Document:

f8k051910ex10i_jbi.htm

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

This employment agreement (this “Agreement”) dated as of May 19, 2010 (the “Effective Date”), is made by and between JBI, Inc., a Nevada corporation (the “Company”) and John Bordynuik (the “Executive”) (collectively, the “Parties”).

WHEREAS, the Company is a publicly traded company whose common shares are quoted on the Over the Counter Bulletin Board (“OTC BB”);

WHEREAS, the Executive will have the duties and responsibilities as described in Section 1 of the Agreement during the period when the Executive is the Chief Executive Officer of the Company; and

WHEREAS, the Parties wish to establish the terms of the Executive’s employment with the Company;

NOW, THEREFORE, in consideration of the foregoing, of the mutual promises contained herein and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

1. POSITION/DUTIES.

(a) During the Employment Term (as defined in Section 2 below), the Executive shall serve as the Chief Executive Officer of the Company. In this capacity the Executive shall be responsible to lead and manage all of the operations of the Company. The Executive shall be responsible for carrying out the strategic plans as established by the board of directors. The Executive shall work with the Company’s U.S. legal counsel and auditors to implement, monitor and oversee the Company’s compliance with the requirements of the Sarbanes-Oxley Act, Securities Act of the 1933, Exchange Act of the 1934, and the listing rules of the OTC Bulletin Board and to advise the Board of the Directors with respect to the Company’s internal controls and procedures, including disclosure controls and procedures.

(b)  During the Employment Term, the Executive shall report directly to the Board of Directors of the Company. The Executive shall obey the lawful directions of the Board of Directors to whom the Executive reports and shall use his diligent efforts to promote the interests of the Company and to maintain and promote the reputation thereof.

(c) During the Employment Term, the Executive shall initially be based in the Canada and shall be expected to travel extensively between and within Canada and the United States. In the event that the Executive is required by the Company to be relocated to the United States at any time during the Employment Term, the Company shall provide the Executive with necessary allowance and full coverage of all the costs in connection with the relocation.

 

  

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(d) During the Employment Term, in the event that the Company engages in any capital markets activities, the Executive shall take a leading role in such transactions by overseeing underwriters, counsels and auditors, and preparing and/or reviewing requisite documentations in connection with such transactions.

(e) During the Employment Term, the Executive shall use his best efforts to perform his duties under this Agreement and shall devote all of his business time, energy and skill in the performance of his duties with the Company. The Executive shall not during the Employment Term (except as a representative of the Company or with consent in writing of the Board) be directly or indirectly engaged or concerned in any other business activity.

2. EMPLOYMENT TERM.  Except for earlier termination as provided in Section 6, the Executive's employment under this Agreement shall be for five (5) years starting on the Effective Date and ending on May 19, 2012 (the “Initial Term”). Subject to Section 5, at the end of the Initial Term this Agreement may be extended for additional terms by mutual agreement of the parties (“Additional Term”).  The amount of compensation payable to the Executive during any extension of the Initial Term shall be discussed and agreed upon by both parties 30 days before the Agreement termination date.  The Initial Term and any Additional Term shall be referred to herein as the “Employment Term.”

 

 

3. COMPENSATION.

(a) Base Salary. In consideration of the services to be rendered hereunder, the Company hereby agrees to pay the Executive an annual base salary of $180,000, commencing the date the Company receives full DEC approval, payable in equal semimonthly installments in accordance with the usual practice of the Company (the “Base Salary”).  The Base Salary shall be subject to an annual review by the Board and may be renegotiated based on criteria to be determined by the Board. The Executive will be responsible for his own income tax payable to relevant federal and state authorities in the United States. The Executive's Base Salary shall be subject to annual review by the Board (or a committee thereof).

(b)   Stock Options. Subject to the terms and conditions provided in this Agreement, the Company agrees to grant the Executive stock options to purchase a maximum of 250,000 shares of the common stock of the Company in the following manner.

1.    The first tranche of 100,000 options at an exercisable at a price of $4.89 and become fully vested on the Effective Date.

2.    The second tranche of 75,000 options carrying an exercise price of $4.89, and vesting upon the completion of 5 fully operational Plastic 2 Oil (“P2O”) processors.

