[exhibit103transactionagr001.jpg]
EXHIBIT 10.3 TRANSACTION AGREEMENT dated as of October 10, 2018 by and among
LILIS ENERGY, INC. THE VÄRDE FUND VI-A, L.P. VÄRDE INVESTMENT PARTNERS, L.P. THE
VÄRDE FUND XI (MASTER), L.P. VÄRDE INVESTMENT PARTNERS (OFFSHORE) MASTER, L.P.
THE VÄRDE SKYWAY MASTER FUND, L.P. and THE VÄRDE FUND XII (MASTER), L.P. KE
57151467 #5792953

--------------------------------------------------------------------------------

 
[exhibit103transactionagr002.jpg]
TABLE OF CONTENTS Page ARTICLE I. DEFINITIONS
........................................................................................................1
1.1
Definitions....................................................................................................1
ARTICLE II. PURCHASE AND SALE; ISSUE; AND GRANT
..............................................9 2.1 Purchase and Sale of
Purchased Shares; Issue of Exchanged Shares ..........9 2.2 Deliveries
...................................................................................................10
ARTICLE III. REPRESENTATIONS AND WARRANTIES
................................................11 3.1 Representations and
Warranties of the Company ......................................11 3.2
Representations and Warranties of the Värde Parties
................................21 ARTICLE IV. CONSENT OF THE SERIES C-1
HOLDERS................................................23 ARTICLE V. OTHER
AGREEMENTS OF THE PARTIES .................................................23
5.1 Filings; Other Actions
................................................................................23
5.2 Transfer Restrictions
..................................................................................24
5.3 Furnishing of Information
..........................................................................25 5.4
Integration
..................................................................................................26
5.5 Securities Laws Disclosure; Publicity
.......................................................26 5.6 Stockholder Rights
Plan
.............................................................................26
5.7 Use of
Proceeds..........................................................................................27
5.8 Reservation and Listing of Securities
........................................................27 5.9 Company
Stockholder Approval
................................................................28 5.10 Certain
Transactions and Confidentiality
..................................................28 5.11 Form D; Blue Sky
Filings
..........................................................................29
5.12 Tax Matters
................................................................................................30
5.13 Board Representation Right
.......................................................................30
ARTICLE VI. MISCELLANEOUS
...........................................................................................30
6.1 Fees and Expenses
.....................................................................................30
6.2 Survival; Limitation on Liability
...............................................................31 6.3 Entire
Agreement
.......................................................................................31
6.4 Notices
.......................................................................................................31
6.5 Amendments; Waivers
...............................................................................32
6.6 Headings
....................................................................................................32
6.7 Successors and
Assigns..............................................................................32
6.8 No Third-Party Beneficiaries
.....................................................................32 6.9
Governing Law
..........................................................................................32
6.10 Waiver of Jury Trial
...................................................................................33
6.11 Execution
...................................................................................................33
6.12 Severability
................................................................................................33
6.13 Replacement of
Securities..........................................................................33
6.14 Remedies
....................................................................................................33

--------------------------------------------------------------------------------

 
[exhibit103transactionagr003.jpg]
TABLE OF CONTENTS (cont’d) Page 6.15 Non-Recourse
............................................................................................34
6.16 Payment Set Aside
.....................................................................................34
6.17 Independent Nature of Värde Parties’ Obligations and Rights
..................34 6.18 Liquidated Damages
..................................................................................35
6.19 Saturdays, Sundays, Holidays, etc
.............................................................35 6.20
Construction and Interpretation
.................................................................35 Schedule I:
Värde Party Allocation Schedule 3.1(a): Subsidiaries Schedule 3.1(l): Compliance
Schedule 3.1(v): Registration Rights Schedule 5.4: Address for Notice Exhibit A:
Registration Rights Agreement Exhibit B: Form of Second Lien Amendment Exhibit
C: Form of Series C Certificate of Designation Exhibit D: Form of Series D
Certificate of Designation Exhibit E: Form of Legal Opinion of Bracewell LLP
Exhibit F: Form of Nevada Opinion ii

--------------------------------------------------------------------------------

 
[exhibit103transactionagr004.jpg]
TRANSACTION AGREEMENT This Transaction Agreement (this “Agreement”) is dated as
of October 10, 2018, between Lilis Energy, Inc., a Nevada corporation (the
“Company”), and The Värde Fund VI-A, L.P., Värde Investment Partners, L.P., The
Värde Fund XI (Master), L.P., Värde Investment Partners (Offshore) Master, L.P.,
The Värde Skyway Master Fund, L.P. and The Värde Fund XII (Master), L.P. (each,
a “Värde Party” and collectively, the “Värde Parties”). WHEREAS, the Company
desires to issue and sell to the Värde Parties, and the Värde Parties desire to
purchase from the Company, 25,000 shares of the Series C-2 Preferred Stock (as
defined below), having the terms set forth in the Series C Certificate of
Designation (as defined below); WHEREAS, shares of the Series C-2 Preferred
Stock will be convertible into shares of the Common Stock (as defined below) in
accordance with the terms of the Series C Certificate of Designation; WHEREAS,
the Company, the guarantors from time to time party thereto, the lenders party
thereto and Wilmington Trust, National Association, as administrative agent, are
parties to the Second Lien Credit Agreement (as defined herein); WHEREAS,
pursuant to Section 4 of the Second Lien Amendment (as defined herein), the
Company desires to issue to the Värde Parties, as consideration for the
reduction of a portion of the outstanding principal amount of the Term Loan (as
defined herein), together with accrued and unpaid interest thereon and the
Make-Whole Amount (as defined herein) (such principal amount, interest and
Make-Whole Amount totaling $68,267,795 (the “Exchange Amount”)), (i) 5,952,763
shares of the Common Stock and (ii) 39,254 shares of the Series D Preferred
Stock (as defined below), having the terms set forth in the Series D Certificate
of Designation (as defined below); WHEREAS, shares of the Series D Preferred
Stock will be convertible into shares of the Common Stock in accordance with the
terms of the Series D Certificate of Designation; and WHEREAS, the Company and
the Värde Parties are concurrently entering into the Registration Rights
Agreement (as defined below). NOW, THEREFORE, in consideration of the mutual
covenants contained in this Agreement, and for other good and valuable
consideration the receipt and adequacy of which are hereby acknowledged, the
Company and each Värde Party agree as follows: ARTICLE I. DEFINITIONS 1.1
Definitions. As used in this Agreement, the following terms have the meanings
set forth in this Section 1.1: “2016 Plan” means the Lilis Energy, Inc. 2016
Omnibus Incentive Plan, as amended from time to time.

--------------------------------------------------------------------------------

 
[exhibit103transactionagr005.jpg]
“Action” has the meaning ascribed to such term in Section 3.1(j). “Affiliate”
means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person, as such terms are used in and construed under Rule 405 under the
Securities Act; provided, that no portfolio company of a Värde Party or its
Affiliates shall be considered or otherwise deemed an Affiliate thereof.
“Agreement” has the meaning ascribed to such term in the preamble. “Articles of
Incorporation” means the Amended and Restated Articles of Incorporation of the
Company, dated as of October 10, 2011, as amended from time to time. “Board of
Directors” means the board of directors of the Company. “Business Day” means any
day except any Saturday, any Sunday, any day which is a federal legal holiday in
the United States or any day on which banking institutions in the State of New
York or Texas are authorized or required by law or other governmental action to
close. “Capitalization Date” has the meaning ascribed to such term in Section
3.1(g). “Certificates of Designation” means the Series C Certificate of
Designation and the Series D Certificate of Designation. “Code” means the
Internal Revenue Code of 1986, as amended from time to time. “Commission” means
the United States Securities and Exchange Commission. “Common Stock” means the
common stock of the Company, par value $0.0001 per share, and any other class of
securities into which such securities may hereafter be reclassified or changed.
“Common Stock Equivalents” means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including, without limitation, any debt, preferred stock, right,
option, warrant or other instrument that is at any time convertible into or
exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock. “Company” has the meaning ascribed to such term in the
preamble. “Company Information” has the meaning ascribed to such term in Section
5.10(b). “Company Stock Awards” has the meaning ascribed to such term in Section
3.1(g). “Company Stockholders” means the holders of shares of the Common Stock.
“Effect” means any change, event, effect or circumstance. 2

--------------------------------------------------------------------------------

 
[exhibit103transactionagr006.jpg]
“Environmental Laws” means any Law relating in any way to protection of the
environment, preservation or reclamation of natural resources, pollution,
occupational or public health or safety, or the management, release or
threatened release of, or exposure to, any Hazardous Material. “Environmental
Liability” means any liability, contingent or otherwise (including any liability
for damages, costs of environmental remediation, fines, penalties or
indemnities), of any Värde Party directly or indirectly resulting from or based
upon (a) violation of or liability under any Environmental Law, (b) the
generation, use, handling, transportation, storage, treatment or disposal (or
arrangement for the disposal) of any Hazardous Materials, (c) exposure to any
Hazardous Materials, (d) the release or threatened release of any Hazardous
Materials into the environment or (e) any contract, agreement, Proceeding or
other arrangement pursuant to which liability is assumed or imposed with respect
to any of the foregoing. “ERISA” means the Employee Retirement Income Security
Act of 1974, as amended from time to time. “ERISA Affiliate” means any trade or
business (whether or not incorporated) that, together with the Company, is
treated as a single employer under Section 414(b) or (c) of the Code or, solely
for purposes of Section 302 or Title IV of ERISA and Section 412 or 430 of the
Code, is treated as a single employer under Section 414 of the Code. “ERISA
Event” means: (a) any “reportable event,” as defined in Section 4043 of ERISA or
the regulations issued thereunder with respect to a Plan (other than an event
for which the 30 day notice period is waived); (b) the failure of any Plan to
satisfy the minimum funding standard applicable to that Plan for a plan year
under Section 412 or 430 of the Code or Section 302 of ERISA; (c) the filing
pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Company or any ERISA Affiliate of any liability
under Title IV of ERISA with respect to the termination of any Plan or
Multiemployer Plan; (e) the receipt by the Company or any ERISA Affiliate from
the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Multiemployer Plan or to appoint a trustee to administer
any Plan; (f) the incurrence by the Company or any ERISA Affiliate of any
liability with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Company or any ERISA Affiliate of
any notice concerning the imposition of Withdrawal Liability or a determination
that a Multiemployer Plan is, or is expected to be, insolvent within the meaning
of Title IV of ERISA. “Exchange Act” means the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder. “Exchange
Amount” had the meaning ascribed to such term in the recitals. “Exchanged Common
Shares” has the meaning ascribed to such term in Section 2.1(b). 3

--------------------------------------------------------------------------------

 
[exhibit103transactionagr007.jpg]
“Exchanged Preferred Shares” has the meaning ascribed to such term in Section
2.1(b). “Exchanged Shares” has the meaning ascribed to such term in Section
2.1(b). “FCPA” means the Foreign Corrupt Practices Act of 1977, as amended.
“First Lien Credit Agreement” means that certain Amended and Restated Senior
Secured Term Loan Credit Agreement, dated as of January 30, 2018, by and among
the Company, the guarantors from time to time party thereto, the lenders party
thereto and Riverstone Credit Management, LLC, as administrative agent and
collateral agent, as amended. “GAAP” has the meaning ascribed to such term in
Section 3.1(h). “Governmental Entity” means any court, administrative agency or
commission or other governmental or arbitral body or authority or
instrumentality, whether federal, state, local or foreign, and any applicable
industry self-regulatory organization. “Hazardous Materials” means all
pollutants, contaminants, chemicals, materials, substances, wastes, mixtures,
pesticides, and any other substance for which liability or standards of conduct
may be imposed under any Environmental Law, including petroleum or petroleum
distillates, asbestos or asbestos containing materials, polychlorinated
biphenyls, radon gas, noise, odor, mold, infectious or medical wastes and all
other materials, substances or wastes of any nature regulated pursuant to any
Environmental Law. “Intellectual Property Rights” has the meaning ascribed to
such term in Section 3.1(p). “Knowledge of the Company” means the actual
knowledge of one or more executive officers of the Company. “Law” means any
federal, state, local, municipal, foreign or other law, statute, constitution,
principle of common law, resolution, ordinance, code, order, edict, decree,
rule, regulation, ruling or requirement issued, enacted, adopted, promulgated,
implemented or otherwise put into effect by or under the authority of any
Governmental Entity. “Legend Removal Date” has the meaning ascribed to such term
in Section 5.2(d). “Lien” means a lien, charge, pledge, security interest,
encumbrance, right of first refusal, preemptive right or other restriction.
“Make-Whole Amount” has the meaning ascribed to such term in the Second Lien
Credit Agreement. “Material Adverse Effect” means, with respect to the Company,
any Effect that, individually or taken together with all other Effects that have
occurred prior to the date of 4

