Document:

EX-10.4

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”), is dated March 30, 2012 and
effective as of January 1, 2012 (“Effective Date”) is entered into by and between Double Eagle
Petroleum Co., a Maryland corporation (the “Company”), and Clark Huffman (“Employee”). The Company
and Employee are collectively referred to as the “Parties”.

W I T N E S S E T H:

WHEREAS, the Company desires to continue the employment of Employee as its Vice
President—Operations and Employee desires to be employed as the Vice President-Operations of the
Company;

WHEREAS, the Company has recently reviewed its compensation practices and adopted a long-term
incentive program (the “LTIP”); and

WHEREAS, the Company and Employee desire to enter into an amended agreement regarding the
employment of Employee;

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements set
forth herein, the Parties, intending to be legally bound, hereby agree as follows:

ARTICLE ONE

POSITION & DUTIES

1.1 Title.

Employee shall serve as Vice President—Operations and agrees to perform services for the
Company and such other affiliates of the Company, as described herein.

1.2 Term.

Employee’s employment shall be for an initial term commencing on the Effective Date through
December 31, 2012 (the “Term”), subject to the termination provisions herein. Employee hereby
agrees to be engaged by the Company for the Term in such capacity. At the end of the Term, this
Agreement shall automatically renew for a term of one (1) year unless this Agreement is superseded
by a new fully executed agreement, or unless notice of non-renewal is delivered in writing by the
Company at least sixty (60) days prior to the end of the term then in effect, or unless this
Agreement is otherwise terminated pursuant to the provisions hereof. Each renewal agreement shall
have a one-year term and will not include the equity grants set forth in Section 2.2. A notice of
non-renewal of this Agreement by the Company to Employee shall give rise to the severance benefits
described in paragraph 3.5 a. below pursuant to the terms and conditions set forth therein, unless
the Company gives notice of termination for cause pursuant to Section 3.2 a. and Section 3.3 of
this Agreement. If this Agreement is terminated for cause, there are no severance benefits.
Bonuses, if any, shall not be deemed to be accrued or part of any severance package unless and
until the Board of Directors has declared and awarded a bonus to Employee.

1.3 Duties and Responsibilities.

Employee shall perform the tasks consistent with the office or position designated herein and
such other reasonable tasks directed by the Board of Directors of the Company. Employee hereby
covenants and agrees to perform the services for which he is hereby retained in good faith and with
reasonable diligence in light of attendant circumstances.

1.4 Performance of Duties.

During the term of the Agreement, except as otherwise approved by the Board of Directors or as
provided below, Employee agrees to devote his full business time, effort, skill and attention to
the affairs of the Company and its subsidiaries, will use his best efforts to promote the interests
of the Company, and will discharge his responsibilities in a diligent and faithful manner,
consistent with sound business practices. The foregoing shall not, however, preclude Employee from
devoting reasonable time, attention and energy in connection with other activities outside of his
existing duties and responsibilities, provided that any such other activities do not interfere with
the performance of his duties and services hereunder and do not conflict with the business
interests of the Company, and further provided that Employee’s participation in any activities in
the oil and gas industry or which may reasonably be deemed to conflict with the business interests
of the Company is approved in advance by the Board of Directors.

1.5 Reporting Location.

For purposes of this Agreement, Employee’s reporting location shall be Denver, Colorado, which
shall include the metropolitan area within a 60 mile radius from the Company’s current office at
that location.

ARTICLE TWO

COMPENSATION

2.1 Base Salary.

As compensation to Employee for the performance of his duties or obligations under this
Agreement, Company shall pay Employee a base salary (the “Base Salary”) effective January 1, 2012
of TWO HUNDRED TWENTY FIVE THOUSAND DOLLARS ($225,000) annually, payable, at the election of the
Company, in monthly or semi-monthly installments subject to all federal, state, and municipal
withholding requirements. The Base Salary shall be prorated for any partial calendar month of
employment.

2.2 Equity Grants.

a. LTIP Restricted Stock. Under the LTIP, the Company has granted to Employee 60,893 shares
of the Company’s restricted common stock (the “Restricted Shares”). The Restricted Shares shall
vest or be forfeited pursuant to the Double Eagle Petroleum Co. Restricted Stock Grant Terms (the
“Grant Terms”) adopted by the Compensation Committee of the Board of Directors. Should there be
any conflict or potential conflict between the terms of this Agreement and the Grant Terms with
respect to the vesting or forfeiture of the Restricted Shares, the Grant Terms shall govern.2.3
Bonus Awards within Discretion of Board.

In addition to receiving the Base Salary described in Section 2.1 and the equity grants
described in Section 2.2, Employee may, in the sole discretion of the Board of Directors, be
awarded such cash and/or non-cash bonuses (including stock options, restricted stock or any
combination of cash and non-cash components) from time to time as are approved by the Compensation
Committee of the Board of Directors (the “Compensation Committee”) or by the Board of Directors
directly. The annual bonus shall be based upon any annual cash incentive bonus plan adopted by the
Compensation Committee. Any bonus under this Section 2.3 will be paid to Employee no later than
March 15 of the calendar year following the calendar year during which the bonus was earned.

2.4 Employee Benefit Plans.

During the term of employment hereunder, Employee shall be eligible to participate in any
employee benefit plans provided by the Company on the same basis as other similarly positioned or
titled employees, as such plans may be changed from time to time, in accordance with the provisions
of such plans, including, but not limited to, the Company’s qualified retirement plans and the
Company’s stock incentive plan(s), if any. Employee hereby agrees and acknowledges that nothing in
this Agreement shall guarantee Employee that any employee benefit plan shall be in effect during
the term of his employment nor shall it guarantee Employee a right to any grant of stock options,
restricted stock or any other right under any stock incentive plan, or other plan.

2.5 Vacation.

Commencing upon Employee’s employment with the Company, Employee shall accrue, four (4) weeks
of vacation per calendar year, pro-rated proportionally for days worked as compared to the calendar
year accruable days in total. Any increase to the number of weeks of vacation that accrue per
calendar year based upon years of service shall be calculated in accordance with the Company’s
vacation policy based upon Employee’s original hire date, assuming continuous employment with the
Company. Unused vacation time may be carried over to a subsequent calendar year; provided, however,
that no more than 1.5 times (1.5x) Employee’s authorized annual vacation allocation may be accrued,
at any given time. Additionally, upon termination, Employee shall be paid for all accrued but
unused vacation days.

2.6 Clawback.

Notwithstanding any other provisions in this Agreement to the contrary, any incentive based
compensation, or any other compensation, paid or payable to Employee pursuant to this Agreement or
any other agreement or arrangement with the Company which is subject to recovery under any law,
government regulation, order or stock exchange listing requirement, whether adopted during or after
the term of this Agreement, will be subject to such deductions and recovery (clawback) as may be
required to be made pursuant to law, government regulation, order, stock exchange listing
requirement or any policy of the Company adopted pursuant to any such law, government regulation,
order or stock exchange listing requirement. Employee specifically authorizes the Company to
withhold from his future wages any amounts that may become due under this provision. This Section
2.6 shall survive the termination of this Agreement for a period of three (3) years or such longer
time period as required by law, government regulation, order, or stock exchange listing
requirement.

ARTICLE THREE

TERMINATION OF EMPLOYMENT

Employee’s employment with the Company may be terminated as follows:

3.1 Death or Disability.

Upon the death or long-term disability of Employee, this Agreement will automatically
terminate, and Employee (or his heirs in the case of death) will be entitled to receive his Base
Salary and benefits as listed above for a period of twelve (12) months from the Date of Termination
(as defined in Section 3.4 below). For purposes of this Agreement, “Disability” shall mean the
absence of Employee from Employee’s duties hereunder on a full-time basis for an aggregate of 180
days within any given period of 270 consecutive days (in addition to any statutorily required leave
of absence and any leave of absence approved by the Company) as a result of the incapacity of
Employee, despite any reasonable accommodation required by law, due to bodily injury or disease or
any other mental or physical illness of Employee.

