Document:

ex10-3.htm

    Exhibit 10.3

     

    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 OFFSHORE SPV II,
      CORP. (the “Holder”) or its registered assigns or successors in
      interest, the sum of Four Million Dollars ($4,000,000), 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 $33,780, 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 $33,780 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) .563 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]ex10-4.htm

Exhibit 10.4

     

    GUARANTY

     

    New
      York,
      New
      York                                                                                                                                                            
November 20, 2007

     

    FOR
      VALUE
      RECEIVED, and in consideration of note purchases from, loans made or to be
      made
      or credit otherwise extended or to be extended by the Purchasers (as defined
      below) to or for the account of Gulf Coast Oil Corporation, a Delaware
      corporation (the “Company”), from time to time and at any time and for
      other good and valuable consideration and to induce the Purchasers, in their
      discretion, to purchase such notes, make such loans or other extensions of
      credit and to make or grant such renewals, extensions, releases of collateral
      or
      relinquishments of legal rights as the Creditor Parties (as defined below)
      may
      deem advisable, each of the undersigned (and each of them if more than one,
      the
      liability under this Guaranty being joint and several) (jointly and severally
      referred to as “Guarantors” or “the undersigned”) unconditionally
      guaranties to the Creditor Parties, their successors, endorsees and assigns
      the
      prompt payment when due (whether by acceleration or otherwise) of all present
      and future obligations and liabilities of any and all kinds of the Company
      to
      the Creditor Parties and of all instruments of any nature evidencing or relating
      to any such obligations and liabilities upon which the Company or one or more
      parties and the Company is or may become liable to the Creditor Parties, whether
      incurred by the Company as maker, endorser, drawer, acceptor, guarantors,
      accommodation party or otherwise, and whether due or to become due, secured
      or
      unsecured, absolute or contingent, joint or several, and however or whenever
      acquired by the Creditor Parties, whether arising under, out of, or in
      connection with (i) that certain Securities Purchase Agreement dated as of
      the
      date hereof (as amended, restated, modified and/or supplemented from time to
      time, the “Securities Purchase Agreement”) by and between the Company,
      the purchasers named therein or which thereafter become a party thereto (each
      a
“Purchaser” and collectively, the “Purchasers”) and LV
      Administrative Services, Inc., as administrative and collateral agent for the
      Purchasers (in such capacity, the “Agent”) (the Purchasers and the Agent,
      each a “Creditor Party” and collectively, the “Creditor Parties”)
      and (ii) each Related Agreement referred to in the Securities Purchase Agreement
      (the Securities Purchase Agreement and each Related Agreement, as each may
      be
      amended, modified, restated or supplemented from time to time, are collectively
      referred to herein as the “Documents”), or any documents, instruments or
      agreements relating to or executed in connection with the Documents or any
      documents, instruments or agreements referred to therein or otherwise, or any
      other indebtedness, obligations or liabilities of the Company to the Creditor
      Parties, whether now existing or hereafter arising, direct or indirect,
      liquidated or unliquidated, absolute or contingent, due or not due and whether
      under, pursuant to or evidenced by a note, agreement, guaranty, instrument
      or
      otherwise (all of which are herein collectively referred to as the
“Obligations”), and irrespective of the genuineness, validity, regularity
      or enforceability of such Obligations, or of any instrument evidencing any
      of
      the Obligations or of any collateral therefor or of the existence or extent
      of
      such collateral, and irrespective of the allowability, allowance or disallowance
      of any or all of the Obligations in any case commenced by or against the Company
      under Title 11, United States Code, including, without limitation, obligations
      or indebtedness of the Company for post-petition interest, fees, costs and
      charges that would have accrued or been added to the Obligations but for the
      commencement of such case.  Terms not otherwise defined herein shall
      have the meaning assigned such terms in the Securities Purchase
      Agreement.  In furtherance of the foregoing, the undersigned hereby
      agrees as follows:

     

