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Exhibit 10.1
NON-NEGOTIABLE CONVERTIBLE PROMISSORY NOTE
$ 2,846,426.02 Denver, Colorado
September 28, 2000
FOR VALUE RECEIVED, the undersigned, Metretek Technologies, Inc., a
Delaware corporation (the "Maker"), hereby promises to pay to Scient
Corporation, a Delaware corporation (the "Payee"), and assigns, by wire transfer
of immediately available funds to an account designated on Exhibit A hereto, or
to any other account designed in writing by the Payee to the Maker at least five
(5) business days before a payment is due hereunder in lawful money of the
United States of America, the amount that is owed by the Maker to the Payee
under the Services Agreements (as defined herein) up to a maximum principal sum
of Two Million Eight Hundred Forty-Six Thousand Four Hundred Twenty-Six and
02/100 Dollars ($2,846,426.02), without any interest thereon.
1. REPAYMENT OF PRINCIPAL. The principal sum of this Note shall be due
and payable as follows: (i) $250,000 shall be due and payable on each of
December 31, 2000, March 31, 2000, June 30, 2000, September 30, 2000 and
December 31, 2001; and (ii) the remainder of the principal sum then outstanding
shall be due and payable on Marchi 31, 2002; provided, however, that in the
event that PowerSpring, Inc., a Delaware corporation and subsidiary of the Maker
("PowerSpring"), shall complete, close and receive at least $8,000,000 cash
proceeds from a venture capital private placement of securities of PowerSpring
(the "Venture Financing"), then the outstanding and unpaid principal balance of
this Note shall become due and payable within 10 days of the day of the closing
of the Venture Financing.
2. PREPAYMENT. The Maker shall have the right to prepay the outstanding
principal sum of this Note, in whole at any time or in part from time to time,
without premium or penalty, and without prior notice.
3. CONVERSION. This Note is convertible into either shares of common
stock, par value $.01 per share ("Metretek Shares"), of Payee, or shares of
common stock, par value $.01 per share ("PowerSpring Shares" and, collectively
with the Metretek Shares, the "Shares"), of PowerSpring, but not both, upon the
terms and subject to the conditions set forth in this Section 3.
(a) CONVERSION OPTION. At the option of the Payee, upon the terms
and subject to the conditions set forth in this Section 3, upon thirty (30) days
prior written notice to the Maker (the "Conversion Notice Period"), the Payee
may elect to convert all, but not less than all, of the unpaid principal balance
of this Note as of the last day of the Conversion Notice Period into either
Metretek Shares, or PowerSpring Shares, but not both.
(b) CONVERSION PRICE. This Note may be converted into the number of
Shares equal to the unpaid principal balance of this Note outstanding as of the
last day of the Conversion Notice Period divided by "Conversion Price" then in
effect for such class of Shares.
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(i) The "Conversion Price" of each Metretek Share shall be equal
$5.94, as adjusted pursuant to the terms of this Note.
(ii) The "Conversion Price" of each PowerSpring Share shall be
equal to $0.60, as adjusted pursuant to the terms of this Note.
(c) CONVERSION PROCEDURE. In order to convert this Note into Shares,
the Payee must (i) complete, sign and deliver to the Maker the Conversion Notice
attached to this Note as Exhibit B, (ii) surrender this Note to the Maker, (iii)
furnish appropriate endorsements and transfer documents if required by the
Maker, and (iv) pay any transfer or similar tax related to such conversion, if
required. The date upon which the Maker receives the duly signed and completed
Conversion Notice, this Note and all other required documentation and fees is
referred to herein as the "Conversion Date." As promptly as practicable after
the Conversion Date, the Payee or PowerSpring, as applicable (each, an "Issuer")
shall issue and deliver one or more certificates for the whole number of Shares
issuable upon such conversion, together with a cash payment in lieu of any
fractional Shares. Such conversion shall be deemed effective immediately prior
to the close of business on the Conversion Date, and at such time the rights of
the Payee with respect to the indebtedness evidenced hereby shall cease. The
Payee shall not be entitled to receive any cash dividends payable to holders of
Shares as of any record date before the Conversion Date.
(d) FRACTIONAL SHARES. No fractional Shares shall be issued upon
conversion of this Note but, in lieu thereof, the Maker shall pay to the Payee
an amount in cash based upon the then current conversion Price.
(e) CONVERSION PRICE ADJUSTMENT FOR CERTAIN GENERAL EVENTS.
(i) EVENTS. The Conversion Price shall be subject to adjustment
upon the occurrence of any of the following events (the "Adjustment Events"):
(A) the issuance of Shares as a dividend or a distribution with respect to the
Shares; (B) the subdivision of the outstanding Shares into a greater number of
Shares; (C) the combination of the outstanding Shares into a smaller number of
Shares; and (D) the distribution to all holders of Shares of shares of capital
stock (other than Shares), evidences of indebtedness of the Issuee or of other
non-cash assets (including securities).
