Document:

f8k073109ex10i_recovery.htm

    Exhibit
10.1

    PURCHASE AND SALE
AGREEMENT

    

    Church
Field

    Washington
County, Colorado

    

    THIS
PURCHASE AND SALE AGREEMENT (this “Agreement”), dated effective as of October 1,
2009 at 7:00 a.m. Mountain Time (the “Effective Time”), is between EDWARD MIKE DAVIS, L.L.C., a
Nevada limited liability company, (“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 Church Field (collectively, the
“Assets”) described in Exhibit A hereto, located in Washington County,
Colorado.

     

    B. Seller
desires to sell and assign to Buyer, and Buyer desires to purchase and acquire
from Seller, the Assets rests 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
consideration of the payment of the Purchase Price (described below), and 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) One
hundred percent (100.00%) working interest and being an eighty percent (80.00%)
net revenue interest in and to 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 (the “Land”) described in Exhibit A
hereto.

     

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

     

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

     

    (d) The
equipment, personal property, facilities, pipelines, improvements, fixtures,
buildings and structures located upon the Land, or 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 (collectively, the
“Equipment”), 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-3 hereto.

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    (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
(collectively, the “Material Contracts”) 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.

     

    (g) Copies of
Seller’s files and 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 a one hundred percent (100.00%)
working interest and being an eighty percent (80.00%) net revenue interest. If
Seller owns less than 100% of the leasehold interest under the Leases, or in the
event the Leases cover less than the full mineral estate in the lands covered by
the Leases, then the interest assigned and the Royalty shall be reduced
proportionately with respect to Seller’s interest in such Lease or the partial
mineral interest covered by the Lease. Seller represents that it only owns
interests from the stratigraphic equivalent of the base of the Niobrara
formation to the stratigraphic equivalent of the total depth drilled in the
Church No. 41-25 well, located in Section 25 of Township 3 South, Range 51 West,
6th
P.M., Washington County, Colorado. No reduction shall occur as result of Seller
not owning interests in zones outside such stratigraphic interval.

     

    3. The
purchase price for the Assets shall be Two Hundred and Fifty Thousand (250,000)
shares of restricted common stock of Buyer (the “Shares”), and Seven Hundred and
Fifty Thousand Dollars ($750,000.00) (the “Purchase Price”), as adjusted
hereunder. The payment of the Purchase Price shall be paid by Buyer to Seller at
the Closing by bank wire to Seller’s account pursuant to the following wiring
instructions:  Bank of America - Nevada; phone: 866-214-6822; P.O. Box
98600, Las Vegas, NV 89193, Routing No. xxxxxxxxx; Credit to the account of
Edward Mike Davis, L.L.C., Account No. xxxxxxxxxx.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    4. Ownership
of the Assets shall be transferred from Seller to Buyer at Closing, but
effective as of the Effective Time. All costs and expenses attributable to the
Assets incurred prior to the Effective Time 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 the Effective Time.
In addition, at the Closing, Buyer shall pay Seller for the value of all oil in
the tanks and line fill at the Effective Time 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 at the Effective Time which shall be jointly measured
and observed by representatives of Seller and Buyer. All costs and expenses
attributable to the Assets and incurred at or after the Effective Time 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 at or after the
Effective Time. 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 the Effective Time.

     

    5. Seller
reserves the right, but shall have no obligation, to sell all (and not less than
all) of the Shares back to Buyer (the “Put Right”), for any reason, in Seller’s
sole discretion.  The Put Right shall be exercisable, if at all, by
notice from Seller to Buyer at any time on Tuesday, December 15, 2009, ending at
5:00 pm local Denver time (if not exercised on such date and by such time, the
Put Right shall expire).  The price for the Shares upon any exercise
of the Put Right shall be Seven Hundred and Fifty Thousand Dollars ($750,000.00)
cash.  Closing shall occur at such time and place as shall be mutually
agreeable between the parties, not later than five (5) days following Seller’s
notice of exercise.  At the Closing, Seller shall deliver the
certificate for the Shares, duly endorsed for transfer, and Buyer shall pay the
repurchase price therefor via wire transfer.

     

    6. Absent
exercise of the Put Right, Buyer shall (i) file a registration statement with
the Securities and Exchange Commission with respect to the Shares (the
“Registration”) not later than Monday, January 11, 2010, and (ii) thereafter
diligently pursue the Registration to effectiveness.  Buyer may
include other equity securities of Buyer in the Registration as well, in Buyer’s
discretion.  In connection with the Registration, Seller shall execute
such underwriting agreement and other documents as are customary under the
circumstances and/or as are executed by all holders of stock included in the
Registration.  Buyer shall pay all underwriting commissions, filing
fees and other expenses of the Registration, other than the legal fees of Seller
(if any).

     

    7. Seller
hereby represents and warrants to Buyer as follows:

     

    (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.

     

    (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.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    (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.

     

    (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.

     

    (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.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    (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.