--------------------------------------------------------------------------------

 
[exhibit103transactionagr008.jpg]
determination of the occurrence of the Material Adverse Effect, is or is
reasonably likely to be materially adverse to the business, assets, results of
operations or condition (financial or otherwise) of the Company and its
Subsidiaries, taken as a whole; provided, that in no event shall any of the
following, alone or in combination, be deemed to constitute a Material Adverse
Effect or be taken into account in determining whether a Material Adverse Effect
has occurred: (i) any change in the Company’s stock price or trading volume,
(ii) any failure by the Company to meet revenue, earnings production or other
projections, (iii) any change in commodity prices or other Effect affecting the
oil and gas industry generally, or the United States economy generally, or any
Effect that results from changes affecting general worldwide economic or capital
market conditions, in each case except to the extent such change of Effect
disproportionately affects the Company and its Subsidiaries, taken as a whole,
relative to other oil and gas exploration and production companies operating in
the United States, (iv) any Effect caused by or resulting from the announcement
or pendency of the transactions contemplated by the Transaction Documents or the
RBL Credit Agreement or the identity of a Värde Party or any of its Affiliates
in connection with the transactions contemplated by this Agreement, (v) acts of
war or terrorism or natural disasters, (vi) the performance of the obligations
under the Transaction Documents and the consummation of the transactions
contemplated hereby and thereby, including compliance with the covenants set
forth herein and therein, or any action taken or omitted to be taken by the
Company at the request or with the prior consent of the Värde Parties, (vii) in
and of itself, the commencement of any suit, action or proceeding (provided,
that such exclusion shall not apply to any underlying fact, event or
circumstance that may have caused or contributed to such action, suit or
proceeding), or any liability, sanction or penalty arising from any governmental
proceeding or investigation that was commenced prior to the date of this
Agreement and disclosed by the Company in this Agreement, in a correspondingly
identified schedule attached hereto or in any SEC Report filed with or furnished
to the Commission prior to the date of this Agreement, (viii) changes in GAAP or
other accounting standards (or any interpretation thereof) or (ix) changes in
any Laws or other binding directives issued by any Governmental Entity or
interpretations or enforcement thereof; provided, that (A) the exceptions in
clause (i) or (ii) shall not prevent or otherwise affect a determination that
any Effect underlying such change or failure has resulted in, or contributed to,
a Material Adverse Effect, (B) without limiting clause (iii), with respect to
clauses (viii) and (ix), such Effects, alone or in combination, may be deemed to
constitute, or be taken into account in determining whether a Material Adverse
Effect has occurred, but only to the extent that such Effects disproportionately
affect the Company and its Subsidiaries, taken as a whole, relative to other oil
and gas exploration and production companies operating in the United States.
“Money Laundering Laws” has the meaning ascribed to such term in Section
3.1(ii). “Multiemployer Plan” means a multiemployer plan as defined in Section
4001(a)(3) of ERISA to which the Company or any ERISA Affiliate contributes or
has any obligations or liabilities (current or contingent). “OFAC” has the
meaning ascribed to such term in Section 3.1(gg). 5

--------------------------------------------------------------------------------

 
[exhibit103transactionagr009.jpg]
“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA and any successor entity performing similar functions. “Person” means an
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any kind.
“Plan” means any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 or 430 of the Code
or Section 302 of ERISA, and in respect of which the Company or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an “employer” as determined under ERISA. “Preferred
Stock” means the Series C-1 Preferred Stock, the Series C-2 Preferred Stock and
the Series D Preferred Stock. “Proxy Statement” has the meaning ascribed to such
term in Section 5.9. “Purchased Shares” has the meaning ascribed to such term in
Section 2.1(a). “RBL Credit Agreement” means that certain Second Amended and
Restated Senior Secured Revolving Credit Agreement, dated as of October 10,
2018, by and among the Company, the guarantors from time to time party thereto,
the lenders party thereto and BMO Harris Bank, N.A., as administrative agent and
collateral agent, as amended from time to time (in accordance with the Second
Lien Credit Agreement, any applicable intercreditor agreement and the
Certificate of Designations). “Registration Rights Agreement” means that certain
Registration Rights Agreement, dated as of the date hereof, by and among the
Company and the Värde Parties, in the form of Exhibit A attached hereto.
“Registration Statement” means a registration statement meeting the requirements
set forth in the Registration Rights Agreement and covering the resale of the
Underlying Shares by each Värde Party as provided for in the Registration Rights
Agreement. “Representatives” means, with respect to a specified Person, the
investors, officers, directors, managers, employees, agents, advisors, counsel,
accountants, investment bankers and other representatives of such Person.
“Required Approvals” has the meaning ascribed to such term in Section 3.1(e).
“Required Minimum” means, as of any date, the maximum aggregate number of shares
of the Common Stock then issuable upon conversion in full of all then
outstanding shares of the Purchased Shares and the Exchanged Preferred Shares,
ignoring any conversion limits set forth in the Certificates of Designation.
“Requisite Stockholder Approval” has the meaning ascribed to such term in
Section 5.9. 6

--------------------------------------------------------------------------------

 
[exhibit103transactionagr010.jpg]
“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or
any rule or regulation hereafter adopted by the Commission having substantially
the same purpose and effect as such Rule. “SEC Reports” has the meaning ascribed
to such term in Section 3.1(h). “Second Lien Amendment” means Amendment No. 6 to
the Second Lien Credit Agreement, dated as of the date hereof, by and among the
Company, the guarantors party thereto, the lenders party thereto and Wilmington
Trust, National Association, as administrative agent, in the form of Exhibit B
attached hereto. “Second Lien Credit Agreement” means that certain Credit
Agreement, dated as of April 26, 2017, by and among the Company, the guarantors
from time to time party thereto, the lenders party thereto and Wilmington Trust,
National Association, as administrative agent, as may be amended, restated,
amended and restated, replaced, refinanced, supplemented or otherwise modified
from time to time (including, for the avoidance of doubt, documentation
evidencing the Term Loan Take Back Debt (as defined therein)). “Securities”
means the Exchanged Shares, the Purchased Shares and the Underlying Shares.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder. “Securities Purchase
Agreement” means the Securities Purchase Agreement, dated January 30, 2018 among
the Company and the original Holders (as defined therein), as amended, modified
or supplemented from time to time in accordance with its terms. “Series C
Certificate of Designation” means the Amended and Restated Certificate of
Designation of Preferences, Rights and Limitations of Series C-1 9.75%
Convertible Participating Preferred Stock and Series C-2 9.75% Convertible
Participating Preferred Stock filed by the Company with the Secretary of State
of Nevada, in the form of Exhibit C attached hereto. “Series C-1 Preferred
Stock” means the Company’s Series C-1 9.75% Convertible Participating Preferred
Stock, par value $0.0001 per share, having the rights, preferences and
privileges set forth in the Series C Certificate of Designation. “Series C-2
Preferred Stock” means the Company’s Series C-2 9.75% Convertible Participating
Preferred Stock, par value $0.0001 per share, having the rights, preferences and
privileges set forth in the Series C Certificate of Designation. “Series D
Certificate of Designation” means the Certificate of Designation of Preferences,
Rights and Limitations of Series D 8.25% Convertible Participating Preferred
Stock filed by the Company with the Secretary of State of Nevada, in the form of
Exhibit D attached hereto. 7

--------------------------------------------------------------------------------

 
[exhibit103transactionagr011.jpg]
“Series D Preferred Stock” means the Company’s Series D 8.25% Convertible
Participating Preferred Stock, par value $0.0001 per share, having the rights,
preferences and privileges set forth in the Series D Certificate of Designation.
“Stated Value” has the meaning ascribed to such term in the Certificates of
Designation, as applicable. “Stockholder Meeting” has the meaning ascribed to
such term in Section 5.9. “Subscription Amount” means, as to each Värde Party,
the aggregate amount to be paid for the Purchased Shares purchased by such Värde
Party hereunder as set forth opposite such Värde Party’s name on Schedule I
hereto under the heading “Purchase— Subscription Amount.” “Subsidiary” means any
subsidiary of the Company as set forth on Schedule 3.1(a) and, where applicable,
also includes any direct or indirect subsidiary of the Company formed or
acquired after the date hereof. “Tax” means any federal, state, local, or
non-U.S. income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits, environmental, customs
duties, capital stock, franchise, profits, withholding, social security,
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated or
other tax of any kind whatsoever, including any interest, penalty or addition
thereto. “Tax Return” means any return, declaration, report, claim for refund or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof. “Term Loan” has the
meaning ascribed to such term in the Second Lien Credit Agreement. “Trading Day”
means a day on which the principal Trading Market is open for trading. “Trading
Market” means any of the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: the NYSE
American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global
Select Market, the New York Stock Exchange or NYSE National (or any successors
to any of the foregoing). “Transaction Documents” means this Agreement, the
Certificates of Designation, the Registration Rights Agreement, and the Second
Lien Amendment, in each case including all exhibits and schedules thereto and
hereto. “Transfer Agent” means Corporate Stock Transfer, Inc., the current
transfer agent and registrar for the Common Stock, and any successor transfer
agent and registrar for the Common Stock. 8

--------------------------------------------------------------------------------

 
[exhibit103transactionagr012.jpg]
“Underlying Shares” means the shares of Common Stock issuable upon conversion of
the Purchased Shares and the Exchanged Preferred Shares. “Värde Party” and
“Värde Parties” have the meanings ascribed to such terms in the preamble. “Värde
Parties’ Transaction Expense Amount” means all reasonable and documented
out-of-pocket fees and expenses incurred by the Värde Parties in connection with
the transactions contemplated by the Transaction Documents. “VWAP” means, for
any date, the daily volume weighted average price of the Common Stock for such
date (or the nearest preceding date) on the Trading Market on which the Common
Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading
Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)).
“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA. ARTICLE II. PURCHASE AND
SALE; ISSUE; AND GRANT 2.1 Purchase and Sale of Purchased Shares; Issue of
Exchanged Shares. (a) On the terms and subject to the conditions set forth
herein, the Company hereby sells to the Värde Parties, and the Värde Parties,
severally and not jointly, hereby purchase from the Company, an aggregate of
25,000 shares of the Series C-2 Preferred Stock (the “Purchased Shares”) with an
aggregate Stated Value of $25,000,000, with each Värde Party purchasing such
number of shares of the Series C-2 Preferred Stock as set forth opposite such
Värde Party’s name on Schedule I hereto, at a purchase price of $1,000 per share
of Series C-2 Preferred Stock. (b) On the terms and subject to the conditions
set forth herein and as consideration for the reduction of a portion of the
outstanding principal amount of the Term Loan, together with accrued and unpaid
interest thereon and the Make-Whole Amount pursuant to Section 4 of the Second
Lien Amendment, the Company hereby issues to the Värde Parties (i) an aggregate
of 5,952,763 shares of the Common Stock (the “Exchanged Common Shares”), with
each Värde Party receiving such number of shares of the Common Stock as set
forth opposite such Värde Party’s name on Schedule I hereto and (ii) an
aggregate of 39,254 shares of the Series D Preferred Stock (the “Exchanged
Preferred Shares” and, together with the Exchanged Common Shares, the “Exchanged
Shares”), with an aggregate Stated Value of $39,254,000, with each Värde Party
receiving such number of shares of the Series D Preferred Stock as set forth
opposite such Värde Party’s name on Schedule I hereto. The Exchanged Common
Shares correspond to $29,013,795 of the Exchange Amount, based on an agreed
exchange price of $5.00 per share of Common Stock plus an additional 150,000
shares of Common Stock; and the Exchanged Preferred 9

