Second Amended and Restated Director Appointment Agreement
Exhibit
10.4
Second
Amended and Restated Director Appointment Agreement
This
Second Amended and Restated Director Appointment Agreement (“Agreement”) is
entered into and made effective as of May 1, 2010, by and between Recovery
Energy, Inc. a Nevada corporation (the “Company”), and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(“▇▇▇▇▇▇”).
WHEREAS,
the Company and ▇▇▇▇▇▇ have previously entered into a Non-Executive Director
Appointment Agreement entered into and made effected November 16, 2009 and an
Amended and Restated Non-Executive Director Appointment Agreement dated as of
December 31, 2009 (together, the "Original Agreement") and, in order to retain
▇▇▇▇▇▇’▇ services as set forth herein, wish to amend and restate the Original
Agreement;
NOW,
THEREFORE, in consideration of the premises and the mutual covenants set forth
below, the Original Agreement is amended and restated as follows:
1. Appointment: The
Company hereby agrees to appoint ▇▇▇▇▇▇ as the Chairman of the Board of
Directors (the “Board”) of the Company, and ▇▇▇▇▇▇ hereby accepts such position,
on the terms and conditions set forth below. ▇▇▇▇▇▇’▇ authority shall
be consistent with that normally associated with and appropriate for such a
position.
2. Start
Date: ▇▇▇▇▇▇’▇ appointment will be effective on November 16,
2009 (the “Effective Date”).
3. Compensation
and Expenses:
(a) Stock
Compensation:
(i) Initial
Grant. On January 1, 2010, the Company will issue to ▇▇▇▇▇▇
1,000,000 shares of common stock (the “Initial Grant”), which common stock shall
vest, subject to acceleration as provided below, on January 1, 2011, so long as
▇▇▇▇▇▇ is either (i) a director of the Company on such date or (ii) died or
became permanently disabled prior to such date and was a director of the Company
at the time of death or disability.
Notwithstanding
any provision to the contrary, the Initial Grant shall vest upon the earlier to
occur of a “Change in Control” of the Company (provided ▇▇▇▇▇▇ is a director
immediately prior to the "Change in Control") or the termination of ▇▇▇▇▇▇’▇
service as Non-Executive Chairman other than by ▇▇▇▇▇▇’▇ voluntary resignation
or for “Cause” (as each term is defined below).
For
purposes of this Agreement, “Change in Control” shall mean the occurrence,
subsequent to the earlier to occur of the first capital raise or January 1,
2010, of any of the following: (A) by a transaction or series of transactions,
any “person” or “group” (within the meaning of Section 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)), becomes the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of more than 30% of the combined voting power of the Company’s
then outstanding securities (provided such person or group was not a beneficial
owner of more than 30% of the combined voting power of the Company’s then
outstanding securities as of the Effective Date); (B) as a result of any merger,
consolidation, combination or sale or issuance of securities of the Company, or
as a result of or in connection with a contested election of directors, the
persons who were directors of the Company as of the Effective Date cease to
constitute a majority of the Board; (C) by a transaction or series of
transactions, the authority of the Board over any activities of the Company
becomes subject to the consent, agreement or cooperation of a third party other
than shareholders of the Company.
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For
purposes of this Agreement, “Cause” shall mean (A) ▇▇▇▇▇▇’▇ conviction by a
court of competent jurisdiction as to which no further appeal can be taken of a
felony (other than a violation based on operation of a vehicle) or entering the
plea of nolo contendere to such crime by ▇▇▇▇▇▇; (B) ▇▇▇▇▇▇’▇ commission of a
crime involving fraud or intentional dishonesty, which results in ▇▇▇▇▇▇’▇
substantial personal enrichment and material adverse effect to the Company; (C)
▇▇▇▇▇▇’▇ becoming subject to any securities related sanctions related to the
Company other than those based on an act of the Company itself for which ▇▇▇▇▇▇
is charged solely as a result of his position with the Company.
(ii) Subsequent
Grants. Upon the occurrence of each of the following events
occurring (x) any time during ▇▇▇▇▇▇’▇ term of service, or (y) within twelve
(12) months after the effective date of the termination of ▇▇▇▇▇▇’▇ service
other than by ▇▇▇▇▇▇’▇ involuntary resignation or for Cause, the Company will
issue to ▇▇▇▇▇▇ the cumulative number of shares of common stock (the “Subsequent
Grants”):
(A) upon the
Company’s attainment of market capitalization of $100,000,000 or more, 100,000
shares of fully-vested common stock;
(B) upon the
Company’s attainment of market capitalization of at least $200,000,000 or more,
the shares specified under subsection (a)(ii)(A) to the extent not yet issued,
plus 200,000 shares of fully-vested common stock;
(C) upon the
Company’s attainment of market capitalization of $300,000,000 or more, the
shares specified under subsections (a)(ii)(A) and (B) to the extent not yet
issued, plus 300,000 shares of fully-vested common stock;
(D) upon the
Company’s attainment of market capitalization of $400,000,000 or more, the
shares specified under subsections (a)(ii)(A), (B) and (C) to the extent not yet
issued, plus 400,000 shares of fully-vested common stock; and
(E) upon the
Company’s attainment of market capitalization of $500,000,000 or more, the
shares specified under subsections (a)(ii)(A), (B), (C) and (D) to the extent
not yet issued, plus 500,000 shares of fully-vested common stock.
