Exhibit 10.1

 

Form of Non-Employee Director Award Agreement

 

This Non-Employee Director Appointment Agreement ("Agreement"), is effective as
of [           ] (the "Effective Date"), by and between Lilis Energy, Inc. a
Nevada corporation (the "Company") and [           ] ("Director").

 

WHEREAS, the Company wishes to retain Director's services as a non-employee
director of the Company (a "Non-Employee Director") under the terms set forth
herein; and

 

WHEREAS, the Director wishes to perform the services of a Non-Employee Director
of the Company.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants set
forth below, the parties agree as follows:

 

1.           Appointment: The Company has appointed Director as a director on
the board of directors (the "Board") of the Company, and Director has accepted
such position, on the terms and conditions set forth below. Director's authority
shall be consistent with that normally associated with and appropriate for such
a position.

 

2.           Start Date: Director's appointment to the Board was on [
          ] (the "Appointment Date").

 

3.           Compensation and Expenses:

 

(a) Stock Compensation:

 

(i)          Initial Grant. On [            ], the Company issued to Director
100,000 shares (the "Initial Grant") of the Company's common stock, par value
$0.0001 (the "Common Stock"), which Common Stock shall vest, subject to
acceleration as provided below, in the following increments on the specified
dates, so long as Director is a director on such date:

 

(A)33,334 shares shall vest on the [first anniversary of the Appointment Date];

 

(B)33,333 shares shall vest on [the second anniversary of the Appointment Date];
and

 

(C)33,333 shares shall vest on [the third anniversary of the Appointment Date].

 

(ii)         Annual Grants. On each annual anniversary of the Appointment Date,
so long as Director is a director on such date, the Company shall issue to
Director a number of shares of Common Stock equal to $60,000 divided by the most
recent per share closing price of the Common Stock on the national securities
exchange on which the Common Stock is traded prior to the date of each annual
grant, or if the Company is not listed on a national exchange, the fair market
value of the Common Stock as determined by the Board in good faith on such date,
which Common Stock shall be fully vested upon issuance.

 

(iii)        Acceleration of Vesting. Notwithstanding any provision to the
contrary, the Initial Grant and any other grants of Common Stock to Director not
then vested shall vest upon the earlier to occur of a Change in Control (as
defined below) of the Company (provided Director is a director immediately prior
to the Change in Control).

 

 

 

 

For purposes of this Agreement, "Change in Control" shall mean the occurrence,
subsequent to the Effective Date, of any of the following: (A) by a transaction
or series of transactions, any "person" or "group" (within the meaning of
Section 13 (d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")), becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of more than 30% of the
combined voting power of the Company's then outstanding securities (provided
such person or group was not a beneficial owner of more than 30% of the combined
voting power of the Company's then outstanding securities as of the Effective
Date); (B) as a result of any merger, consolidation, combination or sale or
issuance of securities of the Company, or as a result of or in connection with a
contested election of directors, the persons who were directors of the Company
as of the Effective Date cease to constitute a majority of the Board; (C) by a
transaction or series of transactions, the authority of the Board over any
activities of the Company becomes subject to the consent, agreement or
cooperation of a third party other than shareholders of the Company.

 

(b) Cash Compensation:

 

(i)           Award Amount. On a quarterly basis beginning at the end of the
first full quarter following the Appointment Date, the Company shall pay to
Director $15,000 in cash compensation as director's fees.

 

(ii)          Award Amount for Committee Chairman. On a quarterly basis,
beginning at the end of the first full quarter following the appointment of
Director to Chairman of the Board, Chairman of the Audit Committee or Chairman
of the Compensation Committee, the Company shall pay to Director $12,500, $6,250
and $6,250 respectively in cash compensation as director's fees.

 

(iii)         Election to Receive Common Stock. At the Director’s election, in
lieu of a cash payment referred to in Sections (i and ii) (or a portion thereof,
as elected by Director), Director may receive a number of shares of Common Stock
(excluding fractional shares, which shall be paid in cash (or carried over to
the next payment if a Director elects to be paid all in Common Stock), which is
calculated by dividing the value of cash compensation (or a portion thereof), by
the most recent per share closing price of the Common Stock on the national
securities exchange on which the Common Stock is traded prior to the date of
each annual or quarterly grant, as the case may be, or if the Company is not
listed on a national exchange, the fair market value of the Common Stock as
determined by the Board in good faith on such date, which Common Stock shall be
fully vested upon issuance. To be effective, any such election shall be made by
submitting a completed and executed election form (the “Election Form) to the
Secretary of the Company, an in accordance with the terms specified in the
Election Form.