--------------------------------------------------------------------------------

 
[exhibit103transactionagr013.jpg]
Shares correspond to $39,254,000 of the Exchange Amount, based on an agreed
exchange price of $1,000 per share of Series D Preferred Stock. 2.2 Deliveries.
(a) On the date hereof, the Company shall deliver or cause to be delivered to
each Värde Party the following: (i) evidence of the number of shares of the
Purchased Shares issued to such Värde Party having been issued in book-entry
form to such Värde Party; (ii) evidence of the number of shares of the Exchanged
Shares issued to such Värde Party having been issued in book-entry form to such
Värde Party; (iii) evidence that the Series C Certificate of Designation has
been filed with, and accepted by, the Secretary of State of the State of Nevada;
(iv) evidence that the Series D Certificate of Designation has been filed with,
and accepted by, the Secretary of State of the State of Nevada; (v) the
Registration Rights Agreement duly executed by the Company; (vi) the Second Lien
Amendment duly executed by the Company and the guarantors party thereto; (vii)
evidence that a number of Underlying Shares at least equal to the Required
Minimum has been reserved by the Company and approved, subject to official
notice of issuance, for listing on the NYSE American; (viii) evidence that the
First Lien Credit Agreement has been terminated and no principal amount of the
Term Loan (as defined in the First Lien Credit Agreement) remains outstanding;
(ix) a certificate of the Company’s Secretary, dated as of the date hereof,
certifying (A) the Articles of Incorporation and bylaws, as then in effect and
attached thereto, (B) the resolutions adopted by the Board of Directors
authorizing the transactions contemplated hereby and (C) as to the signatures
and authority of the Persons signing the Transaction Documents and related
documents on behalf of the Company; (x) an opinion from Bracewell LLP, in
substantially the form attached hereto as Exhibit E, which shall be addressed to
the Värde Parties and dated as of the date hereof; (xi) an opinion of Nevada
counsel, in substantially the form attached hereto as Exhibit F, which shall be
addressed to the Värde Parties and dated as of the date hereof; 10

--------------------------------------------------------------------------------

 
[exhibit103transactionagr014.jpg]
(xii) payment of the Värde Parties’ Transaction Expense Amount, payable by wire
transfer of immediately available funds to the accounts designated by the Värde
Parties prior to the date hereof; and (xiii) a cross-receipt, duly executed by
the Company, acknowledging receipt from the Värde Parties of the aggregate
Subscription Amount. (b) On the date hereof, each Värde Party shall deliver or
cause to be delivered to the Company the following: (i) payment of such Värde
Party’s Subscription Amount in cash by wire transfer of immediately available
funds to the account designated by the Company prior to the date hereof; (ii)
the Registration Rights Agreement duly executed by such Värde Parties; (iii) the
Second Lien Amendment duly executed by such Värde Parties and the other lenders
party thereto; and (iv) a cross-receipt, duly executed by such Värde Party,
acknowledging such Värde Party’s receipt of the number of shares of the
Purchased Shares and the Exchanged Shares, respectively, set forth opposite such
Värde Party’s name on Schedule I hereto. ARTICLE III. REPRESENTATIONS AND
WARRANTIES 3.1 Representations and Warranties of the Company. The Company hereby
represents and warrants to each Värde Party, as of the date hereof, that, except
as disclosed in the SEC Reports filed with or furnished to the Commission and
publicly available prior to the date of this Agreement (excluding any risk
factor disclosure and disclosure of risks included in any “forward-looking
statements” disclaimer or other statements included in such SEC Reports to the
extent that they are predictive, forward-looking or primarily cautionary in
nature, in each case other than any specific factual information contained
therein, and excluding any supplement, modification or amendment thereto made
after the date hereof): (a) Subsidiaries. The Company owns, directly or
indirectly, all of the capital stock or other equity interests of each
Subsidiary free and clear of any Liens (except for Liens created under or
expressly permitted by the RBL Credit Agreement and the Second Lien Credit
Agreement), and all of the issued and outstanding shares of capital stock or
other equity interests of each Subsidiary have been validly issued, are fully
paid and nonassessable (except in the case of any Subsidiary that is a limited
liability company, as such nonassessability may be affected by the applicable
limited liability company Law) and were not issued in violation of any
preemptive or similar rights to subscribe for or purchase securities. None of
the Company’s Subsidiaries is currently prohibited, directly or indirectly, from
paying any dividends or distributions to the Company, from making any 11

--------------------------------------------------------------------------------

 
[exhibit103transactionagr015.jpg]
other distribution on such Subsidiary’s capital stock or other equity
securities, from repaying to the Company any loans or advances to such
Subsidiary from the Company or from transferring any of such Subsidiary’s
property or assets to the Company or any other Subsidiary of the Company, except
for (i) such prohibitions under applicable Law, applicable organizational or
charter documents, the RBL Credit Agreement or the Second Lien Credit Agreement,
(ii) restrictions on the subletting, assignment or transfer of any property,
right or asset that is subject to a lease, license or similar contract, or the
assignment or transfer of any such lease, license or other similar contract and
(iii) other restrictions incurred in the ordinary course of business under
agreements or instruments not relating to indebtedness of the Company or any of
its Subsidiaries. (b) Organization and Qualification. (i) The Company and each
of the Subsidiaries is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, with the requisite corporate or other applicable
entity power and authority to own and use its properties and assets and to carry
on its business as currently conducted. Neither the Company nor any Subsidiary
is in violation or default of any of the provisions of its respective
certificate or articles of incorporation, bylaws or other organizational or
charter documents. (ii) Each of the Company and the Subsidiaries is duly
qualified to conduct business and is in good standing as a foreign corporation
or other entity in each jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary, except to
the extent that any failure to be so qualified or in good standing has not had,
and would not reasonably be expected to have, a Material Adverse Effect. (c)
Authorization; Enforcement. The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by the
Transaction Documents and otherwise to carry out its obligations hereunder and
thereunder. Except for obtaining the Requisite Stockholder Approval, the
execution and delivery of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action on the part of the Company and
no further approval of the Board of Directors or the Company’s stockholders is
required in connection herewith or therewith. The Transaction Documents to which
the Company is a party have been (or upon delivery or filing thereof will have
been) duly executed by the Company and, when delivered or filed with the
Secretary of State of the State of Nevada, as applicable, in accordance with the
terms hereof and thereof, will constitute the valid and binding obligations of
the Company enforceable against the Company in accordance with their terms
(except as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors’ rights or by general equity
principles). 12

--------------------------------------------------------------------------------

 
[exhibit103transactionagr016.jpg]
(d) No Conflicts. The execution, delivery and performance by the Company of the
Transaction Documents to which it is a party and the consummation by it of the
transactions contemplated hereby and thereby do not and will not: (i) conflict
with or violate any provision of the Company’s or any Subsidiary’s certificate
or articles of incorporation, bylaws or other organizational or charter
documents, (ii) assuming the due execution and delivery of each of the RBL
Credit Agreement and the Second Lien Amendment by the parties thereto, conflict
with, or constitute a material default (or an event that with notice or lapse of
time or both would become a material default) under, result in the creation of
any Lien upon any of the properties or assets of the Company or any Subsidiary,
or give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any agreement,
credit facility, debt or other instrument (evidencing a Company or Subsidiary
debt or otherwise and including, for the avoidance of doubt, the RBL Credit
Agreement and the Second Lien Credit Agreement) to which the Company or any
Subsidiary is a party or by which any property or asset of the Company or any
Subsidiary is bound or, (iii) subject to the Required Approvals, conflict with
or result in a material violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority
to which the Company or a Subsidiary is subject (including federal and state
securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound. (e) Filings, Consents and Approvals. Assuming
the due execution and delivery of each of the RBL Credit Agreement and the
Second Lien Amendment by the parties thereto, the Company is not required to
obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any Governmental Entity or other Person in
connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than: (i) as contemplated by Sections 5.5, 5.8, 5.9
and 5.11; (ii) as contemplated by the Registration Rights Agreement; (iii) as
required in connection with the listing of the Exchanged Common Shares and the
Underlying Shares on the NYSE American; (iv) the filing of the Certificates of
Designation with the Secretary of State of the State of Nevada; and (v) as may
be required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended in connection with the conversion of shares of the Preferred Stock
(collectively, the “Required Approvals”). (f) Issuance of the Securities. The
Purchased Shares and the Exchanged Shares have been duly authorized. When the
Certificates of Designation have been filed with the Secretary of State of the
State of Nevada, the Purchased Shares have been issued and paid for and the
Exchanged Shares have been issued, in accordance with the Transaction Documents,
the Purchased Shares and the Exchanged Shares will be duly and validly issued,
fully paid and nonassessable and free and clear of all Liens imposed by, or
arising through, the Company other than restrictions on transfer provided for in
the Transaction Documents. Each of the Underlying Shares, when issued in
accordance with the terms of the Transaction Documents, will be validly issued,
fully paid and nonassessable and free and clear of all Liens imposed by, or
arising through, the Company other than restrictions on transfer provided for in
the Transaction Documents. The Company has reserved from its duly authorized
Common Stock a number of shares of the Common Stock for issuance of the
Underlying Shares at least equal to the Required Minimum. 13

--------------------------------------------------------------------------------

 
[exhibit103transactionagr017.jpg]
(g) Capitalization. The authorized shares of capital stock consist of (i)
150,000,000 shares of the Common Stock and (ii) 10,000,000 shares of preferred
stock, par value $0.0001 per share. As of the close of business on September 30,
2018 (the “Capitalization Date”), (i) 65,900,378 shares of the Common Stock were
issued and outstanding, (ii) 100,000 shares of preferred stock (all designated
Series C-1 Preferred Stock) were issued and outstanding, (iii) 5,099,450 shares
of the Common Stock were reserved for issuance upon the exercise of stock
options outstanding on such date and zero shares of the Common Stock were
reserved for issuance upon the exercise or payment of stock units (including
deferred stock units, restricted stock and restricted stock units) or other
equity-based incentive awards granted pursuant to any plans, agreements or
arrangements of the Company and outstanding on such date (collectively, the
“Company Stock Awards”), (iv) 5,137,329 shares of the Common Stock were reserved
for issuance upon the exercise of outstanding warrants and 20,807,726 conversion
of outstanding Series C-1 Preferred Stock, (v) 24,143,977 shares of the Common
Stock were reserved for issuance upon conversion of the Second Lien Credit
Agreement and (vi) 253,598 shares of the Common Stock were held by the Company
in its treasury. Since the Capitalization Date, the Company has not sold or
issued or repurchased, redeemed or otherwise acquired any shares of the
Company’s capital stock or other equity securities other than shares of the
Common Stock issued in respect of the exercise of Company Stock Awards in the
ordinary course of business. Except as contemplated by the Transaction Documents
and the Second Lien Credit Agreement and as set forth in this Section 3.1(g),
there are no outstanding options, warrants, scrip rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exercisable or exchangeable for, or giving any
Person any right to subscribe for or acquire any shares of the Common Stock, or
contracts, commitments, understandings or arrangements by which the Company or
any Subsidiary is or may become bound to issue additional shares of the Common
Stock or Common Stock Equivalents. None of (i) the issuance and sale of the
Purchased Shares or the issuance of the Exchanged Shares pursuant to this
Agreement or (ii) the issuance of shares of the Common Stock upon conversion of
the Preferred Stock will obligate the Company to issue shares of the Common
Stock or other securities to any Person (other than the Värde Parties) or result
in a right of any holder of Company securities to adjust the exercise,
conversion, exchange or reset price under any of such securities. All of the
outstanding shares of capital stock of the Company have been duly authorized and
validly issued, are fully paid and nonassessable and have been issued in
compliance with all federal and state securities Laws, and none of such
outstanding shares was issued in violation of any preemptive rights or similar
rights to subscribe for or purchase securities. Except as provided in the
Transaction Documents and the Second Lien Credit Agreement, there are no
stockholders agreements, voting agreements or other similar agreements with
respect to the Company’s capital stock to which the Company is a party or, to
the Knowledge of the Company, between or among any of the Company’s
stockholders. (h) SEC Reports; Financial Statements. (i) The Company has filed
with or furnished to the Commission all reports, schedules, forms, statements
and other documents required to be filed with or furnished to the Commission by
the Company under the Securities Act and the 14

--------------------------------------------------------------------------------

 
[exhibit103transactionagr018.jpg]
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, since
December 31, 2015 (all such materials filed or furnished by the Company, whether
or not required to be filed or furnished, including the exhibits thereto and
documents incorporated by reference therein, being collectively referred to
herein as the “SEC Reports”) on a timely basis or has received a valid extension
of such time of filing and has filed any such SEC Reports prior to the
expiration of any such extension. As of their respective dates, the SEC Reports
complied in all material respects with the requirements of the Securities Act
and the Exchange Act, as applicable, and none of the SEC Reports, when filed,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC Reports
complied in all material respects with applicable accounting requirements and
the rules and regulations of the Commission with respect thereto as in effect at
the time of filing. Such financial statements have been prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis during the periods involved (“GAAP”), except as may be
otherwise specified in such financial statements or the notes thereto, and
fairly present in all material respects the financial position of the Company
and its consolidated Subsidiaries as of and for the dates thereof and the
results of operations and cash flows for the periods then ended, subject, in the
case of unaudited statements, to normal, immaterial, year-end audit adjustments.
(ii) The Company (i) has implemented and maintains disclosure controls and
procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are
reasonably designed to ensure that material information relating to the Company,
including its Subsidiaries, is made known to the individuals responsible for the
preparation of the Company’s filings with the Commission and (ii) has disclosed,
based on its most recent evaluation prior to the date of this Agreement, to the
Company’s outside auditors and the Board of Directors’ audit committee (A) any
significant deficiencies and material weaknesses in the design or operation of
internal controls over financial reporting (as defined in Rule 13a-15(f) under
the Exchange Act) that are reasonably likely to materially adversely affect the
Company’s ability to record, process, summarize and report financial information
and (B) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Company’s internal controls over
financial reporting. (i) Material Changes; Undisclosed Events, Liabilities or
Developments. Since the date of the latest audited financial statements included
within the SEC Reports, except as specifically disclosed in a subsequent SEC
Report filed or furnished prior to the date hereof: (i) there has been no event,
occurrence or development that has had or that would reasonably be expected to
result in a Material Adverse Effect, (ii) the Company has not incurred any
liabilities (contingent or otherwise) other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent with past
practice, (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP and (C) liabilities under the Transaction
Documents, the RBL Credit Agreement 15

