Document:

Unassociated Document

    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.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    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.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    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.

     

    
      	 	 	 
	 	
              INDIGO-ENERGY,
                INC.

            
	 
 	 
 	 
 
	 	
              
By:  
	 	Title:
	 	Date: 
	 	 
	 	 
	 	
              /s/ Kirsten
                Braatz

              
                

              

              Kirsten
                Braatz

            
	 	 
	 	 
	 	
              /s/
                William Wenzel, Jr. 3/21/08 

            
	 	
              

              William
                Wenzel, Jr.

            

    

     

     

    
      
         

      

      
        3Unassociated Document

    GLOBAL
      SETTLEMENT AGREEMENT

     

    This
      Modification and Settlement Agreement (the “Agreement”)
      is
      made and entered into as of this day of March 2008 by Indigo-Energy, Inc.,
      a
      corporation organized under the laws of the State of Nevada (the “Company), on
      the one hand, and the individuals listed in Schedule A hereof (the
“Developers”), on the other hand (together with the Company, the
“Parties”).

     

    WHEREAS,
      the
      Company previously entered into various agreements with each of the Developers,
      including but not limited to the Limited Partnership Agreement dated as of
      July
      7, 2006 whereby the Developers were granted interests (the “LP Interests”) in
      Indigo- Energy Partners, LP (“Indigo LP”) and accordingly became limited
      partners of Indigo LP, pursuant to which the Company agreed to grant each of
      the
      Developers certain interests in the Company’s assets, including interests in the
      wells owned and/or operated by the Company as defined in the Indigo Energy
      Partners L.P. Agreement (the “Old Agreements”);

     

    WHEREAS,
      the
      Parties have agreed that it is in all of their interests to modify all of the
      terms provided under the Old Agreements, including those terms relating to
      past
      and future payments to be received by the Developers from revenue generated,
      earned or to be generated or earned from the Company’s wells, as well as any
      interest in such wells that may be have been granted to the
      Developers;

     

    WHEREAS,
      the
      Company desires for the Developers to give up their LP Interests in order for
      the Company to be in a position to dissolve Indigo LP; and

     

    WHEREAS,
      the
      Company has offered and the Developers have agreed to accept modifications
      to
      the terms and condition provided in the Old Agreements, subject to the
      provisions set forth herein,

     

    NOW
      THEREFORE,
      the
      Parties hereto agree as follows:

     

    Section
      1.   Release.
      Effective upon the execution of this Agreement, the Developers hereby release
      the Company, its agents, employees, directors, officers, consultants and
      affiliates from any liability relating to, arising out of or by virtue of the
      Old Agreements, except the obligation to make payments and issue stock warrants
      as set forth below. Further, also upon execution of this Agreement, the Company
      (which includes its officers, directors, shareholders, agents, employees,
      consultants, attorneys, parent, subsidiary and affiliated companies), hereby
      releases the Developers, which includes their agents, employees, directors,
      officers, attorneys, consultants, affiliates, heirs, successors and assigns
      from
      any liability to the Company or any other person or entity, relating to, arising
      out of or by virtue of the Old Agreements. This Release, and the remainder
      of
      this Agreement, does not apply to the Modification and Settlement Agreements
      and
      underlying Promissory Notes related to Indigo Well #2.

     

    Section
      2.   Cancellation
      of LP Interests.
      Effective upon execution of this Agreement by all parties, the Developers hereby
      surrender all of their LP Interests and recognize that such LP Interests, will
      be cancelled, that Indigo LP will be dissolved, and that the old Agreements
      will
      be terminated. A general description of the LP Interests being cancelled are
      set
      forth on Schedule A hereto.

     

    Section
      3.   Consideration.
      As
      consideration for this Agreement, the Parties hereby agree as
      follows:

     

    a.  Settlement
      Amounts
      - The
      Company agrees to pay to the Developers, on a pro-rata basis, an aggregate
      amount of Fifty Thousand Dollars ($50,000) a month for a period of thirty-six
      (36) months commencing on the date on which the Company receives funding,
      regardless of the source of such funding, in the aggregate amount of at least
      Ten Million Dollars ($10,000,000). The Developers understand that the Company
      will not be in a position to make such payments, as set forth in this paragraph,
      until the Company receives the funding described herein. The monthly payments
      to
      be paid to each Developer under this Agreement are set forth in Schedule B
      hereto. In the event that the Company has not commenced any payments by January
      1, 2009, regardless of whether it has received funding of at least $10,000,000,
      or if the Company defaults on any payments hereunder, the Developers have the
      right to seek judicial enforcement of the Company’s obligation to pay the
      Settlement Amounts, and the Release in Section 1 hereof shall be null and void
      and the Developers shall be permitted to pursue any and all claims and remedies
      they may have under the Old Agreements, under this Agreement or under any other
      applicable agreement(s), and any claims and remedies related thereto, against
      any or all persons or entities, including the parties to this Agreement, which
      includes but is not limited to their officers, directors, shareholders, members,
      agents, employees, consultants, attorneys, parent, subsidiary and affiliated
      companies.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    b.  Additional
      Consideration
      - As
      additional consideration to induce the Developers to enter into this Agreement,
      the Company also agrees to and will issue concurrently on the date hereof to
      each of the Developers, three (3) warrants to purchase shares of the Company’s
      common stock (the “Warrants”), for each dollar originally invested. The amount
      invested by each of the Developers and the amount of Warrants that will be
      issued to each investor is set forth on Schedule C hereto, Each Warrant shall
      be
      exercisable for a period of seven years beginning on October 1, 2008 and shall
      entitle the holder thereof to the right to purchase one (1) share of the
      Company’s common stock at a price of $0.25 per share. The form of warrant is
      attached as Exhibit A hereto. If the Company fails to make payment of any
      Settlement Amount under subparagraph (a) above, or otherwise fails to comply
      with any term of this Agreement, the Developers shall retain the Warrants issued
      hereunder and, additionally, shall be permitted to pursue any and all of the
      claims and remedies more fully described in subparagraph (a) above.