 

4.           Scope of Responsibilities. As a Non-Employee Director, subject to
the terms of the immediately following paragraph, Director shall be responsible
for contributing to the development and implementation of the Company's
strategic plan, locating and reviewing prospective acquisition targets,
overseeing the development plan of acquired properties, and providing input on
the Company's development plan. Director shall provide those services required
of a director under the Company's articles of incorporation and bylaws, as both
may be amended from time to time, and under the Nevada Revised Statutes, the
federal securities laws and other state and federal laws and regulations, as
applicable; provided, however, in the event of a conflict or inconsistency
between this Agreement and any governing document of the Company, the governing
document of the Company shall control. In performing such activities, Director
will devote only such time as he in his sole discretion deems necessary and
appropriate.

 

2

 

 

Director for his own account and in collaboration with others is engaged in and
will continue to be engaged in oil and gas exploration, development and
production outside of the Company's business. The Company expressly acknowledges
and agrees that if Director becomes aware of a business opportunity, he shall
have no affirmative duty to present or make such opportunity available to the
Company. Furthermore, in the event Director pursues an opportunity for his own
account or in collaboration with others, the Company shall not be entitled to
any interest in or profits from such property or otherwise claim any right or
damages resulting from Director's pursuit of such opportunity.

 

The relationship between the parties shall be that of non-employee contracting
parties. The Board and the Company expressly acknowledge and agree that neither
shall have the right to direct Director with respect to the means or manner in
which he fulfills his obligations and responsibilities under this Agreement. The
Board and the Company are solely interested in the results obtained by Director
in connection with his performance of services required hereunder. Except as
specifically provided in this Agreement, the Company hereby waives any conflict
or potential conflict resulting from Director's activities conducted apart from
the business of the Company.

 

5.           Representations and Warranties. The Company represents and warrants
to Director that this Agreement has been duly authorized, executed and delivered
by the Company and, upon execution by Director, constitutes a legal, valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms.

 

6.           Indemnity. The Company agrees that if Director is made a party to
or is threatened to be made a party to any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "Proceeding"), by reason of
the fact that Director is or was a trustee, director or officer of the Company
or any predecessor or successor to the Company or any of their affiliates or is
or was serving at the request of the Company, any predecessor or successor to
the Company or any of their affiliates as a trustee, director, officer, member,
employee or agent of another corporation or a partnership, joint venture,
limited liability company, trust or other enterprise, including, without
limitation, service with respect to employee benefit plans, whether or not the
basis of such Proceeding alleges action in an official capacity as a trustee,
director, officer, member, employee or agent while serving as a trustee,
director, officer, member, employee or agent, Director shall be indemnified and
held harmless by the Company to the fullest extent authorized by Nevada law, as
the same exists or may hereafter be amended, against all Costs (as defined
below) incurred or suffered by Director in connection therewith, and such
indemnification shall be deemed to have commenced as of the Appointment Date and
shall continue as to Director even if he has ceased to be an officer, director,
trustee or agent, or is no longer employed by the Company and shall inure to the
benefit of his heirs, executors and administrators. The foregoing indemnity is
contractual and will survive any adverse amendment to or repeal of the bylaws or
any other governing document of the Company.

 

(a)          Costs. For purposes of this Section 6, the term "Costs" shall
include, without limitation unless deemed for cause, damages, losses, judgments,
liabilities, fines, penalties, excise taxes, settlements, and costs, attorneys'
fees, accountants' fees, and disbursements and costs of attachment or similar
bonds, investigations, and any expenses of establishing a right to
indemnification under this Agreement.

 

3

 

 

(b)          Enforcement. If a claim or request under this Section 6 is not paid
by the Company or on its behalf, within thirty (30) days after a written claim
or request has been received by the Company, Director may at any time thereafter
bring suit against the Company to recover the unpaid amount of the claim or
request and if successful in whole or in part, Director be entitled to be paid
also the expenses of prosecuting such suit. All obligations for indemnification
hereunder shall be subject to, and paid in accordance with, applicable Nevada
law.

