreement or any September 2005 Related Agreement,
(iv) any proceeding shall be brought to challenge the validity, binding
effect of the Purchase Agreement, any Related Agreement, the September 2005
Purchase Agreement or any September 2005 Related Agreement or (v) the
Purchase Agreement, any Related Agreement, the September 2005 Purchase
Agreement or any September 2005 Related Agreement ceases to be a valid,
binding and enforceable obligation of the Company or any of its
Subsidiaries (to the extent such persons or entities are a party thereto);
(l) Stop Trade. An SEC stop trade order or Principal Market trading
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suspension of the Common Stock shall be in effect for five (5) consecutive
days or five (5) days during a period of ten (10) consecutive days,
excluding in all cases a suspension of all trading on a Principal Market,
provided that the Company shall not have been able to cure such trading
suspension within thirty (30) days of the notice thereof or list the Common
Stock on another Principal Market within sixty (60) days of such notice; or
(m) Failure to Deliver Common Stock or Replacement Note. The Company's
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failure to deliver Common Stock to the Holder pursuant to and in the form
required by this Note and the Purchase Agreement and, if such failure to
deliver Common Stock shall not be cured within two (2) business days or the
Company is required to issue a replacement Note to the Holder and the
Company shall fail to deliver such replacement Note within seven (7)
business days.
The Events of Default set forth in this Section 4.1 are subject to the
express waiver of certain Events of Default by Holder in favor of the Company as
provided in the Amendment Agreement (the "First Amendment Agreement") and the
Second Amendment Agreement (the "Second Amendment Agreement") entered into on
November 3, 2005 and December 14, 2005, respectively, by and between the Holder
and the Company. Such Events of Default expressly waived pursuant to the First
Amendment Agreement and the Second Amendment Agreement shall remain waived in
accordance with the express terms of the First Amendment Agreement and the
Second Amendment Agreement and shall not be deemed to constitute Events of
Default for purposes of this Note, the Purchase Agreement, Related Agreements,
the September 2005 Purchase Agreement and/or the September 2005 Related
Agreements.
4.2 Default Interest. Following the occurrence and during the continuance
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of an Event of Default, the Company shall pay additional interest on this Note
in an amount equal to two percent (2%) per month, and all outstanding
obligations under this Note, the Purchase Agreement and each other Related
Agreement, including unpaid interest, shall continue to accrue interest at such
additional interest rate from the date of such Event of Default until the date
such Event of Default is cured or waived.
4.3 Default Payment. Following the occurrence and during the continuance of
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an Event of Default, the Holder, at its option, may demand repayment in full of
all obligations and liabilities owing by Company to the Holder under this Note,
the Purchase Agreement and/or any other Related Agreement and/or may elect, in
addition to all rights and remedies of the Holder under the Purchase Agreement
and the other Related Agreements and all obligations and liabilities of the
Company under the Purchase Agreement and the other Related Agreements, to
require the Company to make a Default Payment ("DEFAULT PAYMENT"). The Default
Payment shall be 130% of the outstanding principal amount of the Note, plus
accrued but unpaid interest, all other fees then remaining unpaid, and all other
amounts payable hereunder. The Default Payment shall be applied first to any
fees due and payable to the Holder pursuant to this Note, the Purchase
Agreement, and/or the other Related Agreements, then to accrued and unpaid
interest due on this Note and then to the outstanding principal balance of this
Note. The Default Payment shall be due and payable immediately on the date that
the Holder has exercised its rights pursuant to this Section 4.3.
ARTICLE V
MISCELLANEOUS
5.1 Conversion Privileges. The conversion privileges set forth in Article
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III shall remain in full force and effect immediately from the date hereof until
the date this Note is indefeasibly paid in full and irrevocably terminated.
5.2 Cumulative Remedies. The remedies under this Note shall be cumulative.
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5.3 Failure or Indulgence Not Waiver. No failure or delay on the part of
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the Holder hereof in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other right, power or privilege. All rights and remedies existing
hereunder are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
5.4 Notices. Any notice herein required or permitted to be given shall be
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in writing and provided in accordance with the terms of the Purchase Agreement.
5.5 Amendment Provision. The term "Note" and all references thereto, as
--------------------
used throughout this instrument, shall mean this instrument as originally
executed, or if later amended or supplemented, then as so amended or
supplemented, and any successor instrument as such successor instrument may be
amended or supplemented.
5.6 Assignability. This Note shall be binding upon the Company and its
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successors and assigns, and shall inure to the benefit of the Holder and its
successors and assigns, and may be assigned by the Holder in accordance with the
requirements of the Purchase Agreement. The Company may not assign any of its
obligations under this Note without the prior written consent of the Holder, any
such purported assignment without such consent being null and void.
5.7 Cost of Collection. In case of any Event of Default under this Note,
--------------------
the Company shall pay the Holder reasonable costs of collection, including
reasonable attorneys' fees.