By way of
example, if, as of the date that the Company’s market capitalization is
first measured for purposes of this subsection (a)(ii), the market
capitalization is determined to be $350,000,000, ▇▇▇▇▇▇ would become entitled to
receive 600,000 shares of fully-vested common stock, as the cumulative issuances
under subsections (a)(ii)(A), (B) and (C).
(b) Overriding Royalty –
▇▇▇▇▇▇ will be entitled to a one percent (1%) overriding royalty interest
(“ORRI”) on all ▇▇▇▇▇ and leases acquired by the Company during the term of this
Agreement. ▇▇▇▇▇▇
hereby waives his right to receive an ORRI in the ▇▇▇▇▇ and leases acquired by
the Company effective October 1, 2009 (known as the Church properties) and
effective December 1, 2009 (known as the ▇▇▇▇▇ properties); provided, that if
the Company repurchases such properties after the date hereof ▇▇▇▇▇▇ shall be
entitled to the ORRI. The ORRI will be assigned to ▇▇▇▇▇▇ free
and clear of all liens and the Company will have no interests in the ORRI once
assigned.
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(c) Expenses: As
of the first of each month, the Company shall advance to ▇▇▇▇▇▇ $2,500 towards
the expenses ▇▇▇▇▇▇ is scheduled to incur for that month, as well as an
additional $5,000 toward other expenses associated with ▇▇▇▇▇▇’▇ services on the
Company’s behalf. To the extent any portion of the $5,000 is not
applied toward expenses incurred on the Company’s behalf in any month, the
unspent portion shall carry over to the following month, to be added to that
month’s $5,000 advance; provided, however, that ▇▇▇▇▇▇ shall return to the
Company any unspent amounts no later than the close of the calendar year
following the calendar year in which the funds were first made
available. If in any month the reasonable expenses ▇▇▇▇▇▇ incurs on
the Company’s behalf exceed the amounts advanced (including amounts carried over
from previous months, if any), the Company shall, within thirty (30) days after
receiving notice, reimburse ▇▇▇▇▇▇ for any excess amounts he has
incurred.
(d) Expenses for this
Agreement: Within thirty (30) days of receipt of an invoice,
the Company will reimburse ▇▇▇▇▇▇ for reasonable legal expenses incurred in
connection with this Agreement.
(e) Registration of
Shares. Upon request of ▇▇▇▇▇▇ from time to time, the Company
will promptly file a registration statement with the Securities and Exchange
Commission covering the shares of Common Stock contained in the Initial Grant
and the Subsequent Grants, provided, that each such registration statement must
cover a minimum of 100,000 shares of Common Stock. The Company may
include shares of Common Stock owned by other persons or to be issued by the
Company in each such registration statement.
4. Scope of
Responsibilities. As Non-Executive Chairman, subject to the
terms of the immediately following paragraph, ▇▇▇▇▇▇ shall be responsible for
contributing to the development and implementation of the Company’s strategic
plan, locating and reviewing prospective acquisition targets, overseeing the
development plan of acquired properties, and providing input on the Company’s
development plan. ▇▇▇▇▇▇ shall provide those services required of a
non-executive director under the Company’s articles of incorporation and bylaws,
as both may be amended from time to time, and under the General Corporation Law
of Nevada, the federal securities laws and other state and federal laws and
regulations, as applicable; provided, however, in the event of a conflict or
inconsistency between this Agreement and any governing document of the Company,
this Agreement shall control. In performing such activities, ▇▇▇▇▇▇
will devote only such time as he in his sole discretion deems necessary and
appropriate.
▇▇▇▇▇▇
for his own account and in collaboration with others is engaged in and will
continue to be engaged in oil and gas exploration, development and production
outside of the Company’s business. The Company expressly acknowledges
and agrees that if ▇▇▇▇▇▇ becomes aware of a business opportunity, he shall have
no affirmative duty to present or make such opportunity available to the
Company. Furthermore, in the event ▇▇▇▇▇▇ pursues an opportunity for
his own account or in collaboration with others, the Company shall not be
entitled to any interest in or profits from such property or otherwise claim any
right or damages resulting from ▇▇▇▇▇▇’▇ pursuit of such
opportunity.
