Document:

[*]
Designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the
Commission

    

     

    PARTICIPATION
AGREEMENT

     

    THIS
AGREEMENT made and entered into this 6th of
April 2009, by and between

    

    ARCHER
EXPLORATION, INC.

    1701
Westwind Dr. Suite #125

    Bakersfield,
CA 93301

    A Nevada
corporation, hereinafter called "Operator," and

     

    AMERICAN
PETRO-HUNTER, INC.

    1694
Falmouth Road, Suite 123

    Centerville,
MA 02632

     

     

    A
Massachusetts corporation, hereinafter called "Participant"

     

    WITNESSETH:

     

    WHEREAS
Archer has acquired all right, title and interest to the [*] (the Prospect") and
the land, geological and geophysical information and data used to develop the
concept of the Prospect. In addition, Archer is the owner of oil and gas leases
(hereinafter referred to as "said leases") totaling [*], as more fully described
in Exhibit "A-4" to Exhibit "C" of this Agreement covering and embracing the
lands (hereinafter referred to as "said lands") in the Area of Mutual Interest
(hereinafter referred to as the "AMI"), shown on the attached Exhibit "A" and
described as follows:

     

    [*]

     

    Pursuant
to this Participation Agreement, Archer will make a portion of its working
interest in the [*] available to the Participants. Each Participant shall be
obligated to pay its proportional share of the acquisition costs, including the
anticipated oil and gas lease acquisition costs, which costs are deemed paid in
full with the consideration tendered with this Agreement, together with the
drilling and completing costs of the Test Well provided for in the attached
Operating Agreement; estimates of these costs are set out in the "Authorization
For Expenditure" attached hereto as Exhibit "B" in this Participation
Agreement.

     

    WHEREAS
Participant desires to earn an assignment of Twenty-Five Percent of One Hundred
Percent (25% of 100%) Archer's leasehold working interest in said lands and the
AMI for the consideration of $200,000.00, on conditions hereinafter set
forth:

     

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    
      [*]
Designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the
Commission

       

    

    

    NOW
THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the parties hereto agree as follows:

     

    1.           For
the purposes of this Agreement, the following definitions and/or interpretations
shall apply:

     

    (a) 
Initial Test Well is a well drilled to sufficient depth to test for the presence
of oil or gas on a given property within the AMI.

     

    (b) 
A Completed Well is a well which has been fully equipped for the taking of
production, through and including the tanks for an oil well and through and
including the Christmas tree for gas.

     

    (c) 
Paying quantities means a quantity (in the judgment of a reasonable and prudent
operator) of oil, gas (including any gaseous hydrocarbons produced with oil)
and/or gas (including any liquid hydrocarbons produced with gas) sufficient to
repay, with a reasonable profit, the cost and expense of operating the
well.

     

    (d) 
Contract depth is a depth sufficient to fully test the [*], whichever is first
encountered. This depth is an estimated distance, which will be actually
determined based on results of the seismic study to be conducted per Section 2
below.

     

    (e) 
A Dry Hole is a well drilled to contract depth that is plugged and abandoned as
being incapable of commercial production.

     

    (f) 
Term of Agreement is as long as operations are being conducted on the leased
lands or until terminated under a provision of this Agreement.

     

    (g) 
Net Revenue is that revenue derived from the sale of hydrocarbons from the
oil/gas well after costs associated with the production of the same as described
in the COPAS Agreement, which is attached to the Operating Agreement, have been
deducted.

     

    (h) 
Seismic Survey shall mean the acquisition of additional Seismic Data over the
Prospect area, either 2D or 3D as determined by Operator, and the processing of
the data acquired.

     

    (i) 
Prospect is the land, geological and geophysical information and data used to
develop the concept to locate and extract hydrocarbons from the lands within an
A M I.

     

    (j) 
Earning shall mean that the Participant has paid its entry fee and pro rata
share of all costs of the operations in connection with the Prospect up to and
including the completion of the initial Test Well. (k) Participant assignment of
Interest shall mean any action or attempted action by Participant that would or
could result in a change in the name of the entity holding title to or
exercising control over Participant's right, title or interest in and to the
Prospect. Further, any action resulting in a change of ownership, or control of
ownership of Participant, including but not limited to a change from private to
public ownership, shall be deemed an assignment or attempt to assign, as
contemplated under this Agreement.

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    
      [*]
Designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the
Commission

       

    

     

    2.           Participant
hereby agrees to (i) pay for, acquire, assume and be responsible for its
undivided share of Archer's rights, interests and obligations under and pursuant
to the acquisition and operation of the Prospect and (ii) abide and be bound by
each and all of the terms and provisions of any oil and gas leases, acquired by
Archer, the costs thereof and (iii) the exploration and development costs of the
[*], including seismic study and the drilling and testing of the initial Test
Well on said prospect. In general, each Participant will be responsible for
their pro rata share of the cost of the Prospect, which shall include the
completion of the initial Test Well, and will thereby earn and own an undivided
working interest in the applicable leases proportionate to their participation
interest hereunder, that being Twenty-Five Percent of One Hundred Percent (25%
of 100%) of the working interest.

