Document:

f8k0610ex10iii_recovery.htm

Exhibit 10.3

 

LOCK-UP AGREEMENT

May 28, 2010

Each Purchaser referenced below:

	
  

	
Re:

	
Securities Purchase Agreement, dated as of June 3, 2010 (the “Purchase Agreement”), between ­­­­­­­­­­­­­­­­­­Recovery Energy, Inc., a Nevada corporation (the “Company”) and the purchasers signatory thereto (each, a “Purchaser” and, collectively, the “Purchasers”)

 

Ladies and Gentlemen:

 

Defined terms not otherwise defined in this letter agreement (the “Letter Agreement”) shall have the meanings set forth in the Purchase Agreement.  Pursuant to Section 2.2(a)(v) of the Purchase Agreement and in satisfaction of a condition of the Company’s obligations under the Purchase Agreement, the undersigned irrevocably agrees with the Company that, from the date hereof until January 1, 2011 (such period, the “Restriction Period”), the undersigned will not offer, sell,  contract to sell, hypothecate, pledge or otherwise dispose of (or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition (whether by actual disposition or effective economic disposition due to cash settlement or otherwise) by the undersigned or any Affiliate of the undersigned or any person in privity with the undersigned or any Affiliate of the undersigned), directly or indirectly, including the filing (or participation in the filing) of a registration statement with the Commission in respect of, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act with respect to, any shares of Common Stock or Common Stock Equivalents beneficially owned, held or hereafter acquired by the undersigned (the “Securities”).  Beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act.  In order to enforce this covenant, the Company shall impose irrevocable stop-transfer instructions preventing the Transfer Agent from effecting any actions in violation of this Letter Agreement.

The undersigned acknowledges that the execution, delivery and performance of this Letter Agreement is a material inducement to each Purchaser to complete the transactions contemplated by the Purchase Agreement and that each Purchaser (which shall be a third party beneficiary of this Letter Agreement) and the Company shall be entitled to specific performance of the undersigned’s obligations hereunder.  The undersigned hereby represents that the undersigned has the power and authority to execute, deliver and perform this Letter Agreement, that the undersigned has received adequate consideration therefor and that the undersigned will indirectly benefit from the closing of the transactions contemplated by the Purchase Agreement.

 

  

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This Letter Agreement may not be amended or otherwise modified in any respect without the written consent of each of the Company, each Purchaser and the undersigned.  This Letter Agreement shall be construed and enforced in accordance with the laws of the State of New York without regard to the principles of conflict of laws. The undersigned hereby irrevocably submits to the exclusive jurisdiction of the United States District Court sitting in the Southern District of New York and the courts of the State of New York located in Manhattan, for the purposes of any suit, action or proceeding arising out of or relating to this Letter Agreement, and hereby waives, and agrees not to assert in any such suit, action or proceeding, any claim that (i) it is not personally subject to the jurisdiction of such court, (ii) the suit, action or proceeding is brought in an inconvenient forum, or (iii) the venue of the suit, action or proceeding is improper. The undersigned hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by receiving a copy thereof sent to the Company at the address in effect for notices to it under the Purchase Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  The undersigned hereby waives any right to a trial by jury.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.  The undersigned agrees and understands that this Letter Agreement does not intend to create any relationship between the undersigned and each Purchaser and that each Purchaser is not entitled to cast any votes on the matters herein contemplated and that no issuance or sale of the Securities is created or intended by virtue of this Letter Agreement.

 

By its signature below, the Transfer Agent hereby acknowledges and agrees that, reflecting this Letter Agreement, it has placed an irrevocable stop transfer instruction on all Securities beneficially owned by the undersigned until the end of the Restriction Period.  This Letter Agreement shall be binding on successors and assigns of the undersigned with respect to the Securities and any such successor or assign shall enter into a similar agreement for the benefit of the Purchasers.

