Exhibit 10.12(a)

 

SECURITY AGREEMENT

THIS SECURITY AGREEMENT (as it may be amended or modified from time to time in
accordance with the terms hereof, the “Security Agreement”) is entered into as
of January 8, 2015 by and between LILIS ENERGY, INC., a Nevada corporation
(“Borrower”), and HEARTLAND BANK, an Arkansas state bank in its capacity as
collateral agent pursuant to the Credit Agreement (as hereinafter defined)
(“Agent”).

PRELIMINARY STATEMENT

Borrower, Agent and the lenders from time to time a party thereto (each a
“Lender”; and collectively, the “Lenders”) are entering into that certain Credit
Agreement dated of even date herewith (as it may be amended or modified from
time to time, the “Credit Agreement”), providing, subject to the terms and
conditions thereof, for extensions of credit to be made by the Lenders to the
Borrower. To induce the Lenders to enter into and extend credit to the Borrower
under the Credit Agreement, Borrower is entering into this Security Agreement.

ACCORDINGLY, Borrower, Agent and the Lenders, hereby agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.1. Terms Defined in Credit Agreement. All capitalized terms used
herein and not otherwise defined shall have the meanings assigned to such terms
in the Credit Agreement.

SECTION 1.2. Terms Defined in Code. Terms defined in the Code which are not
otherwise defined in this Security Agreement are used herein as defined in the
Code as in effect on the date hereof.

SECTION 1.3. Definitions of Certain Terms Used Herein. As used in this Security
Agreement, in addition to the terms defined in the Preliminary Statement, the
following terms shall have the following meanings:

“Accounts” means all rights to payment for goods sold or leased or services
rendered by Borrower, whether or not earned by performance, together with all
security interests or other security held by or granted to Borrower to secure
such rights to payment.

“Article” means a numbered article of this Security Agreement, unless another
document is specifically referenced.

“Chattel Paper” means any writing or group of writings which evidences both a
monetary obligation and a security interest in or a lease of specific goods.

 

SECURITY AGREEMENT (Lilis Energy, Inc.) Page 1

 

 

“Code” shall mean the Uniform Commercial Code, as the same may, from time to
time, be enacted and in effect in the State of Arkansas; provided, that, to the
extent that the Code is used to define any term herein or in any Loan Document
and such term is defined differently in different Articles or Divisions of the
Code, the definition of such term contained in Article or Division 9 shall
govern; provided further, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection, or priority of, or
remedies with respect to, Agent’s Lien on any Collateral is governed by the
Uniform Commercial Code in effect in a jurisdiction other than the State of
Arkansas, the term “Code” shall mean the Uniform Commercial Code as enacted and
in effect in such other jurisdiction solely for purposes of the provisions
thereof relating to such attachment, perfection, priority, or remedies and for
purposes of definitions relating to such provisions.

“Collateral” means all Accounts, Chattel Paper, Documents, Equipment, Fixtures,
General Intangibles, Investment Property, Instruments, Inventory, Pledged
Deposits, Stock Rights and Other Collateral, wherever located, in which Borrower
now has or hereafter acquires any right or interest, and the proceeds, insurance
proceeds and products thereof, together with all books and records, customer
lists, credit files, computer files, programs, printouts and other computer
materials and records related thereto.

“Control” shall have the meaning set forth in Chapter 8 of the Code as in effect
from time to time.

“Documents” means all documents of title and goods evidenced thereby, including
without limitation all bills of lading, dock warrants, dock receipts, warehouse
receipts and orders for the delivery of goods, and also any other document which
in the regular course of business or financing is treated as adequately
evidencing that the person in possession of it is entitled to receive, hold and
dispose of the document and the goods it covers.

“Equipment” means all equipment, machinery, furniture and goods used or usable
by Borrower in its business and all other tangible personal property (other than
Inventory), and all accessions and additions thereto, including, without
limitation, all Fixtures.

“Exhibit” refers to a specific exhibit to this Security Agreement, unless
another document is specifically referenced.

