LETTER AGREEMENT
This Letter Agreement is made this
20th
day of May, 2009, by and between the following:
Indigo-Energy,
Inc. (“Indigo”); Epicenter Oil & Gas, LLC (“Epicenter”); Spectrum
Facilitating Technologies, LLC (“Spectrum”); and Xxxxxxxx Xxxxx, PhD
(“Consultant”).
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1.
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Indigo
and Epicenter have drilled four (4) xxxxx in Dubois Field, Xxxxxx County,
Indiana, for the production of natural gas and/or oil, including one
vertical well and two horizontal xxxxx in the New Albany Shale, and one
horizontal well in the Devonian
limestone.
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2.
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Additional
funds are needed to complete the four xxxxx and place them into
production. Spectrum has arranged for said financing to
accomplish the foregoing in the amount of $5,000,000 (five million
dollars).
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3.
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Indigo
and Epicenter have reached an accord with respect to the use of said
$5,000,000 as defined below for the placing of the Xxxxxx Field into full
operation and production.
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The
parties agree as follows:
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A.
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Numbers
1, 2 and 3 above are true and correct, and by reference are incorporated
into this Agreement.
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B.
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Spectrum
shall arrange for funding in the amount of $5,000,000 which shall be
deposited into a bank account subject to the control and direction of
Spectrum. The amount of funds drawn down from said $5,000,000
shall bear interest at the rate of 10% (ten percent) per
annum. Interest shall be paid annually with the first payment
being due on or before one year from the date of first disbursement of any
funds from said bank account, or upon repayment of the $5,000,000,
whichever is first.
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C.
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Indigo
and Epicenter shall form a new LLC (“Newco”)for the purpose of executing
the terms of this Letter Agreement, and shall have two Managing Members,
Xxxxxx Xxxxxxx from Epicenter directing all well and field related
operations and Xxxxxxx X. Xxxxxx from Indigo directing all administrative
and accounting functions. Newco shall be owned 50% (fifty
percent) by Indigo and 50% (fifty percent) by Epicenter. Newco
shall open a bank account into which disbursement of funds from the
Spectrum account shall be deposited. Withdrawals from said
account shall be made based upon written requests. Disbursements from the
Newco account shall not exceed the following amounts, and are to be used
for the following purposes:
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1
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600,000
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Indigo
overhead and expenses for 4 months
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1,900,000
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Current
well payables
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750,000
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4
xxxxx completion expenses
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280,000
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Xxxxxx
Field and Reef overhead and field operations for 4
months
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500,000
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$300,000
initial and two 100,000 monthly payments toward
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forbearance
of Reef LLC to retain rights in the XxXxxx field
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250,000
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Epicenter
overhead and expenses
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720,000
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Contingent
expenses and working capital
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5,000,000
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total
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D.
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Any
funds remaining in the Spectrum account following all disbursements and
all expenditures shall be applied to repayment of borrowed funds and any
interest due.
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E.
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Once
production from the Xxxxxx field is confirmed by Spectrum, a second phase
of funding shall be secured by Spectrum. Epicenter shall
receive $50,000,000 (fifty million dollars) and Indigo shall receive
$50,000,000 (fifty million dollars) with said sums to be used for each
company’s respective projects. In addition, Epicenter shall
purchase all of Indigo’s interest in the XxXxxx field as described in Item
#1 above, for an amount to be mutually agreed upon. Following
the closing of said purchase Newco shall be liquidated and
dissolved.
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F.
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Upon
the funding of the initial $5,000,000, Indigo shall execute and deliver a
release to Spectrum, International Finance, LLC, and Xxxxx
Xxxxxxx. Upon the funding of $50,000,000 each to Indigo and
Epicenter, Indigo, Epicenter, Xxxxxx X. Xxxxxxx and Xxxxx X. Xxxxxxxxxx
shall execute and deliver mutual
releases.
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G.
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One
hundred percent (100%) of the Working Interest from the sale of production
in theDuBois xxxxx as described in Item #1 above shall be deposited into
Newco as workingcapital until the entire $5 million is repaid or Newco is
dissolved..
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The
parties signify their acceptance of the terms and conditions of this Letter
Agreement by their signatures below.
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By:
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/s/
Xxxxxx X. Xxxxxx
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Xxxxxx
X. Xxxxxx, CEO
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Epicenter
Oil & Gas, LLC
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By:
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/s/ Xxxxxx X. Xxxxxxx
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Xxxxxx
X. Xxxxxxx, Managing Member
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By:
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/s/ Xxxxx X. Xxxxxxxxxx
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Xxxxx
X. Xxxxxxxxxx, Managing Member
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Spectrum
Facilitating Technologies, LLC
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By:
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/s/
Xxxxx Xxxxxxx
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Xxxxx
Xxxxxxx
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Consultant
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By:
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/s/ Xxxxxxxx Xxxxx
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Xxxxxxxx
Xxxxx,
PhD.
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3