The
relationship between the parties shall be that of independent contracting
parties. The Board and the Company expressly acknowledge and agree that neither
shall have the right to direct ▇▇▇▇▇▇ with respect to the means or manner in
which he fulfills his obligations and responsibilities under this Agreement. The
Board and the Company are solely interested in the results obtained by ▇▇▇▇▇▇ in
connection with his performance of services required
hereunder. Except as specifically provided in this Agreement, the
Company hereby waives any conflict or potential conflict resulting from ▇▇▇▇▇▇’▇
activities conducted apart from the business of the Company.
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5. Termination. Either
party may terminate this Agreement, thereby terminating ▇▇▇▇▇▇’▇ service as
Non-Executive Chairman, for any reason whatsoever, upon thirty (30) days written
notice as provided in Section 10 herein. In the event of such notice
of termination by the Company or by ▇▇▇▇▇▇, within thirty (30) days, the Company
shall pay the $2,500 office expense and $5,000 expense advance for the month
between notice and termination, and upon termination will promptly reimburse
▇▇▇▇▇▇ for any additional expenses, if any, he has incurred on the Company’s
behalf to date that have not otherwise been reimbursed. Following
termination of ▇▇▇▇▇▇’▇ service, the Initial Grant shall vest as provided in
Section 3(a)(i) and the Subsequent Grants shall be issued as provided in Section
3(a)(ii).
6. Location. ▇▇▇▇▇▇’▇
office for Company business will be based in the vicinity of Denver,
Colorado. ▇▇▇▇▇▇ will have the authority to office where he chooses
and to change such office if and when he chooses, but the Company’ contribution
for related expenses shall be limited as provided in Section 3(b)
herein.
7. Representations
and Warranties. The Company represents and warrants to ▇▇▇▇▇▇
that this Agreement has been duly authorized, executed and delivered by the
Company and, upon execution by ▇▇▇▇▇▇, constitutes a legal, valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms.
8. Indemnity. The
Company agrees that if ▇▇▇▇▇▇ is made a party to or is threatened to be made a
party to any action, suit or proceeding, whether civil, criminal, administrative
or investigative (a “Proceeding”), by reason of the fact that ▇▇▇▇▇▇ is or was a
trustee, director or officer of the Company or any predecessor or successor to
the Company or any of their affiliates or is or was serving at the request of
the Company, any predecessor or successor to the Company or any of their
affiliates as a trustee, director, officer, member, employee or agent of another
corporation or a partnership, joint venture, limited liability company, trust or
other enterprise, including, without limitation, service with respect to
employee benefit plans, whether or not the basis of such Proceeding alleges
action in an official capacity as a trustee, director, officer, member, employee
or agent while serving as a trustee, director, officer, member, employee or
agent, ▇▇▇▇▇▇ shall be indemnified and held harmless by the Company to the
fullest extent authorized by Nevada law, as the same exists or may hereafter be
amended, against all Costs (as defined below) incurred or suffered by ▇▇▇▇▇▇ in
connection therewith, and such indemnification shall continue as to ▇▇▇▇▇▇ even
if he has ceased to be an officer, director, trustee or agent, or is no longer
employed by the Company and shall inure to the benefit of his heirs, executors
and administrators. The foregoing indemnity is contractual and will
survive any adverse amendment to or repeal of the bylaws or any other governing
document of the Company.
(a) Costs. For
purposes of this Section 8, the term “Costs” shall include, without limitation
unless deemed for cause, damages, losses, judgments, liabilities, fines,
penalties, excise taxes, settlements, and costs, attorneys’ fees, accountants’
fees, and disbursements and costs of attachment or similar bonds,
investigations, and any expenses of establishing a right to indemnification
under this Agreement.
(b) Enforcement. If
a claim or request under this Section 8 is not paid by the Company or on its
behalf, within thirty (30) days after a written claim or request has been
received by the Company, ▇▇▇▇▇▇ may at any time thereafter bring suit against
the Company to recover the unpaid amount of the claim or request and if
successful in whole or in part, ▇▇▇▇▇▇ shall be entitled to be paid also the
expenses of prosecuting such suit. All obligations for indemnification hereunder
shall be subject to, and paid in accordance with, applicable Nevada
law.
