Document:

a6627537ex10_01.htm

Exhibit 10.01

 

 

	  	
Conn’s, Inc.

	  	
3295 College Street

	  	
Beaumont, Texas 77701

 

February 27, 2011

Timothy L. Frank

5010 Eaheart Circle

Beaumont, Texas 77706

Re:           Your Resignation as Chief Executive Officer and President

Dear Tim:

This letter agreement (the “Agreement”) is intended to confirm the details of your resignation as Chief Executive Officer and President of Conn’s, Inc. and all of its subsidiaries, affiliates, and related entities (referred to collectively as the “Company,” “we,” or “our”).  In consideration of the promises and conditions set forth below, and intending to be legally bound, you and the Company agree as follows:

1.             Resignation; Continued Employment:  (a) You agree to resign as an officer and director of the Company effective February 27, 2011 (your “Resignation Date”).

 

(b)           You will continue to be employed by the Company in a non-executive capacity on an at-will basis.  You agree to assist the Company in the orderly transition of your responsibilities, and to perform other services as reasonably requested by the Company.

 

2.             Return of Company Property:  At any time upon request by the Company, you agree that you will return to the Company all Company property, including without limitation, reports, files, memoranda, records, computer hardware, software, credit cards, door and file keys, computer access codes or disks and instructional manuals, and that you will not retain any copies, duplicates, reproductions or excerpts thereof.

 

3.             Compensation and Benefits:  Provided you (a) sign this Agreement, (b) comply with the terms of this Agreement, including without limitation, assisting the Company with its transition, and (c) do not resign your employment, or are not terminated by the Company for cause prior to February 27, 2013, the Company will provide you with the following compensation and other benefits:

 

  

  

  

Timothy L. Frank

Page 2 of 5

 

(i)             Your annualized salary for the 12 months following your Resignation Date will be $450,000.00 (less applicable withholding) paid in accordance with the Company’s standard payroll practices; and

 

(ii)            Your annualize salary for the 12 months following the first anniversary of your Resignation Date will be $18,000.00 (less applicable withholding) paid in accordance with the Company’s standard payroll practices; and

 

(iii)           Notwithstanding any limitations regarding eligibility contained in the Company’s employee welfare benefit programs (medical, dental, vision, and other insurance programs available to the Company’s employees), you will be allowed to continue participation in those benefit programs for up to 24 months following your Resignation Date.  During this time, the Company will contribute towards the cost of your coverage at the same level that applies to active employees of the Company.  The Company’s contributions will be imputed to you as taxable income.  Your monthly contribution towards the cost of your coverage will be deducted from the payments referenced in (i) and (ii) above on an after-tax basis.

 

You acknowledge that the compensation and benefits stated above include compensation and/or benefits in addition to what you would otherwise be entitled to receive.  You authorize the Company to deduct from the amounts set forth in this Paragraph 3 amounts, if any, owed by you to the Company for personal expenditures charged to the Company or other amounts that you have agreed to pay to or are contractually obligated to pay the Company.

 

If you accept an offer of employment or to provide other services to a competitor of the Company at any time following the effective date of this Agreement and ending 24 months following your Resignation Date, you will forfeit your right to any payments under this Paragraph 3 and must repay to the Company any amounts previously paid to you under this Paragraph 3 within 5 business days following the date you accept employment or are engaged to provide other services to a competitor.  For purposes of this paragraph, a competitor of the Company is defined as (y) hhgregg, Inc., and any of hhgregg, Inc.’s subsidiaries or affiliates, and (z) any retailer that markets appliances, consumer electronics, lawn and garden products, furniture, or mattresses in any Metropolitan Statistical Area where the Company maintains a retail store.  You must notify the Company immediately if you accept an offer or employment or to provide services to any entity that could be considered a competitor of the Company.

 

4.             Cooperation: You agree that, upon reasonable notice, you will make yourself available to the Company regarding any inquiry associated with any internal investigation or administrative, regulatory, or judicial proceeding.  You understand and agree that your cooperation may include, but is not limited to, making yourself available upon reasonable notice for interviews and factual investigations, appearing at the Company’s request to give testimony without requiring service of a subpoena or other legal process, meeting with the Company and/or its attorneys, and providing the Company with pertinent information and/or relevant documents which are in, or may come into, your possession.  You further agree that any communications to or by you, whether written, verbal, or electronic, regarding any dispute or litigation in which the Company is involved or may become involved with a third party or parties will require you to give notice to the Company and may not take place outside of the attendance and/or participation by Company counsel or the Company’s Corporate Counsel.

