Exhibit 10.2
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS. 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 SECURED TERM NOTE
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FOR VALUE RECEIVED, NEW CENTURY ENERGY CORP., a Colorado corporation (the
"COMPANY"), hereby promises to pay to LAURUS MASTER FUND, LTD., c/o M&C
Corporate Services Limited, P.O. Box 309 GT, Xxxxxx House, South Church Street,
Xxxxxx Town, Grand Cayman, Cayman Islands, Fax: 000-000-0000 (the "HOLDER") or
its registered assigns or successors in interest, the sum of Nine Million Five
Hundred Thousand Dollars ($9,500,000), together with any accrued and unpaid
interest hereon, on July 2, 2007 (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
Term Note (this "NOTE"):
ARTICLE I
CONTRACT RATE AND REDEMPTION
1.1 Contract Rate. Subject to Sections 2.2 and 3.9, 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 twenty percent (20%) (the
"CONTRACT RATE"). Interest shall be (i) calculated on the basis of a 360
day year, and (ii) payable monthly, in arrears, commencing on November 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 Repayments. Amortizing payments of the aggregate Principal Amount
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outstanding under this Note at any time together with accrued and unpaid
interest shall be made by the Company on each Repayment Date (as hereafter
defined) in an amount equal to the Payment Amount (as hereafter defined).
Each such Payment Amount shall be applied (a) first to any fees due and
payable to the Holder pursuant to this Note, the Purchase Agreement or any
other Related Agreement, (b) then to accrued and unpaid interest due on
this Note and (c) then to the outstanding Principal Amount under this Note,
in each case, in such order as the Holder shall determine in its sole
discretion. 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.
For purposes of this Section, (a) the term "PAYMENT AMOUNT" shall mean the
greater of (i) eighty percent (80%) of the gross proceeds paid to the
Company in respect of oil, gas and/or other hydrocarbon production arising
from the Company's 7.15% working interest in the Wishbone Field in the
Xxxxxxxx-Xxxxxx Gas Unit located in XxXxxxxx County, Texas (the "Wishbone
Field"), purchased by the Company pursuant to the Purchase and Sale
Agreement dated September 2, 2005 between the Company and the seller of
such working interest (the "Production Payments"), and (ii) the monthly
interest payment; and (b) the term "REPAYMENT DATE" means a date not later
than five (5) days following the day on which the Company receives each
Production Payment, commencing with all Production Payments received by the
Company after March 1, 2006 with respect to the production month of January
2006 and each month thereafter. Notwithstanding anything contained in this
Section to the contrary, if during the 2006 calendar year the Company
drills one or more xxxxx in the Wishbone Field, then so long as no Event of
Default shall have occurred and be continuing the Company shall be
permitted to deduct from each Payment Amount in respect of the Principal
Amount then required to be made an amount sufficient to cover not more than
the Company's then owing 7.25% pro-rata share of the drilling and
completion costs associated with such drilling, provided that in no event
shall any such drilling and completion costs be deducted from the interest
payments then due and owing by the Company to the Holder hereunder.
1.3 Mandatory Redemption. The total outstanding Principal Amount
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together with any accrued and unpaid interest and any and all other unpaid
amounts which are then owing by the Companies to the Holder under this
Note, the Purchase Agreement and/or any other Related Agreement shall be
due and payable on the Maturity Date.
1.4 Optional Redemption. The Company may prepay this Note ("OPTIONAL
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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 and/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. 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 Notice of Redemption will be null and void. For purposes of this
Section 1.4, the "APPLICABLE PRINCIPAL AMOUNT" shall mean 100% of the
Principal Amount outstanding at the time of such prepayment.