     

    (l) The
Shares are being purchased for Seller's own account, for investment purposes
only, not for the account of any other person and not with a view to
distribution, assignment or resale to others.  Seller will not sell,
hypothecate or otherwise transfer Seller’s Shares unless (i) the transfer is
registered under the Securities Act of 1933, as amended (the "1933 Act"), and
registered or qualified under applicable state securities laws, or (ii) Buyer
has received a written opinion of counsel (which opinion and counsel are
satisfactory to Buyer) that an exemption from the registration or qualification
requirements of the 1933 Act and such state laws is available.

    

    (m) Seller is
familiar with and understands the current and proposed business activities of
Buyer.   Seller has been given the opportunity to obtain
additional information from Buyer and to discuss the current and proposed
business of Buyer with representatives of Buyer.   Buyer has made
available to Seller all documents and information that Seller has requested
relating to an investment in the Shares.  Seller has reviewed and
approved the financial statements and other filings of Buyer of public
record.    With respect to tax and other economic
considerations involved in this investment, Seller is not relying on any advice
or opinions from Buyer or any person acting on its
behalf.   Seller has carefully considered and has, to the extent
Seller believes appropriate, discussed with his or her legal, tax, accounting
and financial advisors the suitability of an investment in the Shares for his or
her particular tax and financial situation, and has determined that the Shares
for which Seller is subscribing are a suitable investment.  Seller (i)
has adequate means for providing for Seller's current financial needs and
personal contingencies; (ii) has no need for liquidity in this investment; (iii)
can afford a complete loss of the funds invested in the Shares; and (iv) does
not have an overall commitment to illiquid investments that is disproportionate
to Seller's net worth (and Seller's investment in the Shares will not cause such
overall commitment to become excessive).

    

    (n) Seller
understands that an investment in the Shares is speculative in nature and
involves a substantial degree of risk, including risk of losing all or a portion
of Seller's investment.   Seller understands that the return
of Seller’s
money, not just the return on Seller’s money, is
not assured.  Seller, in reaching a decision to subscribe, has such
knowledge and experience in financial and business matters that Seller is
capable of reading and interpreting financial statements and evaluating the
merits and risk of an investment in the Shares.

    

    (o) Seller
was not offered or sold the Shares, directly or indirectly, by means of any form
of general advertising or general solicitation, including, but not limited to,
the following: (i) any advertisement, article, notice or other communication
published in any newspaper, magazine, or similar medium of or broadcast over
television or radio; or (ii) to the knowledge of Seller, any seminar or meeting
whose attendees had been invited by any general solicitation or general
advertising.

    

    (p) Seller
understands that Buyer's determination that the exemption from the registration
provisions of the 1933 Act based upon non-public offerings applicable to the
offer and sale of the Shares, is based, in part, upon the representations,
warranties, and agreements made by Seller herein.   Seller
consents to the disclosure of any such information, and any other information
furnished to Buyer or related to this transaction, to any governmental
authority, self-regulatory organization, or, to the extent required by law, to
any other person.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    (q) Seller is
an “accredited investor,” as that term is defined in SEC Rule 501.

     

    (r) The
certificate evidencing the Shares will reflect a legend in substantially the
following form:

    

    THE
SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR STATE SECURITIES
LAWS.  THE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED OR DISPOSED OF UNLESS THE TRANSACTION IS
REGISTERED UNDER THE SECURITIES ACT AND REGISTERED OR QUALIFIED FOR SALE UNDER
APPLICABLE STATE SECURITIES LAWS, OR THE COMPANY HAS RECEIVED AN OPINION OF
COUNSEL THAT AN EXEMPTION FROM THE REGISTRATION OR QUALIFICATION REQUIREMENTS OF
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE.

     

    8. The
purchase and sale of the Assets pursuant to this Agreement (the “Closing”) shall
occur at on November 6 or November 9, 2009, or such other date as Buyer and
Seller may mutually agree by their execution hereof, at the offices of Seller in
Denver, Colorado.  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) Buyer
shall pay to Seller the Purchase Price, in accordance with the terms and
conditions hereof, and Buyer shall deliver to Seller the Shares.

     

    (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.

     

    9. 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

        
          

        

      

      
         

      

    

     

    10. All
production, severance, excise and other taxes (other than income taxes) relating
to production of oil, gas and condensate attributable to the Assets prior to the
Effective Time shall be paid by Seller, and all such taxes relating to such
production on or after the Effective Time 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.

     

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

     

    12. 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.

     

    13. 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.

     

    14. 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.

     

    15. Any
notice required or permitted by this Agreement shall be given in writing by
personal service, by e-mail or by facsimile, in each case with verification of
delivery, as follows:

     

    
      	
              If
      to Seller:

              Edward
      Mike Davis, LLC

               

               

               

               

               

               

            	 
      
	
              If
      to Buyer:

              Recovery
      Energy, Inc.

              1515
      Wynkoop, Suite 200

              Denver,
      Colorado 80202

              Attention:
      Jeffrey Beunier, President

              Fax:  (888)
      887-4449

              E-Mail:  jbeunier@recoveryenergyco.com

               

            	
              With
      a copy to:

              Robert
      G. Lewis, Esq.

