Exhibit 10.2

 

Execution Version

 

 

REGISTRATION RIGHTS AGREEMENT

 

BY AND AMONG

 

LILIS ENERGY, INC.

 

AND

 

THE PURCHASERS

  

 

 

 

TABLE OF CONTENTS

 

ARTICLE I DEFINITIONS 1 Section 1.01   Definitions 1 Section 1.02   Registrable
Securities 2     ARTICLE II REGISTRATION RIGHTS 2 Section 2.01   Mandatory
Registration 2 Section 2.02   Blackout and Delay Rights 3 Section 2.03   Sale
Procedures 4 Section 2.04   Cooperation by Holders 7 Section 2.05   Expenses 7
Section 2.06   Indemnification 8 Section 2.07   Rule 144 Reporting 9 Section
2.08   Transfer or Assignment of Registration Rights 10     ARTICLE III
MISCELLANEOUS 10 Section 3.01   Communications 10 Section 3.02   Successor and
Assigns 11 Section 3.03   Assignment of Rights 11 Section
3.04   Recapitalization, Exchanges, Etc. 11 Section 3.05   Aggregation of
Registrable Securities 11 Section 3.06   Specific Performance 12 Section
3.07   Counterparts 12 Section 3.08   Headings 12 Section 3.09   Governing Law
12 Section 3.10   Severability of Provisions 13 Section 3.11   Entire Agreement
13 Section 3.12   Amendment 13 Section 3.13   No Presumption 13 Section
3.14   Obligations Limited to Parties to Agreement 13 Section 3.15   Independent
Nature of Purchaser’s Obligations 14 Section 3.16   Interpretation 14

 

i 

 

 

REGISTRATION RIGHTS AGREEMENT

 

This REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into
as of February 28, 2017, by and among Lilis Energy, Inc., a Nevada corporation
(the “Company”), and each of the Persons set forth on Schedule A to the
Securities Subscription Agreement (as defined below) (each, a “Purchaser” and
collectively, the “Purchasers”).

 

WHEREAS, this Agreement is made in connection with the closing (the “Closing”)
of the issuance and sale of the Securities pursuant to the Securities
Subscription Agreement, dated as of February 28, 2017, by and among the Company
and the Purchasers (the “Securities Subscription Agreement”); and

 

WHEREAS, the Company has agreed to provide the registration and other rights set
forth in this Agreement for the benefit of the Purchasers pursuant to the
Securities Subscription Agreement.

 

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by each party hereto, the parties hereby agree as
follows:

 

ARTICLE I
DEFINITIONS

 

Section 1.01        Definitions.

 

Capitalized terms used herein without definition shall have the meanings given
to them in the Securities Subscription Agreement. The terms set forth below are
used herein as so defined:

 

“Agreement” has the meaning specified therefor in the introductory paragraph of
this Agreement.

 

“Business Day” means any day other than a Saturday, Sunday, any federal holiday
or any other day on which banking institutions in the State of New York are
authorized or required to be closed by law or governmental action.

 

“Company” has the meaning specified therefor in the introductory paragraph of
this Agreement.

 

“Effectiveness Period” has the meaning specified therefor in Section 2.01 of
this Agreement.

 

“Holder” means the record holder of any Registrable Securities.

 

“Mandatory Shelf Filing Date” has the meaning specified therefore in
Section 2.01 of this Agreement.

 

“Purchaser” and “Purchasers” have the meanings specified therefor in the
introductory paragraph of this Agreement.

 

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“Registrable Securities” means (a) the Purchased Shares and the Warrant Shares
to be acquired by the Purchasers pursuant to the Securities Subscription
Agreement and includes any type of interest issued to the Holder as a result of
Section 3.04 and (b) any additional shares of Common Stock paid, issued or
distributed in respect of such shares by way of a stock dividend, stock split or
distribution, or in connection with a combination of shares, and any security
into which such Common Stock will have been converted or exchanged in connection
with a recapitalization, reorganization, reclassification, merger,
consolidation, exchange, distribution or otherwise.

 

“Registration Expenses” has the meaning specified therefor in Section 2.05(b) of
this Agreement.

 

“Registration Statement” has the meaning specified therefor in Section 2.01 of
this Agreement.

 

“Securities Subscription Agreement” has the meaning specified therefor in the
recitals of this Agreement.

 

“Selling Holder” means a Holder who is selling Registrable Securities pursuant
to a registration statement.

 

Section 1.02        Registrable Securities.

