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JOINT VENTURE/AMI
AGREEMENT
THIS JOINT VENTURE AGREEMENT (the "Agreement") is made and entered into this _______ day of
July, 2006 (the "Effective Date") by and between
Epicenter Oil & Gas, LLC, an
Illinois limited liability company with offices at
_____________________________ (hereinafter referred to as
"Epicenter"),
A
N
D
Indigo-Energy, Inc ., a Nevada
corporation, with offices at __________________________________
(hereinafter referred to as "Indigo").
Epicenter and Indigo will sometimes hereafter be referred to
individually as a Party and collectively as the Parties.
WITNESSETH:
WHEREAS, the Parties are desirous of forming a
joint venture (the "Joint Venture") for the purpose of exploring
and developing oil and/or natural gas from oil and gas horizons
below the base of the New Albany Shale in
__________________________________ Counties, Illinois;
and
WHEREAS, the Parties have identified approximately ________
gross oil and gas leasehold acres, described on Exhibit "A-
-1 " hereto and depicted on the map attached as Exhibit
"B-1" hereto, as containing oil and gas horizons below the base of
the New Albany Shale geologic formations that are to be dedicated
to the Joint Venture, which, together with other oil and gas
leasehold acreage that may be hereafter jointly or severally
acquired by the Parties hereto during the term of the Joint Venture
within _______________________________________ Counties, Illinois,
shall collectively comprise the "Contract Area", as that term may
be used from time to time in this Agreement and in a Joint
Operating Agreement between the Parties hereafter, a copy of which
is attached as Exhibit "C" hereto (the "Operating Agreement").
Further the Parties agree to establish an Area of Mutual Interest
("AMI") encompassing
_____________________________________________________ Counties,
Illinois and depicted on the map attached as Exhibit "B-2".
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NOW THEREFORE, for and in consideration of the
premises and the mutual benefits and obligations described and
contemplated herein, the Parties agree as follows:
ARTICLE I
Consideration
1.1 Payment . At the time of the execution
of this Agreement between the Parties, Indigo will pay Epicenter
$_________________, such payment is consideration for expenses
incurred by Epicenter, its 3 rd party vendors and others
in researching, bidding for and purchasing leases in the Contract
area. In addition Indigo shall be responsible for 100% of all costs
incurred in the leasehold acquisition phase of the Joint Venture,
whether currently incurred or within the three (3) year term of
this Agreement.
1.2 Application of Payments . The fees paid by Indigo to
Epicenter pursuant to Paragraph 1.1 herein, shall collectively
constitute the consideration to be paid by Indigo to Epicenter in
exchange for Indigo's acquisition of a one-half (1/2) interest in
the Joint Venture created pursuant to this Joint Venture Agreement
and a corresponding one-half (1/2) interest in the assets of the
Joint Venture. The assets of the Joint Venture are defined as one
hundred (100%) percent of the oil and gas leasehold acres as
described on Exhibit "A-1" hereto as well as leasehold acres
acquired pursuant to this Joint Venture
Agreement.
ARTICLE II
Area of Mutual Interest
2.1 Creation of the AMI . Pursuant to this
Joint Venture Agreement the Parties hereby create an Area of Mutual
Interest, which shall include all oil and gas interests below the
base of the New Albany Shale geologic formations within
______________________ Counties, Illinois. The oil and gas
leasehold acres described on Exhibit "A" hereto and depicted on the
map attached as Exhibit "B-1", together with other oil and gas
leasehold acreage that may be hereafter jointly or severally
acquired by the Parties hereto during the term of the Joint Venture
within ______________________ Counties, Illinois, shall
collectively comprise the "Contract Area", as that term may be used
from time to time in this Agreement and in the Operating Agreement.
In all respects, during the term of the Joint Venture, the Parties
hereto shall own an equal fifty (50%) percent interest in the Area
of Mutual Interest and each shall be entitled to participate in any
oil and gas leasehold, mineral, royalty, overriding royalty and
related interests heretofore or hereafter acquired by the Parties
during the term of the Joint Venture
within the AMI on an
equal fifty (50%) percent basis.
