Document:

EXHIBIT 10.1

 

 

STOCK
PURCHASE AGREEMENT

 

by
and among

 

BPZ
Resources, Inc. and

the Investors Named Herein

 

 

Dated
February 19, 2009

 

 

 

STOCK PURCHASE AGREEMENT

 

This STOCK PURCHASE
AGREEMENT (this “Agreement”), dated February 19, 2009, is by and among BPZ Resources, Inc., a Texas
corporation (the “Company”), and the Investors named on Schedule 1.1 hereto
(collectively, the “Investors” and each the “Investor”).

 

RECITALS

 

WHEREAS, the Company has received from each Investor
a Purchaser Suitability Questionnaire (the “Questionnaire”) relating to the
transactions contemplated in this Agreement, each Investor has executed a
Confidentiality Agreement relating to the Company’s business and each Investor
acknowledges that he has been given full access by the Company to all
information concerning the business and financial condition, properties,
operations and prospects of the Company that Investor has deemed relevant for
purposes of making the investment contemplated by this Agreement.

 

WHEREAS, the Company proposes to issue and sell to
Investors, and Investors desire to purchase from the Company, shares of the
Company’s common stock, no par value (the “Common Stock”), on the terms set
forth herein.

 

AGREEMENT

 

NOW,
THEREFORE, in
consideration of the mutual covenants and agreements set forth herein and for
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:

 

1.                                      Purchase

 

1.1.                              Purchase and Sale of Stock.  Subject to the terms and conditions of
this Agreement, the Company will issue and sell to each Investor, and each
Investor severally agrees to purchase from the Company, the number of shares of
the Company’s authorized but unissued Common Stock (the “Shares”) set forth
with respect to such Investor on Schedule 1.1 hereto, at a price per share
equal to $3.05.  The closing (the “Closing”) of the sale of the Shares
shall be effected at the offices of the Company on February 19, 2009, or
at such other time and place as may be agreed to by the Investors and the
Company (the “Closing Date”).  At the Closing, subject to the terms and
conditions hereof, the Company shall cause the issuance of the Shares purchased
by such Investor from the Company, against payment of the full amount of such
Investor’s aggregate purchase price by wire transfer of immediately available
funds to the Company’s bank account.

 

1.2.                              Legends.  All certificates representing the Shares shall bear the
following legend (in addition to any legend required by the blue sky or
securities laws of any state or jurisdiction to the extent such laws are
applicable to the shares represented by the certificate so legended):

 

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“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS, PROVIDED
THAT THE SELLER DELIVERS TO THE COMPANY AN OPINION OF COUNSEL (WHICH OPINION
AND COUNSEL ARE REASONABLY SATISFACTORY TO THE COMPANY) CONFIRMING THE
AVAILABILITY OF SUCH EXEMPTION.”

 

The legend set forth above shall be removed and the
Company shall issue a certificate without such legend or any other restrictive
legend to the holder of the Shares upon which it is stamped or issue to such
holder by electronic delivery at the applicable balance account at the
Depository Trust Company (“DTC”) within three business days following delivery
by Investor to the Company or the Company’s transfer agent of a certificate
representing Shares, if (i) such Shares are registered for resale under
the Securities Act of 1933, as amended (the “Securities Act”), (ii) in
connection with a sale, assignment or other transfer, such holder provides the
Company with an opinion of counsel, in a generally acceptable form, to the
effect that such sale, assignment or transfer of the Shares may be made without
registration under the applicable requirements of the Securities Act, or (iii) such
holder provides the Company with reasonable assurance that the Shares can be
sold, assigned or transferred pursuant to Rule 144 promulgated under the
Securities Act (“SEC Rule 144”) or Rule 144A promulgated under the
Securities Act.

 

1.3.                              Stop Transfer Orders.  All certificates representing the
Shares will be subject to a stop transfer order with the Depository Trust
Company or with the Company’s transfer agent that restricts the transfer of
such Shares except in compliance with this Agreement.

 

1.4.                              Buy-In. If the Company shall fail for any reason or for no reason to issue to
an Investor unlegended certificates within seven (7) business days of receipt
of all documents necessary for the removal of the legend set forth above (the “Deadline
Date”), then, in addition to all other remedies available to such Investor, if
on or after the business day immediately following such seven (7) business
day period, such Investor purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by the
holder of shares of Common Stock that such Investor anticipated receiving from
the Company without any restrictive legend (or a broker or trading counterparty
through which the Investor has agreed to sell shares makes such purchase) (a “Buy-In”),
then the Company shall, within seven (7) business days after such Investor’s
request and in such Investor’s sole discretion, either (i) pay cash to the
Investor in an amount equal to such Investor’s total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so purchased (the
“Buy-In Price”), at which point the Company’s obligation to deliver such
certificate (and to issue such shares of Common Stock) shall terminate, or (ii) promptly
honor its obligation to deliver to such Investor a certificate or certificates
representing such shares of 

 

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Common Stock and pay cash to the Investor in an
amount equal to the excess (if any) of the Buy-In Price over the product of (a) such
number of shares of Common Stock, times (b) the closing bid price on the
Deadline Date.

 

2.                                      Representations
and Warranties of the Company.  The Company hereby makes the
following representations and warranties to the Investors:

 

2.1.                              Organization, etc.  The Company is a corporation, duly
organized and validly existing and in good standing under the laws of the State
of Texas, with full power and authority (corporate and otherwise) to own its
properties and conduct its business as currently conducted, and is qualified or
licensed to do business and is in good standing as a foreign corporation in
each other jurisdiction in which the conduct of its business or the ownership
of property requires such qualification or licensing, except where failure to
be so qualified or licensed would not have a material adverse effect on the
financial condition, operations or prospects of the Company and its
Subsidiaries (as defined below), taken as a whole (for the Company and its
Subsidiaries, a “Material Adverse Effect”).  Each company (each, a “Subsidiary”)
listed on Schedule 2.1 hereof is duly organized and validly existing and in
good standing under the laws of the jurisdiction of its organization, with full
power and authority (corporate and otherwise) to own its properties and conduct
its business as currently conducted and is qualified or licensed to do business
and is in good standing as a foreign corporation in each other jurisdiction in
which the conduct of its business or the ownership of property requires such
qualification or licensing, except where failure to be so qualified or licensed
would not have a Material Adverse Effect.  Except for the Subsidiaries,
the Company does not own, of record or beneficially, the securities of any
other entity.

 

2.2.                              Authority.  The Company has the corporate power and authority to execute
and deliver this Agreement and to perform its obligations hereunder, and such
action has been duly authorized by all necessary corporate action on the part
of the Company, and no further action is required by the Company, its Board of
Directors or its stockholders in connection therewith (including, without
limitation, under the rules and regulations of the NYSE Alternext US
exchange). The issuance and sale of the Shares has been duly authorized and if,
as and when issued in accordance with the terms of this Agreement and delivered
to the Investors, the Shares will be duly and validly issued and outstanding,
fully paid and non-assessable and will be free of any Encumbrance (as defined
below) created by the Company, in the Company’s control, or of which the
Company has actual knowledge following reasonable inquiry, other than those
imposed pursuant to this Agreement and securities laws of general
application.  As used in this Agreement, “Encumbrance” shall mean any
claim, lien, pledge, option, charge, easement, security interest, deed of
trust, mortgage, right of way, encroachment, private building or use
restriction, conditional sales agreement or other right of third parties,
whether voluntarily incurred or arising by operation of law, and includes,
without limitation, any agreement to give any of the foregoing in the future, and
any contingent sale or other title.  Except as set forth in Schedule 2.2,
the issuance and sale of the Shares will not be subject to preemptive or other
similar rights of any holder of the Company’s securities.

 

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2.3.                              Enforceability.  This Agreement has been duly executed
and delivered by the Company and constitutes a legal, valid and binding
agreement and obligation of the Company enforceable against it in accordance
with its terms subject to bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect generally relating to or
affecting creditors’ rights.

 

2.4.                              No Violation.  The execution and the delivery by the
Company of this Agreement and the performance by the Company of its obligations
hereunder, including the issuance and sale of the Shares, do not and will not (i) conflict
with or result in a breach of the terms, conditions or provisions of, (ii) constitute
a default under (or an event that with notice or lapse of time would become a
default), (iii) result in a violation of, or (iv) require any
authorization, consent, filing or approval not heretofore obtained pursuant to,
(a) any binding written or oral agreement or instrument including, without
limitation, any charter, bylaw, trust instrument, indenture or evidence of
indebtedness, lease, contract or other obligation or commitment (each, a “Contractual
Obligation”) binding upon the Company or any Subsidiary or any of their
respective properties or assets, or (b) any law, rule, regulation,
restriction, order, writ, judgment, award, determination, injunction or decree
of any court or government, or any decision or ruling of any arbitrator (each,
a “Requirement of Law”) binding upon or applicable to the Company or any
Subsidiary or any of their respective properties or assets (including the rules and
regulations of any self-regulatory organization to which the Company or its
securities are subject) and which would have or reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

2.5.                              Litigation.  Except as set forth in Schedule 2.5 or the SEC Reports (as
defined in Section 2.7 below), there are no pending or, to the best of the
Company’s knowledge, threatened actions, claims, orders, decrees,
investigations, suits or proceedings (each, an “Action”) by or before any
governmental authority, arbitrator, court or administrative agency which would
have or reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.  Neither the
Company nor any Subsidiary, nor any director or officer thereof, is or has been
the subject of any Action involving a claim of violation of or liability under
federal or state securities laws or a claim of breach of fiduciary duty.  There has not been, and to the Company’s
knowledge there is not pending or contemplated, any investigation by the
Securities and Exchange Commission (the “SEC”) involving the Company or any
current or former director or officer of the Company except as publicly
disclosed.  The SEC has not issued any
stop order or other order suspending the effectiveness of any registration
statement filed by the Company or any of its Subsidiaries under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), or the Securities Act.

 

2.6.                              Capitalization.  The
authorized capital stock of the Company consists of 250,000,000 shares of
Common Stock, no par value, 78,748,390 shares issued and outstanding as of the
date hereof, and 25,000,000 shares of preferred stock, no par value, none of
which are issued or outstanding as of the date hereof.  All of the
outstanding shares of capital stock of the Company are duly authorized, validly
issued, fully paid and non-assessable, have been issued in compliance in all material
respects with all applicable federal and state securities laws, and none of
such outstanding shares was 

 

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issued in violation of any preemptive rights or
similar rights to subscribe for or purchase any capital stock of the
Company.  Except as set forth on Schedule
2.6, the Company owns 100% of the capital stock or other equity interest of
each of the Subsidiaries free and clear of any lien, pledge, security interest or
other encumbrance .  Except as set forth on Schedule 2.6 hereto, (i) there
do not exist any other authorized or outstanding securities, options, warrants,
calls, commitments, rights to subscribe or other instruments, agreements or
rights of any character, or any preemptive rights, convertible into or
exchangeable for, or requiring or relating to the issuance, transfer or sale
of, any shares of capital stock or other securities of the Company or any
Subsidiary and (ii) there are no outstanding securities or instruments of
the Company which contain any redemption or similar provisions, and there are
no contracts, commitments, understandings or arrangements by which the Company
is or may become bound to redeem a security of the Company.  The Common
Stock is listed on the NYSE Alternext US exchange and no order ceasing or
suspending trading in the Common Stock has been issued and no proceeding for
such purpose is pending or, to the knowledge of the Company, threatened.

 

2.7.                              Annual Report; Financial Statements.  Except as qualified by Schedule 2.7, the
Company’s Annual Report on Form 10-K for the year ended December 31,
2007, as amended; Quarterly Reports on Form 10-Q for the periods
respectively ended March 31, 2008, as amended; June 30, 2008 and September 30,
2008; and Reports on Form 8-K on January 4, 2008; March 5, 2008;
March 24, 2008; May 20, 2008; July 8, 2008; August 20,
2008; October 2, 2008; October 21, 2008; November 24, 2008; January 14,
2009; January 29, 2009 and February 5, 2009 (including all exhibits
and schedules thereto, the “SEC Reports”) have been filed with the SEC and the
SEC Reports complied in all material respects with the rules of the SEC
applicable to such SEC Reports on the dates filed with the SEC, and the SEC
Reports did not contain, on the date of filing with the SEC, and do not contain
as of the date hereof, and the SEC Reports will not contain as of the Closing
Date, any untrue statement of a material fact, or omit to state any material
fact necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading.   As of the date hereof, except
as set forth in Schedule 2.7, the SEC Reports have not been amended. 
Except as qualified by Schedule 2.7, all of the consolidated financial
statements included in the SEC Reports (the “Company Financial Statements”): 
(i) have been prepared from and on the basis of, and are in accordance
with, the books and records of the Company and with generally accepted
accounting principles in the United States (“GAAP”) applied on a basis
consistent with prior accounting periods; (ii) fairly and accurately
present in all material respects the consolidated financial condition of the
Company as of the date of each such Company Financial Statement and the results
of its operations for the periods therein specified; and (iii) in the case
of the Company Financial Statements contained in the Company’s Annual Report on
Form 10-K for the year ended December 31, 2007, as amended, are
accompanied by the audit opinion of the Company’s independent public
accountants.  Except as set forth in Schedule 2.7 or in the Company
Financial Statements, as of the date hereof and as of the Closing Date, the
Company has no liabilities other than (i) liabilities which are reflected
or reserved against in the Company Financial Statements and which remain
outstanding and undischarged as of the date hereof, (ii) liabilities
arising in the ordinary course of business of the Company since September 30,
2008, or (iii) liabilities which were not required by GAAP to be reflected
or reserved on the Company Financial 

 

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Statements.  Since September 30, 2008,
except as set forth on Schedule 2.7 hereto and in the SEC Reports, there has
not been any event or change which has had or could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect and the
Company has no knowledge after reasonable inquiry of any event or circumstance
that would result in such a Material Adverse Effect.