3.    The third tranche of 75,000 options carrying an exercise price of $4.89, and vesting when the Company’s market capitalization exceeds $500,000,000 as determined by the Company’s independent accounting firm.

  

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4. EMPLOYEE BENEFITS.

(a) Benefit Plans.  The Executive shall be eligible to participate in any employee benefit plan of the Company, including, but not limited to, equity, pension, thrift, profit sharing, medical coverage, education, or other retirement or welfare benefits that the Company has adopted or may adopt, maintain or contribute to the benefit of its senior executives, at a level commensurate with his positions, subject to satisfying the applicable eligibility requirements. The Company may at any time or from time to time amend, modify, suspend or terminate any employee benefit plan, program or arrangement for any reason in its sole discretion.

(b) Vacation.  The Executive shall be entitled to an annual paid vacation in accordance with the Company's policy applicable to senior executives from time to time in effect, but in no event less than three weeks per calendar year (as prorated for partial years), which vacation may be taken at such times as the Executive elects with due regard to the needs of the Company.  The carry-over of vacation days shall be in accordance with the Company's policy applicable to senior executives from time to time in effect.

(c) Business and Entertainment Expenses. Upon presentation of appropriate documentation, the Executive shall be reimbursed for all reasonable and necessary business and entertainment expenses incurred in connection with the performance of his duties hereunder, all in accordance with the Company's expense reimbursement policy applicable to senior executives from time to time in effect.

(d) Insurance. The Executive and each individual family member of the Executive shall be entitled to health and insurance plan providing international standard coverage as determined by the Company after consultation with the Executive.

5. TERMINATION.  The Executive's employment and the Employment Term shall terminate on the first of the following to occur:

(a) Disability.  The thirtieth (30th) day following a written notice of termination by the Company to the Executive due to Disability. For purposes of this Agreement, "Disability" shall mean a determination  by the Company in accordance with applicable law that due to a physical or mental injury, infirmity or incapacity, the Executive is unable to perform the essential functions of his job with or without accommodation for 180 days (whether or not consecutive) during any 12-month period.

(b) Death.  Automatically on the date of death of the Executive.

(c) Cause.  Immediately upon written notice of termination by the Company to the Executive for Cause. “Cause” shall mean, as determined by the Board (or its designee) (1) conduct by the Executive in connection with his employment duties or responsibilities that is fraudulent, unlawful or grossly negligent; (2) the willful misconduct of the Executive; (3) the willful and continued failure of the Executive to perform the Executive's duties with the Company (other than any such failure resulting from incapacity due to physical or mental illness); (4) the commission by the Executive of any felony (other than traffic-related offenses) or any crime involving moral turpitude; (5) violation of any material policy of the Company or any material provision of the Company's code of conduct, employee handbook or similar documents; or (6) any material breach by the Executive of any provision of this Agreement or any other written agreement entered into by the Employee with the Company.

 

  

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(d) Without Cause.  On the sixtieth (60th) day following written notice by either Party to the other Party without Cause, other than for death or Disability of the Executive.  The Company may also terminate this Agreement for cause at any time in the event of the failure of the Executive to perform duties assigned by the Company in a correct, timely and expeditious manner or in the event of material violation by the Executive of any term or condition of this Agreement.

6. CONSEQUENCES OF TERMINATION.

(a) Disability.  Upon termination of the Employment Term because of the Executive's Disability, the Company shall pay or provide to the Executive (1) any unpaid Base Salary and any accrued vacation through the date of termination; (2) any unpaid Annual Bonus accrued with respect to the fiscal year ending on or preceding the date of termination; (3) reimbursement for any unreimbursed expenses properly incurred through the date of termination; and (4) all other payments or benefits to which the Executive may be entitled under the terms of any applicable employee benefit plan, program or arrangement (collectively, “Accrued Benefits”).

(b) Death.  Upon the termination of the Employment Term because of the Executive's death, the Executive's estate shall be entitled to any Accrued Benefits.

(c) Termination for Cause. Upon the termination of the Employment Term by the Company for Cause or by either party in connection with a failure to renew this Agreement, the Company shall pay to the Executive any Accrued Benefits.