    1.           No
      Impairment.  The Creditor Parties may at any time and from time to
      time, either before or after the maturity thereof, without notice to or further
      consent of the undersigned, extend the time of payment of, exchange or surrender
      any collateral for, renew or extend any of the Obligations or increase or
      decrease the interest rate thereon, or any other agreement with the Company
      or
      with any other party to or person liable on any of the Obligations, or
      interested therein, for the extension, renewal, payment, compromise, discharge
      or release thereof, in whole or in part, or for any modification of the terms
      thereof or of any agreement between any Creditor Party and the Company or any
      such other party or person, or make any election of rights the Creditor Parties
      may deem desirable under the United States Bankruptcy Code, as amended, or
      any
      other federal or state bankruptcy, reorganization, moratorium or insolvency
      law
      relating to or affecting the enforcement of creditors’ rights generally (any of
      the foregoing, an “Insolvency Law”) without in any way impairing or
      affecting this Guaranty.  This Guaranty shall be effective regardless
      of the subsequent incorporation, merger or consolidation of the Company, or
      any
      change in the composition, nature, personnel or location of the Company and
      shall extend to any successor entity to the Company, including a debtor in
      possession or the like under any Insolvency Law.

     

    2.           Guaranty
      Absolute.  Subject to Section 5(c) hereof, each of the undersigned
      jointly and severally guarantees that the Obligations will be paid strictly
      in
      accordance with the terms of the Documents and/or any other document, instrument
      or agreement creating or evidencing the Obligations, regardless of any law,
      regulation or order now or hereafter in effect in any jurisdiction affecting
      any
      of such terms or the rights of the Company with respect
      thereto.  Guarantors hereby knowingly accept the full range of risk
      encompassed within a contract of “continuing guaranty” which risk includes the
      possibility that the Company will contract additional indebtedness, obligations
      and liabilities for which Guarantors may be liable hereunder after the Company’s
      financial condition or ability to pay its lawful debts when they fall due has
      deteriorated, whether or not the Company has properly authorized incurring
      such
      additional indebtedness, obligations and liabilities.  The undersigned
      acknowledge that (i) no oral representations, including any representations
      to
      extend credit or provide other financial accommodations to the Company, have
      been made by any Creditor Party to induce the undersigned to enter into this
      Guaranty and (ii) any extension of credit to the Company shall be governed
      solely by the provisions of the Documents.  The liability of each of
      the undersigned under this Guaranty shall be absolute and unconditional, in
      accordance with its terms, and shall remain in full force and effect without
      regard to, and shall not be released, suspended, discharged, terminated or
      otherwise affected by, any circumstance or occurrence whatsoever, including,
      without limitation: (a) any waiver, indulgence, renewal, extension, amendment
      or
      modification of or addition, consent or supplement to or deletion from or any
      other action or inaction under or in respect of the Documents or any other
      instruments or agreements relating to the Obligations or any assignment or
      transfer of any thereof, (b) any lack of validity or enforceability of any
      Document or other documents, instruments or agreements relating to the
      Obligations or any assignment or transfer of any thereof, (c) any furnishing
      of
      any additional security to the Creditor Parties or their assignees or any
      acceptance thereof or any release of any security by the Creditor Parties or
      their assignees, (d) any limitation on any party’s liability or obligation under
      the Documents or any other documents, instruments or agreements relating to
      the
      Obligations or any assignment or transfer of any thereof or any invalidity
      or
      unenforceability, in whole or in part, of any such document, instrument or
      agreement or any term thereof, (e) any bankruptcy,
      insolvency, reorganization, composition, adjustment, dissolution, liquidation
      or
      other like proceeding relating to the Company, or any action taken with respect
      to this Guaranty by any trustee or receiver, or by any court, in any such
      proceeding, whether or not the undersigned shall have notice or knowledge of
      any
      of the foregoing, (f) any exchange, release or nonperfection of any collateral,
      or any release, or amendment or waiver of or consent to departure from any
      guaranty or security, for all or any of the Obligations or (g) any other
      circumstance which might otherwise constitute a defense available to, or a
      discharge of, the undersigned.  Any amounts due from the undersigned
      to the Creditor Parties shall bear interest until such amounts are paid in
      full
      at the highest rate then applicable to the Obligations.  Obligations
      include post-petition interest whether or not allowed or
      allowable.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    3.           Waivers.