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2.2 After Acquired Interests . During the
term of this Joint Venture Agreement, should either Party hereto
(the "Acquiring Party") acquire any oil and gas leases or any
interests therein, any unleased mineral interest or any farmouts or
other contracts with respect thereto which affect lands and
minerals lying within the AMI (the "Interests"), the Acquiring
Party shall promptly advise the other Party (the "Offeree") of such
acquisition. Each Offeree shall have the right to acquire its
proportionate interest in such Interest in accordance with the
other provisions of this AMI. Promptly upon acquiring such
Interest, the Acquiring Party shall, in writing, advise the Offeree
of such acquisition. The notice shall include a copy of all
instruments of acquisition including, by way of example but not of
limitation, copies of the leases, plats or maps of the leased
lands, and any assignments, subleases, farmouts or other contracts
affecting the Interests. The Acquiring Party shall also include an
itemized statement of the actual costs and expenses incurred by the
Acquiring Party in acquiring such Interest, excluding the costs and
expenses of its own personnel (the "Acquisition Costs"), provided
however, should the Acquiring Party utilize its personnel to
perform field lease broker/contract land services beyond the normal
administrative services performed by staff land personnel, their
costs and expenses directly attributable to the acquisition of a
Interest may be included in the Acquisition Costs, provided that
such costs and expenses are commensurate with the normal, customary
and prevailing rate for like services performed by contract land
service providers. The Offeree shall have a period of thirty (30)
days after receipt of such notice within which to furnish the
Acquiring Party written notice of its election to acquire its
proportionate interest in the offered Interest. If, however, a well
in search of oil or gas from the horizons below the base of the New
Albany Shale geologic formations, is being drilled by a third-party
within one mile of the acquired interest, either within the AMI, or
at a location within one (1) mile of the AMI or the receipt of
seismic data is imminent, of which the result could be expected to
materially affect the value of the offered Interest, the Offeree
shall have a period of forty-eight (48) hours after receipt of the
notice within which to elect to acquire its proportionate Interest
in the Interest so offered. It is provided, however, that the
forty-eight (48) hour election period shall not apply unless the
Acquiring Party shall give the written notice to the Offeree within
forty-eight (48) hours after the date on which the Acquiring Party
acquired the Interest so offered. In addition thereto, the
Acquiring Party shall also:
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(i) furnish the Offeree with the approximate
location of the well then being drilled and the name of the
Operator or drilling contractor drilling the well,
and/or
(ii) advise the Offeree of the specific seismic
data which when received may confirm or condemn the offered
Interest, and/or
(iii) specifically advise the Offeree that the
Offeree shall have a period of forty-eight (48) hours within which
to elect an interest in the offered Interest.
The above information shall be in addition to the
information and copies of instruments provided for above in
connection with usual notices of acquisition of an Interest. If the
Acquiring Party shall not have received actual written notice of
the election of the Offeree to acquire its proportionate interest
within the thirty (30) day or forty-eight (48) hour period, as the
case may be, such failure shall constitute an election by Offeree
not to acquire its interest in the Interest. Upon the Offeree's
election to acquire its proportionate interest in the Interest, the
Acquiring Party shall invoice the Offeree for its proportionate
part of the Acquisition Costs. The Offeree shall immediately
reimburse the Acquiring Party for its share of the Acquisition
Costs, as reflected by the invoice. Upon receipt of such
reimbursement the Acquiring Party shall execute and deliver an
appropriate assignment to the Offeree. If the Acquiring Party does
not receive the amount due from the Offeree within thirty (30) days
after the receipt by the Offeree of the invoice for its costs, the
Offeree shall have no further right to acquire an interest in the
offered Interest, and the Acquiring Party shall be free to develop
the offered Interest without any right of participation by the
Offeree and such Interest shall not become a part of the Contract
Area.
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2.3 Assignments of Interests . Any
assignment made by the Acquiring Party shall be made without
warranty of title, either express or implied, even with regard to
the return of the purchase price; however, with full substitution
and subrogation of Offeree in and to all representations and
warranties of every kind and character theretofore given or made to
the Acquiring Party and Acquiring Party's predecessors in title by
others with respect to the Interest assigned, and shall be free and
clear of any reservations, burdens, liens or encumbrances
whatsoever by, through or under the Acquiring Party. The assignment
shall be made and accepted subject to, and Offeree shall expressly
assume its portion of, all of the obligations of the Acquiring
Party. The delivery and recordation of such assignment shall
conform to the terms and provisions of any third-party agreements
that may limit, restrict or prohibit such assignment.
2.4 Partial Interests Outside the AMI . If the Interest
covers lands both within and without the AMI, the Acquiring Party
will offer the entire Interest to the Offeree. If the entirety of
the premises covered the Interest is accepted by Offeree, the lands
lying outside the AMI shall become a part of the AMI provided for
in this Agreement, as well as the Contract Area under the Operating
Agreement, but the AMI shall not thereby be enlarged.
2.5 Rejection of Interests . Any interest not subscribed
for will be retained by the Acquiring Party. Additionally, such
Interest shall no longer be subject to this Agreement. Provided
however, that if such Interest or a portion thereof is included in
a well spacing and drilling unit created pursuant to any regulation
and/or rule of the Oil and Gas Conservation Commission of the
Department of Environmental Protection of the Commonwealth of
Illinois under the Oil and Gas Conservation Law, then and in such
event Exhibit "A" to the Operating Agreement shall be revised to
reflect the proportionate ownership of the Parties on an acreage
basis within such unit.
2.6 Term of the AMI . The AMI created hereunder shall
remain in effect for a period of three (3) years from the date
hereof unless sooner terminated or extended by mutual written
consent of the Parties. Immediately following the expiration of the
term of the Joint Venture, the Parties shall designate in writing
the oil and gas leasehold, mineral, royalty, overriding royalty and
related
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