--------------------------------------------------------------------------------

 
[exhibit103transactionagr019.jpg]
and the Second Lien Credit Agreement and (iii) the Company has not altered its
methods of accounting. (j) Litigation. There is no action, suit, inquiry, notice
of violation, proceeding or investigation pending or, to the Knowledge of the
Company, threatened against or affecting the Company, any Subsidiary or any of
their respective properties before or by any Government Entity (collectively, an
“Action”) which (i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or (ii) if adversely
determined, would reasonably be expected to have a Material Adverse Effect.
Neither the Company nor any Subsidiary, nor any director or officer thereof (in
his or her capacity as a director or officer of the Company), is or has been the
subject of any Action involving a claim of violation of or liability under
federal or state securities laws or a claim of breach of fiduciary duty. There
has not been, and to the Knowledge of the Company, there is not pending or
contemplated, any investigation by the Commission involving the Company or any
current or, to the Knowledge of the Company, former director or officer of the
Company (in his or her capacity as a director or officer of the Company). The
Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company under the
Exchange Act or the Securities Act. (k) Labor Relations. No strike, concerted
refusal to work or other similar material labor dispute exists or, to the
Knowledge of the Company, is imminent with respect to any of the employees of
the Company. None of the Company’s or its Subsidiaries’ employees is a member of
a union that relates to such employee’s relationship with the Company or such
Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a
collective bargaining agreement. To the Knowledge of the Company, no executive
officer of the Company or any Subsidiary, is, or is now expected to be, in
violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement or noncompetition agreement, or
any other contract or agreement or any restrictive covenant in favor of any
third party, and the continued employment of each such executive officer does
not subject the Company or any of its Subsidiaries to any liability with respect
to any of the foregoing matters. The Company and its Subsidiaries are in
material compliance with all Laws relating to employment and employment
practices, terms and conditions of employment and wages and hours. There are no
material Actions against the Company pending, or to the Knowledge of the
Company, threatened to be filed in connection with the employment of any
employee of the Company or any of its Subsidiaries. (l) Compliance. Neither the
Company nor any Subsidiary: (i) is in default under or in violation of (and no
event has occurred that has not been waived that, with notice or lapse of time
or both, would result in a default by the Company or any Subsidiary under), nor
has the Company or any Subsidiary received notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or credit
agreement or any other agreement or instrument to which it is a party or by
which it or any of its properties is bound (whether or not such default or
violation has been waived), (ii) is in violation of any judgment, decree or
order of any Governmental Entity or (iii) is or has been in violation of 16

--------------------------------------------------------------------------------

 
[exhibit103transactionagr020.jpg]
any Laws, except, in each case, as would not reasonably be expected to have a
Material Adverse Effect or as set forth on Schedule 3.1(l). (m) Sarbanes-Oxley.
The Company, the Subsidiaries and the Company’s officers and directors (in their
capacity as such) are in material compliance with any and all applicable
requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date
hereof, and any and all applicable rules and regulations promulgated by the
Commission thereunder that are effective as of the date hereof. (n) Regulatory
Permits. Except as would not reasonably be expected to have a Material Adverse
Effect, (i) the Company and the Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate Governmental Entity
necessary to conduct their respective businesses as described in the SEC Reports
and have fulfilled and performed all of their respective obligations with
respect to such certificates, authorizations and permits and (ii) no event has
occurred that allows, or after notice or lapse of time would allow, revocation
or termination thereof or result in any other impairment of the rights of the
holder of such certificates, authorizations and permits. (o) Title to Assets.
The Company and the Subsidiaries have generally satisfactory title to all of
their interests in producing oil and gas properties and to all of their material
interests in non-producing oil and gas properties, in each case free and clear
of all Liens, except for Liens created under or expressly permitted by the RBL
Credit Agreement and the Second Lien Credit Agreement. (p) Intellectual
Property. The Company and the Subsidiaries have, or have rights to use, all
trademarks, service marks, trade names, trade secrets, information, copyrights,
and other intellectual property rights and similar rights material to its
business as presently conducted (collectively, the “Intellectual Property
Rights”). Neither the Company nor any Subsidiary has received, since the date of
the latest audited financial statements included within the SEC Reports, a
written notice of a claim that the Intellectual Property Rights violate the
intellectual property rights of any Person. To the Knowledge of the Company, all
such Intellectual Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property Rights. (q)
Insurance. Each of the Company and its Subsidiaries carry, or are covered by,
insurance from insurers of recognized financial responsibility in such amounts
and covering such risks as is reasonably adequate for the conduct of their
respective businesses and the value of their respective properties and as is
customary for companies engaged in similar businesses in similar industries. All
material policies of insurance of the Company and its Subsidiaries are in full
force and effect; the Company and its Subsidiaries are in compliance with the
terms of such policies in all material respects; there are no material claims by
the Company or any of its Subsidiaries under any such policy or instrument as to
which any insurance company is denying liability or defending under a
reservation of rights clause; and none of the Company or any of its Subsidiaries
has any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business
without a significant increase in cost. 17

--------------------------------------------------------------------------------

 
[exhibit103transactionagr021.jpg]
(r) Related Party Transactions. Since December 31, 2015, neither the Company nor
any of its Subsidiaries has entered into (i) any transaction required to be
disclosed in SEC Reports prior to the date hereof pursuant to Item 404 of
Regulation S-K promulgated by the Commission that has not been so disclosed or
(ii) any related party transaction subject to the Company’s related party
transactions policy that has not been approved in accordance with such policy.
(s) Certain Fees. No brokerage or finder’s fees or commissions are or will be
payable by the Company or any Subsidiary to any broker, financial advisor,
finder, placement agent, investment banker or other similar Person with respect
to the offer and sale of the Purchased Shares. (t) Private Placement. Assuming
the accuracy of the Värde Parties’ representations and warranties set forth in
Section 3.2, no registration under the Securities Act is required for, the offer
and sale of the Purchased Shares, the issue of the Exchanged Shares or the issue
of the Underlying Shares by the Company to the Värde Parties as contemplated
hereby. The issuance and sale of the Purchased Shares and the issuance of the
Exchanged Shares hereunder do not, and the issuance of the Underlying Shares
will not, contravene the rules and regulations of the NYSE American. (u)
Investment Company. The Company is not, and immediately after the issuance and
sale of the Purchased Shares and receipt of payment therefor will not be, an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended. (v) Registration Rights. Except as set forth on Schedule 3.1(v), no
Person has any right to cause the Company to effect the registration under the
Securities Act of any securities of the Company or any Subsidiary. The Company
has not granted registration rights to any Person other than the Värde Parties
that would provide such Person priority over the Värde Parties’ rights with
respect to any registration pursuant to the Registration Rights Agreement. (w)
Registration and Transfer Requirements. The Common Stock is registered pursuant
to Section 12(b) of the Exchange Act and is listed on NYSE American and the
Company has not taken (and, to the Knowledge of the Company, no Person has
taken) any action designed to, or which to the Knowledge of the Company, is
likely to have the effect of, terminating the registration of the Common Stock
under the Exchange Act nor has the Company received any notification that the
Commission is contemplating terminating (or seeking to terminate) such
registration or listing. No notice of delinquency or delisting from the NYSE
American has been received by the Company with respect to the Common Stock. The
Exchanged Common Shares and a number of Underlying Shares at least equal to the
Required Minimum have been approved, subject to official notice of issuance, for
listing on the NYSE American. (x) Application of Takeover Protections. The
Company and the Board of Directors have taken all necessary action, if any, in
order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a 18

--------------------------------------------------------------------------------

 
[exhibit103transactionagr022.jpg]
rights agreement) or other similar anti-takeover provision under the Articles of
Incorporation (or similar charter documents) or the laws of its state of
incorporation that is or could become applicable to the Värde Parties as a
result of the Värde Parties and the Company fulfilling their obligations or
exercising their rights under the Transaction Documents, including, without
limitation, as a result of the Company’s issuance of the Securities and the
Värde Parties’ ownership of the Securities. (y) No Integrated Offering. Assuming
the accuracy of the Värde Parties’ representations and warranties set forth in
Section 3.2, neither the Company, nor any of its Affiliates, nor any Person
acting on its or their behalf has, directly or indirectly, made any offers or
sales of any security or solicited any offers to buy any security, under
circumstances that would cause the offering of the Securities to be integrated
with prior offerings by the Company for purposes of (i) the Securities Act which
would require the registration of any such securities under the Securities Act
or (ii) any applicable stockholder approval provisions of the NYSE American. (z)
Tax Status. The Company and its Subsidiaries each (i) has made or filed all
United States federal, state and local income and all other material Tax
Returns, reports and declarations required by any jurisdiction to which it is
subject and (ii) has paid all Taxes and other governmental assessments and
charges that are material in amount or shown or determined to be due on such Tax
Returns, reports and declarations, except those being contested in good faith by
appropriate proceedings and for which the Company or such Subsidiary, as
applicable, has set aside on its books adequate reserves in accordance with
GAAP. (aa) ERISA. No ERISA Event has occurred or is reasonably expected to occur
that could reasonably be expected to result in a Material Adverse Effect. (bb)
No General Solicitation. Neither the Company nor any Person acting on behalf of
the Company has offered or sold any of the Securities by any form of general
solicitation or general advertising (as those terms are used in Regulation D
promulgated under the Securities Act). (cc) Foreign Corrupt Practices. Neither
the Company nor any Subsidiary, nor to the Knowledge of the Company or any
Subsidiary, any agent or other person acting on behalf of the Company or any
Subsidiary, has: (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
foreign or domestic political activity; (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds; (iii) failed to
disclose fully any contribution made by the Company or any Subsidiary (or made
by any Person acting on its behalf of which the Company is aware) which is in
violation of law; or (iv) violated in any material respect any provision of
FCPA. (dd) Acknowledgment Regarding Värde Parties’ Purchase of Securities. The
Company acknowledges and agrees that each of the Värde Parties is acting solely
in the capacity of an arm’s length purchaser with respect to the Securities. The
Company further 19

--------------------------------------------------------------------------------

 
[exhibit103transactionagr023.jpg]
acknowledges that no Värde Party is acting as a financial advisor or fiduciary
of the Company (or in any similar capacity) with respect to the Transaction
Documents and the transactions contemplated hereby and thereby and any advice
given by any Värde Party or any of their respective Representatives or agents in
connection with the Transaction Documents and the transactions contemplated
thereby is merely incidental to the transactions contemplated hereby and
thereby. The Company further represents to each Värde Party that the Company’s
decision to enter into the Transaction Documents has been based solely on the
independent evaluation of the transactions contemplated hereby by the Company
and its Representatives. The Company acknowledges and agrees that no Värde Party
makes or has made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in
Section 3.2 hereof. (ee) Regulation M Compliance. The Company has not, and to
the Knowledge of the Company, no one acting on its behalf has, (i) taken,
directly or indirectly, any action designed to cause or to result in the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of any of the Securities, or (ii) sold, bid for,
purchased, or paid any compensation for soliciting purchases of any of the
Securities. (ff) Stock Option Plans. To the Knowledge of the Company, each stock
option granted by the Company under the 2016 Plan was granted (i) in accordance
with the terms of the 2016 Plan and (ii) with an exercise price at least equal
to the fair market value of the Common Stock on the date such stock option would
be considered granted under GAAP and applicable law. To the Knowledge of the
Company, no stock option granted under the 2016 Plan has been backdated. To the
Knowledge of the Company, the Company has not intentionally granted, and there
is no and has been no Company policy or practice to intentionally grant, stock
options under the 2016 Plan prior to, or otherwise intentionally coordinate the
grant of stock options with, the release or other public announcement of
material information regarding the Company or its Subsidiaries or their
financial results or prospects. (gg) Office of Foreign Assets Control. Neither
the Company nor any Subsidiary nor, to the Knowledge of the Company, any
director, officer, agent, employee or affiliate of the Company or any Subsidiary
is currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Treasury Department (“OFAC”). (hh) Environmental
Matters. (i) Except as would not reasonably be expected to have a Material
Adverse Effect, the Company and its Subsidiaries (i) for the last 5 years have
been and are in compliance with all Environmental Laws, which compliance
includes and has included obtaining, maintaining and complying with any permit,
license, authorization or other approval required under any Environmental Law,
(ii) have not incurred, assumed, provided an indemnity with respect to, or
otherwise become subject to any Environmental Liability of any other Person and
(iii) have not received any notice, report, order, directive or other
information regarding any actual or alleged violation of or liability under
Environmental Laws, and are not subject to any pending or, to the Knowledge of
the Company, threatened 20