“First Perfected” means, with respect to any Lien purported to be created in any
Collateral pursuant to this Agreement, such Lien is the most senior lien to
which such Collateral is subject (subject only to Liens permitted under the
Credit Agreement).

“Fixtures” means all goods which become so related to particular real estate
that an interest in such goods arises under any real estate law applicable
thereto, including, without limitation, all trade fixtures.

“General Intangibles” means all intangible personal property (other than
Accounts) including, without limitation, all contract rights, rights to receive
payments of money, choses in action, causes of action, judgments, tax refunds
and tax refund claims, patents, trademarks, trade names, copyrights, licenses,
franchises, computer programs, software, goodwill, customer and supplier
contracts, interests in general or limited partnerships, joint ventures or
limited liability companies, reversionary interests in pension and profit
sharing plans and reversionary, beneficial and residual interests in trusts,
leasehold interests in real or personal property, rights to receive rentals of
real or personal property and guarantee and indemnity claims.

 

SECURITY AGREEMENT (Lilis Energy, Inc.) Page 2

 

 

“Investment Property” means stock or other securities, whether certificated or
uncertificated, of any other Person, or any direct or indirect loan, advance or
capital contribution by such Person to any other Person, or any other item which
would be classified as an “investment” on a balance sheet of such Person
prepared in accordance with GAAP, including any direct or indirect contribution
by such Person of property or assets to a joint venture, partnership or other
business entity in which such Person retains an interest.

“Instruments” means all negotiable instruments (as defined in §3-104 of the Code
as in effect from time to time), certificated and uncertificated securities and
any replacements therefor and Stock Rights related thereto, and other writings
which evidence a right to the payment of money and which are not themselves
security agreements or leases and are of a type which in the ordinary course of
business are transferred by delivery with any necessary endorsement or
assignment, including, without limitation, all checks, drafts, notes, bonds,
debentures, government securities, certificates of deposit, letters of credit,
preferred and common stocks, options and warrants.

“Inventory” means all goods held for sale or lease, or furnished or to be
furnished under contracts of service, or consumed in Borrower’s business,
including without limitation raw materials, intermediates, work in process,
packaging materials, finished goods, semi-finished inventory, scrap inventory,
manufacturing supplies and spare parts, all such goods that have been returned
to or repossessed by or on behalf of Borrower, and all such goods released to
Borrower or to third parties under trust receipts or similar documents.

“Lender” shall have the meaning set forth in the Preliminary Statement, and each
of their respective successors and assigns.

“Obligations” or “Secured Obligations” mean any and all existing and future
indebtedness, obligation and liability of every kind, nature and character,
direct or indirect, absolute or contingent (including all renewals, extensions
and modifications thereof and all fees, costs and expenses incurred by Agent or
any Lender in connection with the preparation, administration, collection or
enforcement thereof), of Borrower to Agent or any Lender arising under or
pursuant to this Security Agreement, the Credit Agreement and the promissory
note or notes issued or hereafter issued under the Credit Agreement (including,
without limitation, the Obligations as defined in the Credit Agreement.)

“Other Collateral” means any property of Borrower, other than real estate, not
included within the defined terms Accounts, Chattel Paper, Documents, Equipment,
Fixtures, General Intangibles, Instruments, Inventory, Investment Property,
Pledged Deposits and Stock Rights, including, without limitation, all cash on
hand and all deposit accounts or other deposits (general or special, time or
demand, provisional or final) with any bank or other financial institution, it
being intended that the Collateral include all property of Borrower other than
real estate and other property excluded in Article II herein from the definition
of Collateral.

“Person” shall mean an individual, partnership, joint venture, corporation,
limited liability company, joint stock company, bank, trust, unincorporated
organization and/or a government or any department or agency thereof.

 

SECURITY AGREEMENT (Lilis Energy, Inc.) Page 3

 

 

“Pledged Deposits” means all time deposits of money, whether or not evidenced by
certificates, which Borrower may from time to time designate as pledged to
Agent, for the benefit of the Lenders, as security for any Obligation, and all
rights to receive interest on said deposits.