 

2.8.                              Absence of Certain
Changes.  Since September 30,
2008 (the “Balance Sheet Date”), except as set forth on Schedule 2.8 hereto,
and in the SEC Reports, neither the Company nor any of the Subsidiaries has:

 

(a)                      redeemed, purchased or otherwise acquired
directly or indirectly any shares of any class or series of its capital stock,
or any instrument or security which consists of or includes a right to acquire
such shares;

 

(b)                     paid, discharged or satisfied any claim,
liability or obligation (whether absolute, accrued, contingent or otherwise)
other than the payment, discharge or satisfaction in the ordinary course of
business and consistent with past practice of liabilities and obligations
reflected or reserved against in the Company Financial Statements or incurred
in the ordinary course of business and consistent with past practice since the
Balance Sheet Date;

 

(c)                      incurred any obligation for money borrowed
(including any obligations under letter of credit, banker’s acceptance or
related reimbursement agreement, to the extent drawn) or assumed, guaranteed or
endorsed such obligations, or permitted or allowed any of its material
properties or assets (real, personal or mixed, tangible or intangible) to be
subjected to any mortgage, pledge, claim, lien, security interest, encumbrance,
restriction or charge of any kind outside of the ordinary course of business;

 

(d)                     cancelled any debt or waived any claim or
right of substantial value;

 

(e)                      sold, transferred, licensed, leased, pledged,
mortgaged or otherwise disposed of any of its material properties or assets
(real, personal or mixed, tangible or intangible) or any material amount of
property or assets, except in the ordinary course of business;

 

(f)                        disposed of or permitted to lapse any right
to the use of any Proprietary Rights (as defined in Section 2.14 hereof),
or disposed of or disclosed to any person or entity, other than representatives
of the Investors and persons subject to a nondisclosure agreement, any trade
secret, formula, process, know-how or other Proprietary Right not yet a matter
of public knowledge;

 

(g)                     granted any material increase or accrual in
or accelerated, any benefit or compensation payable or to become payable to any
officer, director, employee or consultant, including any such increase, accrual
or acceleration pursuant to any benefit plan except in connection with a
promotion or job change or any general increase in the compensation payable or
to become payable to officers, employees or 

 

6

 

directors
in the ordinary course of business, or entered into or amended in any material
way any employment, material consulting, severance, termination or material
benefit plan agreement or arrangement other than in the ordinary course of
business;

 

(h)                     declared, paid or set aside for payment any
dividend or other distribution in respect of its capital stock or redeemed,
purchased or otherwise acquired, directly or indirectly, any shares of capital
stock or other securities of the Company or any of the Subsidiaries;

 

(i)                         made any change in any method of tax or
financial statement accounting or accounting practice that would or would
reasonably be expected to result in any material change in the Company
Financial Statements;

 

(j)                         paid, loaned or advanced any amount to, or
sold, transferred or leased any material properties or assets (real, personal
or mixed, tangible or intangible) to, or entered into any agreement or
arrangement with, any of its officers or directors or employees or any
affiliate of any of its officers or directors or employees, except for
directors’ fees and compensation to officers in the ordinary course of
business;

 

(k)                      amended its certificate of incorporation or
by-laws or similar organizational documents;

 

(l)                         issued, sold, transferred, pledged, disposed
of or encumbered any shares of any class or series of its capital stock, or
securities convertible into or exchangeable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of any class or series
of its capital stock, other than shares of Common Stock reserved for issuance
on the date of this Agreement pursuant to the Company’s 2005 Long-Term
Incentive Compensation Plan, Company’s 2007 Long-Term Incentive Compensation
Plan, or the Company’s 2007 Directors’ Compensation Incentive Plan, the
exercise of any warrants or options to purchase Common Stock described on
Schedule 2.6 or existing agreements that require the Company to issue shares of
Common Stock;

 

(m)                   terminated or materially modified or amended
any of its material contracts or waived, released or assigned any material
rights under any material contract or claims, except in the ordinary course of
business and consistent with past practice;

 

(n)                     revalued in any material respect any of its
assets, including writing down the value of inventory or writing-off notes or
accounts receivable, other than in the ordinary course of business consistent
with past practice or as required by GAAP;

 

(o)                     adopted a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or any of the
Subsidiaries; or

 

(p)                     agreed, whether in writing or otherwise, to
take any action described in this section.

 

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2.9.                              Income Tax Returns.  The Company and the Subsidiaries have
filed all federal and state income tax returns which are required to be filed,
and have paid, or made provision for the payment of, all taxes which have
become due pursuant to said returns or pursuant to any assessment received by
the Company or any Subsidiary, except such taxes, if any, as are being
contested in good faith and as to which adequate reserves have been
provided.  The Company has no knowledge of any pending assessments or adjustments
of the income tax payable of the Company or the Subsidiaries with respect to
any year.

 

2.10.                        Permits; Compliance With Law.  The Company and each Subsidiary possesses, and will hereafter
possess, all permits, consents, approvals, franchises and licenses required and
rights to all trademarks, trade names, patents, and fictitious names, if any,
necessary to enable them to own, lease or operate their respective properties
and to conduct the business in which they are now engaged in compliance with
applicable law, except where failure to do so would not have or reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect.  The Company and each Subsidiary are in compliance with all
Requirements of Law in the conduct of their business and corporate affairs,
except where failure to comply, singly or in the aggregate, would not have or
reasonably be expected to have a Material Adverse Effect. Neither the Company
nor any Subsidiary has received any notice of proceedings relating to the
revocation or modification of any such permits, consents, approvals,
franchises, licenses, trademarks, trade names, patents, or fictitious names.

 

2.11.                        ERISA.  The
Company, each Subsidiary and any “employee benefit plan” (as defined under the
Employee Retirement Income Security Act of 1974, as amended, and the
regulations and published interpretations thereunder (collectively, “ERISA”))
established or maintained by the Company or any Subsidiary or their ERISA
Affiliates (as defined below) (“Plan”) are in compliance in all material
respects with ERISA.  “ERISA Affiliate”
means, with respect to any of the Company or any Subsidiary, any member of any
group of organizations described in Sections 414(b),(c),(m) or (o) of
the Internal Revenue Code of 1986, as amended, and the regulations and
published interpretations thereunder (the “Code”) of which the Company or any
Subsidiary is a member.  No “reportable
event” (as defined under ERISA) has occurred or is reasonably expected to occur
with respect to Plan.  No Plan, if such
Plan were terminated, would have any “amount of unfunded benefit liabilities”
(as defined under ERISA).  Neither the
Company, any Subsidiary nor any of their ERISA Affiliates has incurred or
reasonably expects to incur any liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any Plan or (ii) Sections
412, 4971, 4975 or 4980B of the Code. 
Each Plan that is intended to be qualified under Section 401(a) of
the Code is so qualified and nothing has occurred, whether by action or failure
to act, which would cause the loss of such qualification.  Each Plan will be able to fulfill its benefit
obligations as they come due in accordance with the Plan documents and under
GAAP.

 

2.12.                        Contracts. 
Schedule 2.12 sets forth a description of each Contractual Obligation not filed
as an exhibit to the SEC Reports that provides for payments to or by the
Company or any Subsidiary in excess of $500,000, or is otherwise material to
the operations of the Company or any Subsidiary.  Except as set forth on
Schedule 2.4, 

 

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neither the Company nor any Subsidiary is in default
on any Contractual Obligation, except for such defaults which would not have or
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.

 

2.13.                        Environmental Matters. 
Since September 10, 2004, the Company and the Subsidiaries have at all
times been in compliance with any and all applicable foreign, federal, state
and local laws, regulations, permits, licenses or approvals relating to the
protection of human health and safety, including, without limitation, those
relating to occupational safety and health, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants, including, without
limitation, those relating to the storage, handling or transportation of
hazardous or toxic materials except where the failure to so comply would not
cause or reasonably be expected to cause, individually or in the aggregate, a
Material Adverse Effect.  Except as described in the SEC Reports, to the
Company’s knowledge none of the operations of the Company or any Subsidiary is
the subject of any foreign, federal, state or local investigation evaluating
whether any remedial action involving a material expenditure is needed to
respond to a release of any toxic or hazardous waste or substance into the
environment.  There is no actual or, to the Company’s best knowledge,
threatened claim, investigation, proceeding, order or decree in connection with
any release of any toxic or hazardous waste or substance into the environment.

 

2.14.                        Trademarks, etc. 
The Company and the Subsidiaries own, have sufficient title to, or have the
right to use (or can obtain the right to use on reasonable commercial terms),
all patents, trademarks, service marks, trade names, copyrights, licenses,
trade secrets or other proprietary rights (collectively, the “Proprietary
Rights”) necessary to their business as now conducted without infringing upon
the right of any person.  Except for employee confidentiality agreements
with employees and consultants, there are no outstanding material options,
licenses or agreements relating to intellectual property rights of the Company
or any Subsidiary necessary to their business as now conducted, nor is the
Company or any Subsidiary bound by or a party to any material options, licenses
or agreements with respect to the Proprietary Rights of any other person or
entity.  To the Company’s knowledge, neither the Company nor any
Subsidiary has violated or is in current violation of, and neither the Company
nor any Subsidiary has received any communications alleging that the Company or
any Subsidiary has violated or, by conducting its business as proposed, would
violate, any of the Proprietary Rights of any other person or entity.  The
Company and the Subsidiaries are not aware of any material violation by a third
party of any of their Proprietary Rights necessary to their business as now
conducted.

 

2.15.                        Employees.  All
employees of the Company and each Subsidiary are employed “at will” and, except
as set forth on Schedule 2.15, may be terminated without payment of severance
or incurrence of any other liability of the Company or the Subsidiaries; no
employee of the Company is in violation of any material term of any employment
contract, confidentiality agreement or any other material Contractual
Obligation relating to the right of any such employee to be employed by the
Company or any Subsidiary; and neither the Company nor any Subsidiary has any
employee severance agreement covering any of its employees.  There are no
labor disputes or union 

 

9

 

organization activities pending or threatened
between the Company or the Subsidiaries and their employees.

 

2.16.                        Title to Properties. 
The assets owned or leased by the Company and the Subsidiaries are all of the
assets necessary to conduct the business of the Company and the Subsidiaries as
currently being conducted or as proposed to be conducted.  The Company and the Subsidiaries have good
and marketable title to all of the assets they own, real and personal, movable
and immovable, tangible and intangible, free and clear of any charge, claim, lien,
pledge, security interest or other encumbrance, except for: (a) liens for
taxes not yet due and payable, (b) Encumbrances described on Schedule 2.16
hereto, or (c) minor imperfections of title and Encumbrances, if any,
which (i) are not substantial in amount, (ii) do not detract from the
value of the property subject thereto, impair the operations of the business of
the Company, or the use or license of certain of the assets of the Company, and
(iii) have arisen in the ordinary course of business consistent with past
practice.

 

2.17.                        Related Party Transactions.  Except for this Agreement and those contracts described in the
SEC Reports or on Schedule 2.17 hereto, no existing Contractual Obligation of
the Company or the Subsidiaries is with or for the direct benefit of (i) any
party owning, or formerly owning, beneficially or of record, directly or
indirectly, in excess of five percent (5%) of the outstanding capital stock of
the Company, (ii) any director, officer or similar representative of the
Company or any Subsidiary, (iii) any natural person related by blood,
adoption or marriage to any party described in (i) or (ii), or (iii) any
entity in which any of the foregoing parties has, directly or indirectly, at
least a five percent (5%) beneficial interest (a “Related Party”). 
Without limiting the generality of the foregoing, no Related Party, directly or
indirectly, owns or controls any material assets or material properties which
are used in the Company’s or the Subsidiaries’ business and, to the actual
knowledge of the Company after reasonable inquiry, no Related Party, directly
or indirectly, engages in or has any significant interest in or connection with
any business which is, or has been within the last two years, a competitor,
customer or supplier of the Company or any Subsidiary or has done business with
the Company or any Subsidiary or which currently sells or provides products or
services which are similar or related to the products or services sold or
provided in connection with the business of the Company or any Subsidiary.

 

2.18.                        Brokers.  The
Company will pay Morgan Keegan & Company, Inc. (the “Financial
Advisor”), contingent upon the successful closing of a strategic transaction
(including the private placement covered by this Agreement), an advisory fee,
in cash at closing equal to 1.5% of the gross proceeds delivered to the Company
at such closing.  The Company will also
pay Pritchard Capital Partners, LLC (the “Placement Agent”), contingent upon
the successful closing of a strategic transaction (including the private
placement covered by this Agreement), a placement fee, in cash at closing equal
to 5% of the gross proceeds delivered to the Company at such closing.  No other person or entity will have, as a
result of the transactions contemplated by this Agreement, any valid right,
interest or claim against or upon the Company or an Investor for any
commission, fee or other compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of the Company. The Company shall
indemnify, pay, and hold each 

 

10

 

Investor harmless against, any liability, loss or
expense (including, without limitation, attorneys’ fees and out-of-pocket
expenses) arising in connection with any such right, interest or claim.