     

    By the
consideration tendered with this Agreement, Participant shall be deemed to have
paid its pro rata share of all fees and costs of the Prospect, including land
acquisition and seismic, up to the drilling of the Initial Test Well. Not
included in this amount are delay rental payments for leases previously acquired
or the cost of drilling and completing the Initial Test Well. Cash calls may be
made by Operator from time to time for delay rental payments.

     

    Operator
will issue a cash call for Participant's pro rata share of the cost of drilling
the Initial Test Well sufficiently in advance of the drilling of the Initial
Test Well to insure that all funds are collected by Operator prior to the
signing of a drilling contract for drilling rig. Additional cash calls in
connection with the drilling and completion of the Initial Test Well shall be
made as set forth in this Agreement and in
the Operating Agreement, as appropriate.

    

    3.           Pursuant
to this Participation Agreement and the Operating Agreement attached hereto as
Exhibit "C", Archer, or its assigns, shall serve as Operator for the Prospect.
All operations will be conducted under the terms and conditions of the said
Participation Agreement, or the Operating Agreement which names Archer, or its
assigns, as Operator, as appropriate. Except as provided for in Paragraph 4
below, each Participant(s) hereunder agrees to abide by the decision of the
majority in interest of Participants as to all elections under the Operating
Agreement.

     

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    
      [*]
Designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the
Commission

    4.           Commencing
with the signing of this Participation Agreement, Operator shall perform such
tasks necessary to develop the Prospect with the goal of drilling and completing
the Initial Test Well for the production of Hydrocarbons from the lands in the
AML Participant and Operator agree to the terms and conditions of Section 5
below, which specifies how the duties are to be performed by Operator prior to
the commencement of actual drilling operations. Nothing in this Agreement
precludes the cessation of all activities in connection with this Prospect in
the event that the Operator's recommendation drawn from the Seismic Study
results in the agreement of Participant and Operator that the Initial Test Well
will not produce hydrocarbons in paying quantities_ In which case, the
Participant will be deemed not to have earned and the Parties to this Agreement
shall have no further obligations to each other. Participant understands that
Operator's recommendation is only its best assessment of the Seismic Data and is
no guarantee of the presence or absence of hydrocarbons under the leased
lands.

    

    All AFEs
and elections attached thereto are due and payable at the Office of Operator, no
later than close of business on the fifteenth (15th)
calendar day following the Participant(s) receipt of the AFE. If that date falls
on a Saturday, Sunday, or recognized holiday, the next calendar day will be
used, unless there is a rig on site, in which case Participant has twenty-four
(24) hours to notify Operator of its election. Participant(s) agrees to pay its
pro rata share of costs on a given AFE, even if the total cost exceeds that
shown on the AFE. Failure to timely pay ANY AFE shall be deemed to be an
election not to participate in the [*].

    

    Subsequent
to earning, Participant(s) shall have the right to independently exercise its
"non-consent" rights, under the terms and conditions set forth in the Operating
Agreement with respect to any operation for which Particpant(s) has the right to
exercise non-consent rights under the Operating Agreement. Upon proposing or
receipt of a proposal under the provisions of Articles VI, Paragraph B., 1., of
the Operating Agreement, Operator shall immediately give the written notice set
forth in said Article VI, Paragraph B., 1., of the Operating Agreement to the
Participant hereunder. The Participant shall have fifteen (15) days within which
to notify Operator whether or not they wish to participate in the cost of the
proposed operation, unless there is a rig on site, in which case Participant
shall have twenty-four (24) hours to notify Operator of its election. Failure to
timely notify Operator of its election shall constitute an election not to
proceed in accordance with the proposed operation but to go "Non-Consent" per
the terms of Article VI, Paragraph B., 2. of the Operating Agreement. Any
Participant electing not to participate pursuant to this non-consent provision
shall suffer forfeiture of any and all right, title and interest in the [*]. If
a Participant goes non-consent on any operation subsequent to hook-up of the
Initial Test Well, it shall retain the interest previously earned.

    

    Notwithstanding
any other provision of this Agreement, in no event shall the Participant be
entitled to participate on a "non-consent" basis with respect to the Initial
Test Well as set forth in the AFE and in Article VI, of the Operating Agreement
or any subsequent operations.

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    
      [*]
Designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the
Commission

     

    Any
election, by Participant, not to participate prior to earning, whether by formal
notice or by failure to elect and/or to timely pay, shall result in the
forfeiture of any and all of Participant's right title and interest in the Hetch
Prospect.

     

    5.           Operator's
duties shall be:

     

    (a)          [*]

     

    (b)          to
conduct a study of the Seismic Data and issue a report of its findings to the
Participant.

     

    (c)          to
report to Participant a recommendation as to the suitability of the Prospect for
the drilling of a Test Well, the location and depth of same.

