Contract
Exhibit
10.4
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.
THIRD
AMENDED AND RESTATED SECURED TERM NOTE
FOR
VALUE
RECEIVED, NEW CENTURY ENERGY CORP., a Colorado corporation (the “Company”),
hereby promises to pay to LAURUS MASTER FUND, LTD., c/o M&C Corporate
Services Limited, P.O. Box 309 GT, Xxxxxx House, South Church Street, Xxxxxx
Town, Grand Cayman, Cayman Islands, Fax: 000-000-0000 (the “Holder”)
or its
registered assigns or successors in interest, the sum of Nine Million Five
Hundred Thousand Dollars ($9,500,000), together with any accrued and unpaid
interest hereon, on December 31, 2007 (the “Maturity
Date”)
if not
sooner paid.
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
by and between the Company and the Holder (as amended, modified and/or
supplemented from time to time, the “Purchase
Agreement”).
The
following terms shall apply to this Third Amended and Restated Secured Term
Note
(this “Note”):
ARTICLE
I
CONTRACT
RATE AND REDEMPTION
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 twenty percent (20%) (the “Contract
Rate”).
Interest shall be (i) calculated on the basis of a 360 day year, and (ii)
payable monthly, in arrears, commencing on November 1, 2005, 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 Repayments.
Amortizing payments of the aggregate Principal Amount outstanding under this
Note at any time together with accrued and unpaid interest shall be made by
the
Company on each Repayment Date (as hereafter defined) in an amount equal to
the
Payment Amount (as hereafter defined). Each such Payment Amount shall be applied
(a) first to any fees due and payable to the Holder pursuant to this Note,
the
Purchase Agreement or any other Related Agreement, (b) then to accrued and
unpaid interest due on this Note and (c) then to the outstanding Principal
Amount under this Note, in each case, in such order as the Holder shall
determine in its sole discretion. 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 “Payment
Amount”
shall
mean the greater of (i) eighty percent (80%) of the gross proceeds paid to
the
Company in respect of oil, gas and/or other hydrocarbon production arising
from
the Company’s 7.15% working interest in the Wishbone Field in the
Xxxxxxxx-Xxxxxx Gas Unit located in XxXxxxxx County, Texas (the “Wishbone
Field”),
purchased by the Company pursuant to the Purchase and Sale Agreement dated
September 2, 2005 between the Company and the seller of such working interest
(the “Production Payments”), and (ii) the monthly interest payment; and (b) the
term “Repayment
Date”
means a
date not later than five (5) days following the day on which the Company
receives each Production Payment, commencing with all Production Payments
received by the Company after March 1, 2006 with respect to the production
month
of January 2006 and each month thereafter. Notwithstanding anything contained
in
this Section to the contrary, if during the 2006 or 2007 calendar years the
Company drills one or more xxxxx in the Wishbone Field, then so long as no
Event
of Default shall have occurred and be continuing the Company shall be permitted
to deduct from each Payment Amount in respect of the Principal Amount then
required to be made an amount sufficient to cover not more than the Company’s
then owing 7.25% pro-rata share of the drilling and completion costs associated
with such drilling, provided that in no event shall any such drilling and
completion costs be deducted from the interest payments then due and owing
by
the Company to the Holder hereunder.
1.3 Mandatory
Redemption.
The
total outstanding Principal Amount together with any accrued and unpaid interest
and any and all other unpaid amounts which are then owing by the Companies
to
the Holder under this Note, the Purchase Agreement and/or any other Related
Agreement shall be due and payable on the Maturity Date.
1.4 Optional
Redemption.
The
Company may prepay this Note (“Optional
Redemption”)
by
paying to the Holder a sum of money equal to the Applicable Principal Amount
(as
defined below) together with accrued but unpaid interest thereon and any and
all
other sums due, accrued or payable to the Holder arising under this Note, the
Purchase Agreement and/or any other Related Agreement (the “Redemption
Amount”)
outstanding on the Redemption Payment Date (as defined below). The Company
shall
deliver to the Holder a written notice of redemption (the “Notice
of Redemption”)
specifying the date for such Optional Redemption (the “Redemption
Payment Date”),
which
date shall be seven (7) business days after the date of the Notice of
Redemption. On the Redemption Payment Date, the Redemption Amount must be paid
in good funds to the Holder. In the event the Company fails to pay the
Redemption Amount on the Redemption Payment Date as set forth herein, then
such
Notice of Redemption will be null and void. For purposes of this Section 1.4,
the “Applicable
Principal Amount”
shall
mean 100% of the Principal Amount outstanding at the time of such
prepayment.
