f8k111609ex10ii_recovery.htm


    
      Exhibit
10.2

       

      New
Century Capital Partners, Inc.

      


      1999
Avenue of the Stars, Suite 1100

      Los
Angeles, CA 90067

      (310)
356-4641 Tel

      (310)
451-9092 Fax



    PERSONAL
& CONFIDENTIAL

    


    November
16, 2009

    


    Mr.
Jeffrey Beunier

    President
and Chief Executive Officer

    Recovery
Energy, Inc.

    Denver,
CO 80220

    


    Dear
Jeffrey:

    


    New Century Capital Partners, Inc.
(“NCCP”) is
pleased to act as the exclusive financial advisor to Recovery Energy, Inc.
(together with its subsidiaries and affiliates, the “Company”) during the term (the
“Term”, as hereinafter
defined), of this letter agreement (“Agreement”) solely with
respect to (i) identifying an investment banking firm or firms (“IBF”) to
underwrite (or placed privately) the sale of up to $25 million of equity,
equity-linked securities, convertible securities, preferred stock, debt, or in
any other form as directed and approved by the Company (the “Transaction”) to investors
(the “Investors”) on a
best-efforts basis and (ii) assisting the Company in any other way to complete
the Transaction, including advising on the type and size of security, and the
terms of the Transaction.

     

    The
Company shall cooperate fully with NCCP in connection with the identification of
potential investment banking firms relating to the Transaction. The Company
agrees that it is critical to the Transaction that the Company’s financial data
and legal records be in good working condition – such as would be expected by
investment banks, and institutional or retail investors.

     

    This
Agreement shall commence upon the date of execution of this Agreement by the
Company (the “Effective
Date”) and expire twelve (12) months after the Effective Date of this
Agreement (the “Term”),
unless the Agreement is terminated at an earlier date as provided
below.  In addition, for purposes of this Agreement, the tail (the
“Tail”) shall mean the
twelve (12) months after the termination of the Agreement.

     

    
      	
              1.  

            	
              The
      Transaction

            


    

     

    In
connection with our engagement, we propose to undertake certain services on your
behalf, including to the extent you may request:

     

    
      	
              (i)  

            	
              Advise
      the Company with regard to various financing strategies and alternatives.
      This may initially include assisting in the composition of a summary
      document which would be circulated to potential strategic investors
      selected by the IBF and approved by the
Company;

            


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      Engagement
Agreement

      Recovery
Energy, Inc.

      Page  of 2
of 7

    

     

    
      	
              (ii)  

            	
              Advise
      the management of the Company with regard to the investors
      identified  by the IBF;

            


    

    


    
      	
              (iii)  

            	
              Review
      with and advise the management of the Company with regard to the structure
      of a comprehensive financial package negotiated by the IBF;
      and

            


    

    


    
      	
              (iv)  

            	
              Assist
      the Company in respect to the raising of capital in the form of equity,
      equity-linked securities, preferred stock, debt, or in any other form as
      directed and approved by the Company in the
  Transaction.

            


    

    


    
      	
              2.  

            	
              Fees and
      Expenses

            


    

     

    As
compensation for the services to be provided by NCCP hereunder, the Company
agrees to pay to NCCP:

     

    
      	
              (i)  

            	
              Non-Refundable
      Engagement Fee.  A non-refundable cash engagement fee of $25,000
      (the “Engagement
      Fee”) to be paid upon signing of the Agreement which will be
      credited against any Financial Advisory
Fee;

            


    

    


    
      	
              (ii)  

            	
              Financial
      Advisory Fee.  Upon the consummation of the Transaction, the
      Company shall pay NCCP a financial advisory fee in cash (the “Financial Advisory Fee or
      Advisory Fee”) of twenty percent (20%) of the total amount earned
      by the underwriting IBF, including any cash payments and
      warrants;

            


    

    


    
      	
              (iii)  

            	
              Finder’s
      Fee: NCCP will be entitled to receive as a Finder’s Fee (“Finder’s Fee”)
      in cash equal to 5% of the gross proceeds and in warrants equal to 5% of
      the gross proceeds received by the Company from investors introduced by
      NCCP such as Yorkville and Cohen & Company, if such company
      participates in the capital raise. Such Finder’s Fee will be separate and
      apart from any Advisory Fee received by NCCP under this
      agreement;

            


    

    


    
      	
              (iv)  

            	
              Warrants.  The
      warrants issued to NCCP pursuant to clause (ii) (the "Warrants") shall be
      the equivalent of twenty percent (20%) of the warrants issued to the IBF
      with respect to the Transaction and shall have the same terms and
      conditions, including exercise price and term of the warrants, as the
      warrants issued to the
  IBF.    