     

    (d)          [*]

     

    (e)          to
maintain leases held and acquired by paying rentals and extending terms, where
necessary. During the term of this Agreement the Operator shall keep the said
leases free and clear from all liens.

     

    (f)          to
issue AFEs and Cash Calls to fund operations.

     

    (g)          to
drill, with Participant’s participation, the Initial Test Well on lands within
the AMI.

     

    (h)          to
operate the production of any hydrocarbons found on the Leased Lands from the
Initial Test Well and/or any follow up wells under the terms and provisions of
the Joint Operating Agreement.

     

    
      6.       
     (a)          If it is
determined by Operator, based upon its analysis of the Seismic Data, that there
is a probability of the Initial Test Well producing in paying quantities, [*],
or a date mutually acceptable to both parties, at a location mutually acceptable
between Operator and Participant, initially presumed to be located in [*].
Should Operator and Participant disagree, Participant shall not unreasonably
withhold its consent to Operator's proposal.  Thereafter Operator
shall diligently and continuously prosecute the drilling of said test well in a
proper and workmanlike manner to contract depth. Operator shall furnish
Participant with copies of daily drilling reports as well as copies of all logs.
Participant shall have on-site access to all operations on the subject lands.
Participant's access shall be at its sole risk.

    

     

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    
      [*]
Designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the
Commission

    (b)           In
the event any well provided for herein is lost for any reason prior to being
drilled to contract depth, or Operator has encountered during the drilling of
any well mechanical difficulty or formation or condition which would render
further drilling impractical or impossible, Operator shall plug and abandon such
well and thereafter commence a substitute well at a mutually agreed location
within forty-five (45) days after cessation of Operators drilling operations in
the prior well, or at a time mutually agreed between Operator and Participant.
In the event of a disagreement, Participant shall not unreasonably withhold its
consent in these matters. Any substitute well drilled hereunder shall be drilled
subject to the same terms and conditions and to the same depth as provided for
the well so lost or abandoned. Any reference herein or hereafter made to the
test well shall be deemed to be a reference to any substitute well or wells
which may be drilled there for.

    

    (c)           In
the event the test well, or substitute well there for is abandoned after
reaching contract depth due to the well being incapable of producing oil and/or
gas in paying quantities, Operator shall have the right to commence a second
test well within ninety (90) days after abandonment of the test well, or at a
time mutually agreed between the Operator and Participant, at a location
mutually acceptable between Operator and Participant. In the event of a
disagreement, Participant shall not unreasonably withhold its consent in these
matters. Once consent (election to participate) is given, Operator shall
diligently and continuously prosecute the drilling of the second test well in a
proper and workmanlike manner to contract depth and complete said test well
within 45 days from the date of commencement.

    

    (d)           By
the performance of the covenants and conditions hereof and upon completion of
the test well as a producer of oil and/or gas in paying quantities and in
accordance with the terms and conditions hereof, Participant shall earn and
receive within fifteen (15) days thereof an interest in said lands as
follows:

    

    (1)           An
assignment of twenty-five percent of One Hundred Percent (25% of 100%) of
Archer's working interest in the AMI. The assignment to Participant from
Operator shall be subject to an overriding royalty being the difference between
lessor royalty and twenty five percent (25.0%). Archer covenants and agrees to
deliver to Operator no less than a seventy-five percent (75.0%) net revenue
interest.

    

    (2)           In
addition, any new leasehold interest acquired within the AMI during the term
hereof by Operator shall be subject to said overriding royalty interest reserved
by Operator, being the difference between lessor royalty and twenty five percent
(25.0%). All information acquired in the drilling of any well by Operator in the
AMI shall be furnished to Participant(s) in a timely manner and at no cost to
Participant(s).

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    
      [*]
Designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the
Commission

       

    

     

    (3)        Within
three-hundred and sixty-five (365) days from and after the date of the
commencement of production of oil or gas in paying quantities in the test well,
or at a time mutually agreed between the Operator and Participant(s), Operator
shall have the right to commence drilling operations of the next well.
Operations for drilling of each successor well thereafter may commence within
three-hundred and sixty-five (365) days from and after the cessation of drilling
operations in the preceding well, or at a time mutually agreed between the
Operator and Participant(s), until the leased land has been fully developed. As
used in this paragraph, the term "cessation of drilling operations" shall not
include a temporary stoppage of drilling operations in the same well, nor to a
stoppage of longer duration for such purposes where such stoppage is approved in
writing by Operator. In the event of a disagreement, Participant(s) shall not
unreasonably withhold its consent in these matters. This Section of the
Participation Agreement is subject to the terms and conditions of the Leases
held in the AMI. In. the case of any conflict between the two, the requirements
of the Leases shall prevail.

     

    7.           Operator
shall have the right to contract out for services and assign duties to qualified
entities in the performance of its obligations under this
Agreement.

    

    8.           Participant
shall be responsible for the timely payment of its proportionate share of any
and all expenses in connection with the Prospect, including but not limited to
the drilling and completion of the Initial Test Well.

