Document:

f8k121611ex10i_recoverys.htm

Exhibit 10.1

 

AMENDMENT

TO

8% SENIOR SECURED CONVERTIBLE DEBENTURE

This Amendment (“Amendment”), made as of December 16, 2011, by and between Recovery Energy, Inc., a Nevada corporation (the “Company”), and each holder identified on the signature page hereto (the “Holders”), amends those certain 8% Senior Secured Convertible Debentures due February 8, 2014 (“Debentures”) of the Company.  Terms not otherwise defined herein shall have the meanings ascribed to such terms in the Purchase Agreement (as defined below).

Recitals

WHEREAS, the Debentures were issued in connection with the Securities Purchase Agreement, dated as of February 2, 2011, between the Company and the Holders (the “Purchase Agreement”) and are secured by certain assets of the Company including the Company’s oil and gas leases in the area known as Grover Field in Weld County, Colorado, as further described on Exhibit A (the “Grover Field Properties”), pursuant to the Security Documents;

WHEREAS, the Company wishes to obtain the release of the Grover Field Properties under the Security Documents in exchange for a new first priority security interest in the Company’s oil and gas lease on 7,604.00 acres in Kimball County, Nebraska, as further described on Exhibit B (the “Vrtatko Properties”);

WHEREAS, the Conversion Price under the Debentures is currently $9.40 and in consideration of the exchange of collateral described above, Holders and the Company wish to reduce the Conversion Price under the Debentures.

NOW THEREFORE, in consideration of the premises and mutual covenants and obligations herein set forth and for other good and valuable consideration, the receipt, sufficiency and adequacy of which is hereby acknowledged, accepted and agreed to, the parties hereto, intending to be legally bound, hereby agree as follows:

Agreement

1.           Release of Liens on Grover Field Properties.  Holders hereby consent and agree to the release of all liens with respect to the Grover Field Properties under the Security Documents and hereby direct the Collateral Agent to take all actions necessary and appropriate to effect the release of such liens.

2.           Grant of Lien on the Vrtatko Properties.  The Company hereby grants Holders a first priority lien in the Vrtatko Properties as security for the obligations of the Company under the Debentures, to be reflected in appropriate Security Documents.  The Company agrees to use reasonable best efforts to execute and record such Security Documents with respect to the lien by January 10, 2012.

3.           Amendment of Debentures.

(a)  The Conversion Price under Section 4(b) of the Debentures is hereby amended to equal $4.25.

 

  

1

  

 

Exhibit 10.1

 

(b)   Section 9(i) of the Debentures is hereby amended and restated to reflect the exchange of collateral effected in Sections 1 and 2 above as follows:

3.           Secured Obligation.  The obligations of the Company under this Debenture are secured by the Company’s interests in the properties described on Annex B hereto.”

The Debenture is further amended to add a new Annex B, substantially in the form attached hereto as Exhibit C.

4.           Authority.  Each Holder hereby represents and warrants that it is the true and lawful owner of the Debentures and has full power and authority to enter into this Amendment on the term set forth herein.

5.           Future Debt or Equity Offerings.  The Company hereby grants to Holders the right to purchase on a pro rata basis, based upon their respective percentage ownership of outstanding Debentures, up to 15% of the total offering amount of any newly issued convertible debentures, preferred stock or Common Stock (“New Securities”) issued by the Company prior to December 31, 2012 (a “Preemptive Issuance”), excluding any issuances (i) pursuant to any equity incentive plan or similar issuances to employees, directors and consultants, (ii) pursuant to any financing transaction under bank lines of credit, and (iii)  pursuant to the acquisition of another entity by the Company via merger, consolidation, purchase of all or substantially all of the capital stock or assets of such entity, or any other form of transaction.  The Company shall provide written notice of any Preemptive Issuance (a “Notice of Issuance”) to each Holder at least ten (10) days prior to the proposed consummation of a Preemptive Issuance.  Any Notice of Issuance shall specify (i) the amount, kind and terms of the New Securities to be issued,  (ii) the terms of purchase thereof, including the purchase price, the expected timing of the closing, the payment terms and any additional terms relevant to a Holders’s decision to purchase and (iii) the total amount of New Securities which each such Holder is entitled to purchase in the Preemptive Issuance (such Holder’s “Pro Rata Share”).  Any Holder desiring to accept the offer contained in the Notice of Issuance will be required to deliver written notice of such acceptance to the Company within five (5) days after delivery of the Notice of Issuance, indicating (i) the amount of New Securities such Holder desires to acquire (not in any event to exceed such Holder’s Pro Rata Share) and (ii) the amount, if any, such Holder desires to acquire beyond such Holder’s Pro Rata Share, in the event any Holder does not purchase its own Pro Rata Share.  The Company shall determine in good faith the allocation of New Securities among the interested Holders in a manner consistent with the Holders’ responses, with successive allocations of any New Securities not so purchased by a Holder, if any, on the same pro rata basis until all such New Securities have been so allocated or until such time as all purchasing Holders have been allocated all eligible New Securities that they desire to purchase.  The Preemptive Issuance shall occur, if at all, (a) on the proposed date of issuance specified in the relevant Notice of Issuance (provided that consummation of any Preemptive Issuance may be extended beyond such date to the extent necessary to obtain any applicable governmental approval or to satisfy other conditions) or (b) at such time as the Company shall specify to each purchasing Holder, provided that in no event shall any purchasing Holder be required, without its consent, to close its particular transaction prior to the date that is ten (10) days after the Company delivers the applicable Notice of Issuance and (c) at such place as the Company shall specify to such purchasing Holder..

6.           Further Assurances.  Holders shall from time to time execute such additional instruments and documents, take such additional actions, and give such further assurances as are or may be reasonable or necessary to implement this Amendment.

 

 

  

2

  

 

Exhibit 10.1

 

7.           Binding Effect.  The terms of this Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and assigns.

8.           Reaffirmation of Debenture Terms.  All terms of the Debentures shall, except as amended hereby, remain in full force and effect, and are hereby ratified and confirmed.

