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As filed with the Securities and Exchange Commission on April 28, 2000
Registration No. 333-96369
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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METRETEK TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 84-1169358
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1675 BROADWAY, SUITE 2150
DENVER, COLORADO 80202
(303) 592-5555
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(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
A. BRADLEY GABBARD
EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
METRETEK TECHNOLOGIES, INC.
1675 BROADWAY, SUITE 2150
DENVER, COLORADO 80202
(303) 592-5555
- --------------------------------------------------------------------------------
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copy to:
PAUL R. HESS, ESQ.
KEGLER, BROWN, HILL & RITTER CO., L.P.A.
65 EAST STATE STREET, SUITE 1800
COLUMBUS, OHIO 43215
(614) 462-5400
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [__]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form if filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [__]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [__]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [__]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Title of Each Class of Amount Proposed Maximum Proposed Maximum
Securities to be To be Offering Price Aggregate Amount of Registration
Registered Registered Per Unit Offering Price Fee
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<S> <C> <C> <C> <C>
Common Stock, par value $.01
per share(1) 3,991,079 shares(2) $7.34(3) $29,294,520(3) $7,733.75(4)
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Series B Preferred Stock, par
value $.01 per share 7,000 shares (5) (5) (5)
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</TABLE>
(1) Includes the related Preferred Share Purchase Rights to purchase shares of
Series C Preferred Stock, par value $.01 per share, of Metretek Technologies,
Inc. No separate consideration will be received for the Preferred Share Purchase
Rights, which, prior to the occurrence of certain prescribed events, are not
exercisable, are evidenced by the certificates for the Common Stock, and are
transferable only with the Common Stock. The value, if any, of the Preferred
Share Purchase Rights is reflected in the market price of the Common Stock.
(2) Consists of 1,086,263 shares of Common Stock issuable upon the exercise of
warrants held by the selling securityholders, 1,179,762 shares of Common Stock
issuable upon conversion of the Series B Preferred Stock held by the selling
securityholders, and 1,725,054 shares of Common Stock currently held by the
selling securityholders. The number of shares of Common Stock issuable upon
conversion of the Series B Preferred Stock included in this table is based upon
an initial conversion rate of 168.5374 shares of Common Stock for each share of
Series B Preferred Stock. The initial conversion rate, and therefore the number
of shares of Common Stock into which the Series B Preferred Stock is
convertible, is subject to adjustment for events specified in the terms of the
Series B Preferred Stock, and any adjustment could increase the number of shares
of Common Stock into which the Series B Preferred Stock is convertible. This
Registration Statement covers an indeterminate number of additional shares of
Common Stock as may become issuable upon conversion of the Series B Preferred
Stock, in the event of an adjustment to the initial conversion rate of the
Series B Preferred Stock. Pursuant to Rule 416, this Registration Statement also
covers an indeterminate number of shares of Common Stock issuable pursuant to
the anti-dilution provisions of the Series B Preferred Stock and the warrants
referred to in this note. The Common Stock issuable upon conversion of the
Series B Preferred Stock will be issued for no additional consideration.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act, upon the basis of the average
of the high and low prices of the common stock as reported on the Nasdaq
National Market on April 24, 2000.
(4) Because a registration fee of $9,156.47 was previously paid on February 8,
2000 in connection with the initial filing of this Registration Statement, no
additional registration fee is required with this filing.
(5) The filing fee is being paid with respect to the underlying shares of Common
Stock. Pursuant to Rule 457(i) under the Securities Act, no separate fee is
required for registration of the shares of Series B preferred stock which are
convertible into shares of Common Stock being registered hereby for no
additional consideration.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING SECURITYHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
SUBJECT TO COMPLETION --
PRELIMINARY PROSPECTUS DATED APRIL 28, 2000
PROSPECTUS
METRETEK TECHNOLOGIES, INC.
3,991,079 SHARES OF COMMON STOCK
7,000 SHARES OF SERIES B PREFERRED STOCK
This prospectus relates to the offer and sale from time to time of up
to 3,991,079 shares of our common stock and 7,000 shares of our Series B
preferred stock by the selling securityholders identified in this prospectus. Of
the shares being offered under this prospectus, 1,725,054 shares of common stock
and 7,000 shares of Series B preferred stock were previously issued to the
selling securityholders, 1,086,263 shares of common stock are issuable upon the
exercise of warrants previously issued to the selling securityholders, and
1,179,762 shares of common stock are issuable upon conversion of shares of our
Series B preferred stock previously issued to the selling securityholders. This
prospectus also covers the offer and sale by the selling securityholders of an
indeterminate number of additional shares of common stock as may become issuable
upon conversion of the Series B preferred stock offered under this prospectus,
if the current conversion rate of 168.5374 shares of common stock per share of
Series B preferred stock is adjusted under the terms of the Series B preferred
stock, or if dividends on the Series B preferred stock are accrued and unpaid at
the time of conversion. We refer to the Series B preferred stock and the common
stock offered under this prospectus as the shares.
The selling securityholders may from time to time offer and sell all or
a portion of the shares offered under this prospectus directly or through one or
more broker-dealers or underwriters in one or more transactions on the Nasdaq
National Market or on any other stock market or stock exchange on which the
shares may from time to time be traded, in the over-the-counter market, in
negotiated transactions, in underwritten transactions or otherwise, at market
prices prevailing at the time of sale, at prices related to the then prevailing
market prices, at negotiated prices or at fixed prices.
We will not receive any proceeds from the sale of the shares by the
selling securityholders. We will pay all expenses of the registration of the
shares, and the selling securityholders will pay any broker-dealer or
underwriter fees, discounts or commissions and other selling expenses of the
shares.
Our common stock is traded on the Nasdaq National Market under the
symbol "MTEK". On April 27, 2000, the last sale price of our common stock as
reported on the Nasdaq National Market was $7.78 per share. Our Series B
preferred stock is not traded on any public market.
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INVESTING IN OUR SECURITIES INVOLVES RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 7.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this prospectus is May __, 2000
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TABLE OF CONTENTS
PAGE
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Metretek Technologies, Inc...................................................3
Risk Factors.................................................................7
Special Note Regarding Forward-Looking Statements...........................25
Use of Proceeds.............................................................25
Description of Capital Stock................................................26
Description of the Series B Preferred Stock.................................32
Federal Income Tax Considerations...........................................38
Selling Securityholders.....................................................43
Plan of Distribution........................................................48
Legal Matters...............................................................50
Experts.....................................................................50
Where You Can Find More Information.........................................50
You should rely only on the information contained in or incorporated by
reference in this prospectus. Neither Metretek nor any selling securityholder
has authorized anyone to provide you with information different from that
contained in or incorporated by reference in this prospectus. This prospectus is
not an offer to sell and it is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted. The information in this
prospectus is compete and accurate only as of the date of this prospectus,
regardless of the time of delivery of this prospectus or of any sale of these
securities.
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METRETEK TECHNOLOGIES, INC.
OUR BUSINESS
We are a diversified provider of energy measurement products, services
and data-management systems to industrial and commercial users and suppliers of
natural gas and electricity. In June 1999, we changed our name from "Marcum
Natural Gas Services, Inc." to "Metretek Technologies, Inc." We currently
conduct our continuing operations through three subsidiaries:
- PowerSpring, Inc., based in Denver, Colorado, which operates our
Internet-based business to business energy services hub.
- Metretek, Incorporated, based in Melbourne, Florida, which we refer to
as "Metretek Florida". Metretek Florida designs, manufactures and sells
electronic devices and systems, commonly referred to as automatic meter
reading systems, which we refer to as "AMRs", that automatically
monitor, record and transmit data from natural gas custody transfer
meters, electronic flow correctors and computers, and other energy
measurement products and services.
- Southern Flow Companies, Inc., based in Lafayette, Louisiana, provides
a wide variety of natural gas measurement services principally to
producers and operators of natural gas production facilities.
We are a corporation organized under the laws of the state of Delaware
on April 5, 1999. Our principal executive offices are located at 1675 Broadway,
Suite 2150, Denver, Colorado 80202. Our telephone number is (303) 592-5555.
OUR BUSINESS STRATEGY
Our business strategy is to position ourselves as an integrated
provider of data measurement products, services and systems that enhance the
flow of information to the energy industry. To date, our products and services
have been aimed primarily at the natural gas industry, but we intend to provide
our products and services to other segments of the energy industry, particularly
the electricity industry. The energy industry generally is undergoing
fundamental regulatory and structural changes and trends. Our strategy is to
acquire, develop and operate businesses that are positioned to take advantage of
these trends. While we regularly engage in discussions relating to potential
acquisitions and dispositions, we have no present agreements or commitments with
respect to any material acquisition or disposition.
OUR RECENT INTERNET-BASED BUSINESS STRATEGY
Development of our Internet-based business. We have recently focused a
major part of our business strategy upon the development of an Internet-based
business, which we conduct through PowerSpring. In furtherance of this
Internet-based business strategy, we have retained Scient Corporation, a leading
eBusiness systems and strategy advisor, to assist us in designing, developing
and implementing our Internet-based business. The goal of PowerSpring is to
provide comprehensive energy consumption data and a broad array of additional
information designed to facilitate the purchase and management of natural gas by
commercial users of natural gas. PowerSpring also intends to provide commercial
electricity users with a mechanism to manage their energy needs and reduce their
electricity costs. Our initial focus is the development of a website to provide
a single source of information and services for commercial energy users.
Our Internet-based business objective is to be the leading Internet
provider of energy information products and services. We are developing our
Internet-based business to enable us to take our measurement information
products, services and data management technologies to a broader market of end
users of natural gas and electricity by creating a comprehensive market place on
the Internet for energy consumers and suppliers to take advantage of deregulated
energy markets. The initial focus of our Internet-based business strategy is to
develop and launch an Internet-based transactional website. After we implement
our Internet-based strategy, we will continue to operate our Southern Flow and
Metretek Florida businesses. The technology requirements of PowerSpring will
include AMRs that will be manufactured by Metretek Florida, and thus may enhance
our revenues from our
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Metretek Florida operations, depending on how we fix our revenue and pricing
models for our PowerSpring products and services.
In September 1999, we entered into an agreement with Scient
Corporation. Under the Scient agreement, Scient is assisting and advising us in
designing, developing and implementing a viable Internet-based business
strategy. Scient is a leading consultant and advisor to businesses exploring
their Internet business capabilities. We estimate that our total costs
associated with the services contemplated by the Scient agreement will be
between $6,000,000 and $8,000,000. Under the Scient agreement, Scient is
assisting us in:
- the conception of a viable Internet-based business strategy;
- the architecture of a functional and scalable transactional based
website;
- the design, engineering and development of the website;
- the development, selection and procurement of all applicable operating
software and hardware;
- the branding and marketing strategy for the PowerSpring; and
- the operational structure, management and staffing of PowerSpring.
Acquisition of Mercator. On March 17, 2000, we acquired Mercator Energy
Incorporated through a merger with a wholly-owned subsidiary of PowerSpring.
Mercator is a Denver-based natural gas services and brokerage company that acts
as an independent broker-agent for both producers and users. This acquisition
will provide PowerSpring with Mercator's expertise in the area of energy
procurement, which is an important element in our Internet business strategy.
When we acquired Mercator, we delivered to John A. Harpole, the
president and sole shareholder of Mercator prior to the acquisition, $408,334 in
cash, a $741,666 non-negotiable promissory note payable by PowerSpring over two
years and secured by a general security interest in the assets of PowerSpring,
and 2,500,000 shares of common stock of PowerSpring. Since the acquisition of
Mercator, we now own 87.5% of the outstanding shares of PowerSpring common
stock, Mr. Harpole owns 12.5% of the outstanding shares of PowerSpring common
stock, and Mercator has become a wholly-owned subsidiary of PowerSpring. We,
PowerSpring and Mr. Harpole entered into a stockholders agreement that creates
rights related to Mr. Harpole's PowerSpring common stock, including a right of
first refusal held by us for any sale of PowerSpring common stock by Mr.
Harpole, co-sale rights and similar rights upon PowerSpring transactions,
registration rights, and a right for Mr. Harpole to put his shares of
PowerSpring common stock back to PowerSpring at an appraised value for cash
payable over three years if PowerSpring has not completed an initial public
offering and has not sold its business within two years.
PowerSpring also entered into a two-year employment agreement with Mr.
Harpole. Mr. Harpole will serve as the Executive Vice President, Chief Operating
Officer and a director of PowerSpring. Under the employment agreement, Mr.
Harpole received an option to purchase 60,000 shares of our common stock,
exercisable at $17.88 per share, and an option to purchase 200,000 shares of
PowerSpring common stock, exercisable at $.30 per share. Mr. Harpole agreed not
to compete with the business of PowerSpring for one year after the termination
of his employment.
In September 1999, we had entered into a consulting and joint venture
agreement with Mercator, under which Mercator provided energy procurement
services to us on a consulting basis. In connection with the acquisition of
Mercator, the consulting and joint venture agreement, and a related stock option
agreement, were terminated.
Background of our Internet-based business strategy. Historically, the
primary segment of Metretek Florida's business has been the sale of AMR
equipment and related software to its customers, primarily natural gas utilities
or combined natural gas/electric utilities. Typically, these customers would
purchase Metretek Florida's AMR equipment and software for installation on the
meters of their large, industrial natural gas customers.
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In 1985, the Federal Energy Regulatory Commission issued its Order No.
436 that initiated deregulation of the interstate natural gas transportation
markets. This order was followed by other FERC orders, including FERC Order No.
636, that substantially completed deregulation of the interstate gas markets. As
a result of the FERC rulings and various state level rulings and legislation,
most United States industrial and commercial natural gas customers have, for
some time, been legally able to choose a supplier of natural gas other than
their local natural gas utility. A customer that chooses to purchase natural gas
from a source other than its local utility is characterized by the local utility
as a "transportation" customer, or a customer engaged in "deregulation
purchases" of natural gas. A "transportation" customer periodically contracts
with one or more suppliers of natural gas to provide its supply of natural gas
and pays the local utility a transportation fee to transport the natural gas
from the "city gate" across the utilities distribution system to the customer's
facility. Often, the key benefit to the transportation customer is a lower net
cost of natural gas.
A substantial percentage of industrial natural gas users in the United
States are "transportation" customers that are currently participating in the
benefits of a deregulated natural gas market, while only a very small percentage
of commercial gas users are transportation customers. We believe this largely
explains why the average natural gas prices paid by commercial customers are
higher than those paid by industrial customers, as discussed below. We also
believe that commercial natural gas customers have been precluded from
participating in the deregulated market primarily as a result of both economic
and expertise barriers to market entry. The primary goal of our eBusiness is to
remove these barriers to provide a large percentage of the commercial customer
market access to the deregulated natural gas market, as well as the commercial
electricity market.
Deregulation of natural gas provides us with a market opportunity. A
1998 study published by the Energy Information Administration discloses that the
average natural gas burner tip cost paid by industrial users in 1997 was $3.14
per MMBTU, compared to the average cost paid by commercial natural gas customers
of $5.48 per MMBTU. Our Internet-based business strategy includes the concept of
introducing a product to the commercial natural gas market that will allow
commercial natural gas customers to substantially narrow the margin between
average commercial natural gas costs versus average industrial natural gas
costs.
Our Internet-based business solution is to eliminate the primary
barriers to entry for commercial natural gas customers. While industrial natural
gas customers have been benefiting from deregulating natural gas markets,
commercial users of natural gas have not been. We believe commercial customers
of natural gas have been unable to benefit from deregulated markets largely as a
result of economic and expertise barriers.
Our primary Internet-based business product is being designed to
provide a complete turn-key solution for the commercial natural gas customer and
to reduce or eliminate many of the market entry barriers. We anticipate that
this Internet-based business product will require no up-front capital investment
by the customer, will be seamless in its application to the customer, and will
be perceived by the customer as having a small overall cost compared to the
potential savings in energy costs. The customer is expected to realize a savings
in energy costs and will receive access to current and historical value added
consumption reports through a content and function enriched website.
Application of our Internet-based business strategy to the electricity
markets.The initial focus of PowerSpring is the natural gas market, which has
been almost fully deregulated. However, the historical structure and operating
mechanics of the electricity markets are very similar to the natural gas
markets. Our AMR devices and software management programs are ideal for
application in the electricity markets. In addition, the domestic electricity
markets are about three times the size of the domestic natural gas markets.
Deregulation of the electricity markets is lagging behind deregulation
of natural gas markets, but is progressing. We are aware of at least 29 states
that have either already deregulated their electricity markets, have passed
legislation to implement deregulation, or have active pilot deregulation
programs in place. We believe most or all of the remaining states are currently
considering some form of deregulation of electricity markets.
We believe that the opportunities to create savings for customers are
potentially larger in the electricity markets than in the natural gas markets.
We also expect that many of our natural gas customers will add their electrical
needs to PowerSpring's program as their electricity markets become deregulated.
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Timing and funding of PowerSpring. Based on our current schedule, we
anticipate launching an operable, transaction-based website in June 2000.
We estimate that this initial development phase of PowerSpring will
require aggregate expenditures of between $6,000,000 and $8,000,000, consisting
of research and development costs, consulting fees and expenses and costs of
acquiring the requisite technology, including hardware and software. Through
December 31, 1999, these costs were approximately $1.5 million. We expect that
after this initial development stage is completed and our website is launched,
the further development and growth of PowerSpring, including staffing,
organizational and start-up expenses, marketing costs and additional capital
expenditures, will require significant additional funds. To develop and expand
PowerSpring, we will need to raise significant additional funds beyond the
proceeds of the units private placement, from the proceeds of public or private
equity financing, debt financing or from other sources.
We intend to raise any needed additional capital to fund the
development and operations of PowerSpring primarily through financing at the
PowerSpring level. However, depending upon the availability of capital, market
conditions, our consolidated operations and the operations of PowerSpring, we
may also or instead raise additional capital at the Metretek level. For example,
depending on market conditions and other factors we deem appropriate and the
receipt of required consents, we may call our outstanding publicly trading
dividend warrants for redemption. Due to the trading price of our common stock,
as of the date of this prospectus we have the right, upon 30 days notice, to
call the dividend warrants for redemption at a redemption price of $.01 per
dividend warrant, and we will continue to have this redemption right as long as
the closing sale price of the common stock as reported on the Nasdaq National
Market equals or exceeds $6.50 per share. We expect that, depending upon market
conditions, most or all dividend warrants will be exercised if we call them for
redemption, resulting in gross proceeds of up to $3.5 million to us.
Our capital raising will require the consent of our lender on our
credit facility, if our credit facility is then in effect. In addition,
depending on how it is structured, our capital raising could require the consent
of the holders of our Series B preferred stock. We cannot assure you that
additional funds will be available to us in the future or that, if available,
additional funds can be obtained on terms favorable to us, and on terms
acceptable to our lender, if its consent is required, and on terms acceptable to
the holders of our Series B preferred stock, if their consent is required. In
addition, we can not assure you that any capital which is available to us will
be sufficient to facilitate this successful operation of PowerSpring. Our
inability to raise sufficient additional funds, beyond the proceeds of the units
private placement, to meet the capital requirements of PowerSpring could have a
material adverse effect on our business, financial condition and results of
operations.
UNITS PRIVATE PLACEMENT
On February 4, 2000, we completed a $14,000,000 private placement,
which we refer to in this prospectus as the units private placement, of 7,000
units, including 1,450 units we issued on December 9, 1999. Each unit consisted
of 200 shares of common stock, 1 share of Series B preferred stock and warrants,
which we refer to in this prospectus as unit warrants, to purchase 100 shares of
common stock. For a description of the material terms of these securities, see
"Description of Capital Stock" and "Description of the Series B Preferred
Stock". In the units private placement, we issued 1,400,000 shares of common
stock, 7,000 shares of Series B preferred stock and unit warrants to purchase
700,000 shares of common stock. The units private placement was approved and
ratified by our stockholders at a special meeting held on February 3, 2000. The
units were issued to institutional investors and other "accredited investors"
under Regulation D under the Securities Act. In this prospectus, we refer to the
purchasers of units in the units private placement as unit purchasers.
The primary purpose of the units private placement was to raise capital
to enable us to develop the Internet-based business of PowerSpring. A portion of
the proceeds is being used to repay outstanding indebtedness, and the remaining
proceeds will be used for general corporate and working capital purposes,
including potentially providing the funds to finance an acquisition opportunity,
if one were to arise. We presently have no agreement or arrangement for any
acquisition opportunity.
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RISK FACTORS
An investment in our securities involves risk. You should carefully
consider the risks described below, along with the other information contained
or incorporated by reference in this prospectus, before making an investment
decision. In addition, the risks and uncertainties we face described below are
not the only risks. There may be additional risks and uncertainties that we do
not currently consider material or that are not currently known to us. If any of
the following risks were to occur, our business, prospects, assets, financial
condition, results of operations and cash flows could be materially adversely
affected. When we say that something could or will have a material adverse
effect on us or our business, we mean that it could or will have one or more of
these effects. If this occurs, the trading price of our common stock and the
value of the other securities offered under this prospectus could decline, and
you could lose all or part of your investment.
RISKS RELATED TO OUR BUSINESS
WE HAVE A HISTORY OF LOSSES, AND WE MAY NEVER BECOME PROFITABLE
We have incurred net losses on an annual basis during each year since
our incorporation. We incurred net losses of approximately $0.3 million and $3.7
million for the years ended December 31, 1998 and 1999. At December 31, 1999, we
had an accumulated deficit of approximately $25.2 million. Due to the design,
creation and implementation of PowerSpring, which will require us to make
significant expenditures, we expect operating losses to continue for the
foreseeable future. We also anticipate increased expenses as we support, expand
and improve PowerSpring and its infrastructure, invest in new Internet
applications, enhance our management expertise, expand our sales efforts and
pursue strategic Internet relationships. In addition, our Internet-based
business strategy is unproven. We may never generate sufficient revenues to
achieve profitability. Even if we do achieve profitability, we may not be able
to sustain or increase that profitability on a quarterly or annual basis in the
future.
WE WILL REQUIRE A SUBSTANTIAL AMOUNT OF ADDITIONAL CAPITAL TO FINANCE OUR
BUSINESS, ESPECIALLY POWERSPRING, BUT WE MAY NOT BE ABLE TO OBTAIN A SUFFICIENT
AMOUNT OF FUNDS TO DO SO
We will require substantial additional funds to design, create,
develop, implement, market and operate PowerSpring, our new Internet-based
business. If we cannot raise sufficient funds on a timely basis, we will not be
able to complete the development, implementation and successful operations of
PowerSpring, and our business will be materially and adversely affected.
We estimate that the initial development phase to launch PowerSpring
will require estimated expenditures of between $6,000,000 and $8,000,000,
consisting of research and development costs, consulting fees and expenses and
costs of acquiring the requisite technology, including hardware and software.
Through December 31, 1999, these costs were approximately $1.5 million. We
expect that after this initial development stage is completed and PowerSpring's
web site is launched, the further development and growth of PowerSpring,
including staffing, organizational and start-up expenses, marketing costs and
additional capital expenditures, will require significant additional funds. To
develop and expand PowerSpring, we will need to raise the significant additional
funds, beyond the proceeds of the units private placement, from the proceeds of
public or private equity financing, debt financing or from other sources. We
intend to raise any needed additional capital to fund the development and
operations of PowerSpring primarily through financing at the PowerSpring level.
However, depending upon the availability of capital, market conditions, our
consolidation operations and the operations of PowerSpring, we may also or
instead raise additional capital at the Metretek level. For example, depending
on market conditions, required consents and other factors we deem appropriate,
we may call the outstanding dividend warrants for redemption.
Virtually any capital raising will require the consent of our lender on
our credit facility, if the credit facility is then in effect. In addition,
depending on how it is structured, this capital raising could require the
consent of the holders of our Series B preferred stock. We cannot assure you
that any additional funds will be available to us in the future or that, if
available, funds can be obtained on terms favorable to us, and on terms
acceptable to our lender, if its consent is required, and on terms acceptable to
the holders of the Series B preferred stock, if their consent is required. In
addition, we cannot assure you that available capital will be sufficient for the
successful operation of PowerSpring. Our inability to raise sufficient
additional funds, beyond the proceeds of the
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units private placement, to meet the capital requirements of PowerSpring could
have a material adverse effect on our business, financial condition and results
of operations.
In addition to our need to raise capital to fund PowerSpring, we will
need to raise additional capital in the future to either repay or refinance any
indebtedness we incur in the future to finance our operations, the growth of our
current business or acquisition opportunities. The Series B preferred stock
bears a cumulative dividend at the rate of 8% per year and, if it is not earlier
converted into common stock, we are required to redeem the Series B preferred
stock on December 9, 2004 at a redemption price equal to the liquidation
preference, currently $7,000,000 plus accrued and unpaid dividends. In addition,
unanticipated events, over which we may have no control, could also increase our
operating costs or decrease our ability to generate revenues from product and
service sales. We will also require additional capital in the future to make any
significant acquisitions of businesses or technologies. We have a $5 million
revolving line of credit with our current lender which expires in March 2001.
Our ability to borrow funds under this credit facility is limited to our loan
availability based upon our assets, primarily our accounts receivable and
inventory, and is limited to $3 million by the terms of the Series B Preferred
Stock. As of December 31, 1999, we had a total loan availability of
approximately $3.6 million, and of that we had borrowed approximately $0.3
million. The amount of our loan availability, as well as the amount we borrow,
will change in the future depending on our asset base and our capital
requirements. Any amount outstanding under our credit facility in March 2001
will need to either be repaid by us, refinanced by a new lender or investor, or
extended by our current lender. We cannot estimate the amount that we will have
borrowed under the credit facility when it expires, and we cannot assure you
that we will be able to repay, refinance or extend that indebtedness at that
time.
To finance PowerSpring and the growth of our other businesses, and to
repay or refinance any indebtedness we might incur, we will need to raise a
substantial amount of additional capital from the public or private sales of
equity securities, debt financing, sales of assets, calling the dividend
warrants for redemption, or from other sources. Additional financing may not be
available to us when we need it or, if available, it may not be on terms
satisfactory to us, or we may not be able to obtain the required consents to
complete the financing. Obtaining additional financing will depend on many
factors, including market conditions, our operating performance and investor
sentiment. Terms of debt financing could restrict our ability to operate our
business or to expand our operations. In addition, if we raise capital by
issuing capital stock or securities convertible into capital stock, our
stockholders could suffer a significant dilution of their percentage ownership
interests, and the new capital stock or other new securities could have rights,
preferences or privileges senior to those of our current stockholders. If we are
unable to raise sufficient additional financing on terms satisfactory to us,
then our business will be materially and adversely affected.
FLUCTUATIONS IN OUR QUARTERLY OPERATING RESULTS MAY ADVERSELY AFFECT THE TRADING
PRICE OF OUR COMMON STOCK
Our quarterly revenues, expenses, margins and results of operations
have fluctuated significantly in the past and are expected to continue to
fluctuate significantly in the future due to a variety of factors, many of which
are outside of our control and any of which may cause the trading price of our
common stock to fluctuate. These factors include:
- the size, timing and terms of sales and orders;
- the amount and timing of expenditures on PowerSpring;
- our ability to implement our business plan and strategy with respect to
PowerSpring and the timing of this implementation;
- the timing, pricing and market demand and acceptance of our new
products and services, especially those related to PowerSpring, and
those of our competitors;
- the pace of development of PowerSpring;
- the success of our brand building and marketing campaigns for our
PowerSpring products and services;
- the growth of the market for online energy products, services and
information;
- our ability to effectively manage our growth during the anticipated
rapid growth of PowerSpring;
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- changes in our pricing policies and those of our competitors;
- variations in the length of our product and service implementation
process;
- the mix of products and services sold;
- the mix of international and domestic revenues;
- the life cycles of our products and services;
- budgeting cycles of utilities;
- general economic and political conditions;
- economic conditions in the energy industry in general and the natural
gas and electricity industries in particular;
- the effects of governmental regulations and regulatory changes in our
current and new markets;
- prices charged by our suppliers;
- costs related to future acquisitions of technology or businesses;
- the level of service and price competition;
- changes in our operating expenses;
- the success of our brand building and marketing campaigns for
PowerSpring's products and services; and
- the maintenance and development of business relationships with
strategic partners.
Because many of our operating expenses, other than those related to our
PowerSpring, are relatively fixed, a shortfall in anticipated revenue or delay
in recognizing revenue could cause our operating results to vary significantly
from quarter-to-quarter and could result in significant operating losses in any
particular quarter. The timing of large individual sales is also difficult for
us to predict. In addition, expenditures on PowerSpring will be significant and
will vary in the foreseeable future. If our revenues fall below our expectations
in any particular quarter, our business could be materially adversely affected.
If our revenues fall below our expectations, we will not be able to reduce our
expenses rapidly in response to the short-fall and could suffer significant
operating losses.
Due to all of these factors and the other risks discussed in this
section, you should not rely on quarter-to-quarter comparisons of our results of
operations as an indication of our future performance. It is possible that in
some future periods our results of operations may be below the expectations of
public market analysts and investors. As a result, the trading price of our
common stock may fall.
BECAUSE POWERSPRING HAS VIRTUALLY NO OPERATING HISTORY AND OUR INTERNET-BASED
BUSINESS STRATEGY IS STILL BEING DEVELOPED AND IS UNPROVEN, LIMITED INFORMATION
IS AVAILABLE UPON WHICH YOU CAN EVALUATE POWERSPRING
Our business strategy and future success is highly dependent upon our
ability to develop our eBusiness. PowerSpring strategy is based on an unproven
business model, and our operating, sales and other strategies are still being
developed. PowerSpring strategy depends on the willingness of commercial users
of natural gas and electricity to purchase, at a price profitable to us, a
package consisting of energy data management equipment and energy purchasing
resources. It also depends on our ability to develop a business that will
generate significant revenues, profits and cash flow through the offering of
energy products, services and information over the Internet. PowerSpring will
not be launched until June 2000. Accordingly, we have virtually no operating
history to provide you upon which you can evaluate PowerSpring.
As a company developing a new business in the new and rapidly evolving
markets for Internet products and services generally, and online energy
products, services and information specifically, we face numerous risks and
uncertainties which are described in this "Risk Factors" section as well as
other parts of this prospectus, and in documents incorporated by reference in
this prospectus. Some of these risks relate to our ability to:
- anticipate and adapt to the changing regulatory climate for energy
products and services;
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- anticipate and adapt to the changing Internet market;
- attract customers to PowerSpring;
- collect energy research and other energy information adequate to
support a market for Internet services;
- implement our sales and marketing initiatives, both domestically and
internationally;
- attract, retain and motivate qualified personnel;
- respond to actions taken by our competitors;
- integrate acquired businesses, technologies, products and services;
- generate revenues and sales of new products and services;
- implement an effective marketing strategy to promote awareness of our
new businesses; and
- develop and deploy successful versions of the software necessary for
our services.
Our business and financial results in the future will depend heavily on
market acceptance and profitability of PowerSpring. If we are unsuccessful in
addressing these risks or in executing our business strategies, our business
would be materially and adversely affected.
IF THE INTERNET IS NOT WIDELY ACCEPTED BY COMMERCIAL USERS OF ENERGY AS A MEDIUM
FOR COMMERCE, OUR BUSINESS WOULD BE MATERIALLY AND ADVERSELY AFFECTED
In the future, we expect to derive a significant amount of our
revenues, income and cash flow from PowerSpring. We cannot assure you that
Internet-based commerce for energy products and services, especially by
commercial users of energy, will ever grow to account for substantial revenues,
income and cash flow, or when this growth might occur. Our business would suffer
if the market for Internet-based commerce for energy products and services fails
to develop or develops more slowly than expected. Our business would also suffer
if we are unable to adapt to new forms of, or new pricing models for,
Internet-based commerce for energy products and services.
The viability and future growth of the Internet as a means of commerce
depends on several factors, including:
- the Internet's ability to handle increased activity;
- the Internet's ability to operate as a fast, reliable and secure
network;
- potential changes in government regulation;
- the ability of the Internet infrastructure to support the growing
demands placed on it;
- access costs;
- the performance and reliability of products and services as the number
of users and amount of traffic increases;
- the ability of businesses to adequately address security and privacy
concerns; and
- the nature and pace of technological changes relating to the Internet.
Moreover, critical issues concerning the commercial use of the
Internet, including data corruption, cost, ease of use, accessibility and
quality of service, remain unresolved and may negatively affect commerce on the
Internet. These issues will need to be addressed in order for the market for
online energy products and services to grow. It is difficult to predict when
Internet-based commerce for energy products and services will emerge and obtain
market acceptance and be profitable. This makes it difficult to project our
future revenues, results of operations and cash flows. We cannot assure you that
we will be successful in selling energy products and services over the Internet
or in capturing a significant share of the market for Internet-based energy
products and services.
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CONCERNS ABOUT SECURITY OF ELECTRONIC COMMERCE TRANSACTIONS AND CONFIDENTIALITY
OF INFORMATION ON THE INTERNET MAY IMPEDE THE GROWTH OF POWERSPRING
A significant barrier to electronic commerce has been the need for
security. Internet usage could decline if any well-publicized compromise of
security occurs. We may incur significant costs to protect against the threat of
security breaches or to alleviate problems caused by these breaches.
Unauthorized persons could attempt to penetrate our network security. If
successful, they could misappropriate proprietary information or cause
interruptions in our services. As a result, we may be required to expend capital
and resources to protect against or to alleviate these problems. Security
breaches could have a material and adverse effect on our business.
OUR NEW INTERNET-BASED BUSINESS STRATEGY WILL BE DEPENDENT UPON THE DEVELOPMENT
AND MAINTENANCE OF THE INTERNET INFRASTRUCTURE
The success of our new Internet-based business strategy will depend
largely on the development and maintenance of the Internet infrastructure. This
includes maintenance of a reliable network backbone with the necessary speed,
data capacity and security, as well as timely development of complimentary
products such as high-speed modems, for providing reliable Internet access and
services. Because online commerce is new and evolving, we cannot predict whether
the Internet will prove to be a viable commercial marketplace in the long term.
The Internet has experienced, and is likely to continue to experience,
significant growth in the number of users and the amount of traffic. If the
Internet continues to experience increased numbers of users increased frequency
of use, or more complex requirement, the Internet infrastructure may be unable
to support the demands placed on it. In addition, the performance of the
Internet may be harmed by increased users or more complex requirements.
The Internet has experienced a variety of outages and other delays as a
result of damages to portions of its infrastructure, and it could face outages
and delays in the future. These outages and delays could reduce the level of
Internet usage as well as the level of traffic in the processing of commerce on
our website. In addition, the Internet could lose its viability due to delays in
the development or adoption of new standards and protocols to handle increased
levels of activity or due to increased governmental regulation. The
infrastructure and complimentary products or services necessary to make the
Internet a viable commercial marketplace for the long-term may not be developed
successfully or in a timely manner. Even if these products or services are
developed, the Internet may not become a viable commercial marketplace for
services such as those that we intend to offer.
WE MAY BE UNABLE TO SUCCESSFULLY MANAGE THE EXPECTED EXPANSION OF POWERSPRING
Our anticipated future growth as a result of PowerSpring may place a
significant strain on our management, operating systems and resources. We cannot
successfully implement our Internet-based business strategy if we fail to manage
our growth. We expect that we will need to attract and retain competent
personnel and to continue to improve our financial managerial controls and
reporting systems and procedures. We will also need to continue to expand and
maintain close coordination among our technical, accounting, finance and sales
and marketing organizations. In addition, our systems, procedures or controls
may be inadequate to support our operations, in which case management may be
unable to exploit opportunities for our products and services. Failure to manage
our growth effectively and successfully integrate any acquisition or strategic
relationships could materially and adversely affect our business.
BECAUSE OUR FUTURE GROWTH, IN OUR TRADITIONAL BUSINESSES AND IN POWERSPRING, IS
DEPENDENT IN LARGE PART UPON THE DEREGULATION OF THE ELECTRICITY INDUSTRY,
DELAYS IN THE DEREGULATION OF THE ELECTRICITY MARKETS, OR IN THE ELECTRICITY
INDUSTRY'S COMPETITIVE RESPONSE TO DEREGULATION, MAY MATERIALLY AND ADVERSELY
AFFECT OUR BUSINESS
The electricity industry is currently undergoing fundamental structural
changes due to deregulation, similar to what the natural gas utility industry
has undergone. A key component of our business strategies, in both our
traditional businesses, especially Metretek Florida, and our new Internet-based
business, PowerSpring, is to take advantage of opportunities created by the
deregulation of the electricity industry as the result of the need for more and
more frequent electricity consumption information. A principal expected benefit
to us of electricity deregulation is the ability of commercial and industrial
electricity customers to purchase electricity directly from multiple suppliers,
rather than solely from the local utility. This will require these electricity
customers to obtain timely electricity consumption data. If the deregulatory
environment does not continue or slows down, or if the
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market is slow to respond to the opportunities made available by the changes in
the deregulation of the electricity industry, then commercial electricity
customers may not purchase our products, may purchase less of our products or
may not purchase our products until later than we anticipate. Failure of
electricity industry deregulation to result in a significant increase in the
purchases of our products and services would materially and adversely affect our
business.
BECAUSE WE ARE DEPENDENT UPON THE UTILITY INDUSTRY FOR A SIGNIFICANT PORTION OF
OUR REVENUE, CONTINUED REDUCTIONS OF PURCHASES OF OUR PRODUCTS AND SERVICES BY
UTILITIES CAUSED BY REGULATORY REFORM MAY MATERIALLY AND ADVERSELY AFFECT OUR
BUSINESS
We currently derive a significant portion of our revenue from sales of
our products and services to the utility industry, particularly the natural gas
utility industry. We have experienced variability of operating results on both
an annual and quarterly basis due primarily to utility purchasing patterns, and
delays of purchasing decisions by utilities, as the result of mergers and
acquisitions in the utility industry or potential changes to the federal and
state regulatory framework within which the utility industry operates. The
utility industry is generally characterized by long budgeting, purchasing and
regulatory process cycles that can take up to several years to complete. Our
utility customers typically issue requests for quotes and proposals, establish
committees to evaluate the purchase proposals, review different technical
options with vendors, analyze performance and cost/benefit justifications and
perform a regulatory review, in additional to applying a normal budget approval
process within the utility. In addition, utilities may defer purchases of our
products and services if the utilities reduce capital expenditures as the result
of mergers and acquisitions, pending or unfavorable regulatory decisions, poor
revenues due to weather conditions, rising interest rates or general economic
downturns, among other factors. The natural gas utility industry has been
virtually the sole customer for our automatic meter reading systems. However,
over the last few years, the uncertainty in the utility industry that has
resulted from the regulatory uncertainty in the current era of deregulation, has
caused utilities to defer even further purchases of our products and services.
The continuation of this uncertain regulatory climate will materially and
adversely affect our revenues from sales of meter reading devices.
The domestic utility industry is currently the focus of regulatory
reform initiatives in virtually every state. These initiatives have resulted in
significant uncertainty for industry participants and raise concerns regarding
assets that would not be considered for recovery through rate payer charges.
This regulatory climate has caused most utilities to delay purchasing decisions
that involve significant capital commitments. As a result of these purchasing
decision delays, utilities have reduced their purchases of our products and
services. While we expect some states will act on these regulatory reform
initiatives in the near future, we cannot assure you that the current regulatory
uncertainty will be resolved in the short term. In addition, new regulatory
initiatives could have a material and adverse effect on our business. Moreover,
in part as a result of the competitive pressures in the utility industry arising
from the regulatory reform process, many utilities are pursuing merger and
acquisition strategies. We have experienced considerable delays in purchase
decisions by utilities that have become parties to merger or acquisition
transactions. Typically, capital expenditure purchase decisions are put on hold
indefinitely when merger negotiations begin. If this pattern of merger and
acquisition activity among utilities continues, our business may be materially
and adversely affected.
In addition, if any of the utilities that account for a significant
portion of our revenues decide to significantly reduce their purchases of our
products and services, our business may be materially and adversely affected.
RESTRICTIONS IMPOSED ON US AS A RESULT OF THE TERMS OF OUR CURRENT INDEBTEDNESS
AND OUR SERIES B PREFERRED STOCK COULD LIMIT HOW WE CONDUCT OUR BUSINESS AND OUR
ABILITY TO RAISE ADDITIONAL CAPITAL
The terms of our current credit facility and of our Series B preferred
stock contain financial and operating covenants that limit the discretion of our
management. These covenants place significant restrictions on our ability to:
- incur additional indebtedness;
- create liens or other encumbrances;
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- issue or redeem securities;
- make dividend payments and investments;
- amend our charter documents;
- sell or otherwise dispose of our assets;
- liquidate or dissolve;
- merge or consolidate with other companies; or
- reorganize, recapitalize or engage in a similar business transaction.