 

Any Registrable Security will cease to be a Registrable Security (a) when a
registration statement covering such Registrable Security becomes or has been
declared effective by the Commission and such Registrable Security has been sold
or disposed of pursuant to such effective registration statement; (b) when such
Registrable Security has been disposed of pursuant to any section of Rule 144
(or any similar provision then in effect) under the Securities Act; (c) when
such Registrable Security is held by the Company or one of its subsidiaries; or
(d) when such Registrable Security has been sold or disposed of in a private
transaction in which the transferor’s rights under this Agreement are not
assigned to the transferee of such securities pursuant to hereof or (e) when
such Registrable Security becomes eligible for resale without restriction and
without the need for current public information pursuant to any section of Rule
144 (or any similar provision then in effect) under the Securities Act, assuming
the Holder of such Registrable Security is not an affiliate (as defined in Rule
144(a)(1)) of the Company.

 

ARTICLE II
REGISTRATION RIGHTS

 

Section 2.01        Mandatory Registration.

 

The Company shall prepare and use its reasonable best efforts to file no later
than April 1, 2017 with the Commission (such filing date, the “Mandatory Shelf
Filing Date”) a registration statement with the Commission providing for
registration and resale, on a continuous or delayed basis pursuant to Rule 415,
of all of the Registrable Securities then outstanding from time to time; such
registration statement shall be on Form S-1 (or any equivalent or successor
form) under the Securities Act (or to the extent the Company is eligible to use
Form S-3 or any equivalent or successor form or forms, on Form S-3 or any
comparable or successor form); provided, however, that if the Company has filed
the registration statement on Form S-1 and subsequently becomes eligible to use
Form S-3 or any equivalent or successor form or forms, the Company may elect, in
its sole discretion, to (i) file a post-effective amendment to the registration
statement converting such registration statement on Form S-1 to a registration
statement on Form S-3 or any equivalent or successor form or forms or (ii)
withdraw the registration statement on Form S-1 and file a registration
statement on Form S-3 or any equivalent or successor form or forms, (the
registration statement on such form, as amended or supplemented, the
“Registration Statement”). The Company shall use its reasonable best efforts to
cause the Registration Statement to be declared effective under the Securities
Act by the Commission as soon as reasonably practicable after the Mandatory
Shelf Filing Date. The Company shall use its reasonable best efforts to keep the
Registration Statement continuously effective under the Securities Act until the
earlier of (A) the date when all of the Registrable Securities covered by such
Registration Statement have been sold and (B) the date on which all of the
Purchased Shares and the Warrant Shares cease to be Registrable Securities
hereunder (such period, the “Effectiveness Period”). The Registration Statement
when effective (including the documents incorporated therein by reference) will
comply as to form in all material respects with all applicable requirements of
the Securities Act and the Exchange Act and will not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading (in the case
of any prospectus contained in such Registration Statement, in the light of the
circumstances under which a statement is made). As soon as practicable following
the date that the Registration Statement becomes effective, but in any event
within two (2) Business Days of such date, the Company shall provide the Holders
with written notice of the effectiveness of the Registration Statement. For so
long as any Registrable Securities covered by the Registration Statement remain
unsold, the Company will file any supplements to the prospectus contained
therein or post-effective amendments required to be filed by applicable law in
order to incorporate into such prospectus any Current Reports on Form 8-K
necessary or required to be filed by applicable law, any Quarterly Reports on
Form 10-Q or any Annual Reports on Form 10-K filed by the Company with the
Commission, or any other information necessary so that (i) the Registration
Statement shall not include any untrue statement of material fact or omit to
state any material fact necessary in order to make the statements therein not
misleading, and (ii) the Company complies with its obligations under Item
512(a)(1) of Regulation S-K.

 

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Section 2.02        Blackout and Delay Rights.

 

Notwithstanding anything to the contrary contained herein:

 

(a)                the Company shall not be required to file a Registration
Statement (or any amendment thereto) or, if a Registration Statement has been
filed but not declared effective by the Commission, request effectiveness of
such Registration Statement, for a period of up to sixty-five (65) days, if
(A) the Company determines that a postponement is in the best interest of the
Company and its stockholders generally due to a pending transaction involving
the Company (including a pending securities offering by the Company, or any
proposed financing, acquisition, merger, tender offer, business combination,
corporate reorganization, consolidation or other significant transaction
involving the Company), (B) the Company determines, on the advice of counsel,
that such registration would render the Company unable to comply with applicable
securities laws, or (C) the Company determines such registration would require
disclosure of material information that the Company has a bona fide business
purpose for preserving as confidential; provided, however, that (i) in no event
shall any such period exceed an aggregate of one-hundred thirty-five (135) days
in any 365-day period and (ii) this right, together with the right to suspend
use of a Registration Statement pursuant to Section 2.2(b), may not be exercised
more than two times in any 365-day period; and

 