9.           Governing Law.  This Amendment shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard for principles of conflict of laws thereof.

10.         Counterparts.  This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

[Signature page follows]

 

  

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Exhibit 10.1

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment effective as of the date first set forth above.

 

	 	
COMPANY

	 	 
	 	
Recovery Energy, Inc.

	 	 	 
	 	
By: 

	/s/ Roger A. Parker 
	 	Name: 	Roger A. Parker
	 	
Title:

	 

 

	 	
HOLDERS

	 	 
	 	
Colony Partners, a California general partnership

	 	 	 
	
 

	 	/s/ Bryan Ezralow
	 	Name: 	Bryan Ezralow as Trustee of the Bryan
	 	 	Ezralow 1994 Trust
	 	Title:	Managing General Partner

	 	
Jonathan & Nancy Glaser Family Trust DTD 12/16/1998 Jonathan M. Glaser and Nancy E. Glaser TTEES

	 	 	 
	 	 	/s/ Jonathan Glazer
	 	Name: 	Jonathan Glazer
	 	Title: 	Trustee

	 	
T.R. Winston & Company, LLC

	 	 	 
	 	 	/s/ John W. Galuchie, Jr.
	 	Name: 	John W. Galuchie, Jr.
	 	Title: 	President

 

	 	
Wallington Investment Holdings, Ltd.

	 	 	 
	
 

	 	/s/ Michael Khoury
	 	Name: 	Michael Khoury
	 	Title: 	Director

 

  

4

  

 

	 	
Steven B. Dunn and Laura Dunn Revocable Trust DTD 10/28/10, Steven B. Dunn & Laura Dunn TTEES

	 	 	 
	 	 	/s/ Steven B. Dunn
	 	Name: 	Steven B. Dunn
	 	Title: 	Trustee

 

  

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Exhibit 10.1

 

EXHIBIT A

Description of Grover Field Properties

Weld County, Colorado

	  	  
	
No. 1

	  
	
LEASE DATE:

	
February 12th, 2010

	
LEASE TERM:

	
5 years (this lease is HBP by Purcell PC GK 11-10 well)

	
LESSOR:

	
Christopher C. Bynum, a married man

	
LESSEE:

	
Sovereign Energy LLC

	
DESCRIPTION:

	
Township 11 North, Range 61 West, 6th P.M.

	  	
Section 11: SE/4  (160 gross,  13.33 net)

	  	
Section 13: N/2  (320 gross,  13.33 net)

	  	
Section 14: E/2  (320 gross,  26.66 net)

	  	
Section 24: W/2  (320 gross,  26.66 net)

	  	  
	
RECORDING DATA:

	
Reception No. 3677297

	  	  
	
No. 2

	  
	
LEASE DATE:

	
February 12th, 2010

	
LEASE TERM:

	
5 years (this lease is HBP by Purcell PC GK 11-10 well)

	
LESSOR:

	
Kathleen M. Bynum, an unmarried woman

	
LESSEE:

	
Sovereign Energy LLC

	
DESCRIPTION:

	
Township 11 North, Range 61 West, 6th P.M.

	  	
Section 11: SE/4  (160 gross,  13.33 net)

	  	
Section 13: N/2  (320 gross,  13.33 net)

	  	
Section 14: E/2  (320 gross,  26.66 net)

	  	
Section 24: W/2  (320 gross,  26.66 net)

	  	  
	
RECORDING DATA:

	
Reception No. 3677299

	  	  
	
No. 3

	  
	
LEASE DATE:

	
February 12th, 2010

	
LEASE TERM:

	
5 years (this lease is HBP by Purcell PC GK 11-10 well)

	
LESSOR:

	
Jennifer Tighe, a married woman

	
LESSEE:

	
Sovereign Energy LLC

	
DESCRIPTION:

	
Township 11 North, Range 61 West, 6th P.M.

	  	
Section 11: SE/4  (160 gross,  13.33 net)

	  	
Section 13: N/2   (320 gross,  13.33 net)

	  	
Section 14: E/2  (320 gross,  26.66 net)

	  	
Section 24: W/2  (320 gross,  26.66 net)

	  	  
	
RECORDING DATA:

	
Reception No. 3677298

 

  

6

  

 

Exhibit 10.1

 

	
No. 4

	  
	
LEASE DATE:

	
February 22nd, 2010

	
LEASE TERM:

	
5 years

	
LESSOR:

	
Beverly G. Green etvir.

	
LESSEE:

	
Sovereign Energy LLC

	
DESCRIPTION:

	
Township 11 North, Range 61 West, 6th P.M.

	  	
Section 13: N/2   (320 gross,  40 net)

	  	
Section 24: W/2  (320 gross,  80 net)

	  	  
	
RECORDING DATA:

	
Reception No. 3680249

	  	  
	
No. 5

	  
	
LEASE DATE:

	
January 2nd, 2010

	
LEASE TERM:

	
3 years

	
EFFECTIVE DATE:

	
June 27th, 2011

	
LESSOR:

	
Clifford M. Johnson, etux

	
LESSEE:

	
Sovereign Energy LLC

	
DESCRIPTION:

	
Township 10 North, Range 61 West, 6th P.M.

	  	
Section 18: NE/4  (160 gross,  30 net)

	  	  
	
RECORDING DATA:

	
Reception No. 3676108

	  	  
	
No. 6

	  
	
LEASE DATE:

	
January 2nd, 2010

	
LEASE TERM:

	
3 years

	
EFFECTIVE DATE:

	
June 27th, 2011

	
LESSOR:

	
Gary Johnson, a single man

	
LESSEE:

	
Sovereign Energy LLC

	
DESCRIPTION:

	
Township 10 North, Range 61 West, 6th P.M.

	  	
Section 18: NE/4  (160 gross,  30 net)

	  	  
	
RECORDING DATA:

	
Reception No. 3676111

 

  

7

  

 

Exhibit 10.1

 

	
No. 7

	  
	
LEASE DATE:

	
January 1st, 2010

	
LEASE TERM:

	
5 years

	
EFFECTIVE DATE:

	
July 21st, 2011

	
LESSOR:

	
Cyril Unrein, etux

	
LESSEE:

	
Sovereign Energy LLC

	
DESCRIPTION:

	
Township 12 North, Range 61 West, 6th P.M.