(ii) ADJUSTMENT.
(A) GENERALLY. In the event of the occurrence of any of the
foregoing Events, then the Conversion Price in effect immediately prior to such
event shall be adjusted so that, upon the conversion of this Note the Payee
receives the number of shares of capital stock or other securities or assets
which the Payee would have received immediately following such event if the
Payee had converted immediately prior to the record date relative to such
Adjustment Event. Any adjustment of the Conversion Price shall become effective
immediately after the record date, in the case of a dividend or distribution,
and immediately after the effective date, in the case of a subdivision,
combination or reclassification.
(B) 1% MINIMUM ADJUSTMENT. No adjustment in the Conversion
Rate will be required to be made unless and until such adjustment that would
require a change of at
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least one percent (1%) of the Conversion Rate then in effect; provided, however,
that any adjustment that would not be required to be made shall be taken into
account in any subsequent adjustment.
(C) MULTIPLE ADJUSTMENTS. If any event would require
adjustment of the Conversion Rate pursuant to more than one of the provisions
described above, only one adjustment shall be made.
(D) EVENTS NOT REQUIRING ADJUSTMENT. Except as set forth in
this Section 4, the Conversion Price shall not be adjusted for the issuance of
Shares or securities convertible into or exchangeable for Shares or securities
granting the right to purchase any of the foregoing. No adjustments shall be
made for an event referred to above if the Payee is entitled to participate in
the event on the basis and with notice that the Board of Directors of the Payee
determines to be fair and appropriate in light of the basis and notice on which
the holders of Shares participate in the event.
(E) SPECIAL AUTHORITY. The Payee reserves the right to make
such reductions in the Conversion Price in addition to these required in the
foregoing provisions as it considers to be advisable in order that any event
treated for federal income tax purposes as a dividend of stock or stock rights
will not be taxable to the recipients.
(F) NOTICES OF ADJUSTMENTS. Whenever the Conversion Price is
adjusted, the Company will promptly mail to the Payee a notice of the
adjustment.
(f) MERGERS, CONSOLIDATIONS, AND SALE OF ASSETS. In the event an
Issuer shall be a party to any transaction (including without limitation (i) any
recapitalization or reclassification of the Shares (other than a change in par
value, or from par value to no par value, or from no par value to par value, or
as a result of a subdivision or combination of the Shares), (ii) any
consolidation or merger of the Issuer with or into another person or any merger
of another person into the Issuer. (Other than a merger that does not result in
a reclassification, conversion, exchange or cancellation of the Shares), (iii)
any sale or transfer of all or substantially all of the assets of the Issuer, or
(iv) any compulsory share exchange) pursuant to which either the Shares shall be
converted into the right to receive other securities, cash or other property, or
in the case of a sale or transfer of all or substantially all of the assets of
the Issuer, the holders of the Shares shall be entitled to receive other
securities, cash or other property, then the Payee shall use its best efforts to
make appropriate provision as part of the terms of such transaction so that the
Payee shall have the right thereafter to convert this Note into the kind and
amount of the securities, cash or other property that would have been receivable
upon such recapitalization, reclassification, consolidation, merger, sale,
transfer or share exchange by a holder of the number of Shares issuable upon
conversion of this Note immediately prior to such recapitalization,
reclassification, consolidation, merger, sale, transfer or share exchange.
(g) VOLUNTARY REDUCTION IN CONVERSION PRICE. The Maker from time to
time may reduce the Conversion Price of this Note by any amount for any period
by written Notice thereof to the Payee.
(h) RESERVATION OF SHARES. Each Issuer shall at all times reserve
and keep available out of its authorized but unissued Shares, solely for the
purpose of effecting the conversion of this Note, such number of Shares as shall
from time to time be sufficient to effect the conversion of the
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then outstanding principal sum of the Note. If at any time the number of
authorized but unissued Shares of either Issuer shall not be sufficient to
effect the conversion of this Note, then such Issuer shall take such corporate
action as may be necessary to increase its authorized but unissued Shares to
such number of Shares as shall be sufficient for such purpose.
(i) COST OF CONVERSION. The Maker shall pay all documentary, stamp
or other transactional taxes attributable to the issuance or delivery of Shares
upon conversion of this Note. However, the Payee shall be required to pay any
taxes which may be payable in respect of any transfer involved in the issuance
or delivery of any certificate for such Shares in a name other than that of the
Holder.
4. SUBORDINATION.
(a) SUBORDINATION OF PAYMENT. The indebtedness evidenced by this
Note is subordinated and junior in right of payment to the prior payment in full
of all indebtedness of the Maker and its subsidiaries to any bank, or other
financial institution for money borrowed under any loan agreement, credit
agreement, promissory note or similar instruments ("Bank Debt").
