ex10-2.htm


    Exhibit 10.2

     

    THIS
      NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
      OR
      ANY STATE SECURITIES LAWS.  THIS NOTE MAY NOT BE SOLD, OFFERED FOR
      SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
      STATEMENT AS TO THIS NOTE UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES
      LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO GULF COAST OIL
      CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

     

    SECURED
      TERM NOTE

     

    FOR
      VALUE
      RECEIVED, GULF COAST OIL CORPORATION, a Delaware corporation (the
“Company”) hereby promises to pay to VALENS U.S. SPV I, LLC
      (the “Holder”) or its registered assigns or successors in
      interest, the sum of Three Million One Hundred Thousand Dollars ($3,100,000),
      together with any accrued and unpaid interest hereon, on November 22, 2010
      (the
“Maturity Date”) if not sooner indefeasibly paid in
      full.

     

    Capitalized
      terms used herein without definition shall have the meanings ascribed to such
      terms in that certain Securities Purchase Agreement dated as of the date hereof
      (as amended, restated, modified and/or supplemented from time to time, the
      “Purchase Agreement”) among the Company, the Holder, each other
      Purchaser and LV Administrative Services, Inc., as administrative and collateral
      agent for the Purchasers (the “Agent” together with the
      Purchasers, collectively, the “Creditor Parties”).

     

    The
      following terms shall apply to this Secured Term Note (this
“Note”):

     

    ARTICLE
      I

     

    CONTRACT
      RATE AND AMORTIZATION

     

    1.1           Contract
      Rate.  Subject to Sections 2.2 and 3.9, interest payable on the
      outstanding principal amount of this Note (the “Principal
      Amount”) shall accrue at a rate per annum equal to the “prime rate”
published in The Wall Street Journal from time to time (the “Prime
      Rate”), plus two percent (2%) (the “Contract
      Rate”).  The Contract Rate shall be increased or decreased as
      the case may be for each increase or decrease in the Prime Rate in an amount
      equal to such increase or decrease in the Prime Rate; each change to be
      effective as of the day of the change in the Prime Rate.  The Contract
      Rate shall not at any time be less than eight percent (8%).  Interest
      shall be (i) calculated on the basis of a 360 day year, and (ii) payable
      monthly, in arrears, commencing on March 1, 2008, on the first business day
      of
      each consecutive calendar month thereafter through and including the Maturity
      Date, and on the Maturity Date, whether by acceleration or
      otherwise.

     

    1.2           Contract
      Rate Payments.  The Contract Rate shall be calculated on the last
      business day of each calendar month hereafter (other than for increases or
      decreases in the Prime Rate which shall be calculated and become effective
      in
      accordance with the terms of Section 1.1) until the Maturity Date and shall
      be
      subject to adjustment as set forth herein.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


     