 

  

  

  

Timothy L. Frank

Page 3 of 5

 

5.             Waiver and Release:  (a) In exchange for the special separation benefits promised to you in this Agreement, and as a material inducement for that promise, you hereby WAIVE, RELEASE and FOREVER DISCHARGE the Company and/or related persons from any and all claims, demands, causes of action, attorneys fees, rights and liabilities of every kind (whether or not you now know them to exist) which you ever had, now have or may have against the Company and/or related persons for any reason any matter, cause or thing whatsoever, through the date you sign this Agreement including but not limited to, claims arising out of or related to your employment with the Company.  This WAIVER and RELEASE includes, but is not limited to, any claim for unlawful discrimination under Title VII of the Civil Rights Act of 1964, as amended; the Americans with Disabilities Act of 1990, 42 U.S.C. § 1981; the Worker Adjustment and Retraining Notification Act; the Family and Medical Leave Act of 1993; the Employee Retirement Income Security Act of 1974; the Civil Rights Act of 1991; the Equal Pay Act; and any claim under any other federal, state or local constitution, statute, rule, regulation or ordinance relating to your employment, or for breach of contract, wrongful discharge, tort or other civil wrong.  To the fullest extent permitted by law, you PROMISE NOT TO SUE or bring any lawsuit related to the claims you are waiving by this Agreement against the Company and/or related persons in the future, individually or as a member of a class.  You will immediately withdraw with prejudice any such lawsuit that you have initiated before the Effective Date of this Agreement.  You acknowledge that although this provision prohibits you from filing or maintaining a lawsuit concerning claims covered by this Agreement, it does not prohibit you from lodging a charge or complaint with any governmental agency or participating in a governmental agency investigation.  Notwithstanding the foregoing, you agree to waive your right to recover monetary damages in any charge, complaint or lawsuit filed by you or by anyone else on your behalf.

 

(b)           If you violate this Agreement by bringing or maintaining a lawsuit contrary to this Paragraph 5, you will pay all costs and expenses of the Company and/or related persons in defending against such charges, claims or actions brought by you or on your behalf, including reasonable attorney’s fees, and will be required to give back, at the Company’s sole discretion, the value of anything paid by the Company in exchange for this Agreement.  Any such action permitted to the Company by this paragraph, however, will not affect or impair any of your obligations under this Agreement, including without limitation, the release of claims in Paragraph 5(a).

 

(c)           As referred to in this Agreement, “the Company and/or related persons” includes the Company, its parents, subsidiaries, affiliates and divisions, any employee benefit plan or trust sponsored by the Company, its parents, subsidiaries, affiliates and divisions, any fiduciaries or administrative personnel involved with those employee benefit plans, the respective successors and assigns of all the aforementioned individuals and entities, and all of their past and present directors, officers, representatives, shareholders, agents, employees, whether as individuals or in their official capacity, and the respective heirs and personal representatives of any of them.

 

(d)           This Agreement and your promise not to sue are binding on you, your heirs, legal representatives and assigns.

 

(e)           You do not waive any rights to vested benefits under the Company’s retirement plans or any rights under applicable Workers’ Compensation laws.

 

6.             Employee Review:  You acknowledge that you have read this Agreement in its entirety, fully understand its meaning and are executing this Agreement voluntarily and of your own free will with full knowledge of its significance.

 

  

  

  

Timothy L. Frank

Page 4 of 5

 

7.             Non-disparagement:  You will not disparage, denigrate or defame the Company and/or related persons, or any of their business products or services.

 

8.             Liability Insurance and Indemnification:  You will continue to be indemnified against personal liability to the extent that it involves actions taken by you while actively employed by the Company and further taken in good faith on behalf of the Company to the extent provided in the bylaws, benefit programs, fiduciary liability insurance policies, and any other policy held by, adopted, or sponsored by the Company covering former officers of the Company.

 

9.             Entire Agreement:  Unless otherwise stated herein, 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 in this Agreement.  Prior agreements between the parties concerning confidentiality, non-disclosure, non-competition and non-solicitation will, however, remain in full force and effect to the extent that the agreements protect confidentiality, prohibit specific disclosures, prohibit competition and/or restrict solicitation of Company employees.

 

10.           No Solicitation of Company Employees:  You agree that for two years following the effective date of this Agreement, you will not, directly or indirectly, solicit any employee of the Company to leave their employment with the Company nor will you otherwise participate in or assist any such solicitation by any other person or entity.

 

11.           Confidential and Proprietary Information:  You agree that you will not at any time, except as required by law, disclose to anyone any confidential and proprietary information of the Company or utilize such confidential and proprietary information for your own benefit or for the benefit of third parties.  The term “confidential and proprietary information” as used in this Agreement means (a) confidential and proprietary information of the Company, including without limitation, information received from third parties under confidential conditions, and (b) other technical, business or financial information or trade secrets or proprietary information (including, but not limited to, information relating to customers, pricing, costs, employees, legal affairs, business plans, technology services, data and information, financial matters and any other information of economic value to the Company that is not in the public domain).

 

12.           Attorney-Client Privilege:  Nothing in this Agreement may be construed as a waiver of attorney-client privilege by the Company.

 

13.           No Other Assurances:  You acknowledge that in deciding to sign this Agreement you have not relied on any promises or commitments, whether spoken or in writing, made to you by any Company representative, except for those expressly stated in this Agreement.  This Agreement constitutes the entire understanding and agreement between you and the Company, and replaces and cancels all previous agreements and commitments, whether spoken or written, in connection with the matters described.

 

14.           Binding Effect:  This Agreement will be binding on you and your heirs, administrators, representatives, executors, successors and assigns, and will inure to the benefit of their heirs, administrators, representatives, executors, successors, and assigns.

 

15.           Governing Law and Jurisdiction; Waiver of Jury Trial:  This Agreement will be governed by and enforced in accordance with the laws of the State of Texas, without regard to its conflicts of law principles. Any action arising out of or relating to this Agreement must be brought and prosecuted only in Beaumont, Texas.  The Parties agree to waive any right they may have to a jury trial in any action arising out of or relating to this Agreement.

