Exhibit 10.1
Service and Drill Contract
By and Between
Indigo Energy and Falcon Holdings LLC
This contract is made by and between INDIGO LAND AND DEVELOPMENT, INC. (INDIGO)
of 4100 Meadowhill Lane, Fairfax Virginia 22033 (hereinafter called INDIGO) and
Falcon Holdings LLC (FALCON) of 104 Railroad Street, Mannington, West Virginia
26582 (hereinafter called FALCON) for one dollar, cash paid in hand, hereby
acknowledged by signing of this contract and other valuable considerations to be
provided below:
Recitals
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Where as, FALCON, a West Virginia LLC is in the business of locating, acquiring
and drilling oil and gas plays in the State of West Virginia.
Whereas FALCON is in need of having certain entities such as INDIGO to provide
oil and gas drilling areas for exploitation AND drilling.
Where as, INDIGO is in need of having FALCON to do all the permitting, drilling
and finishing of oil and gas wells on their properties in PENNSYLVANIA and WEST
VIRGINIA.
Therefore, in consideration of the mutual promises set forth below and other
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, it is agreed as follows:
Drilling Program
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FALCON will drill one well per week beginning the first or second week of
October 2005 for a period of time necessary to drill fifty wells (50 wells) for
the Indigo Energy Drilling Program. All activities necessary to permit until
completed is in the hands of FALCON as sub contractor to Indigo. Failures of
geologic structure or non availability of supplies or equipment are the only
reasons for slow down or stoppage of this very important project for Indigo
Energy.
Confidentiality and Fee Structure
---------------------------------
INDIGO and FALCON agree that FALCON will do all these activities for a profit
fee of twenty thousand per well and forty thousand per well G and A cost on all
the wells drilled on INDIGO property and these figure and this entire contract
will be maintained as confidential to all other parties. Cost figures are in
attachment A.
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Effects on the Failure of one Paragraph on Legal Status of Others
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If any of the headers or legal materials within a paragraph fails due to legal
problems its failure will not adverse affect the meaning or enforcement of all
other paragraphs either alone or collectively.
Arbitration
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In cases where arbitration is necessary INDIGO and FALCON elect to use the Board
of Arbitration of the District of Columbia as the first remedy to a solution to
an issue prior to alerting any court in the State of West Virginia of a
potential legal action through suits.
Accounting
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FALCON shall maintain records in sufficient detail for purposes of determining
the cost of operations from permitting to inline gas and oil in tank, including
but not limited to pump horses and motors, if needed FALCON shall provide INDIGO
with a monthly written accounting that sets forth the manner in which the
expenses were paid and receipts for same. This information is essential for tax
purposes on the part of INDIGO. INDIGO ENERGY will be operating as a public
company and must meet customary and ordinary standards of the industry
Audit Rights
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The following audit provision shall continue through the term of this Agreement
and shall survive the termination of this Agreement for one year as applicable
to commission payment obligations prior to such termination. FALCON shall have
the right once every twelve months to audit the records and accounts of INDIGO
for the limited purpose of establishing the amount of the ROYALTY payable
hereunder. A certified public accounting firm paid for solely by FALCON shall
conduct such audit. Any accounting firm retained for this purpose shall be
adequately bound to keep confidential all information of FALCON obtained during
the course of or pursuant to the audit. In the event that any underpayment shall
be determined, such underpayment shall be corrected by appropriate adjustment in
payment that shall be due and payable within 30 days of the date of the
completion of the audit. In the event an audit reveals a discrepancy in the
amount owed to FALCON and paid by INDIGO of at least 1%, the discrepancy shall
be corrected within thirty days and the reasonable expenses of said audit shall
be paid for by INDIGO.
Term and Termination
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The term of the agreement will be from the Effective Date until wells no longer
produce oil and gas and are transferable to FALCON's heirs, assigns, trustees or
will listed persons. If either party notifies the other party of a default, the
notified party has 30 days to remedy the default.
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Payment Terms
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INDIGO will pay for services to FALCON be fore they occur or just after they
occur. The 20,000 profit per well will be paid half up front and half when the
well is in line with a meter on it.
Notices
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All notices shall be in writing and shall be deemed given (a) when delivered by
hand, fax (confirmed by regular mail) or courier, or (b) three days after
postmark of certified or registered mail, postage prepaid, and return receipt
requested. Notice to a party shall be given to the address set forth in the
preamble, or to such other address as may be subsequently designated pursuant to
proper notice by either party.
Indemnity
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Each Party shall indemnify, defend and hold harmless the other from any asserted
third party claims of liability, loss, damages, costs or expenses alleged to
have occurred due to the he intentional or negligent acts or emissions of the
offending Party or its officers, employees, agents or sub- representatives.
Warranty of Authority
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Each person signing this Agreement on behalf of an entity warrants that he or
she has the authority to bind said entity by signing this Agreement.
Entire Agreement
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This is the entire agreement and there are no others, either written or verbal,
which can take its place without the express written permission of all
signatories to this contract. IN WITNESS WHEREOF, the undersigned, being
properly authorized to execute this Agreement as of the date first set above
written, hereunto sets their hand and seat. Executed effective as of the date
first set forth in this Agreement. This agreement may be signed all or in part.
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In witness whereof we all put appropriate signatories as persons or
corporations to this contract to make it effective and legal.
JERRY A. MOORE, PRESIDENT,
INDIGO LAND AND DEVELOPMENT, INC. TA Indigo Energy (NASDAQ)
LENNIE STAFFORD, SR, MEMBER
FALCON HOLDINGS, LLC
LENNY STAFFORD, MEMBER
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FALCON HOLDINGS, LLC
September 2005
NOTARIZATION OF FALCON HOLDINGS LLC BY AN INDEPENDENT NOTARY IS REQUIRED FOR
SIGNATURE VERIFICATION
Attachment
FALCON HOLDINGS 20 WELL DRILLING PROGRAM
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EXHIBIT A
FALCON HOLDINGS, LLC
COMPARATIVE
AUTHORIZATION FOR EXPENDITURE (AFE)
INTANGIBLES: 2005
1. Title Opinion, Abstract and Legal $2,500
2. Access Road $5,500
3. Well Location Damages $3,500
4. Drilling and Liners $53,000
5. Well Locations $13,500
6. Service Rig and Frac Equipment $9,500
7. Water Hauling $7,500
8. Logging $5,600
9. Perforation $4,000
10. Stimulation (Frac) $43,010
11. Cement 4 1/2" $9,875
12. Cement 7" $6,580
13. Cement 9 5/8" $4,975
14. Township and State Road Bonds & Permits $1,800
15. Well Surveys and Permits $3,500
16. Environmental Plans and Permits $2,000
17. Profit to Falcon on operations per wll $20,000
18. Supervision and Overhead (Administration) $40,000
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SUBTOTAL INTANGIBLES $236,840
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TANGIBLES:
1. Casing and Production String (4200') $54,500 *
2. Flowlines and Fittings $10,260
3. Tank $4,500
4. Heater $700
5. Meter $6,000
6. Well Head $3,500
7. Rights of Way $4,000
8. Kimray Valve 3" $3,500
9. Gates $1,200
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SUBTOTAL TANGIBLES $88,160
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TOTAL PER WELL $325,000
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*Subject to manufacturers steel price at time of delivery