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 NEW CENTURY ENERGY
      CORP. THAT SUCH REGISTRATION IS NOT REQUIRED.

     

    SECURED
      TERM NOTE

     

    FOR
      VALUE
      RECEIVED, NEW CENTURY ENERGY CORP., a Colorado corporation (the
“Company”) hereby promises to pay to VALENS OFFSHORE SPV II,
      CORP. (the “Holder”) or its registered assigns or successors in
      interest, the sum of Three Million Dollars ($3,000,000), together with any
      accrued and unpaid interest hereon, on November 30, 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 $28,300, 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 $28,300 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) .566 times (ii) eighty percent (80%) of the Net Revenue for the calendar
      month immediately preceding the Amortization Date relating to all oil and gas
      properties of the Company identified on Schedule A attached hereto, all
      other Leases (as defined in the NPI (as defined below)) and properties and
      interests described on Exhibit A to all Supplemental NPI Conveyance(s) as
      defined in that certain Net Profits Interest Agreement
      dated as of the 30th day of November, 2007, by and among NCEC, Century
      Resources, Inc., Valens U.S. SPV I, LLC and Valens Offshore SPV II, Corp. (as
      amended, supplemented, restated or modified from time to time, the
“NPI”) and any other properties and interests developed with
      the proceeds of the Loans evidenced by this Note ; provided,
however, such percentage shall increase to one hundred percent (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.

     

    
      
        
        

      

      
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    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 (as defined below)) 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 the Company, any of its 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 Company or any of its
      Subsidiaries beyond the period of grace (if any), the effect of which default
      is
      to cause, or permit the holder or holders of such indebtedness or beneficiary
      or
      beneficiaries of such contingent obligation to cause, such indebtedness to
      become due prior to its stated maturity or such contingent obligation to become
      payable;

     

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

     

    (f)           Bankruptcy.  The
      Company, any of its 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;

     

    
      
        
        

      

      
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    (g)           Judgments.  Attachments
      or levies in excess of $100,000 in the aggregate are made upon the Company’s or
      any of its Subsidiaries’ or any Guarantor’s assets or a judgment is rendered
      against the Company’s or any of its 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
      Company or any of its 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
      Company, any of its Subsidiaries or any Guarantor or any executive officer
      of
      the Company or any of its Subsidiaries under any criminal statute, or
      commencement or threatened commencement of criminal or civil proceeding against
      the Company, any of its Subsidiaries or any Guarantor or any executive officer
      of the Company, any of its 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 Company, any of its 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 Company, any of its 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 Company, any of its 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 Company, any of its 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 Company 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 Company 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 Gulf
      Coast Oil Corporation (“Gulf Coast”) 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 Gulf
      Coast 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 Company and Laurus (as amended, restated, modified
      and/or supplemented from time to time, the “December 2006 Securities
      Purchase Agreement”), (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, (xi) the Securities Purchase
      Agreement dated as of November 20, 2007 by and among Gulf Coast, the Agent
      and
      the other Creditor Parties (as amended, restated, modified and/or supplemented
      from time to time, the “November 2007 Securities Purchase
      Agreement”), and (xii) each Related Agreement referred to in the
      November 2007 Securities Purchase Agreement, as each may be amended, restated,
      modified and/or supplemented from time to time.

     

    
      
        
        

      

      
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    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.

     

    
      
        
        

      

      
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    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.

     

    
      
        
        

      

      
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    (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.

     

    
      
        
        

      

      
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    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 Company, Gulf Coast and Century Resources,
      Inc. (“CRI”) as more fully described in the Master Security
      Agreement dated as of the date hereof (the “Master Security
      Agreement”), (ii) in the equity interests of 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 Gulf Coast 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 Gulf Coast and
      CRI
      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.

     

    [Balance
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    IN
      WITNESS WHEREOF, the Company has caused this Secured Term Note to be signed
      in
      its name effective as of this 30th day of November, 2007.

     

    NEW
      CENTURY ENERGY CORP.

     

    By:
      /s/ Edward R. DeStefano

    Name:
      Edward R. DeStefano

    Title:
      President and Chief Executive Officer

     

    WITNESS:

     

    /s/
      Sharon P. Mork

     

     

    
      
        
        

      

      
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