“Receivables” means the Accounts, Chattel Paper, Documents, Investment Property,
Instruments or Pledged Deposits, and any other rights or claims to receive money
which are General Intangibles or which are otherwise included as Collateral.

“Section” means a numbered section of this Security Agreement, unless another
document is specifically referenced.

“Security” has the meaning set forth in Chapter 8 of the Code as in effect from
time to time

“Stock Rights” means any securities, dividends or other distributions and any
other right or property which Borrower shall receive or shall become entitled to
receive for any reason whatsoever with respect to, in substitution for or in
exchange for any securities or other ownership interests in a corporation,
partnership, joint venture or limited liability company constituting Collateral
and any securities, any right to receive securities and any right to receive
earnings, in which Borrower now has or hereafter acquires any right, issued by
an issuer of such securities.

The foregoing definitions shall be equally applicable to both the singular and
plural forms of the defined terms.

ARTICLE II

GRANT OF SECURITY INTEREST

Borrower hereby pledges, assigns and grants to Agent, for the benefit of the
Lenders, a security interest in all of Borrower’s right, title and interest in
and to the Collateral to secure the prompt and complete payment and performance
of the Secured Obligations. Notwithstanding anything herein to the contrary,
“Collateral” shall exclude:

(i) any Equipment subject to any Lien securing purchase money Debt or a
Capitalized Lease to the extent that such contract, instrument or agreement
evidencing such purchase money Debt or Capitalized Lease restricts the granting
of a Lien in such Equipment to Agent only for so long as the grant of such
security interest shall constitute or result in a breach, termination or default
under such contract, instrument or agreement; provided, that, such security
interest shall attach immediately and automatically at such time as the
restriction ceases to exist by virtue of termination or expiration or such
consent has been obtained and provided, further that, the Collateral shall
include any and all proceeds arising from such excluded Equipment to the extent
such inclusion does not constitute or result in a breach, termination or default
under the aforementioned contract;

 

SECURITY AGREEMENT (Lilis Energy, Inc.) Page 4

 

 

(ii) any lease, license or other agreement or contract or any property subject
to a purchase money security interest or similar arrangement, in each case
permitted to be incurred under the Credit Agreement, to the extent that a grant
of a security interest or Lien therein would require a consent not obtained or
violate or invalidate such lease, license or agreement or contract or purchase
money arrangement or similar arrangement or create a right of termination in
favor of any other party thereto (other than Borrower), in each case after
giving effect to the applicable anti-assignment provisions of the UCC and other
applicable law and other than Proceeds and receivables thereof, the assignment
of which is expressly deemed effective under the UCC or other applicable law
notwithstanding such prohibition.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants to Agent and the Lenders that:

SECTION 3.1. Title, Authorization, Validity and Enforceability. Borrower has
good and valid rights in and title to, or a valid leasehold interest in, the
Collateral with respect to which it has purported to grant a security interest
hereunder, free and clear of all Liens except for Liens permitted under Section
4.1(f), and has full power and authority to grant to Agent, for the benefit of
the Lenders, the security interest in such Collateral pursuant hereto. The
execution and delivery by Borrower of this Security Agreement has been duly
authorized by proper corporate proceedings, and this Security Agreement
constitutes a legal, valid and binding obligation of Borrower and creates a
security interest which is enforceable against Borrower in all now owned and
hereafter acquired Collateral (except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and conveyance or similar laws and general equitable principles
affecting the enforcement of creditors' rights generally, regardless of whether
considered in a proceeding in equity or at law); provided however, in the case
of the certificated pledged securities, when stock certificates representing
such pledged securities are delivered to the Agent and in the case of the other
Collateral, when financing statements and other filings in appropriate form are
filed and other actions are taken, this Agreement shall constitute, and will at
all times constitute, security interest which is enforceable against Borrower in
all now owned and hereafter acquired Collateral.