(d) Termination without Cause.  Upon the termination of the Employment Term by the Company without Cause, the Company shall pay or provide to the Executive (1) the Accrued Benefits, and (2) (A) a payment equal to one and a half of the monthly Base Salary, and (B) a payment of (x) one monthly Base Salary multiplied by (y) the number of full years the Executive has served as the Chief Executive Officer of the Company when the Employment Term is terminated without Cause. In addition, in the event of termination without Cause, the Company shall provide the Executive with the opportunity to vest and exercise all stock options issued to the Executive pursuant to Section 3(b) of this Agreement.

 

7. NO ASSIGNMENT.  This Agreement is personal to each of the Parties.  Except as provided below, no Party may assign or delegate any rights or obligations hereunder without first obtaining the written consent of the other Party hereto; provided, however, that the Company may assign this Agreement to any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company.

 

  

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8. NOTICES. For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given (1) on the date of delivery if delivered by hand, (2) on the date of transmission, if delivered by confirmed facsimile, (3) on the first business day following the date of deposit if delivered by guaranteed overnight delivery service, or (4) on the fourth business day following the date delivered or mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

If to the Executive:

John Bordynuik

If to the Company:

JBI, Inc.

500 Technology Square, Suite 150

Cambridge, MA 02139

Tel.: (905) 354-7222

With a copy to (which shall not constitute notice):

Anslow & Jaclin, LLP

195 Route 9 South, Suite 204

Manalapan, New Jersey, 07726

Attention: Gregg E. Jaclin, Esq.

Tel.:732-409-1212

Fax: (732) 577-1188

or to such other address as either Party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

9. PROTECTION OF THE COMPANY'S BUSINESS.

(a) Confidentiality.  The Executive acknowledges that during the course of his employment by the Company (prior to and during the Employment Term) he has and will occupy a position of trust and confidence. The Executive shall hold in a fiduciary capacity for the benefit of the Company and shall not disclose to others or use, whether directly or indirectly, any Confidential Information regarding the Company, except (i) as in good faith deemed necessary by the Executive to perform his duties hereunder, (ii) to enforce any rights or defend any claims hereunder or under any other agreement to which the Executive is a party, provided that such disclosure is relevant to the enforcement of such rights or defense of such claims and is only disclosed in the formal proceedings related thereto, (iii) when required to do so by a court of law, by any governmental agency having supervisory authority over the business of the Company or by any administrative or legislative body (including a committee thereof) with jurisdiction 

 

  

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to order him to divulge, disclose or make accessible such information, provided that the Executive shall give prompt written notice to the Company of such requirement, disclose no more information than is so required, and cooperate with any attempts by the Company to obtain a protective order or similar treatment, (iv) as to such Confidential Information that shall have become public or known in the Company's industry other than by the Executive's unauthorized disclosure, or (v) to the Executive's spouse, attorney and/or his personal tax and financial advisors as reasonably necessary or appropriate to advance the Executive's tax, financial and other personal planning (each an "Exempt Person"), provided, however, that any disclosure or use of Confidential Information by an Exempt Person shall be deemed to be a breach of this Section 9(a) by the Executive. The Executive shall take all reasonable steps to safeguard the Confidential Information and to protect it against disclosure, misuse, espionage, loss and theft.  The Executive understands and agrees that the Executive shall acquire no rights to any such Confidential Information. "Confidential Information" shall mean information about the Company, its subsidiaries and affiliates, and their respective clients and customers that is not disclosed by the Company and that was learned by the Executive in the course of his employment by the Company, including, but not limited to, any proprietary knowledge, trade secrets, data and databases, formulae, sales, financial, marketing, training and technical information, client, customer, supplier and vendor lists, competitive strategies, computer programs and all papers, resumes, and records (including computer records) of the documents containing such Confidential Information.

(b) Non-Competition.  During the Employment Term and for the one-year period following the termination of the Executive's employment for any reason (the “Restricted Period”), the Executive shall not, directly or indirectly, without the prior written consent of the Company, provide employment (including self-employment), directorship, consultative or other services to any business, individual, partner, firm, corporation, or other entity that competes with any business conducted by the Company or any of its subsidiaries or affiliates on the date of the Executive's termination of employment or within one year of the Executive's termination of employment in the geographic locations where the Company and its subsidiaries or affiliates engage or propose to engage in such business (the “Business”). Nothing herein shall prevent the Executive from having a passive ownership interest of not more than 2% of the outstanding securities of any entity engaged in the Business whose securities are traded on a national securities exchange.