     

    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 had the opportunity to be 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 Old Agreements. Notwithstanding the
      foregoing, if the Company defaults with regard to payment of any Settlement
      Amounts due under this Agreement, or defaults in any other term or provision
      of
      this Agreement, the Developers may elect to enforce this Agreement, at their
      sole option and within their sole discretion, or may pursue any and all claims
      and remedies reserved under paragraphs 3(a) and (b) above. Such claims and
      options are cumulative, such that the Developers may pursue any all claims
      and
      remedies without restriction or need for election. Further, and as set forth
      above, this Agreement does not apply to the Modification and Settlement
      Agreements and underlying Promissory Notes related to Indigo Well
      #2,

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    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.

     

    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.

     

     

    IN
      WITNESS WHEREOF, the Parties have caused this Agreement to be entered into
      as of
      the date first written above.

     

    
      	 	 	 
	 	
              INDIGO-ENERGY,
                INC.

            
	 
 	 
 	 
 
	
            	 	
              /s/
                Stanley Teeple 

            
	 	
              

              By: Stanley
                Teeple

            
	 	
              Title: CFO

            
	 	
              Date: 31
                Mar 08

            
	 	 
	 	 
	 	
              
 
	 	 
	 	
              
 
	 	 
	 	
              
 

    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    Schedule
      A

     

    
      	
              Partner
                Participant 

            	 	
              %
                Total Partnership

            	 
	
              Jim
                Walter, Sr. 

            	 	
              18.18

            	 
	
              Tammy
                Walter 

            	 	
              14.77

            	 
	
              Steve
                Durdin 

            	 	
              13.64

            	 
	
              Bill
                Wenzel, Jr. 

            	 	
              11.36

            	 
	
              Dennis
                Ramos 

            	 	
              6.82

            	 
	
              Jim
                Salasin 

            	 	
              7.95

            	 
	
              Bill
                Wenzel, Sr. 

            	 	
              6.82

            	 
	
              Jerry
                Braatz, Sr. 

            	 	
              5.68

            	 
	
              Jim
                Dunn 

            	 	
              4.55

            	 
	
              Kirsten
                Braatz 

            	 	
              3.41

            	 
	
              Henry
                Cobb 

            	 	
              1.14

            	 
	
              Don
                Blatherwiek 

            	 	
              1.14

            	 
	
              JJ
                Johnson 

            	 	
              2.27

            	 
	
              Bruce
                Muhlburger 

            	 	
              2.27

            	 
	 	 	 	 
	
              TOTAL
                

            	 	
              100

            	 

    

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    Schedule
      B

     

    $50,000
      per month

     

    
      	
              Partner
                Participant 

            	 	
              Monthly
                Distribution

            	 
	
              Jim
                Walter, Sr.

            	 	
              $

            	
              9,090.00

            	 
	
              Tammy
                Walter

            	 	
              $

            	
              7,385.00

            	 
	
              Steve
                Durdin

            	 	
              $

            	
              6,820.00

            	 
	
              Bill
                Wenzel, Jr.

            	 	
              $

            	
              5,680.00

            	 
	
              Dennis
                Ramos

            	 	
              $

            	
              3,410.00

            	 
	
              Jim
                Salasin

            	 	
              $

            	
              3,975.00

            	 
	
              Bill
                Wenzel, Sr.

            	 	
              $

            	
              3,410.00

            	 
	
              Jerry
                Braatz, Sr.

            	 	
              $

            	
              2,840.00

            	 
	
              Jim
                Dunn

            	 	
              $

            	
              2,275.00

            	 
	
              Kirsten
                Braatz

            	 	
              $

            	
              1,705.00

            	 
	
              Henry
                Cobb

            	 	
              $

            	
              570.00

            	 
	
              Don
                Blatherwiek

            	 	
              $

            	
              570.00

            	 
	
              JJ
                Johnson

            	 	
              $

            	
              1,135.00

            	 
	
              Bruce
                Muhiburger

            	 	
              $

            	
              1,135.00

            	 
	 	 	 	 	 
	
              TOTAL

            	 	
              $

            	
              50,000.00

            	 

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    Schedule
      C

     

    
      	
              Partner
                Participant

            	 	
              Total
                Investment

            	 	
              #
                Warrants

            	 
	
              Jim
                Walter, Sr.