 

  

  

  

Timothy L. Frank

Page 5 of 5

 

16.           Modification in Writing:  This Agreement cannot be changed or modified except by written agreement signed by both you and a Company authorized representative.

 

17.           No Admission of Liability:  This Agreement does not constitute an admission of any unlawful discriminatory acts or liability of any kind by the Company and/or related persons, or anyone acting under their supervision or on their behalf. This Agreement may not be used or introduced as evidence in any legal proceeding, except to enforce its terms.

 

18.           Counterparts:  This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered will be an original, but all such counterparts will together constitute one and the same instrument.  Each counterpart may consist of a number of copies hereof each signed by less than all, but together signed by all of the parties hereto. Photographic and fax copies of such signed counterparts may be used in lieu of the originals of this Agreement for any purpose.

 

 

***************

 

I have read this AGREEMENT AND GENERAL RELEASE and I understand all of its terms. I enter into and sign this AGREEMENT AND GENERAL RELEASE knowingly and voluntarily, with full knowledge of what it means.

 

	  	
CONN’S, INC.

	 
	 	 	 	 
	 	 	 	 
	  	  	  	 
	  	
By:

	
/s/ Theodore M. Wright

	 
	  	  	
Theodore M. Wright,

	 
	  	  	
Chairman of the Board

	 
	 	 	 	 
	 	 	 	 
	  	  	  	 
	  	
/s/ Timothy L. Frank

	 
	  	
Timothy L. Frank

	 
	  	
Date:

	
February 27, 2011Exhibit 4.1

NEITHER THIS SECURITY NOR THE SECURITY  INTO WHICH THIS SECURITY IS  EXERCISABLE
HAVE  BEEN  REGISTERED  WITH  THE  SECURITIES  AND  EXCHANGE  COMMISSION  OR THE
SECURITIES   COMMISSION  OF  ANY  STATE  IN  RELIANCE  UPON  AN  EXEMPTION  FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND, ACCORDINGLY, MAY
NOT BE OFFERED OR SOLD EXCEPT  PURSUANT TO AN EFFECTIVE  REGISTRATION  STATEMENT
UNDER THE  SECURITIES  ACT OR PURSUANT TO AN AVAILABLE  EXEMPTION  FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION  REQUIREMENTS OF THE SECURITIES ACT
AND IN ACCORDANCE WITH APPLICABLE  STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL  TO THE  TRANSFEROR  TO SUCH  EFFECT,  IN FORM AND  SUBSTANCE
SATISFACTORY TO THE COMPANY.

#W-001                                                        1,250,000 WARRANTS

        VOID AFTER 5:00 P.M., CENTRAL STANDARD TIME ON FEBRUARY 22, 2013

                          COMMON STOCK PURCHASE WARRANT

                                       OF

                               BARON ENERGY, INC.

     BARON ENERGY, INC., a Nevada corporation (the "Company"),  hereby certifies
that, for value received, SUNRISE SECURITIES CORP. (the "Warrant Holder") is the
owner of the number of common stock  purchase  warrants  ("Warrants")  specified
above, each of which entitles the holder thereof to purchase, at any time during
the period commencing on the Commencement Date (as defined herein) and ending on
the Expiration Date (as defined herein), one fully paid and non-assessable share
of the Company's common stock, par value $.001 per share ("Common Stock"),  at a
purchase price equal to the Exercise Price (as defined below) in lawful money of
the United  States of America in cash,  subject  to  adjustment  as  hereinafter
provided.

1. Warrant; Exercise Price.

     (a) Each Warrant shall entitle the Warrant Holder the right to purchase one
share of Common Stock of the Company (individually, a "Warrant Share" severally,
the "Warrant Shares").

     (b) The purchase  price  payable upon  exercise of each Warrant  ("Exercise
Price")  shall be $0.01 per  Warrant  Share.  The  Exercise  Price and number of
Warrant Shares purchasable pursuant to each Warrant are subject to adjustment as
provided in Section 8.

2. Exercise of Warrant; Expiration Date.

     (a)  This  Warrant  is  exercisable  at any  time  and  from  time  to time
commencing on February 22, 2011  ("Commencement  Date") and ending at 5:00 p.m.,
Central  Standard  Time on February 22, 2013, or if such date shall in the State
of Texas be a holiday or a day on which banks are authorized to close, then 5:00
p.m.,  Central  Standard Time the next following day which in the State of Texas
<PAGE>
is  not a  holiday  or a day  on  which  banks  are  authorized  to  close  (the
"Expiration  Date"), in whole or from time to time in part, at the option of the
Warrant  Holder,  upon surrender of this Warrant to the Company  together with a
duly completed  Notice of Exercise in the form attached hereto and payment of an
amount equal to the then applicable  Exercise Price  multiplied by the number of
Warrant Shares then being  purchased  upon such exercise,  except as provided in
Section 2(b).