(c) Non-Solicitation of Employees. The Executive recognizes that he possesses and will possess confidential information about other employees of the Company and its subsidiaries and affiliates relating to their education, experience, skills, abilities, compensation and benefits, and inter-personal relationships with customers of the Company and its subsidiaries and affiliates. The Executive recognizes that the information he possesses and will possess about these other employees is not generally known, is of substantial value to the Company and its subsidiaries and affiliates in developing their business and in securing and retaining customers, and has been and will be acquired by him because of his business position with the Company. The Executive agrees that, during the Restricted Period, he will not, directly or indirectly, (i) solicit or recruit any employee of the Company or any of its subsidiaries or affiliates (a “Current Employee”) or any person who was an employee of the Company or any of its subsidiaries or affiliates during the twelve (12) month period immediately prior to the date the Executive's employment terminates (a “Former Employee”) for the purpose of being employed by him or any other entity, or (ii) hire any Current Employee or Former Employee.

 

  

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(d) Non-Solicitation of Customers.  The Executive agrees that, during the Restricted Period, he will not, directly or indirectly, solicit or attempt to solicit (i) any party who is a customer or client of the Company or its subsidiaries, who was a customer or client of the Company or its subsidiaries at any time during the twelve (12) month period immediately prior to the date the Executive's employment terminates or who is a prospective customer or client that has been identified and targeted by the Company or its subsidiaries for the purpose of marketing, selling or providing to any such party any services or products offered by or available from the Company or its subsidiaries, or (ii) any supplier or vendor to the Company or any subsidiary to terminate, reduce or alter negatively its relationship with the Company or any subsidiary or in any manner interfere with any agreement or contract between the Company or any subsidiary and such supplier or vendor.

(e) Property.  The Executive acknowledges that all originals and copies of materials, records and documents generated by him or coming into his possession during his employment by the Company or its subsidiaries are the sole property of the Company and its subsidiaries (“Company Property”).  During the Employment Term, and at all times thereafter, the Executive shall not remove, or cause to be removed, from the premises of the Company or its subsidiaries, copies of any record, file, memorandum, document, computer related information or equipment, or any other item relating to the business of the Company or its subsidiaries, except in furtherance of his duties under this Agreement.  When the Executive's employment with the Company terminates, or upon request of the Company at any time, the Executive shall promptly deliver to the Company all copies of Company Property in his possession or control.

(f) Non-Disparagement.  Executive shall not, and shall not induce others to, Disparage the Company or its subsidiaries or affiliates or their past and present officers, directors, employees or products. "Disparage" shall mean making comments or statements to the press, the Company's or its subsidiaries' or affiliates' employees or any individual or entity with whom the Company or its subsidiaries or affiliates has a business relationship which would adversely affect in any manner (1) the business of the Company or its subsidiaries or affiliates (including any products or business plans or prospects), or (2) the business reputation of the Company or its subsidiaries or affiliates, or any of their products, or their past or present officers, directors or employees.

(g) Cooperation.  Subject to the Executive's other reasonable business commitments, following the Employment Term, the Executive shall be available to cooperate with the Company and its outside counsel and provide information with regard to any past, present, or future legal matters which relate to or arise out of the business the Executive conducted on behalf of the Company and its subsidiaries and affiliates, and, upon presentation of appropriate documentation, the Company shall compensate the Executive for any out-of-pocket expenses reasonably incurred by the Executive in connection therewith.

 

  

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(h) Equitable Relief and Other Remedies.  The Executive acknowledges and agrees that the Company's remedies at law for a breach or threatened breach of any of the provisions of this Section 9 would be inadequate and, in recognition of this fact, the Executive agrees that, in the event of such a breach or threatened or attempted breach, in addition to any remedies at law, the Company, without posting any bond, shall be entitled to obtain equitable relief in the form of specific performance, a temporary restraining order, a temporary or permanent injunction or any other equitable remedy which may then be available. In addition, without limiting the Company's remedies for any breach of any restriction on the Executive set forth in this Section 9, except as required by law, the Executive shall not be entitled to any payments set forth in Section 6(d) hereof if the Executive has breached the covenants applicable to the Executive contained in this Section 9, the Executive will immediately return to the Company any such payments previously received under Section 6(d) upon such a breach, and, in the event of such breach, the Company will have no obligation to pay any of the amounts that remain payable by the Company under Section 6(d).

