Exhibit 10.12
AGREEMENT
THIS AGREEMENT is made as of April 28, 2006 among Gulf Coast Oil
Corporation, a Delaware corporation (THE "COMPANY"), New Century Energy Corp., a
Colorado corporation (the "PARENT"), and Laurus Master Fund, Ltd. ("LAURUS").
WHEREAS, the Company has issued a Common Stock Purchase Warrant (as
amended, modified or supplemented from time to time, the "WARRANT") to Laurus to
purchase up to 49% of the common stock of the Company (subject to adjustment as
set forth therein).
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. SHAREHOLDERS AGREEMENT. Forthwith following the exercise of the Warrant in
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whole or in part pursuant to Section 1.1 of the Warrant, each of the
Parent, the Company and Laurus agree to negotiate in good faith the terms
of a shareholders agreement mutually agreeable to each of them, which such
shareholder agreement shall include, without limitation, (a) such matters
commonly provided for in a shareholders agreement, such as governance and
transfer restrictions and (b) Laurus' required consent to any of the
Designated Actions (as hereafter defined). For purposes hereof, the term
"Designated Actions" shall have the meaning set forth on Schedule A hereto.
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2. DIVIDEND. Following the exercise by Laurus of the Warrant in whole or in
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part, as the Company receives cash attributable to Net Revenue (as
hereafter defined ) (the "Net Revenue Proceeds"), the Parent (to the extent
permitted by applicable law) shall, and shall cause the Company to, declare
and pay a dividend to its shareholders, but in no event shall the dividend
payable to Laurus be less than (i) Laurus' percentage ownership interest in
the Company at such time times (ii) the Net Revenue Proceeds so received by
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the Company. Such dividend shall be remitted by the Company to Laurus not
later than two (2) business days following the day on which the Company
receives such Net Revenue Proceeds and pursuant to such remittance
instructions as Laurus shall designate to the Company in writing. For
purposes hereof, the term "Net Revenue" means 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 Net Revenue relates (i) the
reasonable ordinary day to day expenses associated with the Company's
operation of the leases, xxxxx 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 and (ii) the Company's reasonable estimate of its federal tax
(including federal income tax) liability (after taking into account all
applicable deductions, depletions and credits), all of which, in the case
of the foregoing clauses (i) and (ii) shall be subject to Laurus' approval
which shall be provided in the exercise of Laurus' reasonable discretion
based on such supporting documentation from the Company as Laurus shall
request.
3. TERM OF AGREEMENT. This Agreement shall be effective for so long as Laurus
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holds the Warrant or any portion thereof or any shares of the Company's
common stock acquired upon the exercise of the Warrant in whole or in part.
4. GOVERNING LAW. This Agreement shall be governed by and construed and
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enforced in all respects in accordance with the laws of the State of New
York.
5. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
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each of which shall be deemed an original and all of which when taken
together shall constitute one and the same agreement. Any signature
delivered by a party by facsimile transmission or by sending a scanned copy
by electronic mail shall be deemed an original signature hereto.
***THE BALANCE OF THIS PAGE INTENTIONALLY BLANK.
SIGNATURE PAGES TO FOLLOW ***
GULF COAST OIL CORPORATION
By: /s/ Xxxxxx X. XxXxxxxxx
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Name: Xxxxxx X. XxXxxxxxx
Title: President
NEW CENTURY ENERGY CORP.
By: /s/ Xxxxxx X. XxXxxxxxx
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Name: Xxxxxx X. XxXxxxxxx
Title: President
LAURUS MASTER FUND, LTD.
By: /s/ Xxxxxx Grin
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Name: Xxxxxx Grin
Title: Director
SCHEDULE A
DESIGNATED ACTIONS
Company shall not (and Parent shall not cause Company to) implement or
effect (or otherwise resolve or agree to implement or effect) (or otherwise
resolve or agree to implement or effect) any of the following actions without
the prior written approval of Laurus (which approval shall not be unreasonably
withheld):
(a) (i) declare or pay any dividends or make any other distribution
in respect of any securities of the Company or (ii) make any
distribution of any nature (including repayment of loans) to any
person, except, in each case, to the extent expressly set forth in
Section 2 of this Agreement.
(b) sell or dispose of any assets or property, other than in the
ordinary course of business consistent with past practice;
(c) establish, acquire or otherwise become an equity holder
(including, for greater certainty, a holder of securities convertible
into equity) in any corporate entity or any partnership, equity joint
venture or similar arrangements;
(d) enter into any transactions outside the ordinary course with
officers, directors or employees or members of their families or other
persons with whom they do not act at arm's length;
(e) enter into (other than in the ordinary course to fund working
capital needs) or materially modify any credit facility;
(f) create any mortgage, lien, charge or other form of encumbrance
with respect to any of its assets;
(g) materially alter the fundamental nature of its business or
otherwise engage in other businesses or activities that are not
incidental to the businesses or activities presently undertaken by it;
(h) enter into any agreement with any third party;
(i) issue or sell any capital stock of, or any rights, warrants or
securities convertible into or exercisable or exchangeable for any
capital stock of, Company, including by way of initial public
offering;
(j) wind up, dissolve or liquidate;
(k) continue under the laws of a jurisdiction other than the
jurisdiction under which it was formed;
(l) change its fiscal year;
(m) amend its articles or by-laws;
(n) merge the Company with or into any other company;
(o) take any action which would make it impossible to carry on the
ordinary business of the Company;
(p) take any action which would place the Company into bankruptcy; or
(q) appoint or replace any outside accountants and/or auditors.