All of Employee’s issued but unexercised or unvested stock options and restricted stock grants
issued prior to September 30, 2011 shall become fully vested and exercisable upon Employee’s death
or the termination of this Agreement due to Employee’s long-term disability and the stock options
shall remain exercisable until they are exercised or expire per the terms of the option plan and/or
agreement under which the options or shares were issued to Employee. All of Employee’s issued but
unexercised or unvested stock options and restricted stock grants issued on or after September 30,
2011 shall, upon Employee’s death or the termination of this Agreement due to Employee’s long-term
disability, become fully vested and exercisable or be forfeited in accordance with the Grant Terms,
and the stock options that vest shall remain exercisable until they are exercised or expire per the
terms of the option plan and/or agreement under which the option or shares were issued to Employee.

3.2 Termination by the Company.

a. Termination for Cause.

This Agreement may be terminated for “cause” by the Company immediately, without prior
notice (except as indicated herein below) and without severance pay or severance benefits.
For purposes hereof, “cause” shall mean any of the following events:

	 	i.	 	Any embezzlement or wrongful diversion of funds of the Company or any
Affiliate by Employee.

	 	ii.	 	An indictment or conviction of Employee, or the entering of a plea of
nolo contendere by Employee with respect to having committed a felony.

	 	iii.	 	Acts of dishonesty or moral turpitude by Employee that are
detrimental to the Company or an Affiliate.

	 	iv.	 	Abandonment by Employee of his job duties or repeated absences from
the Company-directed tasks which are not otherwise excused by the Company.

	 	v.	 	Competing with the Company or otherwise diverting away from the
Company business opportunities intended for the Company or which could reasonably
benefit the Company’s core business.

	 	vi.	 	An unauthorized use of the Company’s or an Affiliate’s name,
trademark(s), service mark(s) or trade name(s), and all variations thereof and
marks or names similar thereto, whether now or hereafter owned, licensed, or used
by the Company.

	 	vii.	 	Acts or omissions by Employee which are detrimental to the business
of the Company or an Affiliate, the Company’s or an Affiliate’s interests and/or
the Company’s or an Affiliate’s reputation.

	 	viii.	 	Failure of Employee to comply with reasonable and lawful directives
and/or policies of the Company that remains uncured for a period of at least
thirty (30) days following written notice from the Company or the Board or a
committee thereof to Employee of such alleged failure, which written notice
describes in reasonable detail the nature of such alleged failure.

	 	ix.	 	Any other material breach by Employee of any agreement between
Employee and the Company that remains uncured for a period of at least thirty (30)
days following written notice from the Company or the Board or a committee thereof
to Employee of such alleged breach, which written notice describes in reasonable
detail the nature of such alleged breach.

	 	b.	 	Reserved

	 	c.	 	Termination Without Cause

Notwithstanding the term provision of this Agreement, the Company may terminate
Employee at any time without “cause”, upon providing written notice to Employee. Upon such
termination, Employee shall have the rights set forth in Section 3.5 a. below subject to
the terms and conditions of Sections 3.5 e. and 3.5 f.

d. Termination for Good Reason

Notwithstanding the term provision of this Agreement, Employee may terminate this Agreement
for “good reason” 60 days after providing written notice to the Company of the “good reason” if the
written notice is provided within 30 days following the good reason event and the “good reason” is
not cured within the 60 day period following the notice. “Good reason” shall mean:

	 	i.	 	A material breach by the Company of any agreement between Employee and the Company
that remains uncured for a period of at least sixty (60) days following written notice by
Employee to the Company of the breach.

	 	ii.	 	A change in reporting location outside the reporting location set forth in Section
1.5 not agreed to by Employee.

	 	iii.	 	A material reduction in Employee’s responsibilities or a reduction in Employee’s
base salary.

Upon termination by Employee for good reason, Employee shall have the rights set forth in
Section 3.5 a. below, subject to the other terms and conditions of Sections 3.5 e. and 3.5 f.;
except that if termination by Employee for good reason satisfies the conditions of Section 3.5 b.,
then Employee shall have the rights set forth in Section 3.5 b., subject to the other terms and
conditions of Section 3.5 b through 3.5 f. Such a termination shall be deemed to be an involuntary
termination.

If the Company and Employee enter into litigation as to whether Employee’s termination validly
qualifies as termination for “good reason,” “for cause” or as following a “change in control,” then
the prevailing party in such action shall be awarded its or his reasonable costs and fees,
including attorneys’ fees, resulting from such litigation up to a maximum of one hundred thousand
dollars ($100,000). The Company and Employee agree that no punitive or consequential damages may
be awarded as a result of such action or otherwise under this Agreement.

3.3 Notice of Termination.

Any termination of Employee’s employment hereunder by the Company or by Employee shall be
communicated by a Notice of Termination (as defined below) to the other party hereto. For purposes
of this Agreement, a “Notice of Termination” shall mean a written notice which (a) indicates the
specific termination provision in this Agreement relied upon; (b) in the case of a termination for
disability or termination for cause, sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Employee’s employment under the provision so
indicated; and (c) specifies the Date of Termination (as defined in Section 3.4 below). The
failure by the Company or Employee to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of a disability or a termination for cause shall not
waive any right of the Company or Employee hereunder or preclude the Company or Employee from
asserting such fact or circumstance in enforcing the Company’s or Employee’s rights hereunder.

3.4 Date of Termination.

For purposes of this Agreement, the “Date of Termination” shall mean the effective date of
termination of Employee’s employment hereunder, which date shall be (a) if Employee’s employment is
terminated by Employee’s death, the date of Employee’s death; (b) if Employee’s employment is
terminated because of Employee’s disability, the disability Effective Date; (c) if Employee’s
employment is terminated by the Company (or applicable affiliated company) for cause, the date on
which the Notice of Termination is given; and (d) if Employee’s employment is terminated for any
other reason, including the resignation by Employee, the date specified in the Notice of
Termination, which date shall in no event be earlier than the date such notice is given.

3.5 Severance Pay Provisions/Change in Control/Effect of Termination Without Cause by
Company, for Good Reason by Employee, or Due to Resignation.

a. In the event this Agreement is agreed by Employee to be renewed, but is not renewed by
the Company and is not superseded by a new agreement, or is terminated by Company without
“cause,” or is terminated by Employee for “good reason,” then Employee’s sole remedy shall
be limited to recovery by Employee from Company of his Base Salary for a period equal to
twelve (12) months from the date of the expiration of this Agreement (in the case of
termination without cause or for good reason, or Employee’s agreement to renew combined
with the Company’s refusal to renew) or the Date of Termination of this Agreement and
continuing health care benefits for a period of twelve (12) months following such
termination (the “Period”). If Employee elects continued group medical coverage for himself
and his eligible dependents pursuant to COBRA, then (i) continued coverage for the lesser
of the COBRA continuation period or the duration of the Period, with the same deductible
and out-of-pocket expenses as apply to active employees (and their eligible dependents)
from time to time during the COBRA continuation coverage period, and (ii) for the period
beginning on the expiration of COBRA continuation coverage and ending on the last day of
the Period, monthly reimbursements for the cost of premiums for health plan benefits
comparable to such benefit plans provided to Employee at the time of termination of active
employment. Notwithstanding the foregoing, any insurance reimbursement obligation set
forth in this Section 3.5 a. shall lapse as of the date comparable coverage in connection
with other employment is made available to Employee regardless of whether Employee
participates in such alternate coverage program. The terms and conditions of this Section
3.5 a. shall continue until the end of the Period notwithstanding the death or disability
of Employee during said period.