 

2.19.                        Securities Law Matters. 
Except as set forth on Schedule 2.7, since January 1, 2008, the Company
has timely filed all reports, registration statements, proxy statements and
other materials (including any exhibits and schedules), together with any
amendments required to be made with respect thereto, that were required to be
filed with (i) the SEC under the Securities Act, or the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), (ii) any applicable
state securities authorities and (iii) the NYSE Alternext US
exchange.  Subject to the accuracy of the representations and warranties
of the Investors set forth in Section 3, the offer, sale and issuance of
the Shares to the Investors will be exempt from registration under the
Securities Act.  The issuance and sale of
the Shares hereunder does not contravene the rules and regulations of the
NYSE Alternext US exchange.  As of their
respective dates, or, if applicable, the dates they were amended prior to the
date hereof, such reports, registration statements, proxy statements and other
materials complied in all material respects with all applicable requirements
(including but not limited to the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley
Act”) to the extent then in effect and applicable) of the Securities Act or the
Exchange Act, as applicable, and other federal securities laws as of the date
thereof.  The Company’s Common Stock is
registered pursuant to Section 12(b) of the Exchange Act, and the
Company has taken no action designed to terminate the registration of the
Common Stock under the Exchange Act nor has the Company received any
notification that the SEC is contemplating terminating such registration.

 

2.20.                        No Anti-Dilution Rights. 
Except as set forth on Schedule 2.20, the transactions contemplated hereby will
not trigger any anti-dilution provisions contained in any existing agreements.

 

2.21.                        Full Disclosure. 
No preliminary summary offering memorandum, final summary offering memorandum,
representation, warranty, schedule or certificate of the Company made or
delivered pursuant to this Agreement contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material fact
the absence of which makes such representation, warranty or other statement
misleading.  Without limiting the
foregoing, the Company further represents that the unaudited financial
statements as of and for the year ended December 31, 2008 included in the
final summary offering memorandum have been prepared in accordance with GAAP
applied on a consistent basis with prior accounting periods, and fairly present
in all material respects the consolidated financial condition of the Company as
of the date of such financial statements and the results of operations and cash
flows for the period then ended, subject to normal, year-end audit adjustments
which would not be material, individually or in the aggregate.

 

2.22.                        Internal Accounting and Disclosure Controls.  The Company maintains a system of
internal control over financial reporting (as such term is defined in Rule 13a-15(f) under
the Exchange Act) that complies with the requirements of the Exchange Act and
has been designed by the Company’s principal executive officer or officers (or
their 

 

11

 

equivalent) and principal financial officer or
officers (or their equivalent), or under their supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
GAAP.  Except as disclosed in the SEC
Reports, the Company’s internal control over financial reporting is effective
and the Company is not aware of any material weaknesses in its internal control
over financial reporting.  Since December 31,
2007, the Company has not made any change in its internal control over
financial reporting that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial
reporting.  The Company has established
and maintains and evaluates “disclosure controls and procedures” (as such term
is defined in Rule 13a-15(e) under the Exchange Act); such disclosure
controls and procedures are designed to ensure that information required to be
disclosed by the Company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the rules and forms of the SEC, including, without
limitation, controls and procedures designed to ensure that information
required to be disclosed by the Company in the reports that it files or submits
under the Exchange Act is accumulated and communicated to the Company’s
management, including its principal executive officer or officers (or their
equivalent) and its principal financial officer or officers (or their
equivalent), as appropriate, to allow timely decisions regarding required
disclosure.  Such disclosure controls and
procedures are effective to perform the functions for which they were
established.  Except as disclosed in the
SEC Reports, since December 31, 2007, neither the Company nor any of the
Subsidiaries has received any notice or correspondence from any accountant
relating to any material weakness in any part of the system of internal
accounting controls of the Company or any of the Subsidiaries.

 

2.23.                        Compliance with Sarbanes-Oxley Act and
Listing Requirements. 
The Company is in compliance in all material respects with all applicable
provisions of the Sarbanes-Oxley Act and all rules and regulations
promulgated thereunder.  The principal
executive officer or officers (or their equivalents) and principal financial
officer or officers (or their equivalents) of the Company have duly made all
certifications required by the Sarbanes-Oxley Act and any related rules and
regulations promulgated by the SEC, and the statements contained in any such
certification are complete and correct as of the respective dates thereof.  The Company is, and has no reason to believe
that it will not in the foreseeable future continue to be, in compliance in all
material respects with the applicable listing and maintenance requirements and
corporate governance rules of the NYSE Alternext US exchange.

 

2.24.                        Auditor.  Johnson Miller & Co., CPA’s PC, who
have audited the Company Financial Statements contained in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2007, are
independent public accountants as required by the Securities Act and the rules and
regulations of the SEC thereunder, and have been appointed by an Audit
Committee comprised entirely of independent directors of the Board of Directors
of the Company, as independence is defined under the rules of the NYSE
Alternext US exchange.

 

12

 

2.25.                        No Integrated Offering.  None of the Company, the
Subsidiaries, any of their affiliates, and any person acting on their behalf
has, directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under circumstances that would
require registration of the issuance of any of the Shares under the Securities
Act, whether through integration with prior offerings or otherwise.  None
of the Company, the Subsidiaries, their affiliates and any person acting on
their behalf will take any action or steps referred to in the preceding
sentence that would require registration of the issuance of any of the Shares
under the Securities Act or cause the offering of the Shares to be integrated
with other offerings for purposes of any such applicable stockholder approval
provisions, including, without limitation, under the rules and regulations
of any stock exchange on which the Common Stock is listed.  Neither the Company nor any person acting on
its behalf has engaged or will engage in any form of general solicitation or
general advertising (within the meaning of Regulation D under the Securities
Act) in connection with any offer or sale of the Shares.

 

2.26.                        Manipulation of Price.  The Company has not, and to its
knowledge no one acting on its behalf has, (i) taken, directly or
indirectly, any action designed to cause or to result in the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of any of the Shares, (ii) other than the Financial Advisor or
the Placement Agent, sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the Shares, or (iii) other than the
Financial Advisor or the Placement Agent, paid or agreed to pay to any person
any compensation for soliciting another person to purchase any other securities
of the Company.

 

2.27.                        Insurance.  Each of the Company and the Subsidiaries
maintains insurance of the types and in the amounts which it deems adequate for
its business, including, but not limited to, insurance covering real and
personal property owned or leased by the Company and the Subsidiaries against
theft, damage, destruction, acts of vandalism and all other risks customarily
insured against, all of which insurance is in full force and effect.  Neither the Company nor any of its
Subsidiaries has received any notice of cancellation of any such insurance,
nor, to the Company’s knowledge, will it or any Subsidiary be unable to renew
their respective existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not have a Material Adverse Effect.

 

2.28.                        Improper and Other Payments.  Neither the Company, any
Subsidiary, any joint venture, any director, officer, employee, agent or
representative of the Company or any Subsidiary nor any person acting on behalf
of any of them during the last five years (i) has made any unlawful
contribution to any domestic or foreign political party or candidate, or failed
to disclose fully any contribution in violation of law, (ii) has made any
payment to any foreign, federal or state governmental officer or official, or
other person charged with similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States, any foreign government
or any respective jurisdiction thereof, or (iii) has made, paid or
received any bribes, kickbacks or other similar payments to or from any person,
whether lawful or unlawful.  The internal
accounting controls of the Company and the Subsidiaries are adequate to detect
any of the foregoing.

 

13

 

2.29.                        Directors and Officers.  To the best of the Company’s knowledge,
information and belief, none of the current directors or officers of the
Company or the Subsidiaries is or has ever been subject to prior regulatory,
criminal or bankruptcy proceedings in the United States or elsewhere.

 

2.30.                        Reserve Report.  The information underlying the estimates of
the reserves of the Company and the Subsidiaries, which was supplied by the
Company to Netherland, Sewell & Associates, Inc. (“NSAI”),
independent petroleum engineers, for purposes of preparing the reserve
information in the Company’s Annual Report on Form 10-K for the years
ended December 31, 2007 and 2008 (the “Reserve Reports”), including,
without limitation, production, volumes, sales prices for production,
contractual pricing provisions under oil or gas sales or marketing contracts
under hedging arrangements, costs of operations and development, and working
interest and net revenue interest information relating to the Company’s
ownership interests in properties, was true and correct in all material
respects on the dates of such Reserve Reports; the estimates of future capital
expenditures and other future exploration and development costs supplied to
NSAI were prepared in good faith and with a reasonable basis; the information
provided to NSAI by the Company for purposes of preparing the Reserve Reports
was prepared in accordance with customary industry practices; NSAI was, as of
the dates of the Reserve Reports, and is, as of the date hereof, independent
petroleum engineers with respect to the Company; to the knowledge of the Company,
there are not any facts or circumstances that would adversely effect the
reserves in the aggregate, or the aggregate present value of future net cash
flows therefrom, as disclosed in the SEC Reports and reflected in the Reserve
Reports such as to cause a Material Adverse Effect; estimates of such reserves
and the present value of the future net cash flows therefrom as disclosed in
the Company’s Annual Report on Form 10-K for the year ended December 31,
2007, as amended, and reflected in the Reserve Reports comply in all material
respects to the applicable requirements of Regulation S-X and Industry Guide 2
under the Securities Act.

 

2.31.                        Disclosure.  Neither the Company nor any other person acting on its behalf
has provided any of the Investors or their respective agents or counsel with
any information that constitutes material non-public information other than
concerning the transactions contemplated by this Agreement or disclosed
pursuant to a non-disclosure agreement.  The Company acknowledges that the
Investor will rely on the foregoing representations in effecting transactions
in securities of the Company.  No event
or circumstance has occurred or information exists with respect to the Company
or any of its Subsidiaries or its or their business, properties operations or
financial conditions, which under applicable law, rule or regulation,
requires public disclosure or announcement by the Company but which has not
been so publicly announced or disclosed, except for the announcement of this
Agreement and related transactions and as may be disclosed on the 10-K Filing
(as defined in Section 9.12 below) or the 8-K Filing (as defined in Section 9.12
below), as applicable.

 

2.32.                        Investment Company.
Neither the Company nor any of its Subsidiaries is required to be registered
as, and is not an affiliate of, and immediately following the 

 

14

 

Closing will not be required to register as, an “investment
company” within the meaning of the Investment Company Act of 1940, as amended.

 

2.33.                        Application of Takeover Protections; Rights Agreements. The Company has not adopted any stockholder
rights plan or similar arrangement relating to accumulations of beneficial
ownership of Common Stock or a change in control of the Company.  The Company and its board of directors have
taken all necessary action, if any, in order to render inapplicable any control
share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar anti-takeover provision
under the Company’s certificate of incorporation or other organizational
documents or the laws of the jurisdiction of its incorporation or otherwise
which is or could become applicable to any Investor solely as a result of the
transactions contemplated by this Agreement, including, without limitation, the
Company’s issuance of the Shares and any Investor’s ownership of the Shares.

 

2.34.                        Acknowledgment Regarding Investors’ Purchase of Shares.  The
Company acknowledges and agrees that each of the Investors is acting solely in
the capacity of an arm’s length purchaser with respect to this Agreement and
the transactions contemplated hereby. 
The Company further acknowledges that no Investor is acting as a
financial advisor or fiduciary of the Company (or in any similar capacity) with
respect to this Agreement and the transactions contemplated hereby and any
advice given by any Investor or any of their respective representatives or
agents in connection with this Agreement and the transactions contemplated
thereby is merely incidental to the Investors’ purchase of the Shares.

 

2.35.                        Shell Company Status.
The Company is not, and has not been within the three years preceding the date
hereof, an issuer identified in Rule 144(i)(1).

 

2.36.                        Registration Eligibility. The Company is eligible to register the resale of the Shares by the
Investors using Form S-3 promulgated under the Securities Act.

 

3.                                      Representations
and Warranties of Investors.  Each Investor, severally and not
jointly, hereby makes the following representations and warranties as to such
Investor:

 

3.1.                              Organization.  Investor, if not a natural person, is
duly organized and validly existing and in good standing under the laws of the
state of its organization.

 

3.2.                              Authority.   Investor has the corporate or other authority to execute and deliver
this Agreement and the Questionnaire to which such Investor is a party and to
perform its obligations hereunder.

 

3.3.                              No Violation.  The execution and the delivery by
Investor of this Agreement and the performance by Investor of its obligations
hereunder do not and will not (a) conflict with or result in a breach of
the terms, conditions or provisions of, (b) constitute a default under, (c) result
in a violation of, or (d) require any authorization, consent or approval
not heretofore obtained pursuant to, any Contractual Obligation or Requirement
of Law binding upon or applicable to Investor or any of its properties or 

 

15

 

assets and which would have a material adverse
effect on the financial condition or operations of Investor.

 

3.4.                              Enforceability.  This Agreement constitutes the legal,
valid and binding obligation of Investor and is enforceable against Investor in
accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect generally relating
to or affecting creditors’ rights.

 

3.5.                              Investment Intent.  Investor is acquiring the Shares for
its own account for investment and not with a view to, or for resale in
connection with, any “distribution” thereof for purposes of the Securities
Act.  Investor is an “accredited investor” as such term is defined in
Regulation D under the Securities Act.  Investor acknowledges that the
Shares shall be “restricted securities” within the meaning of SEC Rule 144,
will contain a transfer restriction legend and may only be resold pursuant to
an effective registration statement filed with the SEC under the Securities
Act, or pursuant to SEC Rule 144 or another valid exemption from the
registration requirements of the Act as established by an opinion of counsel
reasonably acceptable to the Company. 
Notwithstanding the foregoing, such Investor does not agree to hold any
of the Shares for any minimum period of time and reserves the right, subject to
the provisions of this Agreement, at all times to sell or otherwise dispose of
all or any part of such Shares pursuant to an effective registration statement
under the Securities Act or under an exemption from such registration and in
compliance with applicable federal and state securities laws.