Our future financing arrangements will likely contain similar or more
restrictive covenants. As a result of these restrictions, we may be:
- limited in how we conduct our business;
- unable to raise additional debt or equity financing to operate during
general economic or business downturns; and
- unable to compete effectively or to take advantage of new business
opportunities.
DIVIDENDS ON THE SERIES B PREFERRED STOCK WILL INCREASE OUR FUTURE NET LOSS
AVAILABLE TO COMMON SHAREHOLDERS AND OUR NET LOSS PER COMMON SHARE
After issuing the Series B preferred stock, we will recognize the 8%
coupon rate and "deemed distributions" as dividends on the Series B preferred
stock. The proceeds from the sale of the units were allocated to the common
stock, the unit warrants and the Series B preferred stock based on the relative
fair value of each. This allocation process resulted in the Series B preferred
stock being initially recorded at a discount from its $1,000 per share
liquidation value. This discount will be recorded as a distribution over the
term of the Series B preferred stock. Another discount results from the increase
in the fair market value of a share of our common stock from the date we offered
to sell 5,550 units to February 4, 2000, the date we issued those units. This
increase caused the conversion feature of the Series B preferred stock to be "in
the money" on February 4, 2000. The discount related to the "in the money"
conversion feature will be recorded as a distribution between the February 4,
2000 and June 9, 2000, after which date the Series B preferred stock can first
be converted into our common stock. The Series B preferred stock dividends will
increase our future net loss available to common shareholders and net loss per
common share, which could adversely affect the trading price of our common
stock.
RAPID TECHNOLOGICAL CHANGES MAY PREVENT US FROM REMAINING CURRENT WITH OUR
TECHNOLOGICAL RESOURCES AND MAINTAINING COMPETITIVE PRODUCT AND SERVICE
OFFERINGS
The markets in which our current businesses operate and PowerSpring
will operate are characterized by rapid technological change, frequent new and
enhanced product and service introductions, evolving industry standards and
changes in customer needs. Significant technological changes could render our
existing products, services and technology, including our planned PowerSpring
products and services, obsolete. The Internet market's growth and intense
competition exacerbate these conditions. Our future success will depend, in
part, on our ability to:
- effectively use and develop leading technologies;
- continue to develop our technical expertise;
- enhance our current products and services;
- develop new products and services that meet changing customer needs;
and
- respond to emerging industry standards and technological changes
in a cost-effective manner.
If we are unable to successfully respond to these developments or do
not respond in a cost-effective way, our business will be materially and
adversely affected. We cannot assure you that we will be successful in
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responding to changing technology or market needs. In addition, products,
services and technologies developed by others may render our products, services
and technologies uncompetitive or obsolete.
Even if we do successfully respond to technological advances and
emerging industry standards, the integration of new technology may require
substantial time and expense, and we cannot assure you that we will succeed in
adapting our products, services and technology in a timely and cost-effective
manner. We may experience financial or technical difficulties that could prevent
us from introducing new or enhanced products or services. Furthermore, these new
or enhanced products and services may contain problems that are discovered after
they are introduced. We may need to significantly modify the design of these
products and services to correct problems. Rapidly changing Internet technology
and operating systems may impede market acceptance of our PowerSpring products
and services. Our business could be materially and adversely affected if we
experience difficulties in introducing new or enhanced services and products or
if these products and services are not received favorably by our customers.
Development and enhancement of our products and services will require
significant additional expenses and could strain our management, financial and
operational resources. The lack of market acceptance of our products or services
or our inability to generate sufficient revenues from this development or
enhancements to offset their costs could have a material adverse effect on our
business. We have experienced delays in releasing new products and product
enhancements and may experience similar delays in the future. These delays or
problems in the installation of implementation of our new products and services
and enhancements may cause customers to forego purchases of our products and
services to purchase those of our competitors.
CHANGES IN OUR PRODUCT MIX COULD MATERIALLY AND ADVERSELY AFFECT OUR BUSINESS
The margins on our revenues from some of our product and service
offerings is higher than the margins on our other product and service offerings.
For example, revenues from sales of some of Metretek Florida's AMR devices have
significantly higher margins than Metretek Florida's contract manufacturing
revenues. In addition, we do not know what the prices and costs of our future
PowerSpring products and services will be and therefore we cannot estimate their
margins. These new PowerSpring products and services may have lower margins than
our current businesses. If in the future we derive a proportionately greater
percentage of our revenues from lower margin products and services, then our
overall margins on our total revenues will decrease and, accordingly, will
result in lower net income, or higher net losses, and less cash flow on the same
amount of revenues.
OUR MANAGEMENT OF PRIVATE ENERGY PROGRAMS PRESENTS RISKS TO US
Marcum Gas Transmission, Inc. is our subsidiary that manages and holds
a small ownership interest in two private energy programs that own natural gas
assets. The operations of MGT have been discontinued and MGT does not intend to
form any new private programs. MGT is pursuing the sale of the existing energy
programs but will continue managing the two business trusts that operate these
energy programs only until those programs are sold or liquidated or until MGT's
interests and management obligations in those programs are sold. These private
programs were financed by private placements of equity interest raising capital
to acquire the assets and business operated by the programs. Our management of
these energy programs presents risks to us, including:
- material and adverse changes in the business, results of operations and
financial conditions of the programs due to events, conditions and
factors outside the control of MGT, such as general and local
conditions affecting the energy market generally and the revenues of
the programs specifically;
- lawsuits by investors in a program who become dissatisfied with the
result of the program;
- changes in the regulatory environment relating to these programs;
- reliance upon significant suppliers and customers by these programs;
- hazards of energy facilities; and
- changes in technology.
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If any of these risks materialize and we are unsuccessful in addressing
these risks, our business could be materially and adversely affected.
WE MAY BE UNABLE TO SUCCESSFULLY EXPAND OUR INTERNATIONAL OPERATIONS, WHICH
WOULD LIMIT OUR GROWTH AND MAY ADVERSELY AFFECT OUR BUSINESS
We market and sell some of our products and services in international
markets. Our revenues from sales into international markets were approximately
8% and 5% of our consolidated revenues in fiscal years 1998 and 1999. One
component of our strategy for future growth involves the expansion of our
products and services into new international markets and expansion of our
marketing efforts in our current international markets. This expansion will
require significant management attention and financial resources to establish
additional offices, hire additional personnel, localize and market products and
services in foreign markets and to develop relationships with international
service providers. However, we have only limited experience in developing
localized versions of our products and services and in developing relationships
with international service providers. We cannot assure you that we will be
successful in expanding our international operations, or that revenues from
international operations will be sufficient to offset these additional costs. If
revenues from international operations are not adequate to offset the additional
expense from expanding these international operations, our business could be
materially and adversely affected.
In addition to the uncertainty regarding our ability to generate
sufficient revenues from foreign operations and to expand our international
presence, there are risks inherent in doing business on an international level,
including:
- adverse changes in applicable laws and regulatory requirements;
- import and export restrictions;
- export controls relating to technology;
- tariffs and other trade barriers;
- less favorable intellectual property laws;
- difficulties in staffing and managing foreign operations;
- political instability;
- fluctuations in currency exchange rates;
- potential adverse tax consequences;
- cultural and language difficulties;
- the potential exchange and repatriation of foreign earnings;
- localization and translation of products and services;
- difficulties in collecting accounts receivable and longer collection
periods; and
- the impact of local economic conditions and practices.
Our success in expanding our international operations will depend in
large part of our ability to anticipate and effectively manage these and other
risks. We have limited experience in conducting our business outside the United
States and may encounter unforeseen difficulties in conducting operations in
foreign countries. In addition, while our current products and services are
designed to meet relevant regulatory requirements of foreign markets in which
they are sold, any inability to obtain any required foreign regulatory approval
and any changes in foreign regulatory requirements could have a material adverse
effect on our ability to conduct business in these markets. In addition, we may
confront significant challenges in developing and implementing localized
versions of our systems due to many factors including the different standards
among utilities on a country by country basis. We cannot assure you that we will
be able to successfully market, sell and deliver our products and services in
these foreign markets.
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OUR MARKETS ARE HIGHLY COMPETITIVE, AND THE COMPETITION WE FACE COULD MATERIALLY
AND ADVERSELY AFFECT OUR ABILITY TO SELL OUR CURRENT PRODUCTS AND SERVICES,
EXPAND OUR CURRENT BUSINESSES AND DEVELOP OUR NEW BUSINESSES
The markets for energy products, services, technology and information
are highly competitive. We also anticipate that PowerSpring will face intense
competition, especially as the use of the Internet for energy products and
services grows. The growth potential and deregulatory environment of the energy
markets have attracted and are anticipated to continue to attract many new
start-ups as well as established businesses from different industries. We expect
competition to continue to increase because our market poses no substantial
barriers to entry. Competition may also increase as a result of industry
consolidation. Increased competition could result in price reductions, reduced
gross margins, loss of market share, inability to penetrate new markets or to
develop new markets, any of which could have a material and adverse effect on
our business.
Our current and prospective competitors fall into the following
categories:
- large and well established distributors of energy measurement,
monitoring and information products and services, such as Cellnet Data
Systems, Inc., Itron Corp., and Whisper Communications;
- large, well established and diversified companies like Schlumberger,
General Electric and Asea Brown Boveri that have divisions or
subsidiaries devoted to our markets;
- in-house services provided by utilities and major oil and gas
companies;
- large, well established and diversified oil and gas companies like
Enron Corp. and Duke Energy Corp.; and
- numerous prospective competitors that may offer energy information.
We believe that our ability to compete successfully will depend upon
many factors, many of which are outside of our control. These factors include:
- our responsiveness to customers needs;
- functionality of our and our competitors' products and services;
- speed of implementation of new products and services and enhancement to
existing products and services;
- price of competitors' products and services;
- ease of use of products and services;
- performance and features of products and services;
- quality and reliability;
- reputation;
- quality of customer service and support;
- sales and marketing efforts;
- our ability to sustain our strategic relationships; and
- the timing and market acceptance of new products and services and
enhancements to existing products and services developed by us and our
competitors.
We cannot assure you that we will be able to compete successfully or to
adequately address the above factors.
Many of our existing competitors, as well as a number of potential new
competitors, have longer operating histories, greater name recognition, larger
customer bases and significantly greater financial, technical, marketing,
manufacturing and other resources than we do. This may enable our competitors to
respond more quickly to new or
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emerging technologies and changes in customer requirements or preferences and to
devote greater resources to the development, promotion and sale of their
products and services than we can. Our competitors may be able to undertake more
extensive marketing campaigns, adopt more aggressive pricing policies and make
more attractive offers to potential employees, customers, strategic partners and
suppliers and vendors than we can. Our competitors may develop products and
services that are equal or superior to the products and services offered by us
or that achieve greater market acceptance than our products do. In addition,
current and potential competitors have established or may establish cooperative
relationships among themselves or with third parties to improve their ability to
address the needs of our existing and prospective customers. As a result, it is
possible that new competitors may emerge and rapidly acquire significant market
share or impede our ability to acquire market share in new markets. Increased
competition is likely to result in price reductions, reduced gross margins and
loss of market share, and the inability to develop new businesses, which could
materially and adversely affect our business. We cannot assure you that we will
have the financial resources, technical expertise, portfolio of market or
services or marketing and support capabilities to successfully compete.
WE MAY BE UNABLE TO SUCCESSFULLY ACQUIRE OTHER COMPANIES, FORM STRATEGIC
ALLIANCES OR SUCCESSFULLY INTEGRATE ANY ACQUISITION OR ALLIANCE
In the past, we have grown by acquiring complimentary businesses,
technologies, services and products and entering into strategic alliances with
complimentary businesses. We evaluate potential acquisition opportunities from
time to time, including those that could be material in size and scope. As part
of our growth strategy, we intend to continue to evaluate potential
acquisitions, investment opportunities and strategic alliances on an on-going
basis as they present themselves to facilitate our ability to enhance our
existing products and services and introduce new products and services on a
timely basis. However, we do not know if we will be able to identify any future
opportunities that we believe will be beneficial for us. Even if we are able to
identify an appropriate acquisition opportunity, we may not be able to
successfully finance the acquisition. A failure to identify or finance future
acquisitions may impair our growth and adversely affect our business.
Any future acquisition involves risks commonly encountered in business
relationships, including:
- difficulties in assimilating and integrating the operations,
technologies, products and services of the acquired businesses;
- difficulties in retaining key personnel;
- diversion of management's time and resources away from our normal daily
operations;
- difficulties in successfully incorporating licensed or acquired
technology and rights into our product and service offerings;
- difficulties in maintaining uniform standards, controls, procedures and
policies within the two organizations;
- changes in management resulting from an alliance or acquisition that
could impair relationships with employees and customers of the acquired
company;
- risks of entering markets in which we have no or limited direct prior
experience;
- potential disruptions of our ongoing business;
- unexpected costs associated with the acquisition; and
- potential additional expenses associated with amortization of acquired
intangible assets, integration costs and unanticipated liabilities or
contingencies.
We cannot assure you that any acquisition of new businesses or
technology will lead to the successful development of new or enhanced products
and services, or that any new or enhanced products and services, if developed,
will achieve market acceptance or prove to be profitable.
For these reasons, future acquisitions could materially and adversely
affect our existing businesses. Moreover, we currently do not know and cannot
predict the accounting treatment of any acquisition, in part because
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we cannot be certain whether current accounting regulations, conventions or
interpretations may prevail in the future.
In addition, to finance any future acquisitions, it may be necessary
for us to incur additional indebtedness or raise additional funds to public or
private financings. Financing may not be available to us or, if available, may
not be available on terms satisfactory to us or to those persons who must
consent to our financings. Available equity or debt financing available may
materially and adversely affect our business and operations and, in the case of
equity financings, may significantly dilute the percentage ownership interests
of our stockholders.
We currently have no agreements, commitments or obligations with
respect to any material acquisition. We cannot assure you that we will make any
additional acquisitions or that any acquisitions, if made, will be successful,
will assist us in the accomplishment of our business strategy, or will generate
sufficient revenues to offset the associated costs and other adverse effects or
will otherwise result in us receiving the intended benefits of the acquisition.
IF WE FAIL TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY RIGHTS OR IF WE FACE
A CLAIM OF INTELLECTUAL PROPERTY INFRINGEMENT BY A THIRD PARTY, WE COULD LOSE
OUR INTELLECTUAL PROPERTY RIGHTS OR BE LIABLE FOR SIGNIFICANT DAMAGES AND OUR
BUSINESS COULD BE MATERIALLY AND ADVERSELY AFFECTED
Our success and ability to compete will depend, in substantial part,
upon our intellectual property rights and technology. We rely primarily on
patent, copyright, trademark and trade secret laws, along with confidentiality
procedures, contractual provisions and licensing arrangements, to establish and
protect our proprietary rights. Although we hold patents and trademarks in our
business, we believe that the success of our business depends more upon our
proprietary technology, information, processes and know-how than on patents or
trademarks. Much of our proprietary information and technology is not patented
and may not be patentable. Moreover, we have applied for registration of a
number of key trademarks and service marks and intend to introduce new
trademarks and service marks. We may not be successful in obtaining registration
for one or more of these trademarks.
Despite our efforts to protect our intellectual property rights, our
actions may be inadequate to protect these rights or to prevent others from
claiming violations of their proprietary rights. It may be possible for
unauthorized third parties to copy, reverse engineer or otherwise obtain, use or
exploit aspects of our products and services, develop similar technology
independently, or otherwise obtain and use information that we regard as
proprietary. We cannot assure you that our competitors will not independently
develop technology similar or superior to our technology or design around our
proprietary rights. We generally require our employees, consultants and
strategic partners to enter into confidentiality and proprietary invention
agreements with us to limit use of, access to, and distribution of our
proprietary technology. Our intellectual property rights with respect to our
PowerSpring may not be viable or of value in the future because of validity,
enforceability and scope or protection of proprietary rights in Internet-related
industries is uncertain and still evolving. In addition, the laws of some
foreign countries may not protect our proprietary rights as fully or in the same
manner as the laws of the United States.
We may need to resort to litigation to enforce our intellectual
property rights, to protect our trade secrets, and to determine the validity and
scope of other companies' proprietary rights, or to defend against claims of
infringement or validity in the future. However, litigation could result in
significant costs or the diversion of management and financial resources. We
cannot assure you that any litigation will be successful or will prevail over
counterclaims against us. As a result, any litigation could materially and
adversely affect our business.
Although we are not aware that any of our products, services or
technologies infringe on the proprietary rights of third parties, we cannot be
certain that our products, services and technologies do not or will not infringe
valid intellectual property rights held by third parties. In addition, we cannot
assure you that third parties will not claim that we have infringed their
intellectual property rights. We may face legal proceedings and claims from time
to time relating to the intellectual property of third parties in the ordinary
course of our business. We may incur substantial expenses in defending against
these third party infringement claims, regardless of their merit. Successful
infringement claims against us could result in substantial monetary liability or
may materially disrupt the conduct of our business. In addition, even if we
prevail on these claims, this litigation could be time-consuming and expensive
to defend, and could result in the diversion of our time and attention, which
could materially and adversely affect our business.
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POTENTIAL PROBLEMS RESULTING FROM THE YEAR 2000 ISSUE COULD CAUSE US TO INCUR
UNANTICIPATED EXPENSE, DIVERT MANAGEMENT'S TIME AND ATTENTION AND DECREASE USE
OF INTERNET SERVICES, ALL OF WHICH COULD MATERIALLY AND ADVERSELY AFFECT OUR
BUSINESS
The "Year 2000 issue," which was anticipated to present potential risks
and uncertainties to virtually all businesses, is the result of computer
programs and systems that use two digits, rather than four digits, to define the
applicable year. As a result of the Year 2000 issue, these programs and systems
could have failed or malfunctioned because they could not distinguish between
twentieth century and twenty-first century dates. This, in turn, could have
resulted in a major system failure or miscalculations, including an inability to
process transactions, send invoices or engage in normal business activities. In
addition, Year 2000 problems could subject us to liability claims and adversely
affect PowerSpring because Internet industries are susceptible to Year 2000
problems due to their reliance on computer hardware and software. Our potential
areas of exposure to Year 2000 issues include products purchased from third
parties, computers, software, telephone systems and other equipment used
internally. These Year 2000 problems could materially and adversely affect our
business.
To date, we have not experienced any known material adverse effects on
our current products and services or internal systems or of the products,
services or systems or our suppliers, customers and third parties with whom we
do significant business as a result of the Year 2000 issue. In addition, the
total cost of our Year 2000 compliance activities has not been material to our
results of operations. However, some Year 2000 problems could arise later in
2000 or not be currently detectable. We cannot assure you that the Year 2000
issue will not have a material adverse effect on our business.
FROM TIME TO TIME, WE FACE LAWSUITS THAT, IF THEY ARE SUCCESSFUL, COULD
MATERIALLY AND ADVERSELY AFFECT OUR BUSINESS
We are defendants to a pending action filed in 1993 in Denver District
Court in which the plaintiff is seeking $420,000 in damages plus punitive
damages. We believe the allegations against us are without merit. We have
vigorously contested these allegations, and we have asserted counterclaims
against the plaintiff. In 1997, the Denver District Court entered a summary
judgment in favor of us, but the summary judgment was reversed in February 1999
by the Colorado Court of Appeals. This action is currently scheduled for trial
in the third quarter of 2000. We are also from time to time involved in routine
litigation incidental to our business. Although we do not currently expect any
legal proceedings to have a material and adverse affect on us, we recognize that
the outcome of litigation is inherently uncertain. Therefore, present or future
litigation could materially and adversely affect our business.
WE FACE SOME RISKS THAT ARE INHERENT IN NATURAL GAS OPERATIONS
Some of our operations expose us to the hazards and risks inherent of
the servicing and operation of natural gas assets, including encountering
unexpected pressures, explosions, fire, natural disasters, blowouts, cratering
and pipeline ruptures, which could result in personal injuries, loss of life,
environmental damage and other damage to our properties and the properties of
others. These operations involve numerous financial, business, regulatory,
environmental, operating and legal risks. Damages occurring as a result of these
risks may give rise to product liability claims against us. We have product
liability insurance generally providing up to $6 million coverage per occurrence
and $7 million annual aggregate coverage. Although we believe that our insurance
is adequate and customary for companies of our size that are engaged in
operations similar to ours, losses due to risks and uncertainties could occur
for uninsurable or uninsured risks or could exceed our insurance coverage.
Therefore, the occurrence of a significant adverse effect that is not fully
covered by insurance could have a material and adverse effect on our business.
In addition, we cannot assure you that we will be able to maintain adequate
insurance in the future at reasonable rates.
WE COULD FACE BURDENSOME GOVERNMENT REGULATION WHICH AFFECTS OUR ABILITY TO
OFFER OUR PRODUCTS AND SERVICES WHICH AFFECTS DEMAND FOR OUR PRODUCTS AND
SERVICES
In our business operations, we must address many federal, state, local
and foreign laws and regulations. The modification or adoption of future laws
and regulations could adversely affect our business and
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our ability to continually modify or alter our methods of operations at
reasonable costs. We cannot assure that we will be able, for financial or other
reasons, to comply with all applicable laws and regulations. If we fail to
comply with these laws and regulations, we could incur substantial penalties
which could materially and adversely affect our business.
We also anticipate that, due to its increasing popularity in use, the
Internet will receive increased attention and regulation. While there are
currently few laws or regulations that apply directly to commerce and the
Internet, new laws and regulations with respect to the Internet are becoming
more prevalent. These laws and regulations may regulate issues such as user
privacy, pricing, intellectual property, federal, state and local taxation,
distribution, characteristics and quality of products and services, network
access, and content. These laws and regulations could expose us to liability,
materially increase our costs of providing our products and services, decrease
the growth and acceptance of the Internet as a means of commerce, and decrease
demand for our products and services being sold over the Internet. Changes in
laws or regulations governing the Internet and Internet commerce could have a
material and adverse effect on our business.
OUR BUSINESS WILL SUFFER IF WE ARE UNABLE TO CONTINUE TO ATTRACT AND RETAIN KEY
MANAGEMENT AND TECHNICAL PERSONNEL
We believe our future success will depend in large part upon our
ability to attract and retain highly qualified technical, managerial, sales and
marketing, finance and operation personnel. In particular, we will need to hire
highly qualified personnel for our PowerSpring, including a chief executive
officer, a chief financial officer and an information technology officer.
Competition for qualified personnel is intense, and we cannot assure you that we
will be able to attract and retain these key employees in the future. We do not
maintain key person life insurance policies for any key members of our
management team. The loss of the services of one or more of our key personnel
could have a material adverse effect on our business. We cannot assure you that
we will be able to retain our current key personnel or that we will be able
attract or retain other highly qualified personnel in the future. We have from
time to time in the past experienced, and we expect to continue to experience in
the future, difficulty in hiring and retaining highly skilled employees with
appropriate qualifications. A shortage in the number of trained technical and
marketing personnel could limit our ability to increase sales of our existing
products and services and launch new product and service offerings, including in
our total energy plan and Internet businesses. We do not have long-term
employment agreements with any of our key personnel, other than with W. Phillip
Marcum, our President and Chief Executive Officer, A. Bradley Gabbard, our
Executive Vice President and Chief Financial Officer, and John A. Harpole,
PowerSpring's Executive Vice President and Chief Operating Officer.
OUR BUSINESS COULD SUFFER IF WE CANNOT MAINTAIN AND EXPAND OUR CURRENT STRATEGIC
ALLIANCES AND DEVELOP NEW ALLIANCES
A key element of our business strategy is the formation of corporate
relationships such as strategic alliances with other companies to provide
products and services to existing and new markets and to develop new products
and services and enhancements to existing products and services. We believe that
our success in the future in penetrating new markets will depend in large part
on our ability to maintain these relationships and to cultivate additional or
alternative relationships. However, we cannot assure you that we will be able to
develop additional corporate relationships, or that these relationships will be
successful in achieving their purposes. Our failure to continue our existing
corporate relationships and develop new relationships could materially and
adversely affect our business.
RISKS RELATED TO THE SECURITIES MARKETS AND THIS OFFERING
AS A RESULT OF THEIR BENEFICIAL OWNERSHIP OF A LARGE PERCENTAGE OF OUR COMMON
STOCK, OUR DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT STOCKHOLDERS COULD
EXERT SIGNIFICANT INFLUENCE OVER MATTERS REQUIRING STOCKHOLDER APPROVAL
As of April 19, 2000, our executive officers, directors and 5% or
greater stockholders beneficially owned, in the aggregate, approximately 61% of
our outstanding common stock, assuming they exercise or convert all stock
options, warrants and other rights exercisable within 60 days of that date. As a
result, these stockholders could, as a practical matter, be able to exercise
significant control over matters requiring approval by our
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stockholders, including the election of directors and the approval of mergers,
sales of substantially all of our assets and other significant corporate
transactions. The interests of these stockholders may differ from the interests
of other stockholders. In addition, this concentration of stock ownership may
have the effect of delaying or preventing a change in control of us.
VIRTUALLY ALL OF OUR SHARES ARE ELIGIBLE FOR FUTURE SALE BY OUR CURRENT
STOCKHOLDERS, AND SIGNIFICANT SALES OF THESE SHARES COULD RESULT IN A DECLINE IN
OUR STOCK PRICE
If our stockholders sell a significant number of shares of our common
stock in the public market, including shares issuable upon the exercise of
outstanding options, warrants and other rights, or if there is a perception that
these sales could occur, then the market price of our common stock could fall.
These sales also might make it more difficult for us to sell equity securities
in the future at a time and price that we deem appropriate.
On April 19, 2000, 5,164,723 shares of common stock were outstanding.
On the same date, options to purchase 468,699 shares of common stock were
outstanding, and shares acquired upon exercise of these stock options are
eligible for sale on the public market from time to time subject to vesting.
These stock options generally have exercise prices significantly below the last
reported sale price of the common stock as reported on the cover of this
prospectus. On the same date, 7,000 shares of Series B preferred stock
convertible into 1,179,762 shares of common stock, and warrants to purchase
1,826,326 shares of common stock, were outstanding. Virtually all shares
underlying these warrants and other rights to purchase common stock are covered
by registration rights. The exercise or conversion of outstanding options,
warrants and other rights to purchase common stock will dilute the remaining
ownership of other holders of common stock. In addition, the sales in the public
market of a significant number of these shares issuable upon the exercise of
options, warrants and other rights, or the perception that such sales could
occur, could cause the price of the common stock to decline.
IF THE MARKET PRICE OF OUR COMMON STOCK DECLINES, THEN WE MAY BE REQUIRED TO
ISSUE ADDITIONAL SHARES OF OUR COMMON STOCK UPON CONVERSION OF THE SERIES B
PREFERRED STOCK, AND HOLDERS OF OUR COMMON STOCK WILL EXPERIENCE IMMEDIATE
DILUTION
The conversion rate of the Series B preferred stock, and therefore the
number of shares of common stock issuable by us upon conversion of the Series B
preferred stock, will be adjusted if 110% of the average closing bid price of
the common stock for the 30 trading days before December 9, 2000 is less than
the conversion price of the Series B preferred stock then in effect. This
adjustment could require us to issue additional shares of common stock upon the
conversion of the Series B preferred stock and therefore cause the percentage
ownership of holders of our common stock to be diluted substantially. The
conversion price of the Series B preferred stock on the date of this Prospectus
is $5.9334, and each share of Series B preferred stock is initially convertible
into 168.5374 shares of common stock, not including the effect of accrued and
unpaid dividends. If the market price of our common stock decreases
sufficiently, then we may be required to issue a greater number of shares of
common stock, and the percentage ownership of our holders of common stock could
be diluted substantially. The conversion price cannot be reduced by more than
50% of the conversion price in effect on December 9, 2000. Based upon the
initial conversion price and assuming no other adjustments to the conversion
ratio, the maximum number of shares of our common stock that we could be
required to issue upon exercise of the Series B preferred stock due to this
adjustment would be 2,359,524, not including the effect of accrued and unpaid
dividends, if the average closing bid price of our common stock during the
trading period noted above was equal to or less than $2.697. If our average
closing bid price during this period is between $2.697 and $5.394, then the
number of shares of common stock which we will be required to issue upon
conversion of the Series B preferred stock will be proportionately between the
current amount and the maximum amount. In computing this adjustment, any cash,
securities or other assets, other than dividends paid exclusively in cash or
shares of our common stock, will be added to the computation of the average
closing bid price. However, adjustments to the conversion price, or the
existence of accrued and unpaid dividends, before or after this 30 day trading
period, could cause us to issue even a higher number of shares of common stock
upon the conversion of the Series B preferred stock.
OUR SECOND RESTATED CERTIFICATE, BY-LAWS AND STOCKHOLDER RIGHTS PLAN, AND
DELAWARE LAW, CONTAIN ANTI-TAKEOVER PROVISIONS THAT COULD DISCOURAGE A
THIRD-PARTY ACQUISITION OF YOUR SHARES AT A PREMIUM TO THE MARKET PRICE
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Some provisions in our second restated certificate of incorporation,
by-laws and stockholder rights plan, as well as some provisions of Delaware law,
could make it more difficult for a third party to acquire us or discourage a
third party from attempting to acquire us, even if doing so would be beneficial
to you and our other stockholders. These provisions could also limit the price
that investors might be willing to pay in the future for shares of our common
stock. These provisions include:
- a classified board of directors of which only approximately 1/3 of the
total board members are elected at each annual meeting;
- authority for our board of directors to issue common stock and
preferred stock, and to determine the price, voting and other rights,
preferences, privileges and restrictions of undesignated shares of
preferred stock, without any vote by or approval of our stockholders;
- the existence of large amounts of authorized but unissued common stock
and preferred stock;
- super-majority voting requirements to effect material amendments to our
second restated certificate and by-laws;
- limiting the persons who may call special meetings of stockholders;
- prohibiting stockholder action by written consent;
- our stockholders rights plan;
- a fair price provision that sets minimum price requirements for
potential acquirors;
- anti-greenmail provisions which limit our ability to repurchase shares
of common stock from significant stockholders;
- restrictions under Delaware law on mergers and other business
combinations between us and any 15% stockholders; and
- advance notice requirements for director nominations and for
stockholder proposals.
WE DO NOT INTEND TO PAY DIVIDENDS ON THE COMMON STOCK, AND YOU MAY NOT
EXPERIENCE A RETURN ON YOUR INVESTMENT IN OUR SECURITIES WITHOUT SELLING YOUR
SHARES
We have never declared or paid any cash dividends on our common stock.
Therefore, you will not experience a return on your investment in our common
stock without selling your shares since we currently intend on retaining any
future earnings to fund our growth and do not expect to pay dividends in the
foreseeable future.
OUR STOCK PRICE AND ITS TRADING VOLUME FLUCTUATES SIGNIFICANTLY, WHICH COULD
ADVERSELY AFFECT OUR STOCK PRICE AND OUR BUSINESS
The market price and volume of our common stock has in the past been,
and in the future is likely to continue to be, highly volatile. The stock market
in general has been experiencing extreme price and volume fluctuations for
years. The market prices of securities of technology companies and
Internet-related companies in particular have been especially volatile. We
cannot assure you that our common stock will continue to trade at recent price
and volume levels. The following factors could cause wide fluctuations in the
market price and trading volume of our common stock in the future:
- actual or anticipated variations in our results of operations;
- announcements of technological innovations;
- changes in, or the failure by us to meet, securities analysts'
estimates and expectations;
- introduction of new products and services by us or our competitors;
- conditions or trends in the energy services and information industries
in general and in the Internet and other technology industries in
particular;
- announcements by us or our competitors of significant technical
innovations, contracts, acquisitions, strategic relationships, joint
ventures or capital commitments;
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- announcements by us or our competitors of the success or status of our
business;
- general market conditions;
- additions or departures of our key personnel;
- sales of our common stock by directors, executive officers and
significant stockholders; and
- the gain or loss of significant customer orders.
Many of these factors are beyond our control. These factors may
decrease the market price of our common stock, regardless of our operating
performance.
In addition, broad fluctuations in price and volume have been unrelated
or disproportionate to operating performance, both of the market in general and
of us in particular. Any significant fluctuations in the future might result in
a material decline in the market price of our common stock. In the past,
following periods of volatility in the market price of a company's securities,
securities class action litigation has often been brought against that company.
We may become involved in this type of litigation in the future. Litigation is
often expensive and diverts management's attention and resources, which could
have a material adverse effect on our business, even if we ultimately prevail in
the litigation.
WE MAY ISSUE ADDITIONAL JUNIOR-RANKING PREFERRED STOCK, WHICH COULD DILUTE YOUR
INTERESTS
The terms of the Series B preferred stock do not limit the issuance of
additional series of preferred stock ranking junior to the Series B preferred
stock, but do require the approval of the holders of a majority of the
outstanding shares of Series B preferred stock to issue any stock senior to or
on a parity with the Series B preferred stock. The issuance of additional shares
of preferred stock ranking junior to the Series B preferred stock could dilute
the interest of holders of our common stock.
HOLDERS OF SERIES B PREFERRED STOCK HAVE LIMITED VOTING RIGHTS
Holders of Series B preferred stock do not have the right to vote
generally on matters submitted to our stockholders. Holders of Series B
preferred stock do have the right to vote on some material significant corporate
events that require the approval of the holders of the majority of the
outstanding shares of Series B preferred stock, voting separately as a class. In
addition, so long as at least 2,000 shares of Series B preferred stock remain
outstanding, holders of Series B preferred stock, voting as a separate class,
have the right to elect one member of our board of directors. Also, holders of
Series B preferred stock will have the right to elect a majority of our board of
directors if we default on a required redemption.
OUR ABILITY TO PAY DIVIDENDS ON OUR CAPITAL STOCK IS LIMITED
Under Delaware law, we are not permitted to make a distribution to our
stockholders, including dividends on our capital stock, if, after giving effect
to the payment, we would not be able to pay our debts as they become due in the
usual course of business or if our total assets would be less than the sum of
our total liabilities plus the amount which would be needed if we were to be
dissolved at the time of the distribution, to satisfy the preferential rights
upon dissolution of stockholders whose preferential rights are superior to those
receiving the distribution. Consequently, if we fail to meet these criteria, we
will be unable to pay dividends on the Series B preferred stock.
Our ability to pay dividends on our common stock is restricted by our
current credit facility. If we fail to pay dividends on the Series B preferred
stock, we will be prohibited from paying dividends on the common stock until all
unpaid dividends on the Series B preferred stock have been paid in full. In the
future, our board of directors will determine whether we pay dividends on the
Series B preferred stock or on our common stock. We cannot assure you that we
will pay dividends on the Series B preferred stock or on our common stock.
THERE IS NO PUBLIC TRADING MARKET FOR THE SERIES B PREFERRED STOCK AND NONE IS
EXPECTED TO DEVELOP
There has been no public trading market for the Series B preferred
stock before this offering. While the resale of the common stock underlying the
Series B preferred stock, and the resale of the Series B preferred stock, are
covered under this prospectus, we do not intend to list the Series B preferred
stock on any national securities
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exchange or on the Nasdaq Stock Market, or to seek its admission for trading on
any other automated quotation system. Accordingly, we cannot assure you that any
trading market for the Series B preferred stock will develop or, if one does
develop, that it will be liquid or sustained. Therefore, holders of Series B
preferred stock may be unable to sell their securities. Even if a market for the
Series B preferred stock develops, these securities may trade at a discount from
the price you purchase them depending on prevailing interest rates, the market
for similar securities, our performance and other factors.
WE MAY REDEEM THE SERIES B PREFERRED STOCK WITHOUT THE CONSENT OF THE HOLDERS
BEFORE ITS MANDATORY REDEMPTION DATE
We have the right to redeem the Series B preferred stock on or after
December 9, 2000, if our common stock is trading at 200% of the conversion price
of the Series B preferred stock then in effect. You should assume that we will
exercise our redemption option if it is in our interest to do so.
WE MAY BE UNABLE TO REDEEM THE SERIES B PREFERRED STOCK WHEN WE ARE REQUIRED TO
DO SO
We may not be able to pay in full the redemption price when the Series
B preferred stock becomes mandatorily redeemable or when we are required to
redeem the Series B preferred stock at the option of the holder upon an
extraordinary transaction. The terms of the Series B preferred stock require us
to redeem all shares that remain outstanding on December 9, 2004 at a redemption
price equal to the liquidation preference. In addition, in the event of an
"extraordinary transaction", as discussed in "Description of the Series B
Preferred Stock - Redemption", the holders of the Series B preferred stock, by
majority vote, have the option to require us to repurchase all of the
outstanding Series B preferred stock for a purchase price equal to the
liquidation preference. The exercise by the holders of the Series B preferred
stock of the right to require us to repurchase the Series B preferred stock upon
an extraordinary transaction could also cause us to default under other
indebtedness because of the financial effect of this repurchase, even if the
extraordinary transaction itself does not cause a default.
Our ability to pay cash to the holders of the Series B preferred stock
upon this redemption requirement may be limited by our then existing financial
resources. The claims of our creditors, including creditors of our subsidiaries,
will be effectively senior to required redemption payments on the Series B
preferred stock. In addition, our ability to pay the redemption price upon the
redemption of the Series B preferred stock will require the consent of our
lender under our current credit facility, if it is still in effect at the date
of redemption. We cannot assure you that the lender will consent to our payment
of the redemption price upon the redemption of the Series B preferred stock. In
the event of our bankruptcy, liquidation or reorganization, assets will be
available to pay obligations on the Series B preferred stock only after all of
our indebtedness has been paid, and there may not be sufficient assets remaining
to pay amounts due on any or all of the Series B preferred stock. We cannot
assure you that we will have access to sufficient funds to pay in full the
redemption price for outstanding shares of Series B preferred stock when we are
required to do so. If we are unable to pay the redemption price in full, then
the holders Series B preferred stock will have the right to elect a majority of
the members of our board of directors.
WE MAY HAVE DIFFICULTY IN OBTAINING CASH FROM OUR SUBSIDIARIES TO MEET OUR
OBLIGATIONS UNDER THE SERIES B PREFERRED STOCK, WHICH COULD ADVERSELY AFFECT ON
INVESTMENT IN THE SERIES B PREFERRED STOCK
We will have to rely upon dividends and other payments from our
subsidiaries to generate the funds necessary to repurchase the Series B
preferred stock or make cash dividend payments, if any. Our subsidiaries,
however, are legally distinct from us and have no obligation, contingent or
otherwise, to pay amounts due under the Series B preferred stock or to make
funds available for these payments. Our subsidiaries also have not guaranteed
the Series B preferred stock. The ability of our subsidiaries to make dividend
and other payments to us depends upon the availability of funds, the terms of
our subsidiaries' indebtedness and applicable state laws. There are significant
restrictions on the payment of dividends to us contained in the instruments
governing the obligations of our subsidiaries.
THE SERIES B PREFERRED STOCK IS JUNIOR TO ALL OF OUR LIABILITIES
In the event of our bankruptcy, liquidation or winding-up, our assets
will be available to pay obligations on the Series B preferred stock only after
all indebtedness and other liabilities, including our existing credit facilities
have been paid. As a result, there may not be sufficient assets remaining to pay
amounts due on any or all of the Series B preferred stock then outstanding.
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SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference in this
prospectus contain "forward-looking statements" within the meaning of and made
under the safe harbor provisions of Section 27A of the Securities Act and
Section 21E of the Securities Exchange Act of 1934. From time to time, we may
publish or otherwise make available forward-looking statements of this nature.
Forward-looking statements include statements concerning plans, objectives,
goals, strategies, future events or performance, and underlying assumptions and
other statements that are not historical facts. The words "may", "could",
"should", "will", "project", "intend", "continue", "believe", "anticipate",
"estimate", "expect", "plan", "intend" and similar expressions are intended to
identify forward-looking statements. Examples of forward-looking statements
include statements regarding, among other matters, our plans, intentions,
beliefs and expectations regarding the following:
- our future prospects, including our revenues, income, margins,
profitability, cash flow, liquidity, financial condition and results of
operations;
- our business plans and strategies;
- the risks and uncertainties related to our business and our securities;
- our products and services, market position, market share, business,
growth strategies, and strategic relationships;
- industry trends, competitive conditions and market conditions, segments
and trends;
- our capital requirements and capital resources;
- the sufficiency of funds from operations and available borrowings to
meet our future working capital and capital expenditures needs;
- the development of a market for the online energy information products
and services of PowerSpring;
- our ability to successfully develop, implement and operate PowerSpring,
including to design, develop and sell our products and services over
the Internet and achieve our Internet-based business objectives; and
- our ability to finance PowerSpring.