	  	
Section 27: N/2  (320 gross,  106.66 net)

	  	  
	
RECORDING DATA:

	
Reception No. 3676120

	  	  
	
No. 8

	  
	
LEASE DATE:

	
January 1st, 2010

	
LEASE TERM:

	
5 years

	
EFFECTIVE DATE:

	
July 24th, 2011

	
LESSOR:

	
Sharon L. McCurry, a widow

	
LESSEE:

	
Sovereign Energy LLC

	
DESCRIPTION:

	
Township 12 North, Range 61 West, 6th P.M.

	  	
Section 27 : N/2  (320 gross,  106.66 net)

	  	  
	
RECORDING DATA:

	
Reception No. 3677428

	  	  
	
No. 9

	  
	
LEASE DATE:

	
January 10th, 2010

	
LEASE TERM:

	
5 years

	
EFFECTIVE DATE:

	
July 25th, 2011

	
LESSOR:

	
Georgia McCurry, a widow

	
LESSEE:

	
Sovereign Energy LLC

	
DESCRIPTION:

	
Township 12 North, Range 61 West, 6th P.M.

	  	
Section 27 : N/2  (320 gross,  106.66 net)

	  	  
	
RECORDING DATA:

	
Reception No.3680677

 

  

8

  

 

Exhibit 10.1

 

	
No. 10

	  
	
LEASE DATE:

	
December 12th, 2009

	
LEASE TERM:

	
5 years

	
EFFECTIVE DATE:

	
July 25th, 2011

	
LESSOR:

	
Shirley A. Sanders, a widow

	
LESSEE:

	
Sovereign Energy LLC

	
DESCRIPTION:

	
Township 12 North, Range 61 West, 6th P.M.

	  	
Section 27: S/2  (320 gross,  80 net)

	  	
Section 33: NE/4  (160 gross,  40 net)

	  	  
	
RECORDING DATA:

	
Reception No. 3676122

	  	  
	
No.11

	  
	
LEASE DATE:

	
December 12th, 2009

	
LEASE TERM:

	
5 years

	
EFFECTIVE DATE:

	
July 25th, 2011

	
LESSOR:

	
Patty J. Stump,  a widow

	
LESSEE:

	
Sovereign Energy LLC

	
DESCRIPTION:

	
Township 12 North, Range 61 West, 6th P.M.

	  	
Section 27: S/2    (320 gross,  40 net)

	  	
Section 33: NE/4   (160 gross,  20 net)

	  	  
	
RECORDING DATA:

	
Reception No. 3676123

	  	  
	
No.12

	  
	
LEASE DATE:

	
December 15th, 2009

	
LEASE TERM:

	
5 years

	
EFFECTIVE DATE:

	
July 25th, 2011

	
LESSOR:

	
Doris H. Thorne, a married woman

	
LESSEE:

	
Sovereign Energy LLC

	
DESCRIPTION:

	
Township 11 North, Range 61 West, 6th P.M.

	  	
Section 6 : ALL  (640 gross,  160 net)

	  	
Township 11 North, Range 62 West, 6th P.M.

	  	
Section 12: NW/4  (160 gross,  40 net)

	  	  
	
RECORDING DATA:

	
Reception No. 3676127

 

  

9

  

 

Exhibit 10.1

 

	
No. 13

	  	  	  	  	  
	
LEASE DATE:

	
December 21st, 2009

	  	  	  	  
	
EFFECTIVE DATE:

	
October 5th, 2011

	  	  	  	  
	
LESSOR:

	
Larry Nelson, a single man

	  	  	  	  
	
LESSEE:

	
Sovereign Energy LLC

	  	  	  	  
	
DESCRIPTION:

	
Township 11 North, Range 61 West, 6th P.M.

	  	  	  	  
	  	
Section 15 : NW/4  (160 gross,  26.67 net)

	  	  	  	  
	  	  	  	  	  	  
	
RECORDING DATA:

	
Reception No. 3676126

	  	  	  	  
	  	  	  	  	  	  
	
No. 14

	  	  	  	  	  
	
LEASE DATE:

	
December 21st, 2009

	  	  	  	  
	
EFFECTIVE DATE:

	
October 6th, 2011

	  	  	  	  
	
LESSOR:

	
Carolyn Gubser, a married woman

	  	  	  	  
	
LESSEE:

	
Sovereign Energy LLC

	  	  	  	  
	
DESCRIPTION:

	
Township 11 North, Range 61 West, 6th P.M.

	  	  	  	  
	  	
Section 15: NW/4  (160 gross,  26.67 net)

	  	  	  	  
	  	  	  	  	  	  
	
RECORDING DATA:

	
Reception No. 3676128

	  	  	  	  
	  	  	  	  	  	  
	
No. 15

	  	  	  	  	  
	
LEASE DATE:

	
January 13,2010

	  	  	  	  
	
EFFECTIVE DATE:

	
November 7th, 2011

	  	  	  	  
	
LESSOR:

	
Janet S. Baldwin, a married woman

	  	  	  	  
	
LESSEE:

	
Sovereign Energy LLC

	  	  	  	  
	
DESCRIPTION:

	
Township 11 North, Range 62 West, 6th P.M.

	  	  	  	  
	  	
Section 1 : SE/4, N/2SW/4, S/2SW/4 less the S 445 feet, N/2

	  	  	  	  
	  	
Less 126.5 acre described by M&B.

	  	  	  	  
	  	
Section 2 : NE/4

	  	  	  	  
	  	
Section 12: N/2NE/4, SW/4NE/4, NW/4NE/4 S and W of the CB&Q RR

	  	  	  	  
	  	
Township 12 North, Range 62 West, 6th P.M.