     

    (a)           This
      Guaranty is a guaranty of payment and not of collection.  The Creditor
      Parties shall be under no obligation to institute suit, exercise rights or
      remedies or take any other action against the Company or any other person or
      entity liable with respect to any of the Obligations or resort to any collateral
      security held by it to secure any of the Obligations as a condition precedent
      to
      the undersigned being obligated to perform as agreed herein and each of the
      Guarantors hereby waives any and all rights which it may have by statute or
      otherwise which would require the Creditor Parties to do any of the
      foregoing.  Each of the Guarantors further consents and agrees that
      the Creditor Parties shall be under no obligation to marshal any assets in
      favor
      of Guarantors, or against or in payment of any or all of the
      Obligations.  The undersigned hereby waives all suretyship defenses
      and any rights to interpose any defense, counterclaim or offset of any nature
      and description which the undersigned may have or which may exist between and
      among any Creditor Party, the Company and/or the undersigned with respect to
      the
      undersigned’s obligations under this Guaranty, or which the Company may assert
      on the underlying debt, including but not limited to failure of consideration,
      breach of warranty, fraud, payment (other than cash payment in full of the
      Obligations), statute of frauds, bankruptcy, infancy, statute of limitations,
      accord and satisfaction, and usury.

     

    (b)           Each
      of the undersigned further waives (i) notice of the acceptance of this Guaranty,
      of the making of any such loans or extensions of credit, and of all notices
      and
      demands of any kind to which the undersigned may be entitled, including, without
      limitation, notice of adverse change in the Company’s financial condition or of
      any other fact which might materially increase the risk of the undersigned
      and
      (ii) presentment to or demand of payment from anyone whomsoever liable upon
      any
      of the Obligations, protest, notices of presentment, non-payment or protest
      and
      notice of any sale of collateral security or any default of any
      sort.

     

    (c)           Notwithstanding
      any payment or payments made by the undersigned hereunder, or any setoff or
      application of funds of the undersigned by any Creditor Party, the undersigned
      shall not be entitled to be subrogated to any of the rights of such Creditor
      Party against the Company or against any collateral or guarantee or right of
      offset held by such Creditor Party for the payment of the Obligations, nor
      shall
      the undersigned seek or be entitled to seek any contribution or reimbursement
      from the Company in respect of payments
      made by the undersigned hereunder, until all amounts owing to the Creditor
      Parties by the Company on account of the Obligations are indefeasibly paid
      in
      full and the Purchasers’ obligation to extend credit pursuant to the Documents
      has been irrevocably terminated.  If, notwithstanding the foregoing,
      any amount shall be paid to the undersigned on account of such subrogation
      rights at any time when all of the Obligations shall not have been paid in
      full
      and the Purchasers’ obligation to extend credit pursuant to the Documents shall
      not have been terminated, such amount shall be held by the undersigned in trust
      for the Creditor Parties, segregated from other funds of the undersigned, and
      shall forthwith upon, and in any event within two (2) business days of, receipt
      by the undersigned, be turned over to the Agent in the exact form received
      by
      the undersigned (duly endorsed by the undersigned to the Agent, if required),
      to
      be applied against the Obligations, whether matured or unmatured, in such order
      as the Agent may determine, subject to the provisions of the
      Documents.  Any and all present and future debts, obligations and
      liabilities of the Company to any of the undersigned are hereby waived and
      postponed in favor of, and subordinated to the full payment and performance
      of,
      all present and future debts and Obligations of the Company to the Creditor
      Parties.