*** SIGNATURE PAGE FOLLOWS***

  

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This Letter Agreement may be executed in two or more counterparts, all of which when taken together may be considered one and the same agreement.

_________________________

[name and title]

Address for Notice:

1515 Wynkoop Street, Suite 200

Denver, CO 80202

Number of shares of Common Stock:  150,000

Number of shares of Common Stock underlying subject to warrants, options, debentures or other convertible securities:  0

 

By signing below, the Company agrees to enforce the restrictions on transfer set forth in this Letter Agreement.

Recovery Energy, Inc.

By: _________________________________

[name and title]

3f8k0610ex10iv_recovery.htm

 

Exhibit 10.4

 

HEXAGON INVESTMENTS, LLC

730 17th Street, Suite 800

Denver, CO 80202

May 28, 2010

Recovery Energy, Inc.

1515 Wynkoop Street, Suite 200

Denver, CO  80202

Attn:  Roger A. Parker, Chief Executive Officer

 

	Re: 	Credit Agreements between Hexagon Investments, LLC ("Hexagon") and Recovery Energy, Inc. ("Recovery") dated effective January 29, 2010, dated March 25, 2010 and dated April 14, 2010 (together, the "Credit Agreements")

 

Dear Roger:

We understand that Recovery proposes to sell common stock in a private offering with gross proceeds of at least $21 million by May 24, 2010 (the "Stock Sale").  Hexagon and Recovery agree to the following effective upon the closing of the Stock Sale:

	
1.  

	
The Maturity Date as defined in each Credit Agreement shall be amended to be December 1, 2011.

	
2.  

	
Each Credit Agreement shall be amended by deleting from the Events of Default Section 7.1(c) of the January 29, 2010 and March 25, 2010 Credit Agreements and Section 7.1(b) of the April 14, 2010 Credit Agreement.

	
3.  

	
Section 6.2(i) of each Credit Agreement shall be waived with respect to the amount of cash proceeds from the Stock Sale in excess of the amount used to purchase oil and gas properties pursuant to the Purchase Agreement dated May 15, 2010 between Recovery and Edward Mike Davis, L.L.C. (the "Purchase Agreement"), and such excess proceeds may be used by the Company for drilling operations without restriction.

	
4.  

	
The assets purchased in the Purchase Agreement, and all revenues derived from such assets, shall not serve as security or collateral for any of the Obligations (as defined in each Credit Agreement).

	
5.  

	
Section 6.1(q) of each Credit Agreement shall be waived with respect to the registration rights granted to the purchasers in the Stock Sale.

	
6.  

	
At the closing of the Stock Sale Recovery shall deliver to Hexagon a warrant to purchase 1,000,000 shares of Recovery's common stock at $1.50 per share, exercisable for five years from the date of the closing of the Stock Sale, in substantially the same form as the Warrant previously issued to Hexagon in connection with the April 14, 2010 Credit Agreement.

	
7.  

	
If all Obligations under each Credit Agreement have not been paid by Recovery prior to January 1, 2011, Recovery shall issue to Hexagon a second warrant to purchase 1,000,000 shares of Recovery's common stock on identical terms and in the same form as the warrant described in paragraph 6.

 

 

  

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Except as specifically amended hereby, each of the Credit Agreements and all related documents shall remain in full force and effect following the closing of the Stock Sale.

This letter agreement may not be amended except by an instrument in writing signed by all of the parties hereto.  This letter agreement shall be construed in accordance with and governed by the laws of the State of Colorado, excluding its conflict of laws rules.  This letter agreement may be executed in any number of counterparts each of which shall be considered an original.  If the foregoing accurately sets forth our agreement, please so indicate by executing this letter in the space provided below.

 

 

 

Very truly yours

 

HEXAGON INVESTMENTS, LLC

 

By:  Hexagon Investments, Inc., its Manager

 

 

By:  /s/ Brian Fleishmann

Brian Fleischmann

Vice President

 

 

ACCEPTED AND AGREED

 

RECOVERY ENERGY, INC.

