Exhibit 10.9

 

SEPARATION AGREEMENT

 

This Separation Agreement (this “Agreement”) is made this 1st day of August,
2014 by and between Lilis Energy, Inc. (“Lilis” or the “Company”) and Robert A.
Bell (“Bell”). As used herein, “Parties” means, collectively, Lilis and Bell,
and “Party” means either Lilis or Bell.

 

RECITALS

 

WHEREAS, Lilis and Bell are parties to that Employment Agreement dated May 1,
2014 (the “Employment Agreement”);

 

WHEREAS, Lilis and Bell agree that, effective August 1, 2014 (the “Separation
Date”), Bell voluntarily resigned from his positions as officer and employee of
Lilis and any of its subsidiaries, including his positions of President and
Chief Operating Officer and member of the Board of Directors of Lilis; and

 

WHEREAS, in exchange for the consideration provided herein, Bell has agreed to
(a) release all claims that Bell may have against the Company, including all his
remaining rights (if any) in, to and under the Employment Agreement and any
other interests or claims he might have against the Company arising from his
efforts as President, Chief Operating Officer or member of the Board of
Directors, and (b) confirm certain surviving provisions under the Employment
Agreement, and Lilis has agreed to provide the payments and other consideration
specified herein.

 

NOW, THEREFORE, in consideration of the provisions herein, and other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged by Lilis and Bell, the Parties agree as follows:

 

1.Resignation. Effective as of the Separation Date, Bell resigned, and Lilis
accepted such resignation, from all his positions as officer and employee of
Lilis and any of its subsidiaries, including his positions of President and
Chief Operating Officer and member of the Board of Directors of Lilis.

 

2.Existing Obligations. The following payments and obligations exist
independently of this Separation Agreement and the releases contained herein
(the “Existing Obligations”):

 

(a)Within five (5) calendar days after the date this Agreement is executed,
Lilis will pay Bell all compensation due and owing to Bell including but not
limited to:

 

(i) All salary through the date this Agreement is executed;

 

(ii) All accrued but unused vacation; and

 

(iii) All unpaid expense reimbursements properly submitted in accordance with
Section 4.8(a) of the Employment Agreement.

 

The foregoing payments shall be less all applicable state and federal
withholding and other lawful deductions.

 

(b)Within five (5) calendar days after the date this Agreement is executed,
Lilis will (in full settlement of the terms of the signing bonus and stock grant
obligations under Section 4.2 of the Employment Agreement):

 

(i) Pay Bell a lump sum of $100,000 (the “Lump Sum Payment”), less all
applicable state and federal tax withholdings and other lawful deductions; and

 

(ii) Provide to Bell evidence of the issuance of 33,333 shares of the common
stock of Lilis to Bell, which vested on May 1, 2014, pursuant to Section 4.2 of
the Employment Agreement and Lilis’s 2012 Equity Incentive Plan (the “Plan”),
relating to his employment as the COO, it being understood that Lilis will
satisfy all withholding obligations and other lawful deductions related to these
shares out of the Lump Sum Payment.

 

3.Consideration. Lilis agrees to make the following additional payments to Bell
in consideration of the releases and other consideration provided by Bell under
this Agreement, in full satisfaction of any and all other obligations of Lilis
to Bell, under the Employment Agreement or otherwise (the “Consideration”):

 

(a)Within ten (10) calendar days after the date this Agreement is executed,
Lilis will pay Bell a lump sum of $25,000, less all applicable state and federal
tax withholdings and other lawful deductions.

 

 

 

 

(b)Within ten (10) calendar days after the termination of the Revocation Period
(as defined in Paragraph 6(g) below), on the express condition that Bell does
not revoke his waiver and release of claims under the Age Discrimination in
Employment Act, Lilis will:

 

i. Pay Bell an additional lump sum of $75,000, less all applicable state and
federal tax withholdings and other lawful deductions, and

 

ii. Issue to Bell 66,667 shares of the common stock of Lilis, which shares shall
be fully vested as of the date of issuance, it being understood that Lilis will
satisfy all withholding obligations and other lawful deductions related to these
shares out of the lump sum payment described in Paragraph 3(b)(i).

 

(c)Lilis and Bell agree and acknowledge that if Lilis fails for any reason to
remit payment of the Existing Obligations or Consideration set forth in these
Paragraphs 2 and 3 , Bell will retain his right to pursue claims under the terms
of the Employment Agreement that govern resignation for "Good Reason" (including
claims for additional severance in connection therewith) until such time as such
payment of the Existing Obligations and Consideration are made, and that if Bell
elects to pursue any such claims, Lilis shall retain its right to assert any and
all defenses and counterclaims available under the Employment Agreement or
otherwise, without giving effect to the provisions hereof. All other provisions
of this Agreement will remain in full force and effect.