            


    

    


    
      	
              (v)  

            	
              The
      Company agrees to reimburse NCCP by wire transfer on the first business
      day of each month for all reasonable and documented out-of-pocket expenses
      (including, third-party databases and research, communication and document
      production expenses, the fees of counsel, and all travel related expenses)
      incurred by NCCP pursuant to its engagement hereunder and submitted to the
      Company in the preceeding month, whether or not a Transaction is
      consummated and independent of any Advisory
Fee.

            


    

    


    The
Company also agrees to indemnify NCCP and certain other entities and persons as
set forth in Schedule I
attached hereto, which obligation shall survive the termination or expiration of
this Agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      Engagement
Agreement

      Recovery
Energy, Inc.

      Page  of 3
of 7

    

     

    
      	
              3.  

            	
              Information to be
      Supplied

            


    

     

    The
Company shall make available to NCCP all financial and other information
requested by it for the purpose of its assignment hereunder.  In
performing its services hereunder, NCCP shall be entitled to rely upon and
assume, without independent verification, the accuracy and completeness of all
information that has been furnished to it by, or on behalf of, the Company or
otherwise reviewed by it and shall have no obligation to verify the accuracy or
completeness of any such information or to conduct any appraisal of any
assets.

     

    Any
financial advice rendered by NCCP pursuant to this Agreement, written or oral,
will be solely for the information of the Company and may not be disclosed
publicly in any manner without NCCP's prior written approval and will be treated
by the Company as confidential.

     

    
      	
              4.  

            	
              Announcement of
      Transaction

            


    

     

    When a
Transaction is completed, and subject to compliance with applicable securities
laws, NCCP may, at its option and expense, place announcements and
advertisements or otherwise publicize the Transaction and NCCP’s role in it
(which may include the reproduction of the Company’s logo and a hyperlink to the
Company’s web site) on NCCP’s Internet web site and in such newspapers and
periodicals as it may choose stating that NCCP has acted as the financial
advisor to the Company with respect to the Transaction subject to the review and
consent of the of the content by the Company.  When the Company is
going to issue a press release disclosing the Transaction, NCCP has the right to
review the press release and description of NCCP’s role in the
Transaction.

     

    
      	
              5.  

            	
              Termination

            


    

     

    This
Agreement may be terminated by the Company, or by NCCP, with or without cause,
at any time upon giving written notice to the effect to that other
party.  For purposes of this Agreement, the term “with cause” shall
mean gross negligence, bad faith or willful misconduct by NCCP.  No
such termination, whether with or without cause, will affect: (i) NCCP’s right
to receive reimbursement for any out-of-pocket expenses incurred prior to the
date of termination; (ii) the Company’s obligation to pay NCCP any Engagement
Fee, Advisory Fee or termination fee that accrued prior to such termination; or
(iii) the Company’s obligation to indemnify NCCP or any other Indemnified Person
(as defined in Schedule I attached hereto) pursuant to the manner set forth in
this Agreement.

     

    
      	
              6.  

            	
              Dispute Resolution

            


    

     

    Any
controversy arising out of or concerning this Agreement shall be determined by
arbitration upon the initiation of either party, and the parties hereto hereby
agree to submit to such arbitration.  Such controversies shall be
settled and conclusively resolved by a single, mutually-acceptable arbitrator
who shall be an attorney experienced in corporate finance matters.  In
the event the parties are unable to agree upon an arbitrator, the arbitrator
shall be selected by the Director of Arbitration for the Financial Industry
Regulatory Authority.  The arbitration shall be conducted in Los
Angeles, California and the written decision of the arbitrator shall be final
and binding on the parties and enforceable in any court of competent
jurisdiction.  In the event the dispute or controversy between the
parties concerns the determination or calculation of any fees or compensation
payable to NCCP hereunder, NCCP and the Company agree that the amounts in
dispute shall be placed in an escrow account upon the consummation of the
Transaction (with any amounts not in dispute being paid to NCCP at such time as
determined in accordance with section 2, “Fees and Expenses”, above) pending the
outcome of the arbitration.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      Engagement
Agreement

      Recovery
Energy, Inc.