    1.3           Principal
      Payments.  Amortizing payments of the Principal Amount shall be
      made by the Company on December 1, 2007 and on the first business day of each
      succeeding month thereafter through and including the Maturity Date (each,
      an
“Amortization Date”).  So long as no Event of Default
      shall have occurred and then be continuing, interest hereunder shall only be
      payable as a component of the Amortization Amount (as hereafter defined) in
      accordance with the terms of this Section 1.3.  Subject to Article II
      below, commencing on the first Amortization Date, the Company shall make monthly
      payments of principal and interest to the Holder on each Amortization Date
      equal
      to the Amortization Amount.  All such payments shall be applied by the
      Holder first to accrued and unpaid interest, fees and expenses owing by the
      Company to the Holder and then to the outstanding principal balance owing
      hereunder.  In the event the Amortization Amount (as hereafter
      defined) due and payable on any Amortization Date which occurs on or after
      the
      March 1, 2008 Amortization Date is less than $26,220, then the Company shall
      nevertheless be required to make a payment to the Holder on such Amortization
      Date of an amount equal to the difference between $26,220 and the then
      applicable Amortization Amount, which such payment shall be applied by the
      Holder to accrued and unpaid interest, fees and expenses owing by the Company
      to
      the Holder and then to the outstanding principal balance owing hereunder;
provided, however, during such time as an Event of Default shall
      have occurred and be continuing, the Company shall make interest payments
      hereunder to the Holder in accordance with Sections 1.1 and 2.2 of this Note
      without regard to any reduction in such cash interest payment which may
      otherwise have been applicable under this Section 1.3 had no Event of Default
      then been in existence.  Any outstanding Principal Amount together
      with any accrued and unpaid interest and any and all other unpaid amounts which
      are then owing by the Company to the Holder under this Note, the Purchase
      Agreement and/or any other Related Agreement shall be due and payable on the
      Maturity Date.  For purposes of this Section, (a) the term
“Amortization Amount” shall mean an amount equal to the product
      of (i) .437 times (ii) eighty percent (80%) of the Net Revenue relating to
      all
      oil and gas properties of the Company identified on Schedule A attached
      hereto and any others developed with the proceeds of the Loans evidenced by
      this
      Note for the calendar month immediately preceding the Amortization Date;
provided, however, such percentage shall increase to one hundred
      (100%) upon the occurrence and during the continuance of an Event of Default
      and
      (b) “Net Revenue” shall mean the gross proceeds paid to the
      Company in respect of oil, gas and/or other hydrocarbon production in which
      the
      Company has an interest whether or not such proceeds are remitted to the lockbox
      account and/or any other blocked account established by the Company in
      connection with the transactions contemplated hereby net of, in each case,
      with
      respect to the period for which such Net Revenue relates (i) the reasonable
      ordinary day to day expenses associated with the Company’s operation of the
      leases, wells and equipment, including fuel, materials, labor, maintenance,
      routine production equipment replacement, repairs, routine workover costs to
      maintain production from an existing completed well, royalty, severance tax
      and
      ad valorem tax, in each case using accounting practices and procedures ordinary
      and customary in the oil and gas industry (collectively, the “Lease
      Operating Expenses”) and (ii) the Company’s reasonable estimate of its
      federal tax (including federal income tax) liability (after taking into account
      all applicable deductions, depletion and credits) (the “Estimated
      Taxes”), all of which, in the case of the foregoing clauses (i) and
      (ii), shall be subject to the Agent’s approval which shall be provided in the
      exercise of the Agent’s reasonable discretion based on such supporting
      documentation from the Company as the Agent shall request.

     

    ARTICLE
      II

     

    EVENTS
      OF DEFAULT

     

    2.1           Events
      of Default.  The occurrence of any of the following events set
      forth in this Section 2.1 shall constitute an event of default (“Event
      of Default”) hereunder:

     

    (a)           Failure
      to Pay.  The Company fails to pay when due any installment of
      principal, interest or other fees hereon in accordance herewith, or the Company
      fails to pay any of the other Obligations (under and as defined in the Master
      Security Agreement) when due, and, in any such case, such failure shall continue
      for a period of three (3) days following the date upon which any such payment
      was due;

     

    (b)          
      Breach of Covenant.  The Company or any of its Subsidiaries
      breaches any covenant or any other term or condition of this Note in any
      material respect and such breach, if subject to cure, continues for a period
      of
      fifteen (15) days after the occurrence thereof;

     

    (c)            Breach
      of Representations and Warranties.  Any representation, warranty
      or statement made or furnished by New Century Energy Corp. (the
“Parent”), the Company, any of their Subsidiaries or any
      guarantor (each a “Guarantor”) issuing to the Holder a guaranty
      agreement (each a “Guaranty”) in connection with the
      transactions contemplated hereby in this Note, the Purchase Agreement or any
      other Related Agreement shall at any time be false or misleading in any material
      respect on the date as of which made or deemed made;

     