              Ducker
      Montgomery

              1560
      Broadway, Suite 1400

              Denver,
      Colorado 80202

              Fax:
      (303) 861-4017

              E-Mail:
      rlewis@duckerlaw.com

               

            

    

    (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.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    16. 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. None of
the terms and conditions of this Agreement shall be deemed to have merged with
any assignments to be executed in connection herewith. 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.

     

    17. 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 shall be
effective as originals.  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

              Date:  November
      6 , 2009

            	
              BUYER:

              Recovery
      Energy, Inc.

              By:      /s/ Jeffrey
      Beunier

                         
      Jeffrey Beunier, President

              Date:  November
      6 , 2009

            

    

    

    

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    

    EXHIBIT
A

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

    dated
effective October 1, 2009

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

     

     

    The Leases and the
Land:

    

    Lessor:                   Deane
M. White

    Lessee:                  
R.D. Brew

    Dated:                     July
26, 1972

    Recorded:              
Book 654, Page 419 in Washington County, Colorado

    Description:          
Insofar and Only Insofar as the Lease covers:

    Township 3 South, Range 51
West

    Section
25:  NE/4

    

    Lessor:                   Mary
Black Phillips

    Lessee:                   R.D.
Brew

    Dated:                    
July 26, 1972

    Recorded:              
Book 654, Page 421 in Washington County, Colorado

    Description:           Insofar
and Only Insofar as the Lease covers:

    Township 3 South, Range 51
West

    Section
25:  NE/4

    

    Lessor:                  Waymon
G. Peavy

    Lessee:                  R.D.
Brew

    Dated:                    July
26, 1972

    Recorded:             
Book 654, Page 423 in Washington County, Colorado

    Description:          Insofar
and Only Insofar as the Lease covers:

    Township 3 South, Range 51
West

    Section
25:  NE/44

    

    Lessor:     Oliver H. Daniel

    Lessee:     R.D. Brew

    Dated:                   
July 26, 1972

    Recorded:              Book
654, Page 425 in Washington County, Colorado

    Description:          Insofar
and Only Insofar as the Lease covers:

    Township 3 South, Range 51
West

    Section
25:  NE/4

    

    Lessor:                  C-H-M
Company

    Lessee:                  R.D.
Brew

    Dated:                    July
27, 1972

    Recorded:              Book
654, Page 429 in Washington County, Colorado

    Description:          Insofar
and Only Insofar as the Lease covers:

    Township 3 South, Range 51
West

    Section
25:  NE/4

     

    
      
         

      

      
        A-1

        
          

        

      

      
         

      

    

    
 

    Lessor:                   Chester
Kincheloe

    Lessee:                  
R.D. Brew

    Dated:                    
July 27, 1972

    Recorded:              Book
654, Page 431 in Washington County, Colorado

    Description:          Insofar
and Only Insofar as the Lease covers:

    Township 3 South, Range 51
West

    Section
25:  NE/4

    

    Lessor:                  George
N. Church

    Lessee:                  R.D.
Brew

    Dated:                    June
23, 1972

    Recorded:              Book
654, Page 433 in Washington County, Colorado

    Description:          Insofar
and Only Insofar as the Lease covers:

    Township 3 South, Range 51
West

    Section
25:  NE/4

    Correction
of Description

    Recorded:              Book
790, Page 107 in Washington County, Colorado

    Description:          Insofar
and Only Insofar as the Lease covers:

    Township 3 South, Range 51
West

    Section
25:  NE/4

    

    Lessor:                  Frank
De Allen, Jr.

    Lessee:                  R.D.
Brew

    Dated:                    July
7, 1972

    Recorded:              Book
654, Page 435 in Washington County, Colorado

    Description:          
Insofar and Only Insofar as the Lease covers:

    Township 3 South, Range 51
West

    Section
25:  NE/44

    

    Lessor:                   Jack
H. Allen, Executor of the Estate of W.O. Allen, Deceased

    Lessee:                  R.D.
Brew

    Dated:                    October
30, 1972

    Recorded:              Book
656, Page 118 in Washington County, Colorado

    Description:         
Insofar and Only Insofar as the Lease covers:

    Township 3 South, Range 51
West

    Section
25:  NE/4

    

    
      
         

      

      
        A-2

        
          

        

      

      
         

      

    

    

    The
Wells:

    

    Well
Name:           Church
41-25

    Located:                NE/4NE/4
of Section 25, T3S-R51W, Washington County, CO

    API:                       05-121-10858

    Working
Interest 100% - Net Revenue Interest 80%

    

    Well
Name:           Church
41A-25

    Located:                NE/4NE/4
of Section 25, T3S-R51W, Washington County, CO

    API:                      
05-121-10865

    Working
Interest 100% - Net Revenue Interest 80%

    

    Well
Name:           Church
41B-25

    Located:                NE/4NE/4
of Section 25, T3S-R51W, Washington County, CO

    API:                      
05-121-10985

    Working
Interest 100% - Net Revenue Interest 80%

    

    The above
three wells located on the Lands, including without limitation the rods, tubing,
casing and pumping units currently on the Wells (all wells have Grenco drive
gear boxes with P.C. pumps) and four 300-barrel production tanks and one 10’ by
27’ treater, one 8’ by 30’ horizontal tank, one 500-barrel bolted water tank,
one 300-barrel water tank, one 300-barrel safety tank, one 500-barrel tank (not
in use) and two permitted produced water pits located on the Lands.