 

4.General Release.

 

(a)Except as otherwise set forth in this Agreement, Bell, for himself, and
Lilis, for itself, and each Party for its respective affiliates, successors,
heirs, subrogees, assigns, principals, agents, partners, employees, associates,
attorneys and representatives, voluntarily, knowingly and intentionally releases
and discharges the other Party and its respective predecessors, successors,
parents, subsidiaries, affiliates and assigns and each of its respective
officers, directors, principals, shareholders, agents, attorneys, board members,
and employees (the "Released Parties") from any and all claims, actions,
liabilities, demands, rights, damages, costs, expenses, and attorneys’ fees
(including but not limited to any claim of entitlement for attorneys’ fees under
any contract, statute, or rule of law allowing a prevailing party or plaintiff
to recover attorneys’ fees), of every kind and description through the date
hereof (the “Released Claims”). Lilis expressly agrees and assents that this
General Release includes a release of any and all claims, actions, liabilities,
demands, rights, damages, costs, expenses, and attorneys’ fees (including but
not limited to any claim of entitlement for attorneys’ fees under any contract,
statute, or rule of law allowing a prevailing party or plaintiff to recover
attorneys’ fees), of every kind and description against Pierre Caland, Peak Oil
LLC, Peak Oil Holdings LLC and Peak Operator LLC arising out of or related to
the service of Bell or any other employee of Peak Operator LLC at Bell’s
direction, as an officer, director, employee or consultant to Lilis (each such
party to be included as a "Released Party" and each such claim to be included as
a "Released Claim").

 

(b)The Released Claims include but are not limited to those which arise out of,
relate to, or are based upon: (i) Bell’s employment with Lilis and the
termination thereof, (ii) statements, acts or omissions by the Parties whether
in their individual or representative capacities, (iii) express or implied
agreements between the Parties (including the Employment Agreement), except as
provided in this Agreement, (iv) any severance, stock, or stock option grant,
agreement, or plan, except as provided in this Agreement, (v) all federal,
state, and municipal statutes, ordinances, and regulations, including, but not
limited to, claims of discrimination based on race, color, national origin, age,
sex, sexual orientation, religion, disability, veteran status, whistleblower
status, public policy, or any other characteristic of Bell under the Age
Discrimination in Employment Act, the Older Workers Benefit Protection Act, the
Americans with Disabilities Act, the Equal Pay Act, Title VII of the Civil
Rights Act of 1964 (as amended), the Employee Retirement Income Security Act of
1974, the Rehabilitation Act of 1973, the Worker Adjustment and Retraining
Notification Act, or any other federal, state, or municipal law prohibiting
discrimination or termination for any reason, (vi) common law, including but not
limited to claims for breach of contract, tort, defamation, slander or emotional
distress, (vii) taxes, penalties, or interest assessed against vested or
unvested compensation paid, provided, or granted to Bell by the Company,
including all such claims that may arise based on the application of Code
Section 409A, and (viii) any claim which was or could have been raised;
provided, notwithstanding anything to the contrary in this Agreement. The
“Released Claims” shall not include rights or obligations under this Agreement,
Article 5 of the Employment Agreement, COBRA, any 401(k) plan or matters arising
out of or in connection with claims by governmental authorities or
self-regulatory organizations involving actual or potential violations of the
securities laws, rules or regulations applicable to Lilis, any existing rights
Bell has to indemnification, contribution and a defense from Lilis for the time
that Bell was an officer and director of Lilis, any rights Bell has to any D&O
and general liability insurance coverage of Lilis, any rights that Bell has as a
shareholder of Lilis arising after the date hereof, and any rights which cannot
be waived or released as a matter of law.

 

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Moreover, nothing contained in this Agreement is intended to prohibit or
restrict either party in any way from (1) bringing a lawsuit against the other
to enforce the obligations under this Agreement; (2) providing information to,
or testifying or otherwise assisting in any investigation or proceeding brought
by, any federal regulatory or law enforcement agency or legislative body, any
self-regulatory organization, or Lilis’ legal, compliance or human resources
officers; (3) testifying or participating in or otherwise assisting in a
proceeding relating to an alleged violation of any federal, state or municipal
law relating to fraud or any rule or regulation of the Securities and Exchange
Commission or any self-regulatory organization; or (4) filing any claims that
are not permitted to be waived or released under applicable law (although the
ability to recover damages or other relief is still waived and released to the
extent permitted by law).

