Document:

f10k2009a1ex10iv_gws.htm

Exhibit 10.4

 

 

INCENTIVE STOCK OPTION AGREEMENT

 

 

THIS INCENTIVE STOCK OPTION AGREEMENT ("Agreement") is made and entered into in duplicate this 18th day of March, 2009 between GWS Technologies, Inc., a Delaware corporation having a principal place of business at 15455 N. Greenway-Hayden Loop, Suite C4, Scottsdale, AZ 85260 ("Employer"), and Eric Johnson ("Holder"), with respect to the following facts:

 

 

Pursuant and subject to the Employer's 2007 Stock Option Plan, a copy of which is furnished to the Holder with a copy of this Agreement and the provisions of which, by this reference, are made a part of this Agreement as though specified completely and specifically verbatim in this Agreement (the "Plan"), the Employer's Board of Directors has determined that it is in the best interests of the Employer and its stockholders to grant the Option provided for herein to the Holder. The parties agree as follows:

 

 

Option Granted

 

 

1. Employer grants to Holder an Option to purchase 500,000 shares of $.001 par value common stock of Employer at a purchase price of $0.25 per share ("Option"), such Option being further subject to the provisions of the Plan, as administered by the Option Committee or the entire Board in the event there is no standing Option Committee.

 

 

Time of Exercise of Option

 

 

2. The Holder may exercise the Option at any time, and from time to time, during the exercise period, which begins on March 18, 2009 and terminates on March 18, 2012, so long as at all times, beginning with the date of the grant of the Option and ending thirty (30) days prior to the date of exercise, or twelve (12) months prior to the date of exercise, if Holder is disabled within the meaning of Internal Revenue Code Section 22(e)(3), Holder remains employed by the Employer. For purposes of this Agreement, "employment" and "employed" mean that Employee is employed by Employer or a parent or subsidiary corporation of Employer or is a consultant to the Employer during that time.

 

 

Method of Exercise

 

 

3. The Option shall be exercised by written notice delivered to Employer at its principal place of business, specifying the number of shares of common stock of Employer for which the Option is being exercised. The notice must be accompanied by payment (by cash, check, or other means of payment as specified by the Option Committee or the entire Board in the event that there is no standing Option Committee) for the amount of the purchase price for the shares of common stock of Employer purchased pursuant to the exercise of the Option.

 

  

  

  

 

Capital Adjustments

 

 

4.(a) The existence of the Option shall not affect in any way the right or power of Employer or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations, or other changes in Employer's capital structure or its business, or any merger or consolidation of Employer or any issue of bonds, debentures, preferred stock having a preference to or affecting Employer's common stock or the rights thereof, or the issuance of any securities convertible into any such common stock or of any rights, options, or warrants to purchase any such common stock, or the dissolution or liquidation of Employer, any sale or transfer of all or any part of its assets or business, or any other act or proceeding of Employer, whether of a similar character or otherwise.

 

 

(b) The securities with respect to which the Option is granted are shares of the common stock of Employer as presently constituted, but if and whenever, prior to the delivery by Employer of all the shares of the common stock with respect to which the Option is granted, Employer shall effect a subdivision or consolidation of shares or other capital readjustment, the payment of a stock dividend, or other increase or reduction of the number of shares of such common stock outstanding without receiving compensation therefore in money, services, or property, the number of shares of such common stock then remaining subject to the Option shall be adjusted as specified in the Plan, and as determined by the Employer's Option Committee or Board of Directors.

 

 

Merger and Consolidation

 

 

5. (a) Following the merger of one or more corporations with and into Employer or any consolidation of Employer and one or more corporations in which Employer is the surviving corporation, the exercise of the Option shall apply to the shares of common stock of the surviving corporation.

 

 

(b) Notwithstanding any other provision of this Agreement, the Option shall terminate on the dissolution or liquidation of Employer.

 

  

  

  

 

Representations of Employer

 

 

6. During such time as the Option remains outstanding and unexpired, Employer will reserve for issuance, upon the exercise of the Option, the number of shares of Employer's common stock that are subject to the Option. The shares of Employer's common stock subject to the Option, when issued, shall be fully paid and nonassessable. Holder will pay, when due and payable, any federal, state or other personal income tax payable by Holder because of (i) the grant of the Option; (ii) the issuance of any shares of the Employer's common stock upon exercise thereof; or (iii) any subsequent disposition of such shares.

 

 

Withholding Taxes

 

 

7. If Employer determines that it is required to withhold federal, state or local tax as a result of the exercise of the Option, Holder, as a condition to the exercise of the Option, shall make arrangements satisfactory to Employer to enable it to satisfy such withholding requirements.

 

 

Committee Determination Final

 

 

8. The interpretation of the Plan and this Agreement, including any inconsistency between the two documents, shall be reserved to and made by the Option Committee, which is the Committee of the Board of Directors of Employer provided for in the Plan. The Option Committee's determinations shall be final as between the parties hereto, unless otherwise determined by the Board of Directors of Employer.

 

 

Transfer of Option

 

 

9. During Holder's lifetime, the Option shall be exercisable only by Holder. The Option shall not be transferable by Holder, other than by the laws of descent and distribution upon Holder's death. In the event of Holder's death during employment or during the applicable period after termination of employment specified in Paragraph 2 of this Agreement, Holder's personal representatives may exercise any portion of the Option that remains unexercised at the time of Holder's death; provided, however, that any such exercise must be made, if at all, during the period within one year after Holder's death.

 

  

  

  

 

Rights as Shareholder

 

 

10. Holder will not be deemed to be a holder of any shares of Employer's common stock pursuant to the exercise of the Option until Holder pays the purchase price therefor and a stock certificate is delivered to Holder for those shares. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is delivered.