    

    9.           Each
party hereto shall be liable and responsible for and shall indemnify and hold
the other harmless (including costs and attorney's fees) from and against any
claim or actions following injury to, illness or death of any person and any
loss or damage to any property occurring in connection with the performance or
non­performance of this agreement only to the extent of its own negligence
and that of its agents, servants, employees and contractors.

    

    10.           The
Initial Test Well shall be drilled subject to the terms and conditions of the
geological requirements set forth in Exhibit "A-2" to the Operating Agreement,
which is attached hereto and made a part hereof.

    

    11.           All
operations on the leased lands within the AMI shall be governed by a mutually
acceptable Operating Agreement with, among other attachments, a COPAS Accounting
Procedure. The said Operating Agreement and Accounting Procedure is attached
hereto as Exhibit "C". For the purpose of determining Operator's reimbursable
costs and expenses for any well in which Operator retains a working interest,
the said COPAS Accounting Procedure, as herein modified, shall control. In the
event of a conflict between the provisions of the Operating Agreement and/or the
Accounting Procedure and this Agreement, the terms of the latter shall
control.

     

    12.           If
any well is completed as a producer of oil and/or gas in paying quantities,
Operator shall furnish to Participant(s), within ninety (90) days after the date
of completion, an itemized statement of the cost of drilling, testing,
completing and equipping the well, together with an inventory of the material
and equipment therein, thereon and used in connection therewith and Operator
shall thereafter furnish Participants with a monthly itemized statement of the
cost of operations and the quantities and qualities of oil, gas or other
minerals which are produced from said well, together with the amount of proceeds
from the sale of such production in the preceding month; such reports, together
with a complete well record shall be furnished to Participants.

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    
      [*]
Designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the
Commission

       

    

     

    13.           If
a lease described herein covers less that a full oil and gas leasehold estate in
any lands described herein under such lease, or if Operator's interest in such
lease covering any lands described herein under such lease is less than the full
oil and gas leasehold estate (excluding and disregarding any applicable royalty,
overriding royalty, production payment or other burden to which leasehold estate
is subject), then the overriding royalty reserved out of the production from the
lands in which Operator's interest in the oil and gas lease bears to the full
oil and gas leasehold estate in such land, and the interest in the well in which
Operator may acquire a working interest shall be in the proportion that the oil
and gas leasehold estate in such lease covering the lands described herein bears
to the full oil and gas leasehold estate in said lands.

    

    14.           Each
extension of any of the said leases, in whole or in part, shall maintain and
continue in effect the rights and interests reserved by Operator in said leases
so extended and in said lands covered thereby. Should a renewal or new lease or
leases covering the said lands, or a part of or interest in the said lands, or a
part of or interest in such a lease, be acquired by Operator, or by a third
party wholly or partly for Operator or Operator's benefit, within three (3)
years from the date of the expiration of the primary term of said lease, the
rights and interests herein reserved by Operator shall attach and apply to each
renewal or new lease, the lands described therein and estate created thereby
with the same result and effect as such reserved rights and interests attach and
apply to the said lease, the said lands or in the estates created by the said
lease. Should Participant, acting as Agent for the Operator, acquire any
additional acreage within the AMI in addition to the [*] described above,
Participant shall assign said leases to

    

    Operator.
Operator shall reimburse Participant(s) for all of its approved expenses related
to the acquisition. Operator shall maintain rights and interest in the
additional acreage the same as in all other acreage subject to this
Agreement.

     

    15.           The
provisions of this paragraph 15 shall be applicable to all operations conducted
by Operator in which Participant, as to the interest in the said lease covered
by this Agreement, is participating in an operation with a working
interest.

     

    (a)           Operator
shall drill all wells necessary to protect the said lands from drainage through
offset wells to said lease(s).

    

    (b)           If
Operator should elect to abandon any well either drilled on the said lands or on
said unit of production, or if any well either on the said lands or on said unit
of production ceases to produce in paying quantities and if actual drilling
operations for a replacement well or reworking operations are not commenced
within thirty (30) days thereafter, Operator shall immediately inform
Participant in writing of such fact and Participant shall have the option, to be
exercised within fifteen (15) days, to reacquire free of cost the rights
assigned to Operator hereunder free and clear of liens and encumbrances insofar
as said rights cover and embrace the lands attributable to any such well, if
Participant elects to reacquire any of said lease(s) (or any part or interest as
herein provided), Participant shall also have the option to acquire any well,
together with the material in and around such well then on said lands and
necessary in the operation of such well at a price equal to the reasonable
salvage value of said materials. If Participant elects to take over a well, it
does so with the understanding that it accepts all obligations in connection
with said well, including but not limited to all abandonment costs. Further,
Participant(s) must present to Operator, at the time of notification of intent
to take over a well, proof of a "DOGGR Bond".