In addition, all of Employee’s issued but unexercised or unvested stock options and
restricted stock grants issued prior to September 30, 2011 shall become fully vested, and
the stock options shall remain exercisable until they are exercised or expire per the terms
of the option plan and/or agreement under which the options or shares were issued to
Employee. All of Employee’s issued but unexercised or unvested stock options and
restricted stock grants issued on or after September 30, 2011 shall become fully vested and
exercisable or be forfeited in accordance with the Grant Terms, and the stock options that
vest shall remain exercisable until they are exercised or expire per the terms of the
option plan and/or agreement under which the options or shares were issued to Employee.
Notwithstanding this Section 3.5 a., Employee shall not be entitled to payment pursuant to
this Section 3.5 a. if he is entitled to payment pursuant to Section 3.5 b.

b. In the event of a Change in Control as defined below, if

	 	i.	 	Employee is terminated without
“cause” as defined in Section 3.2 a during the 12-month period
following a Change in Control, or

	 	ii.	 	Employee terminates his employment
for “good reason” as defined in Section 3.2 d during the 12-month
period following the Change in Control,

then Employee shall be entitled to benefits in the form of a lump sum payment in the
amount equal to his base salary and benefits (not including grants of common stock, options
or other equity) for a period equal to eighteen (18) months plus 100% of the total amount
of cash bonuses granted to Employee in his capacity as an employee of the Company during
the eighteen (18) months preceding the Change in Control (the “Change in Control
Benefits”). Such payment of the Change in Control Benefits shall be paid within 30 days of
the effective Date of Termination of Employee as applicable pursuant to Section 3.4. The
Change in Control Benefits provided for in this Agreement shall be in lieu of any other
severance or termination pay to which Employee may be entitled under any Company severance
or termination plan, program, practice or arrangement. Employee’s entitlement to any other
compensation or benefits shall be determined in accordance with any Company employee
benefit plans and any other applicable programs, policies and practices then in effect. In
addition, if Employee’s employment is terminated without “cause” during the 12-month period
following a Change in Control, or Employee terminates his employment for “good reason”
during the 12-month period following the Change in Control, then (i) all of Employee’s
issued but unexercised or unvested stock options and restricted stock grants issued prior
to September 30, 2011 shall become fully vested, and the stock options shall become
exercisable and shall remain exercisable until they are exercised or expire per the terms
of the option plan and/or agreement under which the options or shares were issued to
Employee, and (ii) all of Employee’s issued but unexercised or unvested stock options and
restricted stock grants issued on or after September 30, 2011 shall become fully vested and
exercisable or be forfeited in accordance with the Grant Terms, and the stock options that
vest shall become exercisable and shall remain exercisable until they are exercised or
expire per the terms of the option plan and/or agreement under which the options or shares
were issued to Employee.

For the purposes of this Agreement, a Change in Control shall be defined, in accordance
with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), as the
occurrence of any of the following events:

	 	i.	 	If any one person, or more than one person acting as a group (as defined in
Code Section 409A and Internal Revenue Service (“IRS”) guidance issued thereunder),
acquires ownership of common stock of the Company that, together with stock held by
such person or group, constitutes more than fifty (50) percent of the total fair
market value or total voting power of the common stock of the Company. However, if
any one person or more than one person acting as a group, is considered to own more
than fifty (50) percent of the total fair market value or total voting power of the
common stock of the Company, the acquisition of additional stock by the same person or
persons is not considered to cause a Change in Control, or to cause a change in the
effective control of the Company (within the meaning of Code Section 409A and IRS
guidance issued thereunder). An increase in the percentage of common stock owned by
any one person, or persons acting as a group, as a result of a transaction in which
the Company acquires its stock in exchange for property shall be treated as an
acquisition of stock for purposes of this Section. This paragraph applies only when
there is a transfer of stock of the Company (or issuance of stock of the Company) and
stock in such Company remains outstanding after the transaction;

	 	ii.	 	If any one person, or more than one person acting as a group (as determined
in accordance with Code Section 409A and IRS guidance thereunder), acquires (or has
acquired during the 12-month period ending on the date of the most recent acquisition
by such person or persons) ownership of common stock of the Company possessing thirty
(30) percent or more of the total voting power of the common stock of the Company;

	 	iii.	 	If a majority of members on the Company’s Board is replaced during any
12-month period by Directors whose appointment or election is not endorsed by a
majority of the members of the Company’s Board prior to the date of the appointment or
election (provided that for purposes of this paragraph, the term Company refers solely
to the “relevant” Company, as defined in Code Section 409A and IRS guidance issued
thereunder), for which no other Company is a majority shareholder; or

	 	iv.	 	If there is a change in the ownership of a substantial portion of the
Company’s assets, which shall occur on the date that any one person, or more than one
person acting as a group (within the meaning of Code Section 409A and IRS guidance
issued thereunder) acquires (or has acquired during the 12-month period ending on the
date of the most recent acquisition by such person or persons) assets from the Company
that have a total gross fair market value equal to or more than forty (40) percent of
the total gross fair market value of all of the assets of the Company immediately
prior to such acquisition or acquisitions. For this purpose, gross fair market value
means the value of the assets of the Company, or the value of the assets being
disposed of, determined without regard to any liabilities associated with such assets.

c. In the event that the Change in Control Benefits provided for under Section 3.5 a
constitute “parachute payments” within the meaning of Section 280G of the Code, and but for
this Section 3.5 c., would be subject to the excise tax imposed by Section 4999 of the
Code, then the Change in Control Benefits under Section 3.5 b. will be either: (i)
delivered in full, or (ii) delivered as to such lesser extent that would result in no
portion of such Change in Control Benefits being subject to excise tax under Section 4999
of the Code, whichever of the foregoing amounts, taking into account the applicable
federal, state and local income taxes and the excise tax imposed by Section 4999, results
in the receipt by Employee on an after-tax basis, of the greatest amount of Change in
Control Benefits, notwithstanding that all or some portion of such Change in Control
Benefits may be taxable under Section 4999 of the Code; provided, however, that Employee
may elect to receive Change in Control Benefits that would result in no portion of such
Change in Control Benefits being subject to excise tax under Section 4999 of the Code even
if such payment would not result in the greatest amount of Change in Control Benefits to
Employee. Unless the Company and Employee otherwise agree in writing, any determination
required under this Section 3.5 c. will be made in writing by the Company’s independent
public accountants immediately prior to the Change in Control (the “Accountants”), whose
determination will be conclusive and binding upon Employee and the Company for all
purposes. For purposes of making the calculations required by this Section, the
Accountants may make reasonable assumptions and approximations concerning applicable taxes
and may rely on reasonable, good faith interpretations concerning the application of
Sections 280G and 4999 of the Code. The Company and Employee will furnish to the
Accountants such information and documents as the Accountants may reasonably request in
order to make a determination under this Section. The Company will bear all costs the
Accountants may reasonably incur in connection with any calculations contemplated by this
Section. In the event the Accountants determine that this Section requires a reduction in
Employee’s Change in Control Benefits, Employee will be provided the reasonable opportunity
to determine the order in which Change in Control Benefits will be reduced. If Employee
fails to make an appropriate reduction election within the reasonable time period
determined by the Compensation Committee, or the Company’s Board of Directors if no
Compensation Committee exists, in its sole discretion, the order of reduction will be
determined by the Compensation Committee or the Company’s Board of Directors, if
applicable.

d. If Employee terminates Employee’s employment with the Company by resignation,
other than resignation for “good reason”, such termination shall be without any severance
pay or severance benefits and Employee shall be entitled only to such compensation
hereunder that has accrued as of the Date of Termination.

e. As a condition and requirement in order to receive any payment pursuant to
Section 3.5 above, Employee must sign and deliver to the Company a full release of the
Company from any claims that Employee may have against the Company, and Employee must
return to the Company all information, documents, records, memoranda, drafts, emails,
notes, data or other non-public information that is recorded in any electronic, audio,
video or other manner that was furnished to Employee or produced by Employee in connection
with Employee’s employment, except for documents relating to compensation or benefits to
which Employee is entitled following Employee’s resignation. Employee also shall be
required to return all other Company property and equipment, including keys and access
cards. The form of release to be signed and delivered by Employee to the Company will be
provided by the Company.

f. Notwithstanding anything to the contrary contained in this Section 3.5, if
Employee is a Specified Employee (as defined herein) on the date of termination and, as a
result thereof, Section 409A of the Code and the rules promulgated thereunder would so
require, payment of the severance benefit provided pursuant to Section 3.5 a. shall begin
on the first day following the twelve-month anniversary of the Date of Termination, and,
the lump sum payment of the Change in Control Benefit shall be made on the first day
following the twelve-month anniversary of the Date of Termination.