 

 

IN WITNESS WHEREOF, the parties have made and entered into this Agreement in duplicate on the date specified in its preamble.

 

	
EMPLOYER

	  	  	
HOLDER

	  
	 	 	 	 	 
	
GWS Technologies, Inc.,

	  	  	  	  
	
a Delaware corporation

	  	  	  	  
	 	 	 	 	 
	
By: /s/ Richard Reincke

	  	  	
/s/ Eric Johnson

	  
	
Its: Secretary

	  	  	
Eric Johnsonf10k2009ex10xi_recovery.htm

    
Exhibit 10.11

     

     

    PURCHASE AND SALE
AGREEMENT

     

    
      	
              ·  

            	
              Dill
      East Field and Lukassen 14-34 well, Kimball County,
    Nebraska

            

    

    
      	
              ·  

            	
              Pieper
      #3-29 well, Washington County,
Colorado

            

    

    
      	
              ·  

            	
              Omega
      Prospect, Banner County, Nebraska

            

    

    
      	
              ·  

            	
              Comanche
      Farms Prospect, Arapahoe County,
Colorado

            

    

    

    THIS
PURCHASE AND SALE AGREEMENT (this “Agreement”), dated
effective as of January 1, 2010 at 7:00 a.m. Mountain Time (the “Effective Time”), is
between EDWARD MIKE DAVIS,
L.L.C., a Nevada limited liability company, 200 Rancho Circle, Las Vegas,
Nevada 89107 (“Seller”), and RECOVERY ENERGY, INC., a
Nevada corporation, 1515 Wynkoop Street, Suite 200, Denver, Colorado 80202
(“Buyer”).
Seller and Buyer are sometimes referred to in this Agreement, collectively, as
the “Parties,”
and individually, as a “Party.”

    

    Recitals

    

    A. Seller
owns certain rights and interests in and to the Dill East Field (Wilke Lease)
and the Lukassen 14-34 well, located in Kimball County, Nebraska, the Pieper
3-29 well, located in Washington County, Colorado, the Omega Prospect located in
Banner County, Nebraska and the Comanche Farms Prospect located in Arapahoe
County, Colorado (the “Assets” as defined
below).

    

    B. Seller
previously agreed to sell and assign the Assets to Buyer and such transaction
was terminated and the Assets were returned to Seller effective December 1,
2009.

    

    C. Seller
desires to sell and assign to Buyer, and Buyer desires to purchase and acquire
from Seller, the Assets in accordance with the terms and conditions
hereof.

    

    Agreement

    

    IN
CONSIDERATION OF ONE HUNDRED DOLLARS ($100.00), the mutual premises and
covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties hereby
agree as follows:

    

    1. In
accordance with the terms and conditions of this Agreement, Buyer agrees to
purchase and acquire from Seller, and Seller agrees to sell, assign, transfer
and convey to Buyer the following (collectively, the “Assets”):

    

    (a) The
leasehold estates created by the oil and gas leases (the “Leases) described in
Exhibit A hereto, insofar as and only insofar as the Leases cover and relate to
the land described in Exhibit A hereto (the “Land”),
including:

    

    
      	
              (i)  

            	
              an
      undivided eighty-seven and one-half percent (87.50%) working interest and
      a seventy percent (70.00%) net revenue interest in, to and under the Wilke
      Dill East Field) Leases, covering the Land located in Kimball County,
      Nebraska, described in Exhibit A
hereto;

            

    

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    
      	
              (ii)  

            	
              an
      undivided one hundred percent (100.00%) working interest and eighty
      percent (80.00%) net revenue interest in, to and under the Lukassen
      Leases, covering the Land located in Kimball County, Nebraska, described
      in Exhibit A hereto;

            

    

    

    
      	
              (iii)  

            	
               an
      undivided one hundred percent (100.00%) working interest and an eighty
      percent (80.00%) net revenue interest in, to and under the Pieper Lease,
      covering the Land located in Washington County, Colorado, described in
      Exhibit A hereto;

            

    

    

    
      	
              (iv)  

            	
               a
      fifty percent (50.00%) working interest and a forty percent (40.00%) net
      revenue interest in, to and under the Omega Prospect Leases, covering the
      Land located in Banner County, Nebraska, described in Exhibit A hereto;
      and

            

    

    

    
      	
              (v)  

            	
               a
      fifty percent (50.00%) working interest and a forty percent (40.00%) net
      revenue interest in, to and under the Comanche Farms Prospect Leases,
      covering the Land located in Arapahoe County, Colorado, described in
      Exhibit A hereto.

            

    

    

    (b) The
undivided interests in and to the wells located upon the Land and described in
Exhibit A hereto  (the “Wells”).

    

    (c) The oil,
gas, natural gas liquids, condensate and other hydrocarbons produced from the
Land covered by the Leases, or attributable or allocable thereto, or to lands
pooled or unitized therewith, from and after the Effective Time (the “Production”).

    

    (d) The
equipment, personal property, facilities, pipelines, improvements, fixtures,
buildings and structures located upon the Land, and used in connection with the
Leases, the Land or the Wells for the production, gathering, treatment,
compression, transportation, processing, sale or disposal of hydrocarbons or
water produced from the Land, or attributable thereto, including, without
limitation, all the wells, well-bores, casing, tubing, gauges, valves, rods,
flow lines, gear boxes, pumps, tanks, separators, gathering system, compressors,
pipelines, fixtures, pits, buildings and improvements described in Exhibit A
hereto (collectively, the “Equipment”).

