Exhibit 10.6
GULF EXPLORATION CONSULTANTS, INC.
10 Rockefeller Plaza
Suite 1012
New York, New York 10020
July 10, 1996
Mr. Dennis Mensch
300 East 75th Street
Apt 29N
New York, New York 10021
Gentlemen:
This letter sets forth the terms of the understanding
between Gulf Exploration Consultants, Inc., a Delaware
corporation ("GEC"), and Dennis Mensch ("Mensch") regarding
certain loans made and to be made by Mensch to GEC, the proceeds
of the new loans to be used by GEC for the payment of certain of
its outstanding legal and accounting fees and for working
capital.
1. Pursuant to Paragraph 1 of a Letter Agreement,
dated as of December 22, 1995 (the "Letter Agreement"), among
GEC, Osprey Investments, Inc. (formerly DRM&S Inc.), Mensch and
Minmet plc, Mensch agreed to lend to GEC one-half of the funds as
necessary to pay 74.6% of the total accounting and legal fees of
GEC existing at November 15, 1995 or $31,732 upon the
consummation of a Recapitalization (as defined in the Letter
Agreement). The Recapitalization became effective on June 17,
1996.
2. In order to fulfill his obligations under the
Letter Agreement, Mensch is loaning $15,866 to GEC, which loan
shall become due and payable by GEC on July 1, 1997, together
with interest at the rate of 7% annum, provided, however, that
GEC shall prepay the outstanding principal and accrued interest
immediately upon the acquisition by any person through a business
combination or otherwise of a controlling interest in GEC, all as
set forth in the new note ("Note") attached hereto.
3. In order to provide GEC with some short-term
working capital, Mensch agrees to lend GEC an additional $10,000.
This $10,000 shall be part of the Note.
4. GEC acknowledges receiving from Mensch the return
of the GEC promissory note, dated February 21, 1995, in the
principal amount of $100,000 (the "Original Note"). GEC agrees
to promptly instruct its transfer agent to issue to Mensch a
certificate for 438,040 shares (the "Shares") of GEC Common
Stock, as provided for in the Letter Agreement in exchange for
the Original Note.
5. GEC represents that there is no proceeding pending
or, to the knowledge of GEC, threatened against GEC, which, if
adversely determined, would have a material adverse effect on
GEC's ability to perform its obligations hereunder or under the
Note.
6. Mensch acknowledges that the Shares have not been
registered under the Securities Act of 1933, as amended, and that
the certificates for the Shares will contain restrictive legends
and stop orders against the Shares referring to the restrictions
on sale or transfer thereof under such Act. Mensch represents
that he is aware of the current operations, prospects and
financial condition of GEC as described in GEC's Proxy Statement,
dated June 6, 1996, Annual Report on Form 10-K for the year ended
December 31, 1995 and Quarterly Report on Form 10-Q for the
quarter ended March 31, 1996.
7. Mensch acknowledges that GEC has not taken the
actions described under the captions "Convertibility of Preferred
Stock," "Issuance of Preferred," "The Recapitalization," and "The
Placement" of the Term Sheet delivered to Mensch on or before
Mensch's acquisition of the Original Note (the "Term Sheet"). In
consideration of the issuance to Mensch of the Shares, Mensch
hereby waives any claims or demands that he may have against GEC,
its officers, directors, employees, agents and representatives
with respect to any rights to Preferred Stock of GEC that he may
have had under his subscription for the Original Note or the Term
Sheet.
8. This letter agreement shall be governed by the
laws of the State of New York.
9. This letter agreement constitutes the entire
agreement between the parties hereto with respect to the subject
matter hereof, superseding all prior written or oral agreements,
and cannot be amended, modified or terminated except pursuant to
a writing executed by the parties hereto.
10. This letter agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all
of which together shall constitute one and the same document.
Please confirm that this letter correctly sets forth
our agreement with respect to the matters stated herein by
signing, dating and returning this letter to us.
Very truly yours,
GULF EXPLORATION CONSULTANTS, INC.
By: /s/ L. George Rieger
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Name: L. George Rieger
Title: President
AGREED AND ACCEPTED THIS
10TH DAY OF JULY, 1996
/s/ Dennis Mensch
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DENNIS MENSCH