 

 

By:  /s/ Roger A. Parker

Roger A. Parker

Chief Executive Officer

 

 

 

 2ex10_1.htm

Golden Group Services Ltd.

330 DeCastro St. Wichham

STCAY 1, Road Town, Tortola

BVI

Date:        May 19, 2010

To:           Shale Gas Partners, LLC and Checotah Pipeline, LLC (each a “Seller” and collectively, the “Sellers’)

Re:           Letter of Intent for Checotah Field Development Project

Pursuant to our review of the above referenced property, the following letter provides the terms and conditions under which we are willing to consider purchasing the referenced property.

1.           Property:                                                       The
property being acquired by Purchaser from Seller Shale Gas Partners, LLC includes the Working Interest in the leases as more fully described below:

The Working Interest in the leases that comprise 4,480 acres held by production within the Checotah AMI specifically that acreage contained in Section's 8, 9 both in 11N - 17E and Section's 19, 20, 27, 30 all in 12N - 17E. Section's, 36 both in 12N -16 E. together with eleven existing wells and equipment thereon as described in the attached equipment
list. All right, title and interest in any future leasing and development in the Checotah AMI which is more fully described on the attached map presentation and comprising 23,000 acres more or less.  The Acreage HBP described above is listed here:

	
Section
	
8-11N-17E
	
                639.51

	
Section
	
9-11N-17E
	
  640.00

	
Section
	
19-12N-17E
	
       581.60

	
Section
	
20-12N-17E
	
            514.38

	
Section
	
30-12N-17E
	
         495.19

	
Section
	
27-12N-17E
	
        639.99

	
Section
	
36-12N-16E
	
        640.00

	
Various
	  	
    329.33

	
Total HBP
	  	
     4,480.00

2.           Property Purchaser:                                   Golden
Group Services Ltd.

 

3.           Property Seller:                                           Shale
Gas Partners, LLC

 

 

 

 

4.           Gathering System:                                      The
property being acquired by Purchaser from Seller Checotah Pipeline, LLC includes the Gathering System as more fully described below:

	
 
	
Gathering and Pipeline System including:

	
·  
	
Gas gathering system consisting of eight miles of buried 4” poly-pipe.

	
·  
	
Gas treatment facilities along the gathering system to the sales point.

	
·  
	
Checotah compression station and sales point to Enogex low pressure line.

	
·  
	
Water disposal through buried 2” poly-pipe with pumps and permitted water injection wells.

	
·  
	
Enogex CDP, 2”meter run (no meter)

	
·  
	
500 gallon polyethylene liquid tank

	
·  
	
Dehydration Unit – Large unit.

5.           Gathering System Purchaser:                  Golden
Group Services Ltd.

 

6.           Gathering System Seller:                          Checotah
Pipeline, LLC

7.           Earnest Money Deposit:                             Upon
mutual signing of an agreed upon Purchase and Sale Agreement, Purchaser agrees to deposit Twenty Thousand/100 dollars ($20,000.00) into an escrow account with Cane Clark LLP.  Said deposit shall become non refundable upon the expiration of the Due Diligence Period, and shall be immediately released to Sellers, and shall be considered liquidated damages
should Purchaser fail to close escrow.

8.           Due Diligence Period:                                Purchaser
shall have a “Due Diligence Period” of sixty (60) days from the date of acceptance and execution of a mutually acceptable Purchase and Sale Agreement, in which to conduct various investigations regarding the property, including conducting interviews, perform physical inspections, reviewing documents of title and related agreements, investigating applicable Covenants, Conditions and Restrictions, investigating the condition
of the soils and the presence of any hazardous materials and generally satisfying itself with respect to all aspects of this property.

9.          Close of Escrow:                                           Not
to exceed ten (10) days following expiration of the Due Diligence Period.