    

    (e) The
surface rights incident or appurtenant to the Leases, the Land and the Wells,
and all easements, rights-of-way, permits, licenses, servitudes, surface use
agreements or other similar interests affecting the Land, the Leases and the
Wells (collectively, the “Surface
Rights”).

    

    (f) The
agreements, contracts, options, leases, licenses, permits and other documents
related to the ownership or operation of the Leases, the Land, the Wells, the
Production, the Equipment and the Surface Rights including, without limitation,
all operating, unit, pooling, exploration, farm-out, participation, operating,
unit, pooling, communitization, gathering, water disposal, processing,
transportation and product purchase agreements, and options, permits, orders and
decisions of state and federal regulatory authorities (collectively, the “Material
Contracts”).

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (g) Copies of
Seller’s files and records, including all accounting, revenue and expense
records related to the Leases, the Land and the Wells (the “Records”) including,
without limitation, all of the following: (i) land, lease, title, contracts,
rights of way, surveys, maps, plats, correspondence and other documents; (ii)
division of interest and accounting records; (iii) severance, production and
property tax records; and (iv) well, operations, engineering, environmental and
maintenance records.

    

    2. The
working interest assigned by Seller to Buyer shall be subject to a 20% royalty
and overriding royalty (the “Royalty”) burden, so
that after closing of the sale contemplated by this Agreement, Buyer shall own
an undivided eighty-seven and one-half percent (87.50%) working interest and
seventy percent (70.00%) net revenue interest in the Wilke (Dill East Field)
Leases and Wilke (Dill East Field) Wells, located in Kimball County, Nebraska, a
one hundred percent (100.00%) working interest and eighty percent (80.00%) net
revenue interest in the Lukassen Leases and the Lukassen 14-34 well, located in
Kimball County, Nebraska, and the Pieper Lease and the Pieper 3-29 well, located
in Washington County, Colorado, and an undivided fifty percent (50.00%) working
interest and forty percent (40.00%) net revenue interest in the Omega Prospect
Leases in Banner County, Nebraska and the Comanche Farms Prospect Leases in
Arapahoe County, Colorado.  If Seller owns less than 100% of the
leasehold interest created by the Leases, or in the event the Leases cover less
than the full fee mineral estate in the Land covered by the Leases, then the
Royalty shall be reduced proportionately with respect to Seller’s interest in
such Lease or the partial mineral interest covered by the Lease.

    

    3. The
purchase price for the Assets shall be One Million Four Hundred and Fifty
Thousand (1,450,000) shares of restricted common stock of Buyer (the “Shares”),
and Four Million Five Hundred Thousand Dollars ($4,500,000.00) (collectively,
the “Purchase Price”), as adjusted hereunder.  The Shares shall be
delivered to Seller on or before Closing.  The cash portion of the
Purchase Price shall be paid by Buyer to Seller on or before January 29, 2010 by
bank wire to Seller’s account pursuant to the following wiring
instructions

    

    Bank of
America - Nevada; phone: *********;

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

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

    Routing
No. ***********

    Credit to
the account of *******************.

    

    4. Ownership
of the Assets shall be transferred from Seller to Buyer at Closing, but the cash
portion of the Purchase Price shall be adjusted to reflect the
following:  Effective as of December 1, 2009, all costs, liabilities
and expenses attributable to the Assets incurred prior to December 1, 2009 shall
be the responsibility and obligation of Seller, and Seller shall be entitled to
all of the proceeds from the sale of production attributable to the Assets prior
to December 1, 2009. In addition, at the Closing, Buyer shall pay Seller for the
value of all oil in the tanks and line fill as of December 1, 2009 at the
contract price which Seller is receiving from the purchaser of production from
the Assets for the month in which the Closing occurs. The determination of the
amount of oil in the tanks shall be done by gauging on December 1, 2009 which
shall be jointly measured and observed by representatives of Seller and Buyer.
All costs, liabilities and expenses attributable to the Assets and incurred on
or after December 1, 2009 shall be the responsibility and obligation of Buyer,
and Buyer shall be entitled to all proceeds from the sale of production
attributable to the Assets on or after December 1, 2009. Buyer shall be
responsible for and shall pay all of the operating expenses, direct charges and
operator’s overhead attributable to the Assets from and after December 1,
2009.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    5. Seller
hereby represents and warrants to Buyer that the following representations and
warranties shall be true and correct at and as of Closing:

    

    (a) Seller is
a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Nevada, and is authorized to do business
in the State of Colorado and the State of Nebraska.

    

    (b) Seller
has all requisite power and authority to carry on its business as presently conducted, to enter into this
Agreement, and perform its obligations under this Agreement. The consummation of
the transactions contemplated by this Agreement will not violate nor be in
conflict with any provision of Seller’s articles of organization or
organizational documents, or any agreement or instrument to which Seller is a
party or is bound, or any judgment, decree, order, writ, injunction, statute,
rule or regulation applicable to Seller. The execution, delivery and performance
of this Agreement, and the transactions contemplated hereby, have been duly and
validly authorized by all requisite action on the part of Seller.

    

    (c) This
Agreement has been duly executed and delivered on behalf of Seller, and, at the
Closing, all documents and instruments required hereunder to be executed and
delivered by Seller shall have been duly executed and delivered. This Agreement
does, and such documents and instruments shall, constitute legal, valid and
binding obligations of Seller enforceable in accordance with their
terms.

    

    (d) Seller
hereby agrees to warrant and defend the title to the Assets against all liens,
encumbrances and defects of title arising by, through, or under Seller, but not
otherwise.  The Assets are free and clear of all mortgages, liens or
other encumbrances.