ARTICLE FOUR

CONFIDENTIALITY

4.1 Confidentiality.

In consideration of employment by the Company and Employee’s receipt of the salary and other
benefits associated with Employee’s employment and in acknowledgment that:

a. the Company is engaged in the oil and gas business,

b. the Company maintains secret and confidential information,

c. during the course of Employee’s employment by the Company, such secret or confidential
information may become known to Employee, and

d. full protection of the Company’s business makes it essential that no employee
appropriate for his own use, or disclose, such secret or confidential information,

Employee agrees that, during the time of Employee’s employment and for a period of one (1) year
following the termination of Employee’s employment with the Company, Employee will hold in strict
confidence and shall not, directly or indirectly, disclose or reveal to any person, or use for his
own personal benefit or for the benefit of anyone else, any trade secrets, confidential dealings,
or other confidential or proprietary information of any kind, nature, or description (regardless of
whether acquired, learned, obtained, or developed by Employee alone or in conjunction with others)
belonging to or concerning the Company or any of its subsidiaries, except (i) with the prior
written consent of the Company duly authorized by its Board of Directors, (ii) in the course of the
proper performance of Employee’s duties hereunder, (iii) for information (A) that becomes generally
available to the public other than as a result of unauthorized disclosure by Employee or his
affiliates or (B) that becomes available to Employee on a non-confidential basis from a source
other than the Company or its subsidiaries who is not bound by a duty of confidentiality, or other
contractual, legal, or fiduciary obligation, to the Company, or (iv) as required by applicable law
or legal process. Notwithstanding the forgoing, this Section is not intended, nor shall be
construed, to prohibit Employee’s general knowledge, skill and experience or Employee’s inventive
powers.

4.2 Non-Competition.

Except as provided in the last sentence of this paragraph, during Employee’s employment with
the Company and for so long as Employee receives any severance payments or benefits under this
Agreement in respect of the termination of his employment, Employee shall not be engaged as an
officer or employee of, or in any way be associated in a management or ownership capacity with any
corporation, company, partnership or other enterprise or venture that conducts a business in direct
competition with the business of the Company as of the Date of Termination; provided, however,
that Employee may own not more than two percent (2%) of the outstanding securities, or equivalent
equity interests, of any class of any corporation, company, partnership, or other enterprise that
is in direct competition with the business of the Company, which securities are listed on a
national securities exchange or traded in the over-the-counter market. It is expressly agreed that
the remedy at law for breach of this covenant is inadequate and that injunctive relief shall be
available to prevent the breach thereof.

4.3 Non-Solicitation.

Employee also agrees that he will not, directly or indirectly, during the term of his
employment or for so long as Employee receives any severance payments or benefits under this
Agreement in respect of the termination of his employment, for any reason, in any manner, either
(a) employ, or permit an entity by which he becomes employed or of which he becomes a director, to
employ, any person who was employed by the Company on the Date of Termination or 45 days prior to
the Date of Termination; or (b) encourage, persuade, or induce any other employee of the Company to
terminate his employment, or any person or entity engaged by the Company to represent it to
terminate that relationship without the express written approval of the Company. It is expressly
agreed that the remedy at law for breach of this covenant is inadequate and that injunctive relief
shall be available to prevent the breach thereof.

4.4 Indemnification.

a. In the event Employee was, is or becomes a party to or witness or other participant in, or
is threatened to be made a party to or witness or other participant in, any action, suit or
proceeding by reason of his being or having been an officer of the Company, then the Company shall
indemnify Employee against expenses reasonably incurred and/or liability incurred in connection
with any such action, suit or proceeding, and advance expenses to Employee, to the fullest extent
permitted by the Company’s Articles of Incorporation and bylaws now in effect, by the common law,
by the General Corporation Law of the State of Maryland (the “GCLM”) or other applicable law in
effect on the date hereof, and to any greater extent that the GCLM or applicable law may in the
future from time to time permit. Employee shall be indemnified as soon as practicable but in any
event no later than forty-five (45) days after written demand is presented to the Company by
Employee, and any indemnified amount shall include any and all expenses, judgments, fines,
penalties and amounts paid in settlement (including all interest, assessments and other charges
paid or payable in connection with or in respect of such expenses, judgments, fines, penalties or
amounts paid in settlement) of such action, suit or proceeding for which Employee presents valid
invoices and/or receipts. If so requested by Employee, the Company shall advance to Employee,
within five (5) business days of such request, reasonable expenses (an “Expense Advance”) incurred
in defending any action, suit or proceeding, provided that Employee shall provide valid invoices
and/or receipts for such expenses to be advanced, and further provided that Employee shall execute
and deliver to the Company an undertaking that Employee shall repay to the Company any Expense
Advance if it shall ultimately be determined by a court of competent jurisdiction that Employee is
not entitled to be indemnified.

b. i. Upon written demand or other request by Employee for indemnification hereunder, Employee
shall be entitled to such indemnification unless (A) Employee did not act in good faith in a manner
that was reasonable and in the best interests of the Company; (B) Employee’s act or omission was
material to the matter giving rise to the liability and was committed in bad faith or was the
result of active or deliberate dishonesty; (C) Employee actually received an improper personal
benefit in money, property or services; or (D) in the case of a criminal proceeding, Employee had
reasonable cause to believe the act or omission was unlawful.

ii. In the event of a settlement before or after any action or suit, indemnification shall be
provided only in connection with such matters covered by settlement as to which the Company is
advised by the Reviewing Party (as defined below) that Employee was not guilty of such fraud or
misconduct as is covered by the provisions of Section 4.4 b.i. above.

iii. Employee shall not consent to the settlement of any action, suit or proceeding involving
his role as an officer of the Company without first obtaining the Company’s written consent, and
the Company shall not be liable to indemnify Employee for any amounts paid in settlement of any
action, suit or proceeding affected without its written consent, which consent shall not be
unreasonably withheld. The Company shall not be required to obtain the consent of Employee to
settle any action, suit or proceeding that the Company has undertaken to defend if the Company
assumes full and sole responsibility for such settlement and such settlement grants Employee a
complete and unqualified release in respect of any potential liability.

c. Promptly after receipt by Employee of notice of the commencement of any action, suit or
proceeding, Employee will, if a claim in respect thereof is to be made against the Company under
this Section 4.4, notify the Company in writing of the commencement thereof. The omission by
Employee to so notify the Company will not relieve the Company from any liability that it may have
to Employee under this Section 4.4 or otherwise, except to the extent that the Company may suffer
material prejudice by reason of such failure. Notwithstanding any other provision of this Section
4.4, with respect to any such action, suit or proceeding as to which Employee gives notice to the
Company of the commencement thereof:

i. The Company will be entitled to participate therein at its own expense.