10.        1031 Exchange:                                            At
no expense to either party, Sellers and Purchaser agree to cooperate with each other in facilitating Purchaser’s and/or Sellers’ 1031 tax deferred exchange, if necessary.

11.        Property Condition:                                     It
is Purchaser’s obligation to conduct all necessary studies, including but not limited to environmental, construction, market feasibility, title, zoning & CC&R’s during Purchaser’s Due Diligence Period.

 

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12.        Purchase Contract:                                    Purchaser
and Sellers shall promptly prepare and execute a form of purchase contract, including escrow instructions to Escrow, which shall embody each of the terms and conditions of this letter of interest.  Said purchase contract is to be provided no later than May 31, 2010.

13.        Purchaser Investment In Property Development; Sellers’ Retained Interest:  Upon execution the Purchase Contract and the subsequent Close of Escrow, Purchaser shall
have the duty to invest a total of not less than six million Five Hundred Thousand dollars (US $6,500,000) staged over a period of time as agreed to within the purchase contract, however, the intial investment upon the closing shall not be less than (US $1,500,000), in the exploration and development of the Property.  Purchaser’s investments shall include the drilling of new wells, workover costs for certain well re-completions, administrative costs, and other items pursuant to a project
budget, and mutually agreed upon in writing by Purchaser and Sellers.  Following the Close of Escrow, Sellers shall retain a twenty-five percent (25%) ownership interest in the Property and the Gathering System, respectively.  In the event that Purchaser fails to perform, in whole or in part, its duty to invest in the development of the Property, Sellers shall be entitled to recover a proportional ownership in the Property and the Gathering System in a manner to be more specifically defined
in the Purchase Contract.

14.        Standard Provisions:                                  The
Purchase Agreement will include the standard provisions that are customary to the locality and/or that are required by law.

15.        Additional Provisions:                               
Any additional provisions as Buyer/Sellers may wish and/or require.

16.        Brokers:                                                      
Purchaser and Sellers acknowledge that they have dealt with no brokers in connection with this proposed purchase agreement.

17.        Title:                                                              Sellers
shall pay the cost of a CLTA title policy and Purchaser, at Purchaser’s option, may pay for additional premium to obtain ALTA extended coverage in the amount of the sales price, insuring Purchaser’s fee simple title in the Property, subject only to those exceptions set forth in the preliminary title report.  Purchaser shall obtain an engineering survey at Purchaser’s expense.

18.        Legal Fees and Costs:                                Each
party to this transaction shall pay its own legal fees.  Sellers and Purchaser shall each pay one half (1/2) of documentary transfer taxes and recording fees.  All other costs and expenses shall be allocated as are customary in the purchase agreement.

This letter sets forth the base terms for negotiation of a purchase and sale agreement and is not a contract, offer or option.  This letter does not provide Purchaser with rights in the Property or against Sellers or its affiliates.  Neither party shall be bound to the other party until a Purchase Contract is executed by
both parties.

STAND STILL:                                                        
Sellers shall not initiate or carry on negotiations for the sale of the Property or the Gathering System with any party other than Purchaser unless either: (1) Purchaser and Sellers fail to enter into a binding Purchase Agreement by May 31, 2010, or (2) Purchaser and Sellers agree in writing to abandon this Letter of Intent.

 

 

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If this letter accurately sets forth your understanding of the basic business terms relating to this proposed transaction, please execute and return an original of the letter to the undersigned on or before 5:00 PM on May 31, 2010.

Sincerely,

Golden Group Services, Ltd.

By: /s/ Brad Van Siclen 

Its: Director

 

Dated: 5/27/2010

 

 

AGREED AND ACCEPTED THIS DAY 27th DAY OF May, 2010.

Shale Gas Partners, LLC

 

By: /s/ Tim Elias

Its: Member

 

AGREED AND ACCEPTED THIS DAY 27th DAY OF May 2010.

 

Checotah Pipeline, LLC

 

By: /s/ Tim Elias

Its: Member

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