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(b)               the Company may, upon written notice to any Selling Holder
whose Registrable Securities are included in the Registration Statement or other
registration statement contemplated by this Agreement, suspend such Selling
Holder’s use of any prospectus which is a part of the Registration Statement or
other registration statement (in which event the Selling Holder shall
discontinue sales of the Registrable Securities pursuant to the Registration
Statement or other registration statement contemplated by this Agreement but may
settle any previously made sales of Registrable Securities) if (i) the Company
determines that it would be required to make disclosure of material information
in the Registration Statement that the Company has a bona fide business purpose
for preserving as confidential or (ii) the Company has experienced some other
material non-public event the disclosure of which at such time, in the good
faith judgment of the Company, would adversely affect the Company; provided,
however, that (i) in no event shall the Selling Holders be suspended from
selling Registrable Securities pursuant to the Registration Statement or other
registration statement for a period that exceeds an aggregate of sixty (60) days
in any 180-day period or one-hundred thirty-five (135) days in any 365-day
period and (ii) this right, together with the right to delay filing or
effectiveness of a Shelf Registration Statement pursuant to Section 2.2(a), may
not be exercised more than two times in any 365-day period. Upon disclosure of
such information or the termination of the condition described above, the
Company shall provide prompt notice to the Selling Holders whose Registrable
Securities are included in the Registration Statement, and shall promptly
terminate any suspension of sales it has put into effect and shall take such
other reasonable actions to permit registered sales of Registrable Securities as
contemplated in this Agreement.

 

Section 2.03        Sale Procedures.

 

In connection with its obligations under this Article II, the Company will, as
expeditiously as possible:

 

(a)                prepare and file with the Commission such amendments and
supplements to the Registration Statement and the prospectus used in connection
therewith as may be necessary to keep the Registration Statement effective for
the Effectiveness Period and as may be necessary to comply with the provisions
of the Securities Act with respect to the disposition of all Registrable
Securities covered by the Registration Statement;

 

(b)               make available to each Selling Holder (i) as far in advance as
reasonably practicable before filing the Registration Statement or any other
registration statement contemplated by this Agreement or any supplement or
amendment thereto, upon request, copies of reasonably complete drafts of all
such documents proposed to be filed (including exhibits and each document
incorporated by reference therein to the extent then required by the rules and
regulations of the Commission), and provide each such Selling Holder the
opportunity to object to any information pertaining to such Selling Holder and
its plan of distribution that is contained therein and make the corrections
reasonably requested by such Selling Holder with respect to such information
prior to filing the Registration Statement or such other registration statement
or supplement or amendment thereto, and (ii) such number of copies of the
Registration Statement or such other registration statement and the prospectus
included therein and any supplements and amendments thereto as such Selling
Holder may reasonably request in order to facilitate the public sale or other
disposition of the Registrable Securities covered by such Registration Statement
or other registration statement. Each Holder agrees to furnish to the Company a
completed questionnaire in the form attached to this Agreement as Annex A (a
“Selling Stockholder Questionnaire”) on a date that is not less than two (2)
Trading Days prior to the Mandatory Shelf Filing Date or by the end of the
fourth (4th) Trading Day following the date on which such Holder receives draft
materials in accordance with this Section 2.03(b);

 

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(c)                if applicable, use its reasonable best efforts to register or
qualify the Registrable Securities covered by the Registration Statement or any
other registration statement contemplated by this Agreement under the securities
or blue sky laws of such jurisdictions as the Selling Holders shall reasonably
request in writing by the time the Registration Statement is declared effective
by the SEC; provided, however, that the Company will not be required to qualify
generally to transact business in any jurisdiction where it is not then required
to so qualify, take any action that would subject the Company to any material
tax in any such jurisdiction where it is not then so subject, or to take any
action that would subject it to general service of process in any such
jurisdiction where it is not then so subject;

 

(d)               promptly notify each Selling Holder, at any time when a
prospectus relating thereto is required to be delivered by any of them under the
Securities Act, of (i) the filing of the Registration Statement or any other
registration statement contemplated by this Agreement or any prospectus or
prospectus supplement to be used in connection therewith, or any amendment or
supplement thereto, and, with respect to such Registration Statement or any
other registration statement or any post-effective amendment thereto, when the
same has become effective; and (ii) the receipt of any written comments from the
Commission with respect to any filing referred to in clause (i) and any written
request by the Commission for amendments or supplements to the Registration
Statement or any other registration statement or any prospectus or prospectus
supplement thereto;

 