SECTION 3.2. Conflicting Laws and Contracts. Neither the execution and delivery
by Borrower of this Security Agreement, the creation and perfection of the
security interest in the Collateral granted hereunder, nor compliance with the
terms and provisions hereof will violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on Borrower or Borrower’s articles
or certificate of incorporation or by-laws, the provisions of any indenture,
instrument or agreement to which Borrower is a party or is subject, or by which
it, or its property, is bound, or conflict with or constitute a default
thereunder, or result in the creation or imposition of any Lien pursuant to the
terms of any such indenture, instrument or agreement (other than any Lien of
Agent, for the benefit of the Lenders).

SECTION 3.3. Principal Location. Borrower’s mailing address, and the location of
its chief executive office and of the books and records relating to the
Receivables, is disclosed in Exhibit A. Borrower has no other places of business
except those set forth in Exhibit A. The State in which Borrower was originally,
and is still, incorporated is Nevada.

 

SECURITY AGREEMENT (Lilis Energy, Inc.) Page 5

 

 

SECTION 3.4. Property Locations. The Inventory, Equipment and Fixtures are
located solely at the locations described in Exhibit A. All of said locations
are owned by Borrower except for locations (i) which are leased by Borrower as
lessee and designated in Part B of Exhibit A and (ii) at which Inventory is held
in a public warehouse or is otherwise held by a bailee or on consignment as
designated in Part C of Exhibit A, with respect to which Inventory Borrower has
delivered bailment agreements, warehouse receipts, financing statements or other
documents satisfactory to Agent to protect Agent’s security interest in such
Inventory.

SECTION 3.5. No Other Names. Except as set forth on Schedule 3.5, Borrower has
not conducted business under any name except the name in which it has executed
this Security Agreement.

SECTION 3.6. No Default. No Default or Event of Default exists.

SECTION 3.7. Accounts and Chattel Paper. The names of the obligors, amounts
owing, due dates and other information with respect to the Accounts and Chattel
Paper are and will be correctly stated in all records of Borrower relating
thereto and in all invoices and reports with respect thereto furnished to Agent
by Borrower from time to time in all material respects. As of the time when each
Account or each item of Chattel Paper arises, Borrower shall be deemed to have
represented and warranted that such Account or Chattel Paper, as the case may
be, and all records relating thereto, are genuine and in all material respects
what they purport to be.

SECTION 3.8. Filing Requirements. None of the Equipment is covered by any
certificate of title, except for the vehicles described in Part A of Exhibit B.
None of the Collateral is of a type for which security interests or liens may be
perfected by filing under any federal statute except for (i) the vehicles
described in Part B of Exhibit B and (ii) patents, trademarks and copyrights
held by Borrower and described in Part C of Exhibit B. The legal description,
county and street address of the property on which any Fixtures are located is
set forth in Exhibit C together with the name and address of the record owner of
each such property.

SECTION 3.9. No Financing Statements. No financing statement describing all or
any portion of the Collateral which has not lapsed or been terminated naming
Borrower as debtor has been filed in any jurisdiction except (i) financing
statements naming Agent, for the benefit of the Lenders, as the secured party,
(ii) as described in Exhibit D and (iii) as permitted by Section 4.1(f).

SECTION 3.10. Federal Employer Identification Number. Borrower’s Federal
employer identification number is 74-3231613.

SECTION 3.11. Pledged Securities and Other Investment Property. Exhibit E sets
forth a complete and accurate list of the Instruments, Securities and other
Investment Property delivered to Agent. Borrower is the direct and beneficial
owner of each Instrument, Security and other type of Investment Property listed
on Exhibit E as being owned by it, free and clear of any Liens, except for the
security interest granted to Agent, for the benefit of the Lenders, hereunder.
Borrower further represents and warrants that (i) all such Instruments,
Securities or other types of Investment Property which are shares of stock in a
corporation or ownership interests in a partnership or limited liability company
have been (to the extent such concepts are relevant with respect to such
Instrument, Security or other type of Investment Property) duly and validly
issued, are fully paid and non-assessable and (ii) with respect to any
certificates delivered to Agent representing an ownership interest in a
partnership or limited liability company, either such certificates are
Securities as defined in Article 8 of the Code of the applicable jurisdiction as
a result of actions by the issuer or otherwise, or, if such certificates are not
Securities, Borrower has so informed Agent so that Agent may take steps to
perfect its security interest therein as a General Intangible.