--------------------------------------------------------------------------------

 
[exhibit103transactionagr024.jpg]
Proceedings arising under Environmental Laws, in each case the subject matter of
which is unresolved. (ii) Except as would not reasonably be expected to have a
Material Adverse Effect, neither the Company nor any Subsidiary has treated,
stored, released, discharged, disposed of, arranged for or permitted the
disposal of, transported, handled, manufactured, distributed, or exposed any
Person to, or owned or operated any property or facility which is or has been
contaminated by, any Hazardous Materials, in each case so as to give rise to any
Environmental Liability of the Company or its Subsidiaries. (ii) Money
Laundering. The operations of the Company and its Subsidiaries are and have been
conducted at all times in compliance with applicable financial record- keeping
and reporting requirements of the Currency and Foreign Transactions Reporting
Act of 1970, as amended, applicable money laundering statutes and applicable
rules and regulations thereunder (collectively, the “Money Laundering Laws”),
and no action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any Subsidiary with
respect to the Money Laundering Laws is pending or, to the Knowledge of the
Company or any Subsidiary, threatened. Except for the representations and
warranties made by the Company in this Section 3.1, neither the Company nor any
other Person makes any express or implied representation or warranty with
respect to the Company or any Subsidiaries or their respective businesses,
operations, assets liabilities, condition or prospects, and the Company hereby
disclaims any such other representations or warranties. In particular, without
limiting the foregoing disclaimer, neither the Company nor any other Person
makes or has made any representation or warranty to the Värde Parties, or any of
their respective Affiliates or representatives with respect to (i) any financial
projection, forecast, estimate, budget or prospect information relating to the
Company or any of its Subsidiaries or their respective business, or (ii) except
for the representations and warranties made by the Company in this Section 3.1
and any certificate delivered in connection with Section 2.2(a)(vii) and
2.2(a)(ix), any oral or written information presented to the Värde Parties, or
any of their respective Affiliates or representatives, in the course of their
due diligence investigation of the Company, the negotiation of this Agreement or
in the course of the transactions contemplated hereby. Notwithstanding anything
to the contrary herein, nothing in this Agreement shall limit the right of the
Värde Parties to rely on the representations, warranties, covenants and
agreements made to the Värde Parties expressly set forth in the Transaction
Documents or in any certificate delivered hereunder or thereunder. 3.2
Representations and Warranties of the Värde Parties. Each Värde Party, for
itself and for no other Värde Party, hereby represents and warrants to the
Company, as of the date hereof, that: (a) Organization; Authority. Such Värde
Party is an entity duly incorporated or formed, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or formation
with full right, corporate, partnership, limited liability company or similar
power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations 21

--------------------------------------------------------------------------------

 
[exhibit103transactionagr025.jpg]
hereunder and thereunder. The execution and delivery of the Transaction
Documents and performance by such Värde Party of the transactions contemplated
by the Transaction Documents have been duly authorized by all necessary
corporate, partnership, limited liability company or similar action, as
applicable, on the part of such Värde Party. The Transaction Documents to which
such Värde Party is a party have been duly executed by such Värde Party and,
when delivered by such Värde Party in accordance with the terms hereof, will
constitute the valid and legally binding obligations of such Värde Party,
enforceable against it in accordance with their terms (except as enforcement may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating to or
affecting creditors’ rights or by general equity principles). (b) Own Account.
Such Värde Party understands that the Securities are “restricted securities,” as
defined in Section (a)(3) of Rule 144 of the Securities Act, and have not been
registered under the Securities Act or any applicable state securities law and
such Vade party is acquiring the Securities as principal for its own account and
not with a view to or for distributing or reselling the Securities or any part
thereof in violation of the Securities Act or any applicable state securities
law, has no present intention of distributing any of the Securities in violation
of the Securities Act or any applicable state securities law and has no direct
or indirect arrangement or understandings with any other Persons to distribute
or regarding the distribution of the Securities in violation of the Securities
Act or any applicable state securities law (this representation and warranty not
limiting such Värde Party’s right to sell the shares of the Preferred Stock
pursuant to a Registration Statement or otherwise in compliance with applicable
federal and state securities laws). Such Värde Party is acquiring the Securities
hereunder in the ordinary course of its business. (c) Available Funds. Such
Värde Party currently has sufficient cash, capital commitments, available lines
of credit or other sources of immediately available funds to make payment of all
amounts to be paid by such Värde Party hereunder. (d) Värde Party Status. At the
time such Värde Party was offered the Securities, it was, and as of the date
hereof it is, an “accredited investor” as defined in Rule 501 of Regulation D
promulgated under the Securities Act. (e) Access to Information. Such Värde
Party acknowledges that it has had the opportunity to review the Transaction
Documents (including all exhibits and schedules thereto) and the SEC Reports and
has been afforded: (i) the opportunity to ask such questions as it has deemed
necessary of, and to receive answers from, Representatives of the Company
concerning the terms and conditions of the offering of the Securities and the
merits and risks of investing in the Securities; (ii) access to information
about the Company and its financial condition, results of operations, business,
properties, management and prospects sufficient to enable it to evaluate its
investment; and (iii) the opportunity to obtain such additional information that
the Company possesses or can acquire without unreasonable effort or expense that
is necessary to make an informed investment decision with respect to the
investment. 22

--------------------------------------------------------------------------------

 
[exhibit103transactionagr026.jpg]
(f) Experience of Such Värde Party. Such Värde Party, either alone or together
with its Representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities, and has so evaluated the
merits and risks of such investment. Such Värde Party is able to bear the
economic risk of an investment in the Securities and, at the present time, is
able to afford a complete loss of such investment. (g) General Solicitation.
Such Värde Party is not purchasing the Securities as a result of any
advertisement, article, notice or other communication regarding the Securities
published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar or any other general
solicitation or general advertisement. ARTICLE IV. CONSENT OF THE SERIES C-1
HOLDERS 4.1 The Värde Parties hereby represent and warrant to the Company that,
as of the date hereof, they currently own a majority of the outstanding Series
C-1 Preferred Stock. 4.2 The Värde Parties, in their capacity as holders of a
majority of the outstanding Series C-1 Preferred Stock, hereby consent to (i)
the issuance by the Company of the Purchased Shares and the Exchanged Preferred
Shares and (ii) the amendment of the Series C Certificate of Designation and the
filing of the Series D Certificate of Designation with the Secretary of State of
the State of Nevada. ARTICLE V. OTHER AGREEMENTS OF THE PARTIES 5.1 Filings;
Other Actions. Following the execution of this Agreement, the Värde Parties, on
the one hand, and the Company, on the other hand, will cooperate and consult
with the other and use commercially reasonable efforts to prepare and file all
necessary documentation, to effect all necessary applications, notices,
petitions, filings and other documents, and to obtain all necessary permits,
consents, orders, approvals and authorizations of, or any exemption by, all
third parties and Governmental Entities, and the expiration or termination of
any applicable waiting period, necessary or advisable to consummate the
transactions contemplated by this Agreement, and to perform the covenants
contemplated by this Agreement. Each party shall execute and deliver such
further certificates, agreements and other documents and take such other actions
as the other parties may reasonably request to consummate or implement such
transactions or to evidence such events or matters. Each party hereto agrees to
keep the other party apprised of the status of matters referred to in this
Section 5.1. The Värde Parties shall promptly furnish the Company, and the
Company shall promptly furnish the Värde Parties, to the extent permitted by
applicable Law, with copies of written communications received by it or its
Subsidiaries from, or delivered by any of the foregoing to, any Governmental
Entity in respect of the transactions contemplated by this Agreement. 23

--------------------------------------------------------------------------------

 
[exhibit103transactionagr027.jpg]
5.2 Transfer Restrictions. (a) Prior to April 5, 2019, without the consent of
the Company, no Värde Party may transfer any of the Exchanged Common Shares
other than to an affiliate of such Värde Party or in connection with a business
combination transaction involving the Company. After April 5, 2019, the
Exchanged Common Shares shall be unrestricted and freely transferable, subject
to applicable securities laws binding on such Värde Party or transfer. No Värde
Party may transfer any of the Purchased Shares, the Exchanged Preferred Shares
or the Underlying Shares except in accordance with the terms of the Certificates
of Designation. Any purported transfer of any shares of the Securities in
violation of this Section 5.2 or the Certificates of Designation shall be void
ab initio, neither the Company nor such Värde Party shall recognize the same and
the Company shall not record such purported transfer on its books or treat the
purported transferee as the owner of any such Securities for any purpose. (b)
Certificates representing shares of the Securities will bear a legend
conspicuously thereon, as provided in the Certificates of Designation, or, with
respect to the Exchanged Common Shares, a substantially legend with appropriate
modifications. (c) The Company acknowledges and agrees that a Värde Party may
from time to time pledge or grant a security interest in some or all of the
Securities to a financial institution that is an “accredited investor” as
defined in Rule 501(a) under the Securities Act and who agrees to be bound by
the provisions of this Agreement and the Registration Rights Agreement and, if
required under the terms of such arrangement, such Värde Party may transfer
pledged or secured shares of the Securities to the pledgees or secured parties.
Such a pledge or transfer will not be subject to approval of the Company and no
legal opinion of legal counsel of the pledgee, secured party or pledger shall be
required in connection therewith. Further, no notice shall be required of such
pledge. At the appropriate Värde Party’s expense, the Company shall reasonably
cooperate with the Värde Party in connection with such pledge or transfer and
will execute and deliver such reasonable documentation as a pledgee secured
party of the Securities may reasonably request in connection with a transfer of
the Securities. (d) Subject to the limitations set forth below, certificates
evidencing the Underlying Shares shall not contain any legend (except in respect
of the restrictions set forth in Section 13(a) of the Certificates of
Designation, as relevant): (i) while a Registration Statement covering the
resale of such security is effective under the Securities Act, (ii) following
any sale of such Underlying Shares pursuant to Rule 144 or (iii) if such
Underlying Shares are held by a Person who is not, and has not been for the
preceding 90 days, an Affiliate of the Company and such Underlying Shares are
eligible for sale under Rule 144 without restriction and, in the case of this
clause (iii), the Company’s counsel (upon receipt of requested certifications
from the of such Underlying Shares) has delivered an opinion of counsel in form
and substance reasonably acceptable to the Transfer Agent if so requested by the
Transfer Agent. The Company agrees that at such time as such legend is no longer
required under clause (i), (ii) or (iii) of the first sentence of this Section
5.2(d), it will, no later than five Trading Days following the delivery by a
Värde Party to the Company or the Transfer Agent of a certificate representing
Underlying Shares, as 24