     (b) If the Common Stock is registered  under  Section 12 of the  Securities
Exchange  Act of 1934,  as amended,  the Warrant  Holder may elect to pay all or
part of the  Exercise  Price  by  surrendering  shares  of  Common  Stock to the
Company,  including by allowing the Company to deduct from the number of Warrant
Shares  deliverable upon exercise of this Warrant, a number of such shares which
has an aggregate  Fair Market  Value,  determined  as of the average of the last
sale  price  (defined  hereunder)  of the  Common  Stock for the 20  consecutive
trading days immediately  preceding the date of exercise of this Warrant,  equal
to the aggregate  Exercise Price. In the event that the Warrant Holder elects to
utilize the "cashless  exercise"  procedure contained in this Section 2(b), this
Warrant is exercisable  upon  surrender of this Warrant to the Company  together
with a duly  completed  Notice  of  Exercise  in the form  attached  hereto  and
surrender  of that  number  of shares of  Common  Stock  equal to the  aggregate
Exercise Price  determined in accordance with Section 2(b)(i) or (ii). The "Fair
Market Value" per share of Common Stock on any relevant date shall be determined
in accordance with the following provisions:

          (i) If the Common Stock is at the time traded on the Pink Sheets, LLC,
NASD OTC Bulletin Board or other inter-dealer electronic quotation service, then
the Fair  Market  Value shall be the average of the last sale price per share of
the Common  Stock for the 20  consecutive  trading  days  preceding  the date of
exercise of this Warrant; or

          (ii) If the Common Stock is at the time listed on any  Exchange,  then
the Fair  Market  Value shall be the average of the last sale price per share of
the Common  Stock for the 20  consecutive  trading  days  preceding  the date of
exercise of this Warrant,  on the Exchange  determined to be the primary  market
for  the  Common  Stock.  The  term  "Exchange"  shall  mean  any  organization,
association, or group of persons, whether incorporated or unincorporated,  which
constitutes,  maintains,  or provides a market place or facilities  for bringing
together  purchasers and sellers of securities or for otherwise  performing with
respect to securities  the functions  commonly  performed by a stock exchange as
that term is generally understood,  and includes the market place and the market
facilities maintained by such exchange.  (c) Each exercise of this Warrant shall
be deemed to have been  effected  immediately  prior to the close of business on
the day on which this  Warrant  shall have been  surrendered  to the  Company as
provided in this Section 2. At such time, the person or persons in whose name or
names any  certificates  for Warrant Shares shall be issuable upon such exercise
as provided in Section 2(d) shall be deemed to have become the holder or holders
of record of the Warrant Shares represented by such certificates.

     (d) Within three  business  days after the  exercise of the purchase  right
represented  by this Warrant,  the Company at its expense will use  commercially
reasonable  efforts to cause to be issued in the name of, and  delivered to, the
Warrant Holder,  or, subject to the terms and conditions  hereof,  to such other
individual or entity as such Warrant Holder (upon payment by such Warrant Holder
of any applicable transfer taxes) may direct:

          (i) a certificate or certificates  for the number of Warrant Shares to
which such Warrant  Holder shall be entitled upon such  exercise.  No fractional
shares will be issued but  instead  will be rounded  down to the  nearest  whole
share, and

                                        2
<PAGE>
          (ii) in case such  exercise is in part only, a new Warrant or Warrants
(dated the date hereof) of like tenor,  stating on the face or faces thereof the
number of Warrant Shares  currently stated on the face of this Warrant minus the
number of such Warrant Shares purchased by the Warrant Holder upon such exercise
as  provided  in this  Section 2 (in each  case  prior to any  adjustments  made
thereto pursuant to the provisions of this Warrant).

3.  Registration  and Transfer on Company Books. The Company (or an agent of the
Company)  will  maintain a register  containing  the names and  addresses of the
Warrant Holders.  Any Warrant Holder may change its, his or her address as shown
on the warrant register by written notice to the Company requesting such change.
The  Company  shall  register  upon its books  any  transfer  of a Warrant  upon
surrender of same as provided in Section 5.

4.  Reservation  of  Shares.  The  Company  will at all times  reserve  and keep
available,  solely for issuance and delivery  upon the exercise of this Warrant,
such Warrant Shares and other stock,  securities  and property,  as from time to
time shall be issuable upon the exercise of this Warrant. As long as the Warrant
shall be outstanding,  the Company shall use its commercially reasonable efforts
to cause all Warrant Shares  issuable upon exercise of the Warrants to be listed
(subject to official  notice of issuance) on each Exchange  (or, if  applicable,
quoted on Nasdaq,  the OTC Bulletin  Board or Pink Sheets,  LLC or any successor
electronic  quotation  service and trading  market) on which the Common Stock is
then listed and/or quoted, if any.

5.  Exchange,  Transfer,  Assignment  or Loss or  Mutilation  of Warrants.  This
Warrant is exchangeable,  without expense,  at the option of the Warrant Holder,
upon  presentation  and  surrender  hereof to the Company for other  warrants of
different  denominations  entitling  the  holder  thereof  to  purchase  in  the
aggregate the same number of Warrant Shares  purchasable  hereunder.  Subject to
the terms of Section 6 and 7, upon  surrender  of this Warrant to the Company at
its principal  office or at the office of its transfer  agent,  if any, with the
Assignment  Form annexed  hereto duly  executed and funds  sufficient to pay any
transfer  tax,  the Company  shall,  without  charge,  execute and deliver a new
Warrant in the name of the assignee  named in such  instrument of assignment and
this Warrant shall be promptly canceled. This Warrant may be divided or combined
with other warrants which carry the same rights upon presentation  hereof at the
principal  office of the Company  together with a written notice  specifying the
names and denominations in which new Warrants are to be issued and signed by the
Warrant Holder hereof.  The term "Warrant" as used herein  includes any Warrants
into which this Warrant may be divided or exchanged. Upon receipt by the Company
of reasonable  evidence of the ownership of and the loss, theft,  destruction or
mutilation of this Warrant and, in the case of loss,  theft or  destruction,  of
indemnity reasonably satisfactory to the Company, or, in the case of mutilation,
upon  surrender and  cancellation  of the mutilated  Warrant,  the Company shall
execute  and  deliver  in lieu  thereof  a new  Warrant  of like  tenor and date
representing an equal number of Warrants.