 

SECURITY AGREEMENT (Lilis Energy, Inc.) Page 6

 

 

SECTION 3.12. Deposit Accounts. Exhibit F sets forth a complete and accurate
list of all bank accounts maintained by Borrower with any Person.

ARTICLE IV

COVENANTS

From the date of this Security Agreement, and thereafter until this Security
Agreement is terminated:

SECTION 4.1. General.

(a) Inspection. Borrower will permit Agent or any Lender, by its representatives
and agents, to inspect the Collateral pursuant to Section 8.14 of the Credit
Agreement.

(b) Taxes. Borrower will pay when due all taxes, assessments and governmental
charges and levies upon the Collateral, except those which are being contested
in good faith by appropriate proceedings and for which adequate reserves have
been set aside and with respect to which no Lien exists.

(c) Records and Reports; Notification of Default. Borrower will maintain
complete and accurate books and records with respect to the Collateral, and
furnish to Agent or any Lender such records relating to the Collateral as Agent
shall from time to time request. Borrower will give prompt notice in writing to
Agent of the occurrence of any Default or Event of Default and of any other
development, financial or otherwise, which might materially and adversely affect
the Collateral.

(d) Financing Statements and Other Actions; Defense of Title. Borrower will
execute and deliver to Agent all financing statements and other documents and
take such other actions as may from time to time be requested by Agent in order
to maintain a First Perfected security interest in and, in the case of
Investment Property, Control of, the Collateral. Borrower will take any and all
actions necessary to defend title to the Collateral against all persons and to
defend the security interest of Agent in the Collateral and the priority thereof
against any Lien not expressly permitted hereunder or under the Credit
Agreement.

(e) Disposition of Collateral. Borrower will not sell, lease or otherwise
dispose of the Collateral except dispositions in the ordinary course of
business, provided, however, that any such dispositions shall be subject to
Section 4.2(b) of the Credit Agreement and at the time of such disposition, no
Default or Event of Default exists or would result from such disposition.

 

SECURITY AGREEMENT (Lilis Energy, Inc.) Page 7

 

 

(f) Liens. Borrower will not create, incur, or suffer to exist any Lien on the
Collateral except (i) the security interest created by this Security Agreement,
(ii) existing Liens described in Exhibit D and (iii) other Liens permitted
pursuant to Section 9.2 of the Credit Agreement.

(g) Change in Location or Name. Borrower will not (i) have any material
Inventory, Equipment or Fixtures or proceeds or products thereof (other than
Inventory and proceeds thereof disposed of as permitted by Section 4.1(e)) at a
location other than a location specified in Exhibit A, (ii) maintain records
relating to the Receivables at a location other than at the location specified
on Exhibit A, (iii) maintain a place of business at a location other than a
location specified on Exhibit A, (iv) change its name or taxpayer identification
number or (v) change its mailing address, unless Borrower shall have given Agent
not less than thirty (30) days’ prior written notice thereof, and Agent shall
have determined that such change will not adversely affect the validity,
perfection or priority of Agent’s security interest in the Collateral.

(h) Other Financing Statements. Borrower will not authorize the filing of any
financing statement naming it as debtor covering all or any portion of the
Collateral, except as permitted by Section 4.1(f) or as Agent shall agree to in
writing.

SECTION 4.2. Receivables.

(a) Certain Agreements on Receivables. Borrower will not make or agree to make
any discount, credit, rebate or other reduction in the original amount owing on
a Receivable or accept in satisfaction of a Receivable less than the original
amount thereof unless approved by Agent in its reasonable discretion.