    (d)           Default
      Under Other Agreements.  The occurrence of any default (or similar
      term) in the observance or performance of any other agreement or condition
      relating to any indebtedness or contingent obligation, in each case in an
      aggregate amount of not less than $100,000, of the Parent, the Company or any
      of
      their Subsidiaries beyond the period of grace (if any), the effect of which
      default is to cause, or permit the holder or holders of such indebtedness or
      beneficiary or beneficiaries of such contingent obligation to cause, such
      indebtedness to become due prior to its stated maturity or such contingent
      obligation to become payable;

     

    (e)           Material
      Adverse Effect.  Any change or the occurrence of any event which
      could reasonably be expected to have a Material Adverse Effect;

     

    (f)           Bankruptcy.  The
      Parent, the Company, any of their Subsidiaries or any Guarantor shall
      (i) apply for, consent to or suffer to exist the appointment of, or the
      taking of possession by, a receiver, custodian, trustee or liquidator of itself
      or of all or a substantial part of its property, (ii) make a general
      assignment for the benefit of creditors, (iii) commence a voluntary case under
      the federal bankruptcy laws (as now or hereafter in effect), (iv) be adjudicated
      a bankrupt or insolvent, (v) file a petition seeking to take advantage of any
      other law providing for the relief of debtors, (vi) acquiesce to, without
      challenge within ten (10) days of the filing thereof, or failure to have
      dismissed, within thirty (30) days, any petition filed against it in any
      involuntary case under such bankruptcy laws, or (vii) take any action for the
      purpose of effecting any of the foregoing;


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


     

    (g)           Judgments.  Attachments
      or levies in excess of $100,000 in the aggregate are made upon the Parent’s, the
      Company’s or any of their Subsidiaries’ or any Guarantor’s assets or a judgment
      is rendered against the Parent’s, the Company’s or any of their Subsidiaries’ or
      any Guarantor’s property involving a liability of more than $100,000 which shall
      not have been vacated, discharged, stayed or bonded within thirty (30) days
      from
      the entry thereof;

     

    (h)           Insolvency.  The
      Parent, the Company or any of their Subsidiaries or any Guarantor shall admit
      in
      writing its inability, or be generally unable, to pay its debts as they become
      due or cease operations of its present business;

     

    (i)           
      Change of Control.  A Change of Control (as defined below)
      shall occur with respect to the Company, unless Holder shall have expressly
      consented to such Change of Control in writing.  A “Change of
      Control” shall mean any event or circumstance as a result of which (i)
      any “Person” or “group” (as such terms are
      defined in Sections 13(d) and 14(d) of the Exchange Act, as in effect on the
      date hereof), other than the Holder, is or becomes the “beneficial
      owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange
      Act), directly or indirectly, of 35% or more on a fully diluted basis of the
      then outstanding voting equity interest of the Company (other than a
“Person” or “group” that beneficially owns 35%
      or more of such outstanding voting equity interests of the Company on the date
      hereof), (ii) unless the Holder provides its written consent thereto (which
      shall not be unreasonably withheld), the Board of Directors of the Company
      shall
      cease to consist of a majority of the Company’s board of directors on the date
      hereof (or directors appointed by a majority of the board of directors in effect
      immediately prior to such appointment) or (iii) the Company or any of its
      Subsidiaries merges or consolidates with, or sells all or substantially all
      of
      its assets to, any other person or entity;

     

    (j)            
      Indictment; Proceedings.  The indictment or threatened
      indictment of the Parent, the Company, any of their Subsidiaries or any
      Guarantor or any executive officer of the Parent, the Company or any of their
      Subsidiaries under any criminal statute, or commencement or threatened
      commencement of criminal or civil proceeding against the Parent, the Company,
      any of their Subsidiaries or any Guarantor or any executive officer of the
      Parent, the Company, any of their Subsidiaries or any Guarantor pursuant to
      which statute or proceeding penalties or remedies sought or available include
      forfeiture of any of the property of the Parent, the Company, any of their
      Subsidiaries or any Guarantor; or