6. Limitation on Exercise and Sales.

     (a) Each  holder of this  Warrant  acknowledges  that this  Warrant and the
Warrant  Shares have not been  registered  under the  Securities Act of 1933, as
amended (the "Securities Act"), as of the date of issuance hereof.  This Warrant
only may be  transferred to a transferee who certifies in writing to the Warrant
Holder and to the  Company  that such  transferee  is an  "accredited  investor"
within the meaning of Rule 501 of Regulation D promulgated  under the Securities
Act.  The  Company  shall be under no  obligation  to issue the  Warrant  Shares
covered by such exercise unless and until the Warrant Holder shall have executed
the  form of  exercise  annexed  hereto  that  states  that at the  time of such
exercise that it is then an "accredited investor" within the meaning of Rule 501
of Regulation D, is acquiring such Warrant Shares for its own account,  and will
not  transfer the Warrant  Shares  unless  pursuant to an effective  and current
registration  statement  under  the  Securities  Act or an  exemption  from  the

                                       3
<PAGE>
registration  requirements  of the  Securities  Act  and  any  other  applicable
restrictions, in which event the Warrant Holder shall be bound by the provisions
of a  legend  or  legends  to such  effect  that  shall  be  endorsed  upon  the
certificate(s) representing the Warrant Shares issued pursuant to such exercise.
In such event, the Warrant Shares issued upon exercise hereof shall be imprinted
with a legend in substantially the form provided in Section 7(b).

     (b) Warrant  Holder  represents  and  warrants  that it is  acquiring  this
Warrant for its own account, for purposes of investment, and not with a view to,
or for sale in connection with, any  distribution  thereof within the meaning of
the Securities Act and the rules and regulations promulgated thereunder. Warrant
Holder represents, warrants and agrees that it will not sell, exercise, transfer
or otherwise  dispose of this  Warrant (or any  interest  therein) or any of the
Warrant  Shares  purchasable  upon exercise  hereof,  except  pursuant to (i) an
effective  registration  statement under the Securities Act and applicable state
securities laws; or (ii) an opinion of the Company's  corporate  counsel that an
exemption from registration under the Securities Act and such laws is available.
Warrant Holder further acknowledges and agrees that the Company is not required,
legally or contractually,  to so register or qualify the Warrant or such Warrant
Shares or to take any action to make such an exemption available. Warrant Holder
understands  that the Company will be relying upon the truth and accuracy of the
representations  and  warranties  contained  in this  Section 6 in issuing  this
Warrant and such Warrant Shares without first  registering the issuance  thereof
under the Securities Act or qualifying or registering the issuance thereof under
any state securities laws that may be applicable.

     (c) Warrant Holder  acknowledges  and agrees that (i) there is not now, and
there may not be in the future, any public market for the Warrant; (ii) although
the Company's Common Stock is currently quoted on the Pink Sheets,  there can be
no assurance that this or any other market will be sustained in the future;  and
(iii) there can be no assurance  that  Warrant  Holder will be able to liquidate
its investment in the Company. Warrant Holder represents and warrants that it is
familiar with and  understands  the terms and conditions of Rule 144 promulgated
under the Securities Act.

     (d) Warrant  Holder  represents and warrants to the Company that (i) it has
such knowledge and experience in financial and business  matters as is necessary
to enable it to evaluate the merits and risks of any  investments in the Company
and is not  utilizing  any other  person  to be a  purchaser  representative  in
connection with evaluation of such merits and risks; and (ii) it has no need for
liquidity in an  investment  in the Company and is able to bear the risk of that
investment for an indefinite period and to afford a complete loss thereof.

     (e) Warrant  Holder  represents and warrants that it has had access to, and
has been  furnished  with,  all of the  information  it has  requested  from the
Company  and has had an  opportunity  to review  the books  and  records  of the
Company and to discuss with  management and members of the board of directors of
the Company the business and financial affairs of the Company.

     (f)  Warrant  Holder  agrees  that at the  time of  each  exercise  of this
Warrant,  unless the  issuance  of the  Warrant  Shares  issuable  thereupon  is
pursuant to an effective  registration  statement  under the  Securities Act and
under  applicable  state blue sky laws,  Warrant Holder will provide the Company
with a letter embodying the representations and warranties set forth in Sections
6(b) through (e), in form and substance  satisfactory to the Company, and agrees
that the  certificate(s)  representing any shares issued to it upon any exercise
of this  Warrant  may bear  such  restrictive  legend  as the  Company  may deem
necessary  to reflect the  restricted  status of such  Warrant  Shares under the
Securities Act unless the Company shall have received from its corporate counsel
an  opinion  that  such   restrictive   legend  is  not  required

                                       4
<PAGE>
7. Transfer Restrictions.