    

    (e) To
Seller’s knowledge, all rentals and royalties under the Leases have been timely
and fully paid.

    

    (f) Seller
has paid all ad valorem, property, production, severance, excise taxes and
assessments attributable to the Leases, the Land and the Production which were
due and payable prior to December 1, 2009.

    

    (g) Seller
has not received notice of any breach, default or violation under any of the
Leases or the Material Contracts. No claim, demand, filing, cause of action,
administrative proceeding, lawsuit or other litigation has been served upon
Seller or notice received by Seller or, to Seller’s knowledge, threatened with
respect to any of the Assets.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    (l)   To
Seller’s knowledge, there are no consents required to be obtained for, and no
preferential rights to purchase exercisable in connection with, the assignment
of the Assets by Seller to Buyer hereunder.

    

    (m)  To
Seller’s knowledge, there are no outstanding authorities for expenditure or
other commitments to make capital expenditures which are binding on the Assets,
and which Seller reasonably anticipates will require expenditures in excess of
Twenty-five Thousand Dollars ($25,000.00) per item.

     

    (n) Seller’s
interest in the Assets is not subject to any contract for the sale of the
production attributable to periods after the Effective Time, other than
contracts that may be terminated by thirty (30) days prior written notice. To
Seller’s knowledge, Seller’s interest in the Assets is not subject to or
burdened by any obligation under a sales, take-or-pay, gas balancing, marketing,
hedging, forward sale or similar arrangement, to deliver the production
attributable to such interest in the Assets without receiving payment at the
time of or subsequent to delivery, or to deliver the Production in the future
for which payment has already been received (e.g., a “forward” sale
contract).

    

    (h) The
Records have been maintained in the ordinary course of Seller’s business, and
Seller has not intentionally omitted any material information from the
Records.

    

    (i) Seller is
not a “foreign person” within the meaning of Section 1445 of the Internal
Revenue Code.

    

    (j) There are
no bankruptcy, reorganization or receivership proceedings pending, or, to
Seller’s knowledge, threatened against Seller.

    

    (k) Seller
has not incurred any liability for brokers or finders fees relating to the
transactions contemplated by this Agreement for which Buyer shall have any
responsibility whatsoever.

    

    6. Buyer
hereby represents and warrants to Seller that the following representations and
warranties shall be true and correct at and as of Closing:

    

    (a) Buyer is
a Nevada corporation duly organized, validly existing and in good standing under
the laws of the State of Nevada, and is authorized to do business in the State
of Colorado and the State of Nebraska.

    

    (b) Buyer has
all requisite power and authority to carry on its business as presently conducted, to enter into this
Agreement, and perform its obligations under this Agreement. The consummation of
the transactions contemplated by this Agreement will not violate nor be in
conflict with any provision of Buyer’s articles of organization or
organizational documents, or any agreement or instrument to which Buyer is a
party or is bound, or any judgment, decree, order, writ, injunction, statute,
rule or regulation applicable to Buyer. The execution, delivery and performance
of this Agreement, and the transactions contemplated hereby, have been duly and
validly authorized by all requisite action on the part of Buyer.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    (c) This
Agreement has been duly executed and delivered on behalf of Buyer, and, at the
Closing, all documents and instruments required hereunder to be executed and
delivered by Buyer shall have been duly executed and delivered.  This
Agreement does, and such documents and instruments shall, constitute legal,
valid and binding obligations of Buyer enforceable in accordance with their
terms.

    

    (d) There are
no bankruptcy, reorganization or receivership proceedings pending, or, to
Buyer’s knowledge, threatened against Buyer.

    

    (e) Buyer has
not incurred any liability for brokers or finders fees relating to the
transactions contemplated by this Agreement for which Seller shall have any
responsibility whatsoever.

    

    7. The
purchase and sale of the Assets pursuant to this Agreement (the “Closing”) shall occur
at on or before January 29, 2010, by fax or electronically, or such other date
as Buyer and Seller may mutually agree in writing, electronically. At the
Closing, the following shall occur:

    

    (a) Seller
shall execute, acknowledge and deliver to Buyer (in sufficient counterparts to
facilitate recording) an assignment, conveyance and bill of sale (the “Assignment”) covering
the Assets, substantially in the form of Exhibit B hereto, with sufficient
counterparts for filing in the appropriate governmental offices.

    

    (b) On or
before January 29, 2010, Buyer shall pay Seller the Purchase Price by wire
transfer to Seller’s account in accordance with the terms and conditions
hereof.

    

    (c) Buyer and
Seller shall execute, acknowledge and deliver transfer orders or letters in lieu
of transfer orders directing all purchasers of production to make payment of
proceeds attributable to production from the Assets to Buyer after the Effective
Time.

    

    (d) Buyer
shall transfer operations of the Assets to Buyer, or Buyer’s contract
operator.

    

    (e) Seller
shall deliver to Buyer copies of the Records.

    

    8. EXCEPT
AS EXPRESSLY STATED IN THIS AGREEMENT AND THE ASSIGNMENT, THIS AGREEMENT IS MADE
WITHOUT ANY OTHER WARRANTIES OR COVENANTS, EXPRESSED OR IMPLIED IN FACT OR IN
LAW, AS TO TITLE, MERCHANTABILITY, DURABILITY, USE, OPERATION, OR FITNESS FOR
ANY PARTICULAR PURPOSE, AND SELLER DOES NOT IN ANY WAY REPRESENT OR WARRANT THE
ACCURACY OR COMPLETENESS OF ANY INFORMATION, DATA OR OTHER MATERIALS (WRITTEN OR
ORAL) FURNISHED TO BUYER BY OR ON BEHALF OF SELLER. BUYER HEREBY AGREES THAT IT
HAS INSPECTED OR HAS BEEN GIVEN THE OPPORTUNITY TO INSPECT THE ASSETS, INCLUDING
THE LEASES AND ASSOCIATED AGREEMENTS, WELLS, PERSONAL PROPERTY, AND EQUIPMENT
ASSIGNED AND CONVEYED HEREIN AND, EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT
AND THE ASSIGNMENT, BUYER ACCEPTS THE SAME “AS IS, WHERE IS” AND “WITH ALL
FAULTS.”