	 	ii.	 	Except as otherwise provided in this Section 4.4, to the extent that it may
wish, the Company, jointly with any other indemnifying party similarly notified, shall
be entitled to assume the defense thereof with counsel reasonably satisfactory to
Employee. After notice from the Company to Employee of its election to so assume the
defense thereof, the Company shall not be liable to Employee under this Agreement for
any legal or other expenses subsequently incurred by Employee in connection with the
defense thereof other than reasonable costs of investigation or as otherwise provided
below. Employee shall have the right to employ Employee’s own counsel in such action,
suit or proceeding, but the fees and expenses of such counsel incurred after notice
from the Company of its assumption of the defense thereof shall be at the expense of
Employee unless (A) the employment of counsel by Employee and payment for same by the
Company has been authorized by the Company; (B) Employee shall have reasonably
concluded that there may be a conflict of interest between the Company and Employee in
the conduct of the defense of such action and such determination by Employee shall be
supported by an opinion of counsel, which opinion shall be reasonably acceptable to
the Company; or (C) the Company shall not in fact have employed counsel to assume the
defense of the action, in each of which cases the fees and expenses of counsel shall
be at the expense of the Company. The Company shall not be entitled to assume the
defense of any action, suit or proceeding brought by or on behalf of the Company or as
to which Employee shall have reached the conclusion provided for in clause (B) above.

d. If the Company advances Expense Advances or other funds for indemnification pursuant to
this Section, and, subsequently, indemnification pursuant to this Section is declared unenforceable
by a court of competent jurisdiction, or an independent third party, paid by the Company, that is
reviewing the indemnification set forth herein (the “Reviewing Party”) reasonably determines that
Employee is not entitled to indemnification pursuant to this Section, then Employee shall have the
right to retain the indemnification payments until all appeals of the court’s or the Reviewing
Party’s decision have been exhausted.

e. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the
Parties hereto and their respective successors or assigns, including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or substantially all of the
business and/or assets of the Company, spouses, heirs, executors and personal and legal
representatives. This Section 4.4 shall continue in effect regardless of whether Employee
continues to serve as an officer or director of the Company or of any other enterprise at the
Company’s request.

ARTICLE FIVE

MISCELLANEOUS

5.1 Time of Essence.

Time is of the essence with respect to this Agreement and same shall be capable of specific
performance without prejudice to any other rights or remedies under law.

5.2 Benefit.

This Agreement shall inure to and be binding upon the undersigned and their respective heirs,
representatives, successors and permitted assigns. This Agreement may not be assigned by either
party without the prior written consent of the other party.

5.3 Governing Law.

This Agreement shall be governed by, and construed in accordance with the laws of the State of
Colorado without resort to any principle of conflict of laws that would require application of the
laws of any other jurisdiction; provided, however, that the Maryland corporate laws shall be
applicable to the rights of Employee as a shareholder with regard to vested Company shares that
Employee may acquire pursuant to this Agreement.

5.4 Counterparts.

This Agreement may be executed in counterparts and via facsimile, each of which shall be
deemed to constitute an original, but all of which together shall constitute one and the same
Agreement. Each such counterpart shall become effective when one counterpart has been signed by
each Party thereto.

5.5 Severability.

In case any one or more of the provisions contained in this Agreement shall for any reason be
held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or
enforceability shall not affect any other provision hereof, and this Agreement shall be construed
as if such invalid, illegal or enforceable provision had never been contained herein.

5.6 Construction.

Use of the masculine pronoun herein shall be deemed to refer to the feminine and neuter
genders and the use of singular references shall be deemed to include the plural and vice versa, as
appropriate. No inference in favor of or against any Party shall be drawn from the fact that such
Party or such Party’s counsel has drafted any portion of this Agreement.

5.7 Captions for Convenience.

All captions herein are for convenience or reference only and do not constitute part of this
Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof.

5.8  No Waiver.

No waiver of or failure to act upon any of the provisions of this Agreement or any right or
remedy arising under this Agreement shall be deemed or shall constitute a waiver of any other
provisions, rights or remedies (whether similar or dissimilar).

5.9  Amendment.

This Agreement may be amended only by a writing signed by all of the Parties hereto.

5.10 Entire Contract.

This Agreement and the documents and instruments referred to herein constitute the entire
contract between the Parties to this Agreement and supersede all other understandings, written or
oral, with respect to the subject matter of this Agreement.

5.11 Notices.

All notices, requests, demands, directions and other communications (“Notices”) concerning
this Agreement shall be in writing and shall be mailed, delivered personally, sent by telecopier or
facsimile, or emailed to Employee at Employee’s address. When mailed, each such Notice shall be
sent by first class, certified mail, return receipt requested, enclosed in a postage prepaid
wrapper, and shall be effective on the fifth business day after it has been deposited in the mail.
When delivered personally, each such Notice shall be effective when delivered to Employee’s
address, provided that it is delivered on a business day and further provided that it is delivered
prior to 5:00 p.m., local time of Employee, on that business day; otherwise, each such Notice shall
be effective on the first business day occurring after the date on which the Notice is delivered.
When sent by email, telecopier or facsimile, each such Notice shall be effective on the day on
which it is sent provided that it is sent on a business day and further provided that it is sent
prior to 5:00 p.m., local time of Employee, on that business day; otherwise, each such Notice shall
be effective on the first business day occurring after the date on which the Notice is sent. Each
Notice shall be addressed to the Party to be notified as shown below:

	 	 	 	 	 
	(a)
	 	if to the Company:
	 	Double Eagle Petroleum Co.

1675 Broadway, Suite 2200

Denver, Colorado 80202

Facsimile No. (303) 794-8451

Attention: Chairman of the

Compensation Committee of the Board

	(b)
	 	if to Employee:
	 	to be provided

IN WITNESS WHEREOF, the Parties have set their hands and seals hereunto on the dates set forth
below to be effective as of the Effective Date.

	 	 	 
	“Company”

	 	“Employee”
	Double Eagle Petroleum Co.

	 	Clark Huffman
	By: /s/ Roy Cohee

Roy Cohee

	 	By: /s/ Clark Huffman

Clark Huffman
	Chairman of the Compensation

Committee of the Board

	 	

Vice President-Operations
	Date of Execution: March 30, 2012

	 	Date of Execution: March 30, 2012turv_8k20120403exh10.htm

 

Exhibit 10.1

Form of Promissory Note

THE SECURITIES REPRESENTED BY THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR UNDER THE LAWS OF ANY OTHER STATE OR JURISDICTION.  THE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID ACT OR ANY APPLICABLE STATE SECURITIES LAW, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR ANY APPLICABLE STATE SECURITIES LAW.

PROMISSORY NOTE

$________.00                                         _______ __, 2012

   

FOR VALUE RECEIVED, and upon the terms and conditions set forth herein, Two Rivers Water Company, having an office and address for purposes of notices and legal process at 2000 South Colorado Blvd., Annex Building Suite 420, Denver, Colorado 80222 (“Borrower”) promises to pay to the order of  ___________________ (“Lender”), at _______________________________________________ ______ or at any such other place as may be designated in writing by Lender, the principal sum of ___ _______ and No/100 ($___,____.00) Dollars, in lawful money of the United States of America, together with interest thereon to be computed from the date hereof at the Interest Rate (as defined below), and to be paid in accordance with the terms of this Promissory Note (“Note”).

 

 

1. INTEREST.                                The term “Interest Rate,” as used herein shall mean an interest rate equal to twelve percent (12.00%) per annum. Interest for any month or fractional part thereof shall be calculated on the basis of a 360-day year and twelve 30 day months and the daily amount so determined shall be multiplied by the actual number of days for which interest is being paid.