     (a) Transfer Restrictions. If, at the time of the surrender of this Warrant
in connection  with any transfer of this  Warrant,  the transfer of this Warrant
shall not be registered  pursuant to an effective  registration  statement under
the Securities Act and under  applicable  state securities or blue sky laws, the
Company may  require,  as a condition  of allowing  such  transfer  (i) that the
Warrant Holder or transferee of this Warrant, as the case may be, furnish to the
Company a written opinion of counsel (which opinion shall be in form,  substance
and scope  customary  for  opinions of counsel in  comparable  transactions  and
reasonably  satisfactory  to counsel  for the  Company)  to the effect that such
transfer may be made without  registration  under the  Securities  Act and under
applicable state securities or blue sky laws; (ii) that the holder or transferee
execute and deliver to the Company an  investment  letter in form and  substance
acceptable  to the  Company;  (iii) that  transferee  agree in writing  with the
Company to be bound by the terms and  conditions  of this Warrant  applicable to
the Warrant Holder; and (iv) that the transferee be an "accredited  investor" as
defined in Regulation D promulgated under the Securities Act.

     (b) Legend.  The  Warrant  Shares  issuable on the  exercise of the Warrant
shall bear the following or similar legend:

     THESE  SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
     COMMISSION,  OR THE SECURITIES COMMISSION OF ANY STATE, IN RELIANCE UPON AN
     EXEMPTION  FROM  REGISTRATION  UNDER THE SECURITIES ACT OF 1933, AS AMENDED
     (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
     PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
     PURSUANT TO AN AVAILABLE  EXEMPTION  FROM, OR IN A TRANSACTION  NOT SUBJECT
     TO, THE  REGISTRATION  REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
     WITH  APPLICABLE  STATE  SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF
     COUNSEL TO THE COMPANY.

     (c) Restrictions.  The Holder acknowledges that the Warrant Shares acquired
upon the exercise of this Warrant,  if not  registered,  will have  restrictions
upon resale imposed by state and federal securities laws.

8.  Adjustment of Exercise Price and Number of Warrant Shares  Deliverable.  The
Exercise  Price and the number of Warrant  Shares  purchasable  pursuant to each
Warrant  shall be subject to  adjustment  from time to time as  hereinafter  set
forth in this Section 8:

     (a) In case,  prior to the expiration of this Warrant by exercise or by its
terms,  the  Company  shall  issue  any  shares of its  Common  Stock as a stock
dividend or subdivide the number of outstanding  shares of its Common Stock into
a greater  number of shares of Common Stock,  then in either of such cases,  the
then applicable  Exercise Price per Warrant Share  purchasable  pursuant to this
Warrant in effect at the time of such action  shall be  proportionately  reduced
and the  number of  Warrant  Shares at that time  purchasable  pursuant  to this
Warrant shall be  proportionately  increased;  and conversely,  in the event the
Company  shall  reduce  the  number of  outstanding  shares  of Common  Stock by
combining  such shares of Common Stock into a smaller number of shares of Common
Stock, then, in such case, the then applicable  Exercise Price per Warrant Share
purchasable  pursuant to this Warrant in effect at the time of such action shall
be  proportionately  increased  and the  number of  Warrant  Shares at that time
purchasable pursuant to this Warrant shall be proportionately  decreased. If the
Company shall,  at any time during the life of this Warrant,  declare a dividend
payable in cash on its  Common  Stock and shall at  substantially  the same time
offer to its  stockholders  a right to purchase  new shares of Common Stock from
the  proceeds  of such  dividend  or for an  amount  substantially  equal to the
dividend,  all shares of Common Stock so issued  shall,  for the purpose of this

                                       5
<PAGE>
Warrant,  be deemed to have been  issued as a  dividend.  Any  dividend  paid or
distributed  upon the  Common  Stock in stock of any other  class of  securities
convertible  into shares of Common Stock shall be treated as a dividend  paid in
shares of Common  Stock to the extent that shares of Common  Stock are  issuable
upon conversion thereof.

     (b) In case,  prior to the expiration of this Warrant by exercise or by its
terms,  the Company shall be  recapitalized  by  reclassifying  its  outstanding
shares of Common Stock,  (other than a change in par value to no par value),  or
the Company or a successor corporation shall consolidate or merge with or convey
all or substantially all of its or of any successor  corporation's  property and
assets to any other  corporation or  corporations  (any such other  corporations
being  included  within  the  meaning  of  the  term   "successor   corporation"
hereinbefore  used in the event of any consolidation or merger of any such other
corporation with, or the sale of all or substantially all of the property of any
such other corporation to, another corporation or corporations), then the holder
of this Warrant shall thereafter have the right to purchase,  upon the basis and
on the terms and  conditions  specified in this Warrant,  in lieu of the Warrant
Shares theretofore purchasable upon the exercise of this Warrant, such shares of
stock,  securities  or assets as may be issued or payable with respect to, or in
exchange  for, the number of Warrant  Shares  theretofore  purchasable  upon the
exercise of this Warrant, had such recapitalization,  consolidation,  merger, or
conveyance  not taken  place;  and in any such event,  the rights of the Warrant
Holder to any  adjustment in the number of Warrant Shares  purchasable  upon the
exercise of this Warrant, as herein provided, shall continue and be preserved in
respect of any stock which the Warrant Holder becomes entitled to purchase.