--------------------------------------------------------------------------------

 
[exhibit103transactionagr028.jpg]
applicable, issued with a restrictive legend (such third Trading Day, the
“Legend Removal Date”), deliver or cause to be delivered to such Värde Party a
certificate representing such shares that is free from all restrictive and other
legends (except in respect of the restrictions set forth in Section 13(a) of the
Certificates of Designation, as relevant). (e) In connection with Section
5.2(d), each Värde Party, severally and not jointly with the other Värde
Parties, understands and hereby acknowledges that in order for Rule 144 to be
applicable to the sale of the Underlying Shares, the Company must be current
with respect to its filing obligations under the Exchange Act at the time of
such sale. Each Värde Party further understands and hereby acknowledges that any
legal opinion given by the Company’s counsel in connection with Section 5.2(d)
may be limited as to scope and in particular may expire or be withdrawn in the
event that the requirements of Rule 144 are not satisfied, including if the
Company is not in compliance with the current public information requirement of
Rule 144. Finally, each Värde Party understands and hereby acknowledges that the
Company and its legal counsel will rely on such Värde Party’s understanding and
agreement in connection with the issuance of the legal opinion and removal of
the legends from the Underlying Shares in accordance with Section 5.2(d), and
that it is each Värde Party’s sole responsibility to confirm with the Company at
the time of any sale of Underlying Shares that the current public information
requirement set forth in Rule 144 has been met. (f) In addition to such Värde
Party’s other available remedies, the Company shall pay to a Värde Party, in
cash, as partial liquidated damages and not as a penalty, for each $1,000 of
Underlying Shares (based on the VWAP of the Common Stock on the date such
Securities are submitted to the Transfer Agent) delivered for removal of the
restrictive legend and subject to Section 5.2(d) and (e), $5 per Trading Day for
each Trading Day after the Legend Removal Date until such certificate is
delivered without a legend (except in respect of the restrictions set forth in
Section 13(a) of the Certificates of Designation, as applicable). Nothing herein
shall limit such Värde Party’s right to pursue actual damages for the Company’s
failure to deliver certificates representing any Securities as required by the
Transaction Documents, and such Värde Party shall have the right to pursue all
remedies available to it at law or in equity, including, without limitation, a
decree of specific performance or injunctive relief. (g) Each Värde Party,
severally and not jointly with the other Värde Parties, agrees with the Company
that such Värde Party shall sell any of the Securities pursuant to either the
registration requirements of the Securities Act, including any applicable
prospectus delivery requirements, or an exemption therefrom and that, if any of
the Securities are sold pursuant to a Registration Statement, such of the
Securities shall be sold in compliance with the plan of distribution set forth
therein, and acknowledges that the removal of the restrictive legend from
certificates representing the Securities as set forth in this Section 5.2 is
predicated, in part, upon the Company’s reliance upon this understanding. 5.3
Furnishing of Information. Without limitation of any information delivery
requirements set forth in the Second Lien Credit Agreement, the Securities
Purchase Agreement or Certificates of Designation, as applicable, if, at any
time while the Värde Parties and their 25

--------------------------------------------------------------------------------

 
[exhibit103transactionagr029.jpg]
Affiliates beneficially own Underlying Shares representing at least 10% of the
outstanding shares of the Common Stock, the Company is not required to file
reports under Section 13(a) or 15(d) of the Exchange Act, the Company shall
provide to each Värde Party who, together with its Affiliates, beneficially owns
at least 10% of the outstanding shares of the Common Stock: (a) quarterly
unaudited financial statements prepared in accordance with GAAP within 45 days
after the end of each fiscal quarter, in each case, in form and substance
acceptable to the Värde Parties (by action of the Värde Parties who, together
with their Affiliates, beneficially own a majority of the Underlying Shares held
by the Värde Parties); (b) audited annual financial statements prepared in
accordance with GAAP within 90 days after the end of each fiscal year of the
Company (certified by an independent accounting firm of national standing); and
(c) annually, within 90 days after the end of the fiscal year, a reserve report
prepared or audited by a third party engineering firm of national standing in
accordance with Commission guidelines with an “as of” date of December 31 of the
preceding calendar year. 5.4 Integration. The Company shall not sell, offer for
sale or solicit offers to buy any security (as defined in Section 2 of the
Securities Act) that would be integrated with the offer or sale of the Purchased
Shares in a manner that would require the registration under the Securities Act
of the sale of the Purchased Shares or that would be integrated with the offer
or sale of the Purchased Shares for purposes of the rules and regulations of any
Trading Market such that it would require stockholder approval prior to the
closing of such other transaction unless stockholder approval is obtained before
the closing of such subsequent transaction. 5.5 Securities Laws Disclosure;
Publicity. The Company shall (a) by 9:30 a.m. (New York City time) on the
Trading Day immediately following the date hereof, issue a press release
disclosing the material terms of the transactions contemplated hereby, and (b)
file a Current Report on Form 8-K, including the Transaction Documents as
exhibits thereto, with the Commission within the time required by the Exchange
Act. The Company and each Värde Party shall consult with each other in issuing
any other press releases with respect to the transactions contemplated hereby,
and neither the Company nor any Värde Party shall issue any such press release
nor otherwise make any such public statement without the prior consent of the
Company, with respect to any press release of any Värde Party, or without the
prior consent of each Värde Party, with respect to any press release of the
Company, which consent shall not unreasonably be withheld or delayed, except if
such disclosure is required by Law; provided, that no party shall be required to
seek the consent of any other party to this Agreement to disclose information
with respect to the transactions contemplated hereby that has previously been
publicly disclosed in accordance with this Section 5.5. 5.6 Stockholder Rights
Plan. No claim shall be made or enforced by the Company or, with the consent of
the Company, any other Person, that any Värde Party is an “acquiring person”
under any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or similar anti-takeover
plan or arrangement in effect or hereafter 26

--------------------------------------------------------------------------------

 
[exhibit103transactionagr030.jpg]
adopted by the Company, or that any Värde Party could be deemed to trigger the
provisions of any such plan or arrangement, in each case, solely by virtue of
receiving Securities under the Transaction Documents. 5.7 Use of Proceeds. The
Company shall use the net proceeds from the sale of the Purchased Shares
hereunder for general corporate purposes and to fund drilling and development,
acquisitions and for working capital purposes. The Company shall not use such
proceeds for any of the following: (a) for the redemption of any Common Stock or
Common Stock Equivalents, (b) for the settlement of any outstanding litigation
or (c) in violation of FCPA or OFAC regulations. 5.8 Reservation and Listing of
Securities. (a) At any time that shares of the Preferred Stock are outstanding,
the Company shall from time to time take all lawful action within its control to
cause the authorized capital stock of the corporation to include a sufficient
number of authorized but unissued shares of the Common Stock to satisfy the
conversion requirements for all shares of the Preferred Stock then outstanding,
or issuable as a dividend, including by accretion to the Stated Value (assuming
for the purposes of this calculation that the Requisite Stockholder Approval has
been obtained). (b) If, on any date, the number of authorized but unissued (and
otherwise unreserved) shares of the Common Stock is less than the Required
Minimum on such date, the Company shall take all lawful action to amend the
Articles of Incorporation to increase the number of authorized but unissued (and
otherwise unreserved) shares of the Common Stock to at least the Required
Minimum at such time, as soon as possible and in any event not later than the
90th day after such date; provided, that the Company will not be required at any
time to authorize a number of additional shares of the Common Stock greater than
the maximum remaining number of shares of the Common Stock that could possibly
be issued after such time pursuant to the Transaction Documents. (c) The Company
hereby agrees to use reasonable best efforts to maintain the listing of the
Common Stock on the NYSE American or another Trading Market. The Company shall,
if applicable: (i) in the time and manner required by the principal Trading
Market or as may be otherwise necessary to permit the conversion of all
outstanding shares of the Preferred Stock, prepare and file with such Trading
Market an additional shares listing application covering a number of shares of
the Common Stock at least equal to the Required Minimum on the date of each such
application; (ii) take all steps necessary to cause such shares of the Common
Stock to be approved for listing or quotation on such Trading Market as soon as
possible thereafter; and (iii) provide to the Värde Parties evidence of such
listing or quotation. The Company agrees to use reasonable best efforts to
maintain the eligibility of the Common Stock for electronic transfer through The
Depository Trust Company or another established clearing corporation, including,
without limitation, by timely payment of fees to The Depository Trust Company or
such other established clearing corporation in connection with such electronic
transfer. 27

--------------------------------------------------------------------------------

 
[exhibit103transactionagr031.jpg]
(d) The Company agrees, if the Company applies to have the Common Stock traded
on any other Trading Market, it will then include in such application the
applicable number of Underlying Shares specified in clause (i) of Section
5.8(c), and will take such other action as is necessary to cause such Underlying
Shares to be listed or quoted on such other Trading Market as promptly as
possible. The Company will then use reasonable best efforts to continue the
listing or quotation and trading of its Common Stock on a Trading Market and
will comply in all respects with the Company’s reporting, filing and other
obligations under the bylaws or rules of the Trading Market. (e) The Company
agrees that, if any shares of the Common Stock to be provided for the purpose of
the conversion of the Preferred Stock require registration with or approval of
any Governmental Entity under any Law before such shares of the Common Stock may
be validly issued upon conversion, the Company will use commercially reasonable
efforts to secure such registration or approval, as the case may be. 5.9 Company
Stockholder Approval. The Company agrees to use commercially reasonable efforts
to obtain, at the next annual meeting of the Company Stockholders (at which a
quorum is present) (the “Stockholder Meeting”), the approval by the Company
Stockholders of the conversion of (i) all shares of the Series C-1 Preferred
Stock issued pursuant to the Securities Purchase Agreement (assuming maximum
conversion rates as set forth in the Series C Certificate of Designation and
that the Company elects to pay dividends in kind or otherwise accrues to Stated
Value in accordance with the terms of the Series C Certificate of Designation)
and (ii) all shares of the Purchased Shares and the Exchanged Preferred Shares
issued or issuable pursuant to this Agreement (assuming maximum conversion rates
as set forth in the Certificates of Designation, as applicable, and that the
Company elects to pay dividends in kind or otherwise accrues to Stated Value in
accordance with the terms of the Certificates of Designation, as applicable)
(such approval, the “Requisite Stockholder Approval”) in accordance with the
Articles of Incorporation and the bylaws of the Company. The Company will
prepare and file with the SEC a proxy statement to be sent to the Company’s
stockholders in connection with the Stockholder Meeting (the “Proxy Statement”).
Subject to the directors’ fiduciary duties, the Proxy Statement shall include
the Board of Directors’ recommendation that the holders of shares of the Common
Stock vote in favor of the Requisite Stockholder Approval. Each Värde Party
agrees to furnish to the Company information concerning such Värde Party and its
Affiliates as the Company, on the advice of outside counsel, reasonably
determines is necessary for the Proxy Statement, the Stockholder Meeting or any
subsequent proxy solicitation; provided, that the Värde Party shall not be
obligated to provide (i) any information subject to confidentiality,
non-disclosure, or similar agreements or which cannot be disclosed under
applicable Law, (ii) personally identifiable information, (iii) information
regarding the limited partners of such Värde Party and (iv) financial
information that the Värde Party reasonably deems to be material to its
business, as determined in good faith in its sole discretion. The Company shall
promptly notify the Värde Parties of (i) the receipt of the Requisite
Stockholder Approval or (ii) any projected failure to obtain the Requisite
Stockholder Approval. 5.10 Certain Transactions and Confidentiality. (a) Each
Värde Party, severally and not jointly with the other Värde Parties, covenants
that neither it, nor any Affiliate acting on its behalf or pursuant to any 28

--------------------------------------------------------------------------------

 
[exhibit103transactionagr032.jpg]
understanding with it, shall execute any purchases or sales, including short
sales, of any of the Company’s securities during the period commencing with the
execution of this Agreement and ending at such time that the transactions
contemplated by this Agreement are first publicly announced pursuant to the
initial press release as described in Section 5.5. Each Värde Party, severally
and not jointly with the other Värde Parties, covenants that until such time as
the transactions contemplated by this Agreement are publicly disclosed by the
Company pursuant to the initial press release as described in Section 5.5, such
Värde Party shall maintain the confidentiality of the existence and terms of
this transaction and the information included in the Transaction Documents and
the schedules hereto. Notwithstanding the foregoing, in the case of a Värde
Party that is a multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of such Värde Party’s assets and the portfolio
managers have no direct knowledge of the investment decisions made by the
portfolio managers managing other portions of such Värde Party’s assets and
barriers are in place to prevent such portfolio managers from obtaining such
knowledge, the covenant set forth above shall only apply with respect to the
portion of assets managed by the portfolio manager that made the investment
decision to purchase the Securities covered by this Agreement. (b) Each Värde
Party shall, and shall cause its respective Affiliates and its and their
Representatives to, (i) hold, in strict confidence, all non-public records,
books, contracts, instruments, computer data and other data and information
concerning the Company and its Subsidiaries furnished to it by the Company or
its Representatives pursuant to, or in connection with the negotiation of, this
Agreement (collectively, “Company Information”) (except to the extent that such
Company Information was (A) previously known by such Värde Party from other
sources; provided, that such source was not known by such Värde Party to be
bound by a contractual, legal or fiduciary obligation of confidentiality to the
Company or any of its Subsidiaries, (B) in the public domain through no
violation of this Section 5.10(b) by such Värde Party or (C) later lawfully
acquired from other sources by such Värde Party), and (ii) not release or
disclose such Company Information to any other Person, except its
Representatives and financing sources who need to know such Company Information,
who are aware of the confidential nature of such Company Information and who
have agreed to keep such Company Information strictly confidential.
Notwithstanding the foregoing, each Värde Party may disclose Company Information
to the extent that (i) disclosure to a regulatory authority is necessary or
appropriate in connection with any necessary regulatory approval required to be
obtained in connection with the Transaction Documents and the consummation of
the transactions contemplated hereby and thereby or (ii) disclosure is required
by judicial or administrative process or by other requirement of Law or the
applicable requirements of any regulatory agency or relevant stock exchange.
5.11 Form D; Blue Sky Filings. The Company shall timely file a Form D with
respect to the Securities if and as required under Regulation D. The Company
shall take such action as the Company shall reasonably determine is necessary in
order to obtain an exemption for, or to qualify the Securities for, sale to the
Värde Parties under applicable securities or “Blue Sky” laws of the states of
the United States. 29