 

(c)The releases in this paragraph 4 shall be construed in the broadest sense
possible and shall be effective as a prohibition to all claims, charges,
actions, suits, demands, obligations, damages, injuries, liabilities, losses,
and causes of action of every character, nature, kind or description, known or
unknown, and suspected or unsuspected that the Parties may have against the
Released Parties. The Parties hereby expressly acknowledge that they are aware
of the existence of California Civil Code § 1542 and its meaning and effect. The
Parties expressly acknowledge that they have read and understood the following
provision of that section which provides:

 

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR 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 DEBTOR.”

 

The Parties expressly waive and release any right to benefits that they may have
under California Civil Code § 1542 to the fullest extent they may do so
lawfully. The Parties further acknowledge that they may later discover facts
different from or in addition to those facts now known to them or believe by
them to be true with respect to any or all of the matters covered by this
Agreement, and the Parties agree that this Agreement nevertheless shall remain
in full and complete force and effect.

 

5.Survival of Provisions of the Employment Agreement. The Parties expressly
acknowledge and agree that notwithstanding Paragraph 12 of this Agreement, the
following provisions of the Employment Agreement will continue in full force and
effect: Section 4.2 (as specified in this Agreement) of Article 4, Article 5 and
Sections 8.1-8.4, 8.6-8.9, 8.11-8.14, and 8.16-8.18 of Article 8; provided,
however, that any provisions of the Employment Agreement that expire by their
terms shall no longer have any force or effect. The Parties expressly
acknowledge and agree that Section 7 of the Employment Agreement is no longer in
effect. Any and all claims arising out of Section 7 of the Employment Agreement
are included in "Released Claims" and are released herein. Lilis agrees and
acknowledges that it will take no efforts to enforce Section 7 of the Employment
Agreement against Bell. Lilis agrees and acknowledges that its obligation to
Bell pursuant to Section 8.4 of the Employment Agreement to indemnify Bell for
any claims arising out of or relating to his services for Lilis remains in full
force and effect.

 

6.Representations and Warranties. Each of Bell and Lilis (except as to
subparagraphs (f) and (g) below), severally and not jointly, warrants and
represents as follows:

 

(a)He or it has read this Agreement and agrees to the conditions and obligations
set forth in it.

 

(b)He or it voluntarily executes this Agreement (i) after having been advised to
consult with legal counsel, (ii) after having had opportunity to consult with
legal counsel and (iii) without being pressured or influenced by any statement,
representation or omission of any person acting on behalf of the other or any of
its officers, directors, employees, agents and attorneys.

 

(c)Bell has no knowledge of the existence of any lawsuit, charge or proceeding
against Lilis or any of its officers, directors, employees or agents arising out
of or otherwise connected with any of the matters herein released. Lilis has no
knowledge of any lawsuit, charge or proceeding against Bell arising out of or
otherwise connected with any of the matters herein released.

 

(d)He or it has the individual, corporate, or entity power and authority to
execute and deliver this Agreement and to perform its obligations hereunder and,
if such Party is a corporation, limited liability company or partnership, the
execution, delivery, and performance of this Agreement has been duly authorized
by all necessary corporate, company or partnership action. This Agreement
constitutes the legal, valid, and binding obligation of each Party.

 

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(e)Bell admits, acknowledges, and agrees that, other than the payments and
consideration set forth in Paragraphs 1 and 3 of this Agreement, Bell has been
fully paid or provided all wages, compensation, salary, commissions, bonuses,
expense reimbursements, stock, stock options, vacation, change in control
benefits, severance benefits, deferred compensation, or other benefits from
Lilis, which are or could be due to Bell under the terms of Bell’s employment or
otherwise. Bell admits, acknowledges, and agrees that Bell is not otherwise
entitled to the payments set forth in Paragraph 3 except in exchange for the
releases by Bell contained in this Agreement. Lilis admits, acknowledges, and
agrees that, other than the duties set forth in this Agreement, Bell has fully
performed all his duties and obligations to Lilis, under the Employment
Agreement or otherwise.

 

(f)Applicable law provides that Bell shall have at least 21 days to consider
this Agreement. In the event that Bell executes this Agreement prior to the 21st
day after receipt of it, Bell expressly intends such execution as a waiver of
any rights Bell has to review the Agreement for the full 21 days. In such event,
Bell represents that such waiver is voluntary and made without any pressure,
representations or incentives from Lilis for such early execution.