     

    4.           Security.  All
      sums at any time to the credit of the undersigned and any property of the
      undersigned in any Creditor Party’s possession or in the possession of any bank,
      financial institution or other entity that directly or indirectly, through
      one
      or more intermediaries, controls or is controlled by, or is under common control
      with, such Creditor Party (each such entity, an “Affiliate”) shall be
      deemed held by such Creditor Party or such Affiliate, as the case may be, as
      security for any and all of the undersigned’s obligations and liabilities to the
      Creditor Parties and to any Affiliate of the Creditor Parties, no matter how
      or
      when arising and whether under this Guaranty or any other instrument, agreement
      or otherwise.

     

    5.           Representations
      and Warranties.  Each of the undersigned hereby jointly and
      severally represents and warrants (all of which representations and warranties
      shall survive until all Obligations are indefeasibly satisfied in full and
      the
      Documents have been irrevocably terminated), that:

     

    (a)           Corporate
      Status.  It is a corporation, partnership or limited liability
      company, as the case may be, duly formed, validly existing and in good standing
      under the laws of its jurisdiction of formation indicated on the signature
      page
      hereof and has full power, authority and legal right to own its property and
      assets and to transact the business in which it is engaged.

     

    (b)           Authority
      and Execution.  It has full power, authority and legal right to
      execute and deliver, and to perform its obligations under, this Guaranty and
      has
      taken all necessary corporate, partnership or limited liability company, as
      the
      case may be, action to authorize the execution, delivery and performance of
      this
      Guaranty.

     

    (c)           Legal,
      Valid and Binding Character.  This Guaranty constitutes its legal,
      valid and binding obligation enforceable in accordance with its terms, except
      as
      enforceability may be limited by applicable bankruptcy, insolvency,
      reorganization, moratorium
      or other laws of general application affecting the enforcement of creditor’s
      rights and general principles of equity that restrict the availability of
      equitable or legal remedies.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    (d)           Violations.  The
      execution, delivery and performance of this Guaranty will not violate any
      requirement of law applicable to it or any contract, agreement or instrument
      to
      which it is a party or by which it or any of its property is bound or result
      in
      the creation or imposition of any mortgage, lien or other encumbrance other
      than
      in favor of the Agent, for the ratable benefit of the Creditor Parties, on
      any
      of its property or assets pursuant to the provisions of any of the foregoing,
      which, in any of the foregoing cases, could reasonably be expected to have,
      either individually or in the aggregate, a Material Adverse Effect.

     

    (e)           Consents
      or Approvals.  No consent of any other person or entity
      (including, without limitation, any creditor of the undersigned) and no consent,
      license, permit, approval or authorization of, exemption by, notice or report
      to, or registration, filing or declaration with, any governmental authority
      is
      required in connection with the execution, delivery, performance, validity
      or
      enforceability of this Guaranty by it, except to the extent that the failure
      to
      obtain any of the foregoing could not reasonably be expected to have, either
      individually or in the aggregate, a Material Adverse Effect.

     

    (f)           Litigation.  No
      litigation, arbitration, investigation or administrative proceeding of or before
      any court, arbitrator or governmental authority, bureau or agency is currently
      pending or, to the best of its knowledge, threatened (i) with respect to this
      Guaranty or any of the transactions contemplated by this Guaranty or (ii)
      against or affecting it, or any of its property or assets, which, in each of
      the
      foregoing cases, if adversely determined, could reasonably be expected to have
      a
      Material Adverse Effect.

     

    (g)           Financial
      Benefit.  It has derived or expects to derive a financial or other
      advantage from each and every loan, advance or extension of credit made under
      the Documents or other Obligation incurred by the Company to the Creditor
      Parties.

     

    (h)           Solvency.  As
      of the date of this Guaranty, (a) the fair saleable value of its assets exceeds
      its liabilities and (b) it is meeting its current liabilities as they
      mature.