 

 

2. PAYMENT TERMS.

 

 

2.1 Borrower agrees to pay sums under this Note in installments as follows:

 

 

2.1.(a) Except as may be adjusted in accordance with this Section 2.1(a), Borrower shall pay to Lender consecutive monthly installments of accrued interest for each immediately prior month in an amount equal to the Monthly Payment Amount, commencing on ______ 1, 2012, and continuing on the first day of each month thereafter through the 31st day of October, 2012 (the “Maturity Date”). The “Monthly Payment Amount” shall equal interest-only payments on the outstanding principal balance, calculated at an annual interest rate equal to the Interest Rate, computed on the basis of a three hundred sixty (360) day year consisting of twelve (12) months of thirty (30) days each. Commencing on the date hereof, the Monthly Payment Amount shall equal One Thousand and 00/100 Dollars ($1,000.00) for each $100,000 face amount of the note or any fraction thereof.  For payments of accrued interest for partial months, the Monthly Payment Amount shall be adjusted to equal the pro rata amount for the number of days that interest has accrued during such partial month.

 

  

  

  

 

2.1.(b) All accrued and unpaid interest and the unpaid principal balance hereof are due and payable on the earlier to occur of (i) the Maturity Date, or (ii) the date on which the indebtedness becomes immediately due and payable hereunder.

 

 

2.2 All parties hereto, whether Borrower, principal, surety, guarantor or endorser, hereby waive demand, notice of demand, presentment for payment, notice of dishonor, protest and notice of protest.

 

 

3. ADDITIONAL CONSIDERATION.  Upon receipt of the principal amount of the loan, the Borrower shall issue to the Lender shares of Borrower’s restricted $.001 par value common stock in an amount equal to one (1) share for each Ten Dollars ($10.00) of loan proceeds paid to the Borrower as additional consideration for engaging in this transaction.

 

 

4. APPLICATION OF PAYMENTS.

 

 

4.1.           Each Monthly Payment Amount paid by Borrower hereunder, at the option of Lender, shall be applied as follows:

 

 

4.1.(a) First, to any costs of collection hereunder;

 

 

	
  

	
4.1.(b) Then, to late charges and any other fees or charges due hereunder, if any;

 

 

4.1.(c) Then, to interest then due and payable hereunder;

 

 

4.1.(d) Then to the principal balance hereof; and

 

 

4.2.                      Monthly installments of principal (if required) and interest shall be paid when due, regardless of the prior acceptance by Lender of payments in excess of the regular monthly installment of principal (if required) and interest.

 

 

4.3.           The designation or allocation by Borrower of the disposition or allocation of any payments made will not be binding upon the Lender which may allocate any and all such payments to interest, principal and other fees and charges due hereunder or to any one or more of them, in such amount, priorities and proportions as Lender may determine in its sole discretion in accordance with the terms hereof.

 

 

5.  DEFAULT AND ACCELERATION.

 

 

5.1           It is hereby expressly agreed that (A) the whole of the principal sum of this Note, (B) interest, default interest, late charges, fees and other sums, as provided in this Note, (C) all other monies agreed or provided to be paid by Borrower in this Note, and (D) all sums advanced and costs and expenses incurred by Lender in connection with the Indebtedness (as hereinafter defined) or any part thereof, any renewal, extension, or change of or substitution for the Indebtedness or any part thereof whether made or incurred at the request of Borrower or Lender (the sums referred to in (A) through (D) above shall collectively be referred to as the “Indebtedness”) shall, WITHOUT NOTICE, become immediately due and payable at the option of the holder hereof upon the happening of any of the following events (each, an "Event of Default"):

 

 

5.1.(a)  Borrower fails to pay any amount due to Lender under this Note within ten (10) days after the due date for such payment, or if no due date is provided for, within ten (10) days after written demand therefor is made;

 

 

  

  

  

 

5.1.(b) Borrower fails to keep, observe or perform any other promise, condition or agreement contained in this Note or any other documents described herein or delivered in connection herewith and such failure or default is not remedied within fifteen (15) days after notice to Borrower thereof, provided, however, that if such failure or default is not capable of being cured or remedied within said fifteen (15) day period, then if Borrower fails to promptly commence to cure the same and thereafter diligently prosecute such cure to completion but in any event within thirty (30) days after notice thereof;

 

5.1.(c) A receiver, liquidator or trustee shall be appointed for Borrower or for any substantial part of its  property, an assignment shall be made for the benefit of creditors, Borrower shall be adjudicated a bankrupt or insolvent, or any petition for bankruptcy, reorganization or arrangement pursuant to the United States Bankruptcy Code, or under the provisions of any federal or state bankruptcy or receiver laws, shall be filed by or against Borrower, unless such appointment, assignment, adjudication or petition was involuntary, in which event only if the same is not discharged, stayed or dismissed within forty-five (45) days;

 

5.1.(d) A final judgment for the payment of money in excess of $1 million not covered by a policy of insurance or which  would materially adversely affect such Borrower’s ability to make payments under this Note shall be rendered against Borrower and such party shall not discharge the same or cause it to be discharged within forty-five (45) days from the entry thereof, or shall not appeal therefrom or from the order, decree or process upon which or pursuant to which said judgment was granted, based or entered within twenty (20) days, and thereafter to secure a stay of execution pending such appeal;

 

5.1.(e) Borrower shall have concealed, removed and/or permitted to be concealed or removed any substantial part of their property and/or assets with the intent to hinder, delay or defraud Lender of any of its property and/or assets which may be fraudulent under any federal or state bankruptcy, fraudulent conveyance or similar law now or hereafter enacted, or if Borrower shall have made any transfer of any of their property and/or assets to or for the benefit of a creditor at a time when other creditors similarly situated have not been paid, or if Borrower shall have suffered or permitted to be suffered, while insolvent, any creditor to obtain a lien upon any of its property and/or assets through legal proceedings or distraint which is not vacated within (30) days from the date of entry thereof;

 

5.1.(f) Borrower defaults under any other note, instrument, agreement, contract, pledge, mortgage or encumbrance evidencing and/or securing the Indebtedness or any other indebtedness of Borrower to Lender, and such event or occurrence is not remedied or cured within twenty (20) days after notice thereof.

 

5.2                      After the occurrence of an Event of Default, Lender may accept any payments from Borrower without prejudice to the rights and remedies of Lender provided herein.

 

5.3                      Notwithstanding anything to the contrary set forth in this Section 5, if the Lender declares an Event of Default for failure to repay the note in full on or before the Maturity Date, the Company will have 60 days to remedy the Default through repayment of the Note, provided, however, that during the period between the declaration of a Default and repayment, interest will be set the Default Rate as set forth below.  If the Default is not cured through repayment of this Note within the 60-day grace period, then all other provisions of this Section 5 shall apply.

 

 

6.  DEFAULT INTEREST/LATE CHARGES.

 

 

6.1.                      If any portion of the Indebtedness is not paid when due as set forth herein, or earlier by reason of acceleration of the payment hereof, then, from and after the due date, interest shall accrue on such unpaid Indebtedness at a rate equal to the lesser of (a) the Interest Rate plus three percent (3%), or (b) the highest rate permitted by law, computed from said due date until the date of actual repayment (the “Default Rate”).  The Default Rate shall be computed from the occurrence of the Event of Default until the earlier of the date upon which the Event of Default is cured or the date upon which the Indebtedness is paid in full. Interest calculated at the Default Rate shall be added to the Indebtedness.  This clause, however, shall not be construed as an agreement or privilege to extend the date of the payment of the Indebtedness, or as a waiver of any other right or remedy accruing to Lender by reason of the occurrence of any Event of Default.