    

    

    A-3f8k073109ex10ii_recovery.htm

    Exhibit
10.2

     

    PURCHASE AND SALE
AGREEMENT

     

    Church
Field

    Washington
County, Colorado

    

    THIS
PURCHASE AND SALE AGREEMENT (this “Agreement”), dated effective as of October 1,
2009 at 7:00 a.m. Mountain Time (the “Effective Time”), is between RECOVERY
ENERGY, INC., a Nevada corporation, (“Seller”), and DUANE M FREUND IRREVOCABLE
TRUST 2, a Colorado Trust, (“Buyer”). Seller and Buyer shall be referred to
herein, individually, as a “Party,” and collectively, as the
“Parties.”

    

    Recitals

    

    A. Seller
owns certain rights and interests in and to the Church Field (collectively, the
“Assets”) described in Exhibit A hereto, located in Washington County,
Colorado.

    

    B. 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
consideration of the payment of the Purchase Price (described below), and 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, an undivided fifty percent (50%) of Seller’s right, title
and interest in and to 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 (the “Land”) described in Exhibit A hereto.

    

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

    

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

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (d) The
equipment, personal property, facilities, pipelines, improvements, fixtures,
buildings and structures located upon the Land, or 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 (collectively, the
“Equipment”), 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-3 hereto.

    

    (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
(collectively, the “Material Contracts”) 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.

    

    (g) Copies of
Seller’s files and 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 a fifty percent (50.00%) working
interest and being an forty percent (40.00%) net revenue interest. If Seller
owns less than 100% of the leasehold interest under the Leases, or in the event
the Leases cover less than the full mineral estate in the lands covered by the
Leases, then the interest assigned and the Royalty shall be reduced
proportionately with respect to Seller’s interest in such Lease or the partial
mineral interest covered by the Lease. Seller represents that it only owns
interests from the stratigraphic equivalent of the base of the Niobrara
formation to the stratigraphic equivalent of the total depth drilled in the
Church No. 41-25 well, located in Section 25 of Township 3 South, Range 51 West,
6th
P.M., Washington County, Colorado. No reduction shall occur as result of Seller
not owning interests in zones outside such stratigraphic interval.

    

    3. The
purchase price for the Assets shall be Seven Hundred and Fifty Thousand Dollars
($750,000.00) (the “Purchase Price”), as adjusted hereunder. The payment of the
Purchase Price shall be paid by Buyer to Seller at the Closing by bank wire to
Seller’s account pursuant to the following wiring instructions: BBVA Compass;
Phone: (866) 214-6822; Westminster CO, Routing No. xxxxxxxxx; Credit to the
account of Recovery Energy, Inc, Account No. xxxxxxxxxx.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    4. Ownership
of Buyer’s interest in the Assets shall be transferred from Seller to Buyer at
Closing, but effective as of the Effective Time. All costs and expenses
attributable to the Assets incurred prior to the Effective Time 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 the
Effective Time. In addition, at the Closing, Buyer shall pay Seller for the
value of all oil in the tanks and line fill at the Effective Time at the
contract price which Seller is receiving from the purchaser of production from
the Assets for the month in which the Closing occurs. All costs and expenses
attributable to Buyer’s interest in the Assets and incurred at or after the
Effective Time shall be the responsibility and obligation of Buyer, and Buyer
shall be entitled to all proceeds from the sale of production attributable to
Buyer’s interest in the Assets at or after the Effective Time. Buyer shall be
responsible for and shall pay all of the operating expenses, direct charges and
operator’s overhead attributable to Buyer’s interest in the Assets from and
after the Effective Time.

    

    5. Seller
hereby represents and warrants to Buyer as follows:

    

    (a) Seller is
a 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.

     

    (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.

     

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

    

    (f) To
Seller’s knowledge, all ad valorem, property, production, severance, excise
taxes and assessments attributable to the Leases, the Land and the Production
have been timely and fully paid.

    

    (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.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (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)           To
Seller’s knowledge, 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) 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 as follows:

    

    (a) Buyer is
a trust duly organized, validly existing and in good standing under the laws of
the State of Colorado.

     

    (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 trust agreement 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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (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) Buyer is
acquiring the Assets for Buyer’s own benefit and account, and not with the
intent of resale or distribution such as would be subject to regulation by
federal or state securities laws (collectively, the “Securities Laws”), and in
the future, if Buyer should sell, transfer or otherwise dispose of the Assets or
fractional undivided interests therein, Buyer will do so in compliance with all
applicable Securities Laws.