(i) Reformation.  If it is determined by a court of competent jurisdiction in any state that any restriction in this Section 9 is excessive in duration or scope or is unreasonable or unenforceable under the laws of that state, it is the intention of the parties that such restriction may be modified or amended by the court to render it enforceable to the maximum extent permitted by the law of that state.  The Executive acknowledges that the restrictive covenants contained in this Section 9 are a condition of this Agreement and are reasonable and valid in temporal scope and in all other respects.

(j) Liability. Notwithstanding the provisions in this Section 9 the Executive shall not be liable for any mistakes of fact, errors of judgment, for losses sustained by the Company or any subsidiary or for any acts or omissions of any kind, unless caused by the negligence or willful or intentional misconduct of the Executive or any person or entity acting for or on behalf of the Executive.

(k) Survival of Provisions. The obligations contained in this Section 9 shall survive in accordance with their terms the termination or expiration of the Executive's employment with the Company and shall be fully enforceable thereafter.

10. INDEMNIFICATION. The Executive shall be indemnified to the extent permitted by the Company's organizational documents and to the extent required by law.

11. SECTION HEADINGS AND INTERPRETATION. The section headings used in this Agreement are included solely for convenience and shall not affect, or be used in connection with, the interpretation of this Agreement. Expressions of inclusion used in this agreement are to be understood as being without limitation.

12. SEVERABILITY.  The provisions of this Agreement shall be deemed severable and the invalidity of unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof.

13. COUNTERPARTS.  This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same Agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

 

  

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14. GOVERNING LAW AND VENUE.  The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Nevada without regard to its conflicts of law principles. The Parties agree irrevocably to submit to the exclusive jurisdiction of the courts located in Nevada, for the purposes of any suit, action or other proceeding brought by any Party arising out of any breach of any of the provisions of this Agreement and hereby waive, and agree not to assert by way of motion, as a defense or otherwise, in any such suit, action, or proceeding, any claim that it is not personally subject to the jurisdiction of the above-named courts, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper, or that the provisions of this Agreement may not be enforced in or by such courts.

15. ENTIRE AGREEMENT. This Agreement contains the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior agreements, written or oral, with respect thereto. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement.

16. WAIVER AND AMENDMENT.  No provision of this Agreement may be modified, amended, waived or discharged unless such waiver, modification, amendment or discharge is agreed to in writing and signed by the Executive and such officer or director as may be designated by the Board. No waiver by either Party at any time of any breach by the other Party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other Party shall be deemed a waiver or similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

17. WITHHOLDING. The Company may withhold from any and all amounts payable under this Agreement such federal, state, local and foreign taxes as may be required to be withheld pursuant to any applicable law or regulation.

18. AUTHORITY AND NON-CONTRAVENTION.  The Executive represents and warrants to the Company that he has the legal right to enter into this Agreement and to perform all of the obligations on his part to be performed hereunder in accordance with its terms and that he is not a party to any agreement or understanding, written or oral, which could prevent him from entering into this Agreement or performing all of his obligations hereunder.

[Intentionally Blank Signature Page Follows]

  

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.

 

 

	 	JBI, INC.	 
	 	 	 
	 	/s/ John Wesson	 
	 	By: John Wesson	 
	 	Title: Director	 
	 	 	 
	 	 	 
	 	EXECUTIVE	 
	 	 	 
	 	/s/ John Bordynuik	 
	 	By: John Bordynuik	 

 

 

10f8k051510ex10i_recovery.htm

Exhibit 10.1

 

PURCHASE AGREEMENT – DATED MAY 15, 2010

This Purchase Agreement ("Agreement") sets forth our agreement in principle to the acquisition by Recovery Energy, Inc. ("Recovery") from Edward Mike Davis, L.L.C. and Spottie, Inc. (collectively, "Davis") of certain oil and gas interests (the "Assets") described as:

 

	
(i)  

	
All of Davis' right, title and interest in oil and gas leases covering approximately 60,000 acres.  The leases provided by Davis shall cover Lands described in Exhibit A hereto, located in Banner and Kimball Counties, Nebraska and Laramie and Goshen Counties, Wyoming, insofar and only insofar as those leases cover the land described in Exhibit A hereto and limited to formations from the surface of the ground to the base of the Green Horn formation ("Leases");