     

    (k)           
      The Purchase Agreement and Related Agreements.  (i) An Event of
      Default shall occur under and as defined in the Purchase Agreement or any other
      Related Agreement (including, without limitation, the breach by any Guarantor
      of
      any provision of any Guaranty), (ii) the Parent, the Company, any of their
      Subsidiaries or any Guarantor shall breach any term or provision of the Purchase
      Agreement or any other Related Agreement in any material respect and such
      breach, if capable of cure, continues unremedied for a period of fifteen (15)
      days after the occurrence thereof, (iii) the Parent, the Company, any of their
      Subsidiaries or any Guarantor attempts to terminate, challenges the validity
      of,
      or its liability under, the Purchase Agreement or any Related Agreement, (iv)
      any proceeding shall be brought to challenge the validity, binding effect of
      the
      Purchase Agreement or any Related Agreement, (v) the
      Purchase Agreement or any Related Agreement ceases to be a valid, binding and
      enforceable obligation of the Parent, the Company, any of their Subsidiaries
      or
      any Guarantor (to the extent such persons or entities are a party thereto)
      or
      (vi) an Event of Default shall occur under and as defined in any one or more
      of
      the following documents:  (i) the Securities Purchase Agreement dated
      as of June 30, 2005 by and between the Parent and Laurus Master Fund, Ltd.
      (“Laurus”) (as amended, restated, modified and/or supplemented
      from time to time, the “June 2005 Securities Purchase
      Agreement”), (ii) each Related Agreement referred to in the June 2005
      Securities Purchase Agreement, as each may be amended, restated, modified and/or
      supplemented from time to time, (iii) the Securities Purchase Agreement dated
      as
      of September 19, 2005 by and between the Parent and Laurus (as amended,
      restated, modified and/or supplemented from time to time, the “September
      2005 Securities Purchase Agreement”), (iv) each Related Agreement
      referred to in the September 2005 Securities Purchase Agreement, as each may
      be
      amended, restated, modified and/or supplemented from time to time, (v) the
      Securities Purchase Agreement dated as of April 28, 2006 by and between the
      Company and Laurus (as amended, restated, modified and/or supplemented from
      time
      to time, the “April 2006 Securities Purchase Agreement”), (vi)
      each Related Agreement referred to in the April 2006 Securities Purchase
      Agreement, as each may be amended, restated, modified and/or supplemented from
      time to time, (vii) the Securities Purchase Agreement dated as of June 30,
      2006
      by and between the Company and Laurus (as amended, restated, modified and/or
      supplemented from time to time, the “June 2006 Securities Purchase
      Agreement”), (viii) each Related Agreement referred to in the June 2006
      Securities Purchase Agreement, as each may be amended, restated, modified and/or
      supplemented from time to time, (ix) the Securities Purchase Agreement dated
      as
      of December 28, 2006 by and between the Parent and Laurus (as amended, restated,
      modified and/or supplemented from time to time, the “December 2006
      Securities Purchase Agreement”) and (x) each Related Agreement referred
      to in the December 2006 Securities Purchase Agreement, as each may be amended,
      restated, modified and/or supplemented from time to time.

     

    2.2           Default
      Interest.  Following the occurrence and during the continuance of
      an Event of Default, the Company shall pay additional interest on the
      outstanding principal balance of this Note in an amount equal to two percent
      (2%) per month, and all outstanding obligations under this Note, the Purchase
      Agreement and each other Related Agreement, including unpaid interest, shall
      continue to accrue interest at such additional interest rate from the date
      of
      such Event of Default until the date such Event of Default is cured or
      waived.