These forward-looking statements are based on the current plans,
intentions, beliefs and expectations of management as well as assumptions made
by and information currently available to management. You are cautioned not to
place undue reliance on these forward-looking statements. Forward-looking
statements are not guarantees of future performance or events. Forward-looking
statements involve substantial risks and uncertainties Any or all of these
forward-looking statements could turn out to be wrong. Forward-looking
statements will be affected by inaccurate assumptions we might make or by known
or unknown risks and uncertainties that could cause actual results to differ
materially from those expressed or implied by the forward-looking statements.
These risks and uncertainties include, but are not limited to, the factors
described under "Risk Factors" in this prospectus, as well as other risks and
uncertainties discussed elsewhere in this prospectus, in documents incorporated
by reference in this prospectus and in our other reports and filings with the
SEC. We undertake no duty or obligation to update or revise any forward-looking
statements for any reason, whether as a result of new information, future events
or otherwise.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares offered
under this prospectus by the selling securityholders. However, because 1,086,263
shares of common stock offered under this prospectus are issuable upon the
exercise of warrants held by the selling securityholders, we will receive the
proceeds, if any, from any exercise of the warrants by the selling
securityholders, unless the warrants are exercised on a cashless basis. If all
the warrants are exercised and the exercise price is paid in cash, then we will
receive aggregate gross proceeds of approximately $7,090,000, assuming the
exercise prices of the warrants are not adjusted. See "Description of Capital
Stock - Warrants." Proceeds from any cash exercises of warrants will be used for
general corporate purposes, which may include working capital, capital
expenditures, repayment of indebtedness, acquisitions and repurchases of
securities. We cannot assure you that any of the warrants will be
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exercised or, if any warrants are exercised, how many, if any, will be exercised
in cash, or when these exercises will occur. Conversion of the Series B
preferred stock into shares of common stock will not result in any proceeds to
us.
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 25,000,000 shares of common
stock, par value $.01 per share, and 3,500,000 shares of preferred stock, par
value $.01 per share. Of our preferred stock, 1,000,000 shares are designated as
Series B preferred stock, 500,000 shares are designated as Series C preferred
stock, and the remaining 2,000,000 shares are undesignated.
As of April 19, 2000, the following were outstanding:
- 5,164,723 shares of common stock;
- 7,000 shares of Series B preferred stock, convertible into
approximately 1,179,762 shares of common stock;
- options to purchase an aggregate of 468,699 shares of common stock;
and
- warrants to purchase an aggregate of 1,826,326 shares of common
stock.
The following summary of the material terms of our capital stock is not
intended to be complete but is qualified in its entirety by reference to our
second restated certificate and our by-laws and the provisions of Delaware law.
Our second restated certificate and our by-laws are exhibits to the registration
statement of which the prospectus is a part.
COMMON STOCK
The holders of common stock are entitled to one vote per share on all
matters to be voted upon by the stockholders, other than matters to be voted on
solely by one or more series of preferred stock, voting separately. The holders
of common stock are not entitled to cumulative voting rights in the election of
directors. Accordingly, the holders of a majority of the shares of the common
stock entitled to vote in any election of directors may elect all of the
directors standing for election, other than those directors who may be elected
only by holders of a series of preferred stock, voting separately. Depending
upon any preferential dividend rights that may be applicable to any outstanding
a preferred stock, the holders of common stock are entitled to receive ratably
those dividends, if any, as may be declared from time to time by the board of
directors out of funds legally available therefor. In the event of our
liquidation, dissolution or winding up, the holders of common stock are entitled
to share ratably in all assets remaining after payment of all debts and other
liabilities, depending upon the preferential distribution rights of shares of
preferred stock, if any, then outstanding. The holders of our common stock have
no preemptive, conversion or other subscription rights to purchase any shares of
our capital stock. There are no redemption or sinking fund provisions applicable
to the common stock. All outstanding shares of common stock are fully paid and
nonassessable. The rights of holders of common stock depend on, and might be
adversely affected by, the rights of any series of preferred stock which we have
issued or may issue in the future.
PREFERRED STOCK
Authorization. Under our second restated certificate, the board of
directors has the authority, without further action by the stockholders, other
than the approval of holders of Series B preferred stock described in
"Description of the Series B Preferred Stock - Voting Rights", to issue shares
of preferred stock in one or more series and to establish the designations,
powers, preferences and relative, participating, optional or special rights, and
any qualifications, limitations or restrictions, including voting rights,
dividend rates, conversion rights, terms of redemption and liquidation
preferences applicable to the shares of each series, any or all of which may be
greater than the rights of the common stock. Under this authority, the board of
directors can issue shares of preferred stock with voting, conversion or other
rights that could adversely affect the voting power and other rights of the
holders of common stock. This ability of the board of directors to issue
preferred stock could have the effect of delaying, deferring or preventing a
change of control. Additionally, the issuance of preferred stock may have the
effect of decreasing the price of the common stock and may adversely affect the
voting and other rights of the holders of common stock. Except for the issuance
of the Series C preferred stock as required by our rights agreement, we have no
present plans to issue any shares of preferred stock.
Series B preferred stock. The terms of the Series B preferred stock are
described below under "Description of the Series B Preferred Stock."
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Series C preferred stock. The Series C preferred stock is to be issued
only in connection with our rights agreement described below under "- -Rights
Agreement." Each share of Series C preferred stock has the following material
terms:
- cumulative quarterly dividends in preference to the holders of common
stock equal to the greater of $4.00 per share or 25 times the dividend
paid per share to holders of common stock;
- 25 votes per share; and
- a preference on liquidation equal to the greater of $16 per share or 25
times the amount payable per share to the holders of common stock.
WARRANTS
Unit warrants. In the units private placement we issued 700,000 unit
warrants. Each unit warrant entitles the holder to purchase one share of common
stock at an initial exercise price of $6.7425. The initial exercise price of the
unit warrants will be reset on December 9, 2000 to 125% of the average closing
bid price of the common stock for the 30 trading days immediately preceding this
date, if this computed amount is less than the exercise price of the unit
warrants then in effect. The exercise price may also be adjusted under the
anti-dilution provisions of the unit warrants, which are substantially the same
as the anti-dilution provisions of the Series B preferred stock described in
"Description of the Series B Preferred Stock - Conversion Rights". The unit
warrants can be exercised at any time until December 9, 2004. Instead of paying
the exercise price in cash, holders may exercise their unit warrants by
delivering to us shares of common stock with a fair market value equal to the
exercise price. Alternatively, holders of unit warrants may make a "cashless"
exercise of the unit warrants and receive, upon exercise and without making any
payments of cash, common stock or any other asset, a "net" number of shares of
common stock determined by a formula based on the amount the trading price of
the common stock exceeds the exercise price then in effect.
Dividend warrants. In September 1998, we distributed 886,442 common
stock purchase warrants as a dividend to our stockholders on the basis of one
warrant for each four shares of common stock outstanding on September 10, 1998,
the record date for the warrant distribution. Each dividend warrant is
exercisable for one share of common stock at an exercise price of $4.00 per
share until September 10, 2003. We may redeem the dividend warrants at a
redemption price of $0.01 per dividend warrant if the common stock trades at or
above $6.50 per share for 20 consecutive trading days. The dividend warrants
trade on the Nasdaq SmallCap Market under the symbol "MTEKW." Our issuance of
common stock upon exercise of the dividend warrants is covered by an effective
registration statement filed with the SEC. As of April 19, 2000, 839,706
dividend warrants remained outstanding.
Metretek Florida warrants. When we acquired Metretek Florida, we issued
warrants to purchase our common stock to the holders of then outstanding
warrants to purchase Metretek Florida capital stock. As of April 18, 2000,
warrants to purchase an aggregate of 36,620 shares of common stock were
outstanding, with expiration dates through 2004 and with exercise prices ranging
from $44.48 to $88.96 per share. The shares of common stock issuable upon
exercise of these warrants cannot be resold unless the resale is registered
under the Securities Act and under applicable state securities laws made under
available exemption therefrom. The holders of these warrants have the right,
under some circumstances, to require us to register the shares of common stock
issuable upon exercise of these warrants under the Securities Act and applicable
state securities laws.
Other warrants. As of April 19, 2000, in addition to the warrants
described above, warrants to purchase 276,373 shares of common stock at exercise
prices ranging from $2.47 to $14.50 per share were outstanding. Warrants
exercisable for 131,373 shares of common stock are currently exercisable, and
the remainder of the warrants will become exercisable over the next 17 months.
These warrants expire between 2002 and 2004. We issued these warrants for
consulting and other advisory services the warrant holders rendered to us.
The shares of common stock issuable upon the exercise of the warrants
described above cannot be resold unless the resale is registered under the
Securities Act and under applicable state securities laws or is made under
available exemptions from the registration requirements. The holders of these
warrants can require us to register their resale of the shares of common stock
that are issuable upon exercise of these warrants if we register other
securities. These registration rights are described below under "-- Registration
Rights."
REGISTRATION RIGHTS
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Under the terms of the registration rights agreement among us and the
unit purchasers in the units private placement, we are required to register
under the Securities Act the resale of the shares of common stock and Series B
preferred stock acquired by the unit purchasers in the units private placement.
See "Selling Securityholders". This prospectus is a part of the registration
statement registering the resale of those shares.
We have registered the issuance of the shares of common stock
underlying the dividend warrants.
The holders of warrants issued when we acquired Metretek Florida have
registration rights with respect to the resale of the shares of common stock
issuable upon exercise of their warrants. These registration rights are
described above under "-- Warrants -- Metretek Florida Warrants."
In connection with the acquisition of assets from American Meter, we
granted to American Meter the right to demand, on one occasion, beginning May 4,
2000, that we file a registration statement for the registration of all or any
portion of these shares under the Securities Act. In addition, American Meter is
entitled to piggy-back registration rights in connection with any registration
by us of securities for any account or the account of other stockholders.
American Meter's demand registration rights terminate on the earlier of May 4,
2006 or 90 days after American Meter's ownership of these shares falls below 10%
of all outstanding common stock. We have registered the resale of all shares of
common stock owned by American Meter or underlying warrants owned by American
Meter in the registration statement of which this prospectus is a part.
The holders of the other warrants described above are entitled to
piggy-back registration rights in connection with any registration by us of
securities for our own account or for the account of our security holders.
Generally, if we propose to register any securities under the Securities Act, we
are required to give these securityholders notice of the registration and to
include their shares in the registration statement, although these rights may be
cut-back in underwritten offerings. The resale of the shares underlying these
other warrants are also registered in the registration statement of which the
prospectus is a part.
We are generally required to bear all expenses of all demand and
piggy-back registrations, except broker-dealer and underwriting discounts and
commissions and other selling expenses. We have also agreed to indemnify some of
these securityholders from liability involved in these registrations.
ANTI-TAKEOVER EFFECTS OF OUR SECOND RESTATED CERTIFICATE AND BY-LAW PROVISIONS
Provisions of our second restated certificate and our by-laws, which
are summarized below, may be deemed to have anti-takeover effects and may delay,
defer or prevent a tender offer or takeover attempt that a stockholder might
consider in its best interest, including those attempts that might result in a
premium over the market price for the shares held by stockholders.
Related person business combinations. Under our second restated
certificate, "business combinations" with "related persons", which are persons
who beneficially own 20% or more of our voting power, and their affiliates and
associates, must be approved by the affirmative vote of the holders of not less
than 80% of our outstanding voting stock, and the affirmative vote of the
holders of not less than 67% of our outstanding voting stock held by
stockholders other than related persons. This super-majority voting requirement
does not apply to a business combination either in which the cash or the fair
market value of the other consideration to be received per share by stockholders
in the business combination is not less than the highest per share price paid by
the related person in acquiring any of its holdings of our common stock, or
which has been approved in advance by two-thirds of our continuing directors.
Super-majority voting provisions. Under our second restated
certificate, the affirmative vote of the holders of not less than 80% of our
outstanding voting stock is required to approve fundamental corporate actions
including mergers, consolidations, combinations, dissolutions, and sales of all
or substantially all our assets, unless these actions are approved by two-thirds
of our board of directors. Our second restated certificate also requires the
affirmative vote of the holders of not less than 80% of our outstanding voting
shares to amend or repeal any provision of our second restated certificate or
our by-laws, if it is required or demanded that the stockholders vote on the
amendment or repeal, unless the amendment or repeal is approved by two-thirds of
our board of directors.
Classified board of directors. Our board of directors is divided into
three classes, with the directors of each class being elected for three-year
terms at the annual meeting of stockholders. In addition, under Delaware law,
members of our board of directors may be removed only for cause. These
provisions, when coupled with the provision of our second restated certificate
authorizing the board of directors to fill vacant directorships, may delay a
stockholder from removing incumbent directors and simultaneously gaining control
of the board of directors by filling vacancies created by the removal with its
own nominees.
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Stockholder action; special meetings of stockholders. Our second
restated certificate eliminates the ability of stockholders to act by written
consent. Our by-laws further provide that special meetings of our stockholders
may be called only by our President or by our board of directors.
Advance notice requirements for stockholder proposals and directors
nominations. Our by-laws provide that stockholders seeking to bring business
before an annual meeting of stockholders, or to nominate candidates for election
as directors at an annual meeting of stockholders, must provide timely notice in
writing. To be timely, a stockholder's notice must be received at our principal
executive offices not less than 45 days nor more than 120 days before the
anniversary of the date on which we first mailed our proxy materials for the
immediately preceding annual meeting of stockholders. If the annual meeting is
called for a date that is not within 30 days before or after the anniversary
date of the preceding annual meeting, notice from the stockholder must be
received:
- not earlier than 180 days before to the annual meeting of stockholders;
and
- not later than the later of 75 days before the annual meeting of
stockholders or the tenth day following the date on which we publicly
announce the date of the annual meeting.
Our by-laws also specify the requirements of the form and content of a
stockholder's notice. These provisions may preclude stockholders from bringing
matters before an annual meeting of stockholders or from making nominations for
directors at an annual meeting of stockholders.
Authorized but unissued shares of our capital stock. All authorized but
unissued shares of our common stock and preferred stock are available for future
issuance without stockholder approval, except for approvals required by stock
exchange rules and, in the case of the issuance of preferred stock, the terms of
the Series B preferred stock as described in "Description of the Series B
Preferred Stock -Voting Rights." These additional shares may be utilized for a
variety of corporate purposes, including future public offerings to raise
additional capital, corporate acquisitions and employee benefit plans. The
existence of authorized but unissued shares of common stock and preferred stock
could render more difficult or discourage an attempt to obtain control of us by
means of a proxy contest, tender offer, merger or otherwise.
DELAWARE ANTI-TAKEOVER LAW
As a Delaware corporation, the provisions of Section 203 of the
Delaware General Corporation Law apply to us. In general, Section 203 prohibits
a publicly-held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years following the date
that the person became an interested stockholder, unless:
- before the person became an interested stockholder, the board of
directors approved either the business combination or the transaction
that resulted in the person becoming an interested stockholder;
- after the transaction that resulted in the person becoming an
interested stockholder, the interested stockholder owned at least 85%
of the voting stock of the corporation outstanding at the time the
transaction commenced, excluding for purposes of determining the number
of shares outstanding those shares owned by persons who are directors
and also officers and by employee stock plans in which employee
participants do not have the right to determine confidentially whether
shares held under the plan will be tendered in a tender or exchange
offer; or
- following the transaction in which the person became an interested
stockholder, the business combination is approved by the board of
directors and authorized at a meeting of the stockholders, by the
affirmative vote of the holders of at least 66 2/3% of the outstanding
voting stock that is not owned by the interested stockholder.
Section 203 defines a "business combination" to include:
- any merger or consolidation involving the corporation and the
interested stockholder;
- any sale, transfer, pledge or other disposition of 10% or more of the
assets of the corporation involving the interested stockholder;
- any transaction that results in the issuance or transfer by the
corporation of any stock of the corporation to the interested
stockholder, with some exceptions;
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- any transaction involving the corporation that has the effect of
increasing the proportionate share of the stock of any class or series
of the corporation beneficially owned by the interested stockholder; or
- the receipt by the interested stockholder of the benefit of any loans,
advances, guarantees, pledges or other financial benefits provided by
or through the corporation.
In general, Section 203 defines an "interested stockholder" as any
entity or person beneficially owning 15% or more of the outstanding voting stock
of a corporation and any entity or person affiliated with or controlling or
controlled by that entity or person.
A Delaware corporation may "opt out" of Section 203 by including a
provision in its original certificate of incorporation, or by adopting an
amendment to its certificate of incorporation or by-laws resulting approved by
holders of at least a majority of its outstanding voting stock, expressly
electing not to be governed by Section 203. Neither our second restated
certificate nor our by-laws contain any exclusion. Section 203 makes it more
difficult for an "interested stockholder" to effect various business
combinations with a corporation for a three-year period.
RIGHTS AGREEMENT
We have entered into a stockholder rights agreement. As with most
rights agreements, the terms of our rights agreement are complex and not easily
summarized, particularly as they relate to the acquisition of our common stock
and to exercisability of the rights. This summary may not contain all of the
information that is important to you. The following summary should be read in
conjunction with, and is qualified in its entirety by reference to, our rights
agreement, a copy of which has been filed with the SEC.
Under our rights agreement, each outstanding share of common stock has
one right to purchase four one-hundredths of a share of Series C preferred stock
attached to it. The purchase price per one one-hundredth of a share of Series C
preferred stock under the stockholder rights agreement is $25.00.
The rights under our rights agreement are attached to the outstanding
certificates representing our common stock, and no separate certificates
representing the rights have been distributed. The rights will separate from our
common stock and be represented by separate certificates on the distribution
date, which will occur on the tenth day after public announcement that any
person or group has become an acquiring person, which means the beneficial owner
of at least 15% of our outstanding common stock, or ten business days, or a
later date as determined by the board of directors, after the date a person or
group commences a tender offer for 15% or more of our outstanding common stock.
After the rights separate from our common stock, certificates representing the
rights will be mailed to record holders of our common stock. Once distributed,
the rights certificates alone will represent the rights.
All shares of our common stock issued before the date the rights
separate from the common stock will be issued with the rights attached. The
rights are not exercisable until the date the rights separate from the common
stock. The rights will expire on the December 1, 2001, unless the term of the
rights agreement is extended by us or the rights are earlier redeemed or
exchanged by us.
After a distribution date occurs, each right will entitle the holder to
purchase four one-hundredths of a share of Series C preferred stock at a
purchase price of $25.00 per one one-hundredth of a share. In addition, after
the distribution date, each right will entitle the holder to purchase a number
of shares of our common stock having a then current market value of $200.00
subject to adjustment. Further, after the distribution date, each right will
entitle the holder to purchase a number of shares of common stock of the
acquiring person having a then current market value of $200.00, if any of the
following occurs:
- we merge with or consolidate into another entity;
- an acquiring person which is an entity merges with or consolidates into
us; or
- we sell more than 50% of our assets or earning power.
Under our rights agreement, any rights that are or were owned by an
acquiring person will be null and void. Our rights agreement contains exceptions
to the definition of "acquiring persons". American Meter and its affiliates and
associates will not be deemed to be an "acquiring person" so long as they own no
more than 25% of our outstanding common stock. In addition, no person or group
who becomes a beneficial owner of 15% or more of the outstanding shares of our
common stock, solely by virtue of acquiring the units, or exercising or
converting any securities included in the units, will be deemed to be an
acquiring person. Holders of the rights will have no rights as our stockholders,
including the right to vote or receive dividends, simply by virtue of holding
the rights.
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Our rights agreement contains exchange provisions which provide that
after an acquiring person becomes a beneficial ownership owner of 15% or more,
but less than 50%, of our outstanding common stock, our board of directors may,
at its option, exchange all or part of the then outstanding and exercisable
rights for common stock at an exchange ratio of four shares of common stock per
right.
Our board of directors may, at its option, redeem all of the
outstanding rights under our rights agreement before any person or group
becoming an acquiring person. The redemption price under our rights agreement is
$0.04 per right. The right to exercise the rights will terminate upon the action
of our board of directors ordering the redemption of the rights and the only
right of the holders of the rights will be to receive the redemption price.
Our rights agreement may be amended by our board of directors before
the date any person or group becomes an acquiring person, except that the
threshold of "acquiring person" status cannot be reduced below the greater of
10% or .001% above the highest percentage of common stock then beneficially
owned by any person or group, without reference to American Meter. However,
after the date any person or entity becomes an acquiring person, the rights
agreement may not be amended in any manner that would adversely affect the
interests of the holders of the rights. The prices and amounts above will be
appropriately adjusted for stock splits and other changes to our capital stock.
Our rights agreement contain provisions that have anti-takeover
effects. The rights may cause substantial dilution to a person or group that
attempts to acquire us without conditioning the offer on the redemption or the
termination of the rights. Accordingly, the existence of the rights may deter
acquirors from making takeover proposals or tender offers for our common stock.
However, the rights are not intended to prevent a takeover, but rather are
designed to enhance the ability of our board or directors to negotiate with an
acquiror on behalf of all the stockholders. In addition, the rights should not
interfere with a proxy contest or with any merger or business combination
approved by our board of directors.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock is American
Securities Transfer & Trust Co. We are the transfer agent and registrar for the
Series B preferred stock.
LISTING
Our common stock is listed and traded on the Nasdaq National Market
under the trading symbol "MTEK". Our dividend warrants are listed and traded on
the Nasdaq SmallCap Market under the trading symbol "MTEKW." We do not intend to
list the Series B preferred stock on the Nasdaq Stock Market, any national
securities exchange or any other stock market, stock exchange or stock quotation
system.
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 145 of the Delaware General Corporation Law provides for broad
indemnification of the directors, officers, employees and agents of a
corporation. As permitted by Section 145 of the DGCL, our second restated
certificate permits us to indemnify any person who was or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, other than an action
by us or in our right, by reason of the fact the person is or was our officer of
director, or is or was serving at our request as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses, including attorneys' fees, judgments, fines and
amounts paid in settlement actually and reasonably incurred by the person in
connection with the action, suit or proceeding, provided that the person acted
in good faith and in a manner the person reasonably believed to be in or not
opposed to our best interests and, with respect to any criminal action or
proceeding, had no reasonable cause to believe the person's conduct was
unlawful. We are also permitted to indemnify the same persons against expenses,
including attorneys' fees, actually and reasonably incurred by these persons in
connection with the defense or settlement of any threatened, pending or
completed action or suit by us or in our right under the same conditions, except
that no indemnification will be made in respect to any claim, issue or matter as
to which the person has been adjudged to be liable to us unless, and only to the
extent that, the adjudicating court determines that the indemnification is
proper under the circumstances. To the extent these persons are successful on
the merits or otherwise in defense of any action, suit or proceeding,
indemnification is mandatory. We may also pay the expenses incurred in any
action, suit or proceeding in advance of its final disposition, upon receipt of
an appropriate undertaking by the person. These rights are not exclusive of any
other right which any person may have or
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hereafter acquire under any statute, or under any provision of our second
restated certificate, our by-laws, or under any agreement, vote of stockholders
or disinterested directors or otherwise. No repeal or modification of these
provisions of our second restated certificate will in any way diminish or
adversely affect the rights of any person to indemnification thereunder in
respect of any occurrences or matters arising before any repeal or modification.
Our by-laws provide that we shall indemnify our directors, officers,
employees and agents to the extent permitted by the DGCL. We have also entered
into indemnification agreements with each of our directors requiring us to
indemnify them against liabilities that they incur in their capacity as
directors.
Our second restated certificate also specifically authorizes us to
maintain insurance and to grant similar indemnification rights to our employees
or agents. We maintain an insurance policy indemnifying our directors and
officers against liabilities, including liabilities arising under the Securities
Act, which might be incurred by them in these capacities.
As permitted by Section 102(b)(7) of the DGCL, our second restated
certificate also eliminates the personal liability of our directors to us and
our stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability:
- for any breach of a director's duty of loyalty to us or our
stockholders;
- for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
- under Section 174 of the DGCL, relating to unlawful payments of
dividends or unlawful stock purchases or redemptions; and
- for any transaction in which a director derived an improper personal
benefit.
These provisions do not limit or eliminate our rights or the rights of
any stockholder to seek non-monetary relief, such as an injunction or
rescission, in the event of a breach of a director's fiduciary duty. These
provisions will also not alter a director's liability under federal securities
laws.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers and controlling persons pursuant
to the foregoing provisions or otherwise, we have been advised that in the
opinion of the SEC such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable.
DESCRIPTION OF THE SERIES B PREFERRED STOCK
The following is a summary of the material provisions of the Series B
preferred stock, the terms of which are contained in Article Fourth of our
second restated certificate. Copies of our second restated certificate are
available upon request at our address shown under "Where You Can Find More
Information." This summary is not intended to be complete but is qualified in
its entirety by reference to the provisions of Article Fourth of our second
restated certificate.
NUMBER AND DESIGNATION
There are 7,000 shares of our Series B preferred stock, par value $.01
per share, outstanding. The Series B preferred stock is validly issued, fully
paid and non-assessable. The holders of the Series B Preferred Stock have no
preemptive or preferential right to purchase or subscribe for stock,
obligations, warrants or any other of our securities of any class. The Series B
preferred stock is not listed, quoted or traded on any public market.
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RANKING
The Series B preferred stock, with respect to dividend rights and
rights on liquidation, dissolution and winding-up, ranks as follows:
- senior to our common stock and our Series C preferred stock;
- senior to each class of our capital stock or series of our preferred
stock established after the Series B preferred stock by our board of
directors that has terms which do not expressly provide that the class
or series will rank senior to, or on a parity with, the Series B
preferred stock;
- on a parity with each class of our capital stock or series of our
preferred stock established after the Series B preferred stock by our
board of directors that has terms which expressly provide that the
class or series will rank on a parity with the Series B preferred
stock;
- junior to each class of our capital stock or series of our preferred
stock established after the Series B preferred stock by our board of
directors that has terms which expressly provide that the class or
series will rank senior to the Series B preferred stock; and
- junior to all our existing and future debt obligations.
While any shares of Series B preferred stock are outstanding, we may
not issue any equity securities, or securities exchangeable for or convertible
into equity securities or measured by our earnings or profit, other than our
Series C preferred stock, that rank senior to or on a parity with the Series B
preferred stock as to liquidation, dividend and redemption rights without the
consent of the holders of at least a majority of the outstanding shares of
Series B preferred stock then outstanding, voting as a single class. We may,
however, without the consent of any holder of Series B preferred stock, create
or increase the amount of any class of capital stock that ranks junior to the
Series B preferred stock with respect to liquidation, dividend and redemption
rights.
DIVIDENDS
Holders of shares of Series B preferred stock are entitled to receive,
when, as and if declared by our board of directors out of our funds which are
legally available for payment, cumulative dividends in cash at the annual rate
of 8% of the initial liquidation preference of $1,000 per share of Series B
preferred stock. This is equivalent to $80.00 per share annually.
Dividends on the Series B preferred stock are payable quarterly on
March 31, June 30, September 30 and December 31 of each year. These dividends
are cumulative and accrue from the most recent date on which the dividends have
been paid or, if no dividends have been paid, from the date of the original
issuance of the Series B preferred stock. Dividends are payable to holders of
record as they appear on our stock records at the close of business on the
applicable record date. Dividends payable on our Series B preferred stock for
any period greater or less than a full quarterly period are computed on the
basis of a 365-day year.
So long as at least 1,000 shares of Series B preferred stock are
outstanding and cumulative dividends on the Series B preferred stock have not
been paid in full, we will not:
- pay or declare any dividend or make any distribution on any of our
common stock or any other class of our capital stock ranking junior to
or on a parity with the Series B preferred stock as to dividend,
liquidation or redemption rights; or
- purchase, redeem or acquire, or pay, set aside or make available for a
sinking fund any monies to purchase, redeem or acquire, any shares of
our common stock or other class of our capital stock ranking junior to
or on a parity with the Series B preferred stock as to dividend,
liquidation or redemption rights.
In addition to the 8% cumulative dividends discussed above, holders of
Series B preferred stock are entitled to receive dividends out of funds legally
available for payment of dividends at the times and in the amounts as our board
of directors, in its sole discretion, may determine.
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We will not declare or pay any dividend in cash or common stock on any
shares of common stock unless at the same time we declare or pay the same
dividend on the Series B preferred stock on the basis of the number of shares of
common stock into the Series B preferred stock held is then convertible.
REDEMPTION
Mandatory redemption. On December 9, 2004, depending upon the legal
availability of funds, we will be required to redeem all of the outstanding
shares of the Series B preferred stock at a redemption price, payable in cash,
equal to the initial liquidation preference plus accumulated and unpaid
dividends, if any, to the date of redemption. We will not be required to make
sinking fund payments with respect to the Series B preferred stock.
Redemption upon extraordinary transactions. The holders of not less
than a majority of the outstanding shares of Series B preferred stock may elect
to either have the Series B preferred stock redeemed in connection with, or to
participate in, any of the following "extraordinary transactions":
- a merger or consolidation of us with or into another corporation,
unless a majority of the outstanding voting power of the surviving or
consolidated corporation is held by our stockholders immediately before
that transaction;
- the sale or transfer of all or substantially all of our properties and
assets;
- any purchase by any party or group of affiliated parties of shares of
our capital stock, through a negotiated stock purchase or a tender for
our shares, resulting in a party or group of affiliated parties that
did not beneficially own a majority of our voting power immediately
before the purchase beneficially owning a majority of our voting power
immediately after the purchase; or
- our repurchase of shares representing a majority of our voting power
immediately before the redemption.
Unless the holders of Series B preferred stock have elected to convert
their shares of Series B preferred stock into common stock, then as a condition
to any extraordinary transaction we must either:
- redeem all outstanding shares of Series B preferred stock at a
redemption price equal to the initial liquidation preference plus
accumulated and unpaid dividends, if any, payable in cash or, at the
election of the holders of the Series B preferred stock, payable in the
same form of consideration as is paid to the holders of common stock in
the extraordinary transaction, if the holders of Series B preferred
stock elect to have their shares redeemed; or
- take those actions as are sufficient to facilitate the participation of
the holders of the Series B preferred stock in the extraordinary
transaction permitting them to receive, as a preferential amount, the
amount they would have received upon redemption either in cash, or at
the election of the holders of Series B preferred stock, in the same
form of consideration as is paid to the holders of common stock in the
extraordinary transaction, if the holders of Series B preferred stock
elect to participate in the extraordinary transaction.
A sale of substantially all of our assets means a sale or other
disposition other than in the ordinary course of business of more than 75% of
our assets, based upon the book value or fair market value of our assets,
determined on a consolidated basis under generally accepted accounting
principles.
Upon any redemption due to an extraordinary transaction, if the holders
of the Series B preferred stock, by converting their shares into common stock
before the extraordinary transaction, would receive an amount greater than the
redemption price payable to them if they do not convert their shares into common
stock, then they will be entitled, upon an election by holders of a majority of
the outstanding shares of the Series B preferred stock, to receive the greater
amount in the extraordinary transaction. We are not permitted to participate in
any extraordinary transaction or to make or agree to make any payments to
holders of common stock or any other shares of our capital stock ranking junior
to the Series B preferred stock unless the holders of the Series B preferred
stock have received the full preferential amount to which they are entitled in
the extraordinary transaction.
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Optional redemption. On or after December 9, 2000, if the market price
of our common stock equals or exceeds 200% of the conversion price of the Series
B preferred stock then in effect for at least 20 trading days within any 30
consecutive trading day period, we will have the right to redeem the Series B
preferred stock. If we redeem the Series B preferred stock, the redemption price
will be equal to the initial liquidation preference, plus accumulated and unpaid
dividends, if any, to the redemption date. We will give at least 30 days written
notice to the holders of Series B preferred stock before we redeem the Series B
preferred stock, and the notice must be given within 30 days after the 30
consecutive trading day period referred to above.
We may exercise this right to redeem the Series B preferred stock only
if in the time between our giving of the notice of redemption and the date on
which redemption is to occur a registration statement is in effect covering the
sale by the holders of Series B preferred stock of all shares of common stock
issuable upon conversion of the Series B preferred stock.
Other redemption provisions. If, on any date we are obligated to redeem
the Series B preferred stock, we are prohibited under Delaware law from
redeeming all outstanding shares of the Series B preferred stock, then we will
redeem as many shares as we are permitted under Delaware law on a pro rata basis
among the holders of the Series B preferred stock, and we will take any
necessary or appropriate action to remove any impediments on our ability to
redeem the remaining shares. If we are still unable to redeem all shares of
Series B preferred stock, then the dividend rate on the unredeemed shares will
increase to an annual rate of 10%, and will increase by an additional 0.5%
annual rate at the end of each six month period, up to a maximum annual rate of
15%, until all outstanding shares of Series B preferred stock have been redeemed
and the redemption price has been paid in full.
Our ability to redeem the Series B preferred stock is limited by the
terms of our current outstanding indebtedness. We will not be able to redeem the
Series B preferred stock when we are required to do so unless we either obtain
the consent of our current lender or unless we redeem or repay the indebtedness.
LIQUIDATION PREFERENCE
Upon our voluntary or involuntary liquidation, dissolution or
winding-up, each holder of Series B preferred stock is entitled to be paid, out
of our assets available for distribution to stockholders, an amount equal to the
initial liquidation preference of $1,000 per share of Series B preferred stock
held by the holder, plus accumulated and unpaid dividends to the date fixed for
liquidation, dissolution or winding up, before any distribution is made on our
common stock or any other class of our capital stock that is junior to the
Series B preferred stock as to liquidation rights. If, upon our voluntary or
involuntary liquidation, dissolution or winding-up, there are not sufficient
assets to pay all amounts payable with respect to the Series B preferred stock,
then the holders of the Series B preferred stock will share ratably in any
distribution of our assets in proportion to the respective preferential amount
to which they are entitled. In addition, if, upon our voluntary or involuntary
liquidation, dissolution or winding-up, the holders of Series B preferred stock
would have received more than the liquidation preference referred to above if
they had converted their shares into common stock immediately before the
liquidation, dissolution or winding up, then the holders of Series B preferred
stock will receive the greater amount.
VOTING RIGHTS
The holders of Series B preferred stock have no voting rights, except
as required under Delaware law or as provided in the provisions of Article
Fourth of our second restated certificate governing the Series B preferred
stock.
As long as at least 2,000 shares of Series B preferred stock are
outstanding, then the holders of the outstanding shares of Series B preferred
stock, voting together as a separate class, are entitled to elect one member of
our board of directors. On March 13, 2000, the holders of Series B preferred
stock elected Kevin P. Collins as their designated director.
If we fail to redeem all of the Series B preferred stock when we are
required to do so by the terms of the Series B preferred stock, then the holders
of the outstanding shares of Series B preferred stock, voting together as a
separate class, will be entitled to elect to serve on our board of directors
that number of directors constituting a majority of the members of our board of
directors, and the number of members of our board of directors will be
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automatically increased by that number. These special voting rights of the
Series B preferred stock will continue until we have paid the redemption price
of all outstanding shares of Series B preferred stock in full, including any
interest due as a result of our failure to pay the redemption price, at which
time the terms of any directors elected by the holders of Series B preferred
stock under these special voting rights will terminate and the number of members
of our board of directors will be immediately decreased by that number.
As long as at least 1,000 shares of Series B preferred stock remain
outstanding, we may not, without the consent of at least a majority of the then
outstanding shares of Series B preferred stock:
- merge, consolidate, recapitalize, reorganize or engage in any like
transaction;
- liquidate or dissolve;
- sell or transfer all or substantially all of our consolidated
properties or assets;
- dispose of assets for consideration in excess of $1,000,000 without the
approval of our board of directors; or
- borrow money, except up to $3,000,000 under our primary credit
agreement.
In addition, as long as any shares of Series B preferred stock are
outstanding, we may not, without the consent of the holders of at least a
majority of the then outstanding shares of Series B preferred stock:
- issue any equity security, or any securities exchangeable for or
convertible into equity securities or measured by our earnings or
profit, other than the Series C preferred stock, that rank senior to or
parity with the Series B preferred stock as to liquidation, dividend
and redemption rights;
- redeem, repurchase or otherwise acquire for value any of our equity
securities other than the Series B preferred stock under its terms or
up to 250,000 shares of common stock under restriction agreements with
our employees, officers, directors, consultants or other persons
performing services for us; or
- amend our certificate of incorporation, by-laws or other charter
documents or those of any of our subsidiaries.
CONVERSION RIGHTS
Each share of Series B preferred stock will be convertible, in whole or
in part, at any time after June 9, 2000 at the option of the holder, into that
number of shares of common stock equal to the "conversion value," which is
$1,000 plus accumulated and unpaid dividends on the share, divided by the then
applicable "conversion price" of the Series B preferred stock.
The initial conversion price of the Series B preferred stock is $5.9334
per share of common stock. At an initial conversion value of $1,000, each share
of Series B preferred stock is initially convertible into 168.5374 shares of
common stock. The conversion price will be adjusted if any of the following
events occurs:
- if, on December 9, 2000, the "reset price", computed by multiplying
110% by the sum of (1) the average closing bid price of the common
stock for the 30 trading days immediately preceding this date, plus (2)
the fair market value on the date of any securities, cash or assets,
other than any dividend or distribution paid exclusively in cash or in
common stock, distributed or made payable to the holders of Series B
preferred stock, on an as-converted, per share basis, is less than the
then applicable conversion price, then the conversion price of the
Series B preferred stock will be reduced to the reset price, provided
that the conversion price cannot be reduced by more than 50%;
- any dividend or distribution payable in shares of the common stock;
- any subdivision or split-up of the common stock;
- any combination or reverse split of the common stock;
- any issuance, sale or exchange of shares of common stock at a price per
share of common stock less than the greater of the "market price" of
the common stock or the conversion price in effect
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immediately before the issuance, sale or exchange of the shares,
excluding the following "excluded shares":
(1) 1,211,236 shares and options issued or issuable to our
officers, directors and employees or issuable upon the
exercise of options or other rights issued to them under our
stock option, stock purchase and related employee plans,
(2) up to 1,555,150 shares issuable upon the exercise of warrants
or other rights we issued before December 9, 1999, or
(3) any securities issuable upon conversion of the Series B
preferred stock or exercise of unit warrants.
- any issuance of options, warrants or rights to subscribe for shares of
common stock, or securities convertible into or exchangeable for shares
of common stock, at a purchase price less than the greater of the then
current market price or the conversion price then in effect, other than
options or warrants for excluded shares;
- any distribution to all holders of our common stock of evidences of
indebtedness, shares of our capital stock other than common stock,
other securities, cash or assets, excluding any options, rights or
warrants for which an adjustment to the conversion price referred to
above is applicable and any distributions paid exclusively in cash or
in common stock;
- any reclassification or capital reorganization of the common stock; and
- any merger, consolidation or sale of all or substantially all of our
properties and assets.
If the conversion price of the Series B preferred stock is adjusted to
the reset price on December 9, 2000, then the holders of Series B preferred
stock are not permitted, for a period of 90 days after that adjustment, to sell,
pledge or transfer, one capital share, or for a period of 30 days after the
adjustment, to purchase any of our common stock to cover any "short" purchases,
although during the post-adjustment period they can convert their Series B
preferred stock or exercise their warrants.
The "market price" of the common stock for any date means the last sale
price of the common stock on that date or, if there was no sale on that date,
the average of the closing bid and sale price of the common stock on that date,
as reported on the Nasdaq National Market as long as the common stock is traded
on the Nasdaq National Market.
No adjustment in the conversion price will be required to be made until
a cumulative adjustment amounting to 1% or more of the conversion price as last
adjusted is required.
Fractional shares of common stock will not be issued upon conversion
but, instead, we will round the applicable number of shares of common stock to
be issued upon conversion to the nearest whole number of shares.
Holders of shares of Series B preferred stock may convert their shares
by delivering certificates representing the shares being converted, duly
assigned or endorsed for transfer to us or accompanied by duly executed stock
powers, at our principal executive offices as the transfer agent for the Series
B preferred stock. Upon conversion, we will issue one or more certificates
representing the common stock without charge to the holders of the Series B
preferred stock.
TRANSFER AGENT
We act as the transfer agent for the shares of Series B preferred
stock.