    

    (e) Buyer has
such knowledge and experience in financial and business matters, and in oil and
gas investments of the type contemplated by this Agreement, that Buyer is
capable of evaluating the merits and risks of this Agreement and its investment
in the Assets, and Buyer is not in need of the protection afforded investors by
the Securities Laws. In addition, Buyer is an “accredited investor” as defined
in Rule 501(a) of Regulation D promulgated by the Securities and Exchange
Commission under the Securities Act of 1933, as amended. Buyer recognizes that
this investment is speculative and involves substantial risk, and that Seller
has not made any guaranty upon which Buyer has relied concerning the possibility
or probability of profit or loss as a result of Buyer’s acquisition of the
Assets.

    

    (f) By reason
of Buyer’s experience and knowledge in the evaluation, acquisition and operation
of similar properties, Buyer has evaluated the merits and risks of the proposed
investment in the Assets, and has formed opinions based solely upon Seller’s
experience and knowledge, and not upon any representations or warranties by
Seller, other than as expressly set forth in this Agreement. Buyer has conducted
or will conduct its own evaluation of the Assets and, except for the express
representations set forth in this Agreement, Buyer is acquiring the Assets “AS
IS, WHERE IS, WITH ALL FAULTS, AND WITHOUT RECOURSE.”

    

    (g) Buyer is
provided the opportunity to conduct an independent inspection of the Records,
Assets and the public records including, without limitation, for the purpose of
detecting the presence of any environmentally hazardous substances or
contamination, including petroleum, and the presence and concentration of NORM,
and Buyer shall satisfy itself as to the physical condition and environmental
condition of the Assets, both surface and subsurface. Buyer acknowledges that,
except as set forth in this Agreement, no representations have been made by
Seller regarding physical or environmental conditions, past or
present.

    

    (h) Buyer has
not incurred any liability, contingent or otherwise, 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 November 6, 2009 at 5:00 p.m. Mountain Time, or such other
date or time as Buyer and Seller may mutually agree in writing. 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 Buyer’s interest in the Assets, substantially in the form
of Exhibit B hereto, with sufficient counterparts for filing in the appropriate
governmental offices.

    

    (b) Buyer
shall pay to Seller the Purchase Price, in accordance with the terms and
conditions hereof.

    

    8. EXCEPT AS EXPRESSLY STATED IN THIS
AGREEMENT AND THE ASSIGNMENT, THIS AGREEMENT IS MADE WITHOUT WARRANTY OF ANY
KIND, EXPRESS, IMPLIED, STATUTORY, AT COMMON LAW OR OTHERWISE, AND THE PARTIES
HEREBY EXPRESSLY DISCLAIM, WAIVE AND RELEASE ANY WARRANTY OF MERCHANTABILITY,
CONDITION, SAFETY, OR FITNESS FOR A PARTICULAR PURPOSE, AND BUYER ACCEPTS THE
ASSETS “AS IS, WHERE IS, WITH ALL FAULTS, AND WITHOUT RECOURSE.” 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. ANY COVENANTS OR
WARRANTIES IMPLIED BY STATUTE OR LAW BY THE USE OF THE WORD “GRANT,” “TRANSFER,”
OR “CONVEY” OR OTHER WORDS OF GRANT ARE HEREBY EXPRESSLY WAIVED, DISCLAIMED AND
RELEASED BY THE PARTIES HERETO. THE PARTIES HEREBY ACKNOWLEDGE AND
AGREE THAT, TO THE EXTENT REQUIRED BY APPLICABLE LAW, THE DISCLAIMERS CONTAINED
IN THIS AGREEMENT ARE “CONSPICUOUS” FOR THE PURPOSES OF ALL APPLICABLE
LAW.

    

    9. All
production, severance, excise and other taxes (other than income taxes) relating
to production of oil, gas and condensate attributable to the Assets prior to the
Effective Time shall be paid by Seller, and Buyer shall bear and pay all such
taxes relating to Buyer’s interest in such production on or after the Effective
Time. 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 that are required
to be obtained with respect to the transfer of the Assets to Buyer.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    11. The
Leases and the Land shall be subject to and burdened by the terms and conditions
of the A.A.P.L. Form 610-1989 Model Form Operating Agreement (the “Operating
Agreement”). The Operating Agreement shall govern and control all operations
conducted upon the Land. Pursuant to the terms of the Operating Agreement,
Seller shall be designated as Operator, the non-consent penalty shall be equal
to 300%, and the COPAS overhead rate for an operating well shall be equal to
$500 per month per well. Under the terms of this Agreement, each Buyer shall be
an owner of undivided interests in and to the Leases subject to the Operating
Agreement, and each Buyer hereby shall be bound by the terms of the Operating
Agreement. In the event of a conflict between the terms and condition of this
Agreement and the Operating Agreement, the terms and conditions of this
Agreement shall control and govern the point in conflict.

