Exhibit 10.88
 
SETTLEMENT AGREEMENT
 
This Settlement Agreement (“Agreement”) is made by and between Lara Energy, Inc.
(“Lara”),  and J & P Family Properties, Ltd. (“J&P”), and Gulf Coast Oil
Corporation (“Gulf Coast”), effective the 24th day of July, 2008.
A.  Recitals
 
1.           On or about June 30, 2006, J&P, Lara and Gulf Coast entered into a
Asset Purchase Agreement relating to the Mustang Creek Prospects in McMullen and
Atascosa Counties, Texas.
 
2.           On or about June 30, 2006, J&P, Lara, and Gulf Coast entered into a
letter agreement that agreed to create and continue the Area of Mutual Interest
(“AMI”) established in the Geophysical Exploration Agreement dated January 8,
2004 by and between Manti Resources, Inc., J&P and Lara (“GEA”).
 
3.           A dispute has risen as to the parties’ obligations under these
agreements as referenced in letters dated February 5, 2008 and March 14, 2008
from Mr. David Prehn, and the letter dated May 30, 2008 from Mr. Paul Kratzig
(hereinafter the “Claims”).
 
4.           Gulf Coast has denied, and continues to deny, all of the Claims.
 
5.           In order to avoid the uncertainties, annoyance and expense of
litigation, and for and in consideration of the agreements, covenants and
releases set forth herein, all the parties hereto have agreed, without any party
making any admission to any other party, to do the following: (1) to fully
compromise and settle the Claims and (2) to further clarify and define the AMI
as a part of such settlement.
 
B.  Agreements, Covenants, and Release
 
1.            With regard to the AMI, the parties agree as follows:
 
 
 

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a.           The Area of Mutual Interest (“AMI”) is defined as approximately
41,600 acres of land, more or less, in McMullen and Atascosa Counties, Texas,
that is outlined in magenta on the plat attached hereto as Exhibit A, said acres
of land being the same land which was denominated as Phase I in paragraph 2.4
and 2.12 of the Geophysical Exploration Agreement between Manti Resources, Inc.
and J&P and Lara dated January 8, 2004.
 
b.           The parties agree that the AMI, together with any other
restrictions or burdens on any party’s abilities to lease within the relevant
acreage, shall terminate for all parties on January 8, 2014.
 
2.           Gulf Coast shall make the following assignments of overriding
royalty interests to J&P and Lara, effective as first production from such
wells:
 
Well name and number
ORRI to Lara
ORRI to J&P
Rabke #2
1.125%
1.125%
Rabke #3
1.125%
1.125%
Rabke #4
1.125%
1.125%
Rabke-Maspero Oil Unit 1
Previously assigned
Previously assigned
Double K #4
1.50%
1.50%
Double K # 5
1.50%
1.50%
Double K #6
1.50%
1.50%

 
 
 
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3.           With respect to: (1) any wells drilled on any additional leases
hereafter acquired within the AMI through January 18, 2014, irrespective of
origin, and (2) any wells put on production prior to January 18, 2014, on leases
already acquired by Gulf Coast, irrespective of origin, Gulf Coast will make an
assignment (to the extent that the same has not already been made by Gulf Coast
or Manti) of an overriding royalty interest in favor of J&P and Lara, equal to
the positive difference (if any) between (a) 23% of 8/8ths and (b) the sum of
(i) lessor’s royalty burden; and (ii) other revenue burdens attributable
thereto, but only to the extent the same existed in favor of third parties prior
to acquisition by Gulf Coast, determined on a lease by lease basis; in no event,
however, shall the overriding royalty interest ever exceed 3% of the
8/8ths.   In the event that Gulf Coast’s acquisition is of less than the entire
working interest the overriding royalty shall be proportionately reduced.
 
4.           Gulf Coast shall have no other obligation to make any assignments
of any interests to J&P or Lara except as stated in 2 and 3 above.  Furthermore,
notwithstanding anything herein to the contrary, the provisions of paragraphs
3.2 and 3.3 of the GEA shall continue to be fully effective in accordance with
the terms of that agreement.
 
5.           In further consideration of the agreements, covenants and releases
set forth herein, Gulf Coast makes payment with the execution of this Settlement
Agreement of sums due to Lara and J&P as set out in the schedule attached hereto
as Exhibit B, which payments represents the amounts attributable to the ORR on
the wells indicated in said schedule: $32,860.19,  to Lara (Fed Tax ID #
74-2685513) and $32,860.19_ to J&P (Fed Tax ID #20-2695028), which payments are
in full satisfaction of the revenue, net of severance taxes, attributable to the
overriding royalty interests described in said schedule (Exhibit B) accrued from
the date of first production obtained by Gulf Coast through April 2008
production/   Payments attributable to the other wells identified, as noted in
paragraph 2 above, together with production from subsequent wells drilled and
produced within the AMI (i.e., those as to which an overriding royalty interest
is due to Lara and J&P) shall be made concurrently with payment of royalty
attributable to such leases
 
 
 
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6.           In further consideration of the agreements, covenants and releases
set forth herein, Lara, individually and on behalf of its officers, agents,
representatives, and assigns hereby RELEASES, ACQUITS, and FOREVER DISCHARGES
Gulf Coast, together with its directors, officers, owners, affiliates,
employees, agents, shareholders, representatives, heirs, assigns, legal
representatives, predecessors, successors, partners, related and affiliated
entities, and subsidiary and parent organizations, from and against any and all
claims, demands, damages, obligations, liabilities and causes of action, of any
nature whatsoever, at law or in equity, asserted or unasserted, known or
unknown, fixed or contingent, liquidated or unliquidated, including but not
limited to, any and all claims, demands, liabilities, obligations or causes of
action asserted in or which could have been asserted in the Claims; save and
except that the obligations of the parties pursuant to this Settlement Agreement
shall survive and continue.
 