--------------------------------------------------------------------------------

 
[exhibit103transactionagr033.jpg]
5.12 Tax Matters. (a) Absent a change in law or Internal Revenue Service
practice, or a contrary determination (as defined in Section 1313(a) of the
Code), the Värde Parties and the Company agree not to treat the Purchased Shares
and the Exchanged Preferred Shares (based on their terms as set forth in the
Certificates of Designation, as applicable) as “preferred stock” within the
meaning of Section 305 of the Code, and Treasury Regulation Section 1.305-5 for
United States federal income Tax and withholding Tax purposes and shall not take
any position inconsistent with such treatment except pursuant to a determination
within the meaning of Section 1313 of the Code. (b) The Company shall pay any
and all documentary, stamp or similar issue or transfer Tax due on (x) the issue
of the Purchased Shares and the Exchanged Preferred Shares and (y) the issue of
the Underlying Shares. However, in the case of conversion of Preferred Stock,
the Company shall not be required to pay any Tax or duty that may be payable in
respect of any transfer involved in the issue and delivery of shares of the
Underlying stock or Preferred Stock in a name other than that of the holder of
the shares to be converted, and no such issue or delivery shall be made unless
and until the Person requesting such issue has paid to the Company the amount of
any such Tax or duty, or has established to the satisfaction of the Company that
such Tax or duty has been paid. (c) For U.S. federal and applicable state income
tax purposes, the issuance to the Värde Parties on the terms and subject to the
conditions set forth herein and pursuant to Section 4 of the Second Lien
Amendment of (i) 5,952,763 shares of the Common Stock and (ii) 39,254 shares of
the Series D Preferred Stock shall be treated by the parties as a tax-deferred
“recapitalization” of the Company pursuant to Section 368(a)(1)(E) of the Code
except pursuant to a determination within the meaning of Section 1313 of the
Code; provided that, in the event that the transactions do not so qualify as a
recapitalization, as the result of a successful challenge by the Internal
Revenue Service or other taxing authority, then the Company shall be held
harmless and shall not be required to indemnify any person for losses incurred
due to the failure of the transaction to so qualify or the successful challenge,
including the Värde Parties. 5.13 Board Representation Right. The parties agree
that the rights granted to the Purchasers (as defined in the Securities Purchase
Agreement) under Section 4.14 of the Securities Purchase Agreement are hereby
granted to the Värde Parties and that, for the purposes of such rights, the
defined term the “Underlying Shares” as used in Section 4.14 of the Securities
Purchase Agreement shall be deemed to also include (in additional to the other
“Underlying Shares” thereunder) the shares of Common Stock to be issued and
issuable upon conversion of the Purchased Shares and the Exchanged Preferred
Shares, respectively. ARTICLE VI. MISCELLANEOUS 6.1 Fees and Expenses. Except as
expressly set forth in the Transaction Documents to the contrary (including with
respect to the Värde Parties’ Transaction Expense Amount), each 30

--------------------------------------------------------------------------------

 
[exhibit103transactionagr034.jpg]
party shall pay the fees and expenses of its advisers, counsel, accountants and
other experts, if any, and all other expenses incurred by such party incident to
the negotiation, preparation, execution, delivery and performance of this
Agreement. The Company shall pay all fees of the Transfer Agent (including,
without limitation, any fees required for same-day processing of any instruction
letter delivered by the Company and any conversion or exercise notice delivered
by a Värde Party) levied in connection with the delivery of any Securities to
the Värde Parties. Further, for the avoidance of doubt, the Company shall be
responsible for the fees, commissions and expenses of brokers, financial
advisors, finders, placement agents, investment banks or similar Persons engaged
(or purportedly engaged) by the Company or its Subsidiaries with respect to the
offer and sale or issue of any of the Securities. 6.2 Survival; Limitation on
Liability. The representations and warranties of the parties contained in this
Agreement shall survive until the first anniversary of the date hereof, except
for (i) the representations and warranties of the Company contained in Sections
3.1(b)(i), 3.1(c), 3.1(d), 3.1(f), 3.1(g), 3.1(s), 3.1(u) and 3.1(w) and (ii)
the representations and warranties of the Värde Parties contained in Sections
3.2(a), 3.2(b) and 3.2(d), which will survive indefinitely and (iii) the
representations and warranties of the Company contained in Section 3.1(z), which
will survive until 30 days after the expiration of the applicable statute of
limitations. All of the covenants or other agreements of the parties contained
in this Agreement shall survive until fully performed or fulfilled, unless and
to the extent that non-compliance with such covenants or agreements is waived in
writing by the party entitled to such performance. The Company shall not be
liable hereunder to the Värde Party or any other Person for any punitive,
exemplary, treble, special, indirect, incidental or consequential damages
(including any loss of earnings or profits), except for any such damages that
are direct damages in the form of diminution of value or payable to a
third-party. 6.3 Entire Agreement. The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and thereof and supersede all prior
agreements and understandings, oral or written, with respect to such matters,
which the parties acknowledge have been merged into such documents, exhibits and
schedules. 6.4 Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of: (a) the date of
transmission (if there is no receipt of notice of a failed delivery to the
notice party), if such notice or communication is delivered e-mail attachment as
set forth on the signature pages attached hereto at or prior to 5:30 p.m.
(Houston, Texas time) on a Business Day, (b) the next Business Day after the
date of transmission (if there is no receipt of notice of a failed delivery to
the notice party), if such notice or communication is delivered via e-mail
attachment as set forth on the signature pages attached hereto on a day that is
not a Business Day or later than 5:30 p.m. (Houston, Texas time) on any Business
Day, (c) the second Business Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service or (d) upon actual receipt by
the party to whom such notice is required to be given. The initial address for
such notices and communications shall be as set forth on Schedule 5.4 attached
hereto; provided, that a party may update its address by notice duly given to
the other parties. 31

--------------------------------------------------------------------------------

 
[exhibit103transactionagr035.jpg]
6.5 Amendments; Waivers. No provision of this Agreement may be waived, modified,
supplemented or amended except in a written instrument signed, in the case of an
amendment, by the Company and the Värde Parties holding at least a majority in
interest of the Securities held by such Värde Parties then outstanding or, in
the case of a waiver, by the party against whom enforcement of any such waived
provision is sought. No waiver of any default with respect to any provision,
condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any
other provision, condition or requirement hereof, nor shall any delay or
omission of any party to exercise any right hereunder in any manner be deemed to
impair the exercise of any such right. 6.6 Headings. The headings herein are for
convenience only, do not constitute a part of this Agreement and shall not be
deemed to limit or affect any of the provisions hereof. 6.7 Successors and
Assigns. This Agreement shall be binding upon and inure to the benefit of the
parties and their successors and permitted assigns. The Company shall not assign
this Agreement or any rights or obligations hereunder (other than by merger)
without the prior written consent of each Värde Party. No Värde Party may assign
this Agreement or any rights or obligations hereunder to any Person without the
prior written consent of the Company, except that a Värde Party may assign any
or all of its rights hereunder to (i) an Affiliate of such Värde Party or (ii)
following April 26, 2021, to any Person, in each case, to which such Värde Party
transfers any Securities in accordance with the Transaction Documents; provided,
that (x) such transferee or Affiliate agrees with the Company in writing to be
bound by the provisions of the Transaction Documents that apply to the Värde
Parties, (y) no such assignment by a Värde Party shall relieve such Värde Party
of its obligations hereunder without the prior written consent of the Company
and (z) the Värde Parties’ rights under Section 5.13 may not be assigned
pursuant to clause (ii) above unless such assignment has been approved by a
majority of the members of the Board of Directors. 6.8 No Third-Party
Beneficiaries. This Agreement is intended for the benefit of the parties hereto
and their respective successors and permitted assigns and is not for the benefit
of, nor may any provision hereof be enforced by, any other Person, except as
otherwise set forth in Section 6.15. 6.9 Governing Law. All questions concerning
the construction, validity, enforcement and interpretation of the Transaction
Documents shall be governed by and construed and enforced in accordance with the
internal laws of the State of New York, without regard to the principles of
conflicts of law thereof. Each party agrees that all legal proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated by the Transaction Documents (whether brought against a party
hereto or its respective affiliates, directors, officers, stockholders,
partners, members, employees or agents) shall be commenced exclusively in the
state and federal courts in the state and federal courts, sitting in the City of
New York. Each party hereby irrevocably submits to the exclusive jurisdiction of
the state and federal courts sitting in the City of New York, Borough of
Manhattan for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein
(including with respect to the enforcement of any of the Transaction Documents),
and hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is improper or is an
inconvenient venue for such 32

--------------------------------------------------------------------------------

 
[exhibit103transactionagr036.jpg]
proceeding. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service will constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any other manner
permitted by law. If either party commences an action, suit or proceeding to
enforce any provisions of the Transaction Documents, the prevailing party in
such action, suit or proceeding shall be reimbursed by the other party for its
reasonable attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding. 6.10
Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED
TO THE TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY. 6.11 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to each other party, it being understood that the
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission or by e-mail delivery of a “.pdf” format
data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or “.pdf signature page were an original
thereof. 6.12 Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable. 6.13 Replacement of Securities. If any certificate or instrument
evidencing any of the Securities is mutilated, lost, stolen or destroyed, the
Company shall issue or cause to be issued in exchange and substitution for and
upon cancellation thereof (in the case of mutilation), or in lieu of and
substitution therefor, a new certificate or instrument, but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft or
destruction. The applicant for a new certificate or instrument under such
circumstances shall also pay any reasonable third-party costs (including
customary indemnity) associated with the issuance of such new certificate or
instrument. 6.14 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Värde Parties and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that 33

--------------------------------------------------------------------------------

 
[exhibit103transactionagr037.jpg]
monetary damages may not be adequate compensation for any loss incurred by
reason of any breach of obligations contained in the Transaction Documents and
hereby agree to waive and not to assert in any action for specific performance
of any such obligation the defense that a remedy at law would be adequate. 6.15
Non-Recourse. Notwithstanding anything that may be expressed or implied in this
Agreement or any document, agreement, or instrument delivered contemporaneously
herewith, and notwithstanding the fact that any party may be a partnership or
limited liability company, each party hereto, by its acceptance of the benefits
of the Transaction Documents, covenants, agrees and acknowledges that no Persons
other than the parties shall have any obligation hereunder and that it has no
rights of recovery hereunder against, and no recourse hereunder or under any
documents, agreements, or instruments delivered contemporaneously herewith or in
respect of any oral representations made or alleged to be made in connection
herewith or therewith shall be had against, any former, current or future
director, officer, agent, Affiliate, manager, investment manager, investment
advisor, assignee, incorporator, controlling Person, fiduciary, representative
or employee of any party (or any of their successors or permitted assignees),
against any former, current, or future general or limited partner, manager,
stockholder or member of any party (or any of their successors or permitted
assignees) or any Affiliate thereof or against any former, current or future
director, officer, agent, employee, Affiliate, manager, investment manager,
investment advisor, assignee, incorporator, controlling Person, fiduciary,
representative, general or limited partner, stockholder, manager or member of
any of the foregoing, but in each case not including the parties, whether by or
through attempted piercing of the corporate veil, by or through a claim (whether
in tort, contract or otherwise) by or on behalf of such party against such
Persons and entities, by the enforcement of any assessment or by any legal or
equitable proceeding, or by virtue of any statute, regulation or other
applicable law, or otherwise; it being expressly agreed and acknowledged that no
personal liability whatsoever shall attach to, be imposed on, or otherwise be
incurred by any such Persons, as such, for any obligations of the applicable
party under this Agreement or the transactions contemplated hereby, under any
documents or instruments delivered contemporaneously herewith, in respect of any
oral representations made or alleged to be made in connection herewith or
therewith, or for any claim (whether in tort, contract or otherwise) based on,
in respect of, or by reason of, such obligations or their creation.
Notwithstanding anything in the Transaction Documents to the contrary, the
liability of the Värde Parties shall be several, not joint. 6.16 Payment Set
Aside. To the extent that the Company makes a payment or payments to any Värde
Party pursuant to any of the Transaction Documents or a Värde Party enforces or
exercises its rights hereunder or thereunder and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other Person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), to the extent of any such restoration the
obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or
such enforcement or setoff had not occurred. 6.17 Independent Nature of Värde
Parties’ Obligations and Rights. The obligations of each Värde Party under any
of the Transaction Documents are several and not joint with the 34

