MODIFICATION AND SETTLEMENT AGREEMENT
This
Modification and Settlement Agreement (the “Agreement”) is made and entered into
as of this 15th
day of
March 2008 by and among Indigo-Energy, Inc., a corporation organized under
the
laws of the State of Nevada (the “Company”) and the individuals listed in
Schedule A hereof (the “Creditors”“ and together with the Company, the
“Parties”.)
WHEREAS,
the
Company previously issued promissory notes to the Creditors, in the amounts
set
forth beside each individuals name in Schedule A (the “Promissory Notes”),
pursuant to which the Company agreed to make certain payments to each Creditor,
as well as grant each of the Creditors royalties from revenue generated from
the
operations of Indigo Well #2;
WHEREAS,
the
Parties have agreed that it is in all of their interests to modify all of the
terms provided under the Promissory Notes, including those terms relating to
the
payment of the principal amount, the royalty to be received by the Creditors,
and the interest granted to such Creditors under the Promissory Notes in Indigo
Well #2, as more fully set forth below; and
WHEREAS,
the
Company has offered and the Creditors have agreed to accept modifications to
the
terms and condition provided in the Promissory Notes, subject to the provisions
set forth herein.
NOW
THERFORE,
the
Parties hereto agree as follows:
Section
1. Release.
The
Parties hereby agree as follows:
a. Subject
to the provisions below, effective upon the execution of this Agreement, the
Creditors hereby release the Company from any liability relating to, arising
out
of or by virtue of the Promissory Notes, except the obligation to make payments
as set forth below. Further, the Creditors hereby agree to release the Company,
its employees, directors, officers, consultants and affiliates, from any
liability to the Creditors, their successors or assigns, relating to, arising
out of or by virtue of the Promissory Notes.
b. Notwithstanding
the release in this Section, in the event that the Company does not make the
payments set forth in Section 2(a) hereof by November 1, 2008, this Release
provision shall be null and void and otherwise of no force or effect, such
that
the Creditors shall be entitled to make a claim based on this Agreement or
the
obligations under the Promissory Notes or make any other claim they may have.
If
there is such a failure to make these payments by November 1, 2008, the
Creditors are entitled to retain the shares issued hereunder.
c. Further,
nothing in this Release is intended to, and does not, release or waive any
rights or claims against any person or entity, including the Company as well
as
any of its officers, directors, employees, agents, consultants, affiliates,
parents, subsidiaries, accountants, auditors or attorneys arising from or
related to the following: (1) the investments made by the Creditors in
Indigo Energy Partners, L.P.; (2) any and all partnership agreements
governing or related to Indigo-Energy Partners, UP.; (3) any and all
drilling and operating agreements to which Indigo-Energy Partners, L.P. or
any
of the Creditors are parties or beneficiaries; and (4) any and all other
agreements under which the Creditors may have rights or claims, with the sole
exception of the promissory Notes referenced herein. All such rights and claims
are expressly reserved, although the Creditors acknowledge that the Company
and
the LP Partners are currently negotiating a global settlement which addresses
(1)-(3) of this subsection and provides for a release of liability under all
other agreements.
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Section
2. Consideration.
As
consideration for this Modification and Settlement Agreement, the Parties hereby
agree as follows:
a. Payment
of Amounts Owed — The Company acknowledges, and the Creditors agree, that the
Company is indebted to each of the Creditors in the amounts set forth in
Schedule A (the• “Principal”). The Parties agree that in consideration for the
settlement set forth herein, the Company undertakes to pay to each of the
Creditors, on or before May 1, 2008 (the “Due Date”), the Principal, as well as
a Penalty Fee equal to 10% of all amounts set forth in Schedule A (the “Penalty
Fee”).
b. Default
Payments - In the event that the amounts set forth under Section 2(a) hereby
are
not settled in full on or before the Due Date, the Company hereby agrees to
issue to each of the Creditors, for every month past the Due Date on which
the
Principal and the Penalty Fee remain unpaid, one (1) share of the Company’s
common stock for every dollar amount of the Principal and the Penalty then
outstanding.
c. Additional
Consideration - In addition to the amounts set forth above, the Company also
agrees to issue to the Creditors five shares of the Company’s common stock for
every dollar of the Principal amount owed as of the date of the execution
hereof.
Section
3. Successors.
This
Agreement shall be binding upon and inure to the benefit of the Parties and
their respective administrators, representatives, executors, successors and
assigns, either by reason of death, incapacity, merger, consolidation, and/or
purchase or acquisition of substantially all of the Company’s assets or
otherwise.
Section
4. Governing
Law.
Each
Party acknowledges that it has been represented by counsel in connection with
this Agreement, and has executed the same with knowledge of its consequences.
This Agreement is made and entered into under New York law and shall be
interpreted, enforced and governed under the laws of the laws of New York
without regard to its conflicts of laws principles.
Section
5. Paragraph
Headings.
The
paragraph headings used in this Agreement are intended solely for convenience
of
reference and shall not in any manner amplify, limit, modify or otherwise be
used in the interpretation of any of the provisions hereof.
Section
6. Severability.
Should
any of the provisions of this Agreement be declared or be determined to be
illegal or invalid, the validity of the remaining parts, terms or provisions
shall not be affected thereby and said illegal or invalid part, term or
provision shall be deemed not to be a part of this Agreement.
Section
7. Entire
Agreement.
Except
as provided in the next sentence, this Agreement sets forth the entire agreement
between the Parties, and fully supersedes any and all prior agreements or
understandings between the Parties, pertaining to the subject matter hereof,,
including, but not limited to, the Promissory Notes, with the exception of
the
agreements, understandings, representations, claims and rights not waived or
released and which are reserved in Section 1 above. Notwithstanding the
foregoing, if either party defaults in any payments due under this Agreement,
or
defaults in any other term or provision of this Agreement, the other party
may
elect to enforce this Agreement, at its sole option and within its sole
discretion.
Section
8. Counterparts.
This
Agreement may be executed in counterparts. Each counterpart shall be deemed
an
original, and when taken together with the other signed counterpart, shall
constitute one fully executed Agreement.
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Section
9. Further
Assurances.
From
and after the date hereof, the parties hereto shall take all actions, including
the execution and delivery of all documents, necessary to effectuate the terms
hereof.
Section
10. Survival.
All
obligations of the Parties as set forth herein shall surVive the execution
and
delivery hereof.
[Remainder
of Page Intentionally Left Blank]
IN
WITNESS WHEREOF, the Parties have caused this Agreement to be entered into
as of
the date first written above.
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/s/ Xxxxxxx
Xxxxxx
Xxxxxxx
Xxxxxx
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/s/
Xxxxxxx Xxxxxx, Xx. 3/21/08
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Xxxxxxx
Xxxxxx, Xx.
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