 

	
(ii)  

	
all of the Reserved Overriding Royalty Interest in, to and under the Albin Area and Tracy Prospect Leases described in Exhibit B hereto, except for that portion of the reserved overriding royalty which, together with the lease royalty burden does not exceed fifteen percent (15%), burdening leases in Banner County, Nebraska and Laramie County, Wyoming, insofar and only insofar as those leases cover the land described in Exhibit B hereto ("Existing Override") which shall not include lands in Sections 33 and 34 of Township 18 North, Range 60 West, 6th P.M., Laramie County, Wyoming or other Lands not described in Exhibit B; and

 

	
(iii)  

	
all of the Reserved Overriding Royalty Interest in, to and under the Vrtatko Area Prospect Leases described in Exhibit C hereto, except for that portion of the reserved overriding royalty which, together with lease royalty burden does not exceed fifteen percent (15%), burdening leases in Kimball County, Nebraska, insofar and only insofar as those leases cover the land described in Exhibit C hereto ("Vrtatko Override").

 

1. Terms and Purchase Price.

 

	
(a)  

	
The acquisition of the Assets will be effective as of the date the Cash Consideration and the Shares are delivered to Davis.  Recovery shall gauge tanks on the effective date of this Agreement.

 

	
(b)  

	
The Purchase Price will be $20,000,000.00 ("Cash Consideration") and $2,000,000 non-refundable shares of Recovery's common stock ("Shares").  Recovery will deliver to Davis the Cash Consideration by wire transfer and the Shares by May 21, 2010 at 5:00 p.m. Mountain Daylight time.  If Recovery is not able to deliver the Cash Consideration and the 2,000,000 Shares to Davis by May 21, 20l0 at 5:00 p.m., then Davis shall have the right but not the obligation to extend this Agreement on the following terms: (1) the Shares shall increase to 3,000,000 shares of Recovery's common stock, (2) Recovery shall deliver the 3,000,000 non-refundable Shares to Davis by May 21, 2010 at 5:00 p.m. Mountain Daylight Time and (3) Recovery shall deliver the Cash Consideration by wire transfer to Davis as soon as it raises such funds from any source except proceeds of production, but in no event later than June 30, 2010 at 5:00 p.m. Mountain Daylight time.  If Davis elects to extend this agreement and Recovery fails to deliver the Cash Consideration by June 30, 2010, or if acquisition of the Assets otherwise fails to occur through no fault of Davis, Davis shall retain the Shares.

 

  

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(c)  

	
Recovery shall file a registration statement for the Shares with the Securities and Exchange Commission under the Securities Act of 1933 as soon as possible after execution of this Agreement and no later than May 31, 2010 or the next time Recovery flies a registration statement for any other shares of its stock, whichever is earlier.  Recovery shall cause the Shares to be free trading stock as soon as possible and deliver the Shares in denominations specified by Davis with no restrictions and at no cost to Davis.

 

	
(d)  

	
The Cash Consideration shall be allocated to the Existing Override, the Vrtatko Override and other leases.

 

	
(e)  

	
The Leases will be delivered by Davis with a Net Revenue Interest ("NRI") of 77%, (except in those cases in which a lease has a landowner's royalty burden that is greater than 23%, then in that case the lease shall be delivered by Davis to Recovery at the NRI of the lease).  All interests assigned in the Leases wilt be limited to formations from the surface of the ground to the base of the Green Horn formation, Davis retains alt rights below the Green Horn formation and shall have access to the land and leases for Davis' operations.  Recovery shall abide by the terms and conditions of the leases and shall obtain all necessary bonds as required by all governmental agencies.

 

	
(f)  

	
Six (6) months prior to the expiration, surrender or other termination of any lease assigned by Davis to Recovery, Recovery will notify Davis and offer to Davis reassignment of such lease.  This reassignment obligation shall be expressly included in any assignment of the interest being assigned to Recovery hereunder.  If Davis accepts the reassignment offer, then Recovery shall reassign a 100% working interest in such lease with no burdens other than those burdening such lease when Davis assigned such lease to Recovery, with no additional burdens or encumbrances of any kind whatsoever.