      Page  of 4
of 7

    

     

    
      	
              7.  

            	
              Miscellaneous

            


    

     

    It is
understood that if the Company completes a transaction in lieu of any
Transaction (for example, a strategic partnership agreement) for which NCCP is
entitled to compensation pursuant to this Agreement, NCCP and the Company will
negotiate in good faith appropriate compensation for NCCP in an amount to be
mutually agreed upon taking into account, among other things, the results
obtained and the custom and practice among investment bankers acting in similar
transactions.

     

    The
Company acknowledges that NCCP has been retained solely to provide the services
set forth herein, shall have no obligations except as expressly set forth
herein, shall owe such obligations as are expressly set forth herein solely to
the Company, shall be acting as an independent contractor, and shall not be
deemed to have a fiduciary or agency relationship with the Company or any of its
subsidiaries.

    


    NCCP is
not experts on, and cannot render opinions regarding legal, accounting,
regulatory or tax matters. The Company acknowledges that it is not relying on
the advice of NCCP for legal, accounting, regulatory or tax matters and will
rely on the advice of its own professionals and advisors for such matters and it
will make an independent analysis and decision regarding each Transaction based
on such advice.

    


    No
waiver, amendment or other modification of this Agreement shall be effective
unless in writing and signed by each party to be bound thereby.  This
Agreement shall inure to the benefit of and be binding on the Company, NCCP and
their respective successors.  Neither party may sell, assign,
transfer, or otherwise convey any of its rights or delegate any of its duties
under this Agreement without the prior written consent of the other, except to
an entity which has succeeded to substantially all the business and assets of
the assignor or to an entity surviving a merger or consolidation to which the
party to this Agreement is a party.  Any attempted sale, assignment,
transfer, conveyance, delegation or pursuit in violation of this paragraph shall
be void.

    


    This
Agreement sets forth the entire understanding of NCCP and the Company relating
to the subject matter hereof and supersedes and cancels any prior
communications, understandings and agreements between the parties relating to
the subject matter hereof.

    


    In case
any provision of this Agreement shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      Engagement
Agreement

      Recovery
Energy, Inc.

      Page  of 5
of 7

    

     

    It is
also understood that the Company’s obligations hereunder shall survive any
change in control or ownership of the Company.

     

    If the
foregoing correctly sets forth the agreement between the Company and NCCP please
sign and return the enclosed copy of this Agreement, whereupon it shall become
our binding agreement to be governed and construed pursuant to the laws of the
State of California.

     

    Very
truly yours,

     

    NEW
CENTURY CAPITAL PARTNERS, INC.

     

    
      	
              By:

            	
                               /s/
      Mark Salter

            
	 
      	
              Mark
      Salter

            
	 
      	
              Managing
      Director

            


    

    Accepted
as of the date first written above:

    


    RECOVERY
ENERGY, INC.

     

    
      	
              By:

            	
                     /s/
      Jeffrey Beunier

            
	 
      	
              Jeffrey
      Beunier

            
	 
      	
              President
      and Chief Executive Officer

            


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      Engagement
Agreement

      Recovery
Energy, Inc.

      Page  of 6
of 7

    

     

    SCHEDULE
I

     

    The
Company agrees that it will indemnify and hold harmless NCCP and their
affiliates, and their respective directors, officers, employees, agents,
representatives and controlling persons (NCCP and each such entity or person
being an “Indemnified
Party”) from and against any and all losses, claims, damages and
liabilities, joint or several, as incurred, to which such Indemnified Party may
become subject, and related to or arising out of activities performed by or on
behalf of an Indemnified Party pursuant to this Agreement, the Transactions
contemplated thereby or NCCP’s role in connection therewith; provided that the
Company will not be liable to the extent that any loss, claim, damage or
liability is found in a final judgment by a court of competent jurisdiction to
have resulted from actions taken or omitted to be taken by NCCP in bad faith or
from NCCP's gross negligence or willful misconduct in performing the services
described above. The Company also agrees to reimburse any Indemnified Party for
all expenses (including counsel fees and disbursements) as they are incurred in
connection with the investigation of, preparation for or defense of any pending
or threatened claim, or any action, investigation, suit or proceeding arising
therefrom, whether or not such Indemnified Party is a party and whether or not
such claim, action or proceeding is initiated or brought by or on behalf of the
Company. The Company also agrees that no Indemnified Party shall have any
liability (whether direct or indirect, in contract or tort or otherwise) to the
Company or its security holders or creditors related to or arising out of the
engagement of NCCP pursuant to, or the performance by NCCP of the services
contemplated by, this Agreement except to the extent that any loss, claim,
damage or liability is found in a final judgment by a court or competent
jurisdiction to have resulted from actions taken or omitted to be taken by NCCP
in bad faith or from NCCP's gross negligence or willful misconduct.