(b) Collection of Receivables. Except as otherwise provided in this Security
Agreement, but subject to Section 8.21 of the Credit Agreement, Borrower will
collect and enforce, at Borrower’s sole expense, all amounts due or hereafter
due to Borrower under the Receivables.

(c) Delivery of Invoices. Borrower will deliver to Agent immediately upon its
request after the occurrence of a Default or Event of Default duplicate invoices
with respect to each Account bearing such language of assignment as Agent shall
specify.

(d) Disclosure of Counterclaims on Receivables. If (i) any discount, credit or
agreement to make a rebate or to otherwise reduce the amount owing on a
Receivable exists or (ii) if, to the knowledge of Borrower, any dispute, setoff,
claim, counterclaim or defense exists or has been asserted or threatened with
respect to a Receivable, Borrower will disclose such fact to Agent in writing in
connection with the inspection by Agent of any record of Borrower relating to
such Receivable and in connection with any invoice or report furnished by
Borrower to Agent relating to such Receivable.

SECTION 4.3. Inventory and Equipment.

(a) Maintenance of Goods. Borrower will do all things reasonably necessary to
maintain, preserve, protect and keep the Inventory and the Equipment in good
repair and working and saleable condition.

 

SECURITY AGREEMENT (Lilis Energy, Inc.) Page 8

 

 

(b) Insurance. Borrower will maintain insurance in accordance with Section 8.11
of the Credit Agreement.

(c) Titled Vehicles. Borrower will give Agent notice of its acquisition of any
vehicle covered by a certificate of title and deliver to Agent, upon request,
the original of any vehicle title certificate and do all things necessary to
have the Lien of Agent noted on any such certificate.

SECTION 4.4. Instruments, Securities, Chattel Paper, Documents and Pledged
Deposits. Borrower will (i) deliver to Agent immediately upon execution of this
Security Agreement the originals of all Chattel Paper, Securities and
Instruments constituting Collateral (if any then exist), (ii) hold in trust for
Agent upon receipt and immediately thereafter deliver to Agent any Chattel
Paper, Securities and Instruments constituting Collateral, (iii) upon the
designation of any Pledged Deposits (as set forth in the definition thereof),
deliver to Agent such Pledged Deposits which are evidenced by certificates
included in the Collateral endorsed in blank, marked with such legends and
assigned as Agent shall specify, and (iv) upon Agent’s request, after the
occurrence and during the continuance of a Default or Event of Default, deliver
to Agent (and thereafter hold in trust for Agent upon receipt and immediately
deliver to Agent) any Document evidencing or constituting Collateral.

SECTION 4.5. Uncertificated Securities and Certain Other Investment Property.
Borrower will permit Agent from time to time to cause the appropriate issuers
(and, if held with a securities intermediary, such securities intermediary) of
uncertificated securities or other types of Investment Property not represented
by certificates which are Collateral to mark their books and records with the
numbers and face amounts of all such uncertificated securities or other types of
Investment Property not represented by certificates and all rollovers and
replacements therefor to reflect the Lien of Agent granted pursuant to this
Security Agreement. Borrower will take any actions necessary to cause (i) the
issuers of uncertificated securities which are Collateral and which are
Securities and (ii) any financial intermediary other than Agent which is the
holder of any Investment Property which is Collateral, to cause Agent to have
and retain Control over such Securities or other Investment Property; provided
however, unless there shall occur and be continuing an Event of Default, the
Agent hereby instructs each such issuer and financial intermediary that it may
take instructions from Borrower to the extent not inconsistent with this
Agreement. Without limiting the foregoing, Borrower will, with respect to
Investment Property held with a financial intermediary other than Agent, cause
such financial intermediary to enter into a Control Agreement with Agent in form
and substance satisfactory to Agent.

SECTION 4.6. Stock and Other Ownership Interests.

(a) Changes in Capital Structure of Issuers. Borrower will not (i) permit or
suffer any issuer of privately held corporate securities or other ownership
interests in a corporation, partnership, joint venture or limited liability
company constituting Collateral to dissolve, liquidate, retire any of its
capital stock or other Instruments or Securities evidencing ownership, reduce
its capital or merge or consolidate with any other entity, or (ii) vote any of
the Instruments, Securities or other Investment Property in favor of any of the
foregoing.