 

  

  

  

 

6.2.           If any payment (or part thereof) provided for herein shall be made after ten (10) days from the date due, a late charge of ten percent (10%) of the amount so overdue shall become immediately due and payable to the holder of this Note as liquidated damages for failure to make prompt payment.  Such charge shall be payable in any event no later than the due date of the next subsequent installment. O  Nothing herein is intended to or shall extend the due dates set forth for payments under this Note. Such late fee may be charged repeatedly, however, said late fee shall not be compounded on prior late fees, but rather, only on the amount outstanding exclusive of prior late fees.

 

 

6.3           TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, BORROWER HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OF ANY COURT OF RECORD WITHIN THE UNITED STATES OF AMERICA, OR ELSEWHERE, UPON FIVE (5) BUSINESS DAYS’ PRIOR WRITTEN NOTICE TO BORROWER, TO APPEAR AT ANY TIME FOR BORROWER AFTER THE OCCURRENCE OF AN EVENT OF DEFAULT HEREUNDER, IN ANY ACTION BROUGHT AGAINST BORROWER ON THIS NOTE AT THE SUIT OF LENDER, WITH OR WITHOUT DECLARATION FILED, AND THEREIN TO CONFESS OR ENTER JUDGMENT OR A SERIES OF JUDGMENTS AGAINST ANY ONE OR MORE OR ALL OF THE PARTIES NAMED AS BORROWER FOR THE ENTIRE UNPAID PRINCIPAL OF THIS NOTE AND ALL OTHER SUMS PAID BY LENDER TO OR ON BEHALF OF BORROWER PURSUANT TO THE TERMS OF THIS NOTE AND ALL ARREARAGES OF INTEREST THEREON, TOGETHER WITH COSTS OF SUIT AND REASONABLE ATTORNEY'S FEES FOR COLLECTION; AND FOR SO DOING THIS NOTE OR A COPY THEREOF VERIFIED BY AFFIDAVIT SHALL BE A SUFFICIENT WARRANT.

 

 

6.3.(a)                      The authority granted herein to confess judgment shall not be exhausted by any exercise thereof but shall continue from time to time and at all times until payment in full of all the amounts due hereunder.

 

 

6.4                      Should the Indebtedness or any part thereof be collected at law or in equity, or in bankruptcy, receivership or any collected at law or in equity, or in bankruptcy, receivership or any other court proceeding (whether at the trial or appellate level), or should this Note be placed in the hands of attorneys for collection under default, Borrower agrees to pay, in addition to the principal, any late payment charge and interest due and payable hereunder, all costs of collecting or attempting to collect the Indebtedness, including attorneys' fees and expenses and court costs, regardless of whether any legal proceeding is commenced hereunder, together with interest thereon at the Default Rate from the date paid or incurred by Lender until such expenses are paid by Borrower.

 

 

6.5                      After the entry of a judgment Lender shall have the right to continue to charge Borrower and to increase the amount of the judgment for post-judgment reasonable attorneys’ fees and costs, post-judgment interest at the Default Rate provided for herein and other charges that may be incurred by Lender.

 

  

  

  

 

6.6                      Notwithstanding anything heretofore set forth to the contrary, in no event shall any interest payable under this Note exceed the maximum interest rate permitted under law or the rate that could subject Lender to either civil or criminal liability as a result of being in excess of the maximum interest rate that Borrower is permitted by applicable law to contract or agree to pay. If by the terms of this Note, Borrower is at any time required or obligated to pay interest on the principal balance due hereunder at a rate in excess of such maximum rate, the interest rate hereinabove set forth or the Default Rate, as the case may be, shall be deemed to be immediately reduced to such maximum rate and all previous payments in excess of the maximum rate shall be deemed to have been payments in reduction of principal and not on account of the interest due hereunder. All sums paid or agreed to be paid to Lender for the use, forbearance, or detention of the Indebtedness, shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full stated term of this Note until payment in full so that the rate or amount of interest on account of the Indebtedness does not exceed the maximum lawful rate of interest from time to time in effect and applicable to the Indebtedness for so long as the Indebtedness is outstanding. Borrower agrees to an effective rate of interest that is the rate stated herein plus any additional rate of interest resulting from any other charges in the nature of interest paid or to be paid by or on behalf of Borrower, or any benefit received or to be received by Lender, in connection with this Note.

 

 

7. CONVERSION RIGHTS.

 

 

7.1.   It is anticipated that the Borrower will repay the Note out of proceeds from a registered offering ("Take-Out Offering") of Borrower’s securities ("Securities"). Upon the effectiveness of the registration statement registering the Securities, the Borrower agrees to provide the Lender with written notice of the terms and conditions of the Take-Out Offering and a copy of the Conversion Notice required to participate in the Take-Out Offering. To the extent deemed appropriate by the Lender, the Lender shall have the right to convert all or any part of the Note principal to the Securities at the Conversion Price specified in 7.2(a).

 

 

 7.2           The Lender shall effect conversions by delivering to the Borrower the form of Notice of Conversion attached hereto as Annex A (a “Notice of Conversion”) or such other form of conversion notice as may be delivered to the Lender as set forth above, specifying therein the amount of this Note to be converted and the date on which such conversion is to be effected (a “Conversion Date”).  If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that the Take-Out Offering shall be closed. To effect conversions hereunder, the Lender shall not be required to physically surrender this Note to the Borrower unless the entire principal amount of this Note shall be converted and all interest has been paid in full, in which event the Lender shall physically surrender the Note to the Borrower. Conversions hereunder shall have the effect of lowering the outstanding principal amount of the Note in an amount equal to the principal amount so converted. The Lender and the Borrower shall maintain records showing the principal amount converted and the date of such conversions.  The Lender and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note may be less than the amount stated on the face hereof. However, at the Borrower’s request, the Lender shall surrender this Note to the Borrower within five (5) days following such request so that a new Note reflecting the correct principal amount may be issued to Lender.

 

7.2 (a)           Conversion Price.  The conversion price shall be at the price at which the Securities are sold pursuant to the terms of the Take-Out Offering.

7.2 (b)           Mechanics of Conversion.

i.           Securities Issuable Upon Conversion. The Securities issuable upon a conversion hereunder shall be determined by the quotient obtained by dividing (x) the amount of this Note to be converted by (y) the Conversion Price.

 

  

  

  

 

ii.           Delivery of Certificate upon Conversion.  Not later than fifteen Trading Days after any Conversion Date, the Borrower will deliver to the Lender a certificate or certificates representing the Securities being acquired upon the conversion of this Note.

iii.           Fractional Shares.  Upon a conversion hereunder, Borrower shall not be required to issue certificates representing fractions of the Securities, but may, if otherwise permitted, make a cash payment in respect of any final fractional Security based on the market price of the Securities on the Conversion Date at such time. If the Borrower elects not, or is unable, to make such cash payment, the Lender shall be entitled to receive, in lieu of the final fractional Security, one whole share of the Securities.

iv.           Transfer Taxes.  The issuance of certificates for the Securities on conversion of this Note shall be made without charge to the Lender for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate, provided that the Borrower shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Lender of this Note and the Borrower shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Borrower the amount of such tax or shall have established to the satisfaction of the Borrower that such tax has been paid.

 

8.  WAIVERS.

 

 

8.1                      To the maximum extent permitted by applicable law, Borrower and all parties who may become eligible for the payment of all or any part of the Indebtedness, whether principal, surety, guarantor, pledgor, or endorser, hereby waive demand, notice of demand, presentment for payment, notice of intent to accelerate maturity, notice of acceleration of maturity, notice of dishonor, protest, notice of protest and non-payment and all other notices of any kind, except for notices expressly provided for in this Note.