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FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the material federal income tax
consequences relevant to the purchase, ownership and disposition of our Series B
preferred stock and common stock. This summary is based on the current
provisions of the Internal Revenue Code of 1986, Treasury regulations and
judicial and administrative authority, all of which may change, possibly on a
retroactive basis. This summary applies only to investors who hold our Series B
preferred stock or common stock as capital assets, within the meaning of section
1221 of the Internal Revenue Code. This summary does not discuss the tax
consequences to special classes of investors, including:
- brokers or dealers in securities or currencies;
- financial institutions;
- tax-exempt entities;
- life insurance companies;
- persons holding our Series B preferred stock or common stock as a part
of a hedging, short sale or conversion transaction or a straddle;
- investors whose functional currency is not the United States dollar;
- persons who hold our Series B preferred stock or common stock through
partnerships or other pass-through entities; or
- except as specifically noted, foreign holders and U.S. expatriates.
State, local and foreign tax consequences of ownership of our Series B
preferred stock and common stock are not summarized.
We have not requested, and do not intend to request, any rulings from
the Internal Revenue Service concerning the federal tax consequences of an
investment in our Series B preferred stock or common stock. You are advised to
consult with your own tax advisor regarding the consequences of acquiring,
holding or disposing of our Series B preferred stock or common stock in light of
current tax laws, your particular investment circumstances, and the application
of state, local and foreign tax laws.
When we refer in this summary to a "United States Holder," we mean a
beneficial owner of Series B preferred stock or common stock that is:
- a citizen or resident of the United States for United States federal
income tax purposes;
- a corporation created or organized in the United States or under the
laws of the United States or of any political subdivision;
- an estate whose income is includible in gross income for United States
federal income tax purposes regardless of its source; or
- a trust if a court within the United States is able to exercise primary
supervision of the administration of the trust and one or more United
States persons have the authority to control all substantial decisions
of the trust.
When we refer in the summary to a "Non-United States Holder," we mean a
beneficial owner of Series B preferred stock or common stock that is not a
United States Holder.
UNITED STATES HOLDERS
Distributions. We are required to pay distributions on the Series B
preferred stock in cash. A cash distribution on the Series B preferred stock or
common stock will be treated as a dividend to the extent of our current or
accumulated earnings and profits allocable to the distribution as determined
under U.S. federal income tax principles. The amount of our earnings and profits
at any time will depend upon our future actions and financial
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performance. If the amount of the distribution exceeds our current and
accumulated earnings and profits allocable to the distribution, the distribution
will be treated as a nontaxable return of capital and will be applied against
and reduce your adjusted tax basis in the stock, but not below zero. The
reduction in tax basis will increase the amount of any gain, or reduce the
amount of any loss, which you would otherwise realize on the sale or other
taxable disposition of the stock. If the distribution exceeds both our current
and accumulated earnings and profits allocable to the distribution and your
adjusted tax basis in your stock, the excess will be treated as capital gain and
will be either long-term or short-term capital gain depending on your holding
period for the stock.
Corporate investors in our Series B preferred stock or common stock
generally should be eligible for the 70% dividends-received deduction with
respect to the portion of any distribution on the stock taxable as a dividend.
However, corporate investors should consider provisions that may limit the
availability of the dividends-received deduction, including:
- the 46-day holding period required by section 246(c) of the Internal
Revenue Code;
- the rules in section 246A of the Internal Revenue Code that reduce the
dividends-received deduction for dividends on debt-financed stock; and
- the rules in section 1059 of the Internal Revenue Code that reduce the
basis of stock in respect of extraordinary dividends.
Corporate investors should also consider the effect of the dividends-received
deduction on the determination of alternative minimum tax liability.
Redemption. When we redeem our Series B preferred stock, it will be for
cash, and the redemption will be taxable to you. The redemption generally will
be treated as a sale or exchange if you do not own, actually or constructively
within the meaning of section 318 of the Internal Revenue Code, any of our stock
other than the redeemed Series B preferred stock. If you do own, actually or
constructively, other stock of ours, the redemption of your Series B preferred
stock may be taxable in a similar manner as distributions are taxed. The
treatment as a distribution will not apply if the redemption:
- is "substantially disproportionate" with respect to you under section
302(b)(2) of the Internal Revenue Code; or
- is "not essentially equivalent to a dividend" under section 302(b)(1)
of the Internal Revenue Code.
A distribution to you will be "not essentially equivalent to a dividend" if it
results in a meaningful reduction in your stock interest in us, which should be
the case if:
- your proportionate ownership interest, taking into account any actual
ownership of stock and any stock constructively owned, is reduced;
- your relative stock interest in us is minimal; and
- you exercise no control over our business affairs.
If a redemption of your Series B preferred stock is treated as a sale
or exchange, it will result in capital gain or loss equal to the difference
between the amount of cash received and your adjusted tax basis in the Series B
preferred stock redeemed, except to the extent that the redemption price
includes unpaid dividends which we declare before the redemption. The capital
gain or loss will be long term if you have held the Series B preferred stock for
more than one year. Any cash you receive in discharge of dividend arrearages on
the Series B preferred stock will be treated as a distribution on the Series B
preferred stock to the extent of the dividends in arrears, taxable in a similar
manner as distributions are taxed.
If the cash you receive on redemption of your Series B preferred stock
is taxed as a dividend, your tax basis, reduced for amounts, if any, treated as
return of capital, in the redeemed Series B preferred stock will be transferred
to any remaining other stock of ours you own, subject, in the case of a
corporate taxpayer, to reduction or possible gain recognition under section 1059
of the Internal Revenue Code in an amount equal to the nontaxed portion of the
dividend. If you do not actually own any other of our stock, having a remaining
stock interest only
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constructively, you may lose the benefit of your tax basis in the Series B
preferred stock but the tax basis may be shifted to the stock of the related
person whose stock you constructively own.
Under some circumstances, section 305(c) of the Internal Revenue Code
requires that any excess of the redemption price of preferred stock over its
issue price be treated as constructively distributed on a periodic basis before
actual receipt. However, these rules will not apply if:
- you are not "related" to us within the meaning of Treasury regulations
under section 305(c);
- there are no plans, arrangements or agreements that effectively require
or are intended to compel us to exercise our provisional redemption
rights; and
- our exercise of the right to redeem would not reduce the yield of the
Series B preferred stock, as determined under the regulations.
We intend to take the position that the existence of our optional redemption
right does not result in a constructive distribution under section 305(c).
Conversion. You generally will not recognize gain or loss on conversion
of shares of Series B preferred stock into our common stock. However, you may
recognize gain or dividend income to the extent there are dividends in arrears
on your stock at the time of conversion into common stock. Your tax basis in the
common stock received upon conversion of Series B preferred stock generally will
be equal to your tax basis in the Series B preferred stock converted, and the
holding period of the common stock generally will include your holding period
for the Series B preferred stock. However, the tax basis of any common stock
received on conversion which is treated as a dividend will be equal to its fair
market value on the date of the distribution and the holding period of that
common stock will commence on the day after its receipt.
You may be deemed to have received a constructive distribution of stock
taxable as a dividend if the conversion ratio of the Series B preferred stock is
adjusted to reflect a cash or property distribution on our common stock or to
prevent dilution in the case of some issuances of rights or warrants to purchase
common stock at below market or conversion prices. Although an adjustment to the
conversion price made under a bona fide reasonable adjustment formula which has
the effect of preventing the dilution of your interest in us generally will not
be considered to result in a constructive distribution of stock, some of the
possible adjustments could trigger this rule. If a nonqualifying adjustment is
made, or if we fail to make an adjustment, you might be deemed to have received
a taxable stock dividend. If so, the amount of the dividend to be included in
income would be the fair market value of the additional common stock to which
you would be entitled by reason of the increase in your proportionate equity
interest in us.
Sale or other taxable disposition. If you sell or dispose of your
Series B preferred stock or common stock in a taxable transaction other than a
redemption or conversion by us, you will recognize capital gain or loss equal to
the difference between the amount of cash and the fair market value of property
received and your tax basis in the Series B preferred stock or common stock. The
gain or loss will be long-term capital gain or loss if your holding period for
the stock exceeds one year. For corporate taxpayers, long-term capital gains are
taxed at the same rate as ordinary income. For individual taxpayers, net capital
gains -- the excess of the taxpayer's net long-term capital gains over his net
short-term capital losses -- are taxable at a maximum tax rate of 20% if the
stock is held for more than one year.
NON-UNITED STATES HOLDERS
Distributions. Distributions received by you as a Non-United States
Holder in respect of the Series B preferred stock, in cash, and distributions in
respect of common stock, to the extent considered dividends for U.S. federal
income tax purposes, generally will have United States federal income tax
withheld at a 30% rate or at a lower rate specified by an applicable income tax
treaty, unless the dividend is effectively connected with your conduct of a
trade or business within the United States or, where a tax treaty applies, is
attributable to a United States permanent establishment you maintain. If the
dividend is effectively connected with your conduct of a trade or business
within the United States or, where a tax treaty applies, is attributable to your
United States permanent
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establishment, the dividend will be taxable under federal income tax
requirements on a net income basis at applicable graduated individual or
corporate rates and will be exempt from the 30% withholding tax.
In addition to the graduated rate described above, dividends received
by a corporate Non-United States Holder that are effectively connected with a
United States trade or business or, where a tax treaty applies, are attributable
to your United States permanent establishment may, under some circumstances, be
taxable under an additional "branch profits tax" at a 30% rate or at a lower
rate specified by an applicable income tax treaty.
For purposes of obtaining a reduced rate of withholding under an income
tax treaty, you will be required to provide information concerning your country
of residence and entitlement to tax treaty benefits. If you claim exemption from
withholding with respect to dividends effectively connected with your conduct of
a business within the United States, you must provide appropriate certification,
currently Internal Revenue Service Form 4224, to us or our paying agent. If you
are eligible for a reduced rate of U.S. federal withholding tax, you may obtain
a refund of any excess withheld amounts by timely filing an appropriate claim
for refund.
If a distribution exceeds our current and accumulated earnings and
profits allocable to the distribution, it will be treated first as a return of
your tax basis in the stock to the extent of your basis and then as gain from
the sale of a capital asset, which would be taxable as described below. Any
withholding tax on distributions in excess of our current and accumulated
earnings and profits is refundable to you upon the timely filing of an
appropriate claim for refund with the Internal Revenue Service.
Under currently applicable Treasury regulations, dividends paid to an
address outside the United States are presumed to be paid to a resident of that
country, unless the payor has knowledge to the contrary, for purposes of the
withholding discussed above, and, under the current interpretation of these
Treasury regulations, for purposes of determining the applicability of a tax
treaty rate. Under Treasury regulations currently scheduled to be effective with
respect to dividends paid after December 31, 2000, a Non-United States Holder of
our stock who wishes to claim the benefit of an applicable treaty rate, and to
avoid backup withholding as discussed below, will be required to satisfy
applicable certification and other requirements. However, under either set of
regulations, some payments to foreign partnerships and other fiscally
transparent entities may not be eligible for a reduced rate of withholding tax
under an applicable income tax treaty.
Disposition of Series B preferred stock or common stock. Generally, you
will not incur United States federal income tax on any gain recognized upon the
sale or other disposition of Series B preferred stock or common stock. However,
you will incur federal income tax on the gain if:
- the gain is effectively connected with your United States trade or, if
a tax treaty applies, attributable to your United States permanent
establishment;
- you are an individual who is a former citizen of the United States who
lost United States citizenship within the preceding ten-year period, or
a former long-term resident of the United States who relinquished
United States residency on or after February 6, 1995, and the loss of
citizenship or permanent residency had as one of its principal purposes
the avoidance of United States tax; or
- you are a non-resident alien individual, you are present in the United
States for 183 or more days in the taxable year of disposition and
either (a) you have a "tax home" in the United States for United States
federal income tax purposes or (b) the gain is attributable to an
office or other fixed place of business you maintain in the United
States.
You will also incur federal income tax on any gain from the sale of our
Series B preferred stock or common stock if we are or have been a "United States
real property holding corporation" within the meaning of section 897(c)(2) of
the Internal Revenue Code at any time you held the stock, or within the 5-year
period preceding the sale of the stock if you hold the stock for more than five
years. We believe:
- we are not now a "United States real property holding corporation";
- we have not been a "United States real property holding corporation" at
any time since we were formed; and
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<PAGE> 44
- it is unlikely we will become a "United States real property holding
corporation."
If we were a "United States real property holding corporation" or were to become
a "United States real property holding corporation," you would incur U.S. income
tax on any gain from your sale of Series B preferred stock or from your sale of
common stock if you beneficially own, or owned at any time during the specified
5-year period, more than 5 percent of the total fair market value of the class
of stock you sold.
Redemption and conversion of Series B preferred stock. As a Non-United
States Holder, you generally will not recognize any gain or loss for United
States federal income tax purposes upon conversion of Series B preferred stock
into common stock. However, you may recognize gain or dividend income to the
extent there are dividends in arrears on the Series B preferred stock at the
time of conversion into common stock.
A redemption of Series B preferred stock may result in a capital gain
or loss or dividend income. See "United States Holders -- Redemption." To the
extent the redemption results in a dividend, the tax consequences are described
above in "Non-United States Holders -- Distributions." To the extent the
redemption results in capital gain, the tax consequences are described in
"Non-United States Holders - Disposition of Series B preferred stock or common
stock."
Federal estate taxes. If you are an individual Non-United States
Holder, Series B preferred stock or common stock you hold or are treated as
owning at the time of your death will be included in your United States gross
estate for United States federal estate tax purposes and may be taxable under
United States federal estate tax provisions, unless an applicable estate tax
treaty provides otherwise.
INFORMATION REPORTING AND BACKUP WITHHOLDING
We generally will be required to report to holders of our Series B
preferred stock or common stock and to the Internal Revenue Service the amount
of any dividends paid to the holder in each calendar year and the amounts of tax
withheld, if any, with respect to the dividend payments. Copies of the
information returns reporting the dividends and withholding may also be made
available to the tax authorities in the country in which a Non-United States
Holder resides under the provisions of an applicable income tax treaty.
Each holder of Series B preferred stock or common stock, other than an
exempt holder such as:
- a corporation, tax-exempt organization, qualified pension or
profit-sharing trust,
- an individual retirement account, or
- a nonresident alien individual who provides certification as to his or
her status as a nonresident,
will be required to provide, under penalties of perjury, a certification setting
forth:
- the holder's name, address, correct federal taxpayer identification
number, and
- a statement that the holder is not required to incur backup
withholding.
If a nonexempt holder fails to provide the required certification, we
will be required to withhold 31% of the amount otherwise payable to the holder,
and remit the withheld amount to the Internal Revenue Service as a credit
against the holder's federal income tax liability. You should consult your own
tax advisor regarding your qualification for exemption from backup withholding
and the procedure for obtaining any applicable exemption.
Payment of the proceeds of a sale of Series B preferred stock or common
stock by or through a United States office of a broker is required to incur both
backup withholding and information reporting unless the beneficial owner
certifies under penalties of perjury that it is a Non-United States Holder or
otherwise establishes an exemption. In general, backup withholding and
information reporting will not apply to a payment of the proceeds of a sale of
Series B preferred stock or common stock by or through a foreign office of a
broker. If, however, the broker is, for United States federal income tax
purposes:
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<PAGE> 45
- a United States person,
- a "controlled foreign corporation" for U.S. federal income tax
purposes,
- a foreign person that derives 50% or more of its gross income for a
specified period from the conduct of a trade or business in the United
States, or
- for taxable years beginning after December 31, 2000, a foreign
partnership in which one or more United States persons, in the
aggregate, own more than 50% of the income or capital interests in the
partnership or if the partnership is engaged in a trade or business in
the United States,
then the payment of the proceeds will be subject to information reporting, but
not backup withholding, unless:
- the broker has documentary evidence in its records that the beneficial
owner is a Non-United States Holder and other conditions are met, or
- the beneficial owner otherwise establishes an exemption.
For payments after December 31, 2000, certification will be required in
the case of the disposition of shares of Series B preferred stock or common
stock held in an offshore account if the disposition is made through a foreign
broker described in the immediately preceding paragraph.
Any amounts withheld under the backup withholding rules may be allowed
as a refund or a credit against the holder's United States federal income tax
liability provided the required information is furnished to the Internal Revenue
Service.
THE FOREGOING DISCUSSION IS FOR GENERAL INFORMATION AND IS NOT TAX
ADVICE. ACCORDINGLY, EACH PROSPECTIVE HOLDER OF SERIES B PREFERRED STOCK OR
COMMON STOCK SHOULD CONSULT ITS TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO IT OF THE SERIES B PREFERRED STOCK AND COMMON STOCK, INCLUDING
THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN INCOME TAX LAWS, AND
ANY RECENT OR PROSPECTIVE CHANGES IN APPLICABLE TAX LAWS.
SELLING SECURITYHOLDERS
All of the shares of common stock and all of the shares of Series B
preferred stock offered by the selling securityholders under this prospectus
were issued to, or are issuable upon the exercise of warrants or the conversion
of shares of Series B preferred stock issued to, the selling securityholders in
private placement transactions, as described below.
We have registered the resale by the selling securityholders of the
shares offered under this prospectus under their registration rights. In
connection with the issuance in the units private placement of an aggregate of
1,400,000 shares of common stock, 7,000 shares of Series B preferred stock and
warrants to purchase 700,000 shares of common stock to the unit purchasers, we
entered into a registration rights agreement. Under the registration rights
agreement, we agreed to register the public resale of all shares of common stock
and all shares of Series B preferred stock issued or issuable to the unit
purchasers in connection with the units private placement by filing a
registration statement with the SEC and keeping the registration statement
effective until the later of December 9, 2002 or the date which is three months
after all selling securityholders have ceased to be our affiliates. In addition,
we have issued 325,054 shares of common stock and warrants to purchase 386,263
shares of common stock to the other selling securityholders. In connection with
these issuances, we had granted the securityholders piggy-back registration
rights to participate generally in registrations of our securities. These
securityholders have exercised their piggy-back registration rights with respect
to the registration of the shares offered under this prospectus.
The following table sets forth, as of April 19, 2000, except as
otherwise stated in the notes to the table, the number of shares of common stock
and of Series B preferred stock beneficially owned by each selling
securityholder, the percent of outstanding shares the beneficially owned shares
represent, and the number of shares that may be offered for sale from time to
time by each selling securityholder under this prospectus. This information is
based on information provided by or on behalf of the selling securityholders. We
cannot estimate the
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<PAGE> 46
number of shares that the selling securityholders will beneficially own after
completion of this offering, because the selling securityholders may sell all,
part or none of their shares of common stock or of Series B preferred stock
under this prospectus and because there are currently no agreements,
arrangements or understandings with respect to the sale of any of the shares
offered by this prospectus. In addition, the selling securityholders identified
below may have sold, transferred or otherwise disposed of all or a part of their
Series B preferred stock or common stock since the date on which they provided
the information regarding their beneficial ownership.
Beneficial ownership is determined under the rules of the SEC. Unless
otherwise indicated below, to our knowledge, each stockholder named in the table
below has sole voting and investment power with respect to the shares shown in
the table, except as provided by applicable community property laws. This table
has been prepared based upon the information furnished to us by the selling
securityholders. In computing the number of shares of any class beneficially
owned by a person and the percent of outstanding shares of that class holding of
that person, beneficial ownership includes any shares issuable under options,
warrants, conversion rights and other rights that are currently exercisable or
exercisable within 60 days of April 19, 2000. These shares, however, are not
included for purposes of computing the beneficial ownership of any other person.
The percentage of beneficial ownership is based upon 5,164,723 shares of common
stock outstanding on April 19, 2000.
<TABLE>
<CAPTION>
Number of Shares Percent of Number of Shares Offered
Beneficially Owned(1) Outstanding Shares Under this Prospectus(1)
----------------------------- ---------------------------- -------------------------
Name of Selling Common Series B Common Series B Common Series B
Securityholder(2) Preferred Preferred Preferred
- -------------------------------- --------- --------- ----------- ----------- -------------- ----------
<S> <C> <C> <C> <C> <C>
DDJ Capital Management,
LLC (3) 1,405,612 3,000 23.5 42.9 1,405,612 3,000
Special Situations Fund
III, L.P. (4)(5) 386,543 825 7.2 11.8 386,543 825
Special Situations Private
Equity Fund, L.P. (4)(6) 262,669 500 5.0 7.1 234,269 500
Special Situations Technology
Fund, L.P. (4)(7) 216,915 400 4.1 5.7 187,415 400
Special Situations Cayman
Fund, L.P. (4)(8) 128,848 275 2.5 3.9 128,848 275
SEI Institutional Management
Trust (9)(10) 140,561 300 2.7 4.3 140,561 300
Bost & Co.
(9)(11) 93,707 200 1.8 2.9 93,707 200
Warburg Pincus High Yield
Fund (9)(12) 70,281 150 1.4 2.1 70,281 150
The Common Fund (9)(13) 70,281 150 1.4 2.1 70,281 150
CSAM Investment Trust - U.S.
HYLD Series (9)(14) 70,281 150 1.4 2.1 70,281 150
SEI Global - High Yield
Fixed Income Fund (9)(15) 23,427 50 0.5 0.7 23,427 50
Kenneth B. Funsten (16)(17) 200,914 181 3.9 2.6 84,805 181
Famco Value Income
Partners, L.P. (16)(18) 261,135 270 5.0 3.9 126,505 270
Famco Offshore, Ltd.(16)(19) 49,190 49 1.0 0.1 22,959 49
</TABLE>
44
<PAGE> 47
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Leslie R. Schultz (20) 190,822 250 3.6 3.6 117,134 250
Robert M. Freeman (21) 117,134 250 2.2 3.6 117,134 250
American Meter Company (22) 461,317 0 8.7 0 461,317 0
Scient Corporation(23) 0 0 0 0 125,000 0
John A. Harpole (24) 60,000 0 1.1 0 60,000 0
National Bank
of Canada(25) 20,000 0 0.4 0 20,000 0
Silverman Heller
Associates(26) 20,500 0 0.4 0 15,000 0
First Albany Corporation (27) 15,000 0 0.3 0 15,000 0
William Reinert (28) 27,700 0 0.5 0 6,000 0
John S. Koodrich (29) 4,500 0 0.1 0 4,500 0
Lawrence C. Petrucci (30) 5,500 0 0.1 0 4,500 0
- ------------------------
</TABLE>
(1) The number of shares of common stock issuable upon conversion of the
Series B preferred stock, as shown in this table, is based upon the
initial conversion rate of 168.5374 shares of common stock per share of
Series B preferred stock, and also assumes no accumulated and unpaid
dividends. The initial conversion rate will be adjusted as the result of
events contained in the terms of the Series B preferred stock. See
"Description of the Series B Preferred Stock". If any adjustment event
occurs, or if there are any accumulated and unpaid dividends on the Series
B preferred stock, then the number of shares of common stock issuable upon
conversion of the Series B preferred stock could be increased above the
numbers shown in this table. Because this prospectus covers all shares
issuable upon conversion of Series B preferred stock, the actual number of
shares of common stock offered under this prospectus may be greater than
the number shown in the table.
(2) Any information about additional selling securityholders, and any changed
information about the selling securityholders listed in the table below,
will be contained in one or more prospectus supplements, if required.
(3) Information based, in part, upon Amendment No. 3 to Schedule 13D filed
with the SEC on April 11, 2000 by DDJ Capital Management, LLC III-A
Capital Partners, L.P. and GP III-A, LLC. The shares of common stock and
Series B preferred stock are owned by B III-A Capital Partners (234,269
shares of common stock and 500 shares of Series B preferred stock), the
DDJ Canadian High Yield Fund (702,806 shares of common stock and 1,500
shares of Series B preferred stock) and an account established for an
institutional investor (468,537 shares of common stock and 1,000 shares of
Series B preferred stock). GP III-A is the general partner of, and DDJ is
the investment manager for, B III-A Capital Partners. DDJ is also the
investment manager for the account established for the institutional
investor and investment advisor to the DDJ Canadian High Yield Fund.
Includes 300,000 shares of common stock that may be acquired upon the
exercise of currently exercisable warrants (of which warrants to purchase
50,000 shares are owned by B III-A, warrants to purchase 150,000 shares
are owned by DDJ Canadian High Yield Fund and warrants to purchase 100,000
shares are owned by the institutional account) and 505,612 shares of
common stock that may be acquired after June 9, 2000 upon conversion of
the 3,000 shares of Series B preferred stock.
(4) Information based, in part, upon Schedule 13D filed with the SEC on March
8, 2000 by Special Situations Fund III, L.P., Special Situations Cayman
Fund, L.P., Special Situations Private Equity Fund, L.P., Special
Situations Technology Fund, L.P., MGP Advisors Limited Partnership, AWM
Investments Company, Inc., MG Advisors, L.C., SST Advisors, L.L.C., Austin
W. Marxe and David M. Greenhouse. MGP Advisors Limited Partnership is the
general partner of and the investment advisor to the Special Situations
Fund III. AWM Investment Company is the general partner of MGP Advisors
and the general partner of and investment adviser to the Special
Situations Cayman Fund. MG Advisers is the general partner of the Special
Situations Private Equity Fund. SST Advisors is the general partner of the
Special Situations Technology Fund. Austin W. Marxe and David M.
Greenhouse are the officers, directors and members or principal
shareholders of MG Advisors, MGP Advisors, AWM Investment Company and SST
Advisors. As a group, these selling securityholders beneficially own a
total of 994,975 shares of common stock, or 17.5% of outstanding common
stock, and 2,000 shares of Series B preferred stock, or 28.6% of
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<PAGE> 48
outstanding preferred stock, and are offering 937,075 shares of common
stock and 2,000 shares of Series B preferred stock under this prospectus.
(5) Includes 82,500 shares of common stock that may be acquired upon the
exercise of currently exercisable warrants and 139,043 shares of common
stock that may be acquired after June 9, 2000 upon the conversion of 825
shares of Series B preferred stock.
(6) Includes 50,000 shares of common stock that may be acquired upon the
exercise of currently exercisable warrants and 84,269 shares of common
stock that may be acquired after June 9, 2000 upon the conversion of 500
shares of Series B preferred stock.
(7) Includes 40,000 shares of common stock that may be acquired upon the
exercise of currently exercisable warrants and 67,415 shares of common
stock that may be acquired after June 9, 2000 upon the conversion of 400
shares of Series B preferred stock.
(8) Includes 27,500 shares of common stock that may be acquired upon the
exercise of currently exercisable warrants and 46,348 shares of common
stock that may be acquired after June 9, 2000 upon the conversion of 275
shares of Series B preferred stock.
(9) Credit Suisse Asset Management, L.P., is the investment advisor for SEI
Institutional Management Trust, Bost & Co., Warburg Pincus High Yield
Fund, The Common Fund, CSAM Investment Trust - U.S. HYLD Series and SEI
Global - High Yield Fixed Income Fund. As a group, these selling
securityholders beneficially own and are offering under this prospectus
468,538 shares of common stock, or 8.6% of outstanding common stock, and
1,000 shares of Series B preferred stock, or 14.3% of outstanding Series B
preferred stock.
(10) Includes 30,000 shares of common stock that may be acquired upon the
exercise of currently exercisable warrants and 50,561 shares of common
stock that may be acquired after June 9, 2000 upon the conversion of 300
shares of Series B preferred stock.
(11) Includes 20,000 shares of common stock that may be acquired upon the
exercise of currently exercisable warrants and 33,707 shares of common
stock that may be acquired after June 9, 2000 upon the conversion of 200
shares of Series B preferred stock.
(12) Includes 15,000 shares of common stock that may be acquired upon the
exercise of currently exercisable warrants and 25,281 shares of common
stock that may be acquired after June 9, 2000 upon the conversion of 150
shares of Series B preferred stock.
(13) Includes 15,000 shares of common stock that may be acquired upon the
exercise of currently exercisable warrants and 25,281 shares of common
stock that may be acquired after June 9, 2000 upon the conversion of 150
shares of Series B preferred stock.
(14) Includes 15,000 shares of common stock that may be acquired upon the
exercise of currently exercisable warrants and 25,281 shares of common
stock that may be acquired after June 9, 2000 upon the conversion of 150
shares of Series B preferred stock.
(15) Includes 5,000 shares of common stock that may be acquired upon the
exercise of currently exercisable warrants and 8,427 shares of common
stock that may be acquired after June 9, 2000 upon the conversion of 50
shares of Series B preferred stock.
(16) Kenneth B. Funsten is the president and the portfolio manager of Funsten
Asset Management Company. Funsten Asset Management Company is the general
partner of Famco Value Income Partners, L.P. Mr. Funsten is a Director of
Famco Offshore, Ltd. Mr. Funsten holds sole voting and investment power
over the securities owned by Famco Value and Famco Offshore. As a group,
these selling securityholders beneficially own 511,239 shares of common
stock, or 9.6% of outstanding common stock, and 500 shares of Series B
preferred stock, or 7.1% of outstanding Series B
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<PAGE> 49
preferred stock, and are offering under this prospectus 234,269 shares of
common stock and 500 shares of Series B preferred stock. Does not include
4,100 shares owned by an employee of Funsten Asset Management Company
which cannot be sold or further added to without permission by Mr. Funsten
by virtue of restrictions that are placed on securities transactions by
employees of Funsten Asset Management Company, because Mr. Funsten has no
investment or voting authority over the shares of the employee and Mr.
Funsten expressly disclaims beneficial ownership of these shares.
(17) Includes 30,583 shares of common stock that may be acquired upon the
exercise of currently exercisable warrants and 30,505 shares of common
stock that may be acquired after June 9, 2000 upon the conversion of 181
shares of Series B preferred stock.
(18) Includes 80,800 shares of common stock that may be acquired upon the
exercise of currently exercisable warrants and 45,505 shares of common
stock that may be acquired after June 9, 2000 upon the conversion of 270
shares of Series B preferred stock.
(19) Includes 13,962 shares of common stock that may be acquired upon the
exercise of currently exercisable warrants and 8,259 shares of common
stock that may be acquired after June 9, 2000 upon the conversion of 49
shares of Series B preferred stock.
(20) Includes 30,750 shares of common stock that may be acquired upon the
exercise of currently exercisable warrants and 42,134 shares of common
stock that may be acquired after June 9, 2000 upon the conversion of 250
shares of Series B preferred stock.
(21) Includes 25,000 shares of common stock that may be acquired upon the
exercise of currently exercisable warrants and 42,134 shares of common
stock that may be acquired after June 9, 2000 upon the conversion of 250
shares of Series B preferred stock.
(22) Information based, in part, upon Amendment No. 1 to Schedule 13D filed by
American Meter Company, a successor in interest to its former subsidiary
Eagle Research Corporation, with the SEC on February 29, 2000. Includes
136,263 shares of common stock that may be acquired upon the exercise of
currently exercisable warrants.
(23) The number of shares beneficially owned does not include, but the number
of shares offered under this prospectus does include, 125,000 shares of
common stock that may be acquired upon the exercise of a warrant held by
the selling securityholder. The warrant is exercisable from September 7,
2000 through September 7, 2003 at an exercise price of $5.00 per share for
62,500 shares of common stock and at $10.00 per share for an additional
62,500 shares of common stock.
(24) The number of shares of common stock beneficially owned and offered under
this prospectus includes 40,000 shares of common stock that may be
acquired upon the exercise of currently exercisable warrants. The number
of shares beneficially owned does not include, but the number of shares
offered under this prospectus does include, an additional 20,000 shares of
common stock that may be acquired upon the exercise of warrants commencing
March 13, 2001. These warrants are exercisable until September 14, 2002.
The number of shares beneficially owned includes, but the number of shares
offered under this prospectus does not include, 20,000 shares of common
stock that may be acquired upon the exercise of currently exercisable
stock options.
(25) Represents shares of common stock that may be acquired upon the exercise
of a warrant held by the selling securityholder. The warrant is
exercisable until September 7, 2002 at an exercise price of $5.00 per
share.
(26) Includes 15,000 shares of common stock that may be acquired upon the
exercise of a warrant held by the selling securityholder. The warrant is
exercisable until July 19, 2004 at an exercise price of $2.47 per share
for 7,500 shares of common stock and at an exercise price of $4.50 per
share for an additional 7,500 shares of common stock. The number of shares
beneficially owned includes, but the number of shares offered under this
prospectus does not include, 5,500 shares of common stock owned by Eugene
Heller, the owner of the selling securityholder.
(27) Represents shares of common stock that may be acquired upon the exercise
of currently exercisable warrants at an exercise price of $14.50 per share
until February 4, 2004.
(28) The number of shares beneficially owned and offered under this prospectus
consists of 4,500 shares of common stock that may be acquired upon the
exercise of currently exercisable warrants at an exercise price of $14.50
per share until February 4, 2004. The number of shares beneficially owned
includes, but the number of shares offered under this prospectus does not
include, 21,700 shares owned by Mr. Reinert's wife.
(29) Represents shares of common stock that may be acquired upon the exercise
of currently exercisable warrants at an exercise price of $14.50 per share
until February 4, 2004.
(30) The number of shares beneficially owned and offered under this prospectus
consists of 4,500 shares of common stock that may be acquired upon the
exercise of currently exercisable warrants at an exercise price of $14.50
per share until February 4, 2004. The number of shares beneficially owned
includes, but the number of shares offered under this prospectus does not
include, 1,000 shares that may be acquired upon the exercise of currently
exercisable warrants.
Information about the selling securityholders may change over time. Any
changed information will be contained in one or more prospectus supplements.
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<PAGE> 50
Except as described below, none of the selling securityholders has had
any position, office or other material relationship with us or any of our
affiliates within the past three years, other than as a result of the ownership
of our shares or other securities.
On March 17, 2000, PowerSpring acquired Mercator. Mr. Harpole was the
sole shareholder of Mercator. See "Metretek Technologies, Inc. - Our recent
Internet-based business strategy - Acquisition of Mercator."
On May 4, 1998, Metretek Florida acquired assets of a subsidiary of
American Meter. We and Metretek Florida entered into agreements relating to the
acquisition and ongoing relationships with American Meter and its former
subsidiary, including an asset purchase agreement, a promissory note, and a
noncompete agreement. Metretek Florida also entered into a license agreement
with American Meter, for the license by American Meter to Metretek of operating
software, and the development, manufacture and sale by Metretek Florida to
American Meter of electronic components and related equipment pertaining to
electronic temperature and pressure correction to be embedded within certain new
rotary and turbine meters of American Meter. The license agreement also grants
to American Meter and its affiliates the right to sell Metretek Florida products
in the United States and Canada at agreed-upon prices. After the acquisition,
Metretek Florida and American Meter entered into an international sales
agreement, under which American Meter and its affiliates have the non-exclusive
right to sell Metretek Florida products internationally. Harry I. Skilton, the
president, chief executive officer and a director of American Meter, became a
member of our board of directors in May 1998 in connection with this
acquisition. During fiscal 1998 and 1999, we recorded revenues of approximately
$522,000 and $593,000 with respect to sales to American Meter under the license
agreement and the international sales agreement. The terms of the acquisition
agreements, the license agreement and the international sales agreement were the
result of arms-length negotiations between the parties.
Each of the unit purchasers purchased from us, in the units private
placement, units consisting of shares of common stock, shares of Series B
preferred stock and warrants to purchase shares of common stock. In connection
with their purchase of the units, the unit purchasers entered into a securities
purchase agreement, a registration rights agreement and related agreements with
us, relating to the common stock, Series B preferred stock and unit warrants.
The terms of these securities, and the rights of the holders of these
securities, are described below under "Description of Capital Stock" and
"Description of the Series B Preferred Stock".
PLAN OF DISTRIBUTION
The selling securityholders may from time to time offer and sell the
shares offered under this prospectus. References in this prospectus to the
selling securityholders include the persons listed in the table under "Selling
Securityholders" and any donees, pledgees, transferees or other
successors-in-interest selling shares received from a selling securityholder as
a gift, pledge, partnership distribution or other non-sale-related transfer
after the date of this prospectus. The selling securityholders will act
independently of us in making decisions with respect to the timing, manner and
size of each sale of the shares.
The selling securityholders may sell the shares offered under this
prospectus on the Nasdaq National Market, on any other stock exchange or stock
market on which the shares may from time to time be traded, in the
over-the-counter market, in negotiated transactions, in underwritten
transactions or otherwise, at market prices prevailing at the time of sale, at
prices related to the then prevailing market prices, at negotiated prices, or at
fixed prices, in one or more of the following transactions:
- a block trade in which the broker-dealer engaged will attempt to
sell the shares as agent, but may position and resell a portion of
the block as principal to facilitate the transaction;
- a purchase by a broker-dealer as principal and resale by the
broker-dealer for its own account under this prospectus;
- an exchange distribution under the rules of the exchange;
- ordinary brokerage transactions and transactions in which the
broker solicits purchasers;
- privately negotiated transactions;
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<PAGE> 51
- through the writing of options on the shares, whether or not the
options are listed on an options exchange;
- pledges to secure debts and other obligations;
- short sales;
- broker-dealers may agree with the selling securityholders to sell
a specified number of shares at a stipulated price per share; or
- any other method permitted by applicable law.
The selling securityholders may effect sales by selling the shares
directly to purchasers or to or through underwriters or broker-dealers, acting
as principal or agent. In effecting sales, underwriters or broker-dealers
engaged by the selling securityholders may arrange for other broker-dealers to
participate in the resales. The selling securityholders have advised us that, as
of the date of this prospectus, they have not entered into any agreements,
understandings or arrangements with any underwriters or broker-dealers regarding
the sale of the shares offered under this prospectus. There is no underwriter or
coordinating broker acting in connection with the proposed sale of shares by the
selling securityholders.
Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from selling securityholders.
Broker-dealers or agents may also receive compensation from the purchasers of
the shares for whom they act as agents or to whom they sell as principal, or
both. Compensation as to a particular broker-dealer might be in excess of
customary commissions and will be in amounts to be negotiated in connection with
the sale. The selling securityholders and any broker-dealers or agents that
participate in the distribution of the shares may be deemed to be "underwriters"
within the meaning of the Securities Act in connection with these sales.
Accordingly, any commission, discount or concession received by them and any
profit on the resale of the shares purchased by them may be deemed to be
underwriting discounts or commissions under the Securities Act. Because selling
securityholders may be deemed to be underwriters under the Securities Act, the
selling securityholders will be required to comply with the prospectus delivery
requirements of the Securities Act.
The selling securityholders may enter into hedging transactions with
broker-dealers or other financial institutions in connection with distributions
of the shares or otherwise. In connection with these transactions,
broker-dealers or other financial institutions may engage in short sales of the
shares offered under this prospectus in the course of hedging the positions they
assume with selling securityholders. The selling securityholders also may sell
shares short and redeliver the shares offered under this prospectus to close out
their short positions. The selling securityholders may also enter into options
or other transactions with broker-dealers or other financial institutions which
require the delivery to the broker-dealers or other financial institutions of
the shares offered under this prospectus. The broker-dealer may then resell or
otherwise transfer these shares under this prospectus as it may be amended or
supplemented to reflect this transaction. The selling securityholders also may
loan or pledge the shares offered under this prospectus to a broker-dealer or
other financial institution. The broker-dealer or other financial institution
may sell the shares so loaned, or upon a default the broker-dealer or other
financial institution may sell the pledged shares under this prospectus.
In addition, any shares offered under this prospectus that qualify for
sale under Rule 144 under the Securities Act may be sold by the selling
securityholders under Rule 144 rather than under this prospectus.
The shares will be sold only through registered or licensed brokers or
dealers if required by applicable state securities laws. In addition, in some
states the shares may not be sold unless they have been registered or qualified
for sale in the applicable state or an exemption from the registration or
qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any
person engaged in a distribution of the shares offered under this prospectus may
be limited in its ability to engage in market activities with respect to these
shares. The selling securityholders will be required to comply with the
applicable provisions of the Exchange Act and the associated rules and
regulations under the Exchange Act, including the anti-manipulation provisions
of Regulation M, which provisions may restrict activities of the selling
securityholders and limit the timing of purchases and sales of shares by the
selling securityholders. Furthermore, under Regulation M under the Exchange Act,
any person engaged in the distribution of the shares may not simultaneously
engage in market-making activities with respect to the particular shares being
distributed for specific periods before the commencement of the distribution.
All of the
49
<PAGE> 52
foregoing may affect the marketability of the securities and the ability of any
person to engage in market-making activities with respect to the shares.
Upon being notified by a selling securityholder that any material
arrangement has been entered into with a broker-dealer for the sale of shares
through a block trade, special offering, underwritten offering, exchange
distribution or secondary distribution or a purchase by a broker or dealer, we
will file a supplement to this prospectus, if required, under Rule 424(b) under
the Securities Act, disclosing:
- the name of the selling securityholder and of the participating
broker-dealer(s);
- the number of shares involved;
- the price at which the shares were sold;
- the commissions paid or discounts or concessions allowed to the
broker-dealer(s), where applicable;
- that the broker-dealer(s) did not conduct any investigation to verify
the information set out or incorporated by reference in this
prospectus; and
- other facts material to the transaction.