 

	
(g)  

	
Recovery shall commit to drill two wells ("Commitment Wells") on lands covered by the Leases at locations selected by Davis.  Davis shall notify Recovery of the two locations within six months after execution and delivery of this Agreement.  The first well shall be spudded within 12 months after the execution and delivery of this Agreement and the second well within 24 months after the execution and delivery of this Agreement.  One well shall be a horizontal Niobrara test well and one well shall be a horizontal Codell test well.  If Recovery Energy elects to complete either well, then such well shall be fraced by Halliburton using the latest technology.

 

  

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(h)  

	
Recovery shall drill and log all wells on the Leases, including but not limited to the Commitment Wells described above, to 100 feet below the top of the Skull Creek formation.  The logging shall be conducted by Schiumberger and shall include platform express' triple combo (being induction array end neutron density) with linear display logs.  Davis shall be provided all information for each well drilled by Recovery as soon as the information is obtained by Recovery, including but not limited to applications, daily drilling reports, DST's, daily completion reports, daily production reports, etc.  During the life of each well drilled by Recovery or its successors and assigns on the Leases, Recovery shall provide Davis or cause to be provided to Davis all production, testing and other information obtained by the operator for such well.  If Recovery decides to plug and abandon any well on the lands covered by the Assets, including but not limited to the two commitment wells described above, Davis shall have the right but not the obligation to take over the well at no cost to Davis.  If Recovery fails to drill both of the Commitment Wells, Recovery shall lose its interest in the leases upon which the two wells were drilled and any leases in the drilling or spacing unit for such wells, and Recovery shall reassign said leases to Davis with no burdens, liens or encumbrances other than those existing prior to the assignment from Davis.

 

Nothing contained in paragraph (3) above shall change the terms of any previous agreements entered into by and between Davis and Recovery.

 

For each of the two commitment wells, Recovery will lose 1800 acres per well if not drilled, but will not relinquish rights to more than 3600 acres.

 

	
(i)  

	
Recovery shall be responsible for any and all ad valorem, severance and other taxes on production from the Assets and shall keep the total amount of all such taxes in a separate account designated solely for the payment of such taxes.  Recovery shall place the total amount of all such taxes in Treasury bills to be held in a separate non-hypothecable escrow account designated solely for the payment of such taxes.  Recovery shall provide Davis with the monthly statements of account for each such account.  If Recovery assigns any interests in the Assets to a third party, Recovery shall notify Davis of the assignment prior to such assignment and such third party shall comply with the terms of this paragraph.

 

	
(j)  

	
Davis represents that the leasehold interests assigned pursuant to this agreement shall be free of all liens and encumbrances created by, through or under Davis, but not otherwise, Davis does not represent that any lease subject to this Agreement covers 100% of the mineral interest in all lands covered by such lease.  Davis does not warrant title to leases subject to this Agreement.  With respect to all interests assigned by Davis to Recovery pursuant to this Agreement or any previous agreements between the parties, Davis shall be deemed to have assigned such interests "AS IS, WHERE IS" and "WITH ALL FAULTS." All prior representations, warranties, covenants and conditions of Davis with regard to such interests are terminated and released.

 

  

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(k)  

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

 

This Agreement is a binding contract and enforceable under its terms.

 

This Agreement may be executed iii 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.

 

 

	RECOVERY ENERGY, INC.	 	 	 	 
	 	 	 	 	 	 
	By:	/s/ Roger A. Parker    	 	Dated:  May 15, 2010	 
	 	Roger A. Parker, Chief Executive Officer	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	RECOVERY ENERGY, INC.	 	 	 	 
	 	 	 	 	 	 
	By:	/s/ Jeffrey A. Beunier     	 	Dated:  May 15, 2010	 
	 	Jeffrey A. Beunier, President	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 AGREED AND ACCEPTED May 15, 2010	 	SPOTTIE, INC.	 
	 	 	 	 	 	 
	EDWARD MIKE DAVIS, L.L.C.	 	By:	 /s/ Edward Mike Davis  	 
	 	 	 	Edward Mike Davis, President	 
	By:	/s/ Edward Mike Davis      	 	 	 	 
	 	Edward Mike Davis, Manager	 	 	 	 
	 	 	 	 	 	 

 

 

 

4

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