5.8 Governing Law, Jurisdiction and Waiver of Jury Trial.
----------------------------------------------------
(a) THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
(b) THE COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL
COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE
EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN
THE COMPANY, ON THE ONE HAND, AND THE HOLDER, ON THE OTHER HAND, PERTAINING
TO THIS NOTE OR ANY OF THE OTHER RELATED AGREEMENTS OR TO ANY MATTER
ARISING OUT OF OR RELATED TO THIS NOTE OR ANY OF THE RELATED AGREEMENTS;
PROVIDED, THAT THE COMPANY ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS
--------
MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK,
STATE OF NEW YORK; AND FURTHER PROVIDED, THAT NOTHING IN THIS NOTE SHALL BE
----------------
DEEMED OR OPERATE TO PRECLUDE THE HOLDER FROM BRINGING SUIT OR TAKING OTHER
LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS, TO
REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE HOLDER. THE COMPANY
EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY
ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND THE COMPANY HEREBY WAIVES
ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS. THE COMPANY HEREBY WAIVES PERSONAL
--------------------
SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER
PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE
COMPANY AT THE ADDRESS SET FORTH IN THE PURCHASE AGREEMENT AND THAT SERVICE
SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF THE COMPANY'S ACTUAL
RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER
POSTAGE PREPAID.
(c) THE COMPANY DESIRES THAT ITS DISPUTES BE RESOLVED BY A JUDGE
APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION
OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE COMPANY
HERETO WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR
PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT,
TORT, OR OTHERWISE BETWEEN THE HOLDER AND THE COMPANY ARISING OUT OF,
CONNECTED WITH, RELATED OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS NOTE, ANY OTHER RELATED AGREEMENT OR
THE TRANSACTIONS RELATED HERETO OR THERETO.
5.9 Severability. In the event that any provision of this Note is invalid
------------
or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision of this
Note.
5.10 Maximum Payments. Nothing contained herein shall be deemed to
-----------------
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law. In the event that the rate of
interest required to be paid or other charges hereunder exceed the maximum rate
permitted by such law, any payments in excess of such maximum rate shall be
credited against amounts owed by the Company to the Holder and thus refunded to
the Company.
5.11 Security Interest and Guarantee. The Holder has been granted a
----------------------------------
security interest (i) in certain assets of the Company and its Subsidiaries as
more fully described in the Master Security Agreement dated as of the date
hereof and (ii) in the equity interests of the Companies' Subsidiaries pursuant
to the Stock Pledge Agreement dated as of the date hereof. The obligations of
the Company under this Note are guaranteed by certain Subsidiaries of the
Company pursuant to the Subsidiary Guaranty dated as of the date hereof.
5.12 Construction. Each party acknowledges that its legal counsel
------------
participated in the preparation of this Note and, therefore, stipulates that the
rule of construction that ambiguities are to be resolved against the drafting
party shall not be applied in the interpretation of this Note to favor any party
against the other.
5.13 Registered Obligation. This Note is intended to be a registered
----------------------
obligation within the meaning of Treasury Regulation Section 1.871-14(c)(1)(i)
and the Company (or its agent) shall register the Note (and thereafter shall
maintain such registration) as to both principal and any stated interest.
Notwithstanding any document, instrument or agreement relating to this Note to
the contrary, transfer of this Note (or the right to any payments of principal
or stated interest thereunder) may only be effected by (i) surrender of this
Note and either the reissuance by the Company of this Note to the new holder or
the issuance by the Company of a new instrument to the new holder, or (ii)
transfer through a book entry system maintained by the Company (or its agent),
within the meaning of Treasury Regulation Section 1.871-14(c)(1)(i)(B).
5.14 Amendment and Restatement. This Note amends and restates in its
---------------------------
entirety (and is given in substitution for but not in satisfaction of) (a) that
certain $15,000,000 Secured Convertible Term Note dated as of June 30, 2005
executed by the Company in favor of the Holder (the "PRIOR NOTE"). This Note
does not effect a refinancing of all or any portion of the Obligations
heretofore evidenced by the Prior Note, it being the intention of the Company
and the Holder to avoid effectuating a novation of such Obligations.
[Balance of page intentionally left blank; signature page follows]
IN WITNESS WHEREOF, the Company has caused this Amended and Restated
Secured Convertible Term Note to be signed in its name effective as of June 30,
2005.
NEW CENTURY ENERGY CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
EXHIBIT A
---------
NOTICE OF CONVERSION
--------------------
(To be executed by the Holder in order to convert all or part of
the Secured Convertible Term Note into Common Stock)
New Century Energy Corp.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
The undersigned hereby converts $ of the principal due on [specify
---------
applicable Repayment Date] under the Amended and Restated Secured Convertible
Term Note effective as of June 30, 2005 (the "NOTE") issued by New Century
Energy Corp. (the "COMPANY") by delivery of shares of Common Stock of the
Company ("SHARES") on and subject to the conditions set forth in the Note.
1. Date of Conversion
-----------------------
2. Shares To Be Delivered:
-----------------------
[HOLDER]
By:
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Name:
-------------------------
Title:
------------------------