In addition, upon being notified by a selling securityholder that a
donee, pledgee, transferee or other successor-in-interest intends to sell more
than 500 shares, we will file a supplement to this prospectus. Any prospectus
supplement may also add, update or change any information contained in this
prospectus.
We will pay all expenses related to the registration of the sale of the
shares offered under this prospectus by the selling securityholders. The selling
securityholders will pay all commissions, discounts, concessions and other
compensation and selling expenses attributable to the sale of the shares. We
have agreed to indemnify the selling securityholders against liabilities related
to the registration of the shares, including liabilities arising under the
Securities Act, or to contribute to payments the selling securityholders may be
required to make in respect of these liabilities. The selling securityholders
may agree to indemnify any broker-dealer or agent that participates in
transactions involving sales of the shares against liabilities related to the
offer and sale of the shares, including liabilities arising under the Securities
Act, or to contribute to payments a broker-dealer or agent may be required to
make in respect of these liabilities.
We cannot assure you that the selling securityholders will sell all or
any of the shares offered under this prospectus.
LEGAL MATTERS
The validity of the shares offered under this prospectus will be passed
upon for us by Kegler, Brown, Hill & Ritter Co., L.P.A., Columbus, Ohio.
EXPERTS
The financial statements incorporated in this prospectus by reference
from Metretek's Annual Report on Form 10-KSB for the year ended December 31,
1999 have been audited by Deloitte & Touche LLP, independent auditors, as stated
in their report, which is incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. You may read and
copy any reports, proxy statements or other information we file with the SEC at
the SEC's public reference rooms at the following locations:
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<PAGE> 53
Washington, D.C. Office New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, IL 60661-2511
Please call the SEC at 1-800-SEC-0330 to obtain information on the
operation of its public reference rooms. Our SEC filings are also available on
the Internet on the SEC's web site at http://www.sec.gov.
Our common stock is listed on the Nasdaq National Market. Reports,
proxy statements and other information we file with the SEC can be inspected at
the offices of the Nasdaq Stock Market, Reports Section, 1735 K Street, N.W.,
Washington, D.C. 20006.
The SEC allows us to "incorporate by reference" in this prospectus the
information we file with the SEC. This means we can disclose important
information to you by referring you to the filed documents that contain the
information. The information incorporated by reference is considered to be part
of this prospectus, and documents that we file later with the SEC will
automatically update and supersede previously filed information. We incorporate
by reference the documents listed below, which we have already filed with the
SEC, and any future filings we make with the SEC under Sections 13(a), 13(c),
14, or 15(d) of the Securities Exchange Act of 1934, until the termination or
completion of the offering under this prospectus:
- our Annual Report on Form 10-KSB for the fiscal year ended December 31,
1999;
- our Current Report on Form 8-K filed on April 3, 2000; and
- the description of our common stock, including the description of our
preferred share purchase rights, contained in our registration
statement on Form 8-A filed with the SEC on January 10, 1993, which was
amended on Form 8-A/A Amendment No. 1 filed with the SEC on April 3,
1998, Form 8-A/A Amendment No. 3 filed with the SEC on July 7, 1998 and
Form 8-A/A Amendment No. 4 filed with the SEC on December 27, 1999,
including any amendments or reports filed with the SEC for the purpose
of updating the description.
We will provide you with a copy of these filings, at no cost, if you
write or telephone us at the following address:
Metretek Technologies, Inc.
1675 Broadway, Suite 2150
Denver, Colorado 80202
Attention: Corporate Secretary
Telephone: (303) 592-5555
We have filed with the SEC a registration statement on Form S-3 under
the Securities Act of 1933, relating to the securities that may be offered by
this prospectus. This prospectus is a part of the registration statement, but
does not contain all of the information included or incorporated by reference in
the registration statement. The registration statement, including the exhibits
filed with it, can be obtained from the SEC or from us as indicated above.
You should rely only on the information provided or incorporated by
reference in this prospectus or in any supplement to this prospectus. We have
not authorized anyone to provide you with any different information. Neither we
nor the selling securityholders are making an offer of these securities in any
state where the offer is not permitted. You should not assume that the
information in this prospectus or any prospectus supplement is accurate as of
any date other than the date on the front of the documents.
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<PAGE> 54
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table shows the costs and expenses, other than
underwriting discounts and commissions, payable by Metretek Technologies, Inc.
in connection with the offering of the shares being registered in this
registration statement. All amounts shown in the table below, other than the SEC
registration fee, are estimates:
SEC registration fee........................ $9,156.47
Nasdaq National Market listing fee.......... 17,500.00
Legal fees and expenses..................... 20,000.00
Accounting fees and expenses................ 5,000.00
Printing costs.............................. 1,000.00
Miscellaneous............................... 7,343.53
----------
Total............................. $60,000.00
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware
("DGCL") provides for indemnification of the directors, officers, employees and
agents of a corporation under certain conditions and subject to certain
limitations. As permitted by Section 145 of the DGCL, Metretek's Second Restated
Certificate of Incorporation ("Second Restated Certificate") permits Metretek to
indemnify any person who was or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, other than an action by or in the
right of Metretek, by reason of the fact such person is or was an officer of
director of Metretek, or is or was serving at Metretek's request as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such action, suit or proceeding, provided that
such person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of Metretek, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe such
person's conduct was unlawful. Metretek is also permitted to indemnify the same
persons against expenses, including attorneys' fees, actually and reasonably
incurred by such persons in connection with the defense or settlement of any
threatened, pending or completed action or suit by or in the right of Metretek
under the same conditions, except that no indemnification will be made in
respect to any claim, issue or matter as to which such person has been adjudged
to be liable to Metretek unless, and only to the extent that, the adjudicating
court determines that such indemnification is proper under the circumstances. To
the extent such persons are successful on the merits or otherwise in defense of
any such action, suit or proceeding, such indemnification is mandatory. Metretek
may also pay the expenses incurred in any such action, suit or proceeding in
advance of its final disposition, upon receipt of an appropriate undertaking by
such person. Such rights are not exclusive of any other right which any person
may have or hereafter acquire under any statute, or under any provision of the
Second Restated Certificate, Metretek's By-Laws, or under any agreement, vote of
stockholders or disinterested directors or otherwise. No repeal or modification
of these provisions of the Restated Certificate will in any way diminish or
adversely affect the rights of any person to indemnification thereunder in
respect of any occurrences or matters arising before any such repeal or
modification.
Metretek's Amended and Restated By-Laws provide that Metretek shall
indemnify its directors, officers, employees and agents to the extent permitted
by the DGCL.
As permitted by Section 102(b)(7) of the DGCL, Metretek's Second
Restated Certificate also eliminates the personal liability of Metretek's
directors to Metretek or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to us or out stockholders; (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law; (iii) under Section 174 of the DCGL, relating to unlawful payments of
dividends or unlawful stock purchases or redemptions; and (iv) for any
transaction from which a director derived an improper personal benefit.
II-1
<PAGE> 55
Metretek's Second Restated Certificate also specifically authorizes
Metretek to maintain insurance and to grant similar indemnification rights to
employees or agents of Metretek. The directors and officers of Metretek are
covered by an insurance policy indemnifying them against certain liabilities,
including certain liabilities arising under the Securities Act, which might be
incurred by them in such capacity.
Metretek has also entered into indemnification agreements with each of
its directors that require Metretek to indemnify its directors against certain
liabilities, including certain liabilities arising under the Securities Act,
which might be incurred by them in such capacity.
ITEM 16. EXHIBITS
(2) PLAN OF PURCHASE, SALE, REORGANIZATION, ARRANGEMENT, LIQUIDATION OR
SUCCESSION:
(2.1) Asset Purchase Agreement, dated as of March 23, 1998, by and
among Eagle Research Corporation, American Meter Company,
Metretek, Incorporated and Marcum Natural Gas Services, Inc.
(Incorporated by reference to Exhibit 2.4 to Metretek's Annual
Report on Form 10-KSB for the year ended December 31, 1997.)
(2.2) Agreement and Plan of Merger, dated as of March 16, 2000, by
and between TotalPlan, Inc. and PowerSpring, Inc.
(Incorporated by reference to Exhibit 2.2 to Metretek's,
Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1999.)
(2.3) Agreement and Plan of Merger, dated as of March 17, 2000, by
and among PowerSpring, Inc., MERC Acquisition Corp., Mercator
Energy Incorporated and John A. Harpole. (Incorporated by
reference to Exhibit 2.3 to Metretek's Annual Report on
Form 10-KSB for the fiscal year ended December 31, 1999.)
(4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES:
(4.1) Second Restated Certificate of Incorporation of Metretek
Technologies, Inc.*
(4.2) Amended and Restated By-Laws of Metretek Technologies, Inc.
(Incorporated by reference to Exhibit 3.2 to Metretek's Form
8-K filed on July 3, 1998).
(4.3) Specimen Common Stock Certificate. (Incorporated by reference
to Exhibit 4.1 to Metretek's Registration Statement on Form
S-18, Registration No. 33-44558.)
(4.4) Specimen Series B Preferred Stock Certificate.
(4.5) Rights Agreement, dated as of December 2, 1991, between
Metretek Technologies, Inc. and American Securities Transfer,
Inc. (Incorporated by reference to Exhibit 10.6 to Metretek's
Registration Statement on Form S-18, Registration No.
33-44558.)
(4.6) Amendment No. 1 to Rights Agreement, dated as of March 23,
1998, between Metretek Technologies, Inc. and American
Securities Transfer & Trust, Inc. (Incorporated by reference
to Exhibit 2 to Metretek's Form 8-A/A Amendment No. 1 filed
April 3, 1998).
(4.7) Amendment No. 2 to Rights Agreement, dated as of December 9,
2000, between Metretek Technologies, Inc. and American
Securities Transfer & Trust, Inc. (Incorporated by reference
to Exhibit 1 to Metretek's Form 8-A/A Amendment No. 4 filed
December 22, 1999).
(4.8) Securities Purchase Agreement, dated as of December 9, 1999,
by and among Metretek Technologies, Inc. and certain purchases
of securities of Metretek Technology, Inc. (collectively, the
"Unit Purchasers"). (Incorporated by reference to Exhibit 4.3
to Metretek's Form 8-K filed on December 21, 1999).
(4.9) Form of Common Stock Purchase Warrant issued to Unit
Purchasers. (Incorporated by reference to Exhibit 4.3 to
Metretek's Form 8-K filed on December 21, 1999).
(4.10) Registration Rights Agreement, dated December 9, 1999, by and
among Metretek Technologies, Inc. and the Unit Purchasers.
(Incorporated by reference to Exhibit 4.4 to Metretek's Form
8-K filed on December 21, 1999).
(4.11) Letter Agreement, dated as of December 22, 1999, between
Metretek Technologies, Inc. and DDJ Capital Management.
(Incorporated by reference to Exhibit 4.5 to Metretek's Form
8-K filed on December 21, 1999).
(4.12) Form of Common Stock Purchase Warrant issued to Scient
Corporation.
(4.13) Form of Common Stock Purchase Warrant held by John A. Harpole.
(4.14) Form of Common Stock Purchase Warrant issued to National Bank
of Canada.
II-2
<PAGE> 56
(4.15) Form of Common Stock Purchase Warrant issued to Silverman
Heller Associates.
(4.16) Form of Common Stock Purchase Agreement issued to First Albany
Corporation, William Reinert, John S. Koodrich and
Lawrence C. Petrucci.
(5) OPINION ON LEGALITY:
(5.1) Opinion of Kegler, Brown, Hill & Ritter Co., L.P.A.
(8) OPINION ON TAX MATTERS:
(8.1) Opinion of Kegler, Brown, Hill & Ritter Co., L.P.A. on tax
matters
(23) CONSENTS OF EXPERTS AND COUNSEL:
(23.1) Consent of Deloitte & Touche LLP
(23.2) Consent of Kegler, Brown, Hill & Ritter Co. L.P.A. (included
in Exhibits 5.1 and 8.1)
(24) POWER OF ATTORNEY:
(24.1) Powers of Attorney of officers and directors of Metretek
Technologies, Inc. (included on Signature Page).
- ------------------------
* Previously filed.
ITEM 17. UNDERTAKINGS.
(a) Metretek, the Small Business Issuer, will:
(1) File, during any period in which it offers or sells
securities, a post-effective amendment to this Registration
Statement to:
(i) Include any prospectus required by section
10(a)(3) of the Securities Act;
(ii) Reflect in the prospectus any facts or
events which, individually or together,
represent a fundamental change in the
information in the registration statement.
Notwithstanding the foregoing, any increase
or decrease in volume of securities offered
(if the total dollar value of securities
offered would not exceed that which was
registered) and any deviation from the low
or high end of the estimated maximum
offering range may be reflected in the form
of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price
represent no more than a 20% change in the
maximum aggregate offering price set forth
in the "Calculation of Registration Fee"
table in the effective registration
statement; and
(iii) Include any additional or changed material
information on the plan of distribution;
provided, however, that paragraph (i) and (ii) above
do not apply if the information required in a
post-effective amendment is incorporated by reference
from periodic reports filed by Metretek under the
Exchange Act.
II-3
<PAGE> 57
(2) For determining liability under the Securities Act, treat
each post-effective amendment as a new registration statement
of the securities offered, and the offering of the securities
at that time to be the initial bona fide offering.
(3) File a post-effective amendment to remove from
registration any of the securities being registered that
remain unsold at the end of the offering.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Small Business Issuer pursuant to the foregoing provisions, or
otherwise, the Small Business Issuer has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Small Business Issuer of expenses incurred or paid by a director, officer or
controlling person of the Small Business Issuer in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Small Business
Issuer will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
(c) Metretek, the Small Business Issuer, will:
(1) For determining any liability under the Securities Act,
treat the information omitted from the form of prospectus
filed as part of this Registration Statement in reliance upon
Rule 430A and contained in a form of prospectus filed by the
Small Business Issuer under Rule 424(b)(1) or (4) or 497(h)
under the Securities Act as part of this Registration
Statement as of the time the Commission declared if effective.
(2) For determining any liability under the Securities Act,
treat each post-effective amendment that contains a form of
prospectus as a new registration statement for the securities
offered in the registration statement, and that offering of
the securities at that time as the initial bona fide offering
of those securities.
(d) Metretek hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of Metretek's annual report
pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
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<PAGE> 58
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Amendment
No. 1 to Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Denver, State of Colorado on the 26th
day of April, 2000.
METRETEK TECHNOLOGIES, INC.
By: /s/ W. Phillip Marcum
------------------------------------
W. Phillip Marcum, President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
* President, Chief Executive Officer April 26, 2000
- ------------------------------------ and Director (Principal Executive
W. Phillip Marcum Officer)
* Executive Vice President, Chief Financial April 26, 2000
- ------------------------------------ Officer, Treasurer and Director
A. Bradley Gabbard (Principal Financial Officer)
* Principal Accounting Officer, Controller April 26, 2000
- ------------------------------------ and Secretary (Principal Accounting
Gary J. Zuiderveen Officer)
* Director April 26, 2000
- ------------------------------------
Basil M. Briggs
* Director April 26, 2000
- ------------------------------------
Robert Lloyd
* Director April 26, 2000
- ------------------------------------
Albert F. Thomasson
* Director April 26, 2000
- ------------------------------------
Ronald W. McKee
* Director April 26, 2000
- ------------------------------------
Harry I. Skilton
</TABLE>
*Signed pursuant to a Power of Attorney
By: /s/ Paul R. Hess
---------------------------------
Paul R. Hess, Attorney-in-Fact
II-5
<PAGE> 59
METRETEK TECHNOLOGIES, INC.
FORM S-3
EXHIBIT INDEX
ITEM 16. EXHIBITS
(2) PLAN OF PURCHASE, SALE, REORGANIZATION, ARRANGEMENT, LIQUIDATION OR
SUCCESSION:
(2.1) Asset Purchase Agreement, dated as of March 23, 1998, by and
among Eagle Research Corporation, American Meter Company,
Metretek, Incorporated and Marcum Natural Gas Services, Inc.
(Incorporated by reference to Exhibit 2.4 to Metretek's Annual
Report on Form 10-KSB for the year ended December 31, 1997.)
(2.2) Agreement and Plan of Merger, dated as of March 16, 2000, by
and between TotalPlan, Inc. and PowerSpring, Inc.
(Incorporated by reference to Exhibit 2.2 to Metretek, Annual
Report on Form 10-KSB for the fiscal year ended December 31,
1999.)
(2.3) Agreement and Plan of Merger, dated as of March 17, 2000, by
and among PowerSpring, Inc., MERC Acquisition Corp., Mercator
Energy Incorporated and John A. Harpole.(Incorporated by
reference to Exhibit 2.3 to Metretek, Annual Report on
Form 10-KSB for the fiscal year ended December 31, 1999.)
(4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES:
(4.1) Second Restated Certificate of Incorporation of Metretek
Technologies, Inc.*
(4.2) Amended and Restated By-Laws of Metretek Technologies, Inc.
(Incorporated by reference to Exhibit 3.2 to Metretek's Form
8-K filed on July 3, 1998).
(4.3) Specimen Common Stock Certificate. (Incorporated by reference
to Exhibit 4.1 to Metretek's Registration Statement on Form
S-18, Registration No. 33-44558.)
(4.4) Specimen Series B Preferred Stock Certificate.
(4.5) Rights Agreement, dated as of December 2, 1991, between
Metretek Technologies, Inc. and American Securities Transfer,
Inc. (Incorporated by reference to Exhibit 10.6 to Metretek's
Registration Statement on Form S-18, Registration No.
33-44558.)
(4.6) Amendment No. 1 to Rights Agreement, dated as of March 23,
1998, between Metretek Technologies, Inc. and American
Securities Transfer & Trust, Inc. (Incorporated by reference
to Exhibit 2 to Metretek's Form 8-A/A Amendment No. 1 filed
April 3, 1998).
(4.7) Amendment No. 2 to Rights Agreement, dated as of December 9,
2000, between Metretek Technologies, Inc. and American
Securities Transfer & Trust, Inc. (Incorporated by reference
to Exhibit 1 to Metretek's Form 8-A/A Amendment No. 4 filed
December 22, 1999).
(4.8) Securities Purchase Agreement, dated as of December 9, 1999,
by and among Metretek Technologies, Inc. and certain purchases
of securities of Metretek Technology, Inc. (collectively, the
"Unit Purchasers"). (Incorporated by reference to Exhibit 4.3
to Metretek's Form 8-K filed on December 21, 1999).
(4.9) Form of Common Stock Purchase Warrant issued to Unit
Purchasers. (Incorporated by reference to Exhibit 4.3 to
Metretek's Form 8-K filed on December 21, 1999).
(4.10) Registration Rights Agreement, dated December 9, 1999, by and
among Metretek Technologies, Inc. and the Unit Purchasers.
(Incorporated by reference to Exhibit 4.4 to Metretek's Form
8-K filed on December 21, 1999).
(4.11) Letter Agreement, dated as of December 22, 1999, between
Metretek Technologies, Inc. and DDJ Capital Management.
(Incorporated by reference to Exhibit 4.5 to Metretek's Form
8-K filed on December 21, 1999).
(4.12) Form of Common Stock Purchase Warrant issued to Scient
Corporation.
(4.13) Form of Common Stock Purchase Warrant held by John A. Harpole.
(4.14) Form of Common Stock Purchase Warrant issued to National Bank
of Canada.
II-6
<PAGE> 60
(4.15) Form of Common Stock Purchase Warrant issued to Silverman
Heller Associates.
(4.16) Form of Common Stock Purchase Agreement issued to First Albany
Corporation, William Reinert, John S. Koodrich and
Lawrence C. Petrucci.
(5) OPINION ON LEGALITY:
(5.1) Opinion of Kegler, Brown, Hill & Ritter Co., L.P.A.
(8) OPINION ON TAX MATTERS:
(8.1) Opinion of Kegler, Brown, Hill & Ritter Co., L.P.A. on tax
matters
(23) CONSENTS OF EXPERTS AND COUNSEL:
(23.1) Consent of Deloitte & Touche LLP
(23.2) Consent of Kegler, Brown, Hill & Ritter Co. L.P.A. (included
in Exhibits 5.1 and 8.1)
(24) POWER OF ATTORNEY:
(24.1) Powers of Attorney of officers and directors of Metretek
Technologies, Inc. (included on Signature Page).
- ------------------------
* Previously filed.
II-7
<PAGE> 1
Exhibit 4.4
Form of Specimen Series B Preferred Stock Certificate
<PAGE> 2
SPECIMEN SERIES B PREFERRED STOCK CERTIFICATE
INCORPORATED UNDER THE LAWS OF
DELAWARE
No. _____ Shares _____
METRETEK TECHNOLOGIES, INC.
SERIES B PREFERRED STOCK, PAR VALUE $.01 PER SHARE
THIS CERTIFIES THAT ______________________ is the owner of
________________ Shares of Series B Preferred Stock each of the Capital Stock of
METRETEK TECHNOLOGIES, INC.
transferable only on the books of the Corporation by the holder
hereof in person or by Attorney upon surrender of this Certificate
properly endorsed.
IN WITNESS WHEREOF, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and to be sealed with the Seal of the
Corporation this ________ day of ____________ A.D. ______
- ----------------------------- --------------------------------------------
Gary J. Zuiderveen, Secretary A. Bradley Gabbard, Executive Vice President
SHARES $.01 EACH
SEE RESTRICTIONS ON REVERSE SIDE
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, NOR PURSUANT TO THE SECURITIES OR "BLUE SKY"
LAWS OF ANY STATE. SUCH SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED,
PLEDGED, HYPOTHECATED OR OTHERWISE ASSIGNED, EXCEPT IN ACCORDANCE WITH
APPLICABLE "BLUE SKY" LAWS AND PURSUANT TO A REGISTRATION STATEMENT WITH RESPECT
TO SUCH SECURITIES WHICH IS EFFECTIVE UNDER SUCH ACT OR AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT.
THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO REQUESTS
THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR
OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES THEREOF OF THE
CORPORATION, AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH
PREFERENCES AND/OR RIGHTS. SUCH REQUEST MAY BE MADE TO THE CORPORATION OR THE
TRANSFER AGENT
CERTIFICATE
FOR
-------------
SHARES
OF THE
CAPITAL STOCK
METRETEK TECHNOLOGIES, INC.
ISSUED TO
--------------
DATED
-------------------------------
<PAGE> 3
For Value Received, ________ hereby sell, assign and transfer
unto ______________________________________________
__________________________________________ Shares
of the Capital Stock represented by the within
Certificate, and do hereby irrevocably constitute and appoint
___________________________________________________________
to transfer the said Stock on the books of the within named
Corporation with full power of substitution in the premises.
Dated ____________________ _______
In presence of
- --------------------------------- -------------------------------
Notice: The signature of this assignment
must correspond with the name as written upon the
face of the certificate, in every particular, without
alteration or enlargement, or any change whatever.
<PAGE> 1
Exhibit 4.12
Form of Common Stock Purchase Warrant issued to Scient Corporation
<PAGE> 2
THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED, SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSACTION IS REGISTERED UNDER
THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM SUCH SECURITIES REGISTRATION REQUIREMENTS AND THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, TO THAT
EFFECT. THIS WARRANT IS SUBJECT TO FURTHER RESTRICTIONS ON TRANSFER SET FORTH
HEREIN.
METRETEK TECHNOLOGIES, INC.
WARRANT TO PURCHASE COMMON STOCK
WARRANT TO PURCHASE ISSUE DATE: SEPTEMBER 7, 1999
125,000 SHARES OF COMMON STOCK EXPIRATION DATE: SEPTEMBER 7, 2003
THIS CERTIFIES THAT, for value received, Scient Corporation, a Delaware
corporation (the "Holder"), is entitled to purchase up to 125,000 shares of
Common Stock, par value $.01 per share (the "Shares"), of Metretek Technologies,
Inc., a Delaware corporation (the "Company"), at the exercise price per Share
(the "Exercise Price") and during the periods set forth in Section 2 below, as
adjusted pursuant to Section 11 below, until 5:00 p.m., Denver, Colorado time on
September 7, 2003 (the "Expiration Date"), upon the terms and subject to the
conditions set forth in this Warrant.
The Shares or other property or securities issuable upon the exercise
of the Warrants are hereinafter referred to as the "Warrant Shares" and the
exercise price per Warrant Share in effect at any time and as adjusted from time
to time is hereinafter referred to as the "Exercise Price."
1. Method of Exercise of Warrant. This Warrant may be exercised by the
Holder in whole at any time or in part from time to time within the period
specified herein by the presentation and surrender of this Warrant, together
with the Form for Exercise of Warrants attached hereto ("Exercise Form") duly
executed by Holder, to the Company at its principal executive offices,
accompanied by payment, by bank certified or cashier's check payable to the
order of the Company, or by wire transfer of immediately available funds to an
account designated by the Company, in the amount equal to the number of Warrant
Shares for which the Warrant is being exercised multiplied by the Exercise Price
of such Warrant Shares. Upon the Holder's exercise of this Warrant in accordance
with the terms and conditions hereof, the Company shall issue the number of
Warrant Shares to the Holder specified on the Exercise Form.
<PAGE> 3
2. Number of Warrant Shares; Exercisability of Warrant.
(a) Generally. Upon the terms and subject to the conditions set
forth in this Warrant, the Holder is entitled to purchase 125,000 Shares at the
Exercise Prices per Share set forth below, as such number of Shares and/or
Exercise Prices are adjusted from time to time hereunder.
(b) Warrant Tranches. This Warrant shall become exercisable and vest
in two Warrant tranches of 62,500 Shares each (each, a "Tranche"). Each Tranche
shall become vested on the date and at the Exercise Price set forth below:
Vesting Date Number of Shares Vesting Exercise Price
------------ ------------------------ --------------
September 7, 2000 62,500 $ 5.00 per Share
September 7, 2000 62,500 $10.00 per Share
This Warrant shall be exercisable from time to time only for the number of
Warrant Shares which have vested as of such time.
(c) Expiration of Warrant. This Warrant shall expire and become
unexercisable upon the Expiration Date.
3. Exercise in Part. If this Warrant is exercised in part only prior to
the Expiration Date, the Company shall, upon surrender of this Warrant for
cancellation, execute and deliver a new certificate evidencing the right of the
Holder to receive the balance of the Warrant Shares hereunder.
4. Status as Stockholder After Exercise. Upon receipt by the Company of
this Warrant and the Exercise Form at the principal executive offices of the
Company in proper form for exercise and the Exercise Price in full, the Holder
shall be deemed to be the holder of record of the Warrant Shares issuable upon
such exercise, notwithstanding that certificates representing such Warrant
Shares shall not then be actually delivered to the Holder. If the stock transfer
books of the Company shall be closed on the date of receipt of this Warrant, the
Holder shall be deemed to be the Holder of such Warrant Shares on the next
succeeding day on which the stock transfer books of the Company shall be opened.
5. Delivery of Stock Certificates Upon Exercise. As soon as practicable
after the exercise of this Warrant, in whole or in part, the Company shall cause
to be issued in the name of and delivered to the Holder a certificate or
certificates evidencing the number of fully paid and nonassessable Warrant
Shares to which the Holder shall be entitled as a result of such exercise,
together with any other property to which the Holder is entitled upon such
exercise.
6. Reservation of Warrant Shares. The Company shall at all times
reserve and keep available, solely for issuance and/or delivery upon exercise of
this Warrant, such number of Warrant Shares as shall then be issued upon the
exercise of this Warrant. All Warrant Shares issued upon exercise hereof shall,
upon such issuance, be fully paid and nonassessable.
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<PAGE> 4
7. No Fractional Shares. No fractional Warrant Shares shall be issued
upon the exercise, in whole or in part, of this Warrant. If fractional Warrant
Shares would be issuable upon exercise of this Warrant, the Company shall, in
lieu thereof, pay to the Holder an amount in cash equal to such fraction
multiplied by the then "current market value" of such fractional Warrant Shares.
For purposes of this paragraph only, the "current market value" of the Warrant
Shares shall be equal to the closing sale price of the Shares on the Nasdaq
Stock Market, so long as they are listed thereon, and thereafter the closing
sale price (or, if not available on such date, the average of the high and low
bid price for such date) of the Shares on any national securities exchange or
any other stock exchange, stock market or stock quotation system which
constitutes the primary market on which the Shares are then traded or quoted. If
the Shares are not listed or traded on any stock exchange, stock market or stock
system, then the "current market value" shall be an amount, not less than book
value, as determined in good faith by the Board of Directors of the Company.
8. Rights of the Holder Prior to Exercise. The Holder shall not, solely
by virtue of this Warrant, be entitled to any voting or other rights of a
stockholder of the Company, either at law or equity, prior to the exercise of
this Warrant upon the terms and conditions set forth herein, and the rights of
the Holder are limited to those expressed in this Warrant and are not
enforceable against the Company except to the extent expressly set forth herein.
9. Ownership of Warrants. The Company shall be entitled to treat the
registered Holder as the absolute owner hereof for all purposes and shall not be
bound to recognize any equitable or other claim to or interest in the Warrant on
the part of any other person.
10. Assignment and Exchange of Warrants. Upon any registration of
transfer, the Company shall deliver a new Warrant or Warrants to the person
entitled thereto. This Warrant may be exchanged, at the option of the Holder
thereof, for another Warrant, or other Warrants of different denominations, of
like tenor and representing in the aggregate the right to purchase a like number
of Warrant Shares (or portions thereof), upon surrender to the Company or its
duly authorized agent. Notwithstanding anything contained herein to the
contrary, the Company shall have no obligation to cause Warrants to be
transferred on its books to any person if, in the opinion of counsel to the
Company, such transfer does not comply with the provisions of the Act and any
applicable state securities laws and the rules and regulations thereunder.
11. Adjustment of Exercise Price and Type of Warrant Shares. The
Exercise Price in effect at any time and the number and kind of securities
purchasable upon the exercise of this Warrant shall be subject to adjustment
from time to time upon the happening of certain events as follows:
(a) In case the Company shall (i) declare a dividend or make a
distribution on its outstanding Shares, in each case, in Shares, (ii) subdivide
or reclassify its outstanding Shares into a greater number of Shares, or (iii)
combine or reclassify its outstanding Shares into a smaller number of Shares,
the Exercise Price in effect at the time of the record date for such dividend or
distribution or of the effective date of such subdivision, combination or
reclassification shall be proportionately adjusted so that after such event the
Exercise Price shall equal the price determined by multiplying the Exercise
Price by a fraction, the denominator of which shall be the number of Shares
outstanding after giving effect to such action, and the numerator of which shall
be the
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<PAGE> 5
number of Shares outstanding immediately prior to such action. Such adjustment
shall be made successively whenever any event listed above shall occur.
(b) Upon each adjustment of the Exercise Price pursuant to the
provisions of this Section 11, the number of Warrant Shares issuable upon the
exercise at the adjusted Exercise Price of each Warrant shall be adjusted so
that after the event necessitating the adjustment to the Exercise Price, the
number of Warrant Shares into which this Warrant shall be exercisable shall be
equal to the nearest number of whole Shares determined by multiplying a number
equal to the Exercise Price in effect immediately prior to such adjustment by
the number of Warrant Shares issuable upon exercise of this Warrant immediately
prior to such adjustment and dividing the product so obtained by the adjusted
Exercise Price.
(c) For the purposes of this Warrant, the term "Shares" shall mean
(i) the class of stock designated as Shares of Common Stock in the Certificate
of Incorporation of the Company as amended as of the date hereof, or (ii) any
other classes of stock resulting from successive changes or reclassifications of
such Common Stock consisting solely of changes in par value, or from par value
to no par value, or from no par value to par value.
(d) In case of any consolidation of the Company with, or merger of
the Company into, another entity (other than a consolidation or merger which
does not result in any reclassification or change of the outstanding Shares),
the entity formed by such consolidation or merger shall execute and deliver to
the Holder a supplemental warrant agreement providing that the Holder of this
Warrant shall have the right thereafter (until the expiration of such Warrant)
to receive, upon exercise of such Warrant, the kind and amount of shares of
stock and/or other securities and property received upon such consolidation or
merger by a holder of the number of Shares for which such Warrant might have
been exercised immediately prior to such consolidation, merger, sale or
transfer. Such supplemental warrant agreement shall provide for adjustments
which shall be identical to the adjustments provided in this Section 11. The
above provision of this subsection shall similarly apply to successive
consolidations or mergers.
(e) No adjustment in the Exercise Price or the number of Warrant
Shares shall be required if such adjustment is less than one-tenth of one
percent (0.1%) of such Exercise Price or number of Warrant Shares; provided,
however, that any adjustment which by reason of this Section 11e) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be made to
the nearest one-tenth of one cent ($0.001) and one-thousandth of one share
(.001).
(f) In any case in which this Section 11 shall require that an
adjustment in the number of Warrant Shares be made effective as of a record date
for a specified event, the Company may elect to defer, until the occurrence of
such event, issuing to the Holder, if the Holder exercised this Warrant after
the record date, the Warrant Shares, if any, issuable upon such exercise over
and above the Warrant Shares, if any, issuable upon such exercise prior to such
adjustment; provided, however, that the Company shall deliver to the Holder a
due bill or other appropriate instrument evidencing the Holder's right to
receive such additional Warrant Shares upon the occurrence of the event
requiring such adjustment.
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<PAGE> 6
(g) Whenever there shall be an adjustment as provided in this
Section 11, the Company shall promptly cause written notice thereof to be sent
by certified mail, postage prepaid, to the Holder, at its address as it shall
appear in the Company's transfer books, which notice shall be accompanied by an
officer's certificate setting forth the number of Warrant Shares issuable upon
the exercise of this Warrant if such Warrant were exercisable on the date of
such notice, and setting forth a brief statement of the facts requiring such
adjustment and the computation thereof, which officer's certificate shall be
conclusive evidence of the correctness of any such adjustment absent manifest
error.
12. Registration Rights.
(a) Piggy-Back Registration.
(i) Right to Piggy-Back. If, at any time prior to the Expiration
Date, the Company proposes to register with the Securities and Exchange
Commission (the "SEC") the sale for cash of any of its shares of Common Stock by
filing a registration statement under the Securities Act of 1933, as amended
(the "Securities Act"), for its own account or for the account of any of its
stockholders (except pursuant to registration statements filed on Form S-4 or
Form S-8 or any successor or similar forms or other unsuitable forms), the
Company shall promptly give written notice of such proposed filing to Holder and
offer Holder the opportunity to register such number of Warrant Shares issuable
upon execution of this Warrant as it may request in writing. Upon the written
request of Holder received by the Company within fifteen (15) days after the
giving of the notice by the Company, the Company shall use its best efforts to
cause the Shares that the Holder requests to be so registered to be included in
such registration.
(ii) Underwriting Procedures. If any registration pursuant to this
Section 12(a) shall be, in whole or in part, in connection with an underwritten
public offering of Common Stock of the Company, then the Company shall not be
required to include any Warrant Shares in the registration unless Holder accepts
the terms and conditions of the underwriting as agreed upon between the Company
and the underwriters. If the managing underwriter determines and advises the
Company in writing (which shall promptly notify Holder) that the inclusion in
the underwriting of all or any of the Warrant Shares proposed to be included by
Holder would be reasonably likely to jeopardize the successful marketing of the
securities proposed to be registered for the underwriting by the Company or
materially adversely affect the price, time or distribution of the public
offering, then the Company shall only be required to include the number of the
Warrant Shares that the managing underwriter determines in its sole discretion,
will not materially adversely affect the public offering, and, if any such
reduction is so determined by the managing underwriter to be appropriate in
accordance with the standards set forth above, then the number of Warrant Shares
requested to be included in the underwriting shall be reduced, pro rata with
other stockholders (other than those having and exercising demand registration
rights), if any, participating in the public offering, to the number determined
to be appropriate by the managing underwriter (which may include a reduction to
zero).
(iii) No Company Obligation. Neither the giving of a notice by the
Company nor any request by Holder under this Section 12(a) shall, in any way,
obligate the Company to file any registration statement at any time or within
any specific time period after receipt of Holder's written request and,
notwithstanding the filing of any registration statement, the
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<PAGE> 7
Company may, at any time before the effective date thereof, elect to delay or
terminate the entire registration process for any reason or no reason and
without the consent of Holder, without any further obligation to Holder in
respect of such registration statement.
(b) Demand Right. If, at any time prior to the Expiration Date, the
Company shall receive a written request ("Demand Request") from Holder for the
registration of any or all the Warrant Shares, provided that at the time of the
Demand Request at least a majority of the total Warrant Shares are still held of
record by Holder, then the Company, upon the terms and subject to the conditions
set forth in this Section 12(b), shall use its best efforts to cause all Warrant
Shares to be registered in an appropriate registration statement of the SEC as
shall be selected by the Company, provided that if the Company is eligible to
use Form S-3 (or any successor form thereto) for such registration, then such
registration statement shall be used unless such form is inappropriate or the
Company desires to use a different form. If Holder intends for the public
offering covered by its Demand Request to occur by means of an underwriting, it
shall so advise the Company as a part of its Demand Request, and the managing
underwriter of such underwritten public offering shall be selected by Holder and
shall be reasonably acceptable to the Company. The Company shall be obligated to
register the Warrant Shares under this Section 12(b) after receipt of a Demand
Request on one occasion only. The Company shall be entitled to include in any
registration statement filed pursuant to this Section 12(b) additional shares of
Common Stock for its own account and for the account of its other security
holders. If the managing underwriter advises the Company in writing that the
inclusion of any or all such additional shares of Common Stock would materially
adversely affect the marketing of the public offering of the Warrant Shares,
then the Company shall not be entitled to include such additional shares of
Common Stock in any such registration statement to the extent the managing
underwriter advises. Notwithstanding the provisions of this Section 12(b), the
Company shall have the right to delay or suspend the filing of a registration
statement for up to ninety (90) days from the time the filing thereof would
otherwise be required under this Section 12(b) if, in the good faith
determination of the Company's board of directors, such registration would be
seriously detrimental to the Company and its stockholders or would materially
adversely affect the business, affairs, properties, financial condition, results
of operations or prospects of the Company or any pending or proposed
acquisition, merger, reorganization, recapitalization or other transaction or
public offering of the Company's securities, or would require premature
disclosure thereof not in the best interests of the Company; provided, however,
that the Company shall not be entitled to exercise this right more than once. If
this Warrant, or any portion thereof, and/or the Warrant Shares are at any time
held by more than one person or entity, then the obligations of the Company
under this Section 12(b) shall only apply to a "50% holder". The term "50%
holder" as used in this Section 12(b) shall mean the holder or holders of at
least 50% of the Warrant Shares and shall include any owner or combination of
owners of such securities, which ownership shall be calculated by determining
the number of Warrant Shares then held by such owner or owners, as well as the
number of Warrant Shares then issuable upon exercise of this Warrant (or any
successor Warrants) held by such owner or owners.
(c) Information. It shall be condition precedent to the obligation
of the Company hereunder to register the Warrant Shares under this Section 12(c)
that Holder furnish to the Company and the managing underwriters such
information regarding itself, the intended method of disposition of such
securities and such other information as the Company or the
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<PAGE> 8
managing underwriter shall from time to time reasonably request and that shall
be reasonably required to effect the registration of the Warrant Shares.
(d) Market Stand-Off. The Holder, including any assignee or
successors of Holder, agrees in connection with any underwritten public offering
of the Company's securities that upon the request of the managing underwriter,
it shall commit itself in writing not to sell or offer to sell any shares other
than such shares included in the underwritten public offering, during 30 days
prior to, and for a period not to exceed ninety (90) days after, the date of the
final prospectus used in such offering.
(e) Expenses. Holder shall pay all underwriting and brokerage fees,
discounts and commissions related to the sale of the Warrant Shares in a public
offering registered pursuant to the provisions of this Section 12(e), together
with the fees and expenses of any separate counsel, accountants and other
advisors retained by Holder in connection with the offering. All other fees,
costs and expenses incurred in connection with any registration of public
offering including, but not limited to, all federal and state registration,
qualification, filing fees, printed and document distribution costs and
expenses, fees and disbursements of its counsel, accountants and other experts,
Nasdaq additional listing fees, transfer fees, exchange fees, fees of transfer
agents and registrants shall be borne as follows: (i) if pursuant to a demand
registration under Section 12(b), the Company shall bear all reasonable costs,
fees and expenses incurred by the Company (provided the offering being
registered is not pursuant to an underwriting), and (ii) if pursuant to a
piggy-back registration under Section 12(a), by the Company, except that Holder
shall bear its proportionate share of any such costs, fees and expenses to the
extent Warrant Shares of Holder are included in the registration.