     

    2.3           Default
      Payment.  Following the occurrence and during the continuance of
      an Event of Default, the Agent may demand repayment in full of all obligations
      and liabilities owing by the Company to the Holder under this Note, the Purchase
      Agreement and/or any other Related Agreement and/or may elect, in addition
      to
      all rights and remedies of the Agent under the Purchase Agreement and the other
      Related Agreements and all obligations and liabilities of the Company under
      the
      Purchase Agreement and the other Related Agreements, to require the Company
      to
      make a Default Payment (“Default Payment”).  The
      Default Payment shall be one hundred thirty percent (130%) of the outstanding
      principal amount of this Note, plus accrued but unpaid interest, all other
      fees
      then remaining unpaid, and all other amounts payable hereunder.  The
      Default Payment shall be due and payable immediately on the date that the Agent
      has demanded payment of the Default Payment pursuant to this Section
      2.3.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


     

    ARTICLE
      III

     

    MISCELLANEOUS

     

    3.1           Cumulative
      Remedies.  The remedies under this Note shall be
      cumulative.

     

    3.2           Failure
      or Indulgence Not Waiver.  No failure or delay on the part of the
      Holder hereof in the exercise of any power, right, privilege or remedy hereunder
      shall operate as a waiver thereof, nor shall any single or partial exercise
      of
      any such power, right, privilege or remedy preclude other or further exercise
      thereof or of any other power, right, privilege or remedy.  All
      rights, powers, privileges and remedies existing hereunder are cumulative to,
      and not exclusive of, any rights, powers, privileges or remedies otherwise
      available.

     

    3.3           Notices.  Any
      notice herein required or permitted to be given shall be given in writing in
      accordance with the terms of the Purchase Agreement.

     

    3.4           Amendment
      Provision.  The term “Note” and all references
      thereto, as used throughout this instrument, shall mean this instrument as
      originally executed, or if later amended or supplemented, then as so amended
      or
      supplemented, and any successor instrument as such successor instrument may
      be
      amended or supplemented.

     

    3.5           Assignability.  This
      Note shall be binding upon the Company and its successors and assigns, and
      shall
      inure to the benefit of the Holder and its successors and assigns, and may
      be
      assigned by the Holder in accordance with the requirements of the Purchase
      Agreement.  The Company may not assign any of its obligations under
      this Note without the prior written consent of the Holder, any such purported
      assignment without such consent being null and void.

     

    3.6           Cost
      of Collection.  In case of the occurrence of an Event of Default
      under this Note, the Company shall pay the Holder the Holder’s reasonable costs
      of collection, including reasonable attorneys’ fees.

     

    3.7           Governing
      Law, Jurisdiction and Waiver of Jury Trial.

     

    (a)           THIS
      NOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
      LAWS
      OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
      LAW.

     

    (b)           THE
      COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED
      IN
      THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION
      TO
      HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE COMPANY, ON THE ONE HAND,
      AND THE HOLDER, ON THE OTHER HAND, PERTAINING TO THIS NOTE OR ANY OF THE OTHER
      RELATED AGREEMENTS OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS NOTE
      OR
      ANY OF THE RELATED AGREEMENTS; PROVIDED, THAT THE COMPANY ACKNOWLEDGES
      THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED
      OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF NEW YORK; AND
FURTHERPROVIDED, THAT
      NOTHING IN THIS NOTE SHALL BE DEEMED OR OPERATE TO PRECLUDE THE HOLDER FROM
      BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT
      THE OBLIGATIONS (AS DEFINED IN THE MASTER SECURITY AGREEMENT), TO REALIZE ON
      THE
      COLLATERAL (AS DEFINED IN THE MASTER SECURITY AGREEMENT) OR ANY OTHER SECURITY
      FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR
      OF
      THE HOLDER.  THE COMPANY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO
      SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND THE
      COMPANY HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF
      PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
      CONVENIENS.  THE COMPANY HEREBY WAIVES PERSONAL SERVICE OF THE
      SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
      AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE
      BY
      REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE COMPANY AT THE ADDRESS SET FORTH
      IN THE PURCHASE AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED
      UPON THE EARLIER OF THE COMPANY’S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER
      DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c)           THE
      COMPANY DESIRES THAT ITS DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH
      APPLICABLE LAWS.  THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE
      BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE COMPANY HERETO WAIVES
      ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO
      RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN
      THE
      HOLDER AND THE COMPANY ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL
      TO
      THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS NOTE, ANY
      OTHER RELATED AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR
      THERETO.