	  	  	  	  
	  	
Section 34: NE/4, N/2NW/4, SE/4NW/4 ess 4 tracts totaling 2.104 ac, NE/4SE/4

	  	  	  	  
	  	
Section 35: All less a 248.5 acre tract described by M&B

	  	  	  	  
	  	
(1,509.23 gross,  212.19 net)

	  	  	  	  
	  	  	  	  	  	  
	
RECORDING DATA:

	
Reception No. 3677429

	  	  	  	  

 

  

10

  

 

Exhibit 10.1

 

	
No. 16

	  	  	  	  	  
	
LEASE DATE:

	

January 13, 2010

	  	  	  	  
	
EFFECTIVE DATE:

	
November 7th, 2011

	  	  	  	  
	
LESSOR:

	
Diane K. Blakeman, a single woman

	  	  	  	  
	
LESSEE:

	
Sovereign Energy LLC

	  	  	  	  
	
DESCRIPTION:

	
Township 11 North, Range 62 West, 6th P.M.

	  	  	  	  
	  	
Section 1 : SE/4, N/2SW/4, S/2SW/4 less the S 445 feet, N/2

	  	  	  	  
	  	
Less 126.5 acre described by M&B.

	  	  	  	  
	  	
Section 2 : NE/4

	  	  	  	  
	  	
Section 12: N/2NE/4, SW/4NE/4, NW/4NE/4 S and W of the CB&Q RR

	  	  	  	  
	  	
Township 12 North, Range 62 West, 6th P.M.

	  	  	  	  
	  	
Section 34: NE/4, N/2NW/4, SE/4NW/4 ess 4 tracts totaling 2.104 ac, NE/4SE/4

	  	  	  	  
	  	
Section 35: All less a 248.5 acre tract described by M&B

	  	  	  	  
	  	
(1,509.23 gross,  212.19 net)

	  	  	  	  
	  	  	  	  	  	  
	
RECORDING DATA:

	
Reception No. 3677430

	  	  	  	  
	  	  	  	  	  	  
	
No. 17

	  	  	  	  	  
	
LEASE DATE:

	
December 24th, 2009

	  	  	  	  
	
EFFECTIVE DATE:

	
November 14th, 2011

	  	  	  	  
	
LESSOR:

	
Lee Ann Nussbaum, a widow

	  	  	  	  
	
LESSEE:

	
Sovereign Energy LLC

	  	  	  	  
	
DESCRIPTION:

	
Township 11 North, Range 61 West, 6th P.M.

	  	  	  	  
	  	
Section 15 : NW/4  (160 gross,  26.67 net)

	  	  	  	  
	 	 	 	 	 	 
	
RECORDING DATA:

	
Reception No. 3676125

	  	  	  	  
	  	  	  	  	  	  
	
No.18

	  	  	  	  	  
	
LEASE DATE:

	

March 9, 2011

	  	  	  	  
	
LEASE TERM:

	
3 years

	  	  	  	  
	
LESSOR:

	
A. A. Minerals, LLC

	  	  	  	  
	
LESSEE:

	
Sovereign Energy LLC

	  	  	  	  
	
DESCRIPTION:

	
Township 11 North, Range 61 West, 6th P.M.

	  	  	  	  
	  	
Section 23 : ALL  (640 gross,  29.367 net)

	  	  	  	  
	 	 	 	 	 	 
	
RECORDING DATA:

	
Reception No. 3755673

	  	  	  	  

 

  

11

  

 

Exhibit 10.1

 

	
No.19

	  	  	  	  	  
	
LEASE DATE:

	

March 9, 2011

	  	  	  	  
	
LEASE TERM:

	
3 years

	  	  	  	  
	
LESSOR:

	
B & J Resources, LLC

	  	  	  	  
	
LESSEE:

	
Sovereign Energy LLC

	  	  	  	  
	
DESCRIPTION:

	
Township 11 North, Range 61 West, 6th P.M.

	  	  	  	  
	  	
Section 23 : ALL  (640 gross,  29.367 net)

	  	  	  	  
	 	 	 	 	 	 
	
RECORDING DATA:

	
Reception No. 3755672

	  	  	  	  
	  	  	  	  	  	  
	
No.20

	  	  	  	  	  
	
LEASE DATE:

	

January 15, 2011

	  	  	  	  
	
LEASE TERM:

	
5 years

	  	  	  	  
	
LESSOR:

	
Clyde S. Diehl Family Trust

	  	  	  	  
	
LESSEE:

	
Recovery Energy, LLC

	  	  	  	  
	
DESCRIPTION:

	
Township 10 North, Range 64 West, 6th P.M.

	  	  	  	  
	  	
Section 34 : S/2  (320 gross,  320 net)

	  	  	  	  
	  	
Township 9 North, Range 64 West, 6th P.M.

	  	  	  	  
	  	
Section 4 : N/2  (320 gross,  320 net)

	  	  	  	  
	  	  	  	  	  	  
	
RECORDING DATA:

	
Reception No. 3756873

	  	  	  	  
	  	  	  	  	  	  
	
No.21

	  	  	  	  	  
	
LEASE DATE:

	

October 21, 2011

	  	  	  	  
	
LEASE TERM:

	
5 years

	  	  	  	  
	
EFFECTIVE DATE:

	

October 21, 2011

	  	  	  	  
	
LESSOR:

	
John A. Walden

	  	  	  	  
	
LESSEE:

	
BWAB-Sovereign Energy LLC

	  	  	  	  
	
DESCRIPTION:

	
Township 12 North, Range 61 West, 6th P.M.

	  	  	  	  
	  	
Section 27: S/2    (320 gross,  40 net)

	  	  	  	  
	  	
Section 28: N/2   (320 gross,  40 net)

	  	  	  	  
	  	
Section 33: NE/4   (160 gross,  20 net)

	  	  	  	  
	  	  	  	  	  	  
	
RECORDING DATA:

	
Reception No. 3800348

	  	  	  	  

 

  

12

  

 

Exhibit 10.1

 

	
No.22

	  	  	  	  	  
	
LEASE DATE:

	

October 20, 2011

	  	  	  	  
	
LEASE TERM:

	
5 years

	  	  	  	  
	
EFFECTIVE DATE:

	

October 20, 2011

	  	  	  	  
	
LESSOR:

	
Patricia R. Christner fna Patricia R. Walden

	  	  	  	  
	
LESSEE:

	
BWAB-Sovereign Energy LLC

	  	  	  	  
	
DESCRIPTION:

	
Township 12 North, Range 61 West, 6th P.M.