     

    6.           Acceleration.

     

    (a)           If
      any breach of any covenant or condition or other event of default shall occur
      and be continuing under any agreement made by the Company or any of the
      undersigned to any Creditor Party, or either the Company or any of the
      undersigned should at any time become insolvent, or make a general assignment,
      or if a proceeding in or under any Insolvency Law shall be filed or commenced
      by, or in respect of, any of  the undersigned, or if a notice of any
      lien, levy, or assessment is filed of record with respect to any assets of
      any
      of the undersigned by the United States of America or any department, agency,
      or
      instrumentality thereof, or if any taxes or debts owing at any time or times
      hereafter to any one of them becomes a lien or encumbrance upon any assets
      of
      the undersigned in any Creditor Party’s possession, or otherwise, any and all
      Obligations shall
      for
      purposes hereof, at the Creditor Parties’ option, be deemed due and payable
      without notice notwithstanding that any such Obligation is not then due and
      payable by the Company.

     

    (b)           Each
      of the undersigned will promptly notify the Agent of any default by such
      undersigned in its respective performance or observance of any term or condition
      of any agreement to which the undersigned is a party if the effect of such
      default is to cause, or permit the holder of any obligation under such agreement
      to cause, such obligation to become due prior to its stated maturity and, if
      such an event occurs, the Creditor Parties shall have the right to accelerate
      such undersigned’s obligations hereunder.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    7.           Payments
      from Guarantors.  The Creditor Parties, in their sole and absolute
      discretion, with or without notice to the undersigned, may apply on account
      of
      the Obligations any payment from the undersigned or any other guarantors, or
      amounts realized from any security for the Obligations, or may deposit any
      and
      all such amounts realized in a non-interest bearing cash collateral deposit
      account to be maintained as security for the Obligations.

     

    8.           Costs.  The
      undersigned shall pay on demand, all costs, fees and expenses (including
      expenses for legal services of every kind) relating or incidental to the
      enforcement or protection of the rights of the Creditor Parties hereunder or
      under any of the Obligations.

     

    9.           No
      Termination.  This Guaranty is a continuing irrevocable guaranty
      and shall remain in full force and effect and be binding upon the undersigned,
      and each of the undersigned’s successors and assigns, until all of the
      Obligations have been indefeasibly paid in full and the Purchasers’ obligation
      to extend credit pursuant to the Documents has been irrevocably
      terminated.  If any of the present or future Obligations are
      guarantied by persons, partnerships, corporations or other entities in addition
      to the undersigned, the death, release or discharge in whole or in part or
      the
      bankruptcy, merger, consolidation, incorporation, liquidation or dissolution
      of
      one or more of them shall not discharge or affect the liabilities of any
      undersigned under this Guaranty.

     

    10.           Recapture.  Anything
      in this Guaranty to the contrary notwithstanding, if any Creditor Party receives
      any payment or payments on account of the liabilities guaranteed hereby, which
      payment or payments or any part thereof are subsequently invalidated, declared
      to be fraudulent or preferential, set aside and/or required to be repaid to
      a
      trustee, receiver, or any other party under any Insolvency Law, common law
      or
      equitable doctrine, then to the extent of any sum not finally retained by the
      Creditor Parties, the undersigned’s obligations to the Creditor Parties shall be
      reinstated and this Guaranty shall remain in full force and effect (or be
      reinstated) until payment shall have been made to the Creditor Parties, which
      payment shall be due on demand.

     

    11.           Books
      and Records.  The books and records of the Agent showing the
      account between the Creditor Parties and the Company shall be admissible in
      evidence in any action or proceeding, shall be binding upon the undersigned
      for
      the purpose of establishing the items therein set forth and shall constitute
      prima facie proof thereof.

     

    12.           No
      Waiver.  No failure on the part of any Creditor Party to exercise,
      and no delay in exercising, any right, remedy or power hereunder shall operate
      as a waiver thereof, nor shall any single or partial exercise by any Creditor
      Party of any right, remedy or power hereunder preclude any other or future
      exercise of any other legal right, remedy or power.  Each and every
      right, remedy and power hereby granted to the Creditor Parties or allowed it
      by
      law or other agreement shall be cumulative and not exclusive of any other,
      and
      may be exercised by the Creditor Parties at any time and from time to
      time.

