Exhibit 10.1

 

CONVERTIBLE SUBORDINATED PROMISSORY NOTE CONVERSION AGREEMENT

 

THIS CONVERTIBLE SUBORDINATED PROMISSORY NOTE CONVERSION AGREEMENT (this
“Agreement”) is made as of this 23rd day of June, 2016, by and between Lilis
Energy, Inc., a Nevada corporation (the “Company”) and the parties designated on
Exhibit A hereto as Holders (each a “Holder” and together the “Holders”).

 

RECITALS

 

WHEREAS, as of the date of this Agreement, there is approximately $5.83 million
in outstanding aggregate principal amount of the Company’s 12% Convertible Notes
(the “Notes”), which are convertible into shares of common stock of the Company,
par value $0.0001 (the “Common Stock”), according to the terms of the Notes; and

 

WHEREAS, the Holders currently hold Notes with aggregate outstanding principal
amounts as set forth opposite each Holder’s name on Exhibit A attached hereto.

 

AGREEMENT

 

NOW, THEREFORE, BE IT RESOLVED, that in consideration of the promises contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:

 

1.           Amendment and Conversion of Notes. The Company and each Holder
hereby agree that (i) contemporaneous with the closing of the merger between
Lilis Merger Sub, Inc., a wholly-owned subsidiary of the Company, and Brushy
Resources, Inc. (the “Conversion Date”), Holder will be deemed to have converted
such Holder’s Notes without any further action by the Holder, into shares of
Common Stock (the “Conversion”) as determined by dividing the aggregate
principal amount of such Holder’s Notes by $0.11 (the “Conversion Stock”) and
(ii) that in consideration of the forgoing and on the Conversion Date, any right
to payments owed as accrued and unpaid interest (whether in cash or kind) on the
Notes is hereby waived and forfeited and no interest on the Notes will be due
and payable. Except as amended hereby, all of the terms and conditions of the
Note shall remain in full force and effect.

 

2.           Holders’ Representations, Warranties, Covenants and
Agreements.  Each Holder hereby represents and warrants to, and covenants and
agrees with, the Company as follows:

 

(a)           Such Holder is the record and beneficial holder of the Notes set
forth opposite such Holder’s name on Exhibit A attached hereto, free and clear
of any liens and encumbrances.

 

(b)           Such Holder has had complete and unrestricted access to all
material information about the Company that could affect such Holder’s decision
to agree to the Conversion.  As a result of such Holder’s access to all such
material information, such Holder acknowledges that such Holder is fully
informed and knowledgeable about the Company, its business, operations and
plans, and has therefore made a fair and reasoned decision to consent to the
Conversion.

 

 

 

 

(c)           Such Holder acknowledges that an investment in the Conversion
Stock involves a substantial degree of risk and is suitable only for persons
with adequate means who have no need for liquidity in their investments.

 

(d)           Such Holder has knowledge and experience in financial and business
matters and is capable of evaluating the merits and risks of an investment in
the Conversion Stock and the suitability of the investment for such Holder.

 

(e)           Such Holder is effecting the Conversion for investment purposes
only and has no present intention to sell or exchange the Conversion Stock. Such
Holder has adequate means for providing for his or her current needs in any
foreseeable contingency, and such Holder has no need to sell the Conversion
Stock in the foreseeable future.

 

(f)            Such Holder is an “accredited investor” as that term is defined
in Rule 501 of Regulation D promulgated under the Securities Act of 1933, as
amended.

 

(g)           Such Holder acknowledges that no federal or state agency has made
any finding or determination as to the fairness of the Conversion, nor any
recommendation or endorsement, of the issuance of the Conversion Stock in
connection with the Conversion.

 

(h)           Such Holder acknowledges that none of the Conversion Stock has
been registered under the Securities Act of 1933, as amended (the “Act”), or the
blue sky laws of any state.

 

(i)            Such Holder understands that, in issuing the Conversion Stock,
the Company has relied upon an exemption from registration provided in the Act
and upon the foregoing representations and warranties of such Holder.

 

(j)            Such Holder hereby acknowledges that Holder has relied on his or
her own independent tax counsel regarding the tax effects, if any, of the
Conversion.

   

3.           Release of Indebtedness.

 

(a)           Upon each Holder’s receipt of a certificate evidencing the number
of shares of Common Stock in accordance with the terms hereof or the repayment
of the outstanding aggregate principal amount of the Note in full, in exchange
for the cancellation in full of the Notes held by the Holder on or before the
Conversion Date pursuant to this Agreement, Holder hereby (i) acknowledges and
agrees that receipt of the Conversion Stock will constitute payment in full and
complete satisfaction of the Notes held by the Holder, and (ii) agrees that
effective upon receipt by Holder of the Conversion Stock or cash repayment of
the aggregate principal amount of the Note in full, the Company shall have no
further liabilities or obligations to Holder.