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.
-2-
(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 or any
of
its Subsidiaries 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 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 or any of its Subsidiaries 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
Company or any of its Subsidiary’s assets or a judgment is rendered against the
Company’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 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;
-3-
(i) Change
in Control.
A
Change in Control shall occur. A “Change in Control” shall arise when 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) 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) or (ii) 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);
(j) Indictment;
Proceedings.
The
indictment or threatened indictment of the Company or any of its Subsidiaries
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 or any of its Subsidiaries or any executive
officer of the Company or any of its Subsidiaries pursuant to which statute
or
proceeding penalties or remedies sought or available include forfeiture of
any
of the property of the Company or any of its Subsidiaries;
(k) The
Purchase Agreement, Related Agreements, the September 2005 Purchase Agreement,
the September 2005 Related Agreements, the December 2005 Option, the Gulf Coast
Purchase Agreements, the Gulf Coast Related Agreements, the December 2006
Purchase Agreement and the December 2006 Related Agreements,.
(i) An
Event of Default shall occur under and as defined in the Purchase Agreement,
any
other Related Agreement, the Securities Purchase Agreement dated as of June
30,
2005 by and between the Holder and the Company (as amended, modified and
supplemented from time to time, the “June
2005 Purchase Agreement”)
and/or
any other document, instrument or agreement entered into in connection with
the
transactions contemplated by the June 2005 Purchase Agreement (as amended,
modified and supplemented from time to time, the “June 2005
Related Agreements”);
the
Securities Purchase Agreement dated as of September 19, 2005 by and between
the
Holder and the Company (as amended, modified and supplemented from time to
time,
the “September
2005 Purchase Agreement”)
and/or
any other document, instrument or agreement entered into in connection with
the
transactions contemplated by the September 2005 Purchase Agreement (as amended,
modified and supplemented from time to time, the “September
2005 Related Agreements”);
the
Option issued to Holder by the Company on December 30, 2005 (as amended,
modified and supplemented from time to time, the “December
2005 Option”);
and/or the April 26, 2006 or June 30, 2006 Gulf Coast Oil Corporation
(“Gulf
Coast”)
Securities Purchase Agreements by and between the Holder and Gulf Coast (as
amended, modified and supplemented from time to time, the “Gulf
Coast Purchase Agreements”)
and/or
any other document, instrument or agreement entered into in connection with
the
transactions contemplated by the Gulf Coast Purchase Agreements (as amended,
modified and supplemented from time to time, the “Gulf
Coast Related Agreements”),
the
Securities Purchase Agreement dated as of December 28, 2006 by and between
the
Holder and the Company (as amended, modified and supplemented from time to
time,
the “December
2006 Purchase Agreement”)
and/or
any other document, instrument or agreement entered into in connection with
the
transactions contemplated by the December 2006 Purchase Agreement (as amended,
modified and supplemented from time to time, the “December
2006 Related Agreements”),
(ii)
the Company
or any of its Subsidiaries shall breach any term or provision of the Purchase
Agreement, any Related Agreement, the June 2005 Purchase Agreement or any June
2005 Related Agreements, the September 2005 Purchase Agreement or the September
2005 Related Agreements, the December 2005 Option, the Gulf Coast Purchase
Agreements or any Gulf Coast Related Agreements, the December 2006 Purchase
Agreement or the December 2006 Related Agreements (collectively as amended,
modified and supplemented from time to time, the “Funding
and Related Documents”)
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
or
any of its Subsidiaries attempts to terminate, challenges the validity of,
or
its liability under, the Funding and Related Documents (iv) any proceeding
shall
be brought to challenge the validity, binding effect of the New Century Funding
and Related Documents or (v) any of the Funding and Related Documents ceases
to
be a valid, binding and enforceable obligation of the Company or any of its
Subsidiaries (to the extent such persons or entities are a party
thereto);
-4-
2.2 Default
Interest.