 

SECURITY AGREEMENT (Lilis Energy, Inc.) Page 9

 

 

(b) Issuance of Additional Securities. Borrower will not permit or suffer the
issuer of privately held corporate securities or other ownership interests in a
corporation, partnership, joint venture or limited liability company
constituting Collateral to issue any such securities or other ownership
interests, any right to receive the same or any right to receive earnings,
except to Borrower.

(c) Registration of Pledged Securities and other Investment Property. Borrower
will permit any Pledged Securities and other Investment Property to be
registered in the name of Agent or its nominee at any time following an Event of
Default at the option of Agent.

(d) Exercise of Rights in Pledged Securities and other Investment Property.
Borrower will permit Agent or its nominee at any time after the occurrence of an
Event of Default to exercise all voting and corporate rights relating to the
Collateral, including, without limitation, exchange, subscription or any other
rights, privileges, or options pertaining to any corporate securities or other
ownership interests or Investment Property in or of a corporation, partnership,
joint venture or limited liability company constituting Collateral and the Stock
Rights as if it were the absolute owner thereof.

SECTION 4.7. Pledged Deposits. Borrower will not withdraw all or any portion of
any Pledged Deposit or fail to rollover said Pledged Deposit without the prior
written consent of Agent.

SECTION 4.8. Deposit Accounts. Borrower will enter into a control agreement
regarding any deposit account of Borrower maintained with a bank or financial
institution pursuant to which such bank or financial institution acknowledges
the security interest of Agent, for the benefit of Lenders, in such bank
account, and agrees to comply with instructions originated by Agent after the
occurrence of an Event of Default directing disposition of the funds in such
bank account without further consent from Borrower, and agrees to subordinate
and limit any security interest such bank may have in such bank account on terms
satisfactory to Agent.

SECTION 4.9. Federal, State or Municipal Claims. Borrower will notify Agent of
any Collateral which constitutes a claim against the United States government or
any state or local government or any instrumentality or agency thereof, the
assignment of which claim is expressly restricted by federal, state or municipal
law in a manner that would not permit Agent to obtain a Security Interest
therein under the Code.

ARTICLE V

DEFAULT

SECTION 5.1. Default. The occurrence of any one or more of the following events
shall constitute a default:

(a) any representation, warranty, certification or statement made or deemed to
have been made by Borrower in this Security Agreement, shall prove to have been
incorrect in any material respect when made;

 

SECURITY AGREEMENT (Lilis Energy, Inc.) Page 10

 

 

(b) any covenant, agreement or condition contained in this Security Agreement is
not fully and timely performed, observed or kept in all material respects;

(c) the occurrence of any “Event of Default” under, and as defined in, the
Credit Agreement; and

(d) any limited partnership interests or ownership interests in a limited
liability company which are included within the Collateral shall at any time
constitute a Security or the issuer of any such interests shall take any action
to have such interests treated as a Security unless (i) all certificates or
other documents constituting such Security have been delivered to Agent and such
Security is properly defined as such under Article 8 of the Code of the
applicable jurisdiction, whether as a result of actions by the issuer thereof or
otherwise, or (ii) Agent has entered into a control agreement with the issuer of
such Security or with a securities intermediary relating to such Security and
such Security is defined as such under Article 8 of the Code of the applicable
jurisdiction, whether as a result of actions by the issuer thereof or otherwise.

SECTION 5.2. Acceleration and Remedies. Upon the acceleration of the Obligations
under the Credit Agreement, the Obligations shall immediately become due and
payable without presentment, demand, protest or notice of any kind, all of which
are hereby expressly waived, and Agent, upon the written instruction of the
Majority Lenders, may exercise any or all of the following rights and remedies:

(a) Those rights and remedies provided in this Security Agreement, the Credit
Agreement, or any other Loan Document, provided that this Section 5.2(a) shall
not be understood to limit any rights or remedies available to Agent or the
Lenders prior to a Default or Event of Default.