     

    If the
indemnification provided for in this Agreement is for any reason held
unenforceable, the Company agrees to contribute to the losses, claims, damages
and liabilities, as incurred by any Indemnified Person, for which such
indemnification is held unenforceable in such proportion as is appropriate to
reflect the relative benefits to the Company, on the one hand, and NCCP, on the
other hand, of the Transaction (whether or not the Transaction is
consummated).  The Company agrees that for the purposes of this
paragraph the relative benefits to the Company, NCCP of the Transaction shall be
deemed to be in the same proportion that the total value of the Transaction or
contemplated Transaction by the Company as a result of or in connection with the
proposed Transaction bears to the Advisory Fee paid or Finder’s Fee to be paid
to NCCP under this Agreement; provided that, to the extent
permitted by applicable law, in no event shall the Indemnified Parties be
required to contribute an aggregate amount in excess of the aggregate fees
actually paid to NCCP under this Agreement.

     

    Promptly
after receipt by an Indemnified Party of notice of any claim or the commencement
of any action, suit or proceeding with respect to which an Indemnified Party may
be entitled to indemnity hereunder, the Indemnified Parties will notify the
Company in writing of such claim or of the commencement of such action or
proceeding, and the Company will assume the defense
of such action, suit or proceeding and will employ counsel satisfactory to the
Indemnified Parties and will pay the fees and disbursements of such counsel, as
incurred.  Notwithstanding the preceding sentence, any Indemnified
Party will be entitled to employ counsel separate from counsel for the Company
and from any other party in such action if such Indemnified Party reasonably
determines that a conflict of interest exists which makes representation by
counsel chosen by the Company not advisable or if such Indemnified Party
reasonably determines that the Company’s assumption of the defense does not
adequately represent its interest.  In such event, the fees and
disbursements of such separate counsel will be paid by the Company, but in no
event shall the Company be liable for the fees and disbursements of more than
one counsel (in addition to local counsel) for all Indemnified Parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or
circumstances.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      Engagement
Agreement

      Recovery
Energy, Inc.

      Page  of
7 of 7


    

    The
Company agrees that, without NCCP’s prior written consent, it will not settle,
compromise or consent to the entry of any judgment in any pending or threatened
claim, action or proceeding in respect of which indemnification could be sought
under the indemnification provision of this Agreement (whether or not NCCP or
any other Indemnified Party is an actual or potential party to such claim,
action or proceeding), unless such settlement, compromise or consent includes an
unconditional release of each Indemnified Party from all liability arising out
of such claim, action or proceeding. NCCP agrees that, without the Company’s
prior written consent, it will not settle, compromise or consent to the entry of
any judgment in any pending or threatened claim, action or proceeding in respect
of which indemnification could be sought under the indemnification provision of
this Agreement (whether or not the Company is an actual or potential party to
such claim, action or proceeding), unless such settlement, compromise or consent
includes an unconditional release of each Indemnified Party from all liability
arising out of such claim, action or proceeding.

     

    In the
event any Indemnified Party is requested or required to appear as a witness in
any action, suit or proceeding brought by or on behalf of or against the Company
or any affiliate or any participant in a Transaction covered hereby in which
such Indemnified Party is not named as a defendant, the Company agrees to
reimburse NCCP for all reasonable disbursements incurred by it in connection
with such Indemnified Party’s appearing and preparing to appear as a witness,
including, without limitation, the fees and disbursements of its legal counsel,
and to compensate NCCP in an amount to be mutually agreed upon.

     

    The
provisions of Schedule I shall be in addition to any liability which the Company
may otherwise have.  These provisions shall be governed by the law of
the State of California and shall be operative, in full force and in full effect
regardless of any termination or expiration of this agreement.