	  	  	  	  
	  	
Section 27: S/2    (320 gross,  80 net)

	  	  	  	  
	  	
Section 28: N/2   (320 gross,  80 net)

	  	  	  	  
	  	
Section 33: NE/4   (160 gross,  40 net)

	  	  	  	  
	  	  	  	  	  	  
	
RECORDING DATA:

	
Reception No. 3800996

	  	  	  	  
	  	  	  	  	  	  
	
No.23

	  	  	  	  	  
	
LEASE DATE:

	

November 1, 2011

	  	  	  	  
	
LEASE TERM:

	
5 years

	  	  	  	  
	
EFFECTIVE DATE:

	

November 1, 2011

	  	  	  	  
	
LESSOR:

	
Randy J. Peters and Peggy S. Peters

	  	  	  	  
	
LESSEE:

	
BWAB-Sovereign Energy LLC

	  	  	  	  
	
DESCRIPTION:

	
Township 12 North, Range 61 West, 6th P.M.

	  	  	  	  
	  	
Section 28: N/2, less 3 acres   (317 gross,  79.25 net)

	  	  	  	  
	 	 	 	 	 	 
	
RECORDING DATA:

	
Reception No. 3802918

	  	  	  	  
	  	  	  	  	  	  
	
No.24

	  	  	  	  	  
	
LEASE DATE:

	

November 1, 2011

	  	  	  	  
	
LEASE TERM:

	
5 years

	  	  	  	  
	
EFFECTIVE DATE:

	

November 1, 2011

	  	  	  	  
	
LESSOR:

	
Robin Peters Hastings

	  	  	  	  
	
LESSEE:

	
BWAB-Sovereign Energy LLC

	  	  	  	  
	
DESCRIPTION:

	
Township 12 North, Range 61 West, 6th P.M.

	  	  	  	  
	  	
Section 28: N/2, less 3 acres   (317 gross,  79.25 net)

	  	  	  	  
	 	 	 	 	 	 
	
RECORDING DATA:

	
Reception No. 3802917

	  	  	  	  

 

  

13

  

 

Exhibit 10.1

 

	
No. 25

	  	  	  	  	  
	
LEASE DATE:

	

February 7, 2010

	  	  	  	  
	
EFFECTIVE DATE:

	

February 20, 2010

	  	  	  	  
	
LESSOR:

	
William E. Berning, a single man

	  	  	  	  
	
LESSEE:

	
Sovereign Energy LLC

	  	  	  	  
	
DESCRIPTION:

	
Township 10 North, Range 61 West, 6th P.M.

	  	  	  	  
	  	
Section 15 : SW/4

	  	  	  	  
	  	  	  	  	  	  
	
RECORDING DATA:

	
Reception No. 3681646

	  	  	  	  
	  	  	  	  	  	  
	
No. 26

	  	  	  	  	  
	
LEASE DATE:

	
February 7th, 2010

	  	  	  	  
	
EFFECTIVE DATE:

	
October 20th, 2010

	  	  	  	  
	
LESSOR:

	
Heather Anne Holmes, a married woman

	  	  	  	  
	
LESSEE:

	
Sovereign Energy LLC

	  	  	  	  
	
DESCRIPTION:

	
Township 10 North, Range 61 West, 6th P.M.

	  	  	  	  
	  	
Section 15 : SW/4

	  	  	  	  
	  	  	  	  	  	  
	
RECORDING DATA:

	
Reception No. 3677701

	  	  	  	  
	  	  	  	  	  	  
	
No. 27

	  	  	  	  	  
	
LEASE DATE:

	
February 7th, 2010

	  	  	  	  
	
EFFECTIVE DATE:

	
October 20th, 2010

	  	  	  	  
	
LESSOR:

	
Patrick Dale Leathers, an unmarried man

	  	  	  	  
	
LESSEE:

	
Sovereign Energy LLC

	  	  	  	  
	
DESCRIPTION:

	
Township 10 North, Range 61 West, 6th P.M.

	  	  	  	  
	  	
Section 15 : SW/4

	  	  	  	  
	  	  	  	  	  	  
	
RECORDING DATA:

	
Reception No. 3678822

	  	  	  	  

 

  

14

  

 

Exhibit 10.1

 

	
EXHIBIT B

	  
	
Description of the Vrtatko Property

	  
	
Kimball County, Nebraska

	  	  	  	  	  	  
	
LEASE DATE:

	
30-Dec-09

	  	  	  	  
	
LESSOR:

	
Vrtatko, Inc., a Nebraska corporation

	  	  	  	  
	  	
Ellen M. Vrtatko, a widow

	  	  	  	  
	  	
James F. Vrtatko, a single man

	  	  	  	  
	  	
Rodney J. Vrtatko, a married man

	  	  	  	  
	
LESSEE:

	
Edward Mike Davis, L.L.C.

	  	  	  	  
	
DESCRIPTION:

	  	  	  	  	  

 

	 	
Township 14 North, Range 54 West, 6th P.M.

	 	 	 	 	 
	 	
Section 29: W/2, W/2SE/4;

	
Section 30: ALL;

	
Section 31: ALL

	 	 	 
	 	
Section 32: ALL;

	
Section 33: ALL

	 	 	 	 
	 	 	 	 	 	 	 
	 	
Township 13 North, Range 54 West, 6th P.M.

	 	 	 	 	 
	 	
Section 5: N/2, SW/4;

	
Section 6: ALL;

	
Section 7: ALL

	 	 	 
	 	
Section 17: SE/4;

	
Section 22: ALL

	 	 	 	 
	 	 	 	 	 	 	 
	 	
Township 13 North, Range 55 West, 6th P.M.