 

(b)           In consideration of the amendment of the conversion of price of
each Holder’s Note, each Holder, on behalf of itself and its successors and
assigns, do hereby forever release, discharge and acquit the Company and each of
its subsidiaries, affiliates, officers, members, managers, agents and employees,
and their respective successors, heirs, and assigns, and each of them
(collectively and severally, “Releasees”) of and from any and all of the
following: claims, demands, obligations, liabilities, indebtednesses, breaches
of contract, breaches of duty or any relationship, acts, omissions, misfeasance,
malfeasance, cause or causes of actions, debts, sums of money, accounts,
compensations, contracts, controversies, promises, damages, costs, attorneys’
fees, losses and expenses, of every type, kind, nature, description or
character, and irrespective of how, why, or by reason of what facts, whether
heretofore, now existing or hereafter arising, or which could, might, or may be
claimed to exist, or whatever kind or name, whether known or unknown, suspected
or unsuspected, liquidated or unliquidated, each as though fully set forth
herein at length other than the Company’s obligations under this Agreement.

 

 

 

 

(c)           If Holder is afforded the protections of the Civil Code of
California, each Holder further acknowledges that the release contained herein
includes relinquishing all rights and benefits afforded by Section 1542 of the
Civil Code of California (“Section 1542”), which provides as follows:

 

“A general release does not extend to claims which the [Holder] does not know or
suspect to exist in his or her favor at the time of executing the release, which
if known by him or her must have materially affected his or her settlement with
the Company.”

 

Holder understands and acknowledges the significance and consequences of a
specific waiver of Section 1542, that Holder intends to waive, and assume the
risk relating to, existing but as yet unknown claims and have been encouraged by
the Releasees to consult independent legal counsel in relation to Holders’
relinquishment of all rights and benefits afforded by Section 1542.

 

4.           Miscellaneous.

 

(a)           All capitalized terms used in this Agreement but not defined
herein shall have the meaning set forth in the Notes.

 

(b)           Any provision of this Agreement may be amended or waived if such
amendment or waiver is in writing and is signed, in the case of an amendment, by
each party to this Agreement, or in the case of a waiver, by the party against
whom the waiver is to be effective.

 

(c)           No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.  The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.

 

(d)           This Agreement shall be binding on and inure to the benefit of
each party hereto and his or its legal representatives, successors and assigns.

 

(e)           This Agreement shall be governed by and construed in accordance
with the law of the State of New York, without regard to the conflicts of law
rules of such state.

 

(f)           This Agreement may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.

 

(g)           The headings contained in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement;

 

(h)           This Agreement constitutes the entire agreement between and among
the parties with respect to the subject matter of this Agreement and supersedes
all prior agreements and understandings, both oral and written, between and
among the parties with respect to the subject matter hereof and thereof.  No
provision of this Agreement is intended to confer upon any person other than the
parties hereto any rights or remedies hereunder;

 

 

 

 

(i)            In case any provision of this Agreement shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby;

 

(j)           Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

 

(k)           Each Holder agrees that irreparable damage to the Company would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the Company shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this Agreement and
to enforce specifically the terms and provisions hereof, this being in addition
to any other remedy to which the parties may be entitled by law or equity.

 

[Signatures Follow]

 

 

 

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.

 

LILIS ENERGY, INC.         By: /s/Abraham Mirman   Name:  Abraham Mirman  
Title:  Chief Executive Officer       Address for Notices:       Lilis Energy,
Inc.   216 16th Street   Suite 1350   Denver, CO 80202   Attention: Chief
Financial Officer   Telephone: 303-893-9000   Fax: (303) 957-2234

 

 

 

 

HOLDERS:

      Wallington Investment Holdings, Ltd.       /s/Pierre Caland  
Name:  Pierre Caland   Title:    Director       Siskey Capital Opportunity Fund
II, LLC       /s/Martin Sumichrast   Name:  Martin Sumichrast  
Title:    Manager       Siskey Capital, LLC       /s/Martin Sumichrast  
Name:   Martin Sumichrast   Title:     Manager       Bruin Trust       /s/Bruin
Trust   Name:  Jarrell B. Ormand   Title: Trustee       Abraham Mirman      
/s/Abraham Mirman   Name: Abraham Mirman       General Merrill A. McPeak      
/s/General Merrill A. McPeak   Name:  General Merrill A. McPeak       Nuno
Brandolini       /s/Nuno Brandolini   Name:  Nuno Brandolini

 

 

 

 

  J. Steven Emerson       /s/ J. Steven Emerson   Name: J. Steven Emerson      
Emerson Partners       /s/ J. Steven Emerson   Name:  J. Steven Emerson   Title:
Authorized Trader       JEB Partners, L.P.       /s/James E. Besser  
Name:  James E. Besser   Title:  Managing Member       R. Glenn Dawson       /s/
R. Glenn Dawson   Name:  Glenn Dawson       Kurt Zimmerman       /s/ Kurt
Zimmerman   Name: Kurt Zimmerman

 

 

 

 

  Kevin Nanke       /s/ Kevin Nanke   Name: Kevin Nanke