 

3.6.                              Investigation.  Investor acknowledges that he has been
given full access by the Company to all information concerning the business and
financial condition, properties, operations and prospects of the Company that
Investor has deemed relevant for purposes of making the investment contemplated
by this Agreement and has received and reviewed the Company’s (i) preliminary
summary offering memorandum dated February 9, 2009 and all exhibits
thereto and (ii) final summary offering memorandum dated February 19,
2009 and all exhibits thereto.  By reason of Investor’s knowledge and
experience in financial and business matters in general, the business of the
Company and investments of the type contemplated by this Agreement in
particular, Investor is capable of evaluating the merits and risks of making
the investment in the Shares and is able to bear the economic risk of the
investment (including a complete loss of its investment in the Shares). 
Subject to the truth and accuracy of the representations and warranties made by
the Company hereunder, Investor has conducted such investigation as it deems
relevant in connection with its consummation of the transactions contemplated
by this Agreement.

 

3.7.                              Brokers.  Investor has not agreed to pay or
incurred any obligation in respect of any finder’s fee, brokerage fee or other
commission in connection with the sale of Shares contemplated by this
Agreement.

 

3.8.                              Trading Activities. 
Neither the Investor nor any person acting on its behalf or at its
direction has engaged in any purchase or sale of Common Stock (including
without limitation any short sale, pledge, transfer, or establishment of an
open 

 

16

 

“put equivalent position” within the meaning of Rule 16a-1(h) under
the Exchange Act) after learning about the transaction contemplated hereby.

 

4.                                      Conditions
to the Obligations of the Company.  The obligations of the Company
to consummate the transactions contemplated by this Agreement on the Closing
Date shall be subject to the satisfaction of each of the conditions set forth
in this Section 4, unless waived by the Company, on or prior to the
Closing Date.

 

4.1.                              Representations and
Warranties.  If this Agreement
is not signed on the Closing Date, the representations and warranties of the
Investors set forth in Section 3 shall be true and correct in all material
respects as of the Closing Date as though made on and as of such date.

 

4.2.                              No Proceedings.  No order, injunction, decree or other
action or legal, administrative, arbitration or other proceeding by any person
other than the Company or investigation by any governmental agency or authority
shall be pending or, to the knowledge of the Company, threatened, challenging
or imposing a material limitation on the execution, delivery or performance of
this Agreement, or the consummation of any of the transactions contemplated
hereby.

 

4.3.                              Approval of
Documents.  All proceedings taken
in connection with the transactions contemplated hereby and all documents
incident to such transactions shall be reasonably satisfactory in form and
substance to the Company and its counsel.

 

4.4.                              Compliance with
Laws.  The purchase of
the Shares by each Investor hereunder shall be legally permitted by all laws
and regulations to which each Investor or the Company is subject.

 

4.5.                              Questionnaire.  Each investor shall have completed and
executed and delivered to the Company a Questionnaire in a manner reasonably
acceptable to the Company.

 

5.                                      Conditions
to the Obligations of Investors.  The obligations of each Investor
to consummate the transactions contemplated by this Agreement on the Closing
Date shall be subject to the satisfaction of each of the conditions set forth
in this Section 5, unless waived by each Investor, on or prior to the
Closing Date.

 

5.1.                              Representations and
Warranties; Performance.  
If this Agreement is not signed on the Closing Date, (i) the
representations and warranties of the Company set forth in Section 2 shall
be true and correct in all material respects (except for those representations
and warranties which are qualified as to materiality, in which case such
representations and warranties shall be true and correct in all respects) as of
the date when made and as of the Closing Date as though made on and as of such
date; (ii) the Company shall have performed all obligations and complied
with all covenants required to be performed or complied with by the Company
under this Agreement on or prior to the Closing Date; and (iii) each
Investor shall have received on the Closing Date from the Company a certificate
or certificates, dated the Closing Date, to such effect, which certificate or
certificates shall be signed by an authorized officer of the Company.

 

17

 

5.2.                              No Proceedings.  No order, injunction, decree or other
action or legal, administrative, arbitration or other proceeding by any person
or investigation by any governmental agency or authority shall be pending or,
to the knowledge of the Company, threatened, challenging or imposing a material
limitation on the execution, delivery or performance of this Agreement, the
consummation of any of the transactions contemplated thereby or the operation
by the Company of its businesses as now conducted.

 

5.3.                              Approval of
Documents.  All proceedings
taken in connection with the transactions contemplated hereby and all documents
incident to such transactions shall be reasonably satisfactory in form and
substance to each Investor and its counsel.

 

5.4.                              Compliance with
Laws; Consents.  The purchase of
the Shares by each Investor hereunder shall be legally permitted by all laws
and regulations to which each Investor or the Company is subject.  The Company shall have obtained any and all
consents, permits, approvals, registrations and waivers necessary for
consummation of the purchase and sale of the Shares at the Closing, all of
which shall be and remain so long as necessary in full force and effect.

 

5.5.                              No Material Adverse
Change.  Except as
described in the SEC Reports or in Schedule 2.8, there shall have been no event
that has had or could reasonably be expected to result in a Material Adverse
Effect since September 30, 2008.

 

5.6.                              Opinion of Counsel.  Investor shall have received an
opinion of counsel to the Company in substantially the form attached as
Schedule 5.6 hereto.

 

5.7.                              Lock-up Agreements.  The
Company shall have obtained and delivered to each Investor executed copies of
lock-up agreements satisfactory to the Placement Agent from the directors and
executive officers of the Company.

 

5.8.                              No Suspensions of Trading in Common Stock;
Listing. The Common Stock (i) shall
be listed on the NYSE Alternext US and (ii) shall not have been suspended,
as of the Closing Date, by the SEC or the NYSE Alternext US from trading on the
NYSE Alternext US nor shall suspension by the SEC or the NYSE Alternext US have
been threatened, as of the Closing Date, either (A) in writing by the SEC
or the NYSE Alternext US or (B) by falling below the minimum listing
maintenance requirements of the NYSE Alternext US.

 

5.9.                              Compliance Certificate. If this Agreement is not signed on the
Closing Date, the Company shall have delivered to each Purchaser a certificate,
dated as of the Closing Date and signed by its Chief Executive Officer or its Chief
Financial Officer, certifying to the fulfillment of the conditions specified in
Sections 5.1(i) and (ii).

 

6.                                      Certain
Covenants of the Company.

 

6.1.                              Listing of Common Stock.  The Company shall use its reasonable
best efforts to cause the Common Stock to remain listed on the NYSE Alternext
US exchange.  The Company shall cause the Shares to be listed or included
on each securities 

 

18

 

exchange or automated quotation system on which
similar securities issued by the Company are then listed or included.

 

6.2.                              Shelf Registration.  The Company shall prepare and file or
cause to be prepared and filed with the SEC, as soon as practicable but in any
event no later than forty-five (45) days after the Closing Date (the “Filing
Deadline”), a Registration Statement on Form S-3 (or such other form as
the Company is then eligible to use) for an offering to be made on a delayed or
continuous basis pursuant to Rule 415 of the Securities Act registering
the resale from time to time by the Investors of the Shares pursuant to plans
of distribution reasonably acceptable to the Investors (the “Registration
Statement”).  Each Investor agrees to promptly provide to the Company, in
writing, such information as the Company may reasonably request for inclusion
in the Registration Statement.  The Company shall use its reasonable best
efforts to cause the Registration Statement to be declared effective under the
Securities Act no later than the earlier of (i) ninety (90) days after the
Closing Date or in the event of SEC review, one hundred and twenty (120) days
after the Closing Date and (ii) the third business day following the date
on which the Company is notified (orally or in writing, whichever is earlier)
by the SEC that the Registration Statement will not be reviewed or is no longer
subject to further review and comments (the “Effectiveness Deadline”), unless
upon the advice of counsel it is advisable not to accelerate the effectiveness
of such Registration Statement, for such reasons including but not limited to,
the Company issues an earnings release or material news or a material event
relating to the Company occurs in which case such third business day shall be
the third business day following the fifteen (15) calendar day period after
such event occurs, and to keep such Registration Statement continuously
effective under the Securities Act until the earlier of (i) the date on
which all Shares covered by the Registration Statement may be sold pursuant to
SEC Rule 144 without the requirement for the Company to be in compliance
with the current public information required under SEC Rule 144 and
without volume or manner of sale restriction by persons who are not affiliates
of the Company, or (ii) such date as all Shares registered on such
Registration Statement have been resold either pursuant to such Registration
Statement or under SEC Rule 144 (the earlier to occur of (i) or (ii) is
the “Registration Termination Date”).

 

(a)                      Notwithstanding the registration obligations
set forth in this Section 6.2, in the event the SEC informs the Company
that all of the Shares cannot, as a result of the application of Rule 415,
be registered for resale as a secondary offering on a single registration
statement, the Company agrees to promptly (i) inform each of the Investors
thereof and use its commercially reasonable efforts to file amendments to the
initial Registration Statement as required by the SEC and/or (ii) withdraw
the initial Registration Statement and file a new Registration Statement, in
either case covering the maximum number of Shares permitted to be registered by
the SEC, on Form S-3 or such other form available to register for resale
the Shares as a secondary offering; provided, however, that prior to filing
such amendment or new Registration Statement, the Company shall be obligated to
use its commercially reasonable efforts to advocate with the SEC for the
registration of all of the Shares in accordance with SEC guidance.  Notwithstanding any other provision of this
Agreement and subject to the payment of liquidated damages in Sections 6.2(k), (l) and
(m), if any SEC guidance sets forth a limitation of the number of Shares or
other shares of Common Stock permitted to be 

 

19

 

registered
on a particular Registration Statement as a secondary offering (and
notwithstanding that the Company used diligent efforts to advocate with the SEC
for the registration of all or a greater number of Shares), the number of
Shares or other shares of Common Stock to be registered on such Registration
Statement will be reduced as follows: first, the Company shall reduce or
eliminate the shares of Common Stock to be included by any person other than an
Investor; second, the Company shall reduce or eliminate any shares of Common
Stock to be included by any affiliate of the Company; and third, the Company
shall reduce the number of Shares to be included by all other Investors on a
pro rata basis based on the total number of unregistered Shares held by such Investors,
subject to a determination by the SEC that certain Investors must be reduced
before other Investors based on the number of Shares held by such
Investors.  In the event the Company
amends the initial Registration Statement or files a new Registration
Statement, as the case may be, under clauses (i) or (ii) above, the
Company will use its commercially reasonable efforts to file with the SEC, as
promptly as allowed by SEC guidance provided to the Company or to registrants
of securities in general, one or more Registration Statements on Form S-3
or such other form available to register for resale those Shares that were not
registered for resale on the initial Registration Statement, as amended, or the
new Registration Statement.  Any
Registration Statements filed hereunder shall be kept effective until the
Registration Termination Date.  No
Investor shall be named as an “underwriter” in any Registration Statement
without such Investor’s prior written consent.

 

(b)                     If a Registration Statement ceases to be
effective for any reason at any time prior to the applicable Registration
Termination Date, the Company shall use its reasonable best efforts to
reinstate the effectiveness thereof.

 

(c)                      The Company shall supplement and amend the
Registration Statement if required by the rules, regulations or instructions
applicable to the registration form used by the Company for such Registration
Statement, if required by the Securities Act or, to the extent to which the
Company does not reasonably object, as requested by the Investors.

 

(d)                     All Registration Expenses incurred in
connection with the registrations pursuant to this Section 6.2 shall be
borne by the Company. “Registration Expenses” shall mean all expenses incurred
by the Company in complying with this Section 6.2 hereof including,
without limitation, all registration and filing fees, printing expenses, fees
and disbursements of counsel for the Company, blue sky fees and expenses, and
the expense of any special audits incident to or required by any such registration
(but excluding the compensation of regular employees of the Company which shall
be paid in any event by the Company and Selling Expenses, as defined
hereinafter).   All Selling Expenses incurred in connection with any
registrations hereunder, shall be borne by the Investors. “Selling Expenses”
shall mean all brokerage and selling commissions applicable to a sale of the
Shares pursuant to the Registration Statement.

 

(e)                      The Company may suspend sales of Shares
pursuant to the Registration Statement for a period of not more than fifteen
(15) days during any six (6) 

 

20

 

month
period (an “Allowable Grace Period”) in the event it determines in good faith
that such Registration Statement contains an untrue statement of material fact
or omits to state a material fact required to be stated therein or necessary to
make the statement therein not misleading; provided that (i) the
Company shall immediately notify the Investors of such suspension and (ii) the
Company shall promptly amend such Registration Statement in order to correct
any untrue statement and/or ensure that such Registration Statement is not
misleading; provided further that subject to the time limitations set forth
above, the Company may delay such amendment if the Company determines that such
delay is in the best interest of the Company in order to avoid premature public
announcements of potential acquisitions or other extraordinary
transactions.  At the time the Registration Statement is declared effective,
each Investor shall be named as a selling securityholder in the Registration
Statement and the related prospectus in such a manner as to permit such
Investor to deliver such prospectus to purchasers of Shares in accordance with
applicable law.