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    

    9. All
production, severance, excise, ad valorem, property and other taxes (other than
income taxes) relating to ownership or production of oil, gas and condensate
attributable to the Assets prior to December 1, 2009 shall be paid by Seller,
and all such taxes relating to such production on or after December 1, 2009
shall be paid by Buyer. Buyer shall be responsible for any and all state and
local taxes or fees imposed on the transfer of the Assets.

    

    10. Seller
and Buyer shall use their commercially reasonable efforts in good faith to
obtain all of the consents or waivers of preferential rights, if any, that are
required to be obtained with respect to the transfer of the Assets to
Buyer.

    

    11. The Omega
Prospect Leases and the Comanche Prospect Leases shall each be subject to and
burdened by a separate operating agreement (the “Operating Agreement”)
in the form of the A.A.P.L. Form 610-1989 Model Form Operating Agreement. The
Operating Agreement shall govern and control all operations conducted upon the
Land. Pursuant to the terms of the Operating Agreement, Buyer, or Buyer’s
contract operator, shall be the Operator; except with regard to the Omega
Prospect Lease and the Comanche Prospect Leases, Seller shall remain as Operator
until the first well located on such prospect is drilled, and then Buyer, or
Buyer’s contract operator shall be Operator thereafter. The Operating Agreement
shall provide a non-consent penalty equal to four hundred percent (400%) for
drilling and one hundred percent (100%) for surface equipment. Pursuant to the
Operating Agreement, the COPAS overhead rate for drilling a well shall be equal
to $5,000.00 per month, and for operating a well shall be equal to $500.00 per
month.  If Buyer fails to commence the drilling of a well in the
Comanche Prosect Leases by July 1, 2010, Buyer shall reassign to Seller the
Comanche Prospect Leases.  If the Buyer fails to commence the drilling
of a well in the Omega Prospect Leases by July 1, 2010, Buyer shall reassign to
Seller the Omega Prospect Leases.  All reassignments to Seller shall
have the same interests as when received, acquired or assigned to Buyer with no
additional burdens or encumbrances of any kind whatsoever.

    

    12. If Buyer
fails to pay Seller the Purchase Price on or before January 29, 2010, Seller
shall have the right to terminate this Agreement by written notice delivered to
Buyer on or before January 29, 2010. If Seller elects to terminate this
Agreement hereunder, Buyer shall promptly reassign to Seller the Assets, with a
special warranty of title by, through and under Buyer, but not otherwise, and
this Agreement shall terminate.

    

    13. All
exhibits attached to this Agreement are hereby incorporated by reference herein
and made a part hereof for all purposes as if set forth in their entirety
herein. This Agreement, including the exhibits attached hereto, constitutes the
entire agreement between the Parties as to the subject matter of this Agreement
and supersedes all prior agreements, understandings, negotiations and
discussions of the Parties, whether oral or written. No supplement, amendment,
alteration, modification or waiver of this Agreement shall be binding unless
executed in writing by the Parties. All other drafts whether written or oral of
this Agreement are rescinded and this Agreement supersedes any prior draft of
this Agreement whether written or oral, including all previous letters or emails
rescinding or cancelling the selling and buying of the Assets.

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
 

    14. The
rights of Seller and Buyer may be assigned and the provisions of this Agreement
shall extend to their successors and assigns, provided, however, no assignment
shall relieve successors or assigns of its obligations under this
Agreement.

    

    15. This
Agreement shall be governed and construed in accordance with the laws of the
State of Colorado. In the event of any dispute arising out of or relating to
this Agreement, the prevailing Party shall be entitled to recover from the other
Party court costs and reasonable attorneys’ fees.

    

    16. Any
notice required or permitted by this Agreement shall be given in writing by
personal service, overnight delivery service, e-mail, facsimile or by certified
mail, return receipt requested, postage prepaid, as follows:

    

    
      	
              If
      to Seller:

              Edward
      Mike Davis, LLC

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

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

              Attention:  Edward
      Mike Davis

              Fax:  **********

              E-Mail:  **********

               

            	 
      
	
              If
      to Buyer

                 
      Recovery
      Energy, Inc.

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

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

              Attention:
      Jeffrey Beunier, President

              Fax:  **********

              E-Mail:  **********

               

            	
                
      With a copy to:

              Jeff
      Knetsch

              Brownstein
      Hyatt Farber Schreck, LLP

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

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

              Fax:
      *************

              E-Mail:
      **********

               

            

    

    (or such
other address as designated in writing by either Party to the other) and shall
be deemed to have been given as of the date of receipt by the intended
Party.

    

    17. The
Parties agree to execute, acknowledge and deliver such additional instruments,
agreements or other documents, and take such other action as may be necessary or
advisable to consummate the transactions contemplated by this Agreement. The
Parties acknowledge that they and their respective counsel have negotiated and
drafted this Agreement jointly and agree that the rule of construction that
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation or construction of this Agreement.

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    
 

    18. This
Agreement may be executed in counterparts, and each such counterpart shall be
deemed to be an original instrument, but all such counterparts together shall
constitute for all purposes one agreement.  Facsimiles and electronic
copies of this Agreement shall be effective as originals.