(b) DISSOLUTION, LIQUIDATION AND BANKRUPTCY. Upon any distribution
of assets of the Payee to creditors upon any dissolution, winding-up,
liquidation or reorganization, whether voluntary or involuntary, or in
bankruptcy, insolvency, receivership or other proceeding, all principal premium,
if any, and interest due or to become due on all Bank Debt must be paid in full
before the Payee is entitled to receive or retain any payments.
(c) SUBROGATION. Upon satisfaction of all claims of all Bank Debt
then outstanding, the rights of the Payee shall be subrogated to the rights of
the holders of Bank Debt to receive payments or distributions applicable to Bank
Debt until all amounts owing on this Note are paid in full.
(d) CERTAIN DISTRIBUTIONS. In the event that, notwithstanding the
foregoing, a payment or distribution of assets of Maker of any kind in
contravention of any of the provisions set forth in this Section 4(d) pertaining
to subordination, whether in cash, property or securities, including, without
limitation, by way of set-off or otherwise, in respect of this Note before all
Bank Debt is paid in full, then such payment or distribution shall be held by
the Payee in trust for the benefit of holders of Bank Debt or their
representatives to the extent necessary to make payment in full of all Bank Debt
remaining unpaid, after giving effect to any concurrent payment or distribution
or provision therefor, to or for the holders of Bank Debt.
5. DEFAULT.
(a) EVENTS OF DEFAULT. Each of the following shall be deemed an
"Event of Default":
(i) The failure of the Maker to make any payment within fifteen
(15) days of the date when the same becomes due and payable;
(ii) The failure of the Maker to convert the principal sum of the
Note into Shares (as defined below) upon the terms and subject to the conditions
set forth in this Note;
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(iii) The failure of the Maker to observe or perform any of its
other covenants set forth in this Note, which failure continues for a period of
thirty (30) days after receipt of notice by the Payee of such failure;
(iv) The commencement by the Maker of a voluntary proceeding
seeking liquidation, reorganization or other relief with respect to itself or
its debts under any bankruptcy, insolvency or other similar law now or hereafter
in effect, or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or a substantial part of its property,
or the consent by the Maker to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against it, or the making by the Maker of a general
assignment for the benefit of creditors; or
(v) The commencement of an involuntary proceeding against the
Maker seeking liquidation, reorganization, or other relief with respect to it or
its debts under any bankruptcy, insolvency or other similar law now or hereafter
in effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official for it or a substantial part of its
property, which involuntary proceeding remains undismissed and unstayed for a
period of sixty (60) days.
(b) REMEDIES UPON DEFAULT. If an Event of Default under this Note
shall occur and be continuing, the Payee shall have the right to declare the
outstanding principal sum of this Note then outstanding to be due and payable by
giving written notice to the Maker to that effect, and upon the Maker's receipt
of such Notice, the principal sum of this Note shall become due and payable. In
addition, if an Event of Default shall occur and be continuing, the Payee may
pursue any available remedy to collect the payment of principal from the date of
Default on this Note or to enforce the performance of any provision of this
Note. The Payee shall have the right to waive any past or existing default or
Event of Default and its consequences.
6. LETTER AGREEMENT AND SERVICES AGREEMENTS. This Note is the
"Convertible Promisory Note" provided for in that certain Letter Agreement,
dated September 28, 2000 (the "Letter Agreement"), by and between the Payee and
the Maker. The "Services Agreements" are those agreements defined as such in the
Letter Agreement.
7. WAIVER OF PROCEDURAL DEFENSES. The Maker hereby waives presentment
for payment, demand for payment, notice of non-payment or dishonor, protest,
notice of protest, notice of acceleration or maturity, and any and all other
notices and demands whatsoever, and agree to remain bound until the principal
and interest are paid in full, notwithstanding any extensions of time for
payment which may be granted, even though the period of extension may be
indefinite, and notwithstanding any inaction by or failure to asset any legal
right available to the Payee.
8. SEVERABILITY. If any provision of this Note or application thereof
to any person or circumstance is held invalid, such invalidity shall not affect
other provisions of this Note which can be given effect without the invalid
provisions, and to this end the provisions of this Note shall be severable.
9. GOVERNING LAW. This Note shall be governed by and construed in
accordance with the laws of the State of California, without giving effect to
principles of conflict or choice of law.
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10. NO WAIVER. No delay or omission of the Payee to exercise any right
or power arising under this Note shall impair any such right or power or be
construed to be a waiver of any such right or power, nor shall the action or
nonaction of the Payee in case of default on the part of the Maker impair any
right or power resulting therefrom.
11. SUCCESSORS AND ASSIGNS. This Note shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns. Neither this Note nor any rights or obligations herein may be
assigned or transferred by the Maker or the Payee without the prior written
consent of the other.
MAKER:
METRETEK TECHOLOGIES, INC.
By: /s/ W. Phillip Marcum
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W. Phillip Marcum, President
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