 

(f)                        The Company shall promptly furnish to the
Investors, upon request and without charge, (i) any correspondence from
the SEC or the staff of the SEC to the Company or its representatives relating
to any Registration Statement (but shall redact any material non-public
information therefrom), and (ii) after the same is prepared and filed with
the SEC, one copy of any Registration Statement and any amendment(s) thereto,
including financial statements and schedules, all documents incorporated
therein by reference and all exhibits. 
The Company shall respond as promptly as reasonably practicable to any
comments received from the SEC with respect to any Registration Statement or
any amendment thereto.

 

(g)                     The Company shall furnish to the Investors
such numbers of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other
documents as they may reasonably request in order to facilitate the disposition
of the Shares owned by them.

 

(h)                     The Company shall use its reasonable best
efforts to register and qualify the securities covered by a Registration
Statement under such other securities or blue sky laws of such jurisdictions as
shall be reasonably requested by the Investors, provided that the Company
shall not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of process in
any such states or jurisdictions.

 

(i)                         The Company shall notify immediately each
Investor holding Shares covered by a Registration Statement at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act of the happening of any event as a result of which the prospectus included
in such Registration Statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing; provided, however, that, subject to Section 6.2(d) the
Company shall promptly amend such Registration Statement in order to correct
any untrue statement and/or ensure that such Registration Statement is not
misleading.  The Company shall immediately notify each Investor 

 

21

 

holding
Shares covered by such Registration Statement (i) when such registration
statement or any post-effective amendment thereto has become effective; (ii) of
any request by the SEC or any other federal or state governmental authority for
amendments or supplements to a Registration Statement or prospectus or for
additional information that pertains to the Investors as selling stockholders
or their respective plans of distribution; (iii) of the issuance by the SEC
of any stop order suspending the effectiveness of a Registration Statement
covering any or all of the Shares or the initiation of any proceedings for that
purpose, including pursuant to Section 8A of the Securities Act; (iv) of
the receipt by the Company of any notification with respect to the suspension
of the qualification or exemption from qualification of any of the Shares for
sale in any jurisdiction, or the initiation or threatening of any proceeding
for such purpose; and (v) of the occurrence of any other event that
results in the Investors being unable to sell Shares pursuant to the
Registration Statement or related prospectus. 
The Company shall use commercially reasonable efforts to avoid the
issuance of, or, if issued, obtain the withdrawal of (i) any order
suspending the effectiveness of a Registration Statement, or (ii) any
suspension of the qualification (or exemption from qualification) of any of the
Shares for sale in any jurisdiction, as soon as practicable.  The Company shall, by 9:30 a.m. New York
City time on the first business day after the effective date of a Registration
Statement, file a final prospectus with the SEC under Rule 424(b).

 

(j)                         The Company shall not less than three (3) business
days prior to the filing of the Registration Statement covering the Shares and
not less than one (1) business day prior to the filing of any related
prospectus, or any amendment or supplement thereto containing information about
an Investor or the plan of distribution of the Shares, furnish to the Investor
copies of such Registration Statement, prospectus or amendment or supplement
thereto, as proposed to be filed, which documents will be subject to the review
of such Investor (it being acknowledged and agreed that if an Investor does not
object to or comment on the aforementioned documents within such three (3) business
day or one (1) business day period, as the case may be, then the Investor
shall be deemed to have consented to and approved the use of such
documents).  The Company shall not file
any such Registration Statement covering the Shares or amendment or supplement
thereto in a form to which an Investor reasonably objects in good faith,
provide that, the Company is notified of such objection in writing within the
three (3) business day or one (1) business day period described above
, as applicable.

 

(k)                      If the Registration Statement covering the
Shares required to be filed by the Company pursuant to this Section 6.2 is
not filed with the SEC by the date that is the Filing Deadline, then the Company
shall make the payments to the Investors as provided in the next sentence as
liquidated damages and not as a penalty.  If the Registration Statement
covering the Shares required to be filed by the Company pursuant to this Section 6.2
is not filed with the SEC by the date that is the Filing Deadline, a one-time
amount equal to three percent (3%) of the purchase price for the Shares shall
be paid by the Company to the Investors.

 

22

 

(l)                         If the Registration Statement covering the
Shares required to be filed by the Company pursuant to this Section 6.2 is
not declared effective by the SEC by the date that is the Effectiveness
Deadline, then the Company shall make the payments to the Investors as provided
in the next sentence as liquidated damages and not as a penalty.  If the
Registration Statement covering the Shares required to be filed by the Company
pursuant to this Section 6.2 is not declared effective by the date that is
the Effectiveness Deadline, an amount equal to two percent (2%) of the purchase
price for the Shares shall be paid by the Company to the Investors, and an
additional amount equal to two percent (2%) of the purchase price for the
Shares shall be paid by the Company to the Investors in respect of any
Computation Date (as defined below) thereafter.  Except for the first
payment under this Section 6.2(l), which shall be paid within five (5) business
days of the Effectiveness Deadline, the amount to be paid by the Company to the
Investors pursuant to this Section 6.2(l) shall begin accruing as of
the Effectiveness Deadline and shall be determined and paid as of each
Computation Date (as defined below) and for each thirty (30)-day period of any
subsequent Computation Dates thereafter, calculated on a pro rata basis to the
date on which the Registration Statement is declared effective by the SEC (the “Periodic
Amount”).  However, payments pursuant to this Section 6.2(l) are
subject to a cap of ten percent (10%) of the purchase price or five (5) thirty
(30)-day periods.

 

(m)                   After the effective date of the Registration
Statement, (i) if the Company suspends sales of Shares pursuant to the
Registration Statement for a period exceeding the Allowable Grace Period or (ii) the
Registration Statement ceases for any reason to remain continuously effective
or available as to all Shares included in the Registration Statement for a
period exceeding the Allowable Grace Period, an amount equal to one percent
(1%) of the purchase price for the Shares shall be paid by the Company to the
Investors within five (5) business days of the date of such event, and an
additional amount equal to one percent (1%) of the purchase price for the
Shares shall be paid by the Company to the Investors if such suspension or
unavailability lasts an additional 30 days, or in respect of any subsequent
suspension or unavailability period in excess of the Allowable Grace Period.

 

(n)                     The amounts payable under sections 6.2 (k),(l) or
(m) above shall be paid by the Company to the Investors, pro rata, at the
option and sole discretion of the Company, by (i) wire transfer of
immediately available funds within five (5) business days after the Filing
Deadline and each Computation Date or each date triggering payment pursuant to Section 6.2(m),
as the case may be (each a “Measurement Date”), or (ii) by the issuance of
additional shares of Common Stock; the number of shares to be issued shall be
calculated as the Periodic Amount to which each Investor is entitled for each
thirty (30)-day computation period, divided by the lesser of (a) 90% of
the average closing price of the Common Stock for the thirty (30)-day period
prior to the Measurement Date, or (b) 90% of the closing price of the
Common Stock on the Measurement Date. 
Any such Shares shall be entitled to the same registration right under
this Section 6.2.

 

(o)                     As used in this Section 6.2, “Computation Date” means the date that
is thirty (30) days after the Effectiveness Deadline and, if the Registration 

 

23

 

Statement
to be filed by the Company pursuant to this Section 6.2 has not
theretofore been filed with the SEC or declared effective by the SEC, as the
case may be, each date which is thirty (30) days after the previous Computation
Date until such Registration Statement is so filed or declared effective, or
until the liquidated damages limit has been reached, as the case may be.

 

(p)                     The liquidated damages payable under Sections
6.2 (k), (l) or (m) above shall cease to apply (except to the extent
already accrued) on the date that is six months from the Closing Date and
thereafter as long as the Investors are able to sell the Shares pursuant to SEC
Rule 144 and the Company is in compliance with the current public
information requirement under SEC Rule 144;  provided, however, that the liquidated
damages contemplated hereunder shall apply in full force and effect, after the
date that is six months from the Closing Date, until the date that is one year
from the Closing Date, to the extent and from the date that the Company fails
to file with the SEC any required reports as a result of which the Investors
are unable to sell the Shares without restriction under SEC Rule 144. Such
liquidated damages shall cease to apply (except to the extent already accrued),
and shall be pro-rated accordingly, once the required filings are made by the
Company and the Investors are otherwise able to sell the Shares pursuant to SEC
Rule 144. No liquidated damages shall accrue under this Section 6.2
once the Investors are able to sell the Shares pursuant to SEC Rule 144
without the requirement for the Company to be in compliance with the current
public information required under SEC Rule 144 and without restriction.

 

6.3.                              Termination of
Registration Rights. All
rights and obligations provided for in Section 6.2 (other than any
liquidated damages due) shall terminate on the date on which the Company has no
obligation to maintain the effectiveness of the Registration Statement;
provided that the rights of any Investor under Section 6.2 shall terminate
(other than the right to any liquidated damages due from the Company) on the
Registration Termination Date.

 

6.4.                              Reports Under
Securities Exchange Act of 1934. With a view to making available to the Investors the benefits of SEC Rule 144
and any other rule or regulation of the SEC that may at any time permit
Investors to sell securities of the Company to the public without registration
or pursuant to a Registration Statement, the Company agrees to:

 

(a)                      use its reasonable best efforts to make and
keep public information available, as those terms are understood and defined in
SEC Rule 144, at all times so long as the Company remains subject to the
periodic reporting requirements under Sections 13 or 15(d) of the Exchange
Act;

 

(b)                     use its reasonable best efforts to take such
action as is necessary to enable the Investors to utilize Form S-3 or such
other registration statement form as may be applicable for the sale of their
Shares;

 

24

 

(c)                      use its reasonable best efforts to file with
the SEC in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act; and

 

(d)                     furnish to any Investor, so long as the
Investor owns any Shares, forthwith upon request (i) a written statement
by the Company that it has complied with the reporting requirements of the
Securities Act and the Exchange Act, or that it qualifies as a registrant whose
securities may be resold pursuant to Form S-3 (or such other form as the
Company is then eligible to use), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed
by the Company, and (iii) such other information as may be reasonably
requested in availing any Investor of any rule or regulation of the SEC
which permits the selling of any such securities without registration or
pursuant to such form.

 

6.5.                              Integration.  The Company shall not, and shall use its best efforts to ensure
that no Subsidiary or affiliate of the Company shall, sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that will be integrated with
the offer or sale of the Shares in a manner that would require the registration
under the Securities Act of the sale of the Shares to the Investors, or that
will be integrated with the offer or sale of the Shares for purposes of the rules and
regulations of the NYSE Alternext US exchange, including, without limitation,
the rules and regulations relating to stockholder approval.

 

6.6.                              Form D and Blue Sky.  The
Company agrees to timely file a Form D with respect to the Shares as
required under Regulation D.  The
Company, on or before the Closing Date, shall take such action as the Company
shall reasonably determine is necessary in order to obtain an exemption for or
to qualify the Shares for sale to the Investors at the Closing pursuant to this
Agreement under applicable securities or “Blue Sky” laws of the states of the
United States (or to obtain an exemption from such qualification).  The Company shall make all filings and
reports relating to the offer and sale of the Shares required under applicable
securities or “Blue Sky” laws of the states of the United States following the
Closing Date.

 

6.7.                              No Piggyback on the Registration Statement;
Certain Preemptive Rights.

 

(a)                      Neither the Company nor any of its security
holders (other than the Investors in such capacity pursuant hereto) may include
securities of the Company in the Registration Statement other than the Shares
and the Company shall not prior to the effective date of the Registration
Statement enter into any agreement providing any such right to any of its
security holders.

 

(b)                     In addition, if the Company, from the date
hereof until the date that is 30 days after the effective date of the initial
Registration Statement, proposes to prepare and file with the SEC a
registration statement relating to an offering for its own account (a “Primary
Offering”) under the Securities Act of any of its equity securities (other than
on Form S-8, or, in connection with an acquisition on Form S-4), then
the Company will

 

25

 

(i)                                    promptly give to each Investor that holds at
least 20% of the Shares sold in the transaction contemplated by this Agreement
as set forth on Schedule 1.1 hereto  (each, a “Lead Investor”) written notice thereof;
and

 

(ii)                                 the Lead Investors shall have five (5) business
days to consent to the Primary Offering, which consent shall not be
unreasonably withheld; if the Lead Investors do not object to such Primary
Offering within five (5) business days, then such Lead Investors shall be
deemed to have consented to the Primary Offering.

 

In addition, from the date hereof until the date
that is 90 days after the effective date of the initial Registration Statement,
each Investor shall have the right to purchase its pro rata share of equity or
equity-linked securities in any Primary Offering on the same terms and
conditions and at the same time as the most favorable offer to a third
party.  Each Investor’s pro rata share,
for purposes of this right, is the ratio of the shares of Common Stock owned by
it immediately prior to the issuance of equity or equity-linked securities in
the Primary Offering to all shares of Common Stock of the Company outstanding
immediately prior to the issuance of equity or equity-linked securities in the
Primary Offering.  In the event the Company
proposes to undertake a Primary Offering pursuant to this Section 6.7(b) and
the Lead Investors have not objected, the Company shall give each Investor at
least four business days’ written notice of its intention, describing the type
of equity or equity-linked securities, and the general terms upon which the
Company proposes to issue the same.  The
Company shall have the right to terminate or withdraw any such registration
initiated by it under this Section 6.7(b) prior to the effectiveness
of such registration whether or not any Investor has elected to exercise its
preemptive right in such registration.