    

    IN
WITNESS WHEREOF, Buyer and Seller have executed and delivered this Agreement on
the dates below the signatures hereto, to be effective for all purposes as of
the Effective Time.

    

    
      	
              SELLER:

               

              Edward
      Mike Davis, L.L.C.

               

              By:  /s/ Edward Mike
      Davis     

                        Edward
      Mike Davis, Manager

            	
              BUYER:

               

              Recovery
      Energy, Inc.

               

              By:  /s/ Jeffrey
      Beunier                   
      

                      Jeffrey
      Beunier, President

            

    

    

     

     

     

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

    EXHIBIT
A

    Attached
to and made a part of that certain Purchase and Sale Agreement

    dated
effective January 1, 2010

    between
Edward Mike Davis, L.L.C. and Recovery Energy, Inc.

     

    WILKE (DILL EAST FIELD)
LEASES and LANDS:

     

    
      
        	
                Lessor:

              	
                Gary
      L. Schneider, Individually and as heir of Maxine Schneider,
      deceased

              
	
                Lessee:

              	
                Edward
      Mike Davis, L.L.C.

              
	
                Dated:

              	
                May
      20, 2008

              
	
                Recorded:

              	
                Book
      206 OG, Page 44 in Kimball County, Nebraska

              
	
                Description:

              	
                Township 15 North, Range 56
      West

              
	 
      	
                Section
      5:  S/2

              
	 
      	 
      
	
                Lessor:

              	
                Peggy
      Atkins and Howard Atkins, wife and husband

              
	
                Lessee:

              	
                Edward
      Mike Davis, L.L.C.

              
	
                Dated:

              	
                May
      20, 2008

              
	
                Recorded:

              	
                Book
      206 OG, Page 48 in Kimball County, Nebraska

              
	
                Description:

              	
                Township 15 North, Range 56
      West

              
	 
      	
                Section
      5:  S/2

              
	 
      	 
      
	
                Lessor:

              	
                Galeen
      B. Hergenrader and Kenneth Hergenrader, wife and
husband

              
	
                Lessee:

              	
                Edward
      Mike Davis, L.L.C.

              
	
                Dated:

              	
                May
      16, 2008

              
	
                Recorded:

              	
                Book
      206 OG, Page 52 in Kimball County, Nebraska

              
	
                Description:

              	
                Township 15 North, Range 56
      West

              
	 
      	
                Section
      5:  S/2

              
	 
      	 
      
	
                Lessor:

              	
                Paula
      Wilke, a/k/a Paula J. Wilke and Erwin Wilke, Jr., wife and
      husband

              
	
                Lessee:

              	
                Edward
      Mike Davis, L.L.C.

              
	
                Dated:

              	
                June
      26, 2008

              
	
                Recorded:

              	
                Book
      206 OG, Page 132 in Kimball County, Nebraska

              
	
                Description:

              	
                Township 15 North, Range 56
      West

              
	 
      	
                Section
      5:  S/2

              
	Amendment
      of Oil and Gas Dated: July
      9, 2008
	
                Recorded:

              	
                Book
      206 OG, Page 221 in Kimball County, Nebraska

              
	
                Description:

              	
                Township 15 North, Range 56
      West

              
	 
      	
                Section
      5:  S/2

              
	 
      	 
      
	
                WILKE (DILL EAST FIELD)
    WELLS

              
	 
      	 
      
	
                Well
      Name:

              	
                Wilke
      24-5

              
	
                Located:

              	
                SE/4SW/4
      of Section 5, T15N-R56W, Kimball County, NE

              
	
                API:  26105226270000

              	
                Working
      Interest:  87.50%

              	
                Net
      Revenue Interest: 70.00%

              
	
                Equipment
      and Inventory:  consisting of a pumping unit, rods, tubing and
      casing

              
	 
      	 
      

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

         

         

        	
                Well
      Name:

              	
                Wilke
      23-5

              
	
                Located:

              	
                NE/4SW/4
      of Section 5, T15N-R56W, Kimball County, NE

              
	
                API:  26105226250000

              
	
                Equipment
      and Inventory:  consisting of a pumping unit, rods, tubing and
      casing

              
	 
      	 
      
	
                Well
      Name:

              	
                Wilke
      34-5

              
	
                Located:

              	
                SW/4SE/4
      of Section 5, T15N-R56W, Kimball County, NE

              
	
                API:  26105226290000

              	
                Working
      Interest:  87.50%

              	
                Net
      Revenue Interest: 70.00%

              
	
                Equipment
      and Inventory:  consisting of a pumping unit, rods, tubing and
      casing

              
	 
      	 
      
	
                Well
      Name:

              	
                Wilke
      33-5

              	 
      
	
                Located:

              	
                NW/4SE/4
      of Section 5, T15N-R56W, Kimball County, NE

              
	
                API:  26105226280000

              	
                Working
      Interest:  87.50%

              	
                Net
      Revenue Interest: 70.00%

              
	
                Equipment
      and Inventory:  consisting of a pumping unit, rods, tubing and
      casing

              
	 
      	 
      
	
                Well
      Name:

              	
                Wilke
      44-5

              	 
      
	
                Located:

              	
                SE/4SE/4
      of Section 5, T15N-R56W, Kimball County, NE

              
	
                API:  26105226320000

              	
                Working
      Interest:  87.50%

              	
                Net
      Revenue Interest: 70.00%

              
	
                Equipment
      and Inventory:  consisting of a pumping unit, rods, tubing and
      casing

              
	 
      	 
      
	
                Well
      Name:

              	
                Wilke
      14-5

              	 
      
	
                Located:

              	
                SW/4SW/4
      of Section 5, T15N-R56W, Kimball County, NE

              
	
                API:  26105226520000

              	
                Working
      Interest:  87.50%

              	
                Net
      Revenue Interest: 70.00%

              
	
                Equipment
      and Inventory:  consisting of a pumping unit, rods, tubing and
      casing

              
	 
      	 
      
	
                Wilke
      Tank Battery consisting of 8 400 bbl tanks and an 8 foot
      treater.