7.           In further consideration of the agreements, covenants and releases
set forth herein, J&P, individually and on behalf of its officers, agents,
representatives, and assigns hereby RELEASES, ACQUITS, and FOREVER DISCHARGES
Gulf Coast, together with its directors, officers, owners, affiliates,
employees, agents, shareholders, representatives, heirs, assigns, legal
representatives, predecessors, successors, partners, related and affiliated
entities, and subsidiary and parent organizations, from and against any and all
claims, demands, damages, obligations, liabilities and causes of action, of any
nature whatsoever, at law or in equity, asserted or unasserted, known or
unknown, fixed or contingent, liquidated or unliquidated, including but not
limited to, any and all claims, demands, liabilities, obligations or causes of
action asserted in or which could have been asserted in the Claims; save and
except that the obligations of the parties pursuant to this Settlement Agreement
shall survive and continue.
 
 
 
 
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8.           In further consideration of the agreements, covenants and releases
set forth herein, Gulf Coast, individually and on behalf of its officers,
agents, representatives, and assigns hereby RELEASES, ACQUITS, and FOREVER
DISCHARGES Lara, together with its directors, officers, owners, affiliates,
employees, agents, shareholders, representatives, heirs, assigns, legal
representatives, predecessors, successors, partners, related and affiliated
entities, and subsidiary and parent organizations, from and against any and all
claims, demands, damages, obligations, liabilities and causes of action, of any
nature whatsoever, at law or in equity, asserted or unasserted, known or
unknown, fixed or contingent, liquidated or unliquidated, including but not
limited to, any and all claims, demands, liabilities, obligations or causes of
action asserted in or which could have been asserted in the Claims; save and
except that the obligations of the parties pursuant to this Settlement Agreement
shall survive and continue.
 
9.           In further consideration of the agreements, covenants and releases
set forth herein, Gulf Coast, individually and on behalf of its officers,
agents, representatives, and assigns hereby RELEASES, ACQUITS, and FOREVER
DISCHARGES J&P, together with its partners, officers, owners, affiliates,
employees, agents, shareholders, representatives, heirs, assigns, legal
representatives, predecessors, successors, partners, related and affiliated
entities, and subsidiary and parent organizations, from and against any and all
claims, demands, damages, obligations, liabilities and causes of action, of any
nature whatsoever, at law or in equity, asserted or unasserted, known or
unknown, fixed or contingent, liquidated or unliquidated, including but not
limited to, any and all claims, demands, liabilities, obligations or causes of
action asserted in or which could have been asserted in the Claims; save and
except that the obligations of the parties pursuant to this Settlement Agreement
shall survive and continue.
 
 
 
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10.          In further consideration of the agreements, covenants and releases
set forth herein, Lara and J&P represent and warrant that they are the lawful
owners of the Claims and have not assigned, transferred, encumbered or sold the
Claims in whole or in part.
 
11.          No party to this Agreement makes any acknowledgment or admission of
any liability to any other party to this Agreement, and each party expressly
agrees that this Agreement is made for the sole purpose of compromising a claim
that is disputed as to validity and amount.
 
12.          Each party represents that they have carefully read and fully
understand all of the provisions of this Agreement, that they have been given
the opportunity to fully discuss the contents of this Agreement with independent
counsel of their choice and have done so, and that by executing the agreement,
each party relies entirely on its own judgment and the advice of their
respective counsel and not upon any representation, statement or promise, not
otherwise set forth in this Agreement, of any of the other parties, their
attorneys or other individual or entity, and that it is voluntarily and without
duress entering into this Agreement.
 
13.          Each party further represents that they have the authority to
execute this document to be fully binding on behalf of the person or entity
indicated.
 
14.          This Agreement may be executed in multiple counterparts, all of
which, taken together, shall constitute but a single agreement, and each of
which shall be deemed an original.
 
15.          This Agreement shall be governed and construed by the laws of the
State of Texas, without regard to the choice of law rules of Texas or any other
jurisdiction.
 
 
 
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16.          The language of all parts of the Agreement shall in all cases be
construed as a whole according to its fair meaning and not strictly construed
for or against any party.  The parties agree that this Agreement shall be deemed
to have been jointly drafted for purposes of applying any rules of construction.
 
17.          Should any part, term or provision of this Agreement be declared or
determined by any Court or body of competent jurisdiction to be illegal,
invalid, or unenforceable, the legality, validity and enforceability of the
remaining parts, terms or provisions shall not be affected thereby and said
illegal, unenforceable or invalid part, term or provision shall not be deemed to
be a part of this agreement.
 
18.          Each party shall be responsible for their own attorneys’ fees and
all other costs.
 
19.          This Agreement reflects the entire agreement between the
parties.  There are no other agreements, either written or oral, and the
execution and delivery of this written Agreement supersedes any and all prior
representations, negotiations or agreements pertaining to the subject matter
thereof.
 
20.          The parties agree to execute and promptly file in the appropriate
county records a memorandum making reference to this agreement.
 
EXECUTED effective as of the date stated above.
 

 
Gulf Coast Oil Corporation
     
By: /s/ Edward R. DeStefano
 
Its President
         
J & P Family Properties, Ltd.
     
By: /s/ Jim Wheeler, President J&P Oil and Gas, Inc.
 
Its general partner
         
Lara Energy, Inc.
         
By: /s/ John Hearn
 
Its President
  07/25/08

 
 
 
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