     

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    
      [*]
Designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the
Commission

    (c)           In
the event Operator desires to surrender any of the said lease(s) as to all or
any part of said lands covered thereby or to allow any of said lease(s) to
terminate or expire, Operator shall notify Participant at least sixty (60) days
in advance of the anniversary date specified in such lease (or the date to be
surrendered, if other than the anniversary date) and Participant shall have
fifteen (15) days after receipt of such notice of its election to take a
reassignment of said lease as to the portion thereof to be relinquished or to be
allowed either to expire or terminate. Should Participant elect to receive a
reassignment, it shall be delivered by Operator not less than fifteen (15) days
prior to the anniversary date of any such lease (or proposed date of surrender).
Any reassignment under terms hereof shall be free of cost to
Participant.

     

    (d)           As
to each well that Operator drills on the leased lands, or lands within the AMI,
Operator shall notify Participant in writing of the following
items:

     

     

    (1)           The
exact legal description of the location.

    (2)           The
date actual drilling is commenced.

    (3)           The
total depth drilled.

    (4)           The
date of completion.

    (5)           Whether
completed as a producer of oil and/or gas or as a dry hole.

    (6)           The
date any production commences.

    (7)           The
date any well is shut -in.

    (8)           The
date and amount of payment of any shut-in royalty.

     

    Such
written notice shall be given to Participant within five (5) days after the
occurrence of each of said items.

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    
      [*]
Designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the
Commission

       

    

     

    (e)           Should
Operator commence any well which will be drilling over the end of the primary
term of any of the said lease(s), Operator shall give Participant written notice
of such drilling at least ten (10) days prior to the end of such primary
term.

     

    16.           Any
notices given or required to be given hereunder shall be accomplished as set
forth below. Operator's address and telephone number are:

     

    ARCHER
EXPLORATION, INC.

    1701
Westwind Drive, Suite 125

    Bakersfield,
CA 93301

    (661)
631-1700

     

    Participant's
address and telephone number are:

     

    AMERICAN
PETRO-HUNTER, INC.

    1694
Falmouth Road, Suite 123

    Centerville,
MA 02632

    (480)
626-5331

     

    Each
Participant shall promptly advise Operator, in writing, of its current address
and telephone number to be used in connection with the giving of any notices
hereunder.

    

    The time
for such receiving party to give any notice in response thereto shall begin to
run on the day following the date the originating notice is received, and
responsive notice shall be deemed given when deposited in the United States mail
or private express courier, properly addressed and with postage or charges
prepaid. Any notice or response sent by Fax with hard copy via U. S. Mail shall
be deemed delivered on the date of fax transmission.

    

    17.           Operator,
prior to commencing operations for any well on the leased lands shall, conduct
title work and make reasonable effort to cure any title defects found. Operator
shall keep Participant advised of these efforts. Operator shall promptly furnish
Participant(s) with copies of all title reports, abstracts and attorney's title
opinions obtained by it relating to said lease(s). Operator and Participant
shall make available to each other, any title information it may have pertaining
to said lease(s). Neither party shall be liable for the accuracy of any title
information furnished pursuant to the foregoing. Participant does not warrant
title, either expressed or implied, to the said lease(s).

     

    18.           Participant
may not assign its interest or rights under this Agreement without the prior
written consent of Operator. Any change in the name of holder of the
Participant(s)' interest, change in ownership, including but not limited to a
change from private to public ownership of the Participant or any other change
in the status or nature of the ownership interest, shall be considered to be an
assignment, or attempt to assign, under this Section 18.

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    
      [*]
Designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the
Commission

       

    

     

    19.           No
party hereto shall directly or indirectly make or authorize press or public
information releases announcing or concerning the Unit Area and operations
hereunder, the execution of or continuation or termination of this agreement or
the results of any operation conducted hereunder without approval of all parties
hereto

     

    20.           Time
shall be the essence of this Agreement in all of its parts. This Agreement may
be executed in any number of counterparts, each of which shall be considered as
an original for all purposes. The terms, covenants and conditions hereof shall
run in favor of and are binding upon the parties hereto, their successors and
assigns, and shall run in favor of and are binding upon the parties hereto,
their successors and assigns, and shall run with the said leases and
lands.

     

    The
$200,000.00 consideration shall be paid to Operator upon Participant's execution
of this Agreement.

     

    IN
WITNESS WHEREOF, Operator and Participant have hereunder caused their names to
be subscribed the day and year first above written.

     

    
      	
              ARCHER
      EXPLORATION, INC.

            	
              AMERICAN
      PETRO-IILTNTER, INC.

            
	
               

            	 
      
	
              /s/
      John W. Howe, President

            	
              /s/
      John Lennon, PresidentUnassociated Document

    Exhibit 10.1

     

    

     

    SEVERANCE PACKAGE AND
RELEASE AGREEMENT

    

     

    This
Severance Package and Release Agreement (“Agreement”) is made and entered into
between United PanAm Financial Corporation, United Auto Credit Corporation, and
their officers, directors,  shareholders, employees, representatives,
attorneys, agents, affiliates and subsidiaries  (hereinafter
collectively referred to as “the Company”) on the one hand, and Mario Radrigan
(“Mr. Radrigan”) on the other hand. The purpose of this Agreement is to settle
and compromise any and all disputes and controversies of any nature existing
between the parties, including, but not limited to, any claims arising out of
Mr. Radrigan’s employment with, and separation from, the Company.