ARTICLE II
EVENTS OF DEFAULT
2.1 Events of Default. The occurrence of any of the following events
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set forth in this Section 2.1 shall constitute an event of default ("EVENT
OF DEFAULT") hereunder:
(a) Failure to Pay. The Company fails to pay when due any
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installment 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
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(or 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
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event which could reasonably be expected to have a Material Adverse
Effect;
(f) Bankruptcy. The Company or any of its Subsidiaries shall (i)
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apply 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
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admit in 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
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in 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 Company (other than a
"Person" or "group" that beneficially owns 35% or more of such
outstanding voting equity interests of the Company on the date hereof)
or (ii) the Board of Directors of the Company shall cease to consist
of a majority of the Company'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
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indictment 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 June 2005
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Purchase Agreement and the June 2005 Related Agreements. (i) An Event
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of Default shall occur under and as defined in the Purchase Agreement,
any other Related Agreement, the Securities Purchase Agreement dated
as of June 30, 2005 by and between the Holder and the Company (as
amended, modified and supplemented from time to time, the "June 2005
Purchase Agreement") and/or any other document, instrument or
agreement entered into in connection with the transactions
contemplated by the June 2005 Purchase Agreement (as amended, modified
and supplemented from time to time, the "June 2005 Related
Agreements") and/or hereby (ii) the Company or any of its Subsidiaries
shall breach any term or provision of the Purchase Agreement or any
other 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 or any Related Agreement, (iv)
any proceeding shall be brought to challenge the validity, binding
effect of the Purchase Agreement or any Related Agreement or (v) the
Purchase Agreement or any 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); or
2.2 Default Interest. Following the occurrence and during the
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continuance 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.
2.3 Default Payment. Following the occurrence and during the
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continuance of 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 2.3.
ARTICLE III
MISCELLANEOUS
3.1 Cumulative Remedies. The remedies under this Note shall be
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cumulative.
3.2 Failure or Indulgence Not Waiver. No failure or delay on the part
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of 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.
3.3 Notices. Any notice herein required or permitted to be given shall
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be in writing and provided in accordance with the terms of the Purchase
Agreement.
3.4 Amendment Provision. The term "Note" and all references thereto,
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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.
3.5 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.
3.6 Cost of Collection. In case of any Event of Default under this
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Note, the Company shall pay the Holder reasonable costs of collection,
including reasonable attorneys' fees.
3.7 Governing Law, Jurisdiction and Waiver of Jury Trial.
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(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
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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
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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
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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.
3.8 Severability. In the event that any provision of this Note is
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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.
3.9 Maximum Payments. Nothing contained herein shall be deemed to
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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.
3.10 Security Interest and Guarantee. The Holder has been granted a
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security interest (i) in certain assets of the Company and its Subsidiaries
as more fully described in the Master Security Agreement and in the
Mortgage, Deed of Trust, Security Agreement, Financing Statement and
Assignment of Production and (ii) in the equity interests of the Companies'
Subsidiaries pursuant to the Stock Pledge Agreement which such security
interests, in each case, have been reaffirmed and ratified pursuant to the
Reaffirmation Agreement. The obligations of the Company under this Note are
guaranteed by certain Subsidiaries of the Company pursuant to the
Subsidiary Guaranty which guaranty has been reaffirmed pursuant to the
Reaffirmation Agreement.
3.11 Construction. Each party acknowledges that its legal counsel
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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
3.12 Amendment and Restatement. This Note amends and restates in its
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entirety (and is given in substitution for but not in satisfaction of) that
certain Xxxxxxx and Restated Secured Term Note entered into as of March 31,
2006, to be effective as of September 19, 2005, executed by the Company in
favor of the Holder in the original principal amount of $9,500,000 (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 Second Amended and Restated
Secured Term Note to be signed in its name on December 28, 2006 to be effective
as of the 19th day of September, 2005.
NEW CENTURY ENERGY CORP.
By: /s/ Xxxxxx X. XxXxxxxxx
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Name: Xxxxxx X. XxXxxxxxx
Title: President
WITNESS:
/s/ Xxxx X. Xxxxxxx
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