(e)                immediately notify each Selling Holder, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of (i) the happening of any event as a result of which the prospectus or
prospectus supplement contained in the Registration Statement or any other
registration statement contemplated by this Agreement, as then in effect,
includes an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading (in the case of any prospectus contained therein, in the light of
the circumstances under which a statement is made); (ii) the issuance or express
threat of issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any other registration statement
contemplated by this Agreement, or the initiation of any proceedings for that
purpose; or (iii) the receipt by the Company of any notification with respect to
the suspension of the qualification of any Registrable Securities for sale under
the applicable securities or blue sky laws of any jurisdiction. Following the
provision of such notice, the Company agrees to as promptly as practicable amend
or supplement the prospectus or prospectus supplement or take other appropriate
action so that the prospectus or prospectus supplement does not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing and to take such other commercially
reasonable action as is necessary to remove a stop order, suspension, threat
thereof or proceedings related thereto;

 

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(f)                upon request and subject to appropriate confidentiality
obligations, furnish to each Selling Holder copies of any and all transmittal
letters or other correspondence with the Commission or any other governmental
agency or self-regulatory body or other body having jurisdiction (including any
domestic or foreign securities exchange) relating to the Registration Statement;

 

(g)               otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement,
which earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 promulgated thereunder;

 

(h)               cause all such Registrable Securities registered pursuant to
this Agreement to be listed on each securities exchange or nationally recognized
quotation system on which similar securities issued by the Company are then
listed;

 

(i)                 use its reasonable best efforts to cause the Registrable
Securities to be registered with or approved by such other governmental agencies
or authorities as may be necessary by virtue of the business and operations of
the Company to enable the Selling Holders to consummate the disposition of such
Registrable Securities;

 

(j)                 provide a transfer agent and registrar for all Registrable
Securities covered by such registration statement not later than the effective
date of such registration statement;

 

(k)               if requested by a Selling Holder, (i) incorporate in a
prospectus supplement or post-effective amendment such information as such
Selling Holder reasonably requests to be included therein relating to the sale
and distribution of Registrable Securities, including information with respect
to the number of Registrable Securities being offered or sold, the purchase
price being paid therefor and any other terms of the offering of the Registrable
Securities to be sold in such offering and (ii) make all required filings of
such prospectus supplement or post-effective amendment after being notified of
the matters to be incorporated in such prospectus supplement or post-effective
amendment;

 

(l)                 with respect to any offering of Registrable Securities,
furnish to each Selling Holder, without charge, such number of copies of the
applicable Registration Statement, each amendment and supplement thereto, the
prospectus included in such Registration Statement (including each preliminary
prospectus, final prospectus, and any other prospectus (including any prospectus
filed under Rule 424, Rule 430A or Rule 430B promulgated under the Securities
Act and any “issuer free writing prospectus” as such term is defined under Rule
433 promulgated under the Securities Act), all exhibits and other documents
filed therewith and such other documents as such seller or such managing
underwriters may reasonably request including in order to facilitate the
disposition of the Registrable Securities owned by such seller, and upon
request, a copy of any and all transmittal letters or other correspondence to or
received from, the Commission or any other governmental authority relating to
such offer; and

 

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(m)             the Company may require each Holder to furnish to the Company a
certified statement as to the number of shares of Common Stock beneficially
owned by such Holder and, if required by the Commission, the natural persons
thereof that have voting and dispositive control over the shares.

 

The Company will not name a Holder as an underwriter as defined in Section
2(a)(11) of the Securities Act in any Registration Statement without such
Holder’s consent. If the staff of the Commission requires the Company to name
any Holder as an underwriter as defined in Section 2(a)(11) of the Securities
Act, and such Holder does not consent thereto, then such Holder’s Registrable
Securities shall not be included on the Registration Statement and the Company
shall have no further obligations hereunder with respect to Registrable
Securities held by such Holder.

 

Each Selling Holder, upon receipt of notice from the Company of the happening of
any event of the kind described in subsection (e) of this Section 2.03, shall
forthwith discontinue offers and sales of the Registrable Securities by means of
a prospectus or prospectus supplement until such Selling Holder’s receipt of the
copies of the supplemented or amended prospectus contemplated by subsection (e)
of this Section 2.03 or until it is advised in writing by the Company that the
use of the prospectus may be resumed and has received copies of any additional
or supplemental filings incorporated by reference in the prospectus, and, if so
directed by the Company, such Selling Holder will deliver to the Company (at the
Company’s expense) all copies in their possession or control, other than
permanent file copies then in such Selling Holder’s possession, of the
prospectus covering such Registrable Securities current at the time of receipt
of such notice.

 

Section 2.04        Cooperation by Holders.

 

The Company shall have no obligation to include Registrable Securities of a
Holder in the Registration Statement who has failed to furnish, within five (5)
Business Days of a request by the Company, such information that the Company
determines, after consultation with its counsel, is reasonably required in order
for the registration statement or prospectus supplement, as applicable, to
comply with the Securities Act.

 

Section 2.05        Expenses.