     

    Separation of
Employment.  The parties have reached a mutual agreement that
Mr. Radrigan’s current Employment Agreement, dated July 30, 2007 (“the
Employment Agreement”) and his employment with the Company shall be terminated
by the Company  effective April 9, 2009 (“the Separation Date”). Mr.
Radrigan confirms that he has received all
salary and benefits up to and including the Separation
Date.  Specifically, Mr. Radrigan has been provided with a final
paycheck reflecting payment of his salary through April 9, 2009 in the gross
amount of Six Thousand Six Hundred Seventy-Eight Dollars and Thirty-Six Cents
($6,678.36), less applicable state and federal
withholdings.   Mr. Radrigan has also received payment for all
accrued and unused vacation as of the Separation Date in the gross amount of
Thirty Six Thousand, Ninety-Five Dollars and Thirty-Six Cents ($36,095.36), less
applicable state and federal taxes and withholdings, and a final car allowance
payment in the amount of One Hundred Dollars ($100.00).  Mr. Radrigan
confirms that he has previously submitted any and all outstanding
business-related expenses for reimbursement, except for one outstanding cell
phone bill, and has received payment from the Company for such expenses as of
the Separation Date.  Regarding this one outstanding cell phone bill,
Mr. Radrigan agrees to submit proper documentation regarding such cell phone
bill within thirty (30) days of the execution of this Agreement by
him.  This outstanding expense shall be reimbursed in accordance with
the Company’s applicable policies. Mr. Radrigan shall be provided with
information regarding how to continue his group health insurance pursuant to
COBRA, consistent with the Company’s normal practices.  In addition,
within 30 days of the Separation Date, Mr. Radrigan has the right to exercise
One Hundred Ninety Thousand (190,000) options that have vested of Company common
stock.  Mr. Radrigan has zero (0) shares of restricted Company common
stock that have vested as of the Separation Date.  In selling any
shares of Company common stock, Mr. Radrigan shall be responsible for complying
with Rule 144 of the Securities Act of 1933 for a period of 90 days from the
Separation Date.  In addition, Mr. Radrigan understands that any
purchase or sale of Company common stock made by him for six months prior to the
Separation Date could potentially be matched to a purchase or sale of Company
common stock made by him for six months after the Separation Date pursuant to
Section 16 of the Securities Exchange Act of 1934.  Mr. Radrigan shall
also be responsible for complying with any reporting obligations under Section
16 of the Securities Exchange Act of 1934.

     

    Termination of
Positions.  Effective as of the Separation Date, Mr. Radrigan
has been terminated as an officer, trustee and any other position currently held
at the Company and any subsidiary of the Company.

     

    1.           Severance Payment and
Target.  After execution of this Agreement and the expiration
of the revocation period provided in Paragraph 13 below,  provided
that this Agreement has not been revoked by Mr. Radrigan,  and after
the return of all Company property as described in Paragraph 2 below, the
Company agrees to pay Mr. Radrigan, pursuant to Paragraph 9.1 of the Employment
Agreement: (1)  severance pay equal to twelve (12) months of his
current base salary in the amount of Two Hundred Forty-Eight
Thousand  and Sixty-three Dollars ($248,063.00), less applicable state
and federal taxes and withholdings and (2) a prorated Target Bonus through the
Separation Date, in the amount of  Twenty-Three Thousand Eight Hundred
and Seventy Six Dollars ($23,876.00), less applicable state and federal taxes
and withholdings.

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    2.           Return of
Property.  Mr. Radrigan agrees immediately to return to the
Company all property of the Company which he has in his custody or control such
as keys, key cards, passwords, office equipment, forms, manuals, customer files,
personnel files, or other confidential or proprietary materials of the Company;
provided, however, that Mr. Radrigan shall be permitted to keep the Company’s
laptop (Dell Latitude D620) which he has been using, after the Company has been
provided with the opportunity to remove all Company-related information and
programs from that laptop.

     

    3.           Release of Known and Unknown
Claims.  In consideration of the payment outlined above and the
further agreements set forth below, and excepting only the obligations created
in this letter Agreement, Mr. Radrigan hereby agrees unconditionally to release
and discharge United Pan Am Financial Corporation, United Auto Credit
Corporation, their respective current and former officers, directors,
shareholders, employees, representatives, attorneys and agents, as well as their
predecessors, parents, subsidiaries, affiliates, divisions, and successors in
interest, of and from any and all claims, demands, liabilities, suits or damages
of any type or kind, whether known or unknown, including, but not limited to,
any claims or demands arising from or in any way related to Mr. Radrigan’s
employment with or separation from the Company on or before the date of the
execution of this Agreement.  Mr. Radrigan also hereby releases the
Company from any claims made to recover additional taxes paid under Internal
Revenue Code Section 409A.