	 	 	 	 	 
	 	
Section 1: ALL;

	
Section 11: ALL;

	
Section 12: ALL

	 	 	 
	 	 	 	 	 	 	 
	 	
Township 15 North, Range 55 West, 6th P.M.

	 	 	 	 	 
	 	
Section 29: A 3.627 acre tract in SW/4NW/4

	 	 	 	 	 
	 	
Section 32: A tract in the S/2

	 	 	 	 	 
	 	 	 	 	 	 	 
	 	
Containing in all approximately 7,604.00 acres, more or less.

	 	 	 	 	 

 

RECORDING DATA: BOOK OG 209, PAGE 430-434 recorded December 31, 2009 at 10:29am in Kimball County, Nebraska

 

  

15

  

 

Exhibit 10.1

 

EXHIBIT C

to Amendment

ANNEX B

to 8% Senior Secured Convertible Debentures

 

	
Goshen County, Wyoming

	  	  	  
	  	  	  	  
	
LEASE DATE:

	
January 1st, 2011

	  	  
	
LESSOR:

	
Crossed Arrows Ranch Inc.

	  	  
	
LESSEE:

	
Recovery Energy, Inc.

	  	  
	
DESCRIPTION:

	
Township 26 North, Range 62 West, 6th P.M.

	  	  
	  	
Section 1: Lots 3, 4, S/2NW/4, SW4

	  	  
	  	
Section 2: Lots 1-4, S/2N/2, S/2

	  	  
	  	
Section 3: Lots 1, 2, S/2NE/4

	  	  
	 	 	 	 
	  	
Township 27 North, Range 61 West, 6th P.M.

	  	  
	  	
Section 31: Lots 1-4, E/2W/2

	  	  
	  	  	  	  
	  	
Township 27 North, Range 62 West, 6th P.M.

	  	  
	  	
Section 7:    Lots 4

	  	  
	  	
Section 15: SW/4, N/2SE/4

	  	  
	  	
Section 17: SW/4NE/4, NW/4NW/4, S/2NW/4, S/2

	  	  
	  	
Section 18: Lots 1, 4, N/2NE/4, SE/4NE/4, E/2NW/4, NE/4SW/4,

	  	  
	  	
Section 19: Lot 1

	  	  
	  	
Section 20: NW/4NE/4, NE/4NW/4

	  	  
	  	
Section 21: SE/4NE/4, E/2SE/4

	  	  
	  	
Section 22: W/2, W/2SE/4

	  	  
	  	
Section 25: W/2

	  	  
	  	
Section 26: ALL

	  	  
	  	
Section 27: E/2, N/2NW/4

	  	  
	  	
Section 28: E/2, SE/4SW/4

	  	  
	  	
Section 29: S/2SW/4, SW/4SE/4

	  	  
	  	
Section 30: SE/4SE/4

	  	  
	  	
Section 32: NW/4

	  	  
	  	
Section 34: N/2NE/4

	  	  
	  	
Section 35: N/2NE/4, W/2, SE/4

	  	  
	  	  	  	  
	  	
Township 27 North, Range 63 West, 6th P.M.

	  	  
	  	
Section 11: SE/4SW/4, SW/4SE/4

	  	  
	  	
Section 12: Lot 4, S/2SW/4, SW/4SE/4

	  	  
	  	
Section 13: Lot 1, W/2NW/4, SW/4, SE/4SE/4

	  	  
	  	
Section 14: NW/4NE/4, S/2NE/4, NE/4NW/4, N/2SE/4

	  	  
	  	
Section 23: E/2SE/4

	  	  
	  	
Section 24: N/2, SW/4

	  	  
	  	
Section 25: W/2

	  	  
	  	
Section 26: NE/4NE/4, S/2NE/4, SW/4, NW/4SE/4, S/2SE/4

	  	  
	  	
Section 27: S/2SE/4

	  	  
	  	
Containing 16,299.37 acres more or less

	  	  

 

  

16

  

 

Exhibit 10.1

 

	
LEASE DATE:

	

February 9, 2011

	  	  
	
LESSOR:

	
Eric Alan McCallan, a/k/a Alan Claude McCallan, dealing in his sole and separate property, and Christopher P. McCallan, a married man dealing in his sole and separate

	
LESSEE:

	
Recovery Energy, Inc.

	  	  
	
DESCRIPTION:

	
Township 25 North, Range 62 West, 6th P.M.

	  	  
	  	
Section 07:  N2NE, SENE, NESE

	  	  
	  	
Section 08:  N2NW, SWNW, NWSW

	  	  
	  	
Section 16:  SW

	  	  
	  	
Section 20:  SESE, that part of NESE lying south of railroad

	  	  
	  	
Section 28:  SWNW, W2SW

	  	  
	  	
Section 29:  E2E2

	  	  
	  	
Section 32:  N2NE

	  	  
	  	
Section 26:  NW

	  	  
	  	  	  	  
	  	
Township 25 North, Range 63 West, 6th P.M.

	  	  
	  	
Section 18:  Lots 1, 2, 3 and 4

	  	  
	 	 	 	 
	  	
Township 25 North, Range 64 West, 6th P.M.

	  	  
	  	
Section 11:  W2SE

	  	  
	  	
Section 13:  E2, E2W2

	  	  
	  	
Section 14:  Lots 1, 2, 3, 5, 6, 7, W2NE, W2, NWSE

	  	  
	  	
Section 23:  Lots 3, 4, 7, 8, NWNE, N2NW, NWSE

	  	  
	  	
Section 24:  NWSW

	  	  
	  	  	  	  
	
Kimball County, Nebraska

	  	  	  
	  	  	  	  
	
LEASE DATE:

	

December 30, 2009

	  	  
	
LESSOR:

	
Vrtatko, Inc., a Nebraska corporation

	  	  
	  	
Ellen M. Vrtatko, a widow

	  	  
	  	
James F. Vrtatko, a single man

	  	  
	  	
Rodney J. Vrtatko, a married man

	  	  
	
LESSEE:

	
Edward Mike Davis, L.L.C.

	  	  
	
DESCRIPTION:

	  	  	  

 

  

17

  

 

Exhibit 10.1

 

	 	
Township 14 North, Range 54 West, 6th P.M.