            	 	
              $

            	
              800,000.00

            	 	 	
              2,400,000

            	 
	
              Tanimy
                Walter

            	 	
              $

            	
              650,000.00

            	 	 	
              1,950,000

            	 
	
              Steve
                Durdin

            	 	
              $

            	
              600,000.00

            	 	 	
              1,800,000

            	 
	
              Bill
                Wenzel, Jr.

            	 	
              $

            	
              500,000.00

            	 	 	
              1,500,000

            	 
	
              Dennis
                Ramos

            	 	
              $

            	
              300,000.00

            	 	 	
              900,000

            	 
	
              Jim
                Salasin

            	 	
              $

            	
              350,000.00

            	 	 	
              1,050,000

            	 
	
              Bill
                Wenzel, Sr. 

            	 	
              $

            	
              300,000.00

            	 	 	
              900,000

            	 
	
              Jerry
                Braatz, Sr. 

            	 	
              $

            	
              250,000.00

            	 	 	
              750,000

            	 
	
              Jim
                Dunn

            	 	
              $

            	
              200,000.00

            	 	 	
              600,000

            	 
	
              Kirsten
                Braatz

            	 	
              $

            	
              150,000.00

            	 	 	
              450,000

            	 
	
              Henry
                Cobb

            	 	
              $

            	
              50,000.00

            	 	 	
              150,000

            	 
	
              Don
                Blatherwick

            	 	
              $

            	
              50,000.00

            	 	 	
              150,000

            	 
	
              JJ
                Johnson

            	 	
              $

            	
              100,000.00

            	 	 	
              300,000

            	 
	
              Brace
                Muhiburger

            	 	
              $

            	
              100,000.00

            	 	 	
              300,000

            	 
	 	 	 	 	 	 	 	 
	
              TOTAL

            	 	
              $

            	
              4,400,000.00

            	 	 	
              13,200,000

            	 

    

    

    
      	
              INDIGO-ENERGY,
                INC. 

            	 	
              WARRANT
                ISSUANCE 

            	 	
              Indigo-Energy
                Partners, LP

            	 
	 	 	 	 	 	 	 	 
	
              March
                31, 2008

            	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	
              Partner
                Participant 

            	 	
              Total
                Investment 

            	 	
              #
                Warrants 

            	 	
              Warrant
                #

            	 
	
              Jim
                Walter, Sr.

            	 	
              $

            	
              800,000.00

            	 	 	
              2,400,000
                

            	 	 	
              001

            	 
	
              Tammy
                Walter

            	 	
              $

            	
              650,000.00

            	 	 	
              1,950,000

            	 	 	
              002

            	 
	
              Steve
                Durdin

            	 	
              $

            	
              600,000.00

            	 	 	
              1,800,000

            	 	 	
              003

            	 
	
              Bill
                Wenzel, Jr.

            	 	
              $

            	
              500,000.00

            	 	 	
              1,500,000

            	 	 	
              004

            	 
	
              Dennis
                Ramos

            	 	
              $

            	
              300,000.00

            	 	 	
              900,000

            	 	 	
              005

            	 
	
              Jim
                Salasin

            	 	
              $

            	
              350,000.00

            	 	 	
              1,050,000

            	 	 	
              006

            	 
	
              Bill
                Wenzel, Sr.

            	 	
              $

            	
              300,000.00

            	 	 	
              900,000

            	 	 	
              007

            	 
	
              Jerry
                Braatz, Sr.

            	 	
              $

            	
              250,000.00

            	 	 	
              750,000

            	 	 	
              008

            	 
	
              Jim
                Dunn

            	 	
              $

            	
              200,000.00

            	 	 	
              600,000

            	 	 	
              009

            	 
	
              Kirsten
                Braatz

            	 	
              $

            	
              150,000.00

            	 	 	
              450,000

            	 	 	
              010

            	 
	
              Henry
                Cobb

            	 	
              $

            	
              50,000.00

            	 	 	
              150,000
                

            	 	 	
              011

            	 
	
              Don
                Blatherwick

            	 	
              $

            	
              50,000.00

            	 	 	
              150,000
                

            	 	 	
              012

            	 
	
              JJ
                Johnson

            	 	
              $

            	
              100,000.00

            	 	 	
              300,000
                

            	 	 	
              013

            	 
	
              Bruce
                Muhiburger

            	 	
              $

            	
              100,000.00

            	 	 	
              300,000

            	 	 	
              014

            	 
	 	 	 	 	 	 	 	 	 	 	 
	
              TOTAL

            	 	
              $

            	
              4,400,000.00

            	 	 	
              13,200,000

            	 	 	 	 

    

     

     

    
      
         

      

      
        6

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