9. Rights of the Holder.  The Warrant  Holder  shall not, by virtue  hereof,  be
entitled to any rights of a stockholder in the Company, either at law or equity,
and the rights of the  Warrant  Holder are  limited to those  expressed  in this
Warrant and are not  enforceable  against  the Company  except to the extent set
forth  herein.  This Warrant does not entitle the Holder to any voting rights or
other rights as a stockholder of the Company prior to the Exercise Date and then
only with respect to the Warrant Shares issued with respect thereto.

10. Notices of Record Date. In case:

     (a) the Company  shall take a record of the holders of its shares of Common
Stock (or other stock or securities at the time deliverable upon the exercise of
this  Warrant)  for the purpose of  entitling  or  enabling  them to receive any
dividend  or other  distribution,  or to receive any right to  subscribe  for or
purchase  any shares of any class or any other  securities,  or to  receive  any
other right; or

     (b) of any capital  reorganization of the Company,  any reclassification of
the capital  stock of the Company,  any  consolidation  or merger of the Company
with or into another  corporation (other than a consolidation or merger in which
the Company is the surviving  entity),  or any transfer of all or  substantially
all of the assets of the Company,

then,  and in each such case, the Company will mail or cause to be mailed to the
Warrant Holder a notice  specifying,  as the case may be (i) the date on which a
record is to be taken for the purpose of such dividend,  distribution  or right,
and stating the amount and character of such dividend, distribution or right; or
(ii)  the  effective  date  on  which  such  reorganization,   reclassification,
consolidation,  merger, transfer,  dissolution,  liquidation or winding-up is to
take  place,  and the time,  if any is to be fixed,  as of which the  holders of
record of shares of Common Stock (or such other stock or  securities at the time
deliverable  upon the  exercise of this  Warrant)  shall be entitled to exchange
their shares of Common Stock (or such other stock or securities)  for securities
or  other  property  deliverable  upon  such  reorganization,  reclassification,
consolidation, merger, or transfer.

                                       6
<PAGE>
11.  Successors.  The rights and obligations of the parties to this Warrant will
inure to the  benefit  of and be  binding  upon the  parties  hereto  and  their
respective heirs, successors, assigns, pledgees, transferees and purchasers.

12. Change or Waiver.  Any term of this Warrant may be changed or waived only by
an instrument in writing  signed by the party  against whom  enforcement  of the
change or waiver is sought.

13.  Headings.  The headings in this Warrant are for purposes of reference  only
and shall not limit or  otherwise  affect the meaning of any  provision  of this
Warrant.  Wherever possible, each provision of this Warrant shall be interpreted
in such manner as to be  effective  and valid under  applicable  law, but if any
provision of this Warrant shall be  prohibited  by or invalid  under  applicable
law, such provision  shall be  ineffective to the extent of such  prohibition or
invalidity,  without  invalidating  the  remainder  of  such  provisions  or the
remaining provisions of this Warrant.

14.  Governing  Law.  This  Agreement  shall be  governed  by and  construed  in
accordance  with the laws of the State of Texas  without  regard to conflicts of
laws principles that would result in the application of the substantive  laws of
another  jurisdiction.  Any action  brought by either  party  against  the other
concerning the transactions contemplated by this Agreement shall be brought only
in the Texas civil or state  courts or the federal  courts  located in or having
jurisdiction  over  New  Braunfels,  Texas.  The  parties  and  the  individuals
executing this Agreement and other agreements referred to herein or delivered in
connection herewith on behalf of the Company agree to submit to the jurisdiction
of such courts and waive trial by jury. The  prevailing  party shall be entitled
to recover from the other party its reasonable attorney's fees and costs.

15.  Mailing  of  Notices,  Etc.  All  notices,  demands,  requests,   consents,
approvals,  and other communications required or permitted hereunder shall be in
writing and, unless otherwise specified herein,  shall be (a) personally served;
(b) deposited in the mail,  registered or certified,  return receipt  requested,
postage  prepaid;  (c)  delivered  by  reputable  courier  service  with charges
prepaid;  or (d)  transmitted  by via  facsimile  or email  delivery of a ".pdf"
format data file,  addressed as set forth below or to such other address as such
party shall have specified most recently by written notice.  Any notice or other
communication  required  or  permitted  to be given  hereunder  shall be  deemed
effective  (i) upon hand  delivery  or  delivery  by  facsimile  or email,  with
accurate confirmation  generated by the transmitting  facsimile machine or email
server,  at the address or number  designated  below (if delivered on a business
day during normal  business  hours where such notice is to be received),  or the
first  business  day  following  such  delivery  (if  delivered  other than on a
business day during normal  business hours where such notice is to be received);
or (ii) on the  second  business  day  following  the date of mailing by express
courier  service,  fully  prepaid,  addressed  to such  address,  or upon actual
receipt of such  mailing,  whichever  shall first occur.  The addresses for such
communications  shall be: if to the Company,  to: Baron Energy,  Inc.,  392 Mill
Street,  New Braunfels,  Texas 78130,  Facsimile  (830) 608-0300,  Attn:  Ronnie
Steinocher,  email: Rls43@aol.com,  and (ii) if to the registered holder of this
Warrant:  to his or her last known address,  facsimile and/or email as indicated
on the Company's books and records.

     IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer as of February 22, 2011.