              
	 
      	 
      	 
      
	
                LUKASSEN LEASES and
  LANDS:

              
	 
      	 
      
	
                Lessor:

              	
                Antelope
      Energy Company, LLC, a Colorado limited liability
  company

              
	
                Lessee:

              	
                Edward
      Mike Davis, L.L.C.

              
	
                Dated:

              	
                4-Aug-08

              
	
                Recorded:

              	
                Book
      206 OG, Page 647 in Kimball County, Nebraska

              
	
                Covering:

              	
                INSOFAR
      AND ONLY INSOFAR AS THE LEASE COVERS:

              
	 	TOWNSHIP 16 NORTH, RANGE 56 WEST, 6th P.M.
	 
      	
                Section
      34:  S/2SW/4SW/4

              
	 
      	 
      
	
                Lessor:

              	
                Marian
      J. Payne, a single woman

              
	
                Lessee:

              	
                Edward
      Mike Davis, L.L.C.

              
	
                Dated:

              	
                25-Jul-08

              	 
      
	
                Recorded:

              	
                Book
      206 OG, Page 487 in Kimball County, Nebraska

              
	Correction
      of Description
      Recorded: Book
      207, Page 354 in Kimball County, Nebraska
	
                Covering:

              	
                INSOFAR
      AND ONLY INSOFAR AS THE LEASE COVERS:

              
	 
      	
                TOWNSHIP
      15 NORTH, RANGE 56 WEST, 6th P.M.

              
	 
      	
                Section
      3:  N/2 of Lot 4, also described as
  N/2NW/4NW/4

              
	 
      	 
      	 
      

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

         

        	
                Lessor:

              	
                Judith
      Ann Mays, a married woman dealing in her sole and separate
      property

              
	
                Lessee:

              	
                Edward
      Mike Davis, L.L.C.

              
	
                Dated:

              	
                July  25,
      2008

              
	
                Recorded:

              	
                Book
      207 OG, Page 16 in Kimball County, Nebraska

              
	Correction
      of Description
      Recorded: Book
      207, Page 356 in Kimball County, Nebraska
	
                Covering:

              	
                INSOFAR
      AND ONLY INSOFAR AS THE LEASE COVERS:

              
	 
      	
                TOWNSHIP 15 NORTH, RANGE 56 WEST, 6th P.M.

              
	 
      	
                Section
      3:  N/2 of Lot 4, also described as
  N/2NW/4NW/4

              
	 
      	 
      
	
                Lessor:

              	
                William
      O. Smith a/k/a William Otis Smith and Rita Marie Smith, husband and
      wife

              
	
                Lessee:

              	
                Edward
      Mike Davis, L.L.C.

              
	
                Dated:

              	
                May
      16, 2008

              
	
                Recorded:

              	
                Book
      206 OG, Page 33 in Kimball County, Nebraska

              
	Correction
      of Description Recorded: Book
      207, Page 352 in Kimball County, Nebraska
	
                Covering:

              	
                INSOFAR
      AND ONLY INSOFAR AS THE LEASE COVERS:

              
	 
      	
                TOWNSHIP 15 NORTH, RANGE 56 WEST, 6th P.M.

              
	 
      	
                Section
      3:  N/2 of Lot 4, also described as
  N/2NW/4NW/4

              
	 
      	 
      	 
      
	
                Lessor:

              	
                Rita
      J. Bingaman f/k/a Rita Jeanne Smith and Gary P. Bingaman, wife and
      husband

              
	
                Lessee:

              	
                Edward
      Mike Davis, L.L.C.

              
	
                Dated:

              	
                May
      16, 2008

              
	
                Recorded:

              	
                Book
      206 OG, Page 29 in Kimball County, Nebraska

              
	Correction
      of Description Recorded: Book
      207, Page 350 in Kimball County, Nebraska
	
                Covering:

              	
                INSOFAR
      AND ONLY INSOFAR AS THE LEASE COVERS:

              
	 
      	
                TOWNSHIP 15 NORTH, RANGE 56 WEST, 6th P.M.

              
	 
      	
                Section
      3:  N/2 of Lot 4, also described as
  N/2NW/4NW/4

              
	 
      	 
      
	
                Lessor:

              	
                Mary
      L. Soper, individually and as Trustee of the Ronald R. Soper Family Trust,
      dated October 4, 1995

              
	
                Lessee:

              	
                Edward
      Mike Davis, L.L.C.

              
	
                Dated:

              	
                July
      15, 2009

              
	
                Recorded:

              	
                Book
      208 OG, Page 760 in Kimball County, Nebraska

              
	
                Covering:

              	
                INSOFAR
      AND ONLY INSOFAR AS THE LEASE COVERS:

              
	 
      	
                TOWNSHIP 15 NORTH, RANGE 56 WEST, 6th P.M.

              
	 
      	
                Section
      3:  N/2 of Lot 4, also described as
  N/2NW/4NW/4

              
	 
      	 
      
	
                Lessor:

              	
                Steven
      Knigge, a single man

              
	
                Lessee:

              	
                Edward
      Mike Davis, L.L.C.