--------------------------------------------------------------------------------

 
[exhibit103transactionagr038.jpg]
obligations of any other Värde Party hereunder or thereunder and no Värde Party
will be responsible in any way for the performance or non-performance of the
obligations of any other Värde Party under any of the Transaction Documents.
Nothing contained in the Transaction Documents, and no action taken by any Värde
Party pursuant hereto or thereto, shall be deemed to constitute the Värde
Parties as a partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Värde Parties are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated by the Transaction Documents. Each Värde Party shall be entitled to
independently protect and enforce its rights, including, without limitation, the
rights arising out of the Transaction Documents, and it shall not be necessary
for any other Värde Party to be joined as an additional party in any proceeding
for such purpose. 6.18 Liquidated Damages. The Company’s obligations to pay any
partial liquidated damages or other amounts owing under the Transaction
Documents is a continuing obligation of the Company and shall not terminate
until all unpaid partial liquidated damages and other amounts have been paid,
notwithstanding the fact that the instrument or security pursuant to which such
partial liquidated damages or other amounts are due and payable shall have been
canceled. 6.19 Saturdays, Sundays, Holidays, etc. If the last or appointed day
for the taking of any action or the expiration of any right required or granted
herein is not a Business Day, such action may be taken or such right may be
exercised on the next succeeding Business Day. 6.20 Construction and
Interpretation. (a) The term “or” when used in the Agreement is not exclusive,
unless the context required otherwise. The parties agree that each of them and
their respective counsel have reviewed and had an opportunity to revise the
Transaction Documents and, therefore, the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of the Transaction Documents or any
amendments thereto. In addition, each and every reference to share prices and
shares of the Common Stock in any of the Transaction Documents shall be subject
to adjustment for reverse and forward stock splits, stock dividends, stock
combinations and other similar transactions of the Common Stock that occur after
the date of this Agreement. (b) The words “hereof,” “herein” and “hereunder” and
words of similar import when used in this Agreement will refer to this Agreement
as a whole and not to any particular provision of this Agreement, and section
and subsection references are to this Agreement unless otherwise specified. The
headings in this Agreement are included for convenience of reference only and
will not limit or otherwise affect the meaning or interpretation of this
Agreement. Whenever the words “include,” “includes” or “including” are used in
this Agreement, they shall be deemed to be followed by the words “without
limitation.” The phrases “the date of this Agreement,” “the date hereof” and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to the date set forth in the first paragraph of this Agreement. The
meanings given to terms defined herein will be equally applicable to both the
singular and plural forms of such terms. Except as otherwise specified herein,
references to agreements, policies, standards, guidelines or instruments, or to
statutes or regulations, are to such agreements, policies, standards, 35

--------------------------------------------------------------------------------

 
[exhibit103transactionagr039.jpg]
guidelines or instruments, or statutes or regulations, as amended or
supplemented from time to time (or to successors thereto). (Signature Pages
Follow) 36

--------------------------------------------------------------------------------

 
[exhibit103transactionagr040.jpg]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above. LILIS ENERGY, INC. By: /s/ Joseph C. Daches Name: Joseph C.
Daches Title: President, Chief Financial Officer and Treasurer [REMAINDER OF
PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGES FOR VÄRDE PARTIES FOLLOW]
SIGNATURE PAGE TRANSACTION AGREEMENT

--------------------------------------------------------------------------------

 
[exhibit103transactionagr041.jpg]
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above. SEVERALLY AND NOT JOINTLY FOR EACH ENTITY LISTED BELOW: By: /s/
Markus Specks Name: Markus Specks Title: Managing Director THE VÄRDE FUND VI-A,
L.P., By: Värde Investment Partners G.P., LLC, its General Partner By: Värde
Partners, L.P., its Managing Member By: Värde Partners, Inc., its General
Partner VÄRDE INVESTMENT PARTNERS, L.P., By: Värde Investment Partners G.P.,
LLC, its General Partner By: Värde Partners, L.P., its Managing Member By: Värde
Partners, Inc., its General Partner THE VÄRDE FUND XI (MASTER), L.P., By: Värde
Fund XI G.P., LLC, its General Partner By: Värde Partners, L.P., its Managing
Member By: Värde Partners, Inc., its General Partner VÄRDE INVESTMENT PARTNERS
(OFFSHORE) MASTER, L.P., By: Värde Investment Partners G.P., LLC, its General
Partner By: Värde Partners, L.P., its Managing Member By: Värde Partners, Inc.,
its General Partner THE VÄRDE SKYWAY MASTER FUND, L.P., By: The Värde Skyway
Fund G.P., LLC, its General Partner By: Värde Partners, L.P., its Managing
Member By: Värde Partners, Inc., its General Partner THE VÄRDE FUND XII
(MASTER), L.P., By: The Värde Fund XII G.P., LLC, its General Partner By: The
Värde Fund XII UGP, LLC, its General Partner By: Värde Partners, L.P., its
Managing Member By: Värde Partners, Inc., its General Partner SIGNATURE PAGE
TRANSACTION AGREEMENT

--------------------------------------------------------------------------------

 
[exhibit103transactionagr042.jpg]
Schedule I Värde Party Allocation Purchase Exchange Amount of Reduction of Term
Loan Exchanged Exchanged (pursuant to Subscription Purchased Common Preferred
Second Lien Värde Party Amount Shares Shares Shares Amendment) THE VÄRDE FUND
VI-A, L.P. ................................................. $750,000 750
178,583 1,178 $2,048,034 VÄRDE INVESTMENT PARTNERS, L.P.
............................... $1,700,000 1,700 404,788 2,669 $4,642,210 THE
VÄRDE FUND XI (MASTER), L.P. ................................. $10,400,000
10,400 2,476,349 16,330 $28,399,403 VÄRDE INVESTMENT PARTNERS (OFFSHORE) MASTER,
L.P.
............................................................................
$1,500,000 1,500 357,166 2,355 $4,096,068 THE VÄRDE SKYWAY MASTER FUND,
L.P........................ $3,250,000 3,250 773,859 5,103 $8,874,813 THE VÄRDE
FUND XII (MASTER), L.P. ................................ $7,400,000 7,400
1,762,018 11,619 $20,207,267 Total: $25,000,000 25,000 5,952,763 39,254
$68,267,795 SCHEDULE I

--------------------------------------------------------------------------------

 
[exhibit103transactionagr043.jpg]
Schedule 3.1(a) Subsidiaries Brushy Resources, Inc. ImPetro Resources, LLC
ImPetro Operating, LLC Lilis Operating Company, LLC Hurricane Resources, LLC
SCHEDULE 3.1(A)

--------------------------------------------------------------------------------

 
[exhibit103transactionagr044.jpg]
Schedule 3.1(l) Failure to comply with Section 4.10 of the Securities Purchase
Agreement. SCHEDULE 3.1(V)

--------------------------------------------------------------------------------

 
[exhibit103transactionagr045.jpg]
Schedule 3.1(v) Registration Rights Agreement, dated as of April 26, 2017, by
and among Lilis Energy, Inc. and the Lenders party thereto. Registration Rights
Agreement, dated as of February 28, 2017, by and among the Company and the Värde
Parties party thereto. The Registration Rights Agreement (as defined herein).
SCHEDULE 3.1(V)

--------------------------------------------------------------------------------

 
[exhibit103transactionagr046.jpg]
Schedule 5.4 Address for Notice If to the Company: 201 Main Street, Suite 1351
Fort Worth, Texas 76102 Attn: Joseph Daches Email: JDaches@lilisenergy.com with
a copy to (which will not constitute notice): Bracewell LLP 711 Louisiana Street
Suite 2300 Houston, Texas Attn: Charles H. Still, Jr. Fax: (800) 404-3970 Email:
charles.still@bracewell.com If to the Värde Parties: 609 Main Street, Suite 3925
Houston, Texas 77002 Attn: Markus Specks Email: mspecks@varde.com 901 Marquette
Ave S., Suite 3300 Minneapolis, Minnesota 55402 Attn: Legal Department Email:
legalnotices@varde.com with a copy to (which will not constitute notice):
Kirkland & Ellis LLP 609 Main Street Houston, Texas 77002 Attn: Lucas E. Spivey,
P.C. Julian Seiguer, P.C. Jhett R. Nelson Email: lucas.spivey@kirkland.com
julian.seiguer@kirkland.com jhett.nelson@kirkland.com SCHEDULE 5.4

--------------------------------------------------------------------------------

 
[exhibit103transactionagr047.jpg]
Exhibit A Registration Rights Agreement [See Attached.] EXHIBIT A

--------------------------------------------------------------------------------

 
[exhibit103transactionagr048.jpg]
Exhibit B Form of Second Lien Amendment [See Attached.] EXHIBIT B

--------------------------------------------------------------------------------

 
[exhibit103transactionagr049.jpg]
Exhibit C Form of Series C Certificate of Designation [See Attached.] EXHIBIT C

--------------------------------------------------------------------------------

 
[exhibit103transactionagr050.jpg]
Exhibit D Form of Series D Certificate of Designation [See Attached.] EXHIBIT D

--------------------------------------------------------------------------------

 
[exhibit103transactionagr051.jpg]
Exhibit E Form of Legal Opinion of Bracewell LLP [See Attached.] EXHIBIT E

--------------------------------------------------------------------------------

 
[exhibit103transactionagr052.jpg]
Exhibit F Form of Nevada Opinion 1. The Company is a corporation duly
incorporated under the laws of the State and in good standing in the State of
Nevada, with the corporate power and authority to conduct its business and own
its properties as presently conducted. 2. The execution and delivery to the
Purchasers by the Company of the Transaction Agreement, the Second Lien
Amendment, the Second Lien Credit Agreement, the Intercreditor Agreement, the
Certificates of Designations and the Registration Rights Agreement
(collectively, the “Opinion Documents”), and the performance by the Company of
its obligations thereunder, have been authorized by all necessary corporate
action by the Company and the Opinion Documents have been duly executed and
delivered by the Company. 3. The execution and delivery to the Purchasers by the
Company of the Opinion Documents, and the performance by the Company of its
obligations thereunder, do not violate any provision of the articles of
incorporation or bylaws (together, the “Organizational Documents”) of the
Company. 4. The execution and delivery to the Purchasers by the Company of the
Opinion Documents, and the performance by the Company of its obligations under
each Opinion Document, do not require under Nevada law any filing or
registration by the Company with, or approval or consent to the Company of, any
governmental agency or authority of the State of Nevada, that has not been made
or obtained except that we express no opinion with respect to any securities
laws. 5. Issuance of the Issued Shares has been duly authorized by all necessary
corporate action on the part of the Company. 6. Upon issuance of the Issued
Shares, in accordance with the terms of the Transaction Agreement and the Second
Lien Amendment, the Issued Shares will be duly issued, fully paid and
non-assessable and, to the best of our knowledge, free and clear of all liens,
and will not be issued in violation of preemptive or other similar rights
pursuant to (A) any statute, rule or regulation of the State of Nevada (B) the
Company’s Organizational Documents as in effect on the date hereof or (C) to the
best of our knowledge, any agreement to which the Company or any of its
subsidiaries is a party or bound. 7. Issuance of (i) the Preferred Stock in
accordance with the terms of the Transaction Agreement and (ii) Common Stock
issuable upon conversion of the Preferred Stock has been duly authorized by all
necessary corporate action on the part of the Company. 8. Upon issuance of the
Preferred Stock in accordance with the terms of the Transaction Agreement, the
Preferred Stock will be duly issued, fully paid and non-assessable and, to the
best of our knowledge, free and clear of all liens, and will not be issued in
violation of preemptive or other similar rights pursuant to (A) any statute,
rule or regulation of the State of Nevada (B) the EXHIBIT F

--------------------------------------------------------------------------------

 
[exhibit103transactionagr053.jpg]
Company’s Organizational Documents in effect on the date hereof or (C) to the
best of our knowledge, any agreement to which the Company was a party or bound.
9. The shares of Common Stock issuable upon conversion of the Preferred Stock,
when issued in accordance with the terms of the Certificates of Designations,
will be duly issued, fully paid and non-assessable and, to the best of our
knowledge, free and clear of all liens, and will not be issued in violation of
preemptive or other similar rights pursuant to (A) any statute, rule or
regulation of the State of Nevada (B) the Company’s Organizational Documents as
in effect on the date hereof or (C) to the best of our knowledge, any agreement
to which the Company or any of its subsidiaries is a party or bound. EXHIBIT F

--------------------------------------------------------------------------------