 

7.                                      Indemnification.

 

7.1.                              Indemnification by the Company.  The Company will indemnify, defend and
hold harmless each Investor, its officers, directors, employees, partners,
affiliates, agents, representatives and legal counsel, and each person
controlling (or deemed controlling) such Investor within the meaning of the
Securities Act, (collectively, the “Investors’ Agents”) against all claims,
losses, damages, liabilities, costs and expenses (or actions in respect
thereof) (“Liabilities”), joint or several, arising out of or based on (A) (i) any
untrue statement (or alleged untrue statement) of a material fact contained in
the Registration Statement, any prospectus, offering circular or other similar
document or any amendments or supplements thereto (including any related
registration statement and amendments or supplements thereto, notification or
the like), or any omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances under which they were made,
and will reimburse the Investors and the Investors’ Agents for any legal or any
other expenses reasonably incurred in connection with investigating or
defending any Liabilities, as such expenses are incurred, or (ii) any
violation by the Company of any federal, state or common law rule or
regulation applicable to the Company in 

 

26

 

connection with any registration, qualification or
compliance relating to the Shares, and will reimburse each Investor, and each
Investors’ Agents, for any legal and any other expenses reasonably incurred in
connection with investigating or defending any Liabilities; or (B) any
breach of any covenant, agreement, representation or warranty of the Company in
this Agreement.  Notwithstanding the foregoing, the Company shall
not be liable under this Section 7.1: (a) in any such case to the
extent that any Liabilities or expense arises out of or are based on any untrue
statement or omission in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by such
Investor and stated to be specifically for use therein, (b) for any amount
paid in settlement of claims without the Company’s written consent (which
consent shall not be unreasonably withheld), or (c) to an indemnified
party to the extent that it is finally judicially determined that such
Liabilities resulted primarily from the fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) of such
indemnified party; provided, further, that if and to the extent that
such indemnification against any Liabilities is held, by final judicial
determination to be unenforceable, in whole or in part, for any reason, the
Company shall make the maximum contribution to the payment and satisfaction of
such indemnified Liabilities.  In connection with the obligation of the
Company to indemnify for expenses as set forth above, if an indemnified party
is reimbursed hereunder for any expenses, such reimbursement of expenses shall
be refunded without any interest thereon to the extent it is finally judicially
determined that the Liabilities in question resulted primarily from the
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) of such indemnified party.

 

7.2.                              Indemnification by Investors.  In connection with any Registration
Statement in which an Investor is participating, such Investor will severally
and not jointly indemnify the Company, each of its directors and officers, each
legal counsel and independent accountant of the Company, each person who
controls the Company within the meaning of the Securities Act, any underwriter
(the “Company’s Agents”), and each other Investor, against all Liabilities
arising out of or based on any untrue statement (or alleged untrue statement)
of a material fact contained in the Registration Statement, any prospectus,
offering circular or other similar document, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances under which they were made, and will reimburse the Company, the
Company’s Agents and each other Investor for any legal or any other expenses
reasonably incurred in connection with investigating or defending any
Liabilities, as such expenses are incurred, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in the Registration Statement, any
prospectus, offering circular or other similar document in reliance upon and in
conformity with written information furnished to the Company by an instrument
duly executed by such Investor and stated to be specifically for use
therein.  Notwithstanding the foregoing, the indemnity agreement
provided in this Section 7.2 shall not apply to amounts paid in settlement
of any Liabilities if such settlement is effected without the written consent
of the Investor, which consent shall not be unreasonably withheld. In no event
shall an Investor’s indemnification obligation exceed the net proceeds received
from its sale of the Shares.

 

27

 

7.3.                              Notification; Procedure.

 

(a)                      Each party entitled to indemnification under
this Section 7  (the “Indemnified
Party”) shall give notice to the party required to provide indemnification (the
“Indemnifying Party”) promptly after such Indemnified Party has received
written notice of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld). The Indemnified Party may participate in such defense at such party’s
expense; provided, however, that the Indemnifying Party shall bear the
expense of such defense of the Indemnified Party if (i) representation of
both parties by the same counsel would be inappropriate due to actual or
potential conflicts of interest or (ii) the Indemnifying Party shall have
failed promptly to assume the defense of such proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party. The failure of any
Indemnified Party to give notice within a reasonable period of time as provided
herein shall relieve the Indemnifying Party of its obligations under this Section 7,
but only to the extent that such failure to give notice shall materially
adversely prejudice the Indemnifying Party in the defense of any such claim or
any such litigation. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.

 

(b)                     If the indemnification provided for in this Section 7
is held to be unavailable to an Indemnified Party with respect to any
Liabilities or expense referred to therein, then the Indemnifying Party, in
lieu of indemnifying such Indemnified Party hereunder, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such
Liabilities or expense in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party on the one hand and of the Indemnified
Party on the other in connection with the statements or omissions that resulted
in such Liabilities or expense as well as any other relevant equitable
considerations; provided, that in no event shall any contribution by an
Investor under this Section 7.3(b) exceed the net proceeds received
by such Investor from its sale of the Shares. The relative fault of the
Indemnifying Party and of the Indemnified Party shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Indemnifying Party or by
the Indemnified Party and the parties’ relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement or
omission.  The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 7.3(b) were
determined by pro rata allocation or by any other method of allocation that
does not take into account the equitable considerations referred to in the
immediately preceding sentence.

 

(c)                      The obligations of the Company and each
Investor under this Section 7 shall survive the Closing and the completion
of any offering of the Shares in 

 

28

 

a
Registration Statement, any investigation made by or on behalf of the
Indemnified Party or any officer, director or controlling Person of such
Indemnified Party and will survive the transfer of securities.

 

(d)                     Each Investor shall furnish in writing to the
Company such information regarding such Investor and the distribution proposed
by such Investor as the Company may reasonably request in writing and as shall
be reasonably required in connection with any registration, qualification or
compliance referred to in this Section 7.

 

7.4.                              Registration Rights.  Each Investor agrees that if such
Investor wishes to sell securities pursuant to the Registration Statement, it
will do so in accordance with this Agreement.

 

8.                                      Survival
of Representations and Warranties.  All representations,
warranties and agreements made by the Company and Investors in this Agreement
or in any certificate or other instrument delivered pursuant hereto shall
survive the Closing and any investigation and discovery by the Company or by
Investors, as the case may be, made at any time with respect thereto.

 

9.                                      Miscellaneous
Provisions.

 

9.1.                              Deliveries.  The Company and Investors hereby
covenant and agree to use their respective reasonable best efforts to perform
each of their obligations hereunder, to deliver all certificates and to satisfy
all other conditions set forth in this Agreement and to close the transactions
contemplated by this Agreement on the Closing Date.

 

9.2.                              Successors and
Assigns.  This
Agreement is executed by, and shall be binding upon and inure to the benefit
of, the parties hereto and each of their respective successors and assigns; provided,
however, that neither this Agreement nor any right pursuant hereto nor
interest herein shall be assignable except (a) by the Company with the
consent of the Investors, (b) by the Company in connection with a merger,
consolidation or sale of all or substantially all of its assets, (c) by an
Investor with the prior written consent of the Company or (d) by an
Investor in connection with a sale or other transfer of the Shares.  None
of the provisions of this Agreement shall be for the benefit of or enforceable
by any other person.

 

9.3.                              Notices.  All notices, demands and other
communications provided for or permitted hereunder shall be made in writing and
shall be by registered or certified first-class mail, return receipt requested,
telecopier, courier service or personal delivery:

 

29

 

	
  if to the Investors at the address set forth on the signature
  page hereof:

  
	
   

  
	
  if to the Company at the following address:

  	
  with a copy to:

  
	
   

  	
   

  
	
  BPZ Resources, Inc.

  	
  Seyfarth Shaw LLP

  
	
  580 Westlake Park Blvd., Suite 525

  	
  3700 Bank of America Building

  
	
  Houston, Texas 77079

  	
  700 Louisiana

  
	
  Attn: Chief Executive Officer and President

  	
  Houston, Texas 77002

  
	
  Attn: Chief Financial Officer

  	
  Attn: Mark W. Coffin

  
	
  Fax: (281) 556-6377

  	
  Fax: (713) 225-2300

  

 

All such notices and
communications shall be deemed to have been duly given: when delivered by hand,
if personally delivered; when delivered by courier,
if delivered by commercial overnight courier service; five business days after
being deposited in the mail, postage prepaid, if mailed; and when receipt is
acknowledged, if telecopied.

 

9.4.                              Counterparts.  This Agreement may be executed in any
number of counterparts, and each such counterpart will for all purposes be
deemed an original, and all such counterparts shall constitute one and the same
instrument.

 

9.5.                              Governing Law;
Forum.  This Agreement
shall be governed by, and construed and enforced in accordance with, the laws
of the State of Delaware applicable to contracts entered into and to be wholly
performed therein.  Each party to this Agreement hereby irrevocably agrees
that any legal action or proceeding arising out of or relating to this
Agreement or any agreements or transactions contemplated hereby shall be
brought in the courts of the State of Delaware or of the United States of
America for the District of Delaware and hereby expressly submits to the
personal jurisdiction and venue of such courts for the purposes thereof and
expressly waives any claim of improper venue and any claim that such courts are
an inconvenient forum.  Each party hereby irrevocably consents to the
service of process of any of the aforementioned courts in any such suit, action
or proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to the address set forth in Section 9.3, such service to
become effective 10 days after such mailing.

 

9.6.                              Attorneys’ Fees.  If any party should institute any
action to enforce or interpret any term or provision of this Agreement, the
party prevailing in such action, after all appeals have been exhausted, shall
be entitled to its attorneys’ fees, out-of-pocket disbursements and all other
expenses from the non-prevailing party in such action.

 

9.7.                              Entire Agreement.  This Agreement (together with all
Exhibits and Schedules hereto) constitutes the entire understanding and
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior and contemporaneous written and oral negotiations,
discussions, agreements and understandings with respect to such subject matter.

 

30

 

9.8.                              Section Headings.  The section and subsection headings
contained in this Agreement are included for convenience only and form no part
of the agreement between the parties.

 

9.9.                              Amendments;
Waivers; No Additional Consideration. No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by the Company and each of the Investors or, in the case of a waiver, by the
party against whom enforcement of any such waiver is sought. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver
of any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right. No
consideration shall be offered or paid to any Investor to amend or consent to a
waiver or modification of any provision of this Agreement unless the same
consideration is also offered to all Investors who then hold Shares.

 

9.10.                        Interpretation.  Each of the Investors and the Company
have participated in the negotiation and drafting of this Agreement. 
Accordingly, each of the parties hereby waives any statutory provision,
judicial precedent or other rule of law to the effect that contractual
ambiguities are to be construed against the party who shall have drafted the
same.

 

9.11.                        Severability.  Whenever possible, each provision of
this Agreement shall be interpreted in such a manner as to be effective and
valid under applicable law, but if any provision of this Agreement shall be or
become prohibited or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining provisions of
this Agreement except to the extent that any provision would clearly be
contemplated by the parties to be conditioned upon the validity and
enforceability of such invalid or prohibited provision.

 

9.12.                        Public Announcements.   On or before 8:30 a.m.,
New York City time, on the first business day following the date of this
Agreement, the Company shall issue a one or more press releases (each, a “Press
Release”) describing the terms of the transactions contemplated by this
Agreement, but not disclosing in such press release(s) the names of any
Investor or any of its affiliates or investment advisers or the amount of
Shares purchased by each Investor.  In addition, on or before 8:30 a.m.,
New York City time, on the second business day following the date of this
Agreement, the Company shall file a Current Report on Form 8-K describing
the terms of the transactions contemplated by this Agreement in the form
required by the Exchange Act and attaching this Agreement as an exhibit to such
filing.  From and after the filing of the Company’s Form 10-K (the “10-K
Filing”) for the year ended December 31, 2008 with the SEC, the Investors
as a consequence of participating in the transactions contemplated by this
Agreement shall not be in possession of any material, nonpublic information
received from the Company, any of the Subsidiaries or any of their respective
officers, directors, employees or agents authorized to disclose such
information, that is not disclosed in such Form 10-K; provided, however,
that if such Form 10-K is not filed by March 2, 2009, the 

 

31

 

Company will file by 8:30 a.m., New York City
time, on March 3, 2009 a Current Report on Form 8-K disclosing any
material non-public information that the Company may have provided any Investor
prior to the issuance of such Form 8-K (the “8-K Filing”) that has not
been publicly disclosed.  The Company shall not, and shall cause each of
the Subsidiaries and its and each of their respective officers, directors,
employees and agents, not to, provide the Investors with any material,
nonpublic information regarding the Company or any of the Subsidiaries from and
after the issuance of the Press Release(s) without the consent of the
Investors.  Except for such disclosure as the Company is advised by counsel
is required to be included in documents filed with the SEC or otherwise
required by law or by any stock exchange on which the Company is listed, in
which case the Company shall provide the Investors with prior written notice of
such disclosure, the Company shall not use the name of, or make reference to,
any Investor or any of its affiliates or investment advisers in any press
release or in any public manner (including any reports or filings made by the
Company under the Exchange Act) without such Investor’s prior written consent.

 

9.13.                        Short Sales.  Each Investor agrees that it will not directly or indirectly
make or participate in any “short sales,” as defined in Rule 200 under
Regulation SHO, of the Company’s Common Stock, whether or not exempt, until the
earlier of (i) the effective date of the Registration Statement covering
the Shares purchased by such Investor hereunder, (ii) the date that the
Shares may be sold pursuant to SEC Rule 144  or (iii) one year after the Closing
Date.  Notwithstanding the foregoing, in the event that an Investor is a
multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Investor’s assets and the portfolio managers have no
direct knowledge of the investment decision made by the portfolio managers
managing other portions of such Investor’s assets, the representation set forth
above shall apply only with respect to the portion of assets managed by the
portfolio manager that has knowledge about the financing transaction contemplated
by this agreement. Each Investor will not use any of the restricted Shares
acquired pursuant to this Agreement to cover any short position in the Common
Stock if doing so would be in violation of applicable securities laws and
otherwise will comply with federal securities laws in the holding and sale of
the Shares.