 

(g)Bell understands that this Agreement waives and releases any claims Bell may
have under the Age Discrimination in Employment Act (the “ADEA”). Bell may
revoke such waiver and release of claims under the ADEA for 7 calendar days
following its execution (the “Revocation Period”), and Bell’s waiver and release
of claims under the ADEA shall not become enforceable and effective against Bell
or Lilis until 7 calendar days after such execution. If Bell chooses to revoke
this Agreement, Bell must provide written notice by hand delivery and email to
Ron Levine, 1550 Seventeenth Street, Suite 500, Denver, Colorado 80202 (email:
ron.levine@dgslaw.com) within 7 calendar days of Bell’s execution of this
Agreement. If Bell does not revoke within Revocation Period, the right to revoke
is lost. If Bell does revoke within the Revocation Period, such revocation shall
only be effective with respect to Bell's ADEA claims, and the releases set forth
in Paragraph 4 above otherwise shall remain in full force and effect.

 

7.Non-Disparagement. Bell agrees not to make to any person any statement that
disparages the Company or its directors, officers, employees or affiliates or
reflects negatively upon the Company, including, without limitation, statements
regarding the Company’s financial condition, business practices, employment
practices, or its predecessors, successors, subsidiaries, officers, directors,
employees or affiliates. Lilis and Abraham Mirman and its/his directors,
officers, employees or affiliates agree not to make to any person any statement
that disparages Bell or his affiliates, successors, heirs, subrogees, assigns,
principals, agents, partners, employees, associates, attorneys and
representatives, including but not limited to Pierre Caland, Peak Oil LLC, Peak
Oil Holdings LLC, and Peak Operator LLC. In response to inquiries about Bell’s
employment, Bell and the Company shall make the statement set forth on Exhibit A
hereto and file the Form 8-K substantially as set forth on Exhibit B, and
nothing more.

 

8.Section 409A. It is the intention of the parties that compensation or benefits
payable under this Agreement not be subject to the additional tax imposed
pursuant to Section 409A of the Code and this Agreement shall be interpreted
accordingly. To the extent such potential payments or benefits could become
subject to additional tax under such Section, the parties shall cooperate to
amend this Agreement with the goal of giving Bell the economic benefits
described herein in a manner that does not result in such tax being imposed.
Each payment or benefit made pursuant to this Agreement shall be deemed to be a
separate payment for purposes of Code Section 409A and each payment made in
installments shall be treated as a series of separate payments for purposes of
Code Section 409A, to the extent permitted under applicable law. In addition,
payments or benefits pursuant to this Agreement shall be exempt from the
requirements of Code Section 409A to the maximum extent possible as “short-term
deferrals” pursuant to Treasury Regulation Section 1.409A-1(b)(4), as exempt
reimbursements under Treasury Regulation Section 1.409A-1(b)(9)(v), and/or under
any other exemption that may be applicable, and this Agreement shall be
construed accordingly. The parties agree and acknowledge that Bell incurred a
“separation from service,” as defined in Section 409A of the Code and the
Treasury Regulations thereunder, on the Separation Date. If any payment made
hereunder within 6 months of the Separation Date constitutes deferred
compensation that would otherwise be subject to the additional tax imposed
pursuant to Section 409A of the Code as a result of Bell’s status as a specified
employee, then such payment shall instead be payable on the date that is five
(5) days following the earliest to occur of (i) 6 months after Bell’s
“separation from service,” or (ii) Bell’s death. All taxable reimbursements
provided hereunder that are deferred compensation subject to the requirements of
Code Section 409A shall be made not later than the calendar year following the
calendar year in which the expense was incurred. Any such taxable reimbursements
or any taxable in-kind benefits provided in one calendar year shall not affect
the expenses eligible for reimbursement or in-kind benefits to be provided in
any other taxable year.

 

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9.Successors. This Agreement shall be binding upon, and inure to the benefit of,
any successor to Lilis or Bell.

 

10.Restricted Assignment. Neither Party may assign, transfer, or delegate this
Agreement or any of its or his rights or obligations under this Agreement
without the prior written consent of the other Party. Any attempted assignment,
transfer, or delegation in violation of the preceding sentence shall be void and
of no effect.

 

11.Waiver and Amendment. No term or condition of this Agreement shall be deemed
waived other than by a writing signed by the Party against whom or which
enforcement of the waiver is sought. Without limiting the generality of the
preceding sentence, a Party’s failure to insist upon the other Party’s strict
compliance with any provision of this Agreement or to assert any right that a
Party may have under this Agreement shall not be deemed a waiver of that
provision or that right. Any written waiver shall operate only as to the
specific term or condition waived under the specific circumstances and shall not
constitute a waiver of that term or condition for the future or a waiver of any
other term or condition. No amendment or modification of this Agreement shall be
deemed effective unless stated in a writing signed by the Parties.