     

    This
release specifically includes, without limitation, all claims for wrongful
discharge, breach of express or implied contract, defamation, fraud,
misrepresentation, discrimination, harassment, breach of implied covenant of
good faith and fair dealing, compensatory and/or other relief relating or in any
way connected with the terms, conditions, and benefits of employment,
discrimination based on race, color, sex, religion, national origin, age,
marital status, handicap and medical condition, and/or all claims arising under
Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e
et seq., the Age
Discrimination in Employment Act of 1967 as amended by the Older Workers Benefit
Protection Act, the California Fair Employment and Housing Act, the California
Labor Code, the Family and Medical Leave Act, the California Family Rights
Act,  the Employee Retirement Income Security Act of 1974 (“ERISA”),
and/or violations of any other statutes, rules, regulations or ordinances
whether federal, state or local.  This release, however, is not
intended to require Mr. Radrigan to waive any rights he may have under COBRA or
any rights to indemnification that he may have pursuant to the Company’s by-laws
and applicable law.

     

    The
Company similarly agrees unconditionally to release and discharge Mr. Radrigan,
his representatives, agents, attorneys, executors, heirs and assigns, of and
from any and all claims, demands, liabilities, suits or damages of any type or
kind, whether known or unknown including, but not limited to, any claims or
demands arising from or in any way related to Mr. Radrigan’s employment with or
separation from the Company on or before the date of the execution of this
Agreement.

     

    It is
understood and agreed that this release extends to all claims of whatever
nature, known or unknown, and includes all rights under Section 1542 of the
Civil Code of California, which provides as follows:

     

    A general
release does not extend to claims which the creditor does not know or suspect to
exist in his or her favor at the time of executing the release, which if known
by him or her must have materially affected his or her settlement with the
debtor.

     

    Thus,
notwithstanding the provisions of Section 1542, and for the purpose of
implementing a full and complete release and discharge of all claims, the
parties expressly acknowledge that this Agreement also includes in its effect,
without limitation, all claims that the parties do not know or suspect to exist
in their favor at the time of execution hereof, and that this Agreement
contemplates the extinguishment of any and all such
claim(s).  Notwithstanding the foregoing, nothing in this Agreement
shall prevent Mr. Radrigan from filing a charge with any federal, state or
administrative agency, but Mr. Radrigan agrees not to participate in, and waives
any rights with respect to, any monetary or financial relief arising from any
such proceeding that relates to the matters released by this
Agreement.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    4.           No Admission of
Liability.  By entering into this Agreement, the Company and
Mr. Radrigan do not suggest or admit to any liability to each other or that they
violated any law or any duty or obligation to the other party.

     

    5.           Confidentiality. Mr. Radrigan
agrees that neither he nor his agents or representatives will disclose,
disseminate and/or publicize, or cause or permit to be disclosed, disseminated
or publicized, the existence of this Agreement, any of the terms of this
Agreement, or any claims or allegations which he believes could have been made
or asserted against the Company, directly or indirectly, specifically or
generally, to any person, corporation, association or governmental agency or
other entity, or participate, cooperate or assist any person(s) with respect to
any claim they may have against the Company, except:  (1) to the
extent necessary to report income to appropriate taxing authorities; (2) to
members of his immediate family; (3) in response to an order of a court of
competent jurisdiction or subpoena issued under the authority thereof; or (4) in
response to any inquiry or subpoena issued by a state or federal governmental
agency; provided, however, that notice of receipt of such judicial order or
subpoena shall be immediately communicated to the Company telephonically, and
confirmed immediately thereafter in writing, so that the Company will have the
opportunity to assert what rights it has to non-disclosure prior to the response
to the order, inquiry or subpoena. Mr. Radrigan also agree to maintain all
non-public information regarding the Company while at the Company, including but
not limited to, information regarding the Company’s customers, officers,
directors, employees, financial and business information, and internal Company
policies or procedures as strictly confidential and shall not disclose them to
third parties.

     

    In the
event that the Human Resources Department of the Company receives an inquiry
into Mr. Radrigan’s employment with United Auto Credit Corporation related in
any way to a future employment opportunity for Mr. Radrigan, the Company will
confirm, in writing, the dates of employment of Mr. Radrigan, the last position
he held with the Company, and if authorized in writing by Mr. Radrigan, his last
salary.  In addition, the parties have agreed, pursuant to Paragraph
9.4 of the Employment Agreement, that the following statement will be provided
to prospective employers with respect to Mr. Radrigan’s separation from the
Company: “Mr. Radrigan has resigned as Executive Vice President and Chief
Marketing Officer of United PanAm Financial Corp. and United Auto Credit
Corporation and any positions held with subsidiaries in order to pursue other
interests. This resignation is not the result of any disagreement with the
Company concerning any matter relating to the Company’s operations, policies, or
practices”.  The parties have further agreed that the Company will
provide the following information to the California Employment Development
Department and for purposes of COBRA:  “The Company terminated Mr.
Radrigan for business reasons unrelated to his job performance”.  In
return, Mr. Radrigan will not provide or disclose any information, adverse or
otherwise, regarding matters related to this Agreement or the Company to any
other party or entity he is seeking employment with, nor with any current or
past employees or vendors of the Company.