    

    12. Buyer
shall have the right, but not the obligation, to cause Seller to purchase and
acquire the Assets from Buyer for $825,000.00 (the “Repurchase Price”) by
written notice delivered to Seller on or before January 6, 2010 (the “Repurchase
Deadline”). Seller shall have the right, but not the obligation, to cause Buyer
to sell and assign the Assets to Seller for the Repurchase Price by written
notice delivered to Buyer on or before the Repurchase Deadline. If Buyer does
not elect to cause Seller to purchase, and Seller does not elect to cause Buyer
to sell the Assets on or before the Repurchase Deadline, Buyer’s right to cause
Seller to purchase, and Seller’s right to cause Buyer to Sell the Assets
hereunder shall expire automatically. If Buyer elects to cause Seller to
purchase, or Seller elects to cause Buyer to sell the Assets on or before the
Repurchase Deadline, the closing of the purchase and sale of the Assets shall
occur at the offices of Seller on or before January 11, 2010. At the closing:
(a) Buyer shall execute, acknowledge and deliver to Seller (in sufficient
counterparts to facilitate recording) an assignment, conveyance and bill of sale
covering the Assets, with a special warranty of title from Buyer against liens,
encumbrances and defects of title arising by, through or under Buyer, but not
otherwise, substantially in the form of the Assignment, with sufficient
counterparts for filing in the appropriate governmental offices; and (b) Seller
shall pay to Buyer the Repurchase Price by wire transfer to Buyer’s
account.

    

    13. It is not
the intention of the Parties to create a partnership, joint venture, mining
partnership or association; and neither this Agreement nor the operations
hereunder shall be construed as creating such a relationship. The liability of
the Parties shall be several and separate, and not joint or collective, and each
Party shall be responsible for its obligations only. Nothing contained herein
shall be construed to constitute either Party to be the partner or agent of the
other Party. Each Party hereby expressly waives, disclaims and releases any and
all fiduciary duties between the Parties.

    

    14. All
notices authorized or required by the terms of this Agreement shall be deemed
given upon the first to occur of actual receipt by the Party to be notified or
three days after deposit in the mail, postage prepaid, return receipt requested,
certified, Federal Express or other reputable overnight delivery service,
addressed as set forth herein. Any party may, from time to time, change its
address hereunder by written notice to the other Parties. The Parties’
respective addresses for notice are:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              If
      to Seller:

              Recovery
      Energy, Inc.

              1515
      Wynkoop, Suite 200

              Denver,
      Colorado 80202

              Attention:
      Jeffrey Beunier, President

              Fax:  (888)
      887-4449

              E-Mail:  jbeunier@recoveryenergyco.com

               

            	
              With
      a copy to:

               

              Robert
      G. Lewis, Esq.

              Ducker
      Montgomery

              1560
      Broadway, Suite 1400

              Denver,
      Colorado 80202

              Fax:
      (303) 861-4017

              E-Mail:
      rlewis@duckerlaw.com

               

            
	
              If
      to Buyer:

               

              Duane
      M. Freund Irrevocable Trust 2

               

               

            	 
      

    

    15. 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.

    

    16. 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.  Any assignment hereunder shall be subject to all of the
terms and conditions of this Agreement, and the assignee shall agree to assume,
bear and perform the assignor’s duties and obligations hereunder.

    

    17. 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.

    

    18. 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. None of
the terms and conditions of this Agreement shall be deemed to have merged with
any assignments to be executed in connection herewith. 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.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    19. 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 shall be
effective as originals. 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:

              Recovery
      Energy, Inc.

              By:      /s/ Jeffrey
      Beunier

                        
      Jeffrey Beunier, President

              Date:
      December 6, 2009

            	
              BUYER:

              Duane
      M Freund Irrevocable Trust 2

              By:     /s/ Ali
      Freund

                        Ali
      Freund, Trustee

              Date:
      December 6, 2009

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    EXHIBIT
A

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

    dated
effective October 1, 2009

    between
Recovery Energy, Inc. and

    Duane M
Freund Irrevocable Trust 2

    

    The Leases and the
Land:

    

    Lessor:                   Deane
M. White

    Lessee:                  
R.D. Brew

    Dated:                    July
26, 1972

    Recorded:              Book
654, Page 419 in Washington County, Colorado

    Description:          Insofar
and Only Insofar as the Lease covers:

    Township 3 south, Range 51
West

    Section
25:  NE/4

    

    Lessor:                  
Mary Black Phillips

    Lessee:                  
R.D. Brew

    Dated:                    
July 26, 1972

    Recorded:              Book
654, Page 421 in Washington County, Colorado

    Description:          Insofar
and Only Insofar as the Lease covers:

    Township 3 south, Range 51
West

    Section
25:  NE/4

    

    Lessor:                  
Waymon G. Peavy

    Lessee:                  
R.D. Brew

    Dated:                    
July 26, 1972

    Recorded:              Book
654, Page 423 in Washington County, Colorado

    Description:          
Insofar and Only Insofar as the Lease covers:

    Township 3 south, Range 51
West

    Section
25:  NE/44

    

    Lessor:                  
Oliver H. Daniel

    Lessee:                  
R.D. Brew

    Dated:                    
July 26, 1972

    Recorded:              
Book 654, Page 425 in Washington County, Colorado

    Description:          
Insofar and Only Insofar as the Lease covers:

    Township 3 south, Range 51
West

    Section
25:  NE/4

    