 

12.Entire Agreement. This Agreement contains the Parties’ entire agreement
regarding Bell’s employment with the Company and the subject matter of this
Agreement. This Agreement supersedes all other and prior agreements and
understandings between the Parties, including the Employment Agreement, except
as otherwise provided herein. The Parties have made no agreements,
representations, or warranties regarding the subject matter of this Agreement
that are not set forth in this Agreement.

 

13.Notice. Except as otherwise set forth in this Agreement, each notice or other
communication required or permitted under this Agreement shall be in writing and
transmitted, delivered, or sent by personal delivery, prepaid courier or
messenger service (whether overnight or same-day), or prepaid certified United
States mail (with return receipt requested), addressed (in any case) to the
other Party at the address set forth as follows:

 

If to Bell, to:

 

300 E. Esplanade Drive, Suite 1810

Oxnard, CA 93036

 

With a copy to:

 

Rapp & Krock, PC

Attn: Bradley W. Rapp

3050 Post Oak Blvd, Suite 1425

Houston, Texas 77056

brapp@rk-lawfirm.com

 

If to Lilis, to:

 

Lilis Energy, Inc.
Attention: Chief Financial Officer
1900 Grant Street, Suite #720
Denver, CO 80203

 

With a copy to:

 

Davis Graham & Stubbs LLP
Attention: Ron Levine
1550 Seventeenth Street, Suite 500
Denver, Colorado 80202

 

Each notice or communication so transmitted, delivered, or sent in person, by
courier or messenger service, or by certified United States mail shall be deemed
given, received, and effective on the date delivered to or refused by the
intended recipient (with the return receipt, or the equivalent record of the
courier or messenger, being deemed conclusive evidence of delivery or refusal).
Nevertheless, if the date of delivery is after 5:00 p.m. on a business day, the
notice or other communication shall be deemed given, received, and effective on
the next business day.

 

14.Severability. It is the desire of the Parties hereto that this Agreement be
enforced to the maximum extent permitted by law. Should any provision contained
herein be held unenforceable by a court of competent jurisdiction, the Parties
hereby agree and consent that such provision shall be reformed to create a valid
and enforceable provision to the maximum extent permitted by law; provided,
however, if such provision cannot be reformed, it shall be deemed ineffective
and deleted herefrom without affecting any other provision of this Agreement.
This Agreement should be construed by limiting and reducing it only to the
minimum extent necessary to be enforceable under then applicable law.

 

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15.Title and Headings; Construction. Titles and headings to sections hereof are
for the purpose of reference only and shall in no way limit, define or otherwise
affect the provisions hereof. The words “herein,” “hereof,” “hereunder” and
other compounds of the word “here” shall refer to the entire Agreement and not
to any particular provision.

 

16.Governing Law; Jurisdiction. All matters or issues relating to the
interpretation, construction, validity, and enforcement of this Agreement shall
be governed by the laws of the State of Colorado, without giving effect to any
choice-of-law principle that would cause the application of the laws of any
jurisdiction other than Colorado. Jurisdiction and venue of any action or
proceeding relating to this Agreement or any dispute shall be exclusively in the
state or federal courts in Denver, Colorado.

 

17.Counterparts. This Agreement may be signed in counterparts, with the same
effect as if both Parties had signed the same document. All counterparts shall
be construed together to constitute one, and the same, document.

 

18.Cooperation. Bell hereby agrees that after the date hereof, Bell will
reasonably cooperate with the Company to ensure a smooth transition of
management, to continue to protect the Company’s confidential information and
trade secrets in accordance with Articles V and VII of the Employment Agreement,
and to promptly respond to Company inquiries regarding such confidential
information, including, without limitation, any corporate opportunities
disclosed or entrusted to Bell by the Company, its affiliates or third parties
during or prior to Bell’s employment with the Company.

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement to be effective as
of the date first above written.

 

  BELL:         /s/ Robert A. Bell   Name: Robert A. Bell         LILIS:        
Lilis Energy, Inc., a Nevada corporation         By: /s/ Eric Ulwelling   Its:
Acting Chief Financial Officer   Name: Eric Ulwelling

  

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Exhibit A

  

On August 1, 2014, Robert A. Bell resigned his positions as President, Chief
Operating Officer and member of the Board of Directors of Lilis Energy, Inc. in
order to focus his full attention on other ongoing roles and responsibilities.

 

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Exhibit B

 

Form 8-K

 

[See attached]

 

 

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