(f) Indemnification by Holder. If any of the Warrant Shares are
included in a registration, to the extent permitted by law, Holder shall
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the registration statement, each person, if any, who
controls the Company within the meaning of Section 15 of Securities Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), any underwriter, and any controlling person of any such underwriter, from
and against any and all losses, claims, liabilities, damages and expenses
(including any investigative, legal, accounting and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim (the "Damages") asserted to which any of the
foregoing persons may become subject under the Securities Act, the Exchange Act,
or other federal or state law, common law or otherwise, insofar as such Damages
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in such registration statement, any preliminary
prospectus or final prospectus, or any amendments or supplements thereto, the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
any violation or alleged violation by the Company of the Securities Act, the
Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law
(collectively, a "Violation"), to the extent that such Violation occurs in
reliance upon and in conformity with written information furnished to the
Company by the Holder expressly for use in connection with such registration;
and Holder shall pay, as incurred, any legal or other expenses reasonably
incurred by any person intended to be indemnified pursuant to this Section 12(f)
in connection with the investigation or defense of any such Damages.
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<PAGE> 9
(g) Indemnification by the Company. If any of the Warrant Shares
are included in a registration, to the extent permitted by law, the Company
shall indemnify and hold harmless the Holder, each of its directors and officers
from and against any and all Damages asserted to which any of the foregoing
persons may become subject under the Securities Act, the Exchange Act, or other
federal or state law, common law or otherwise, insofar as such Damages arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, any preliminary
prospectus or final prospectus, or any amendments or supplements thereto, the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
any Violation or alleged Violation by the Holder, to the extent that such
Violation occurs in reliance upon and in conformity with written information
furnished to the Holder by the Company expressly for use in connection with such
registration; and the Company shall pay, as incurred, any legal or other
expenses reasonably incurred by any person intended to be indemnified pursuant
to this Section 12(g) in connection with the investigation or defense of any
such Damages.
13. Legend. The certificate or certificates evidencing the Warrant
Shares shall bear a legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED,
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSACTION
IS REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR UNLESS SUCH TRANSACTION IS EXEMPT FROM SUCH
SECURITIES REGISTRATION REQUIREMENTS AND THE COMPANY HAS RECEIVED
AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, TO THAT EFFECT.
14. Issue Tax. The issuance of certificates for Warrant Shares upon
exercise of this Warrant shall be made without charge to the Holder for any
issuance tax in respect thereof; provided, however, that the Company shall not
be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any certificate in a name other than
that of the Holder.
15. Limitations on Disposition of Warrant. Neither this Warrant nor,
unless registered under the Securities Act and applicable securities laws, as
contemplated by Section 12 hereof, the Warrant Shares issuable upon exercise of
the Warrant, may be offered, sold, assigned, hypothecated or otherwise
transferred, in whole or in part, except (i) to the officers, directors,
shareholders or employees of the Holder, (ii) by will or the laws of descent and
distribution as a result of the death of any permitted transferee, or (iii) to
any successor to the business of the Holder. In addition, neither this Warrant
nor, until registered under the Securities Act and applicable securities laws,
any Warrant Shares issued upon exercise of this Warrant, may be pledged,
offered, sold, assigned, hypothecated or otherwise transferred until (i) such
transaction has been registered under the Securities Act and any applicable
state securities laws, or (ii) such transaction is exempt from such securities
registration requirements and the Company has received an opinion of counsel to
which opinion is satisfactory to the Company, to that effect. It shall be a
condition to the transfer of this Warrant and any Warrant Shares that any
transferee hereof or thereof deliver to the Company its written agreement to
accept and be bound by all of the terms and conditions of this Warrant.
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<PAGE> 10
16. Lost, Stolen, Mutilated or Destroyed Warrant. Upon receipt of
evidence satisfactory to the Company of the loss, theft, destruction, or
mutilation of any Warrant (and upon surrender of any Warrant if mutilated), and
upon reimbursement of the Company's reasonable incidental expenses and, if
reasonably requested, an indemnity reasonably acceptable to the Company, the
Company shall execute and deliver to the Holder thereof a new Warrant of like
date, tenor, and denomination.
17. Securities Law Representation. The Holder and each transferee of
this Warrant or of the Warrant Shares issuable upon the exercise of this
Warrant, by their acceptance of this Warrant or of any Warrant Shares, each
hereby represents and warrants that this Warrant and the Warrant Shares issuable
upon exercise of this Warrant are being acquired or will be acquired for
investment purposes for the account of the holder of such securities with no
intention of a sale, transfer or other distribution that is not in compliance
with the Securities Act and applicable state securities laws.
18. No Impairment. The Company will not, by any voluntary action, avoid
or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all times in good
faith assist in the carrying out of all the provisions of this Warrant and in
the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Holder of this Warrant against impairment.
19. Waiver. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
20. Notices. All notices, payments, requests and demands and other
communications required or permitted under this Warrant shall be deemed to have
been duly given, delivered and made if in writing and if served either by
personal delivery to the party for whom it is intended or by being deposited
postage prepaid, certified or registered mail, return receipt requested, to the
address of the Holder at the last address as appears on the books of the Company
or its stock transfer agent, if any, and to the Company at its principal
executive offices.
21. Governing Law. This Warrant shall be construed and enforced in
accordance with and governed by the internal substantive laws of the State of
Delaware, without giving effect to any change or conflict of law principles.
22. Further Assurances. The parties agree to execute, acknowledge and
deliver any and all such other documents and to take any and all such other
actions as may, in the reasonable opinion of either of the parties hereto, be
necessary or convenient to carry out more efficiently any or all of the purposes
of this Warrant.
23. Severability. Any provision of this Warrant which shall be
prohibited by law or otherwise held invalid shall be ineffective only to the
extent of such prohibition or invalidity and shall not invalidate or otherwise
render ineffective any or all of the remaining provisions of this Warrant.
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<PAGE> 11
24. Parties in Interest. This Warrant and the various rights and
obligations arising hereunder shall be binding upon and shall inure to the
benefit of the parties hereto and to each and all of their respective successors
and permitted assigns.
25. Amendments. Neither this Warrant nor any of the terms and
conditions hereof shall be amended or modified in any respect except in a
writing executed by the Company and Holder.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its President and attested by its Secretary as of the 7th day of September,
1999.
METRETEK TECHNOLOGIES, INC.
By:_________________________________
W. Phillip Marcum, President
ATTEST:
By: ______________________________
Gary J. Zuiderveen, Secretary
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FORM FOR EXERCISE OF WARRANTS
[TO BE EXECUTED BY THE HOLDER IN ORDER TO EXERCISE THE WITHIN WARRANT]
The undersigned, the Holder of the within Warrant, hereby irrevocably
elects to exercise the right, represented by the within Warrant, to purchase
_____ shares of Common Stock, par value $.01 per share ("Shares"), of Metretek
Technologies, Inc., a Delaware corporation (the "Company"), in accordance with
the terms of the within Warrant. The undersigned requests that a certificate for
such Shares be issued in the name of, and delivered to:
Name: ________________________________
Address:______________________________
______________________________________
Social Security or Tax ID No. ________
and, if such number of Shares shall not be all the Shares issuable upon exercise
of the within Warrant, that a new Warrant exercisable on the same terms for the
balance of such Shares be registered in the name of, and delivered to, the
Holder at the address set forth below.
Payment of the Exercise Price per Share required under the within
Warrant accompanies this Form.
The undersigned hereby represents and warrants that the undersigned
owns the within Warrant free and clear of any and all claims, liens and/or
encumbrances and is acquiring such Shares for its own account for investment
purposes only, and not for resale or with a view to distribution of such Shares
or any part thereof.
Dated: ________________ _____________________________________
By:__________________________________
Title:_______________________________
Address:_____________________________
_____________________________
_____________________________
Number of Shares: _________________
Total Exercise Price:$_____________
METRETEK TECHNOLOGIES, INC.
By:__________________________________
Its:_________________________________
Date:________________________________
11
<PAGE> 13
FORM OF ASSIGNMENT
[TO BE EXECUTED BY THE HOLDER TO TRANSFER THE WITHIN WARRANT]
FOR VALUE RECEIVED, the undersigned, as the registered Holder of the
within Warrant, hereby sells, assigns and transfers unto:
Name:______________________________
Address: __________________________
__________________________
Social Security or Tax ID No.______
all of the undersigned's right, title and interest to and under such Warrant to
purchase ____ shares of Common Stock, par value $.01 per share, of Metretek
Technologies, Inc., a Delaware corporation (the "Company"), evidenced by the
within Warrant, and does hereby irrevocably constitute and appoint ____________
attorney to make such transfer on the books of the Company, with full power of
substitution in the premises.
-----------------------------------
Date:___________________________ By:_________________________________
Title:
------------------------------------
(Street Address)
------------------------------------
(City), (State) (Zip Code)
NOTE: The above signature must
conform to the name of Holder as
specified on the face of the within
Warrant in every particular, without
alteration or enlargement or any
change whatsoever.
12
<PAGE> 1
Exhibit 4.13
Form of Common Stock Purchase Warrant held by John A. Harpole
<PAGE> 2
THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED, SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSACTION IS REGISTERED UNDER
THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM SUCH SECURITIES REGISTRATION REQUIREMENTS AND THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, TO THAT
EFFECT. THIS WARRANT IS SUBJECT TO FURTHER RESTRICTIONS ON TRANSFER SET FORTH
HEREIN.
METRETEK TECHNOLOGIES, INC.
WARRANT TO PURCHASE COMMON STOCK
WARRANT TO PURCHASE ISSUE DATE: SEPTEMBER __, 1999
60,000 SHARES OF COMMON STOCK EXPIRATION DATE: SEPTEMBER__, 2002
THIS CERTIFIES THAT, for value received, ______________ (the "Holder"), is
entitled to purchase up to 60,000 shares of Common Stock, par value $.01 per
share (the "Shares"), of Metretek Technologies, Inc., a Delaware corporation
(the "Company"), at the exercise price per Share (the "Exercise Price") and
during the periods set forth in Section 2 below, as adjusted pursuant to Section
11 below, until 5:00 p.m., Denver, Colorado time on September __, 2002 (the
"Expiration Date"), upon the terms and subject to the conditions set forth in
this Warrant.
The Shares or other property or securities issuable upon the exercise
of the Warrants are hereinafter referred to as the "Warrant Shares" and the
exercise price per Warrant Share in effect at any time and as adjusted from time
to time is hereinafter referred to as the "Exercise Price."
1. Method of Exercise of Warrant. This Warrant may be exercised by the
Holder in whole at any time or in part from time to time within the period
specified herein by the presentation and surrender of this Warrant, together
with the Form for Exercise of Warrants attached hereto ("Exercise Form") duly
executed by Holder, to the Company at its principal executive offices,
accompanied by payment, by bank certified or cashier's check payable to the
order of the Company, or by wire transfer of immediately available funds to an
account designated by the Company, in the amount equal to the number of Warrant
Shares for which the Warrant is being exercised multiplied by the Exercise Price
of such Warrant Shares. Upon the Holder's exercise of this Warrant in accordance
with the terms and conditions hereof, the Company shall issue the number of
Warrant Shares to the Holder specified on the Exercise Form.
<PAGE> 3
2. Number of Warrant Shares: Exercisability of Warrants.
(a) Generally. Upon the terms and subject to the conditions set
forth in this Warrant, the Holder is entitled to purchase 60,000 Shares, at an
Exercise Price per Share set forth below, as such number of Shares and/or
Exercise Price are adjusted from time to time hereunder.
(b) Warrant Tranches. This Warrant shall become exercisable and vest
in three Warrant tranches of 20,000 Shares each (each, a "Tranche"). Each
Tranche shall become vested on the date and at the Exercise Price set forth
below:
Vesting Date Number of Shares Vesting Exercise Price
------------ ------------------------ --------------
September ___, 1999 20,000 $4.50 per share
March ___, 2000 20,000 $5.00 per share
March ___, 2001 20,000 $5.50 per share
This Warrant shall be exercisable from time to time only for the number of
Warrant Shares which have vested as of such time.
(c) Expiration of Warrants. The Warrants shall expire and become
unexercisable upon the Expiration Date.
3. Exercise in Part. If this Warrant is exercised in part only prior to
the Expiration Date, the Company shall, upon surrender of this Warrant for
cancellation, execute and deliver a new certificate evidencing the right of the
Holder to receive the balance of the Warrant Shares hereunder.
4. Status as Stockholder After Exercise. Upon receipt by the Company of
this Warrant and the Exercise Form at the principal executive offices of the
Company in proper form for exercise and the Exercise Price in full, the Holder
shall be deemed to be the holder of record of the Warrant Shares issuable upon
such exercise, notwithstanding that certificates representing such Warrant
Shares shall not then be actually delivered to the Holder. If the stock transfer
books of the Company shall be closed on the date of receipt of this Warrant, the
Holder shall be deemed to be the Holder of such Warrant Shares on the next
succeeding day on which the stock transfer books of the Company shall be opened.
5. Delivery of Stock Certificates Upon Exercise. As soon as practicable
after the exercise of this Warrant, in whole or in part, the Company shall cause
to be issued in the name of and delivered to the Holder a certificate or
certificates evidencing the number of fully paid and nonassessable Warrant
Shares to which the Holder shall be entitled as a result of such exercise,
together with any other property to which the Holder is entitled upon such
exercise.
6. Reservation of Warrant Shares. The Company shall at all times
reserve and keep available, solely for issuance and/or delivery upon exercise of
this Warrant, such number of Warrant Shares as shall then be issued upon the
exercise of this Warrant. All Warrant Shares issued upon exercise hereof shall,
upon such issuance, be fully paid and nonassessable.
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<PAGE> 4
7. No Fractional Shares. No fractional Warrant Shares shall be issued
upon the exercise, in whole or in part, of this Warrant. If fractional Warrant
Shares would be issuable upon exercise of this Warrant, the Company shall, in
lieu thereof, pay to the Holder an amount in cash equal to such fraction
multiplied by the then "current market value" of such fractional Warrant Shares.
For purposes of this paragraph only, the "current market value" of the Warrant
Shares shall be equal to the closing sale price of the Shares on the Nasdaq
Stock Market, so long as they are listed thereon, and thereafter the closing
sale price (or, if not available on such date, the average of the high and low
bid price for such date) of the Shares on any national securities exchange or
any other stock exchange, stock market or stock quotation system which
constitutes the primary market on which the Shares are then traded or quoted. If
the Shares are not listed or traded on any stock exchange, stock market or stock
system, then the "current market value" shall be an amount, not less than book
value, as determined in good faith by the Board of Directors of the Company.
8. Rights of the Holder Prior to Exercise. The Holder shall not, solely
by virtue of this Warrant, be entitled to any voting or other rights of a
stockholder of the Company, either at law or equity, prior to the exercise of
this Warrant upon the terms and conditions set forth herein, and the rights of
the Holder are limited to those expressed in this Warrant and are not
enforceable against the Company except to the extent expressly set forth herein.
9. Ownership of Warrants. The Company shall be entitled to treat the
registered Holder as the absolute owner hereof for all purposes and shall not be
bound to recognize any equitable or other claim to or interest in the Warrant on
the part of any other person.
10. Assignment and Exchange of Warrants. Upon any registration of
transfer, the Company shall deliver a new Warrant or Warrants to the person
entitled thereto. This Warrant may be exchanged, at the option of the Holder
thereof, for another Warrant, or other Warrants of different denominations, of
like tenor and representing in the aggregate the right to purchase a like number
of Warrant Shares (or portions thereof), upon surrender to the Company or its
duly authorized agent. Notwithstanding anything contained herein to the
contrary, the Company shall have no obligation to cause Warrants to be
transferred on its books to any person if, in the opinion of counsel to the
Company, such transfer does not comply with the provisions of the Act and any
applicable state securities laws and the rules and regulations thereunder.
11. Adjustment of Exercise Price and Type of Warrant Shares. The
Exercise Price in effect at any time and the number and kind of securities
purchasable upon the exercise of this Warrant shall be subject to adjustment
from time to time upon the happening of certain events as follows:
(a) In case the Company shall (i) declare a dividend or make a
distribution on its outstanding Shares, in each case, in Shares, (ii) subdivide
or reclassify its outstanding Shares into a greater number of Shares, or (iii)
combine or reclassify its outstanding Shares into a smaller number of Shares,
the Exercise Price in effect at the time of the record date for such dividend or
distribution or of the effective date of such subdivision, combination or
reclassification shall be proportionately adjusted so that after such event the
Exercise Price shall equal the price determined by multiplying the Exercise
Price by a fraction, the denominator of which shall be the number of
3
<PAGE> 5
Shares outstanding after giving effect to such action, and the numerator of
which shall be the number of Shares outstanding immediately prior to such
action. Such adjustment shall be made successively whenever any event listed
above shall occur.
(b) Upon each adjustment of the Exercise Price pursuant to the
provisions of this Section 11, the number of Warrant Shares issuable upon the
exercise at the adjusted Exercise Price of each Warrant shall be adjusted so
that after the event necessitating the adjustment to the Exercise Price, the
number of Warrant Shares into which this Warrant shall be exercisable shall be
equal to the nearest number of whole Shares determined by multiplying a number
equal to the Exercise Price in effect immediately prior to such adjustment by
the number of Warrant Shares issuable upon exercise of this Warrant immediately
prior to such adjustment and dividing the product so obtained by the adjusted
Exercise Price.
(c) For the purposes of this Warrant, the term "Shares" shall mean
(i) the class of stock designated as Shares of Common Stock in the Certificate
of Incorporation of the Company as amended as of the date hereof, or (ii) any
other classes of stock resulting from successive changes or reclassifications of
such Common Stock consisting solely of changes in par value, or from par value
to no par value, or from no par value to par value.
(d) In case of any consolidation of the Company with, or merger of
the Company into, another entity (other than a consolidation or merger which
does not result in any reclassification or change of the outstanding Shares),
the entity formed by such consolidation or merger shall execute and deliver to
the Holder a supplemental warrant agreement providing that the Holder of this
Warrant shall have the right thereafter (until the expiration of such Warrant)
to receive, upon exercise of such Warrant, the kind and amount of shares of
stock and/or other securities and property received upon such consolidation or
merger by a holder of the number of Shares for which such Warrant might have
been exercised immediately prior to such consolidation, merger, sale or
transfer. Such supplemental warrant agreement shall provide for adjustments
which shall be identical to the adjustments provided in this Section 11. The
above provision of this subsection shall similarly apply to successive
consolidations or mergers.
(e) No adjustment in the Exercise Price or the number of Warrant
Shares shall be required if such adjustment is less than one-tenth of one
percent (0.1%) of such Exercise Price or number of Warrant Shares; provided,
however, that any adjustment which by reason of this Section 11e) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be made to
the nearest one-tenth of one cent ($0.001) and one-thousandth of one share
(.001).
(f) In any case in which this Section 11 shall require that an
adjustment in the number of Warrant Shares be made effective as of a record date
for a specified event, the Company may elect to defer, until the occurrence of
such event, issuing to the Holder, if the Holder exercised this Warrant after
the record date, the Warrant Shares, if any, issuable upon such exercise over
and above the Warrant Shares, if any, issuable upon such exercise prior to such
adjustment; provided, however, that the Company shall deliver to the Holder a
due bill or other appropriate instrument evidencing the Holder's right to
receive such additional Warrant Shares upon the occurrence of the event
requiring such adjustment.
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<PAGE> 6
(g) Whenever there shall be an adjustment as provided in this
Section 11, the Company shall promptly cause written notice thereof to be sent
by certified mail, postage prepaid, to the Holder, at its address as it shall
appear in the Company's transfer books, which notice shall be accompanied by an
officer's certificate setting forth the number of Warrant Shares issuable upon
the exercise of this Warrant if such Warrant were exercisable on the date of
such notice, and setting forth a brief statement of the facts requiring such
adjustment and the computation thereof, which officer's certificate shall be
conclusive evidence of the correctness of any such adjustment absent manifest
error.
12. Registration Rights.
(a) Piggy-Back Registration.
(i) Right to Piggy-Back. If, at any time after February 1, 2000
and prior to the Expiration Date, the Company proposes to register with the
Securities and Exchange Commission (the "SEC") the sale for cash of any of its
shares of Common Stock by filing a registration statement under the Securities
Act of 1933, as amended (the "Securities Act"), for its own account or for the
account of any of its stockholders (except pursuant to registration statements
filed on Form S-4 or Form S-8 or any successor or similar forms or other
unsuitable forms), the Company shall promptly give written notice of such
proposed filing to Holder and offer Holder the opportunity to register such
number of Warrant Shares issuable upon execution of this Warrant as it may
request in writing. Upon the written request of Holder received by the Company
within fifteen (15) days after the giving of the notice by the Company, the
Company shall use its best efforts to cause the Shares that the Holder requests
to be so registered to be included in such registration.
(ii) Underwriting Procedures. If any registration pursuant to
this Section 12(a) shall be, in whole or in part, in connection with an
underwritten public offering of Common Stock of the Company, then the Company
shall not be required to include any Warrant Shares in the registration unless
Holder accepts the terms and conditions of the underwriting as agreed upon
between the Company and the underwriters. If the managing underwriter determines
and advises the Company in writing (which shall promptly notify Holder) that the
inclusion in the underwriting of all or any of the Warrant Shares proposed to be
included by Holder would be reasonably likely to jeopardize the successful
marketing of the securities proposed to be registered for the underwriting by
the Company or materially adversely affect the price, time or distribution of
the public offering, then the Company shall only be required to include the
number of the Warrant Shares that the managing underwriter determines in its
sole discretion, will not materially adversely affect the public offering, and,
if any such reduction is so determined by the managing underwriter to be
appropriate in accordance with the standards set forth above, then the number of
Warrant Shares requested to be included in the underwriting shall be reduced,
pro rata with other stockholders (other than those having and exercising demand
registration rights), if any, participating in the public offering, to the
number determined to be appropriate by the managing underwriter (which may
include a reduction to zero).
(iii) No Company Obligation. Neither the giving of a notice by
the Company nor any request by Holder under this Section 12(a) shall, in any
way, obligate the Company to file any registration statement at any time or
within any specific time period after
5
<PAGE> 7
receipt of Holder's written request and, notwithstanding the filing of any
registration statement, the Company may, at any time before the effective date
thereof, elect to delay or terminate the entire registration process for any
reason or no reason and without the consent of Holder, without any further
obligation to Holder in respect of such registration statement.
(b) Demand Right. If, at any time prior to the Expiration Date, the
Company shall receive a written request ("Demand Request") from Holder for the
registration of any or all the Warrant Shares, provided that at the time of the
Demand Request at least a majority of the total Warrant Shares are still held of
record by Holder, then the Company, upon the terms and subject to the conditions
set forth in this Section 12(b), shall use its best efforts to cause all Warrant
Shares to be registered in an appropriate registration statement of the SEC as
shall be selected by the Company, provided that if the Company is eligible to
use Form S-3 (or any successor form thereto) for such registration, then such
registration statement shall be used unless such form is inappropriate or the
Company desires to use a different form. If Holder intends for the public
offering covered by its Demand Request to occur by means of an underwriting, it
shall so advise the Company as a part of its Demand Request, and the managing
underwriter of such underwritten public offering shall be selected by Holder and
shall be reasonably acceptable to the Company. The Company shall be obligated to
register the Warrant Shares under this Section 12(b) after receipt of a Demand
Request on one occasion only. The Company shall be entitled to include in any
registration statement filed pursuant to this Section 12(b) additional shares of
Common Stock for its own account and for the account of its other security
holders. If the managing underwriter advises the Company in writing that the
inclusion of any or all such additional shares of Common Stock would materially
adversely affect the marketing of the public offering of the Warrant Shares,
then the Company shall not be entitled to include such additional shares of
Common Stock in any such registration statement to the extent the managing
underwriter advises. Notwithstanding the provisions of this Section 12(b), the
Company shall have the right to delay or suspend the filing of a registration
statement for up to ninety (90) days from the time the filing thereof would
otherwise be required under this Section 12(b) if, in the good faith
determination of the Company's board of directors, such registration would be
seriously detrimental to the Company and its stockholders or would materially
adversely affect the business, affairs, properties, financial condition, results
of operations or prospects of the Company or any pending or proposed
acquisition, merger, reorganization, recapitalization or other transaction or
public offering of the Company's securities, or would require premature
disclosure thereof not in the best interests of the Company; provided, however,
that the Company shall not be entitled to exercise this right more than once. If
this Warrant, or any portion thereof, and/or the Warrant Shares are at any time
held by more than one person or entity, then the obligations of the Company
under this Section 12(b) shall only apply to a "50% holder". The term "50%
holder" as used in this Section 12(b) shall mean the holder or holders of at
least 50% of the Warrant Shares and shall include any owner or combination of
owners of such securities, which ownership shall be calculated by determining
the number of Warrant Shares then held by such owner or owners, as well as the
number of Warrant Shares then issuable upon exercise of this Warrant (or any
successor Warrants) held by such owner or owners.
(c) Information. It shall be condition precedent to the obligation
of the Company hereunder to register the Warrant Shares under this Section 12(c)
that Holder furnish to the Company and the managing underwriters such
information regarding itself, the intended method of disposition of such
securities and such other information as the Company or the
6
<PAGE> 8
managing underwriter shall from time to time reasonably request and that shall
be reasonably required to effect the registration of the Warrant Shares.
(d) Market Stand-Off. The Holder, including any assignee or
successors of Holder, agrees in connection with any underwritten public offering
of the Company's securities that upon the request of the managing underwriter,
it shall commit itself in writing not to sell or offer to sell any shares other
than such shares included in the underwritten public offering, during 30 days
prior to, and for a period not to exceed ninety (90) days after, the date of the
final prospectus used in such offering.
(e) Expenses. Holder shall pay all underwriting and brokerage fees,
discounts and commissions related to the sale of the Warrant Shares in a public
offering registered pursuant to the provisions of this Section 12(e), together
with the fees and expenses of any separate counsel, accountants and other
advisors retained by Holder in connection with the offering. All other fees,
costs and expenses incurred in connection with any registration of public
offering including, but not limited to, all federal and state registration,
qualification, filing fees, printed and document distribution costs and
expenses, fees and disbursements of its counsel, accountants and other experts,
Nasdaq additional listing fees, transfer fees, exchange fees, fees of transfer
agents and registrants shall be borne as follows: (i) if pursuant to a demand
registration under Section 12(b), the Company shall bear all reasonable costs,
fees and expenses incurred by the Company (provided the offering being
registered is not pursuant to an underwriting), and (ii) if pursuant to a
piggy-back registration under Section 12(a), by the Company, except that Holder
shall bear its proportionate share of any such costs, fees and expenses to the
extent Warrant Shares of Holder are included in the registration.
(f) Indemnification. If any of the Warrant Shares are included in a
registration, to the extent permitted by law, Holder shall indemnify and hold
harmless the Company, each of its directors, each of its officers who have
signed the registration statement, each person, if any, who controls the Company
within the meaning of Section 15 of Securities Act or Section 20 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), any
underwriter, and any controlling person of any such underwriter, from and
against any and all losses, claims, liabilities, damages and expenses (including
any investigative, legal, accounting and other expenses reasonably incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claim (the "Damages") asserted to which any of the foregoing
persons may become subject under the Securities Act, the Exchange Act, or other
federal or state law, common law or otherwise, insofar as such Damages arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, any preliminary
prospectus or final prospectus, or any amendments or supplements thereto, the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
any violation or alleged violation by the Company of the Securities Act, the
Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law
(collectively, a "Violation"), to the extent that such Violation occurs in
reliance upon and in conformity with written information furnished to the
Company by the Holder expressly for use in connection with such registration;
and Holder shall pay, as incurred, any legal or other expenses reasonably
incurred by any person intended to be indemnified pursuant to this Section 12(f)
in connection with the investigation or defense of any such Damages.
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<PAGE> 9
(g) Indemnification. If any of the Warrant Shares are included in a
registration, to the extent permitted by law, the Company shall indemnify and
hold harmless the Holder, each of its directors and officers from and against
any and all Damages asserted to which any of the foregoing persons may become
subject under the Securities Act, the Exchange Act, or other federal or state
law, common law or otherwise, insofar as such Damages arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in such registration statement, any preliminary prospectus or final
prospectus, or any amendments or supplements thereto, the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any Violation or
alleged Violation by the Holder, to the extent that such Violation occurs in
reliance upon and in conformity with written information furnished to the Holder
by the Company expressly for use in connection with such registration; and the
Company shall pay, as incurred, any legal or other expenses reasonably incurred
by any person intended to be indemnified pursuant to this Section 12(g) in
connection with the investigation or defense of any such Damages.
13. Legend. The certificate or certificates evidencing the Warrant
Shares shall bear a legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED,
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSACTION
IS REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR UNLESS SUCH TRANSACTION IS EXEMPT FROM SUCH
SECURITIES REGISTRATION REQUIREMENTS AND THE COMPANY HAS RECEIVED
AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, TO THAT EFFECT.
14. Issue Tax. The issuance of certificates for Warrant Shares upon
exercise of this Warrant shall be made without charge to the Holder for any
issuance tax in respect thereof; provided, however, that the Company shall not
be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any certificate in a name other than
that of the Holder.
15. Limitations on Disposition of Warrant. Neither this Warrant nor,
unless registered under the Securities Act and applicable securities laws, as
contemplated by Section 12 hereof, the Warrant Shares issuable upon exercise of
the Warrant, may be offered, sold, assigned, hypothecated or otherwise
transferred, in whole or in part, except (i) to the officers, directors,
shareholders or employees of the Holder, (ii) by will or the laws of descent and
distribution as a result of the death of any permitted transferee, or (iii) to
any successor to the business of the Holder. In addition, neither this Warrant
nor, until registered under the Securities Act and applicable securities laws,
any Warrant Shares issued upon exercise of this Warrant, may be pledged,
offered, sold, assigned, hypothecated or otherwise transferred until (i) such
transaction has been registered under the Securities Act and any applicable
state securities laws, or (ii) such transaction is exempt from such securities
registration requirements and the Company has received an opinion of counsel to
which opinion is satisfactory to the Company, to that effect. It shall be a
condition to the transfer of this Warrant and any Warrant Shares that any
transferee hereof or thereof deliver to the Company its written agreement to
accept and be bound by all of the terms and conditions of this Warrant.
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<PAGE> 10
16. Lost, Stolen, Mutilated or Destroyed Warrant. Upon receipt of
evidence satisfactory to the Company of the loss, theft, destruction, or
mutilation of any Warrant (and upon surrender of any Warrant if mutilated), and
upon reimbursement of the Company's reasonable incidental expenses and, if
reasonably requested, an indemnity reasonably acceptable to the Company, the
Company shall execute and deliver to the Holder thereof a new Warrant of like
date, tenor, and denomination.
17. Securities Law Representation. The Holder and each transferee of
this Warrant or of the Warrant Shares issuable upon the exercise of this
Warrant, by their acceptance of this Warrant or of any Warrant Shares, each
hereby represents and warrants that this Warrant and the Warrant Shares issuable
upon exercise of this Warrant are being acquired or will be acquired for
investment purposes for the account of the holder of such securities with no
intention of a sale, transfer or other distribution that is not in compliance
with the Securities Act and applicable state securities laws.
18. No Impairment. The Company will not, by any voluntary action, avoid
or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all times in good
faith assist in the carrying out of all the provisions of this Warrant and in
the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Holder of this Warrant against impairment.
19. Waiver. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
20. Notices. All notices, payments, requests and demands and other
communications required or permitted under this Warrant shall be deemed to have
been duly given, delivered and made if in writing and if served either by
personal delivery to the party for whom it is intended or by being deposited
postage prepaid, certified or registered mail, return receipt requested, to the
address of the Holder at the last address as appears on the books of the Company
or its stock transfer agent, if any, and to the Company at its principal
executive offices.
21. Governing Law. This Warrant shall be construed and enforced in
accordance with and governed by the internal substantive laws of the State of
Delaware, without giving effect to any change or conflict of law principles.
22. Further Assurances. The parties agree to execute, acknowledge and
deliver any and all such other documents and to take any and all such other
actions as may, in the reasonable opinion of either of the parties hereto, be
necessary or convenient to carry out more efficiently any or all of the purposes
of this Warrant.
23. Severability. Any provision of this Warrant which shall be
prohibited by law or otherwise held invalid shall be ineffective only to the
extent of such prohibition or invalidity and shall not invalidate or otherwise
render ineffective any or all of the remaining provisions of this Warrant.
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<PAGE> 11
24. Parties in Interest. This Warrant and the various rights and
obligations arising hereunder shall be binding upon and shall inure to the
benefit of the parties hereto and to each and all of their respective successors
and permitted assigns.
25. Amendments. Neither this Warrant nor any of the terms and
conditions hereof shall be amended or modified in any respect except in a
writing executed by the Company and Holder.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its President and attested by its Secretary as of the _____ day of September,
1999.
METRETEK TECHNOLOGIES, INC.
By:_________________________________
W. Phillip Marcum, President
ATTEST:
By: ____________________________
Gary J. Zuiderveen, Secretary
10
<PAGE> 12
FORM FOR EXERCISE OF WARRANTS
[TO BE EXECUTED BY THE HOLDER IN ORDER TO EXERCISE THE WITHIN WARRANT]
The undersigned, the Holder of the within Warrant, hereby irrevocably
elects to exercise the right, represented by the within Warrant, to purchase
_____ shares of Common Stock, par value $.01 per share ("Shares"), of Metretek
Technologies, Inc., a Delaware corporation (the "Company"), in accordance with
the terms of the within Warrant. The undersigned requests that a certificate for
such Shares be issued in the name of, and delivered to:
Name: _______________________________
Address:_____________________________
_____________________________
Social Security or Tax ID No. _______
and, if such number of Shares shall not be all the Shares issuable upon exercise
of the within Warrant, that a new Warrant exercisable on the same terms for the
balance of such Shares be registered in the name of, and delivered to, the
Holder at the address set forth below.
Payment of the Exercise Price per Share required under the within
Warrant accompanies this Form.
The undersigned hereby represents and warrants that the undersigned
owns the within Warrant free and clear of any and all claims, liens and/or
encumbrances and is acquiring such Shares for its own account for investment
purposes only, and not for resale or with a view to distribution of such Shares
or any part thereof.
Dated: ________________ ____________________________________
By:_________________________________
Title:______________________________
Address:____________________________
____________________________
____________________________
Number of Shares: _________________
Total Exercise Price:$_____________
METRETEK TECHNOLOGIES, INC.
By:_________________________________
Its:________________________________
Date:_______________________________
11
<PAGE> 13
FORM OF ASSIGNMENT
[TO BE EXECUTED BY THE HOLDER TO TRANSFER THE WITHIN WARRANT]
FOR VALUE RECEIVED, the undersigned, as the registered Holder of the
within Warrant, hereby sells, assigns and transfers unto:
Name:______________________________
Address: __________________________
__________________________
Social Security or Tax ID No.______
all of the undersigned's right, title and interest to and under such Warrant to
purchase ____ shares of Common Stock, par value $.01 per share, of Metretek
Technologies, Inc., a Delaware corporation (the "Company"), evidenced by the
within Warrant, and does hereby irrevocably constitute and appoint ____________
attorney to make such transfer on the books of the Company, with full power of
substitution in the premises.
-----------------------------------
Date:___________________________ By:_________________________________
Title:
------------------------------------
(Street Address)
------------------------------------
(City), (State) (Zip Code)
NOTE: The above signature must
conform to the name of Holder as
specified on the face of the within
Warrant in every particular, without
alteration or enlargement or any
change whatsoever.
12
<PAGE> 1
Exhibit 4.14
Form of Common Stock Purchase Warrant issued to National Bank of Canada
<PAGE> 2
THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED, SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSACTION IS REGISTERED UNDER
THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM SUCH SECURITIES REGISTRATION REQUIREMENTS AND THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, TO THAT
EFFECT. THIS WARRANT IS SUBJECT TO FURTHER RESTRICTIONS ON TRANSFER SET FORTH
HEREIN.
METRETEK TECHNOLOGIES, INC.
WARRANT TO PURCHASE COMMON STOCK
WARRANT TO PURCHASE ISSUE DATE: SEPTEMBER 7, 1999
20,000 SHARES OF COMMON STOCK EXPIRATION DATE: SEPTEMBER 7, 2002
THIS CERTIFIES THAT, for value received, National Bank of Canada, a Canadian
chartered bank (the "Holder"), is entitled to purchase up to 20,000 shares of
Common Stock, par value $.01 per share (the "Shares"), of Metretek Technologies,
Inc., a Delaware corporation (the "Company"), at the exercise price per Share
(the "Exercise Price") and during the periods set forth in Section 2 below, as
adjusted pursuant to Section 11 below, until 5:00 p.m., Denver, Colorado time on
September 7, 2002 (the "Expiration Date"), upon the terms and subject to the
conditions set forth in this Warrant.
The Shares or other property or securities issuable upon the exercise
of the Warrants are hereinafter referred to as the "Warrant Shares" and the
exercise price per Warrant Share in effect at any time and as adjusted from time
to time is hereinafter referred to as the "Exercise Price."
1. Method of Exercise of Warrant. This Warrant may be exercised by the
Holder in whole at any time or in part from time to time within the period
specified herein by the presentation and surrender of this Warrant, together
with the Form for Exercise of Warrants attached hereto ("Exercise Form") duly
executed by Holder, to the Company at its principal executive offices,
accompanied by payment, by bank certified or cashier's check payable to the
order of the Company, or by wire transfer of immediately available funds to an
account designated by the Company, in the amount equal to the number of Warrant
Shares for which the Warrant is being exercised multiplied by the Exercise Price
of such Warrant Shares. Upon the Holder's exercise of this Warrant in accordance
with the terms and conditions hereof, the Company shall issue the number of
Warrant Shares to the Holder specified on the Exercise Form.
<PAGE> 3
2. Exercisability of Warrant.
(a) Generally. Upon the terms and subject to the conditions set
forth in this Warrant, the Holder is entitled to purchase up to 20,000 Shares at
an Exercise Price per Share of $5.00, as such number of Shares and/or Exercise
Price are adjusted from time to time hereunder.
(b) Exercisability of Warrant. This Warrant shall become exercisable
upon the Issue Date set forth on the cover hereof and shall expire and become
unexercisable upon the Expiration Date.
3. Exercise in Part. If this Warrant is exercised in part only prior to
the Expiration Date, the Company shall, upon surrender of this Warrant for
cancellation, execute and deliver a new certificate evidencing the right of the
Holder to receive the balance of the Warrant Shares hereunder.
4. Status as Stockholder After Exercise. Upon receipt by the Company of
this Warrant and the Exercise Form at the principal executive offices of the
Company in proper form for exercise and the Exercise Price in full, the Holder
shall be deemed to be the holder of record of the Warrant Shares issuable upon
such exercise, notwithstanding that certificates representing such Warrant
Shares shall not then be actually delivered to the Holder. If the stock transfer
books of the Company shall be closed on the date of receipt of this Warrant, the
Holder shall be deemed to be the Holder of such Warrant Shares on the next
succeeding day on which the stock transfer books of the Company shall be opened.
5. Delivery of Stock Certificates Upon Exercise. As soon as practicable
after the exercise of this Warrant, in whole or in part, the Company shall cause
to be issued in the name of and delivered to the Holder a certificate or
certificates evidencing the number of fully paid and nonassessable Warrant
Shares to which the Holder shall be entitled as a result of such exercise,
together with any other property to which the Holder is entitled upon such
exercise.
6. Reservation of Warrant Shares. The Company shall at all times
reserve and keep available, solely for issuance and/or delivery upon exercise of
this Warrant, such number of Warrant Shares as shall then be issued upon the
exercise of this Warrant. All Warrant Shares issued upon exercise hereof shall,
upon such issuance, be fully paid and nonassessable.
7. No Fractional Shares. No fractional Warrant Shares shall be issued
upon the exercise, in whole or in part, of this Warrant. If fractional Warrant
Shares would be issuable upon exercise of this Warrant, the Company shall, in
lieu thereof, pay to the Holder an amount in cash equal to such fraction
multiplied by the then "current market value" of such fractional Warrant Shares.
For purposes of this paragraph only, the "current market value" of the Warrant
Shares shall be equal to the closing sale price of the Shares on the Nasdaq
Stock Market, so long as they are listed thereon, and thereafter the closing
sale price (or, if not available on such date, the average of the high and low
bid price for such date) of the Shares on any national securities exchange or
any other stock exchange, stock market or stock quotation system which
constitutes the primary market on which the Shares are then traded or quoted. If
the Shares are not listed or traded on any stock
2
<PAGE> 4
exchange, stock market or stock system, then the "current market value" shall be
an amount, not less than book value, as determined in good faith by the Board of
Directors of the Company.