	  	  	  
	 	
Section 29:  W/2, W/2SE/4;

	
Section 30:  ALL;

	
Section 31:  ALL

	  
	 	
Section 32:  ALL;

	
Section 33:  ALL

	 	  
	 	  	  	  	  
	 	
Township 13 North, Range 54 West, 6th P.M.

	  	  	  
	 	
Section 5:  N/2, SW/4;

	
Section 6:  ALL;

	
Section 7:  ALL

	  
	 	
Section 17:  SE/4;

	
Section 22:  ALL

	 	  
	 	  	  	  	  
	 	
Township 13 North, Range 55 West, 6th P.M.

	  	  	  
	 	
Section 1:  ALL;

	
Section 11:  ALL;

	
Section 12:  ALL

	 
	 	  	  	  	  
	 	
Township 15 North, Range 55 West, 6th P.M.

	  	  	  
	 	
Section 29:  A 3.627 acre tract in SW/4NW/4

	  	  	  
	 	
Section 32:  A tract in the S/2

	  	  	  
	 	  	  	  	  
	 	
Containing in all approximately 7,604.00 acres, more or less.

	  	  	  

 

RECORDING DATA:   BOOK OG 209, PAGE 430-434   recorded December 31, 2009 at 10:29am in Kimball County, Nebraska

 

 

18f8k121611ex10ii_recoverys.htm

EXHIBIT 10.2

 

TERMINATION AND RELEASE AGREEMENT

 

This Termination and Release Agreement (“Agreement”) is made and entered into to be effective this 16th day of December, 2011, by and between Recovery Energy, Inc., a Nevada corporation (“Recovery”) and TRW Exploration, LLC, a Delaware limited liability company (“Participant”).

 

RECITALS

 

A.   Recovery and Participant are parties to an Acquisition and Development Agreement dated effective as of October 1, 2010 (the “Development Agreement”).  Terms not otherwise defined herein shall have the meanings ascribed to such terms in the Development Agreement.

 

B.   Under the Development Agreement, Participant purchased 60% of Recovery’s right, title and interest in, to and under the Leases insofar as the Leases cover the Lands (the “Subject Interests”) but no formal assignment was made of the Subject Interests.

 

C.   Pursuant to Section 5 of the Development Agreement, Recovery drilled two wells (the “Carry Wells”) with respect to which Participant funded approximately $7,070,000 and in connection therewith, the parties entered into a Joint Operating Agreement, including various amendments and agreements related thereto (the “JOA”).

 

D.   Pursuant to the Development Agreement, Recovery and Participant have, among other things, agreed to an area of mutual interest (“AMI”).

 

E.   Recovery desires to purchase and Participant desires to sell all of Participant’s right, title and interest in the Subject Interests and the Carry Wells for consideration consisting of 1,500,000 shares (the “Shares”) of the common stock of the Company, $0.001 par value per share (the “Common Stock”), and Recovery and Participant further desire to resolve and settle all matters with respect to the Carry Wells and terminate the Development Agreement, including the AMI, and the JOA.

 

AGREEMENT

 

NOW, THEREFORE, for Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby specifically acknowledged, Recovery and Participant agree as follows:

 

1.   Termination of Interests.  Participant hereby forfeits, waives and assigns to Recovery all beneficial interest with respect to all right, title and interest it purchased, earned or otherwise acquired under the Development Agreement, including all rights to assignment of the Subject Interests and rights to assignment related to the Carry Wells (the “Interests”).

 

 

  

1

  

 

2.   Termination of Agreements.

 

(a)   Development Agreement.  Recovery and Participant hereby agree to terminate the Development Agreement, including without limitation the AMI therein, except for Section 14 (Confidentiality) thereof, which shall survive and remain in full force and effect.

 

(b)   JOA.  Recovery and Participant hereby agree to terminate the JOA except for that Agreement Concerning Relationship of the Parties for Tax Purposes attached as Exhibit G to the JOA (“Tax Partnership”) shall remain in full force and effect for the purposes set forth in Section 4.

 

(c)   Effect of Terminations.  After giving effect to Sections 2(a) and (b) above, and after the date hereof, the Development Agreement and the JOA, except as specifically set forth above, shall be of no further force and effect.  For purposes of clarification only (and not by way of limitation), the parties acknowledge and agree that as of and from the date hereof:

 

(i)   Participant and Recovery will have no further rights or obligations with respect to the Carry Wells;

 

(ii)   Participant shall have no claim or interest whatsoever and of any nature or kind to participate or share in any manner in the development of the Leases or in any future wells drilled on the AMI Lands or to share in any manner from the production therefrom; and

 

(iii)   Participant further agrees that, as of and from the date hereof Recovery shall have no obligation to grant, convey or assign or otherwise provide to Participant any interest of any kind in any of the Lands or in any wells, drilled thereon or in lands pooled or communitized therewith.

 

3.   Issuance of Shares.  As consideration for Participant’s assignment of the Interests, Recovery hereby agrees to issue the Shares to Participant.  Participant acknowledges and agrees that the Shares will be “restricted” securities as defined in Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), and that the certificate for such Shares shall bear a restrictive legend restricting transfer thereof.

 

4.   Intangible Drillings Costs.  The parties agree to amend the Tax Partnership to reallocate intangible drilling costs incurred in 2011 to Recovery.

 

5.   Tax Matters.  The parties agree that the value of the Shares will be equal to the closing price of the Common Stock on Nasdaq Stock Market on the date of this Agreement and that the Interests transferred by Participant to Recovery constitute Class V assets within the meaning of IRS Form 8594

 

6.   Representations of Recovery; Existence/ Authority.  Recovery is a corporation validly organized and in good standing under the laws of the State of Nevada.  This Agreement, and all documents to be executed in connection herewith, have been duly authorized, executed and delivered on behalf of Recovery and the Shares issued hereunder have been duly authorized and issued by Recovery.