     

    13.           WAIVER
      OF JURY TRIAL.  EACH OF THE UNDERSIGNED 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, EACH OF THE UNDERSIGNED 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 ANY CREDITOR PARTY, AND/OR
      ANY
      OF THE UNDERSIGNED ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO
      THE
      RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS GUARANTY, ANY
      DOCUMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO.

     

    14.           GOVERNING
      LAW; JURISDICTION.  THIS GUARANTY CANNOT BE CHANGED OR TERMINATED
      ORALLY, AND SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH
      THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED
      IN
      SUCH STATE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.  EACH
      OF THE UNDERSIGNED 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 ANY OF THE
      UNDERSIGNED, ON THE ONE HAND, AND ANY CREDITOR PARTY, ON THE OTHER HAND,
      PERTAINING TO THIS GUARANTY OR ANY OF THE DOCUMENTS OR TO ANY MATTER ARISING
      OUT
      OF OR RELATED TO THIS GUARANTY OR ANY OF THE DOCUMENTS; PROVIDED, THAT
      EACH OF THE UNDERSIGNED 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 GUARANTY SHALL BE
      DEEMED OR OPERATE TO PRECLUDE THE CREDITOR PARTIES FROM BRINGING SUIT OR TAKING
      OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS, TO
      REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO
      ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF ANY CREDITOR
      PARTY.  EACH OF THE UNDERSIGNED EXPRESSLY SUBMITS AND CONSENTS IN
      ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT,
      AND EACH UNDERSIGNED HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON
      LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
      CONVENIENS.  EACH OF THE UNDERSIGNED 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 SUCH UNDERSIGNED IN ACCORDANCE WITH SECTION 18 AND THAT
      SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH UNDERSIGNED’S
      ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER
      POSTAGE PREPAID.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    15.           Understanding
      With Respect to Waivers and Consents.  Each Guarantor warrants and
      agrees that each of the waivers and consents set forth in this Guaranty is
      made
      voluntarily and unconditionally after consultation with outside legal counsel
      and with full knowledge of its significance and consequences, with the
      understanding that events giving rise to any defense or right waived may
      diminish, destroy or otherwise adversely affect rights which such Guarantor
      otherwise may have against the Company, any Creditor Party or any other person
      or entity or against any collateral.  If, notwithstanding the intent
      of the parties that the terms of this Guaranty shall control in any and all
      circumstances, any such waivers or consents are determined to be unenforceable
      under applicable law, such waivers and consents shall be effective to the
      maximum extent permitted by law.

     

    16.           Severability.  To
      the extent permitted by applicable law, any provision of this Guaranty which
      is
      prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
      be ineffective to the extent of such prohibition or unenforceability without
      invalidating the remaining provisions hereof, and any such prohibition or
      unenforceability in any jurisdiction shall not invalidate or render
      unenforceable such provision in any other jurisdiction.

     

    17.           Amendments,
      Waivers.  No amendment or waiver of any provision of this Guaranty
      nor consent to any departure by the undersigned therefrom shall in any event
      be
      effective unless the same shall be in writing executed by each of the
      undersigned directly affected by such amendment and/or waiver and the
      Agent.

     

    18.           Notice.  All
      notices, requests and demands to or upon the undersigned, shall be in writing
      and shall be deemed to have been duly given or made (a) when delivered, if
      by
      hand, (b) three (3) days after being sent, postage prepaid, if by
      registered or certified mail, (c) when confirmed electronically, if by
      facsimile, or (d) when delivered, if by a recognized overnight delivery service
      in each event, to the numbers and/or address set forth beneath the signature
      of
      the undersigned.