     

    Any
violation of the confidentiality provision contained in this Agreement by Mr.
Radrigan shall be considered a material breach of this Agreement.

     

    6.           Employee
Contact.  At no time shall Mr. Radrigan contact any employee
who is currently employed by United Auto Credit Corporation or United Pan Am
Financial Corporation during normal business hours for any
reason.  Should Mr. Radrigan maintain personal relationships with
United Auto Credit Corporation or United Pan Am Financial Corporation employees
outside of employment with the Company, Mr. Radrigan shall at no time discuss
the terms of this Agreement with current employees of the Company.

     

    7.           Cooperation.  Mr.
Radrigan agrees to cooperate reasonably with the Company in the prosecution or
defense of all threatened claims or actual litigation in which the Company is or
may become a party, whether now pending or hereafter brought, in which Mr.
Radrigan has knowledge of relevant facts or issues.  This cooperation
may include, but is not limited to, conferring with and assisting the Company in
preparatory work in litigation matters and providing factual information to the
Company.

     

    8.           Arbitration. Any and all
disputes, controversies or claims arising under or in any way relating to the
interpretation, application or enforcement of this Agreement, Mr. Radrigan’s
employment with the Company, any claim for benefits, or his separation of
employment from the Company, including without limitation any claim by him that
he was fraudulently induced to enter into this Agreement, or regarding the
enforceability or interpretation of this Agreement, shall be settled by final
and binding arbitration under the auspices and rules of JAMS or other mutually
agreeable alternative dispute resolution service in accordance with that
service’s rules for the resolution of employment disputes.  Any such
arbitration must be filed in Orange, California, and the laws of the State of
California shall control except where federal law governs.  The
prevailing party in any such arbitration proceeding shall be entitled to
reasonable costs and attorney’s fees.  The award of the arbitrator is
to be final and enforceable in any court of competent jurisdiction.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    9.           Waiver and
Modification.  The failure to enforce any provision of this
Agreement shall not be construed to be a waiver of such provision or to affect
either the validity of this Agreement or the right of any party to enforce the
Agreement.  This Agreement may be modified or amended only by a
written agreement  executed by Mr. Radrigan and a properly authorized
designee of the Board of Directors of the Company.

     

    10.           Integration.  This
Agreement constitutes a single, integrated written contract expressing the
entire agreement of the parties hereto relative to the subject matter
hereof.  No covenants, agreements, representations, or warranties of
any kind whatsoever have been made by any party hereto.  All prior
discussions and negotiations have been and are merged and integrated into, and
are superseded by, this Agreement.

     

    11.           Severability.  In
the event that any provision of this Agreement should be held to be void,
voidable, or unenforceable, the remaining portions hereof shall remain in full
force and effect.

     

    12.           Governing Law.  This
Agreement shall be construed in accordance with, and be governed by the laws of
the State of California.

     

    13.           Right to an Attorney, Time to
Consider, Revocation.  Mr. Radrigan acknowledges and agrees
that he was provided twenty-one (21) days to consider this Agreement and to
consult with counsel and the Company has advised Mr. Radrigan of his right to do
so.  To the extent that Mr. Radrigan has taken less than twenty-one
(21) days to consider this Agreement, Mr. Radrigan acknowledges that he has had
sufficient time to consider the Agreement and to consult with counsel and that
he does not desire additional time.  This Agreement is revocable by
Mr. Radrigan for a period of seven (7) calendar days following Mr. Radrigan’s
execution of this Agreement.  The revocation by Mr. Radrigan of this
Agreement must be by registered letter addressed to the undersigned
representative of the Company, must specifically revoke this Agreement, and must
be received by the Company prior to the eighth (8th) day following the execution
of this Agreement by Mr. Radrigan.  This Agreement becomes effective,
enforceable and irrevocable on the eighth (8th) day following Mr. Radrigan’s
execution of this Agreement.

     

    PLEASE
READ CAREFULLY.  THIS AGREEMENT CONTAINS A RELEASE OF ALL KNOWN AND
UNKNOWN CLAIMS.

     

     

    UNITED
PANAM FINANCIAL CORPORATION

     

     

    
      
        	
                /S/   James
      Vagim

              	
                Dated:  April
      9, 2009

              
	
                By:  James
      Vagim

              	 
      

      

    

    

    I
have carefully read this Agreement and understand that it contains a release of
known and unknown claims.  I acknowledge and agree to all of the terms
and conditions of this Agreement.  I further acknowledge that I enter
into this Agreement voluntarily with a full understanding of its
terms.

     

     

    
      
        	
                /S/   Mario
      Radrigan

              	
                Dated:  April
      9, 2009

              
	
                By:  Mario
      Radrigan

              	 
      

      

    

    
      
         

      

      
        4

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