 

 

8.2                      The liability of Borrower shall be unconditional and shall not be in any manner affected by any indulgence whatsoever granted or consented to by the holder hereof, including, but not limited to any extension of time, renewal, waiver or other modification. No release of any security for the Indebtedness or extension of time for payment of this Note or any installment hereof, and no alteration, amendment or waiver of any provision of this Note, or any other guaranty or instrument made by agreement of Lender or any other person or party shall release, modify, amend, waive, extend, change, discharge, terminate or affect the liability of Borrower, and any other person or entity who may become liable for the payment of all or any part of the Indebtedness under this Note.

 

 

8.3                      No notice to or demand on Borrower shall be deemed to be a waiver of the obligation of Borrower or of the right of Lender to take further action without further notice or demand on Borrower as provided for in this Note. Any failure of the holder of this Note to exercise any right hereunder shall not be construed as a waiver of the right to exercise the same or any other right at any time and from time to time thereafter. Lender or any holder may accept late payment, or partial payment, even though marked “payment in full” or containing words of similar import or other conditions, without waiving any of its rights. No amendment, modification or waiver of any provision of this Note nor consent to any departure by Borrower therefrom shall be effective, irrespective of any course of dealing, unless the same shall be in writing and signed by the Lender, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

 

  

  

  

 

8.4                      BORROWER AGREES THAT ANY ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS NOTE MAY BE INITIATED AND PROSECUTED IN THE STATE OR FEDERAL COURTS, AS THE CASE MAY BE, LOCATED IN DENVER COUNTY, STATE OF COLORADO.  TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, BORROWER CONSENTS TO AND SUBMITS TO THE EXERCISE OF JURISDICTION OVER THE SUBJECT MATTER, WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON HIM AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE BORROWER AT HIS ADDRESS SET FORTH ABOVE OR TO ANY OTHER ADDRESS AS MAY APPEAR IN THE  LENDER’S RECORDS AS THE ADDRESS OF THE BORROWER (BUT NOTHING HEREIN SHALL AFFECT THE VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW).

 

 

8.5           TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, IN ANY ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS NOTE, BORROWER WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN EVIDENCED BY THIS NOTE, THE APPLICATION FOR THE LOAN EVIDENCED BY THIS NOTE, THE LOAN DOCUMENTS, OR ANY ACTS OR OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY, INTENTIONALLY AND VOLUNTARILY BY BORROWER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. BORROWER AND LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP THAT EACH OF THEM HAS RELIED ON THIS WAIVER IN ENTERING INTO THIS NOTE AND THE OTHER LOAN DOCUMENTS AND THAT EACH OF THEM WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. BORROWER AND LENDER EACH WARRANT AND REPRESENT THAT EACH HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.

 

 

9.      PREPAYMENT.                                       Prior to the Maturity Date, Borrower shall have the right, without penalty or premium, to pay in whole, the total outstanding principal due and owing under this Note, provided that such prepayment is accompanied by payment of all interest accrued hereunder and unpaid through the date of prepayment and any other sums due and owning the holder of this Note, whether under this Note or any other document or agreement entered into by Borrower in connection with this Note.

 

 

10.           NOTICES.  All notices to be given pursuant to this Note shall be in writing and sufficient if given by personal service, by guaranteed overnight delivery service, or by being mailed postage prepaid, by registered or certified mail, to the address of the parties first hereinabove set forth or to such other address as either party may request in writing from time to time. Any time period provided in the giving of any notice hereunder shall commence upon the date of personal service, the date after delivery to the guaranteed overnight delivery service, or three (3) days after any notices are deposited, postage prepaid, in the United States mail, certified or registered mail. Notices may be given by a party's attorneys or agents with the same force and effect as though given by such party.

 

  

  

  

 

11.                      MISCELLANEOUS.

 

 

11.1.           Time shall be of the essence with respect to all provisions of this Note.

 

 

11.2.           If any payment to be made by Borrower shall otherwise become due on a day other than a Business Day, such payment shall be made on the prior preceding day which is a Business Day. “Business Day” shall mean any day of the week other than a Saturday, Sunday or federal holiday.

 

 

11.3.           Borrower represents that it has full power, authority and legal right to execute and deliver this Note, and that this Note constitutes the valid and binding obligation of Borrower.

 

 

11.4.           Wherever pursuant to this Note it is provided that Borrower pay any costs and expenses, such costs and expenses shall include, without limitation, legal fees and disbursements of Lender, whether with respect to retained firms, the reimbursement of the expenses of in-house staff, counsel, or otherwise. Borrower shall pay to Lender on demand any and all expenses, including legal expenses and attorneys’ fees, incurred or paid by Lender in enforcing this Note.

 

 

11.5.           This Note cannot be changed, modified, amended, waived, extended, discharged or terminated orally or by estoppel or waiver, regardless of any claimed partial performance referable thereto, or by any alleged oral modification or by any act or failure to act on the part of Borrower or Lender.  The agreements contained herein shall remain in full force and effect, notwithstanding any changes in the individuals or entities comprising Borrower, and the term “Borrower,” as used herein, shall include any alternate or successor person or entity, but any predecessor person or entity, and its partners or members, as the case may be, shall not thereby be released from any liability. Nothing in the foregoing shall be construed as a consent to, or a waiver of, any prohibition or restriction on transfers of interests in Borrower which may be set forth in this Note.

 

 

11.6.           Titles of articles and sections are for convenience only and in no way define, limit, amplify or describe the scope or intent of any provision hereof.

 

 

11.7.           If any paragraph, clause or provision of this Note is construed or interpreted by a court of competent jurisdiction to be void, invalid or unenforceable, such voidness, invalidity or unenforceability will not affect the remaining paragraphs, clauses and provisions of this Note, which shall nevertheless be binding upon the parties hereto with the same effect as though the void or unenforceable part had been severed and deleted.

 

 

11.8.           The terms and provision of this Note shall be binding upon and inure to the benefit of Borrower and Lender and their respective heirs, executors, legal representatives, successors, successors-in-title, and assigns, whether by voluntary action of the parties or by operation of law. As used herein, the terms “Borrower” and “Lender” shall be deemed to include their respective heirs, executors, legal representative, successors, successors-in-title, and assigns, whether by voluntary action of the parties or by operation of law.

 

 

11.9.           All the terms and words used in this Note, regardless of the number and gender in which they are used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine, or neuter, as the context or sense of this Note or any paragraph or clause herein may require, the same as if such work had been fully and properly written in the correct number and gender.

 

 

11.10           This Note shall be governed by and construed in accordance with the laws of the State of Colorado without regard to conflicts of laws principles.

 

  

  

  

IN WITNESS WHEREOF, the undersigned have executed the foregoing instrument as of the date first above written.

BORROWER:

Two Rivers Water Company

By: ______________________________

Its:

  

  

  

 

Annex A

 

 

NOTICE OF CONVERSION

 

(To be executed by the Lender

in order to Convert the Note)

The undersigned hereby irrevocably elects to convert $________principal amount of the Note into the Securities of Borrower as of the date written below.  If the Securities are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates.  No fee will be charged to the Lender for any conversion, except for transfer taxes, if any.

The undersigned hereby requests that the Borrower issue a certificate or certificates representing the Securities set forth below (which numbers are based on the Lender's calculation attached hereto) in the name(s) specified immediately below or, if additional space is necessary, on an attachment hereto:

Name: _____________________________________________________________

Address: ____________________________________________________________

Taxpayer ID: _________________________________________________________

The undersigned represents and warrants that all offers and sales by the undersigned of the Securities issuable to the undersigned upon conversion of this Note shall be made pursuant to registration of the securities under the Securities Act of 1933, as amended (the "Act"), or pursuant to an exemption from registration under the Act.

Date of Conversion: ____________________________

Applicable Conversion Price: ____________________

Number of Securities to be Issued: ________________

Pursuant to Conversion of the Note: _______________

Signature: ____________________________________

Name: _______________________________________

Address: _____________________________________

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