Following the occurrence and during the continuance of an Event of Default,
the
Company shall pay additional interest on 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
Holder, at its option, may demand repayment in full of all obligations and
liabilities owing by 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 Holder 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 130% of the outstanding principal amount of the Note,
plus accrued but unpaid interest, all other fees then remaining unpaid, and
all
other amounts payable hereunder. The Default Payment shall be applied first
to
any fees due and payable to the Holder pursuant to this Note, the Purchase
Agreement, and/or the other Related Agreements, then to accrued and unpaid
interest due on this Note and then to the outstanding principal balance of
this
Note. The Default Payment shall be due and payable immediately on the date
that
the Holder has exercised its rights 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 or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or privilege. All
rights and remedies
existing hereunder are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
-5-
3.3 Notices.
Any
notice herein required or permitted to be given shall be in writing and provided
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 any Event of Default under this Note, the Company shall pay the Holder
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
FURTHER PROVIDED,
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, TO REALIZE ON THE COLLATERAL 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.
-6-
(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 and Guarantee.
The
Holder has been granted a security interest (i) in certain assets of the Company
and its Subsidiaries as more fully described in the Master Security Agreement
and in the Mortgage, Deed of Trust, Security Agreement, Financing Statement
and
Assignment of Production and (ii) in the equity interests of the Companies’
Subsidiaries pursuant to the Stock Pledge Agreement which such security
interests, in each case, have been reaffirmed and ratified pursuant to the
Reaffirmation Agreement. The obligations of the Company under this Note are
guaranteed by certain Subsidiaries of the Company pursuant to the Subsidiary
Guaranty which guaranty has been reaffirmed pursuant to the Reaffirmation
Agreement.
3.11 Construction.
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
-7-
3.12 Amendment
and Restatement.
This
Note amends and restates in its entirety (and is given in substitution for
but
not in satisfaction of) that certain Second Amended and Restated Secured Term
Note entered into as of December 28, 2006, to be effective as of September
19,
2005, executed by the Company in favor of the Holder in the original principal
amount of $9,500,000 (the “Prior
Note”
and
the
“Amendment”).
This
Note does not effect a refinancing of all or any portion of the obligations
heretofore evidenced by the Prior Note, it being the intention of the Company
and the Holder to avoid effectuating a novation of such obligations.
3.13 Acceptance
of Amendment and Restatement by Xxxxxx.
By
signing below, and agreeing and accepting this Note, the Holder of this Note
hereby agrees to and accepts the Amendment of and restatement of the Prior
Note
in the form of this Note, as well as the terms and conditions contained herein.
3.14 Registered
Obligation.
This
Note is intended to be a registered obligation within the meaning of Treasury
Regulation Section 1.871-14(c)(1)(i) and the Company (or its agent) shall
register this Note (and thereafter shall maintain such registration) as to
both
principal and any stated interest. 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) transfer through a book entry system
maintained by the Company (or its agent), within the meaning of Treasury
Regulation Section 1.871-14(c)(1)(i)(B).
[Balance
of page intentionally left blank; signature page follows]
-8-
IN
WITNESS WHEREOF,
the
Company has caused this Third Amended and Restated Secured Term Note to be
signed in its name on July 10, 2007 to be effective as of the 19th
day of
September, 2005.
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By:
/s/ Xxxxxx X. XxXxxxxxx
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Xxxxxx
X. XxXxxxxxx
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Chief
Executive Officer and President
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WITNESS:
/s/
Xxxxx
Xxxx
Printed
Name: Xxxxx
Xxxx
Agreed
to an accepted by:
LAURUS
MASTER FUND, LTD.
By:
/s/ Xxxxx
Xxxx
Its:
Director
Printed
Name: Xxxxx
Xxxx
Acknowledged
and Consented to:
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CENTURY
RESOURCES, INC.
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GULF
COAST OIL CORPORATION
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/s/
Xxxxxx X.
XxXxxxxxx
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/s/
Xxxxxx X.
XxXxxxxxx
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Xxxxxx
X. XxXxxxxxx
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Xxxxxx
X. XxXxxxxxx
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Chief
Executive Officer and President
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Chief
Executive Officer and President
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-9-