                                     BARON ENERGY, INC. a Nevada corporation

                                     By: /s/ Ronnie Steinocher
                                         ---------------------------------------
                                         Ronnie Steinocher
                                         President and CEO

                                       7
<PAGE>
Notice of Exercise
                      To Be Executed by the Warrant Holder
                          In Order to Exercise Warrants

TO: Baron Energy, Inc.

     The  undersigned  hereby:  (1)  irrevocably  subscribes  for and  offers to
purchase  _______ shares of the common stock, par value $.001 per share ("Common
Stock"), of Baron Energy, Inc., pursuant to Warrant No. 001 heretofore issued to
Sunrise  Securities  Corp. on February 22, 2011;  (2) encloses a cash payment of
$__________; or (3) surrenders shares of Common Stock or Warrant Shares pursuant
to the cashless exercise procedure provided for in the following paragraph;  and
(4) requests that a certificate  for the Warrant Shares be issued in the name of
the  undersigned,   or  the  undersigned's   designee,   and  delivered  to  the
undersigned, or the undersigned's designee, at the address specified below.

     The  undersigned  hereby elects to subscribe for Warrant Shares by cashless
exercise of the Warrant in accordance with Section 2(b), and indicates below the
number of  shares  of Common  Stock or  Warrant  Shares  to be  surrendered  and
provides the  calculation  (pursuant to Section  2(b)(i) or (ii) of the Warrant)
for the number of shares to be surrendered:

     Number of shares to be Surrendered:
                                         ---------------------------

     Calculation Pursuant to Section 2(b):
                                           -------------------------

     The undersigned hereby represents and warrants to the Company that it is an
"Accredited Investor" within the meaning of Rule 501 of Regulation D promulgated
under the  Securities  Act of 1933, as amended (the  "Securities  Act"),  and is
acquiring  these  securities  for its own account and not with a view to, or for
sale in  connection  with,  any  distribution  thereof,  nor  with  any  present
intention  of  distributing  or  selling  the  same.  The  undersigned   further
represents  that it does not  have any  contract,  agreement,  understanding  or
arrangement  with any  person to sell,  transfer  or grant the  shares of Common
Stock issuable under this Warrant.  The undersigned  understands that the shares
it will be receiving are "restricted  securities" under Federal  securities laws
inasmuch as they are being acquired from Baron Energy, Inc., in transactions not
including any public  offering and that under such laws, such shares may only be
sold  pursuant to an  effective  and current  registration  statement  under the
Securities  Act  or an  exemption  from  the  registration  requirements  of the
Securities Act and any other applicable restrictions, in which event a legend or
legends  will be placed upon the  certificate(s)  representing  the Common Stock
issuable  under  this  Warrant  denoting  such  restrictions.   The  undersigned
understands and acknowledges that the Company will rely on the accuracy of these
representations and warranties in issuing the securities underlying the Warrant.

              [WARRANT NOTICE OF EXERCISE SIGNATURE PAGE TO FOLLOW]

                                       8
<PAGE>
                   [WARRANT NOTICE OF EXERCISE SIGNATURE PAGE]

Date:
      --------------------------------------------------------------------------
Investor Name:
               -----------------------------------------------------------------
Taxpayer Identification Number:
                                ------------------------------------------------
By:
    ----------------------------------------------------------------------------
Printed Name:
              ------------------------------------------------------------------
Title:
       -------------------------------------------------------------------------
Address:
         -----------------------------------------------------------------------

           Note: The above signature should correspond  exactly with the name on
           the face of this  Warrant or with the name of assignee  appearing  in
           assignment form below.

AND, if said  number of Warrant  Shares  shall be less than the total  number of
Warrant Shares  purchasable under the Warrant,  a new Warrant is to be issued in
the name of said undersigned for the balance  remaining number of Warrant Shares
purchasable thereunder.

                                       9
<PAGE>
                                 ASSIGNMENT FORM
                      To be executed by the Warrant Holder
                           In order to Assign Warrants

FOR VALUE RECEIVED,____________________________________ hereby sell, assigns and
transfer unto

PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

                     (Please print or type name and address)

______________________  of the Warrants  represented by this Warrant, and hereby
irrevocably  constitutes  and  appoints   ________________________  Attorney  to
transfer  this  Warrant  on the  books  of  the  Company,  with  full  power  of
substitution in the premises.

Dated:
      ----------------------         -------------------------------------------
                                           (Signature of Registered Holder)

THE SIGNATURE ON THE EXERCISE FORM OR THE ASSIGNMENT FORM MUST CORRESPOND TO THE
NAME AS  WRITTEN  UPON THE FACE OF THIS  WARRANT  IN EVERY  PARTICULAR,  WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER.

                      CERTIFICATION OF STATUS OF TRANSFEREE
                TO BE EXECUTED BY THE TRANSFEREE OF THIS WARRANT

The undersigned  transferee  hereby  certifies to the registered  holder of this
Warrant and to Baron  Energy,  Inc.,  a Nevada  corporation  located at 392 Mill
Street,  New  Braunfels,  Texas  78130  that the  transferee  is an  "accredited
investor"  within the meaning of Rule 501 of Regulation D promulgated  under the
Securities Act of 1933, as amended.

Dated:
      ----------------------         -------------------------------------------
                                              (Signature of Transferee)

                                       10

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