    Lessor:                   C-H-M
Company

    Lessee:                  
R.D. Brew

    Dated:                    
July 27, 1972

    Recorded:              Book
654, Page 429 in Washington County, Colorado

    Description:          Insofar
and Only Insofar as the Lease covers:

    Township 3 south, Range 51
West

    Section
25:  NE/4

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Lessor:                   Chester
Kincheloe

    Lessee:                   R.D.
Brew

    Dated:                     July
27, 1972

    Recorded:              
Book 654, Page 431 in Washington County, Colorado

    Description:          
Insofar and Only Insofar as the Lease covers:

    Township 3 south, Range 51
West

    Section
25:  NE/4

    

    Lessor:                   George
N. Church

    Lessee:                  
R.D. Brew

    Dated:                     June
23, 1972

    Recorded:              Book
654, Page 433 in Washington County, Colorado

    Description:          
Insofar and Only Insofar as the Lease covers:

    Township 3 south, Range 51
West

    Section
25:  NE/4

    Correction
of Description

    Recorded:              Book
790, Page 107 in Washington County, Colorado

    Description:          
Insofar and Only Insofar as the Lease covers:

    Township 3 south, Range 51
West

    Section
25:  NE/4

    

    Lessor:                   Frank
De Allen, Jr.

    Lessee:                   R.D.
Brew

    Dated:                     July
7, 1972

    Recorded:              Book
654, Page 435 in Washington County, Colorado

    Description:          
Insofar and Only Insofar as the Lease covers:

    Township 3 south, Range 51
West

    Section
25:  NE/44

    

    Lessor:                   Jack
H. Allen, Executor of the Estate of W.O. Allen, Deceased

    Lessee:                   R.D.
Brew

    Dated:                    October
30, 1972

    Recorded:              Book
656, Page 118 in Washington County, Colorado

    Description:          Insofar
and Only Insofar as the Lease covers:

    Township 3 south, Range 51
West

    Section
25:  NE/4

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    The
Wells:

    

    Well
Name:           Church
41-25

    Located:                NE/4NE/4
of Section 25, T3S-R51W, Washington County, CO

    API:                       
05-121-10858

    Working
Interest 100% - Net Revenue Interest 80%

    

    Well
Name:           Church
41A-25

    Located:                NE/4NE/4
of Section 25, T3S-R51W, Washington County, CO

    API:                       
05-121-10865

    Working
Interest 100% - Net Revenue Interest 80%

    

    Well
Name:           Church
41B-25

    Located:                NE/4NE/4
of Section 25, T3S-R51W, Washington County, CO

    API:                       
05-121-10985

    Working
Interest 100% - Net Revenue Interest 80%

    

    The above
three wells located on the Lands, including without limitation the rods, tubing,
casing and pumping units currently on the Wells (all wells have Grenco drive
gear boxes with P.C. pumps) and four 300-barrel production tanks and one 10’ by
27’ treater, one 8’ by 30’ horizontal tank, one 500-barrel bolted water tank,
one 300-barrel water tank, one 300-barrel safety tank, one 500-barrel tank (not
in use) and two permitted produced water pits located on the Lands.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    EXHIBIT
B

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

    dated
effective October 1, 2009

    between
Recovery Energy, Inc. and

    Duane M
Freund Irrevocable Trust 2

    

    

    

    When
Recorded Return To:

    Recovery
Energy, Inc.

    1515
Wynkoop St., # 200

    Denver,
Colorado 80202

    Attn:
Jefffrey Beunier, President

     

    

     

     

    ASSIGNMENT, CONVEYANCE AND
BILL OF SALE

     

    

    STATE
OF
COLORADO                §

                  §           ss.

    WASHINGTON
COUNTY              §

    

    THIS ASSIGNMENT, CONVEYANCE AND BILL
OF SALE (this “Assignment”), dated effective as of October 1st,
2009 at 7:00 a.m. Mountain Time (the “Effective Time”), is from RECOVERY ENERGY,
INC., a Nevada corporation (“Assignee”), 1515 Wynkoop Street, Suite 200, Denver,
Colorado 80202, to DUANE M. FREUND IRREVOCABLE TRUST 2, a Colorado Trust
(“Assignee”), 290 Albion Street, Denver, Colorado 80220. Assignor and Assignee
are referred to herein, individually, as a “Party,” and, collectively, as the
“Parties.”

    

    FOR TEN DOLLARS ($10.00), and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Assignor hereby sells, assigns, transfers and conveys unto
Assignee an undivided fifty percent (50%) of Assignor’s right, title and
interest in and to 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 (the “Land”) described in Exhibit A hereto.

    

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

    

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

     

    
      
         

      

      
        B-1

        
          

        

      

      
         

      

    

     

    (d) The
equipment, personal property, facilities, pipelines, improvements, fixtures,
buildings and structures located upon the Land, or 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 (collectively, the
“Equipment”), 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-3 hereto.

    

    (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
(collectively, the “Material Contracts”) 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.

    

    (g) Copies of
Assignor’s files and 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.