 

  

2

  

 

7.   Representations of Participant.

 

(a)   Existence/ Authority.  Participant is a limited liability company validly organized and in good standing under the laws of the State of Delaware.  This Agreement, and all documents to be executed in connection herewith, have been duly authorized, executed and delivered on behalf of Participant.

 

(b)   Title.  Participant represents and warrants that it has not assigned, pledged, mortgaged or otherwise encumbered the Interests or any portion thereof to a third party prior to the date hereof.

 

(c)   Consents.  No consent of any governmental entity or other person is required on the part of Participant in connection with the execution, delivery and performance by Participant of this Agreement or the assignment of the Interests, except for governmental consents customarily obtained after a transfer.

 

(d)   Investment Representations.  Participant understands that the Shares have not been registered under the Securities Act in reliance on exemptions from the registration requirements of the Securities Act applicable to issuances of securities not involving a public offering.  Participant acknowledges and agrees that it is acquiring the Shares for investment purposes and solely for its own account and with no intention of or view to distribute or resell the Shares, or any part of the Shares, in any transaction that would be in violation of the securities laws of the United States of America or of any state, including the Securities Act.  Participant represents to Recovery that: (a) prior to acquiring the Shares, Participant has made an investigation of Recovery and its business and has had access to all information with respect thereto which Participant needed to make an informed decision to acquire the Shares and (b) Participant possesses the experience and sophistication to adequately evaluate the merits and risks of its investment in the Shares.  Participant is an “accredited investor” within the meaning of Regulation D promulgated under the Securities Act.

 

8.   Mutual Release.

 

(a)   Recovery, on behalf of itself and its former and present shareholders, officers, agents, directors, principals and representatives, hereby fully, finally and forever releases and discharges Participant and each of its former and present members, officers, agents, directors, principals and representatives of and from any and all liabilities, claims, demands and damages, whether known or unknown, arising out of any acts or omissions occurring, or facts or circumstances existing, on the date of this Agreement or any earlier date and relating to or arising out of the Development Agreement or the JOA (each a “Claim” and, collectively, the “Claims”).

 

(b)   Participant, on behalf of itself and its former and present members, officers, agents, directors, principals and representatives, hereby fully, finally and forever releases and discharges Recovery and each of its shareholders, officers, agents, directors, principals and representatives of and from any and all Claims.

 

(c)   Each of Recovery and Participant hereby covenant and agree never to institute (or participate in) or cause to be instituted or continue prosecution of any suit or other form of action or proceeding of any kind or nature whatsoever against any the other party hereto by reason of or in connection with any of the Claims released, acquitted and discharged in Section 7(a) and (b) above.

 

  

3

  

 

(d)   Each of Recovery and Participant hereby covenant and agree that it has not sold, assigned or otherwise transferred any such Claim.

 

(e)   Each of Recovery and Participant knowingly grants the release contained herein notwithstanding that such party may hereafter discover facts in addition to, or different from, those to which that party now knows of believes to be true, and without regard to the subsequent discovery of existence of such different or additional facts, and expressly waives any and all rights that any such party may have under any statute, procedural rule or common law principle, in equity or otherwise, which would limit the effect of the release contained herein to those Claims actually known or suspected to exist at the time of the effectiveness of this Agreement.

 

(f)   Each party understands, acknowledges and agrees that the release of Claims set forth herein may be pleaded as a full and complete defense and/or as a cross-complaint or counterclaim against, and may be used as a basis for an injunction against, any action, suit, or other proceeding which may be instituted, prosecuted or attempted in breach of the provisions herein.

 

9.   Recovery Indemnity.  Upon the execution of this Agreement, Recovery (a) agrees to assume, pay, perform and discharge all claims, costs, expenses, liabilities and obligations (the “Obligations”) relating to the ownership and operation of the Subject Interests and the drilling and reclamation of all wells thereon after the effective date of this Agreement, and (b)  shall defend, indemnify and save and hold harmless Participant and its officers, members and agents, from and against all claims and liabilities of every kind and nature asserted by a third party against Participant or its officers, members and agents after the date of this Agreement which arise directly or indirectly with regard to the Subject Interests after the effective date of the Development Agreement.

 

10.   Further Assurances.  The parties shall from time to time execute such additional instruments and documents, take such additional actions, and give such further assurances as are or may be reasonable or necessary to implement this Agreement.

 

11.   Binding Effect.  The terms of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and assigns.

 

12.   Governing Law.  This Agreement shall be construed in accordance with the laws of the State of Colorado, without regard to conflicts of laws principles, except with respect to real property matters, which shall be governed and construed in accordance with the laws of the State of Wyoming.

 

13.   Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original for all purposes and all of which collectively shall be deemed one and the same instrument.

 

  

4

  

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement effective as of the date first set forth above

 

	 	RECOVERY
	 	 
	 	Recovery Energy, Inc.
	 	 	 
	 	
By: 

	/s/ Roger A. Parker
	 	Name: 	Roger A. Parker
	 	Title:	Chief Executive Officer

 

	 	PARTICIPANT
	 	 
	 	TRW Exploration, LLC
	 	 	 
	
 

	
By: 

	/s/ John W. Galuchie, Jr.
	 	Name:	John W. Galuchie, Jr.
	 	Title:	President

 

  

5

  

 

ACKNOWLEDGMENTS

 

	 STATE OF COLORADO 	 )
	 	 ) ss.
	 COUNTY OF DENVER	 )

 

This instrument was acknowledged before me this 16th day of December, 2011 by Roger A. Parker, as Chief Executive Officer of Recovery Energy, Inc., a Nevada corporation.

 

Witness my hand and official seal.

 

My commission expires:                                                                                                                             

 

	
 

	/s/ Ruth Elder
	 	
Notary Public

           

	STATE OF NJ	 )
	 	 ) ss.
	COUNTY OF SOMERSET	 )

          

This instrument was acknowledged before me this 14th day of December, 2011 by John W. Galuchie, Jr., President, of TRW Exploration, LLC, a Delaware limited liability company.

 

Witness my hand and official seal.

 

My commission expires:  July 13, 2016

 

	
 

	 /s/ P. Sheldon
	 	
Notary Public

 

 

 6

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