     

    3.8            
      Severability.  In the event that any provision of this Note is
      invalid or unenforceable under any applicable statute or rule of law, then
      such
      provision shall be deemed inoperative to the extent that it may conflict
      therewith and shall be deemed modified to conform with such statute or rule
      of
      law.  Any such provision which may prove invalid or unenforceable
      under any law shall not affect the validity or enforceability of any other
      provision of this Note.

     

    3.9            
      Maximum Payments.  Nothing contained herein shall be deemed to
      establish or require the payment of a rate of interest or other charges in
      excess of the maximum permitted by applicable law.  In the event that
      the rate of interest required to be paid or other charges hereunder exceed
      the
      maximum rate permitted by such law, any payments in excess of such maximum
      rate
      shall be credited against amounts owed by the Company to the Holder and thus
      refunded to the Company.

     

    3.10           Security
      Interest, Guarantee and Mortgage.  The Agent, for the ratable
      benefit of the Creditor Parties, has been granted a security interest
      (i) in certain assets of the Parent,
      the Company and Century Resources, Inc. (“CRI”) as more fully
      described in the Master Security Agreement dated as of the date hereof,
      (ii) in the equity interests of the Parent in the Company pursuant to the
      Stock Pledge Agreement dated as of the date hereof, (iii) in the oil and
      gas properties of the Company pursuant to a Mortgage, Deed of Trust, Security
      Agreement, Financing Statement and Assignment of Production, dated as of the
      date hereof and (iv) in the oil and gas properties of the Parent and CRI
      pursuant to a Mortgage, Deed of Trust, Security Agreement, Financing Statement
      and Assignment of Production, dated as of the date hereof.  The
      obligations of the Company under this Note are guaranteed by the Parent pursuant
      to the Guaranty dated as of the date hereof.

     

    3.11           Construction;
      Counterparts.  Each party acknowledges that its legal counsel
      participated in the preparation of this Note and, therefore, stipulates that
      the
      rule of construction that ambiguities are to be resolved against the drafting
      party shall not be applied in the interpretation of this Note to favor any
      party
      against the other.  This Note may be executed by the parties hereto in
      one or more counterparts, each of which shall be deemed an original and all
      of
      which when taken together shall constitute one and the same
      instrument.  Any signature delivered by a party by facsimile or
      electronic transmission shall be deemed to be an original signature
      hereto.

     

    3.12           Registered
      Obligation.  This Note shall be registered (and such registration
      shall thereafter be maintained) as set forth in Section 9.4(b) of the Purchase
      Agreement.  Notwithstanding any document, instrument or agreement
      relating to this Note to the contrary, transfer of this Note (or the right
      to
      any payments of principal or stated interest thereunder) may only be effected
      by
      (i) surrender of this Note and either the reissuance by the Company of this
      Note
      to the new holder or the issuance by the Company of a new instrument to the
      new
      holder or (ii) registration of such holder as assignee in accordance with
      Section 9.4(b) of the Purchase Agreement.

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


     

    IN
      WITNESS WHEREOF, the Company has caused this Secured Term Note to be signed
      in
      its name effective as of this 20th day of
      November,
      2007.

     

    GULF
      COAST OIL CORPORATION

     

    By:
      /s/ Edward R. DeStefano

    Name:
      Edward R. DeStefano

    Title:
      President

     

    WITNESS:

     

    


     

    /s/
      Michael S. Pearson


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    SCHEDULE
      A

     

    [Confidential
      Information Removed]