    

    The
working interest assigned by Assignor to Assignee hereunder shall be subject to
a 20% royalty and overriding royalty (the “Royalty”) burden, so that Assignee
shall own a fifty percent (50.00%) working interest and being a forty percent
(40.00%) net revenue interest. If Assignor owns less than 100% of the leasehold
interest under the Leases, or in the event the Leases cover less than the full
mineral estate in the lands covered by the Leases, then the interest assigned
and the Royalty shall be reduced proportionately with respect to Assignor’s
interest in such Lease or the partial mineral interest covered by the Lease.
Assignor represents that it only owns interests from the stratigraphic
equivalent of the base of the Niobrara formation to the stratigraphic equivalent
of the total depth drilled in the Church No. 41-25 well, located in Section 25
of Township 3 South, Range 51 West, 6th
P.M., Washington County, Colorado. No reduction shall occur as result of
Assignor not owning interests in zones outside such stratigraphic
interval.

     

    
      
         

      

      
        B-2

        
          

        

      

      
         

      

    

     

    Assignor
hereby agrees to warrant and defend the title to the Assets against all liens,
encumbrances and defects of title arising by, through, or under Assignor, but
not otherwise. EXCEPT AS
EXPRESSLY STATED IN THIS ASSIGNMENT, THIS ASSIGNMENT IS MADE WITHOUT WARRANTY OF
ANY KIND, EXPRESS, IMPLIED, STATUTORY, AT COMMON LAW OR OTHERWISE, AND THE
PARTIES HEREBY EXPRESSLY DISCLAIM, WAIVE AND RELEASE ANY WARRANTY OF
MERCHANTABILITY, CONDITION, SAFETY, OR FITNESS FOR A PARTICULAR PURPOSE, AND
ASSIGNOR ACCEPTS THE ASSETS “AS IS, WHERE IS, WITH ALL FAULTS, AND WITHOUT
RECOURSE.” ANY COVENANTS OR WARRANTIES IMPLIED BY STATUTE OR LAW BY THE USE OF
THE WORD “GRANT,” “TRANSFER,” OR “CONVEY” OR OTHER WORDS OF GRANT ARE HEREBY
EXPRESSLY WAIVED, DISCLAIMED AND RELEASED BY THE PARTIES HERETO. THE PARTIES HEREBY ACKNOWLEDGE AND
AGREE THAT, TO THE EXTENT REQUIRED BY APPLICABLE LAW, THE DISCLAIMERS CONTAINED
IN THIS ASSIGNMENT ARE “CONSPICUOUS” FOR THE PURPOSES OF ALL APPLICABLE
LAW

    

    TO HAVE AND TO HOLD the
Assets, unto Assignee, and Assignee’s successors and assigns,
forever.

    

    All
exhibits attached hereto are hereby incorporated herein and made a part hereof
for all purposes, as if set forth in full herein. References in such exhibits to
instruments on file in the public records are hereby incorporated by reference
herein for all purposes. This Assignment shall be binding upon and inure to the
benefit of the Parties, and their respective successors and assigns. The
references in this Assignment or in the exhibits hereto to liens, encumbrances,
agreements and other burdens shall not be deemed to recognize or create any
rights in third parties. Assignor and Assignee hereby agree to take all action,
and execute, acknowledge and deliver all such instruments as are necessary or
advisable to effectuate the purposes of this Assignment.

    

    This
Assignment may be executed in one or more counterparts, and each counterpart
hereof shall be an original instrument, but all such counterparts shall
constitute but one assignment.

    

    EXECUTED on the dates below
the signatures hereto, to be effective for all purposes as of the Effective
Time.

    

    
      	
              ASSIGNOR:

              Recovery
      Energy, Inc.

              By:_____________________________

                    Jeffrey
      Beunier, President

               

              Date:
      ________________

            	
              ASSIGNEE:

              Duane
      M Freund Irrevocable Trust 2

              By:  ______________________________

                        Ali
      Freund, Trustee

               

              Date:
      ____________

            

    

     

    
      
         

      

      
        B-3

        
          

        

      

      
         

      

    

     

    Acknowledgments

    

    

    STATE OF
COLORADO                          §

                                                          §           ss.

    CITY AND
COUNTY OF
DENVER         §

    

    The foregoing instrument was
acknowledged before me this ___  day of November, 2009, by Jeffrey
Beunier, President of Recovery Energy, Inc., a Nevada corporation, on behalf of
said corporation.

    

    My
commission expires:

    ____________________

    ________________________________

    Signature

    (Notary
Seal)                                                                         ________________________________

    Name (Printed, Typed or
Stamped)

    Notary Public in and for

    State of Colorado

    

    

    

    STATE OF
COLORADO                          §

                                                          §           ss.

    CITY AND
COUNTY OF
DENVER         §

    

    The foregoing instrument acknowledged
before me this ___  day of November, 2009, by Ali Freund, Trustee of
the Duane M Freund Irrevocable Trust 2, a Colorado trust, on behalf of said
trust.

    

    My
commission expires:

    ____________________

    ________________________________

    Signature

    (Notary
Seal)                                                                         ________________________________

    Name (Printed, Typed or
Stamped)

    Notary Public in and for

    State of Colorado

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