     

    19.           Successors.  Each
      Creditor Party may, from time to time, without notice to the undersigned, sell,
      assign, transfer or otherwise dispose of all or any part of the Obligations
      and/or rights under this Guaranty.  Without limiting the generality of
      the foregoing, each Creditor Party may assign, or grant participations to,
      one
      or more banks, financial institutions or other entities all or any part of
      any
      of the Obligations.  In each such event, the Creditor Parties, their
      Affiliates and each and every immediate and successive purchaser, assignee,
      transferee or holder of all or any part of the Obligations shall have the right
      to enforce this Guaranty, by legal action or otherwise, for its own benefit
      as
      fully as if such purchaser, assignee, transferee or holder were herein by name
      specifically given such right.  The Creditor Parties shall have an
      unimpaired right to
      enforce this Guaranty for its benefit with respect to that portion of the
      Obligations which the Creditor Parties have not disposed of, sold, assigned,
      or
      otherwise transferred.

     

    20.           Joinder.  It
      is understood and agreed that any person or entity that desires to become a
      Guarantor hereunder, or is required to execute a counterpart of this Guaranty
      after the date hereof pursuant to the requirements of any Document, shall become
      a Guarantor hereunder by (x) executing a joinder agreement in form and substance
      satisfactory to the Agent, (y) delivering supplements to such exhibits and
      annexes to such Documents as the Agent shall reasonably request and/or as may
      be
      required by such joinder agreement and (z) taking all actions as specified
      in
      this Guaranty as would have been taken by such such Guarantor had it been an
      original party to this Guaranty, in each case with all documents required above
      to be delivered to the Agent and with all documents and actions required above
      to be taken to the reasonable satisfaction of the Agent.

     

    21.           Release.  Nothing
      except indefeasible payment in full of the Obligations shall release any of
      the
      undersigned from liability under this Guaranty.

     

    22.           Remedies
      Not Exclusive.  The remedies conferred upon the Creditor Parties
      in this Guaranty are intended to be in addition to, and not in limitation of
      any
      other remedy or remedies available to the Creditor Parties.

     

    23.           Limitation
      of Obligations under this Guaranty.  Each Guarantor and each
      Creditor Party (by its acceptance of the benefits of this Guaranty) hereby
      confirms that it is its intention that this Guaranty not constitute a fraudulent
      transfer or conveyance for purposes of the Bankruptcy Code, the Uniform
      Fraudulent Conveyance Act of any similar Federal or state law.  To
      effectuate the foregoing intention, each Guarantor and each Creditor Party
      (by
      its acceptance of the benefits of this Guaranty) hereby irrevocably agrees
      that
      the Obligations guaranteed by such Guarantor shall be limited to such amount
      as
      will, after giving effect to such maximum amount and all other (contingent
      or
      otherwise) liabilities of such Guarantor that are relevant under such laws
      and
      after giving effect to any rights to contribution pursuant to any agreement
      providing for an equitable contribution among such Guarantor and the other
      Guarantors (including this Guaranty), result in the Obligations of such
      Guarantor under this Guaranty in respect of such maximum amount not constituting
      a fraudulent transfer or conveyance.

     

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    SIGNATURE
      PAGE IMMEDIATELY FOLLOWS]

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    IN
      WITNESS WHEREOF, this Guaranty has been executed by the undersigned as of the
      date and year here above written.

     

    NEW
      CENTURY ENERGY CORP.

     

    By:
      /s/ Edward R. DeStefano

     

    Name:
      Edward R. DeStefano

     

    Title:
      President

     

    Address:

     

    5851
      San
      Felipe, Suite 775

    Houston,
      TX 77057

    Facsimile:  (713)
      255-4358

    State
      of
      Formation:  Colorado

     

    CENTURY
      RESOURCES, INC.

     

    By:
      /s/ Edward R. DeStefano

     

    Name:
      Edward R. DeStefano

     

    Title:
      President

     

    

     

    Address:

     

    5851
      San
      Felipe, Suite 775

    Houston,
      TX 77057

    Facsimile:  (713)
      255-4358

    State
      of
      Formation:  Delaware

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