 

(a)                Expenses. The Company will pay all reasonable Registration
Expenses as determined in good faith. In addition, except as otherwise provided
in Section 2.06 hereof, the Company shall not be responsible for legal fees
incurred by Holders in connection with the exercise of such Holders’ rights
hereunder.

 

(b)               Certain Definitions. “Registration Expenses” means all
expenses incident to the Company’s performance under or compliance with this
Agreement to effect the registration of Registrable Securities on the
Registration Statement pursuant to Section 2.01, and the disposition of such
Registrable Securities, including, without limitation, all registration, filing,
securities exchange listing fees, all registration, filing, qualification and
other fees and expenses of complying with securities or blue sky laws, fees of
the Financial Industry Regulatory Authority, fees of transfer agents and
registrars, all word processing, duplicating and printing expenses, any transfer
taxes and the fees and disbursements of counsel and independent public
accountants for the Company, including the expenses of any special audits or
“cold comfort” letters required by or incident to such performance and
compliance.

 

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Section 2.06        Indemnification.

 

(a)                Indemnification by the Company. In the event of any
registration of any securities of the Company under the Securities Act pursuant
to this Agreement, the Company will, and hereby does, indemnify and hold
harmless the seller of any Registrable Securities covered by such registration
statement, its directors and officers, each other Person who participates in the
offering or sale of such securities and each other Person, if any, who controls
such seller, within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which such seller or any
such director or officer or controlling person may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such securities were registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the Company will
reimburse such seller and each such director, officer, and controlling person
for any legal or any other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, liability, action or
proceeding; provided that the Company shall not be liable in any such case to
the extent that any such loss, claim, damage, liability (or action or proceeding
in respect thereof) or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in conformity
with information furnished to the Company in writing or electronically
specifically stating that it is for use in the preparation thereof. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such seller or any such director, officer or controlling
person and shall survive the transfer of such securities by such seller.

 

(b)               Indemnification by the Sellers. The Company may require, as a
condition to including any Registrable Securities in any registration statement
filed pursuant to Section 2.01 above, that the Company shall have received an
undertaking satisfactory to it from the prospective seller of such securities,
to indemnify and hold harmless (in the same manner and to the same extent as set
forth in Section 2.06(a) above) the Company, each director of the Company, each
officer of the Company and each other Person, if any, who controls the Company
within the meaning of the Securities Act, with respect to any statement or
alleged statement in or omission or alleged omission from such registration
statement, any preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, if such statement or
alleged statement or omission or alleged omission was made in reliance upon and
in conformity with information furnished to the Company in writing or
electronically, by the Holder or reviewed by and expressly approved by such
Holder, specifically stating that it is for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement (it being understood that the Holder has
approved Annex A hereto for this purpose). The maximum liability of each seller
for any such indemnification shall not exceed the amount of net proceeds
received by such seller from the sale of his/its Registrable Securities pursuant
to the Registration Statement. Such indemnity shall remain in full force and
effect, regardless of any investigation made by or on behalf of the Company or
any such director, officer or controlling Person and shall survive the transfer
of such securities by such seller.

 

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(c)                Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in Section 2.06(a) or (b) above, such indemnified
party will, if a claim in respect thereof is to be made against an indemnifying
party, give written notice to the latter of the commencement of such action;
provided that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligations under
Section 2.06(a) or (b) above, except to the extent that the indemnifying party
is actually prejudiced by such failure to give notice. In case any such action
is brought against an indemnified party, unless in such indemnified party’s
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, the indemnifying party
shall be entitled to participate in and to assume the defense thereof, jointly
with any other indemnifying party similarly notified to the extent that it may
wish, with counsel reasonably satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from all liability
in respect to such claim or litigation.

 

(d)               Other Indemnification. Indemnification similar to that
specified in Sections 2.06(a), (b) and (c) above (with appropriate
modifications) shall be given by the Company and each seller of Registrable
Securities with respect to any required registration or other qualification of
securities under any Federal or state law or regulation of any governmental
authority other than the Securities Act.

 

(e)                Indemnification Payments. The indemnification required by
this Section 2.06 shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred.

 

Section 2.07        Rule 144 Reporting.

 

With a view to making available the benefits of certain rules and regulations of
the Commission that may permit the sale of the Registrable Securities to the
public without registration, the Company agrees to use its reasonable best
efforts to:

 

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(a)                make and keep public information regarding the Company
available, as those terms are understood and defined in Rule 144 under the
Securities Act, at all times from and after the date hereof;

 

(b)               file with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act at all times from and after the date hereof; and

 

(c)                so long as a Holder owns any Registrable Securities, furnish,
unless otherwise available via EDGAR, to such Holder forthwith upon request a
copy of the most recent annual or quarterly report of the Company, and such
other reports and documents so filed as such Holder may reasonably request in
availing itself of any rule or regulation of the Commission allowing such Holder
to sell any such securities without registration.