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(c) Payment of
Costs. Costs incurred by ▇▇▇▇▇▇ in connection with any
Proceeding shall be paid by the Company within thirty (30) days notice of
▇▇▇▇▇▇’▇ request for such payment, provided that ▇▇▇▇▇▇ has delivered to the
Company written notification of (i) his agreement to reimburse the Company for
Costs with respect to which ▇▇▇▇▇▇ is not eligible for payment or reimbursement,
and (ii) a statement of his good faith belief that he has satisfied the standard
of conduct necessary for indemnification under this Section 8.
(d) Insurance. The
Company will maintain a Director’s and Officer’s Insurance Policy naming ▇▇▇▇▇▇
as a covered party in amount deemed mutually sufficient to the Company and
▇▇▇▇▇▇.
9. Survival of Certain Provisions. The representations, warranties and covenants and indemnity provisions contained in Sections 7 and 8 of this Agreement and the Company’s obligation to pay or issue to ▇▇▇▇▇▇, or to cause ▇▇▇▇▇▇ to vest in, any compensation or compensatory awards earned pursuant hereto shall remain operative and in full force and effect regardless of any completion or termination of this Agreement and shall be binding upon, and shall inure to the benefit of any successors, assigns, heirs and personal representatives of the Company, the indemnified parties and any such person.
10. Notices. Notice
given pursuant to any of the provisions of this Agreement shall be in writing
and shall be mailed or delivered (a) if to the Company, at its offices at ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and (b) if to ▇▇▇▇▇▇, at his
offices at ▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇.
11. Counterparts. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument.
12. Third
Party Beneficiaries. This Agreement has been and is made
solely for the benefit of the Parties hereto, and their respective successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement.
13. Severability. Whenever
possible, each provision of this Agreement will be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or any other jurisdiction
but this Agreement will be reformed, construed and enforced in such jurisdiction
as if such invalid, illegal or unenforceable provision had never been contained
herein.
14. Dispute
Resolution: If a dispute arises out of or relating to this Agreement or
the breach of this Agreement, and if the dispute cannot be settled through
direct discussions, the Company and ▇▇▇▇▇▇ agree that suit may be brought in
state or federal court in Denver, Colorado.
If any dispute arises between the
Company and ▇▇▇▇▇▇ regarding any provision of this Agreement, the Company shall
reimburse ▇▇▇▇▇▇ for all legal fees and expenses incurred by him in connection
with such dispute (whether arising from mediation, arbitration, litigation or
otherwise) unless an unlawful act has preceded, but only if ▇▇▇▇▇▇ substantially
prevails in such action. Such reimbursement shall be made as soon as practicable
following the resolution of such contest or dispute (whether or not appealed) to
the extent the Company receives reasonable written evidence of such fees and
expenses.
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15. Reimbursement
of Expenses. ▇▇▇▇▇▇ shall be reimbursed by the Company for all
ordinary and necessary expenses incurred by ▇▇▇▇▇▇ in the performance of his
duties or otherwise in furtherance of the business of the Company, as well as
any expenses specified in this Agreement, in accordance with the policies of the
Company in effect from time to time. No reimbursement will be made
later than the close of the calendar year following the calendar year in which
the expense was incurred. Expenses eligible for payment or
reimbursement in any one taxable year shall not affect the amount of expenses
eligible for payment or reimbursement in any other taxable year, and the right
to expense payment or reimbursement shall not be subject to liquidation or
exchange for any other benefit.
16. Modification;
Entire Agreement. No provisions of this Agreement may be
amended, modified, or waived unless such amendment or modification is agreed to
in writing signed by ▇▇▇▇▇▇ and by a duly authorized officer of the Company, and
such waiver is set forth in writing and signed by the party to be charged. No
waiver by either party hereto at any time of any breach by the other party
hereto of any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. The respective rights and obligations of the
parties hereunder of this Agreement shall survive the termination of this
Agreement to the extent necessary for the intended preservation of such rights
and obligations. Except or otherwise provided in Section 8 herein, the validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Colorado without regard to its conflicts of law
principles.
17. Choice of
Law, Jurisdiction and Venue. This Agreement shall be governed
by, construed, and enforced in accordance with the laws of the State of
Colorado, without regard to Colorado’s choice of law rules. Any and
all actions, suits, or judicial proceedings upon any claim arising from or
relating to this Agreement, subject to Section 8 herein, shall be instituted and
maintained in the State of Colorado. If it is judicially determined that either
party may file an action, suit or judicial proceeding in federal court, such
action, suit or judicial proceeding shall be in the Federal District Court for
the District of Colorado.
The
parties’ authorized representatives have executed this Agreement as of the
Effective Date, as defined above.
▇▇▇▇▇
▇.
▇▇▇▇▇▇
Recovery Energy, Inc.
/s/
▇▇▇▇▇ ▇.
▇▇▇▇▇▇ By: /s/
▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Chief Financial
Officer
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