ex10-88.htm


    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:

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

     

    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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