 

Section 2.08        Transfer or Assignment of Registration Rights.

 

The rights to cause the Company to register Registrable Securities granted to
the Purchasers by the Company under this Article II may be transferred or
assigned by any Purchaser to one or more transferees or assignees of Registrable
Securities; provided, however, that (a) unless the transferee or assignee is an
Affiliate of, and after such transfer or assignment continues to be an Affiliate
of, such Purchaser, the amount of Registrable Securities transferred or assigned
to such transferee or assignee shall represent at least $5 million of
Registrable Securities (based on the Unit Price), (b) the Company is given
written notice prior to any said transfer or assignment, stating the name and
address of each such transferee or assignee and identifying the securities with
respect to which such registration rights are being transferred or assigned, and
(c) each such transferee or assignee assumes in writing responsibility for its
portion of the obligations of such Purchaser under this Agreement.

 

ARTICLE III
MISCELLANEOUS

 

Section 3.01        Communications.

 

All notices and other communications provided for or permitted hereunder shall
be made in writing by facsimile, electronic mail, courier service or personal
delivery:

 

(a)if to a Purchaser:

 

To the respective address listed on Schedule B to the Securities Subscription
Agreement

 

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(b)if to a transferee of an Purchaser, to such Holder at the address provided
pursuant to Section 2.08 above; and

 

(c)if to the Company:

 

300 E. Sonterra Blvd., Suite 1220

San Antonio, Texas 78258

Attention: General Counsel

Email: AFuchs@lilisenergy.com

 

with a copy to:

 

K&L Gates LLP

1 Park Plaza

Twelfth Floor

Irvine, CA 92614

Attention: Michael A. Hedge

Email: Michael.Hedge@klgates.com

 

All such notices and communications shall be deemed to have been received at the
time delivered by hand, if personally delivered; when receipt acknowledged, if
sent via facsimile or sent via Internet electronic mail; and when actually
received, if sent by courier service or any other means.

 

Section 3.02        Successor and Assigns.

 

This Agreement shall inure to the benefit of and be binding upon the successors
and permitted assigns of each of the parties, including subsequent Holders of
Registrable Securities to the extent permitted herein.

 

Section 3.03        Assignment of Rights.

 

All or any portion of the rights and obligations of any Purchaser under this
Agreement may be transferred or assigned by such Purchaser only in accordance
with Section 2.08 hereof.

 

Section 3.04        Recapitalization, Exchanges, Etc. Affecting the Shares.

 

The provisions of this Agreement shall apply to the full extent set forth herein
with respect to any and all shares of the Company or any successor or assign of
the Company (whether by merger, consolidation, sale of assets or otherwise) that
may be issued in respect of, in exchange for or in substitution of, the
Registrable Securities, and shall be appropriately adjusted for combinations,
share splits, recapitalizations, pro rata distributions of shares and the like
occurring after the date of this Agreement.

 

Section 3.05        Aggregation of Registrable Securities.

 

All Registrable Securities held or acquired by Persons who are Affiliates of one
another shall be aggregated together for the purpose of determining the
availability of any rights and applicability of any obligations under this
Agreement.

 

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Section 3.06        Specific Performance.

 

Damages in the event of breach of this Agreement by a party hereto may be
difficult, if not impossible, to ascertain, and it is therefore agreed that each
such Person, in addition to and without limiting any other remedy or right it
may have, will have the right to an injunction or other equitable relief in any
court of competent jurisdiction, enjoining any such breach, and enforcing
specifically the terms and provisions hereof, and each of the parties hereto
hereby waives any and all defenses it may have on the ground of lack of
jurisdiction or competence of the court to grant such an injunction or other
equitable relief. The existence of this right will not preclude any such Person
from pursuing any other rights and remedies at law or in equity that such Person
may have.

 

Section 3.07        Counterparts.

 

This Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which counterparts, when so
executed and delivered, shall be deemed to be an original and all of which
counterparts, taken together, shall constitute but one and the same Agreement.

 

Section 3.08        Headings.

 

The headings in this Agreement are for convenience of reference only and shall
not limit or otherwise affect the meaning hereof.

 

Section 3.09        Governing Law.