              
	
                Dated:

              	
                July
      15, 2009

              
	
                Recorded:

              	
                Book
      208 OG, Page 763 in Kimball County, Nebraska

              
	
                Covering:

              	
                INSOFAR
      AND ONLY INSOFAR AS THE LEASE COVERS:

              
	 
      	
                TOWNSHIP 15 NORTH, RANGE 56 WEST, 6th P.M.

              
	 
      	
                Section
      3:  N/2 of Lot 4, also described as
  N/2NW/4NW/4

              
	 
      	 
      	 
      

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

         

        	
                Lessor:

              	
                Linda
      McDowall, f.k.a. Linda Wilson, a single woman

              
	
                Lessee:

              	
                Edward
      Mike Davis, L.L.C.

              
	
                Dated:

              	
                July
      15, 2009

              
	
                Recorded:

              	
                Book
      208 OG, Page 766 in Kimball County, Nebraska

              
	
                Covering:

              	
                INSOFAR
      AND ONLY INSOFAR AS THE LEASE COVERS:

              
	 
      	
                TOWNSHIP 15 NORTH, RANGE 56 WEST, 6th P.M.

              
	 
      	
                Section
      3:  N/2 of Lot 4, also described as
  N/2NW/4NW/4

              
	 
      	 
      
	
                Lessor:

              	
                Marla
      Knigge,f.k.a. Marla Teasley, a single woman

              
	
                Lessee:

              	
                Edward
      Mike Davis, L.L.C.

              
	
                Dated:

              	
                July
      15, 2009

              
	
                Recorded:

              	
                Book
      208 OG, Page 769 in Kimball County, Nebraska

              
	
                Covering:

              	
                INSOFAR
      AND ONLY INSOFAR AS THE LEASE COVERS:

              
	 
      	
                TOWNSHIP 15 NORTH, RANGE 56 WEST, 6th P.M.

              
	 
      	
                Section
      3:  N/2 of Lot 4, also described as
  N/2NW/4NW/4

              
	 
      	 
      	 
      
	
                LUKASSEN WELL

              
	 
      	 
      	 
      
	
                Well
      Name:

              	
                Lukassen
      14-34

              
	
                Located:

              	
                S/2SW/4SW/4
      of Section 34, T16N-R56W, Kimball County, NE

              
	
                API:  26105226450000

              	
                Working
      Interest:  100.00%

              	
                Net
      Revenue Interest: 80.00%

              
	
                Equipment
      and Inventory:  consisting of a pumping unit, rods, tubing and
      casing

              
	 
      	 
      	 
      
	
                Lukassen
      Tank Battery consisting of 3 – 400 bbl tanks and a 4 foot
      treater

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                PIEPER LEASE and LANDS:

              
	 
      	 
      
	
                Lessor:

              	
                Dean
      Reed and Beaulah Reed, husband and wife

              
	
                Lessee:

              	
                King
      Resources Company

              
	
                Dated:

              	
                August
      10, 1966

              
	
                Recorded:

              	
                Book
      583, Page 71 in Washington County, Colorado

              
	
                Description:

              	
                Township 1 North, Range 53
    West

              
	 
      	
                Section
      29:  NE/4

              

         

        	
                PIEPER WELL

              
	 
      	 
      
	
                Well
      Name:

              	
                Pieper
      #3-29

              
	
                Located:

              	
                NE/4
      of Section 29, T1N-R53W, Washington County, CO

              
	
                API:  05-121-08367

              	
                Working
      Interest:  100.00%

              
	
                Equipment
      and Inventory:  consisting of a pumping unit, rods, tubing and
      casing

              
	 
      
	
                Pieper
      Tank Battery consisting of 2 – PR&R 500 bolted bbl tanks and a 6 X 20
      vertical inside leg cold weather treater

              

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

         

        	
                OMEGA PROSPECT LEASES and
      LANDS:

              
	 
      	 
      	 
      
	
                Lessor:

              	
                Katharine
      E. Nelson,, Individually and as Trustee of the Katharine E. Nelson Living
      Trust, dated 5-19-2003

              
	
                Lessee:

              	
                Edward
      Mike Davis, L.L.C.

              
	
                Dated:

              	
                September
      20, 2008

              	 
      
	
                Recorded:

              	
                Book
      131 OG, Page 455, in Banner County, Nebraska

              
	
                Description:

              	
                Township 17 North, Range 55 West, 6th P.M.

              
	 
      	
                Section
      11:  NE, S2

              
	 
      	 
      	 
      
	
                Lessor:

              	
                Ruth
      L. Pile, individually and as Trustee of the Ruth L. Pile Revocable Trust,
      dated 6-26-1998

              
	
                Lessee:

              	
                Edward
      Mike Davis, L.L.C.

              
	
                Dated:

              	
                October
      9, 2008

              
	
                Recorded:

              	
                Book
      131 OG, Page 459, in Banner County, Nebraska

              
	
                Description:

              	
                Township 17 North, Range 55 West, 6th P.M.

              
	 
      	
                Section
      12:  W/2

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                COMANCHE FARMS PROSPECT LEASES and
      LANDS:

              
	 
      	 
      
	
                Lessor:

              	
                State
      of Colorado    Lease # OG 8056.4

                State
      Board of Land Commissioners

              
	
                Lessee:

              	
                Contex
      Energy Company

              
	
                Dated:

              	
                August
      19, 2004

              
	
                Recorded:

              	
                Reception
      Number B 4199551, in Arapahoe County, Colorado

              
	
                Description:

              	
                Township 4 South, Range 62 West, 6th P.M.

              
	 
      	
                Section
      36:  ALL

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