 

(c)          Payment of Costs. Costs incurred by Director in connection with any
Proceeding shall be paid by the Company within thirty (30) days' notice of
Director's request for such payment, provided that Director has delivered to the
Company written notification of (i) his agreement to reimburse the Company for
Costs with respect to which Director is not eligible for payment or
reimbursement, and (ii) a statement of his good faith belief that he has
satisfied the standard of conduct necessary for indemnification under this
Section 6.

 

(d)          Insurance. The Company will maintain a Director's and Officer's
Insurance Policy naming Director as a covered party in amount deemed mutually
sufficient to the Company and Director.

 

7.           Survival of Certain Provisions. The representations, warranties and
covenants and indemnity provisions contained in Sections 5 and 6 of this
Agreement and the Company's obligation to pay or issue to Director, or to cause
Director to vest in, any compensation or compensatory awards earned pursuant
hereto shall remain operative and in full force and effect regardless of any
completion or termination of this Agreement and shall be binding upon, and shall
inure to the benefit of any successors, assigns, heirs and personal
representatives of the Company, the indemnified parties and any such person.

 

8.           Notices. Notice given pursuant to any of the provisions of this
Agreement shall be in writing and shall be mailed or delivered (a) if to the
Company, at its offices at 1900 Grant Street, Suite 720, Denver Colorado 80203,
attention Chief Executive Officer, with a copy to Ariella Fuchs, Esq., General
Counsel.

 

9.           Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.

 

10.         Third Party Beneficiaries. This Agreement has been and is made
solely for the benefit of the Parties hereto, and their respective successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement.

 

11.          Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.

 

12.          Legal Fees. If any arbitration or litigation shall rise between the
Company and Director regarding any provision of this Agreement, the Company
shall reimburse Director for all legal fees and expenses incurred by him in
connection with such contest or dispute unless an unlawful act has preceded, but
only if Director substantially prevails in such action. Such reimbursement shall
be made as soon as practicable following the resolution of such contest or
dispute (whether or not appealed) to the extent the Company receives reasonable
written evidence of such fees and expenses.

 

4

 

 

13.          Reimbursement of Expenses. Director shall be reimbursed by the
Company for all ordinary and necessary expenses incurred by Director in the
performance of his duties or otherwise in furtherance of the business of the
Company, as well as any expenses specified in this Agreement, in accordance with
the policies of the Company in effect from time to time. No reimbursement will
be made later than the close of the calendar year following the calendar year in
which the expense was incurred. Expenses eligible for payment or reimbursement
in any one taxable year shall not affect the amount of expenses eligible for
payment or reimbursement in any other taxable year, and the right to expense
payment or reimbursement shall not be subject to liquidation or exchange for any
other benefit.

 

14.          Modification; Entire Agreement. No provisions of this Agreement may
be amended, modified, or waived unless such amendment or modification is agreed
to in writing signed by Director and by a duly authorized officer of the
Company, and such waiver is set forth in writing and signed by the party to be
charged. No waiver by either party hereto at any time of any breach by the other
party hereto of any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. The respective rights and obligations of the
parties hereunder of this Agreement shall survive the termination of this
Agreement to the extent necessary for the intended preservation of such rights
and obligations. Except or otherwise provided in Section 8 herein, the validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Colorado without regard to its conflicts of law
principles.

 

15.          Choice of Law, Jurisdiction and Venue. This Agreement shall be
governed by, construed, and enforced in accordance with the laws of the State of
Colorado, without regard to Colorado's choice of law rules. Any and all actions,
suits, or judicial proceedings upon any claim arising from or relating to this
Agreement, subject to Section 8 herein, shall be instituted and maintained in
the State of Colorado. If it is judicially determined that either party may file
an action, suit or judicial proceeding in federal court, such action, suit or
judicial proceeding shall be in the Federal District Court for the District of
Colorado.

 

5

 

 

The parties' authorized representatives have executed this Agreement as of the
date above.

 

[DIRECTOR]   Lilis Energy, Inc.         By:     By:         Name: Kevin Nanke  
    Title: Executive Vice President and Chief Financial Officer

 

 

6