 

THIS AGREEMENT, AND ALL CLAIMS OR CAUSES OF ACTION (WHETHER IN CONTRACT OR TORT)
THAT MAY BE BASED UPON, ARISE OUT OF OR RELATE TO THIS AGREEMENT OR THE
NEGOTIATION, EXECUTION OR PERFORMANCE OF THIS AGREEMENT (INCLUDING ANY CLAIM OR
CAUSE OF ACTION BASED UPON, ARISING OUT OF OR RELATED TO ANY REPRESENTATION OR
WARRANTY MADE IN OR IN CONNECTION WITH THIS AGREEMENT), WILL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAWS. ANY ACTION AGAINST ANY PARTY RELATING TO THE
FOREGOING SHALL BE BROUGHT IN ANY FEDERAL OR STATE COURT OF COMPETENT
JURISDICTION LOCATED WITHIN THE STATE OF NEW YORK, AND THE PARTIES HERETO HEREBY
IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY FEDERAL OR STATE
COURT LOCATED WITHIN THE STATE OF NEW YORK OVER ANY SUCH ACTION. THE PARTIES
HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH
DISPUTE BROUGHT IN SUCH COURT OR ANY DEFENSE OF INCONVENIENT FORUM FOR THE
MAINTENANCE OF SUCH DISPUTE. EACH OF THE PARTIES HERETO AGREES THAT A JUDGMENT
IN ANY SUCH DISPUTE MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.

 

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Section 3.10        Severability of Provisions.

 

Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting or impairing the validity or enforceability of
such provision in any other jurisdiction.

 

Section 3.11        Entire Agreement.

 

This Agreement is intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement of the agreement
and understanding of the parties hereto in respect of the subject matter
contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein with respect to
the rights granted by the Company set forth herein. This Agreement supersedes
all prior agreements and understandings between the parties with respect to such
subject matter.

 

Section 3.12        Amendment.

 

This Agreement may be amended only by means of a written amendment signed by the
Company and the Holders of a majority of the then outstanding Registrable
Securities; provided, however, that no such amendment shall materially and
adversely affect the rights of any Holder hereunder without the consent of such
Holder.

 

Section 3.13        No Presumption.

 

If any claim is made by a party relating to any conflict, omission or ambiguity
in this Agreement, no presumption or burden of proof or persuasion shall be
implied by virtue of the fact that this Agreement was prepared by or at the
request of a particular party or its counsel.

 

Section 3.14        Obligations Limited to Parties to Agreement.

 

Each of the Parties hereto covenants, agrees and acknowledges that no Person
other than the Purchasers (and their permitted transferees and assignees) and
the Company shall have any obligation hereunder and that, notwithstanding that
one or more of the Purchasers may be a corporation, partnership or limited
liability company, no recourse under this Agreement or under any documents or
instruments delivered in connection herewith or therewith shall be had against
any former, current or future director, officer, employee, agent, general or
limited partner, manager, member, stockholder or Affiliate of any of the
Purchasers or any former, current or future director, officer, employee, agent,
general or limited partner, manager, member, stockholder or Affiliate of any of
the foregoing, whether by the enforcement of any assessment or by any legal or
equitable proceeding, or by virtue of any applicable Law, it being expressly
agreed and acknowledged that no personal liability whatsoever shall attach to,
be imposed on or otherwise be incurred by any former, current or future
director, officer, employee, agent, general or limited partner, manager, member,
stockholder or Affiliate of any of the Purchasers or any former, current or
future director, officer, employee, agent, general or limited partner, manager,
member, stockholder or Affiliate of any of the foregoing, as such, for any
obligations of the Purchasers under this Agreement or any documents or
instruments delivered in connection herewith or therewith or for any claim based
on, in respect of or by reason of such obligation or its creation, except in
each case for any transferee or assignee of a Purchaser hereunder.

 

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Section 3.15        Independent Nature of Purchaser’s Obligations.

 

The obligations of each Purchaser under this Agreement are several and not joint
with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under this Agreement. Nothing contained herein, and no action taken by
any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as
a partnership, an association, a joint venture or any other kind of group or
entity, or create a presumption that the Purchasers are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated by this Agreement. Each Purchaser shall be entitled to
independently protect and enforce its rights, including without limitation, the
rights arising out of this Agreement, and it shall not be necessary for any
other Purchaser to be joined as an additional party in any proceeding for such
purpose.

 

Section 3.16        Interpretation.

 

Article and Section references are to this Agreement, unless otherwise
specified. All references to instruments, documents, contracts and agreements
are references to such instruments, documents, contracts and agreements as the
same may be amended, supplemented and otherwise modified from time to time,
unless otherwise specified. The word “including” shall mean “including but not
limited to.” Whenever any determination, consent or approval is to be made or
given by a Purchaser under this Agreement, such action shall be in such
Purchaser’s sole discretion unless otherwise specified.

 

[Signature pages to follow]

 

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IN WITNESS WHEREOF, the Parties hereto execute this Agreement, effective as of
the date first above written.

 

  LILIS ENERGY, INC.               By:     Name:                           
Title:                       PURCHASERS               By:     Name:     Title:  

 

[Signature Page to Registration Rights Agreement]

 

 

Annex A

 

lilis energy, inc.