8. Rights of the Holder Prior to Exercise. The Holder shall not, solely
by virtue of this Warrant, be entitled to any voting or other rights of a
stockholder of the Company, either at law or equity, prior to the exercise of
this Warrant upon the terms and conditions set forth herein, and the rights of
the Holder are limited to those expressed in this Warrant and are not
enforceable against the Company except to the extent expressly set forth herein.
9. Ownership of Warrants. The Company shall be entitled to treat the
registered Holder as the absolute owner hereof for all purposes and shall not be
bound to recognize any equitable or other claim to or interest in the Warrant on
the part of any other person.
10. Assignment and Exchange of Warrants. Upon any registration of
transfer, the Company shall deliver a new Warrant or Warrants to the person
entitled thereto. This Warrant may be exchanged, at the option of the Holder
thereof, for another Warrant, or other Warrants of different denominations, of
like tenor and representing in the aggregate the right to purchase a like number
of Warrant Shares (or portions thereof), upon surrender to the Company or its
duly authorized agent. Notwithstanding anything contained herein to the
contrary, the Company shall have no obligation to cause Warrants to be
transferred on its books to any person if, in the opinion of counsel to the
Company, such transfer does not comply with the provisions of the Act and any
applicable state securities laws and the rules and regulations thereunder.
11. Adjustment of Exercise Price and Type of Warrant Shares. The
Exercise Price in effect at any time and the number and kind of securities
purchasable upon the exercise of this Warrant shall be subject to adjustment
from time to time upon the happening of certain events as follows:
(a) In case the Company shall (i) declare a dividend or make a
distribution on its outstanding Shares, in each case, in Shares, (ii) subdivide
or reclassify its outstanding Shares into a greater number of Shares, or (iii)
combine or reclassify its outstanding Shares into a smaller number of Shares,
the Exercise Price in effect at the time of the record date for such dividend or
distribution or of the effective date of such subdivision, combination or
reclassification shall be proportionately adjusted so that after such event the
Exercise Price shall equal the price determined by multiplying the Exercise
Price by a fraction, the denominator of which shall be the number of Shares
outstanding after giving effect to such action, and the numerator of which shall
be the number of Shares outstanding immediately prior to such action. Such
adjustment shall be made successively whenever any event listed above shall
occur.
(b) Upon each adjustment of the Exercise Price pursuant to the
provisions of this Section 11, the number of Warrant Shares issuable upon the
exercise at the adjusted Exercise Price of each Warrant shall be adjusted so
that after the event necessitating the adjustment to the Exercise Price, the
number of Warrant Shares into which this Warrant shall be exercisable shall be
equal to the nearest number of whole Shares determined by multiplying a number
equal to the Exercise Price in effect immediately prior to such adjustment by
the number of Warrant Shares
3
<PAGE> 5
issuable upon exercise of this Warrant immediately prior to such adjustment and
dividing the product so obtained by the adjusted Exercise Price.
(c) For the purposes of this Warrant, the term "Shares" shall mean
(i) the class of stock designated as Shares of Common Stock in the Certificate
of Incorporation of the Company as amended as of the date hereof, or (ii) any
other classes of stock resulting from successive changes or reclassifications of
such Common Stock consisting solely of changes in par value, or from par value
to no par value, or from no par value to par value.
(d) In case of any consolidation of the Company with, or merger of
the Company into, another entity (other than a consolidation or merger which
does not result in any reclassification or change of the outstanding Shares),
the entity formed by such consolidation or merger shall execute and deliver to
the Holder a supplemental warrant agreement providing that the Holder of this
Warrant shall have the right thereafter (until the expiration of such Warrant)
to receive, upon exercise of such Warrant, the kind and amount of shares of
stock and/or other securities and property received upon such consolidation or
merger by a holder of the number of Shares for which such Warrant might have
been exercised immediately prior to such consolidation, merger, sale or
transfer. Such supplemental warrant agreement shall provide for adjustments
which shall be identical to the adjustments provided in this Section 11. The
above provision of this subsection shall similarly apply to successive
consolidations or mergers.
(e) No adjustment in the Exercise Price or the number of Warrant
Shares shall be required if such adjustment is less than one-tenth of one
percent (0.1%) of such Exercise Price or number of Warrant Shares; provided,
however, that any adjustment which by reason of this Section 11e) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be made to
the nearest one-tenth of one cent ($0.001) and one-thousandth of one share
(.001).
(f) In any case in which this Section 11 shall require that an
adjustment in the number of Warrant Shares be made effective as of a record date
for a specified event, the Company may elect to defer, until the occurrence of
such event, issuing to the Holder, if the Holder exercised this Warrant after
the record date, the Warrant Shares, if any, issuable upon such exercise over
and above the Warrant Shares, if any, issuable upon such exercise prior to such
adjustment; provided, however, that the Company shall deliver to the Holder a
due bill or other appropriate instrument evidencing the Holder's right to
receive such additional Warrant Shares upon the occurrence of the event
requiring such adjustment.
(g) Whenever there shall be an adjustment as provided in this
Section 11, the Company shall promptly cause written notice thereof to be sent
by certified mail, postage prepaid, to the Holder, at its address as it shall
appear in the Company's transfer books, which notice shall be accompanied by an
officer's certificate setting forth the number of Warrant Shares issuable upon
the exercise of this Warrant if such Warrant were exercisable on the date of
such notice, and setting forth a brief statement of the facts requiring such
adjustment and the computation thereof, which officer's certificate shall be
conclusive evidence of the correctness of any such adjustment absent manifest
error.
4
<PAGE> 6
12. Registration Rights.
(a) Piggy-Back Registration.
(i) Right to Piggy-Back. If, at any time prior to the
Expiration Date, the Company proposes to register with the Securities and
Exchange Commission (the "SEC") the sale for cash of any of its shares of Common
Stock by filing a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), for its own account or for the account of any of
its stockholders (except pursuant to registration statements filed on Form S-4
or Form S-8 or any successor or similar forms or other unsuitable forms), the
Company shall promptly give written notice of such proposed filing to Holder and
offer Holder the opportunity to register such number of Warrant Shares issuable
upon execution of this Warrant as it may request in writing. Upon the written
request of Holder received by the Company within fifteen (15) days after the
giving of the notice by the Company, the Company shall use its best efforts to
cause the Shares that the Holder requests to be so registered to be included in
such registration.
(ii) Underwriting Procedures. If any registration pursuant to
this Section 12(a) shall be, in whole or in part, in connection with an
underwritten public offering of Common Stock of the Company, then the Company
shall not be required to include any Warrant Shares in the registration unless
Holder accepts the terms and conditions of the underwriting as agreed upon
between the Company and the underwriters. If the managing underwriter determines
and advises the Company in writing (which shall promptly notify Holder) that the
inclusion in the underwriting of all or any of the Warrant Shares proposed to be
included by Holder would be reasonably likely to jeopardize the successful
marketing of the securities proposed to be registered for the underwriting by
the Company or materially adversely affect the price, time or distribution of
the public offering, then the Company shall only be required to include the
number of the Warrant Shares that the managing underwriter determines in its
sole discretion, will not materially adversely affect the public offering, and,
if any such reduction is so determined by the managing underwriter to be
appropriate in accordance with the standards set forth above, then the number of
Warrant Shares requested to be included in the underwriting shall be reduced,
pro rata with other stockholders (other than those having and exercising demand
registration rights), if any, participating in the public offering, to the
number determined to be appropriate by the managing underwriter (which may
include a reduction to zero).
(iii) No Company Obligation. Neither the giving of a notice by
the Company nor any request by Holder under this Section 12(a) shall, in any
way, obligate the Company to file any registration statement at any time or
within any specific time period after receipt of Holder's written request and,
notwithstanding the filing of any registration statement, the Company may, at
any time before the effective date thereof, elect to delay or terminate the
entire registration process for any reason or no reason and without the consent
of Holder, without any further obligation to Holder in respect of such
registration statement.
(b) Demand Right. If, at any time prior to the Expiration Date, the
Company shall receive a written request ("Demand Request") from Holder for the
registration of any or all the Warrant Shares, provided that at the time of the
Demand Request at least a majority of the total Warrant Shares are still held of
record by Holder, then the Company, upon the terms and subject to the conditions
set forth in this Section 12(b), shall use its best efforts to cause all
5
<PAGE> 7
Warrant Shares to be registered in an appropriate registration statement of the
SEC as shall be selected by the Company, provided that if the Company is
eligible to use Form S-3 (or any successor form thereto) for such registration,
then such registration statement shall be used unless such form is inappropriate
or the Company desires to use a different form. If Holder intends for the public
offering covered by its Demand Request to occur by means of an underwriting, it
shall so advise the Company as a part of its Demand Request, and the managing
underwriter of such underwritten public offering shall be selected by Holder and
shall be reasonably acceptable to the Company. The Company shall be obligated to
register the Warrant Shares under this Section 12(b) after receipt of a Demand
Request on one occasion only. The Company shall be entitled to include in any
registration statement filed pursuant to this Section 12(b) additional shares of
Common Stock for its own account and for the account of its other security
holders. If the managing underwriter advises the Company in writing that the
inclusion of any or all such additional shares of Common Stock would materially
adversely affect the marketing of the public offering of the Warrant Shares,
then the Company shall not be entitled to include such additional shares of
Common Stock in any such registration statement to the extent the managing
underwriter advises. Notwithstanding the provisions of this Section 12(b), the
Company shall have the right to delay or suspend the filing of a registration
statement for up to ninety (90) days from the time the filing thereof would
otherwise be required under this Section 12(b) if, in the good faith
determination of the Company's board of directors, such registration would be
seriously detrimental to the Company and its stockholders or would materially
adversely affect the business, affairs, properties, financial condition, results
of operations or prospects of the Company or any pending or proposed
acquisition, merger, reorganization, recapitalization or other transaction or
public offering of the Company's securities, or would require premature
disclosure thereof not in the best interests of the Company; provided, however,
that the Company shall not be entitled to exercise this right more than once. If
this Warrant, or any portion thereof, and/or the Warrant Shares are at any time
held by more than one person or entity, then the obligations of the Company
under this Section 12(b) shall only apply to a "50% holder". The term "50%
holder" as used in this Section 12(b) shall mean the holder or holders of at
least 50% of the Warrant Shares and shall include any owner or combination of
owners of such securities, which ownership shall be calculated by determining
the number of Warrant Shares then held by such owner or owners, as well as the
number of Warrant Shares then issuable upon exercise of this Warrant (or any
successor Warrants) held by such owner or owners.
(c) Information. It shall be condition precedent to the obligation
of the Company hereunder to register the Warrant Shares under this Section 12(c)
that Holder furnish to the Company and the managing underwriters such
information regarding itself, the intended method of disposition of such
securities and such other information as the Company or the managing underwriter
shall from time to time reasonably request and that shall be reasonably required
to effect the registration of the Warrant Shares.
(d) Market Stand-Off. The Holder, including any assignee or
successors of Holder, agrees in connection with any underwritten public offering
of the Company's securities that upon the request of the managing underwriter,
it shall commit itself in writing not to sell or offer to sell any shares other
than such shares included in the underwritten public offering, during 30 days
prior to, and for a period not to exceed ninety (90) days after, the date of the
final prospectus used in such offering.
6
<PAGE> 8
(e) Expenses. Holder shall pay all underwriting and brokerage fees,
discounts and commissions related to the sale of the Warrant Shares in a public
offering registered pursuant to the provisions of this Section 12(e), together
with the fees and expenses of any separate counsel, accountants and other
advisors retained by Holder in connection with the offering. All other fees,
costs and expenses incurred in connection with any registration of public
offering including, but not limited to, all federal and state registration,
qualification, filing fees, printed and document distribution costs and
expenses, fees and disbursements of its counsel, accountants and other experts,
Nasdaq additional listing fees, transfer fees, exchange fees, fees of transfer
agents and registrants shall be borne as follows: (i) if pursuant to a demand
registration under Section 12(b), the Company shall bear all reasonable costs,
fees and expenses incurred by the Company (provided the offering being
registered is not pursuant to an underwriting), and (ii) if pursuant to a
piggy-back registration under Section 12(a), by the Company, except that Holder
shall bear its proportionate share of any such costs, fees and expenses to the
extent Warrant Shares of Holder are included in the registration.
(f) Indemnification by Holder. If any of the Warrant Shares are
included in a registration, to the extent permitted by law, Holder shall
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the registration statement, each person, if any, who
controls the Company within the meaning of Section 15 of Securities Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), any underwriter, and any controlling person of any such underwriter, from
and against any and all losses, claims, liabilities, damages and expenses
(including any investigative, legal, accounting and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim (the "Damages") asserted to which any of the
foregoing persons may become subject under the Securities Act, the Exchange Act,
or other federal or state law, common law or otherwise, insofar as such Damages
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in such registration statement, any preliminary
prospectus or final prospectus, or any amendments or supplements thereto, the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
any violation or alleged violation by the Company of the Securities Act, the
Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law
(collectively, a "Violation"), to the extent that such Violation occurs in
reliance upon and in conformity with written information furnished to the
Company by the Holder expressly for use in connection with such registration;
and Holder shall pay, as incurred, any legal or other expenses reasonably
incurred by any person intended to be indemnified pursuant to this Section 12(f)
in connection with the investigation or defense of any such Damages.
(g) Indemnification by the Company. If any of the Warrant Shares
are included in a registration, to the extent permitted by law, the Company
shall indemnify and hold harmless the Holder, each of its directors and officers
from and against any and all Damages asserted to which any of the foregoing
persons may become subject under the Securities Act, the Exchange Act, or other
federal or state law, common law or otherwise, insofar as such Damages arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, any preliminary
prospectus or final prospectus, or any amendments or supplements thereto, the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
any Violation or
7
<PAGE> 9
alleged Violation by the Holder, to the extent that such Violation occurs in
reliance upon and in conformity with written information furnished to the Holder
by the Company expressly for use in connection with such registration; and the
Company shall pay, as incurred, any legal or other expenses reasonably incurred
by any person intended to be indemnified pursuant to this Section 12(g) in
connection with the investigation or defense of any such Damages.
13. Legend. The certificate or certificates evidencing the Warrant
Shares shall bear a legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED,
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSACTION
IS REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR UNLESS SUCH TRANSACTION IS EXEMPT FROM SUCH
SECURITIES REGISTRATION REQUIREMENTS AND THE COMPANY HAS RECEIVED
AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, TO THAT EFFECT.
14. Issue Tax. The issuance of certificates for Warrant Shares upon
exercise of this Warrant shall be made without charge to the Holder for any
issuance tax in respect thereof; provided, however, that the Company shall not
be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any certificate in a name other than
that of the Holder.
15. Limitations on Disposition of Warrant. Neither this Warrant nor,
unless registered under the Securities Act and applicable securities laws, as
contemplated by Section 12 hereof, the Warrant Shares issuable upon exercise of
the Warrant, may be offered, sold, assigned, hypothecated or otherwise
transferred, in whole or in part, except (i) to the officers, directors,
shareholders or employees of the Holder, (ii) by will or the laws of descent and
distribution as a result of the death of any permitted transferee, or (iii) to
any successor to the business of the Holder. In addition, neither this Warrant
nor, until registered under the Securities Act and applicable securities laws,
any Warrant Shares issued upon exercise of this Warrant, may be pledged,
offered, sold, assigned, hypothecated or otherwise transferred until (i) such
transaction has been registered under the Securities Act and any applicable
state securities laws, or (ii) such transaction is exempt from such securities
registration requirements and the Company has received an opinion of counsel to
which opinion is satisfactory to the Company, to that effect. It shall be a
condition to the transfer of this Warrant and any Warrant Shares that any
transferee hereof or thereof deliver to the Company its written agreement to
accept and be bound by all of the terms and conditions of this Warrant.
16. Lost, Stolen, Mutilated or Destroyed Warrant. Upon receipt of
evidence satisfactory to the Company of the loss, theft, destruction, or
mutilation of any Warrant (and upon surrender of any Warrant if mutilated), and
upon reimbursement of the Company's reasonable incidental expenses and, if
reasonably requested, an indemnity reasonably acceptable to the Company, the
Company shall execute and deliver to the Holder thereof a new Warrant of like
date, tenor, and denomination.
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<PAGE> 10
17. Securities Law Representation. The Holder and each transferee of
this Warrant or of the Warrant Shares issuable upon the exercise of this
Warrant, by their acceptance of this Warrant or of any Warrant Shares, each
hereby represents and warrants that this Warrant and the Warrant Shares issuable
upon exercise of this Warrant are being acquired or will be acquired for
investment purposes for the account of the holder of such securities with no
intention of a sale, transfer or other distribution that is not in compliance
with the Securities Act and applicable state securities laws.
18. No Impairment. The Company will not, by any voluntary action, avoid
or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all times in good
faith assist in the carrying out of all the provisions of this Warrant and in
the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Holder of this Warrant against impairment.
19. Waiver. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
20. Notices. All notices, payments, requests and demands and other
communications required or permitted under this Warrant shall be deemed to have
been duly given, delivered and made if in writing and if served either by
personal delivery to the party for whom it is intended or by being deposited
postage prepaid, certified or registered mail, return receipt requested, to the
address of the Holder at the last address as appears on the books of the Company
or its stock transfer agent, if any, and to the Company at its principal
executive offices.
21. Governing Law. This Warrant shall be construed and enforced in
accordance with and governed by the internal substantive laws of the State of
Delaware, without giving effect to any change or conflict of law principles.
22. Further Assurances. The parties agree to execute, acknowledge and
deliver any and all such other documents and to take any and all such other
actions as may, in the reasonable opinion of either of the parties hereto, be
necessary or convenient to carry out more efficiently any or all of the purposes
of this Warrant.
23. Severability. Any provision of this Warrant which shall be
prohibited by law or otherwise held invalid shall be ineffective only to the
extent of such prohibition or invalidity and shall not invalidate or otherwise
render ineffective any or all of the remaining provisions of this Warrant.
24. Parties in Interest. This Warrant and the various rights and
obligations arising hereunder shall be binding upon and shall inure to the
benefit of the parties hereto and to each and all of their respective successors
and permitted assigns.
25. Amendments. Neither this Warrant nor any of the terms and
conditions hereof shall be amended or modified in any respect except in a
writing executed by the Company and Holder.
9
<PAGE> 11
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its President and attested by its Secretary as of the 7th day of September,
1999.
METRETEK TECHNOLOGIES, INC.
By:______________________________
W. Phillip Marcum, President
ATTEST:
By: ____________________________
Gary J. Zuiderveen, Secretary
10
<PAGE> 12
FORM FOR EXERCISE OF WARRANTS
[TO BE EXECUTED BY THE HOLDER IN ORDER TO EXERCISE THE WITHIN WARRANT]
The undersigned, the Holder of the within Warrant, hereby irrevocably
elects to exercise the right, represented by the within Warrant, to purchase
_____ shares of Common Stock, par value $.01 per share ("Shares"), of Metretek
Technologies, Inc., a Delaware corporation (the "Company"), in accordance with
the terms of the within Warrant. The undersigned requests that a certificate for
such Shares be issued in the name of, and delivered to:
Name: _______________________________
Address:_____________________________
_____________________________
Social Security or Tax ID No. _______
and, if such number of Shares shall not be all the Shares issuable upon exercise
of the within Warrant, that a new Warrant exercisable on the same terms for the
balance of such Shares be registered in the name of, and delivered to, the
Holder at the address set forth below.
Payment of the Exercise Price per Share required under the within
Warrant accompanies this Form.
The undersigned hereby represents and warrants that the undersigned
owns the within Warrant free and clear of any and all claims, liens and/or
encumbrances and is acquiring such Shares for its own account for investment
purposes only, and not for resale or with a view to distribution of such Shares
or any part thereof.
Dated: ________________ ______________________________
By:___________________________
Title:________________________
Address:______________________
______________________
______________________
Number of Shares: ______________________
Total Exercise Price:$__________________
METRETEK TECHNOLOGIES, INC.
By:___________________________
Its:__________________________
Date:_________________________
11
<PAGE> 13
FORM OF ASSIGNMENT
[TO BE EXECUTED BY THE HOLDER TO TRANSFER THE WITHIN WARRANT]
FOR VALUE RECEIVED, the undersigned, as the registered Holder of the
within Warrant, hereby sells, assigns and transfers unto:
Name:_________________________________
Address: _____________________________
_____________________________
Social Security or Tax ID No._________
all of the undersigned's right, title and interest to and under such Warrant to
purchase ____ shares of Common Stock, par value $.01 per share, of Metretek
Technologies, Inc., a Delaware corporation (the "Company"), evidenced by the
within Warrant, and does hereby irrevocably constitute and appoint ____________
attorney to make such transfer on the books of the Company, with full power of
substitution in the premises.
-----------------------------------
Date:___________________________ By:_________________________________
Title:
------------------------------------
(Street Address)
------------------------------------
(City), (State) (Zip Code)
NOTE: The above signature must
conform to the name of Holder as
specified on the face of the within
Warrant in every particular, without
alteration or enlargement or any
change whatsoever.
12
<PAGE> 1
Exhibit 4.15
Form of Common Stock Purchase Warrant issued to Silverman Heller Associates
<PAGE> 2
THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED, SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSACTION IS REGISTERED UNDER
THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM SUCH SECURITIES REGISTRATION REQUIREMENTS AND THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, TO THAT
EFFECT. THIS WARRANT IS SUBJECT TO FURTHER RESTRICTIONS ON TRANSFER SET FORTH
HEREIN.
METRETEK TECHNOLOGIES, INC.
WARRANT TO PURCHASE COMMON STOCK
WARRANT TO PURCHASE ISSUE DATE: JULY 19, 1999
15,000 SHARES OF COMMON STOCK EXPIRATION DATE: JULY 19, 2004
THIS CERTIFIES THAT, for value received, Silverman Heller Associates (the
"Holder"), is entitled to purchase up to 15,000 shares of Common Stock, par
value $.01 per share (the "Shares"), of Metretek Technologies, Inc., a Delaware
corporation (the "Company"), at the exercise price per Share (the "Exercise
Price") and during the periods set forth in Section 2 below, as adjusted
pursuant to Section 11 below, until 5:00 p.m., Denver, Colorado time on July 19,
2004 (the "Expiration Date"), upon the terms and subject to the conditions set
forth in this Warrant.
The Shares or other property or securities issuable upon the exercise
of the Warrants are hereinafter referred to as the "Warrant Shares" and the
exercise price per Warrant Share in effect at any time and as adjusted from time
to time is hereinafter referred to as the "Exercise Price."
1. Method of Exercise of Warrant. This Warrant may be exercised by the
Holder in whole at any time or in part from time to time within the period
specified herein by the presentation and surrender of this Warrant, together
with the Form for Exercise of Warrants attached hereto ("Exercise Form") duly
executed by Holder, to the Company at its principal executive offices,
accompanied by payment, by bank certified or cashier's check payable to the
order of the Company, or by wire transfer of immediately available funds to an
account designated by the Company, in the amount equal to the number of Warrant
Shares for which the Warrant is being exercised multiplied by the Exercise Price
of such Warrant Shares. Upon the Holder's exercise of this Warrant in accordance
with the terms and conditions hereof, the Company shall issue the number of
Warrant Shares to the Holder specified on the Exercise Form.
<PAGE> 3
2. Exercisability of Warrant.
(a) Generally. Upon the terms and subject to the conditions set
forth in this Warrant, the Holder is entitled to purchase up to 15,000 Shares at
the Exercise Prices set forth below, as such number of Shares and/or Exercise
Prices are adjusted from time to time hereunder:
Number of Shares Exercise Price
---------------- --------------
7,500 $2.47
7,500 $4.50
(b) Exercisability of Warrant. This Warrant shall become exercisable
upon the Issue Date set forth on the cover hereof and shall expire and become
unexercisable upon the Expiration Date.
3. Exercise in Part. If this Warrant is exercised in part only prior to
the Expiration Date, the Company shall, upon surrender of this Warrant for
cancellation, execute and deliver a new certificate evidencing the right of the
Holder to receive the balance of the Warrant Shares hereunder.
4. Status as Stockholder After Exercise. Upon receipt by the Company of
this Warrant and the Exercise Form at the principal executive offices of the
Company in proper form for exercise and the Exercise Price in full, the Holder
shall be deemed to be the holder of record of the Warrant Shares issuable upon
such exercise, notwithstanding that certificates representing such Warrant
Shares shall not then be actually delivered to the Holder. If the stock transfer
books of the Company shall be closed on the date of receipt of this Warrant, the
Holder shall be deemed to be the Holder of such Warrant Shares on the next
succeeding day on which the stock transfer books of the Company shall be opened.
5. Delivery of Stock Certificates Upon Exercise. As soon as practicable
after the exercise of this Warrant, in whole or in part, the Company shall cause
to be issued in the name of and delivered to the Holder a certificate or
certificates evidencing the number of fully paid and nonassessable Warrant
Shares to which the Holder shall be entitled as a result of such exercise,
together with any other property to which the Holder is entitled upon such
exercise.
6. Reservation of Warrant Shares. The Company shall at all times
reserve and keep available, solely for issuance and/or delivery upon exercise of
this Warrant, such number of Warrant Shares as shall then be issued upon the
exercise of this Warrant. All Warrant Shares issued upon exercise hereof shall,
upon such issuance, be fully paid and nonassessable.
7. No Fractional Shares. No fractional Warrant Shares shall be issued
upon the exercise, in whole or in part, of this Warrant. If fractional Warrant
Shares would be issuable upon exercise of this Warrant, the Company shall, in
lieu thereof, pay to the Holder an amount in cash equal to such fraction
multiplied by the then "current market value" of such fractional Warrant Shares.
For purposes of this paragraph only, the "current market value" of the Warrant
Shares shall be equal to the closing sale price of the Shares on the Nasdaq
Stock Market, so long as they are
2
<PAGE> 4
listed thereon, and thereafter the closing sale price (or, if not available on
such date, the average of the high and low bid price for such date) of the
Shares on any national securities exchange or any other stock exchange, stock
market or stock quotation system which constitutes the primary market on which
the Shares are then traded or quoted. If the Shares are not listed or traded on
any stock exchange, stock market or stock system, then the "current market
value" shall be an amount, not less than book value, as determined in good faith
by the Board of Directors of the Company.
8. Rights of the Holder Prior to Exercise. The Holder shall not, solely
by virtue of this Warrant, be entitled to any voting or other rights of a
stockholder of the Company, either at law or equity, prior to the exercise of
this Warrant upon the terms and conditions set forth herein, and the rights of
the Holder are limited to those expressed in this Warrant and are not
enforceable against the Company except to the extent expressly set forth herein.
9. Ownership of Warrants. The Company shall be entitled to treat the
registered Holder as the absolute owner hereof for all purposes and shall not be
bound to recognize any equitable or other claim to or interest in the Warrant on
the part of any other person.
10. Assignment and Exchange of Warrants. Upon any registration of
transfer, the Company shall deliver a new Warrant or Warrants to the person
entitled thereto. This Warrant may be exchanged, at the option of the Holder
thereof, for another Warrant, or other Warrants of different denominations, of
like tenor and representing in the aggregate the right to purchase a like number
of Warrant Shares (or portions thereof), upon surrender to the Company or its
duly authorized agent. Notwithstanding anything contained herein to the
contrary, the Company shall have no obligation to cause Warrants to be
transferred on its books to any person if, in the opinion of counsel to the
Company, such transfer does not comply with the provisions of the Act and any
applicable state securities laws and the rules and regulations thereunder.
11. Adjustment of Exercise Price and Type of Warrant Shares. The
Exercise Price in effect at any time and the number and kind of securities
purchasable upon the exercise of this Warrant shall be subject to adjustment
from time to time upon the happening of certain events as follows:
(a) In case the Company shall (i) declare a dividend or make a
distribution on its outstanding Shares, in each case, in Shares, (ii) subdivide
or reclassify its outstanding Shares into a greater number of Shares, or (iii)
combine or reclassify its outstanding Shares into a smaller number of Shares,
the Exercise Price in effect at the time of the record date for such dividend or
distribution or of the effective date of such subdivision, combination or
reclassification shall be proportionately adjusted so that after such event the
Exercise Price shall equal the price determined by multiplying the Exercise
Price by a fraction, the denominator of which shall be the number of Shares
outstanding after giving effect to such action, and the numerator of which shall
be the number of Shares outstanding immediately prior to such action. Such
adjustment shall be made successively whenever any event listed above shall
occur.
(b) Upon each adjustment of the Exercise Price pursuant to the
provisions of this Section 11, the number of Warrant Shares issuable upon the
exercise at the adjusted Exercise Price of each Warrant shall be adjusted so
that after the event necessitating the adjustment to the
3
<PAGE> 5
Exercise Price, the number of Warrant Shares into which this Warrant shall be
exercisable shall be equal to the nearest number of whole Shares determined by
multiplying a number equal to the Exercise Price in effect immediately prior to
such adjustment by the number of Warrant Shares issuable upon exercise of this
Warrant immediately prior to such adjustment and dividing the product so
obtained by the adjusted Exercise Price.
(c) For the purposes of this Warrant, the term "Shares" shall mean
(i) the class of stock designated as Shares of Common Stock in the Certificate
of Incorporation of the Company as amended as of the date hereof, or (ii) any
other classes of stock resulting from successive changes or reclassifications of
such Common Stock consisting solely of changes in par value, or from par value
to no par value, or from no par value to par value.
(d) In case of any consolidation of the Company with, or merger of
the Company into, another entity (other than a consolidation or merger which
does not result in any reclassification or change of the outstanding Shares),
the entity formed by such consolidation or merger shall execute and deliver to
the Holder a supplemental warrant agreement providing that the Holder of this
Warrant shall have the right thereafter (until the expiration of such Warrant)
to receive, upon exercise of such Warrant, the kind and amount of shares of
stock and/or other securities and property received upon such consolidation or
merger by a holder of the number of Shares for which such Warrant might have
been exercised immediately prior to such consolidation, merger, sale or
transfer. Such supplemental warrant agreement shall provide for adjustments
which shall be identical to the adjustments provided in this Section 11. The
above provision of this subsection shall similarly apply to successive
consolidations or mergers.
(e) No adjustment in the Exercise Price or the number of Warrant
Shares shall be required if such adjustment is less than one-tenth of one
percent (0.1%) of such Exercise Price or number of Warrant Shares; provided,
however, that any adjustment which by reason of this Section 11e) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be made to
the nearest one-tenth of one cent ($0.001) and one-thousandth of one share
(.001).
(f) In any case in which this Section 11 shall require that an
adjustment in the number of Warrant Shares be made effective as of a record date
for a specified event, the Company may elect to defer, until the occurrence of
such event, issuing to the Holder, if the Holder exercised this Warrant after
the record date, the Warrant Shares, if any, issuable upon such exercise over
and above the Warrant Shares, if any, issuable upon such exercise prior to such
adjustment; provided, however, that the Company shall deliver to the Holder a
due bill or other appropriate instrument evidencing the Holder's right to
receive such additional Warrant Shares upon the occurrence of the event
requiring such adjustment.
(g) Whenever there shall be an adjustment as provided in this
Section 11, the Company shall promptly cause written notice thereof to be sent
by certified mail, postage prepaid, to the Holder, at its address as it shall
appear in the Company's transfer books, which notice shall be accompanied by an
officer's certificate setting forth the number of Warrant Shares issuable upon
the exercise of this Warrant if such Warrant were exercisable on the date of
such notice, and setting forth a brief statement of the facts requiring such
adjustment and the computation thereof, which officer's certificate shall be
conclusive evidence of the correctness of any such adjustment absent manifest
error.
4
<PAGE> 6
12. Registration Rights.
(a) Piggy-Back Registration.
(i) Right to Piggy-Back. If, at any time prior to the
Expiration Date, the Company proposes to register with the Securities and
Exchange Commission (the "SEC") the sale for cash of any of its shares of Common
Stock by filing a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), for its own account or for the account of any of
its stockholders (except pursuant to registration statements filed on Form S-4
or Form S-8 or any successor or similar forms or other unsuitable forms), the
Company shall promptly give written notice of such proposed filing to Holder and
offer Holder the opportunity to register such number of Warrant Shares issuable
upon execution of this Warrant as it may request in writing. Upon the written
request of Holder received by the Company within fifteen (15) days after the
giving of the notice by the Company, the Company shall use its best efforts to
cause the Shares that the Holder requests to be so registered to be included in
such registration.
(ii) Underwriting Procedures. If any registration pursuant to
this Section 12(a) shall be, in whole or in part, in connection with an
underwritten public offering of Common Stock of the Company, then the Company
shall not be required to include any Warrant Shares in the registration unless
Holder accepts the terms and conditions of the underwriting as agreed upon
between the Company and the underwriters. If the managing underwriter determines
and advises the Company in writing (which shall promptly notify Holder) that the
inclusion in the underwriting of all or any of the Warrant Shares proposed to be
included by Holder would be reasonably likely to jeopardize the successful
marketing of the securities proposed to be registered for the underwriting by
the Company or materially adversely affect the price, time or distribution of
the public offering, then the Company shall only be required to include the
number of the Warrant Shares that the managing underwriter determines in its
sole discretion, will not materially adversely affect the public offering, and,
if any such reduction is so determined by the managing underwriter to be
appropriate in accordance with the standards set forth above, then the number of
Warrant Shares requested to be included in the underwriting shall be reduced,
pro rata with other stockholders (other than those having and exercising demand
registration rights), if any, participating in the public offering, to the
number determined to be appropriate by the managing underwriter (which may
include a reduction to zero).
(iii) No Company Obligation. Neither the giving of a notice by
the Company nor any request by Holder under this Section 12(a) shall, in any
way, obligate the Company to file any registration statement at any time or
within any specific time period after receipt of Holder's written request and,
notwithstanding the filing of any registration statement, the Company may, at
any time before the effective date thereof, elect to delay or terminate the
entire registration process for any reason or no reason and without the consent
of Holder, without any further obligation to Holder in respect of such
registration statement.
(b) Demand Right. If, at any time prior to the Expiration Date,
the Company shall receive a written request ("Demand Request") from Holder for
the registration of any or all
5
<PAGE> 7
the Warrant Shares, provided that at the time of the Demand Request at least a
majority of the total Warrant Shares are still held of record by Holder, then
the Company, upon the terms and subject to the conditions set forth in this
Section 12(b), shall use its best efforts to cause all Warrant Shares to be
registered in an appropriate registration statement of the SEC as shall be
selected by the Company, provided that if the Company is eligible to use Form
S-3 (or any successor form thereto) for such registration, then such
registration statement shall be used unless such form is inappropriate or the
Company desires to use a different form. If Holder intends for the public
offering covered by its Demand Request to occur by means of an underwriting, it
shall so advise the Company as a part of its Demand Request, and the managing
underwriter of such underwritten public offering shall be selected by Holder and
shall be reasonably acceptable to the Company. The Company shall be obligated to
register the Warrant Shares under this Section 12(b) after receipt of a Demand
Request on one occasion only. The Company shall be entitled to include in any
registration statement filed pursuant to this Section 12(b) additional shares of
Common Stock for its own account and for the account of its other security
holders. If the managing underwriter advises the Company in writing that the
inclusion of any or all such additional shares of Common Stock would materially
adversely affect the marketing of the public offering of the Warrant Shares,
then the Company shall not be entitled to include such additional shares of
Common Stock in any such registration statement to the extent the managing
underwriter advises. Notwithstanding the provisions of this Section 12(b), the
Company shall have the right to delay or suspend the filing of a registration
statement for up to ninety (90) days from the time the filing thereof would
otherwise be required under this Section 12(b) if, in the good faith
determination of the Company's board of directors, such registration would be
seriously detrimental to the Company and its stockholders or would materially
adversely affect the business, affairs, properties, financial condition, results
of operations or prospects of the Company or any pending or proposed
acquisition, merger, reorganization, recapitalization or other transaction or
public offering of the Company's securities, or would require premature
disclosure thereof not in the best interests of the Company; provided, however,
that the Company shall not be entitled to exercise this right more than once. If
this Warrant, or any portion thereof, and/or the Warrant Shares are at any time
held by more than one person or entity, then the obligations of the Company
under this Section 12(b) shall only apply to a "50% holder". The term "50%
holder" as used in this Section 12(b) shall mean the holder or holders of at
least 50% of the Warrant Shares and shall include any owner or combination of
owners of such securities, which ownership shall be calculated by determining
the number of Warrant Shares then held by such owner or owners, as well as the
number of Warrant Shares then issuable upon exercise of this Warrant (or any
successor Warrants) held by such owner or owners.
(c) Information. It shall be condition precedent to the obligation
of the Company hereunder to register the Warrant Shares under this Section 12(c)
that Holder furnish to the Company and the managing underwriters such
information regarding itself, the intended method of disposition of such
securities and such other information as the Company or the managing underwriter
shall from time to time reasonably request and that shall be reasonably required
to effect the registration of the Warrant Shares.
(d) Market Stand-Off. The Holder, including any assignee or
successors of Holder, agrees in connection with any underwritten public offering
of the Company's securities that upon the request of the managing underwriter,
it shall commit itself in writing not to sell or offer to sell any shares other
than such shares included in the underwritten public offering, during 30 days
prior to, and for a period not to exceed ninety (90) days after, the date of the
final prospectus used in such offering.
6
<PAGE> 8
(e) Expenses. Holder shall pay all underwriting and brokerage
fees, discounts and commissions related to the sale of the Warrant Shares in a
public offering registered pursuant to the provisions of this Section 12(e),
together with the fees and expenses of any separate counsel, accountants and
other advisors retained by Holder in connection with the offering. All other
fees, costs and expenses incurred in connection with any registration of public
offering including, but not limited to, all federal and state registration,
qualification, filing fees, printed and document distribution costs and
expenses, fees and disbursements of its counsel, accountants and other experts,
Nasdaq additional listing fees, transfer fees, exchange fees, fees of transfer
agents and registrants shall be borne as follows: (i) if pursuant to a demand
registration under Section 12(b), the Company shall bear all reasonable costs,
fees and expenses incurred by the Company (provided the offering being
registered is not pursuant to an underwriting), and (ii) if pursuant to a
piggy-back registration under Section 12(a), by the Company, except that Holder
shall bear its proportionate share of any such costs, fees and expenses to the
extent Warrant Shares of Holder are included in the registration.
(f) Indemnification by Holder. If any of the Warrant Shares are
included in a registration, to the extent permitted by law, Holder shall
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the registration statement, each person, if any, who
controls the Company within the meaning of Section 15 of Securities Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), any underwriter, and any controlling person of any such underwriter, from
and against any and all losses, claims, liabilities, damages and expenses
(including any investigative, legal, accounting and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim (the "Damages") asserted to which any of the
foregoing persons may become subject under the Securities Act, the Exchange Act,
or other federal or state law, common law or otherwise, insofar as such Damages
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in such registration statement, any preliminary
prospectus or final prospectus, or any amendments or supplements thereto, the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
any violation or alleged violation by the Company of the Securities Act, the
Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law
(collectively, a "Violation"), to the extent that such Violation occurs in
reliance upon and in conformity with written information furnished to the
Company by the Holder expressly for use in connection with such registration;
and Holder shall pay, as incurred, any legal or other expenses reasonably
incurred by any person intended to be indemnified pursuant to this Section 12(f)
in connection with the investigation or defense of any such Damages.
(g) Indemnification by the Company. If any of the Warrant Shares
are included in a registration, to the extent permitted by law, the Company
shall indemnify and hold harmless the Holder, each of its directors and officers
from and against any and all Damages asserted to which any of the foregoing
persons may become subject under the Securities Act, the Exchange Act, or other
federal or state law, common law or otherwise, insofar as such Damages arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in
7
<PAGE> 9
such registration statement, any preliminary prospectus or final prospectus, or
any amendments or supplements thereto, the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, or any Violation or alleged Violation by the
Holder, to the extent that such Violation occurs in reliance upon and in
conformity with written information furnished to the Holder by the Company
expressly for use in connection with such registration; and the Company shall
pay, as incurred, any legal or other expenses reasonably incurred by any person
intended to be indemnified pursuant to this Section 12(g) in connection with the
investigation or defense of any such Damages.
13. Legend. The certificate or certificates evidencing the Warrant
Shares shall bear a legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED,
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSACTION
IS REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR UNLESS SUCH TRANSACTION IS EXEMPT FROM SUCH
SECURITIES REGISTRATION REQUIREMENTS AND THE COMPANY HAS RECEIVED
AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, TO THAT EFFECT.
