Exhibit
10.3
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.
SECOND AMENDED AND RESTATED
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SECURED CONVERTIBLE TERM NOTE
-----------------------------
FOR
VALUE RECEIVED, NEW CENTURY ENERGY
CORP., a Colorado corporation (the
"COMPANY"), promises
to pay to PROMETHEAN INDUSTRIES, INC. as successor
in
interest to
LAURUS MASTER FUND, LTD., c/o Laurus
Capital Management, LLC, 825
Third Ave.,
14th Floor, New York, NY 10022, (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 Second 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
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on
the outstanding principal amount of
this Note (the "PRINCIPAL AMOUNT")
shall accrue at a rate per annum equal to the "prime rate"
published in The
---
Wall
Street Journal from
time to time (the "PRIME RATE"), plus two percent
--------------------
(2%)
(the "CONTRACT RATE"). The Contract Rate shall be increased or
decreased as
the case may be for each increase or
decrease in the Prime
Rate
in an amount equal to such increase or decrease
in the Prime Rate;
each
change to be effective
as of the day of the change in the Prime Rate.
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
<PAGE>
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
------------------
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 through December 31, 2006,
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").
Beginning January
1, 2007, through December 31, 2007,
the Monthly Amount
shall be $100,000. Beginning January 1, 2008, through
the Maturity Date,
the
Monthly amount shall be $250,000. 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.
(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.
<PAGE>
(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
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contrary 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
<PAGE>
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 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 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 Holder's Conversion. In the event that the
Holder
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elects 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
<PAGE>
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
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delivery of
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 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
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
----------------
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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