 

9.14.                        Replacement of Shares.  If any certificate or instrument evidencing
any Shares is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation
thereof, or in lieu of and substitution therefor, a new certificate or
instrument, but only upon receipt of evidence reasonably satisfactory to the
Company and its transfer agent of such loss, theft or destruction and the
execution by the holder thereof of a customary lost certificate affidavit of
that fact and an agreement to indemnify and hold harmless the Company and the
transfer agent for any losses in connection therewith or, if required by the
transfer agent, a bond in such form and amount as is required by the transfer
agent.

 

9.15.                        Remedies. In
addition to being entitled to exercise all rights provided herein or granted by
law, including recovery of damages, each of the Investors and the Company will
be entitled to specific performance under this Agreement. The parties agree
that monetary damages may not be adequate compensation for any loss incurred by

 

32

 

reason of any breach of obligations described in the
foregoing sentence and hereby agree to waive in any action for specific
performance of any such obligation (other than in connection with any action
for a temporary restraining order) the defense that a remedy at law would be
adequate.

 

9.16.                        Independent Nature of Investors’ Obligations and Rights. The obligations of each Investor under this
Agreement are several and not joint with the obligations of any other Investor,
and no Investor shall be responsible in any way for the performance of the
obligations of any other Investor under this Agreement.  The decision of each Investor to purchase
Shares pursuant to this Agreement has been made by such Investor independently
of any other Investor and independently of any information, materials,
statements or opinions as to the business, affairs, operations, assets,
properties, liabilities, results of operations, condition (financial or
otherwise) or prospects of the Company or any Subsidiary which may have been
made or given by any other Investor or by any agent or employee of any other
Investor, and no Investor and any of its agents or employees shall have any
liability to any other Investor (or any other person) relating to or arising
from any such information, materials, statement or opinions.  Nothing contained herein, and no action taken
by any Investor pursuant thereto, shall be deemed to constitute the Investors
as a partnership, an association, a joint venture or any other kind of entity,
or create a presumption that the Investors are in any way acting in concert or
as a group with respect to such obligations or the transactions contemplated by
this Agreement.  Each Investor
acknowledges that no other Investor has acted as agent for such Investor in
connection with making its investment hereunder and that no Investor will be
acting as agent of such Investor in connection with monitoring its investment
in the Shares or enforcing its rights under this Agreement.  Each Investor shall be entitled to
independently protect and enforce its rights, including without limitation the
rights arising out of this Agreement, and it shall not be necessary for any
other Investor to be joined as an additional party in any proceeding for such
purpose.  Each Investor has been
represented by its own separate legal counsel in its review and negotiation of
this Agreement.  The Company has elected
to provide all Investors with the same terms and Agreement for the convenience
of the Company and not because it was required or requested to do so by any
Investor.

 

9.17.                        Fees and Expenses.  The Company shall reimburse the Investors
listed on Schedule 9.17 for all legal fees incurred in connection with this
Agreement, which amount shall be paid directly by the Company at the Closing.
Except as set forth in this Section 9.17, each party hereto shall bear its
own expenses in connection with the preparation and negotiation of the
Agreement.

 

9.18.                        Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without
limiting any similar provisions of) this Agreement, whenever any Investor
exercises a right, election, demand or option hereunder and the Company does
not timely perform its related obligations within the periods herein provided,
then such Investor may rescind or withdraw, in its sole discretion from time to
time upon written notice to the Company, any relevant notice, demand or
election in whole or in part without prejudice to its future actions and
rights.

 

33

 

9.19.                        Payment Set Aside.
To the extent that the Company makes a payment or payments to any Investor
pursuant to this Agreement to which Investor was entitled or an Investor
enforces or exercises its rights hereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law (including,
without limitation, any bankruptcy law, state or federal law, common law or
equitable cause of action), then to the extent of any such restoration the
obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or
such enforcement or setoff had not occurred.

 

[Signature pages follow]

 

34

 

IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed and delivered by their
respective representatives hereunto duly authorized as of the date first above
written.

 

	
  BPZ RESOURCES, INC.,

  	
   

  
	
  a Texas corporation

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Manuel Pablo Zúñiga-Pflücker

  	
   

  
	
  President and Chief Executive Officer

  	
   

  
	
  580 Westlake Park Blvd., Suite 525

  	
   

  
	
  Houston, Texas 77079

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  INVESTOR

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Title

  	
   

  
	
   

  	
   

  
	
  Address:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

35Exhibit 10.1

 

EXECUTION

 

SEPARATION
AND GENERAL RELEASE AGREEMENT

 

This Separation and
General Release Agreement (this “Separation Agreement”), is entered into
this 23rd day of February 2009, by and between Peter C. Brown (“Employee”),
AMC Entertainment Holdings, Inc, a Delaware corporation (“AMCEH”),
Marquee Holdings Inc., a Delaware corporation (“Holdings”), and AMC
Entertainment Inc., a Delaware corporation (“AMCE,” and, collectively
with AMCEH and Holdings, the “Company”).

 

WHEREAS,
Employee has been employed as the Chairman of the Board, Chief Executive
Officer and President of each of AMCEH, Holdings and AMCE; and

 

WHEREAS,
Employee desires to resign from his employment and other service relationships
with the Company and its affiliates upon the terms set forth herein.

 

NOW,
THEREFORE, in consideration of the covenants undertaken and
the release contained in this Separation Agreement, Employee and the Company
agree as follows:

 

I.              Resignation.  Employee hereby resigns as Chairman of
the Board, Chief Executive Officer, and President, and otherwise as an
employee, officer, director, member, manager and in any other capacity, of
AMCEH, Holdings, AMCE, American Multi-Cinema, Inc. (“AMC”) and each
of its and their parents, partnerships, subsidiaries, joint ventures,
predecessors and affiliates, including, without limitation, MovieTickets.com,
National CineMedia, Inc., Midland Empire Partners, LLC and Digital Cinema
Implementation Partners, LLC, effective March 2, 2009 (the “Separation
Date”).  Concurrently with the
execution and delivery of this Separation Agreement, Employee has executed the
letter attached as Exhibit A hereto and delivered such letter to
AMCEH.  The Company and its affiliates
hereby accept such resignation, effective immediately.  Employee acknowledges and agrees that he has
received all amounts owed for his regular and usual salary (including, but not
limited to, any severance, overtime, bonus, accrued vacation, commissions, or
other wages) and usual benefits, and that all payments due to Employee from the
Company after the Separation Date shall be determined under this Separation
Agreement.

 

II.            Severance.

 

A.    Severance Pay.  The Company shall pay as severance pay to
Employee a lump sum amount of 7,013,985.00 less applicable withholding and authorized
deductions, on the day after the Separation Date, provided Employee
returns this executed Separation Agreement on February 23, 2009 (“Lump
Sum Severance Payment”), provided this Separation Agreement has not
sooner been revoked, in whole or in part, by Employee.

 

B.    Retirement Benefit Continuation.  To the extent Employee is eligible for
benefits under the AMC Supplemental Executive Retirement Income Plan, the
Defined Benefit Retirement Income Plan, the AMC Nonqualified Deferred
Compensation Plan and the AMC Retirement Enhancement Plan (collectively, the “Retirement
Plans”) as in effect immediately prior to the Separation Date, he will
remain eligible for such benefits pursuant to the terms thereof as may be
amended or terminated from time to time.

 

 

C.    Certain
Other Benefits. 
Employee shall be entitled to the benefits described on the attached Exhibit B
in accordance with their terms as in effect from time to time and subject to
his satisfaction of applicable requirements thereunder.  Nothing in this Separation Agreement shall
affect the Company’s ability to amend or terminate any such benefit plan,
program or arrangement from time to time in accordance with its terms (“Exhibit B
Benefit Programs”).  Further, nothing
in this Separation Agreement shall establish or enhance any rights or benefits
on the part of Employee under the Retirement Plans or under any Exhibit B
Program that he would not have had had he not entered into this Separation
Agreement.

 

D.    No
Other Benefits. 
The Lump Sum Severance Payment, benefits under the Retirement Plans and Exhibit B
Benefits pursuant to this Section II are in lieu of any other payments or
benefits (and, except as specifically provided under the Retirement Plans and
the Exhibit B Benefit Programs, none shall accrue) after the Separation
Date.  Employee specifically acknowledges
and agrees that he is entitled to receive no severance pay or other severance
benefits pursuant to any severance plan or policy of the Company or any of its
affiliates.  Nothing contained in this Section II
shall be construed as curtailing Employee’s rights to elect to make portable
any insurance benefits provided to him by the Company as may be available to
him pursuant to the terms of the applicable insurance arrangements.

 

III.           Mutual Nondisparagement; Press
Release. 
Employee agrees that he shall not, directly or indirectly, make or
ratify any statement, public or private, oral or written, to any person that
disparages, either professionally or personally, the Company or any of its affiliates,
past and present, and each of them, as well as its and their trustees,
directors, officers, members, managers, partners, agents, attorneys, insurers,
employees, stockholders, representatives, assigns, and successors, past and
present, and each of them, or make any statement or engage in any conduct that
has the purpose or effect of disrupting the business of the Company or any of
its affiliates.  The Company agrees that
it shall not, and it shall take reasonable steps to ensure that its officers or
directors shall not, directly or indirectly, make or ratify any statement,
public or private, oral or written, to any person that disparages Employee,
either professionally or personally.  A
copy of the form of press release announcing Employee’s employment termination
is attached hereto as Exhibit E. 
Any other Company press release (whether internal or external) issued by
the public relations department of the Company with respect to Employee’s
employment termination shall require the approval of Employee.  Employee acknowledges that any
characterization of his resignation as a “retirement” in any press release or
similar communication shall not affect Employee’s rights or benefits under any
employee benefit plan or program, including, without limitation, any Retirement
Plan.

 

IV.           Releases.

 

A.    Release by Employee.  Employee on behalf of himself, his
descendants, dependents, heirs, executors, administrators, assigns, and
successors, and each of them, hereby covenants not to sue and fully releases
and discharges each of AMCEH, Holdings and AMC and each of its and their
respective parents, subsidiaries and affiliates, past and present, as well as
its and their trustees, directors, officers, members, managers, partners,
agents, attorneys, insurers, employees, stockholders, representatives, assigns,
and successors, past and present, and each of them, hereinafter together and
collectively referred to as the “Releasees,” with respect to and from
any and all claims, wages, demands, rights, liens, agreements, contracts,
covenants, 

 

2

 

actions, suits, causes of action, obligations, debts,
costs, expenses, attorneys’ fees, damages, judgments, orders and liabilities of
whatever kind or nature in law, equity or otherwise, whether now known or
unknown, suspected or unsuspected, and whether or not concealed or hidden,
which he now owns or holds or he has at any time heretofore owned or held or
may in the future hold as against any of said Releasees, arising out of or in any
way connected, in whole or in part, with his service as an officer, director,
employee, member or manager of any Releasee, his separation from his position
as an officer, director, employee, manager and/or member, as applicable, of any
Releasee, or any other transactions, occurrences, acts or omissions or any
loss, damage or injury whatever, known or unknown, suspected or unsuspected,
resulting from any act or omission by or on the part of said Releasees, or any
of them, committed or omitted prior to the date of this Separation Agreement
including, without limiting the generality of the foregoing, any claim under
Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act,
the Age Discrimination in Employment Act, the Family and Medical Leave Act of
1993, the Missouri Human Rights Act of 1986, as amended, and applicable state
and local law or any claim for severance pay, bonus, sick leave, holiday pay,
vacation pay, life insurance, health or medical insurance or any other fringe
benefit, workers’ compensation or disability; provided that such release
shall not apply to (1) the benefits due to Employee under Section II
in connection with the execution and delivery of this Separation Agreement; (2) any
rights Employee has to the put right set forth in Section VIII.B; (3) any
right that Employee may have to indemnification pursuant to the Company’s
certificate of incorporation, bylaws, Section 8 of the Employment
Agreement (as defined in Section VIII.B) or under applicable laws with
respect to any losses that Employee may have incurred or may in the future
incur with respect to his past service as an officer or employee of the
Company; and (4) with respect to any such losses, any rights that Employee
may have to insurance coverage for such losses under any Company directors and
officers liability insurance policy.  In
addition, this release does not cover any claim that cannot be released as a
matter of applicable law.

 

B.    Release
by the Company. 
The Company, on behalf of its employees, officers, directors, divisions,
subsidiaries, parents, affiliates, assigns and successors, and each of them,
hereby acknowledges full and complete satisfaction of and releases and
discharges and covenants not to sue Employee, his descendants, dependents,
heirs, executors, administrators, assigns and successors, and each of them,
from and with respect to any and all claims, agreements, obligations, demands
and causes of action, known or unknown, suspected or unsuspected, arising out
of or in any way connected, in whole or in part, with Employee’s employment,
the termination thereof, or any other relationship with or interest in the
Company resulting from or arising out of any act or omission by or on the part
of Employee committed or omitted prior to the date of this Separation
Agreement; provided, however, that the foregoing
release does not apply to any breach by Employee of his fiduciary duties to the
Company, to fraud by Employee, or to any claim that cannot be released as a
matter of applicable law.