 

Selling Stockholder Notice and Questionnaire

 

The undersigned beneficial owner of common stock (the “Registrable Securities”)
of Lilis Energy, Inc., a Nevada corporation (the “Company”), understands that
the Company has filed or intends to file with the Securities and Exchange
Commission (the “Commission”) a registration statement (the “Registration
Statement”) for the registration and resale under the Securities Act of 1933, as
amended (the “Securities Act”), of the Registrable Securities, in accordance
with the terms of the Registration Rights Agreement (the “Registration Rights
Agreement”) to which this document is annexed. A copy of the Registration Rights
Agreement is available from the Company upon request at the address set forth
below. All capitalized terms not otherwise defined herein shall have the
meanings ascribed thereto in the Registration Rights Agreement.

 

Certain legal consequences arise from being named as a selling stockholder in
the Registration Statement and the related prospectus. Accordingly, holders and
beneficial owners of Registrable Securities are advised to consult their own
securities law counsel regarding the consequences of being named or not being
named as a selling stockholder in the Registration Statement and the related
prospectus.

 

NOTICE

 

The undersigned beneficial owner (the “Selling Stockholder”) of Registrable
Securities hereby elects to include the Registrable Securities owned by it in
the Registration Statement.

 

 

 

 

The undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:

 

QUESTIONNAIRE

 

1.Name.

 

(a)Full Legal Name of Selling Stockholder

 

   

 

(b)Full Legal Name of Registered Holder (if not the same as (a) above) through
which Registrable Securities are held:

 

   

 

(c)Full Legal Name of Natural Control Person (which means a natural person who
directly or indirectly alone or with others has power to vote or dispose of the
securities covered by this Questionnaire):

 

   

 

 

2. Address for Notices to Selling Stockholder:

 

     

 

Telephone:   Fax:   Contact Person:    

 

3. Broker-Dealer Status:

 

(a)Are you a broker-dealer?

 

Yes ¨ No ¨

 

(b)If “yes” to Section 3(a), did you receive your Registrable Securities as
compensation for investment banking services to the Company?

 

Yes ¨ No ¨

 

Note: If “no” to Section 3(b), the Commission’s staff has indicated that you
should be identified as an underwriter in the Registration Statement.

 

 

 

 

(c)Are you an affiliate of a broker-dealer?

 

Yes ¨ No ¨

 

(d)If you are an affiliate of a broker-dealer, do you certify that you purchased
the Registrable Securities in the ordinary course of business, and at the time
of the purchase of the Registrable Securities to be resold, you had no
agreements or understandings, directly or indirectly, with any person to
distribute the Registrable Securities?

 

Yes ¨ No ¨

 

Note: If “no” to Section 3(d), the Commission’s staff has indicated that you
should be identified as an underwriter in the Registration Statement.

 

4. Beneficial Ownership of Securities of the Company Owned by the Selling
Stockholder.

 

Except as set forth below in this Item 4, the undersigned is not the beneficial
or registered owner of any securities of the Company other than the securities
issuable pursuant to the Purchase Agreement.

 

(a)Type and Amount of other securities beneficially owned by the Selling
Stockholder:

 

     

5. Relationships with the Company:

 

Except as set forth below, neither the undersigned nor any of its affiliates,
officers, directors or principal equity holders (owners of 5% of more of the
equity securities of the undersigned) has held any position or office or has had
any other material relationship with the Company (or its predecessors or
affiliates) during the past two years.

 

State any exceptions here:

 

     

 

The undersigned agrees to promptly notify the Company of any material
inaccuracies or changes in the information provided herein that may occur
subsequent to the date hereof at any time while the Registration Statement
remains effective; provided, that the undersigned shall not be required to
notify the Company of any changes to the number of securities held or owned by
the undersigned or its affiliates.

 

By signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items 1 through 5 and the inclusion of such
information in the Registration Statement and the related prospectus and any
amendments or supplements thereto. The undersigned understands that such
information will be relied upon by the Company in connection with the
preparation or amendment of the Registration Statement and the related
prospectus and any amendments or supplements thereto.

 

 

 

 

IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this
Notice and Questionnaire to be executed and delivered either in person or by its
duly authorized agent.

 

Date:     Beneficial Owner:  

 

      By:         Name:         Title:  

  

PLEASE FAX A COPY (OR EMAIL A .PDF COPY) OF THE COMPLETED AND EXECUTED NOTICE
AND QUESTIONNAIRE, AND RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:

 

Lilis Energy, Inc.

Attn: General Counsel

300 E. Sonterra Blvd., Suite 1220

San Antonio, TX 78258

Email: afuchs@lilisenergy.com