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).

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;

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.

 

 

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.

 

 

 

[Signature page follows]

 

 

 

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

 

 

 

	Wallington Investment Holdings, Ltd.
		/s/ Michael Khoury
	Name:	Michael Khoury
	Title:	Director

 

 

	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