 

C.    Additional
Release by Employee. 
In addition to the release set forth in Section IV.A above, and
subject to the exceptions set forth therein, Employee, on his own behalf and
behalf of his descendants, dependents, heirs, executors, administrators,
assigns and successors, and each of them, hereby acknowledges full and complete
satisfaction of and releases and discharges and covenants not to sue any
director, officer, shareholder, partner, representative, attorney, agent or
employee, past or present, of any Company Releasee, from and with respect to
any and all claims, agreements, obligations, demands and causes of action 

 

3

 

(collectively, “Known Claims”), arising out of
or in any way connected with Employee’s employment or any other relationship
with or interest in the Company.

 

D.    Additional
Release by the Company. 
In addition to the release set forth in Section IV.B above, and
subject to the exceptions set forth therein, the Company, on behalf of its
employees, officers, directors, divisions, subsidiaries, parents, affiliates,
assigns and successors, and each of them, hereby acknowledges full and complete
satisfaction of and releases and discharges and covenants not to sue any
director, officer, shareholder, partner, representative, attorney, agent or
employee, past or present, of Employee, any entities he controls, his
descendants, dependents, heirs, executors, administrators, assigns and
successors, from and with respect to any Known Claims.

 

V.            ADEA Waiver.  Employee expressly acknowledges and agrees
that by entering into this Separation Agreement, he is waiving any and all
rights or claims that he may have arising under the Age Discrimination in
Employment Act of 1967, as amended, which have arisen on or before the date of
execution of this Separation Agreement. 
Employee further expressly acknowledges and agrees that:

 

A.    In
return for this Separation Agreement, he will receive consideration beyond that
which he was already entitled to receive before entering into this Separation
Agreement;

 

B.    He
is hereby advised in writing by this Separation Agreement to consult with an
attorney before signing this Separation Agreement;

 

C.    He
was informed that he had twenty-one (21) days within which to consider this
Separation Agreement (or to waive such period if he so desired by executing Exhibit C
hereto); and

 

D.    He
was informed that he had seven (7) days following the date of execution of
this Separation Agreement in which to revoke this Separation Agreement.

 

VI.           No Transferred Claims.  Employee warrants and represents that he has
not heretofore assigned or transferred to any person not a party to this
Separation Agreement any released matter or any part or portion thereof and he
shall defend, indemnify and hold the Company and each of its affiliates
harmless from and against any claim (including the payment of attorneys’ fees
and costs actually incurred whether or not litigation is commenced) based on or
in connection with or arising out of any such assignment or transfer made,
purported or claimed.

 

VII.          Confidential
Information.

 

A.    As
provided in Section 9 of the Employment Agreement, Employee acknowledges
that he possesses information relating to the Company and its affiliated
companies and their respective operations that is confidential or a trade
secret. Such information includes information, whether obtained in writing, in
conversation or otherwise, concerning corporate strategy, intent and plans,
business operations, pricing, costs, budgets, equipment, the status, scope and
term of pending acquisitions, negotiations and transactions, the terms of 

 

4

 

existing or proposed
business arrangements, contracts and obligations, and corporate and financial
reports. Such confidential or trade secret information shall not, however,
include information in the public domain unless Employee has, without
authority, made it public.  To the extent
Employee’s disclosure of any such information is compelled by federal or state
law, Employee agrees to advise (to the extent legally permitted) the Company in
advance of any such compelled disclosure and acknowledge that it shall be only
pursuant to a court order that protects the confidentiality of the information
to the greatest extent permitted by law, and only to such persons and/or
agencies authorized to receive such information under such order, with the
costs of complying with such court order promptly reimbursed by the Company to
Employee.

 

B.    Employee
shall (i) keep such information confidential, (ii) take appropriate
precautions to maintain the confidentiality of such information, and (iii) not
use such information for personal benefit or the benefit of any competitor or
any other person.

 

C.    Employee
has returned all materials in his possession or under his control that were
prepared by, relate to, or are the property of, the Company or its affiliates,
including, but not limited to, materials containing confidential information,
files, memorandums, price lists, reports, budgets and handbooks.

 

VIII.        Stock Options.

 

A.    Employee
hereby voluntarily forfeits all of the options to purchase shares of Holdings
common stock granted to Employee by Holdings, including, without limitation,
those granted under the 2004 Stock Option Plan of Marquee Holdings Inc., as
amended (the “Plan”) on December 23, 2004 (which options were
converted into options to purchase shares of AMCEH common stock pursuant to the
letter to sent to all optionholders on June 15, 2007), and disclaims any
current or future right to any benefit or payment in respect thereof.

 

B.    Employee
hereby elects to exercise the put right set forth in Section 7(c) of
that certain Employment Agreement by and between Marquee, AMCE and Employee
dated as of December 23, 2004 and amended as of January 26, 2006 (the
“Employment Agreement”), with respect to all shares of common stock of
the Company owned by or on behalf of Employee as of the Separation Date, as set
forth on Exhibit D.  Employee
shall be paid $323.95 for each share of Company common stock sold pursuant to
the put right, at the same time that the Lump Sum Severance Payment is made.

 

IX.           Miscellaneous

 

A.    Successors.

 

1.          This
Separation Agreement is personal to Employee and shall not, without the prior
written consent of the Company, be assignable by Employee.

 

2.          This
Separation Agreement shall inure to the benefit of and be binding upon the
Company and its respective successors and assigns and any such successor or
assignee shall be deemed substituted for the Company under the terms of this
Separation Agreement for all purposes. 
As used herein, “successor” and “assignee” shall include any 

 

5

 

person, firm, corporation
or other business entity which at any time, whether by purchase, merger or otherwise,
directly or indirectly acquires the ownership of the Company or to which the
Company assigns this Separation Agreement by operation of law or otherwise.

 

B.    Waiver.  No waiver of
any breach of any term or provision of this Separation Agreement shall be
construed to be, nor shall be, a waiver of any other breach of this Separation
Agreement.  No waiver shall be binding
unless in writing and signed by the party waiving the breach.

 

C.    Modification.  This
Separation Agreement may not be amended or modified other than by a written
agreement executed by Employee and any successor to Employee as Chairman of the
Board of Holdings (or, with prior authorization of the Board of Directors of
Holdings, such Chairman’s designee).

 

D.    Complete Agreement.  This Separation Agreement constitutes and
contains the entire agreement and final understanding concerning Employee’s
relationship with the Company and its affiliates and the other subject matters
addressed herein between the parties, and supersedes and replaces all prior
negotiations and all agreements proposed or otherwise, whether written or oral,
concerning the subject matters hereof, including, without limitation, the
Employment Agreement.  Any
representation, promise or agreement not specifically included in this
Separation Agreement shall not be binding upon or enforceable against either
party.  This Separation Agreement
constitutes an integrated agreement.

 

E.     Severability.  If
any provision of this Separation Agreement or the application thereof is held invalid,
the invalidity shall not affect other provisions or applications of the
Separation Agreement which can be given effect without the invalid provisions
or applications and to this end the provisions of this Separation Agreement are
declared to be severable.

 

F.     Choice of Law;
Forum; Waiver of Jury Trial.  This Separation Agreement shall be deemed to
have been executed and delivered within the State of Missouri, and the rights
and obligations of the parties hereunder shall be construed and enforced in
accordance with, and governed by, the laws of the State of Missouri without
regard to principles of conflict of laws that would give effect to the laws of
another jurisdiction.  Each party hereby
consents to the exclusive jurisdiction of the state court located in or having
jurisdiction over Jackson County, Missouri or the federal district court for
the Western District of Missouri located in Kansas City, Missouri (or any other
federal court with jurisdiction thereover) and each party irrevocably submits to
the exclusive jurisdiction of each such court in any action or proceeding with
respect to this Separation Agreement, waives any objection it may now have or
hereafter have to venue or to convenience of such forum.  EACH
PARTY HERETO HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY
ACTION RELATED TO OR ARISING OUT OF EMPOYEE’S EMPLOYMENT OR TERMINATION OR THIS
SEPARATION AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

G.    Cooperation in Drafting.  Each party has cooperated in the drafting and
preparation of this Separation Agreement. 
Hence, in any construction to be made of this

 

6

 

Separation Agreement, the
same shall not be construed against any party on the basis that the party was
the drafter.

 

H.    Counterparts.  This
Separation Agreement may be executed in counterparts, and each counterpart,
when executed, shall have the efficacy of a signed original.  Photographic copies of such signed
counterparts may be used in lieu of the originals for any purpose.

 

I.      Advice of Counsel.  In entering this Separation Agreement, the
parties represent that they have relied upon the advice of their attorneys, who
are attorneys of their own choice, and that the terms of this Separation
Agreement have been completely read and explained to them by their attorneys,
and that those terms are fully understood and voluntarily accepted by them.

 

J.     Supplementary Documents.  All parties agree to cooperate fully and to
execute any and all supplementary documents and to take all additional actions
that may be necessary or appropriate to give full force to the basic terms and
intent of this Separation Agreement and which are not inconsistent with its
terms.

 

K.    Headings.  The section headings contained in this
Separation Agreement are inserted for convenience only and shall not affect in
any way the meaning or interpretation of this Separation Agreement.

 

L.    Taxes.  The Company has the right to withhold from
any payment hereunder or under any other agreement between the Company and
Employee the amount required by law to be withheld with respect to such payment
or other benefits provided to Employee. 
Other than as to such withholding right, Employee shall be solely
responsible for any taxes due as a result of the payments and benefits received
by Employee contemplated by this Separation Agreement.

 

M.   Section 409A.  This Separation Agreement is intended to
comply with Section 409A.  To the
extent any party hereto reasonably determines that any provision of this
Separation Agreement would subject Employee to the excise tax under Section 409A,
the parties agree in good faith to cooperate to reform this Separation Agreement
in a manner that would avoid the imposition of such tax on Employee while
preserving any affected benefit or payment to the extent reasonably practicable
without increasing the cost to the Company. 
Nothing contained in this Separation Agreement is intended to constitute
a guarantee of Employee’s personal tax treatment.

 

[Remainder of page intentionally
left blank.]

 

7

 

I have
read the foregoing Separation Agreement and I accept and agree to the provisions
it contains and hereby execute it voluntarily with full understanding of its
consequences.

 

EXECUTED this 23rd day of
February 2009, at Jackson County, Missouri.

 

 

	
   

  	
  /s/ PETER C. BROWN

  
	
   

  	
  Peter C. Brown

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AMC ENTERTAINMENT
  HOLDINGS, INC., and its divisions, subsidiaries, parents, and affiliated
  companies, past and present, and each of them

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ CRAIG R. RAMSEY

  
	
   

  	
  Name:

  	
  Craig R. Ramsey

  
	
   

  	
  Title:

  	
  Executive Vice
  President and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MARQUEE HOLDINGS INC.,

  
	
   

  	
  and its divisions,
  subsidiaries, parents, and affiliated companies, past and present, and each
  of them

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ CRAIG R. RAMSEY

  
	
   

  	
  Name:

  	
  Craig R. Ramsey

  
	
   

  	
  Title:

  	
  Executive Vice
  President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AMC ENTERTAINMENT INC., and its divisions, subsidiaries,
  parents, and affiliated companies, past and present, and each of them

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ CRAIG R. RAMSEY

  
	
   

  	
  Name:

  	
  Craig R. Ramsey

  
	
   

  	
  Title:

  	
  Executive Vice
  President and Chief Financial Officer

  

 

8

 

EXECUTION

 

EXHIBIT
A

 

RESIGNATION
LETTER

 

February 23, 2009

 

Boards of Directors

AMC Entertainment
Holdings, Inc.

Marquee Holdings, Inc.

AMC Entertainment, Inc.

920 Main Street

Kansas City, Missouri
64105

 

Re: 
Resignation

 

Ladies and Gentlemen:

 

As we have mutually
agreed, I hereby resign, effective as of March 2, 2009, as Chairman of the
Board, Chief Executive Officer, and President, and otherwise as an employee,
officer, director, member, manager and in any other capacity, of AMC
Entertainment Holdings, Inc., Marquee Holdings, Inc., AMC
Entertainment Inc., American Multi-Cinema, Inc. and each of its and their
parents, partnerships, subsidiaries, joint ventures, predecessors and
affiliates, including, without limitation, MovieTickets.com, National CineMedia, Inc.,
Midland Empire Partners, LLC and Digital Cinema Implementation Partners, LLC.

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ PETER C. BROWN

  
	
   

  	
   

  
	
   

  	
  Peter C. Brown

  

 

 

EXECUTION

 

EXHIBIT
B

 

American
Multi-Cinema, Inc. 401(k) Savings Plan, a defined contribution 401(k) plan

 

Accrued
vacation through March 2, 2009

 

Base
salary through March 2, 2009

 

Reimbursement
for previously unreimbursed business travel and entertainment expenses
reasonably incurred prior to the Separation Date and timely submitted in
accordance with Company policies

 

 

EXECUTION

 

EXHIBIT
C

 

ENDORSEMENT

 

I, Peter C. Brown, hereby
acknowledge that I was given 21 days to consider the foregoing Separation and
General Release Agreement and voluntarily chose to sign the Separation and
General Release Agreement prior to the expiration of the 21-day period.

 

I declare, under penalty
of perjury, that the foregoing is true and correct.

 

*  *  *

 

EXECUTED this 23rd day of
February 2009, at Jackson County, Missouri.

 

 

	
   

  	
  /s/ PETER C. BROWN

  
	
   

  	
  Peter C. Brown

  

 

 

EXECUTION

 

EXHIBIT
D

 

Number of Shares of Common Stock of Holdings Owned by
or on Behalf of Employee

 

2,542.00 shares

 

 

EXECUTION

 

EXHIBIT
E

 

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