14. Issue Tax. The issuance of certificates for Warrant Shares upon
exercise of this Warrant shall be made without charge to the Holder for any
issuance tax in respect thereof; provided, however, that the Company shall not
be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any certificate in a name other than
that of the Holder.
15. Limitations on Disposition of Warrant. Neither this Warrant nor,
unless registered under the Securities Act and applicable securities laws, as
contemplated by Section 12 hereof, the Warrant Shares issuable upon exercise of
the Warrant, may be offered, sold, assigned, hypothecated or otherwise
transferred, in whole or in part, except (i) to the officers, directors,
shareholders or employees of the Holder, (ii) by will or the laws of descent and
distribution as a result of the death of any permitted transferee, or (iii) to
any successor to the business of the Holder. In addition, neither this Warrant
nor, until registered under the Securities Act and applicable securities laws,
any Warrant Shares issued upon exercise of this Warrant, may be pledged,
offered, sold, assigned, hypothecated or otherwise transferred until (i) such
transaction has been registered under the Securities Act and any applicable
state securities laws, or (ii) such transaction is exempt from such securities
registration requirements and the Company has received an opinion of counsel to
which opinion is satisfactory to the Company, to that effect. It shall be a
condition to the transfer of this Warrant and any Warrant Shares that any
transferee hereof or thereof deliver to the Company its written agreement to
accept and be bound by all of the terms and conditions of this Warrant.
16. Lost, Stolen, Mutilated or Destroyed Warrant. Upon receipt of
evidence satisfactory to the Company of the loss, theft, destruction, or
mutilation of any Warrant (and upon surrender of any Warrant if mutilated), and
upon reimbursement of the Company's reasonable
8
<PAGE> 10
incidental expenses and, if reasonably requested, an indemnity reasonably
acceptable to the Company, the Company shall execute and deliver to the Holder
thereof a new Warrant of like date, tenor, and denomination.
17. Securities Law Representation. The Holder and each transferee of
this Warrant or of the Warrant Shares issuable upon the exercise of this
Warrant, by their acceptance of this Warrant or of any Warrant Shares, each
hereby represents and warrants that this Warrant and the Warrant Shares issuable
upon exercise of this Warrant are being acquired or will be acquired for
investment purposes for the account of the holder of such securities with no
intention of a sale, transfer or other distribution that is not in compliance
with the Securities Act and applicable state securities laws.
18. No Impairment. The Company will not, by any voluntary action, avoid
or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all times in good
faith assist in the carrying out of all the provisions of this Warrant and in
the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Holder of this Warrant against impairment.
19. Waiver. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
20. Notices. All notices, payments, requests and demands and other
communications required or permitted under this Warrant shall be deemed to have
been duly given, delivered and made if in writing and if served either by
personal delivery to the party for whom it is intended or by being deposited
postage prepaid, certified or registered mail, return receipt requested, to the
address of the Holder at the last address as appears on the books of the Company
or its stock transfer agent, if any, and to the Company at its principal
executive offices.
21. Governing Law. This Warrant shall be construed and enforced in
accordance with and governed by the internal substantive laws of the State of
Delaware, without giving effect to any change or conflict of law principles.
22. Further Assurances. The parties agree to execute, acknowledge and
deliver any and all such other documents and to take any and all such other
actions as may, in the reasonable opinion of either of the parties hereto, be
necessary or convenient to carry out more efficiently any or all of the purposes
of this Warrant.
23. Severability. Any provision of this Warrant which shall be
prohibited by law or otherwise held invalid shall be ineffective only to the
extent of such prohibition or invalidity and shall not invalidate or otherwise
render ineffective any or all of the remaining provisions of this Warrant.
24. Parties in Interest. This Warrant and the various rights and
obligations arising hereunder shall be binding upon and shall inure to the
benefit of the parties hereto and to each and all of their respective successors
and permitted assigns.
9
<PAGE> 11
25. Amendments. Neither this Warrant nor any of the terms and
conditions hereof shall be amended or modified in any respect except in a
writing executed by the Company and Holder.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its President and attested by its Secretary as of the 19th day of July, 1999.
METRETEK TECHNOLOGIES, INC.
By:_________________________________
W. Phillip Marcum, President
ATTEST:
By: ____________________________
Gary J. Zuiderveen, Secretary
10
<PAGE> 12
FORM FOR EXERCISE OF WARRANTS
[TO BE EXECUTED BY THE HOLDER IN ORDER TO EXERCISE THE WITHIN WARRANT]
The undersigned, the Holder of the within Warrant, hereby irrevocably
elects to exercise the right, represented by the within Warrant, to purchase
_____ shares of Common Stock, par value $.01 per share ("Shares"), of Metretek
Technologies, Inc., a Delaware corporation (the "Company"), in accordance with
the terms of the within Warrant. The undersigned requests that a certificate for
such Shares be issued in the name of, and delivered to:
Name: _____________________________________
Address:___________________________________
___________________________________
Social Security or Tax ID No. _____________
and, if such number of Shares shall not be all the Shares issuable upon exercise
of the within Warrant, that a new Warrant exercisable on the same terms for the
balance of such Shares be registered in the name of, and delivered to, the
Holder at the address set forth below.
Payment of the Exercise Price per Share required under the within
Warrant accompanies this Form.
The undersigned hereby represents and warrants that the undersigned
owns the within Warrant free and clear of any and all claims, liens and/or
encumbrances and is acquiring such Shares for its own account for investment
purposes only, and not for resale or with a view to distribution of such Shares
or any part thereof.
Dated: ________________ ___________________________________
By:________________________________
Title:_____________________________
Address:___________________________
___________________________
___________________________
Number of Shares: ______________________
Total Exercise Price:$__________________
METRETEK TECHNOLOGIES, INC.
By:________________________________
Its:_______________________________
Date:______________________________
11
<PAGE> 13
FORM OF ASSIGNMENT
[TO BE EXECUTED BY THE HOLDER TO TRANSFER THE WITHIN WARRANT]
FOR VALUE RECEIVED, the undersigned, as the registered Holder of the
within Warrant, hereby sells, assigns and transfers unto:
Name:____________________________________
Address: ________________________________
________________________________
Social Security or Tax ID No.____________
all of the undersigned's right, title and interest to and under such Warrant to
purchase ____ shares of Common Stock, par value $.01 per share, of Metretek
Technologies, Inc., a Delaware corporation (the "Company"), evidenced by the
within Warrant, and does hereby irrevocably constitute and appoint ____________
attorney to make such transfer on the books of the Company, with full power of
substitution in the premises.
-----------------------------------
Date:___________________________ By:_________________________________
Title:
------------------------------------
(Street Address)
------------------------------------
(City), (State) (Zip Code)
NOTE: The above signature must
conform to the name of Holder as
specified on the face of the within
Warrant in every particular, without
alteration or enlargement or any
change whatsoever.
12
<PAGE> 1
Exhibit 4.16
Form of Common Stock Purchase Warrant issued to First Albany
Corporation, William Reinert, John S. Koodrich and Lawrence C. Petrucci
<PAGE> 2
THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED, SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSACTION IS REGISTERED UNDER
THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM SUCH SECURITIES REGISTRATION REQUIREMENTS AND THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, TO THAT
EFFECT. THIS WARRANT IS SUBJECT TO FURTHER RESTRICTIONS ON TRANSFER SET FORTH
HEREIN.
METRETEK TECHNOLOGIES, INC.
WARRANT TO PURCHASE COMMON STOCK
WARRANT TO PURCHASE ISSUE DATE: FEBRUARY 4, 2000
SHARES OF COMMON STOCK EXPIRATION DATE: FEBRUARY 4, 2004
EXERCISE PRICE: $14.50
THIS CERTIFIES THAT, for value received, (the
"Holder"), is entitled to purchase up to shares of Common Stock, par
value $.01 per share (the "Shares"), of Metretek Technologies, Inc., a Delaware
corporation (the "Company"), at the exercise price per Share (the "Exercise
Price") and during the periods set forth in Section 2 below, as adjusted
pursuant to Section 11 below, until 5:00 p.m., Denver, Colorado time on February
4, 2004 (the "Expiration Date"), upon the terms and subject to the conditions
set forth in this Warrant.
The Shares or other property or securities issuable upon the exercise
of the Warrants are hereinafter referred to as the "Warrant Shares" and the
exercise price per Warrant Share in effect at any time and as adjusted from time
to time is hereinafter referred to as the "Exercise Price."
1. Method of Exercise of Warrant. This Warrant may be exercised by the
Holder in whole at any time or in part from time to time within the period
specified herein by the presentation and surrender of this Warrant, together
with the Form for Exercise of Warrants attached hereto ("Exercise Form") duly
executed by Holder, to the Company at its principal executive offices,
accompanied by payment, by bank certified or cashier's check payable to the
order of the Company, or by wire transfer of immediately available funds to an
account designated by the Company, in the amount equal to the number of Warrant
Shares for which the Warrant is being exercised multiplied by the Exercise Price
of such Warrant Shares. Upon the Holder's exercise of this Warrant in accordance
with the terms and conditions hereof, the Company shall issue the number of
Warrant Shares to the Holder specified on the Exercise Form.
<PAGE> 3
2. Exercisability of Warrant.
(a) Generally. Upon the terms and subject to the conditions set
forth in this Warrant, the Holder is entitled to purchase up to 15,000 Shares at
an Exercise Price per Share of $14.50, as such number of Shares and/or Exercise
Price are adjusted from time to time hereunder.
(b) Exercisability of Warrant. This Warrant shall become exercisable
upon the Issue Date set forth on the cover hereof and shall expire and become
unexercisable upon the Expiration Date.
3. Exercise in Part. If this Warrant is exercised in part only prior to
the Expiration Date, the Company shall, upon surrender of this Warrant for
cancellation, execute and deliver a new certificate evidencing the right of the
Holder to receive the balance of the Warrant Shares hereunder.
4. Status as Stockholder After Exercise. Upon receipt by the Company of
this Warrant and the Exercise Form at the principal executive offices of the
Company in proper form for exercise and the Exercise Price in full, the Holder
shall be deemed to be the holder of record of the Warrant Shares issuable upon
such exercise, notwithstanding that certificates representing such Warrant
Shares shall not then be actually delivered to the Holder. If the stock transfer
books of the Company shall be closed on the date of receipt of this Warrant, the
Holder shall be deemed to be the Holder of such Warrant Shares on the next
succeeding day on which the stock transfer books of the Company shall be opened.
5. Delivery of Stock Certificates Upon Exercise. As soon as practicable
after the exercise of this Warrant, in whole or in part, the Company shall cause
to be issued in the name of and delivered to the Holder a certificate or
certificates evidencing the number of fully paid and nonassessable Warrant
Shares to which the Holder shall be entitled as a result of such exercise,
together with any other property to which the Holder is entitled upon such
exercise.
6. Reservation of Warrant Shares. The Company shall at all times
reserve and keep available, solely for issuance and/or delivery upon exercise of
this Warrant, such number of Warrant Shares as shall then be issued upon the
exercise of this Warrant. All Warrant Shares issued upon exercise hereof shall,
upon such issuance, be fully paid and nonassessable.
7. No Fractional Shares. No fractional Warrant Shares shall be issued
upon the exercise, in whole or in part, of this Warrant. If fractional Warrant
Shares would be issuable upon exercise of this Warrant, the Company shall, in
lieu thereof, pay to the Holder an amount in cash equal to such fraction
multiplied by the then "current market value" of such fractional Warrant Shares.
For purposes of this paragraph only, the "current market value" of the Warrant
Shares shall be equal to the closing sale price of the Shares on the Nasdaq
Stock Market, so long as they are listed thereon, and thereafter the closing
sale price (or, if not available on such date, the average of the high and low
bid price for such date) of the Shares on any national securities exchange or
any other stock exchange, stock market or stock quotation system which
constitutes the primary market on which the Shares are then traded or quoted. If
the Shares are not listed or traded on any stock
2
<PAGE> 4
exchange, stock market or stock system, then the "current market value" shall be
an amount, not less than book value, as determined in good faith by the Board of
Directors of the Company.
8. Rights of the Holder Prior to Exercise. The Holder shall not, solely
by virtue of this Warrant, be entitled to any voting or other rights of a
stockholder of the Company, either at law or equity, prior to the exercise of
this Warrant upon the terms and conditions set forth herein, and the rights of
the Holder are limited to those expressed in this Warrant and are not
enforceable against the Company except to the extent expressly set forth herein.
9. Ownership of Warrants. The Company shall be entitled to treat the
registered Holder as the absolute owner hereof for all purposes and shall not be
bound to recognize any equitable or other claim to or interest in the Warrant on
the part of any other person.
10. Assignment and Exchange of Warrants. Upon any registration of
transfer, the Company shall deliver a new Warrant or Warrants to the person
entitled thereto. This Warrant may be exchanged, at the option of the Holder
thereof, for another Warrant, or other Warrants of different denominations, of
like tenor and representing in the aggregate the right to purchase a like number
of Warrant Shares (or portions thereof), upon surrender to the Company or its
duly authorized agent. Notwithstanding anything contained herein to the
contrary, the Company shall have no obligation to cause Warrants to be
transferred on its books to any person if, in the opinion of counsel to the
Company, such transfer does not comply with the provisions of the Act and any
applicable state securities laws and the rules and regulations thereunder.
11. Adjustment of Exercise Price and Type of Warrant Shares. The
Exercise Price in effect at any time and the number and kind of securities
purchasable upon the exercise of this Warrant shall be subject to adjustment
from time to time upon the happening of certain events as follows:
(a) In case the Company shall (i) declare a dividend or make a
distribution on its outstanding Shares, in each case, in Shares, (ii) subdivide
or reclassify its outstanding Shares into a greater number of Shares, or (iii)
combine or reclassify its outstanding Shares into a smaller number of Shares,
the Exercise Price in effect at the time of the record date for such dividend or
distribution or of the effective date of such subdivision, combination or
reclassification shall be proportionately adjusted so that after such event the
Exercise Price shall equal the price determined by multiplying the Exercise
Price by a fraction, the denominator of which shall be the number of Shares
outstanding after giving effect to such action, and the numerator of which shall
be the number of Shares outstanding immediately prior to such action. Such
adjustment shall be made successively whenever any event listed above shall
occur.
(b) Upon each adjustment of the Exercise Price pursuant to the
provisions of this Section 11, the number of Warrant Shares issuable upon the
exercise at the adjusted Exercise Price of each Warrant shall be adjusted so
that after the event necessitating the adjustment to the Exercise Price, the
number of Warrant Shares into which this Warrant shall be exercisable shall be
equal to the nearest number of whole Shares determined by multiplying a number
equal to the Exercise Price in effect immediately prior to such adjustment by
the number of Warrant Shares
3
<PAGE> 5
issuable upon exercise of this Warrant immediately prior to such adjustment and
dividing the product so obtained by the adjusted Exercise Price.
(c) For the purposes of this Warrant, the term "Shares" shall mean
(i) the class of stock designated as Shares of Common Stock in the Certificate
of Incorporation of the Company as amended as of the date hereof, or (ii) any
other classes of stock resulting from successive changes or reclassifications of
such Common Stock consisting solely of changes in par value, or from par value
to no par value, or from no par value to par value.
(d) In case of any consolidation of the Company with, or merger of
the Company into, another entity (other than a consolidation or merger which
does not result in any reclassification or change of the outstanding Shares),
the entity formed by such consolidation or merger shall execute and deliver to
the Holder a supplemental warrant agreement providing that the Holder of this
Warrant shall have the right thereafter (until the expiration of such Warrant)
to receive, upon exercise of such Warrant, the kind and amount of shares of
stock and/or other securities and property received upon such consolidation or
merger by a holder of the number of Shares for which such Warrant might have
been exercised immediately prior to such consolidation, merger, sale or
transfer. Such supplemental warrant agreement shall provide for adjustments
which shall be identical to the adjustments provided in this Section 11. The
above provision of this subsection shall similarly apply to successive
consolidations or mergers.
(e) No adjustment in the Exercise Price or the number of Warrant
Shares shall be required if such adjustment is less than one-tenth of one
percent (0.1%) of such Exercise Price or number of Warrant Shares; provided,
however, that any adjustment which by reason of this Section 11e) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be made to
the nearest one-tenth of one cent ($0.001) and one-thousandth of one share
(.001).
(f) In any case in which this Section 11 shall require that an
adjustment in the number of Warrant Shares be made effective as of a record date
for a specified event, the Company may elect to defer, until the occurrence of
such event, issuing to the Holder, if the Holder exercised this Warrant after
the record date, the Warrant Shares, if any, issuable upon such exercise over
and above the Warrant Shares, if any, issuable upon such exercise prior to such
adjustment; provided, however, that the Company shall deliver to the Holder a
due bill or other appropriate instrument evidencing the Holder's right to
receive such additional Warrant Shares upon the occurrence of the event
requiring such adjustment.
(g) Whenever there shall be an adjustment as provided in this
Section 11, the Company shall promptly cause written notice thereof to be sent
by certified mail, postage prepaid, to the Holder, at its address as it shall
appear in the Company's transfer books, which notice shall be accompanied by an
officer's certificate setting forth the number of Warrant Shares issuable upon
the exercise of this Warrant if such Warrant were exercisable on the date of
such notice, and setting forth a brief statement of the facts requiring such
adjustment and the computation thereof, which officer's certificate shall be
conclusive evidence of the correctness of any such adjustment absent manifest
error.
4
<PAGE> 6
12. Registration Rights.
(a) Piggy-Back Registration. If, at any time prior to the
Expiration Date, the Company proposes to register with the Securities and
Exchange Commission (the "SEC") the sale for cash of any of its shares of Common
Stock by filing a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), for its own account or for the account of any of
its stockholders (except pursuant to registration statements filed on Form S-4
or Form S-8 or any successor or similar forms or other unsuitable forms), the
Company shall promptly give written notice of such proposed filing to Holder and
offer Holder the opportunity to register such number of Warrant Shares issuable
upon execution of this Warrant as it may request in writing. Upon the written
request of Holder received by the Company within fifteen (15) days after the
giving of the notice by the Company, the Company shall use its best efforts to
cause the Shares that the Holder requests to be so registered to be included in
such registration.
(b) Underwriting Procedures. If any registration pursuant to this
Section 12 shall be, in whole or in part, in connection with an underwritten
public offering of Common Stock of the Company, then the Company shall not be
required to include any Warrant Shares in the registration unless Holder accepts
the terms and conditions of the underwriting as agreed upon between the Company
and the underwriters. If the managing underwriter determines and advises the
Company in writing (which shall promptly notify Holder) that the inclusion in
the underwriting of all or any of the Warrant Shares proposed to be included by
Holder would be reasonably likely to jeopardize the successful marketing of the
securities proposed to be registered for the underwriting by the Company or
materially adversely affect the price, time or distribution of the public
offering, then the Company shall only be required to include the number of the
Warrant Shares that the managing underwriter determines in its sole discretion,
will not materially adversely affect the public offering, and, if any such
reduction is so determined by the managing underwriter to be appropriate in
accordance with the standards set forth above, then the number of Warrant Shares
requested to be included in the underwriting shall be reduced, pro rata with
other stockholders (other than those having and exercising demand registration
rights), if any, participating in the public offering, to the number determined
to be appropriate by the managing underwriter (which may include a reduction to
zero).
(c) No Company Obligation. Neither the giving of a notice by the
Company nor any request by Holder under this Section 12 shall, in any way,
obligate the Company to file any registration statement at any time or within
any specific time period after receipt of Holder's written request and,
notwithstanding the filing of any registration statement, the Company may, at
any time before the effective date thereof, elect to delay or terminate the
entire registration process for any reason or no reason and without the consent
of Holder, without any further obligation to Holder in respect of such
registration statement.
(d) Information. It shall be condition precedent to the obligation
of the Company hereunder to register the Warrant Shares under this Section 12
that Holder furnish to the Company and the managing underwriters such
information regarding itself, the intended method of disposition of such
securities and such other information as the Company or the managing underwriter
shall from time to time reasonably request and that shall be reasonably required
to effect the registration of the Warrant Shares.
5
<PAGE> 7
(e) Market Stand-Off. The Holder, including any assignee or
successors of Holder, agrees in connection with any underwritten public offering
of the Company's securities that upon the request of the managing underwriter,
it shall commit itself in writing not to sell or offer to sell any shares other
than such shares included in the underwritten public offering, during 30 days
prior to, and for a period not to exceed ninety (90) days after, the date of the
final prospectus used in such offering.
(f) Expenses. Holder shall pay all underwriting and brokerage fees,
discounts and commissions and other selling fees and expenses related to the
sale of the Warrant Shares registered pursuant to the provisions of this Section
12, together with the fees and expenses of any separate counsel, accountants and
other advisors retained by Holder in connection with the offering. All other
fees, costs and expenses incurred by the Company in connection with any
registration of the Warrant Shares including, but not limited to, all federal
and state registration, qualification and filing fees, fees and disbursements of
the Company's own (but not of the Holder's) counsel, accountants and other
experts, Nasdaq additional listing fees, and fees of transfer agents shall be
borne by the Company.
(g) Indemnification by Holder. If any of the Warrant Shares are
included in a registration, to the extent permitted by law, Holder shall
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the registration statement, each person, if any, who
controls the Company within the meaning of Section 15 of Securities Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), any underwriter, and any controlling person of any such underwriter, from
and against any and all losses, claims, liabilities, damages and expenses
(including any investigative, legal, accounting and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim (the "Damages") asserted to which any of the
foregoing persons may become subject under the Securities Act, the Exchange Act,
or other federal or state law, common law or otherwise, insofar as such Damages
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in such registration statement, any preliminary
prospectus or final prospectus, or any amendments or supplements thereto, the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
any violation or alleged violation by the Company of the Securities Act, the
Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law
(collectively, a "Violation"), to the extent that such Violation occurs in
reliance upon and in conformity with written information furnished to the
Company by the Holder expressly for use in connection with such registration;
and Holder shall pay, as incurred, any legal or other expenses reasonably
incurred by any person intended to be indemnified pursuant to this Section 12(g)
in connection with the investigation or defense of any such Damages.
(h) Indemnification by the Company. If any of the Warrant Shares
are included in a registration, to the extent permitted by law, the Company
shall indemnify and hold harmless the Holder, each of its directors and officers
from and against any and all Damages asserted to which any of the foregoing
persons may become subject under the Securities Act, the Exchange Act, or other
federal or state law, common law or otherwise, insofar as such Damages arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, any preliminary
prospectus or final prospectus, or any amendments or
6
<PAGE> 8
supplements thereto, the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any Violation or alleged Violation by the Holder, to
the extent that such Violation occurs in reliance upon and in conformity with
written information furnished to the Holder by the Company expressly for use in
connection with such registration; and the Company shall pay, as incurred, any
legal or other expenses reasonably incurred by any person intended to be
indemnified pursuant to this Section 12(h) in connection with the investigation
or defense of any such Damages.
13. Legend. The certificate or certificates evidencing the Warrant
Shares shall bear a legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED,
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSACTION
IS REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR UNLESS SUCH TRANSACTION IS EXEMPT FROM SUCH
SECURITIES REGISTRATION REQUIREMENTS AND THE COMPANY HAS RECEIVED
AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, TO THAT EFFECT.
14. Issue Tax. The issuance of certificates for Warrant Shares upon
exercise of this Warrant shall be made without charge to the Holder for any
issuance tax in respect thereof; provided, however, that the Company shall not
be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any certificate in a name other than
that of the Holder.
15. Limitations on Disposition of Warrant. Neither this Warrant nor,
unless registered under the Securities Act and applicable securities laws, as
contemplated by Section 12 hereof, the Warrant Shares issuable upon exercise of
the Warrant, may be offered, sold, assigned, hypothecated or otherwise
transferred, in whole or in part, except (i) to the officers, directors,
shareholders or employees of the Holder, (ii) by will or the laws of descent and
distribution as a result of the death of any permitted transferee, or (iii) to
any successor to the business of the Holder. In addition, neither this Warrant
nor, until registered under the Securities Act and applicable securities laws,
any Warrant Shares issued upon exercise of this Warrant, may be pledged,
offered, sold, assigned, hypothecated or otherwise transferred until (i) such
transaction has been registered under the Securities Act and any applicable
state securities laws, or (ii) such transaction is exempt from such securities
registration requirements and the Company has received an opinion of counsel to
which opinion is satisfactory to the Company, to that effect. It shall be a
condition to the transfer of this Warrant and any Warrant Shares that any
transferee hereof or thereof deliver to the Company its written agreement to
accept and be bound by all of the terms and conditions of this Warrant.
16. Lost, Stolen, Mutilated or Destroyed Warrant. Upon receipt of
evidence satisfactory to the Company of the loss, theft, destruction, or
mutilation of any Warrant (and upon surrender of any Warrant if mutilated), and
upon reimbursement of the Company's reasonable incidental expenses and, if
reasonably requested, an indemnity reasonably acceptable to the Company, the
Company shall execute and deliver to the Holder thereof a new Warrant of like
date, tenor, and denomination.
7
<PAGE> 9
17. Securities Law Representation. The Holder and each transferee of
this Warrant or of the Warrant Shares issuable upon the exercise of this
Warrant, by their acceptance of this Warrant or of any Warrant Shares, each
hereby represents and warrants to the Company, which representations and
warranties shall be true and correct on the date hereof and also upon the date
of exercise of the Warrants as follows:
(a) This Warrant and the Warrant Shares issuable upon exercise of
this Warrant are being acquired or will be acquired for investment purposes for
the account of the holder of such securities with no intention of a sale,
transfer or other distribution that is not in compliance with the Securities Act
and applicable state securities laws.
(b) Holder has such knowledge and experience in business and
financial matters to be capable of independently evaluating the merits and risks
of an investment in the warrant shares. Upon exercise of the Warrant, Holder
represents and Warrants that it will have evaluated the risks and merits of
acquiring the Warrant Shares and will have independently determined that the
Warrant Shares are a suitable investment for the Holder. Holder has sufficient
financial resources to bear an economic risk of a loss of its entire investment
in the Warrant Shares.
(c) Holder and its representatives have made an independent
investigation of the Company and its assets, properties, business, liabilities,
financial condition, results of operations and prospects, and have had access to
all of the information they consider necessary or appropriate, in order to
evaluate the risks and merits of acquiring the Warrant Shares.
(d) In determining to exercise the Warrant, Holder shall not, and
acknowledges it shall not have the right to, rely upon any representations made
by the Company or its representatives with respect to the Company, the Warrant
Shares, or any projections or other estimates or forecasts of future performance
of the Company.
18. No Impairment. The Company will not, by any voluntary action, avoid
or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all times in good
faith assist in the carrying out of all the provisions of this Warrant and in
the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Holder of this Warrant against impairment.
19. Waiver. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
20. Notices. All notices, payments, requests and demands and other
communications required or permitted under this Warrant shall be deemed to have
been duly given, delivered and made if in writing and if served either by
personal delivery to the party for whom it is intended or by being deposited
postage prepaid, certified or registered mail, return receipt requested, to the
8
<PAGE> 10
address of the Holder at the last address as appears on the books of the Company
or its stock transfer agent, if any, and to the Company at its principal
executive offices.
21. Governing Law. This Warrant shall be construed and enforced in
accordance with and governed by the internal substantive laws of the State of
Delaware, without giving effect to any change or conflict of law principles.
22. Further Assurances. The parties agree to execute, acknowledge and
deliver any and all such other documents and to take any and all such other
actions as may, in the reasonable opinion of either of the parties hereto, be
necessary or convenient to carry out more efficiently any or all of the purposes
of this Warrant.
23. Severability. Any provision of this Warrant which shall be
prohibited by law or otherwise held invalid shall be ineffective only to the
extent of such prohibition or invalidity and shall not invalidate or otherwise
render ineffective any or all of the remaining provisions of this Warrant.
24. Parties in Interest. This Warrant and the various rights and
obligations arising hereunder shall be binding upon and shall inure to the
benefit of the parties hereto and to each and all of their respective successors
and permitted assigns.
25. Amendments. Neither this Warrant nor any of the terms and
conditions hereof shall be amended or modified in any respect except in a
writing executed by the Company and Holder.
* * * * *
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its President and attested by its Secretary as of the 4th day of February,
2000.
METRETEK TECHNOLOGIES, INC.
By:_________________________________
W. Phillip Marcum, President
ATTEST:
By: ____________________________
Gary J. Zuiderveen, Secretary
9
<PAGE> 11
FORM FOR EXERCISE OF WARRANTS
[TO BE EXECUTED BY THE HOLDER IN ORDER TO EXERCISE THE WITHIN WARRANT]
The undersigned, the Holder of the within Warrant, hereby irrevocably
elects to exercise the right, represented by the within Warrant, to purchase
_____ shares of Common Stock, par value $.01 per share ("Shares"), of Metretek
Technologies, Inc., a Delaware corporation (the "Company"), in accordance with
the terms of the within Warrant. The undersigned requests that a certificate for
such Shares be issued in the name of, and delivered to:
Name: __________________________________________
Address:________________________________________
________________________________________
Social Security or Tax ID No. __________________
and, if such number of Shares shall not be all the Shares issuable upon exercise
of the within Warrant, that a new Warrant exercisable on the same terms for the
balance of such Shares be registered in the name of, and delivered to, the
Holder at the address set forth below.
Payment of the Exercise Price per Share required under the within
Warrant accompanies this Form.
The undersigned hereby represents and warrants that the undersigned
owns the within Warrant free and clear of any and all claims, liens and/or
encumbrances and is acquiring such Shares for its own account for investment
purposes only, and not for resale or with a view to distribution of such Shares
or any part thereof.
Dated: ________________ ____________________________________
By:_________________________________
Title:______________________________
Address:____________________________
____________________________
____________________________
Number of Shares: ____________________
Total Exercise Price:$________________
METRETEK TECHNOLOGIES, INC.
By:_________________________________
Its:________________________________
Date:_______________________________
10
<PAGE> 12
FORM OF ASSIGNMENT
[TO BE EXECUTED BY THE HOLDER TO TRANSFER THE WITHIN WARRANT]
FOR VALUE RECEIVED, the undersigned, as the registered Holder of the
within Warrant, hereby sells, assigns and transfers unto:
Name:____________________________________
Address:_________________________________
_________________________________
Social Security or Tax ID No.____________
all of the undersigned's right, title and interest to and under such Warrant to
purchase ____ shares of Common Stock, par value $.01 per share, of Metretek
Technologies, Inc., a Delaware corporation (the "Company"), evidenced by the
within Warrant, and does hereby irrevocably constitute and appoint ____________
attorney to make such transfer on the books of the Company, with full power of
substitution in the premises.
-----------------------------------
Date:___________________________ By:_________________________________
Title:
------------------------------------
(Street Address)
------------------------------------
(City), (State) (Zip Code)
NOTE: The above signature must
conform to the name of Holder as
specified on the face of the within
Warrant in every particular, without
alteration or enlargement or any
change whatsoever.
11
<PAGE> 1
EXHIBIT 5.1
KEGLER, BROWN, HILL & RITTER CO., L.P.A.
65 E. STATE STREET, SUITE 1800, CAPITOL SQUARE
COLUMBUS, OHIO 43215-4294
(614) 462-5400
April 26, 2000
Metretek Technologies, Inc.
1675 Broadway, Suite 2150
Denver, Colorado 80202
Re: Registration Statement on Form S-3 covering the
Resale of 3,973,079 shares of Common Stock, par value
$.01 per share, and 7,000 shares of Series B
Preferred Stock, par value $.01 per share
Gentlemen:
We have acted as counsel to Metretek Technologies, Inc., a Delaware
corporation (the "Company"), in connection with the preparation and filing of a
Registration Statement on Form S-3 (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), relating to the
registration for resale of (i) 7,000 shares of the Company's Series B Preferred
Stock, par value $.01 per share ("Preferred Shares"), and (ii) 3,973,079 shares
of the Company's common stock, par value $.01 per share ("Common Shares"),
consisting of (a) 1,725,054 Common Shares issued prior to the date hereof and
outstanding as of the date hereof (the "Outstanding Common Shares"), (b)
1,179,762 Common Shares issuable upon the conversion of 7,000 Preferred Shares,
and (c) 1,086,263 Common Shares issuable upon the exercise of outstanding
warrants (the "Warrants"), plus any additional Common Shares issuable upon
conversion of the Preferred Shares pursuant to the terms of the Preferred Shares
(collectively, the "Underlying Common Shares"). The Common Shares and the
Preferred Shares are collectively referred to herein as the "Shares".
This opinion is being furnished in accordance with the requirements of
Item 16 of Form S-3 and Item 601(b)(5)(i) of Regulation S-B under the Securities
Act.
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of (i) the Company's
Second Restated Certificate of Incorporation, (ii) the Company's Amended and
Restated By-Laws, (iii) the Registration Statement, (iv) the specimen
certificates evidencing the Shares, (v) resolutions adopted by the Board of
Directors of the Company relating to, among other things, the authorization and
issuance of the Shares and the registration of the resale thereof, and (vi) such
other documents, certificates and records as we have deemed necessary or
appropriate for the purpose of rendering the opinion below. We have also
examined such authorities of law as we have deemed relevant as a basis for this
opinion.
In our examination of the documents referred to above, we have assumed
the legal capacity of all natural persons, the genuineness of all signatures,
the authenticity and completeness of all documents submitted to us as originals,
and the conformity to original documents of all documents submitted to us as
certified, conformed, photostatic or facsimile copies. As to any facts material
to the opinion expressed herein which we did not independently establish or
verify, we have relied upon written or oral certificates, statements,
representations and other documentation furnished to us by officers, employees
and representatives of the Company, public officials and others without
independent verification of the facts set forth therein.
Based upon and subject to the foregoing and the further assumptions,
qualifications and limitations set forth below, we are of the opinion that:
1. The Outstanding Common Shares and the Preferred Shares have
been duly authorized and validly issued and are fully paid and
non-assessable; and
<PAGE> 2
2. The Underlying Common Shares have been duly authorized and,
when issued upon conversion of the Preferred Shares in
accordance with the Restated Certificate upon the terms of the
Preferred Shares and upon exercise of the Warrants in
accordance with the terms of the Warrants, as applicable, will
be validly issued, fully paid and non-assessable.
In rendering the opinion above, we have assumed that (i) the
certificates representing the Shares will conform to the specimens thereof
examined by us and will be countersigned by a duly authorized officer of the
transfer agent for the Common Shares and duly registered by the registrar for
the Common Shares in the share record books of the Company, (ii) upon issuance
of the Underlying Common Shares, the Company will have a sufficient number of
authorized but unissued Common Shares not restricted for other purposes to
permit the issuance of such Underlying Common Shares, (iii) no changes occur in
the applicable law or pertinent facts, and (iv) the Company will comply with all
applicable state securities laws.
We are attorneys admitted to practice law in the State of Ohio. This
opinion is limited to, and we express no opinion concerning the laws of any
jurisdiction other than, the Federal laws of the United States of America, the
laws of the State of Ohio and the General Corporation Law of the State of
Delaware in effect as of the date hereof. This opinion is furnished by us solely
for the benefit of the Company in connection with the issuance of the Shares and
the filing of the Registration Statement and any amendments thereto. This
opinion may not be furnished to or relied upon by any other person or entity for
any purpose or assigned, quoted or otherwise used without our prior written
consent. Please note that we are opining only as to the matters expressly set
forth herein, and we express no opinion, and no opinion should be inferred, as
to any other matters relating to the Company, the Shares or otherwise.
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement and the
reference to us under the caption "Legal Matters" in the Registration Statement.
In giving such consent, however, we do not thereby admit that we are included in
the category of persons whose consent is required under Section 7 of the
Securities Act or the rules and regulations of the Securities and Exchange
Commission promulgated thereunder.
Very truly yours,
/s/ Kegler, Brown, Hill & Ritter Co., L.P.A.
<PAGE> 1
EXHIBIT 8.1
KEGLER, BROWN, HILL & RITTER CO., L.P.A.
65 E. STATE STREET, SUITE 1800, CAPITOL SQUARE
COLUMBUS, OHIO 43215-4294
(614) 462-5400
April 26, 2000
Metretek Technologies, Inc.
1675 Broadway, Suite 2150
Denver, CO 80202
Gentlemen:
We have acted as counsel to Metretek Technologies, Inc., a Delaware
corporation (the "Company"), in connection with the preparation and filing of a
Registration Statement on Form S-3 (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), relating to the
registration for resale of (i) 7,000 shares of the Company's Series B Preferred
Stock, par value $.01 per share ("Preferred Shares"), and (ii) 3,973,079 shares
of the Company's common stock, par value $.01 per share ("Common Shares"),
consisting of (a) 1,725,054 Common Shares issued prior to the date hereof and
outstanding as of the date hereof (the "Outstanding Common Shares"), (b)
1,179,762 Common Shares issuable upon the conversion of 7,000 Preferred Shares,
and (c) 1,086,263 Common Shares issuable upon the exercise of outstanding
warrants (the "Warrants"), plus any additional Common Shares issuable upon
conversion of the Preferred Shares pursuant to the terms of the Preferred
Shares.
This opinion is being furnished in accordance with the requirements of
Item 16 of Form S-3 and Item 601(b)(8) of Regulation S-B under the Securities
Act.
In rendering our opinion, we have participated in the preparation of
the Registration Statement. Our opinion is conditioned on, among other things,
the initial and continuing accuracy of the facts, information, covenants and
representations set forth in the Registration Statement and certain other
documents and the statements and representations made by officers of the
Company. In our examination, we have assumed the genuineness of all signatures,
the legal capacity of natural persons, the authenticity of all documents
submitted to us as certified or photostatic copies and the authenticity of the
originals of such documents. We also have assumed that the transactions related
to the offering and resale of the Preferred Shares will be consummated in the
manner contemplated by the Registration Statement. As to any facts material to
the opinion expressed herein which we did not independently establish or verify,
we have relied upon written or oral certificates, statements, representations
and other documentation furnished to us by officers, employees and
representatives of the Company, public officials and others without independent
verification of the facts set forth therein.
In rendering our opinion, we have considered the current provisions of
the Internal Revenue Code of 1986, as amended (the Code"), Treasury regulations
promulgated thereunder, rulings and other pronouncements of the Internal Revenue
Service (the "IRS") currently in effect, and judicial decisions, all of which
are subject to change, prospectively or retroactively. No assurance can be given
that such changes will not take place, or that such changes would not affect the
opinion expressed herein. Furthermore, our opinion represents only our best
judgment of how a court would conclude if presented with the issues addressed
herein and is not binding upon either the IRS or any court. Thus, no assurance
can be given that a position taken in reliance on our opinion will not be
challenged by the IRS or rejected by a court.
<PAGE> 2
Metretek Technologies, Inc.
April 26, 2000
Page 2
Our opinion relates solely to the tax consequences specifically
discussed under the heading "Federal Income Tax Consequences" in the
Registration Statement under the federal income tax laws of the United States,
and we express no opinion (and no opinion should be inferred) regarding any
other tax consequences relating to the Preferred Shares under the laws of any
jurisdiction.
Based upon and subject to the foregoing, it is our opinion that the
discussion set forth in the Registration Statement under the caption "Federal
Income Tax Considerations," to the extent that it pertains to matters of law or
legal conclusions constitutes, in all material respects, a fair and accurate
summary of the United States federal income tax consequences of the ownership
and disposition of the Preferred Shares, subject to the limitations set forth
therein.
Except as set forth above, we express no opinion to any party as to the
tax consequences, whether federal, state, local or foreign, of the Preferred
Shares. This opinion is furnished to you solely for your benefit in connection
with the Registration Statement and is not to be used, circulated, quoted or
otherwise referred to for any other purpose or relied upon by any other person
without our prior written consent.
This opinion is expressed as of the date hereof, unless otherwise
expressly stated, and we disclaim any undertaking to advise you of any
subsequent changes of the facts stated or assumed herein or any subsequent
changes in applicable law.
We hereby consent to the use of our name in the Registration Statement
under the heading "Legal Matters" and to the filing of this opinion as an
exhibit to the Registration Statement. In giving this consent, we do not admit
that are included in the category of persons whose consent is required under
Section 7 of the Securities Act or the rules and regulations of the Securities
and Exchange Commission thereunder.
Very truly yours,
/s/ Kegler, Brown, Hill & Ritter Co., L.P.A.
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-96369 of Metretek Technologies, Inc. (f.k.a.
Marcum Natural Gas Services, Inc.) on Form S-3 of our report dated March 17,
2000 appearing in the Annual Report on Form 10-KSB of Metretek Technologies,
Inc. for the year ended December 31, 1999, and to the reference to us under the
heading "Experts" in the Prospectus, which is part of such Registration
Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Denver, Colorado
April 27, 2000