(b) Those rights and remedies available to a secured party under the Code
(whether or not the Code applies to the affected Collateral) or under any other
applicable law (including, without limitation, any law governing the exercise of
a bank’s right of setoff or bankers’ lien) when a debtor is in default under a
security agreement.

(c) Without notice except as specifically provided in Section 7.1 or elsewhere
herein, sell, lease, assign, grant an option or options to purchase or otherwise
dispose of the Collateral or any part thereof in one or more parcels at public
or private sale, for cash, on credit or for future delivery, and upon such other
terms as Agent may deem commercially reasonable.

SECTION 5.3. Borrower’s Obligations Upon Default. Upon the request of Agent
after the occurrence of an Event of Default, Borrower will:

(a) Assembly of Collateral. Assemble and make available to Agent the Collateral
and all records relating thereto at any place or places specified by Agent.

(b) Secured Party Access. Permit Agent, by Agent’s representatives and agents,
to enter any premises where all or any part of the Collateral, or the books and
records relating thereto, or both, are located, to take possession of all or any
part of the Collateral and to remove all or any part of the Collateral.

 

SECURITY AGREEMENT (Lilis Energy, Inc.) Page 11

 

 

SECTION 5.4. License. Agent, for the benefit of the Lenders, is hereby granted a
license or other right to use, following the occurrence and during the
continuance of a Default or Event of Default, without charge, Borrower’s labels,
patents, copyrights, rights of use of any name, trade secrets, trade names,
trademarks, service marks, customer lists and advertising matter, or any
property of a similar nature, as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral, and, following
the occurrence and during the continuance of a Default or Event of Default,
Borrower’s rights under all licenses and all franchise agreements shall inure to
Agent’s benefit, for the benefit of the Lenders. In addition, Borrower hereby
irrevocably agrees that Agent, upon the written instruction of the Majority
Lenders, may, following the occurrence and during the continuance of an Event of
Default, sell any of Borrower’s Inventory directly to any Person, including
without limitation Persons who have previously purchased Borrower’s Inventory
from Borrower and in connection with any such sale or other enforcement of
Agent’s and Lenders’ rights under this Agreement, may sell Inventory which bears
any trademark owned by or licensed to Borrower and any Inventory that is covered
by any copyright owned by or licensed to Borrower and Agent may finish any work
in process and affix any trademark owned by or licensed to Borrower and sell
such Inventory as provided herein.

ARTICLE VI

WAIVERS, AMENDMENTS AND REMEDIES

No delay or omission of Agent or any Lender to exercise any right or remedy
granted under this Security Agreement shall impair such right or remedy or be
construed to be a waiver of any Default or Event of Default or an acquiescence
therein, and any single or partial exercise of any such right or remedy shall
not preclude any other or further exercise thereof or the exercise of any other
right or remedy. No waiver, amendment or other variation of the terms,
conditions or provisions of this Security Agreement whatsoever shall be valid
unless in writing signed by Agent and then only to the extent in such writing
specifically set forth. All rights and remedies contained in this Security
Agreement or by law afforded shall be cumulative and all shall be available to
Agent and the Lenders until the Secured Obligations have been paid in full.

ARTICLE VII

GENERAL PROVISIONS

SECTION 7.1. Notice of Disposition of Collateral. Borrower hereby waives notice
of the time and place of any public sale or the time after which any private
sale or other disposition of all or any part of the Collateral may be made. To
the extent such notice may not be waived under applicable law, any notice made
shall be deemed reasonable if sent to Borrower, addressed as set forth in
Article IX, at least ten days prior to (i) the date of any such public sale or
(ii) the time after which any such private sale or other disposition may be
made.

 

SECURITY AGREEMENT (Lilis Energy, Inc.) Page 12

 

 

SECTION 7.2. Compromises and Collection of Collateral. Borrower and Agent
recognize that setoffs, counterclaims, defenses and other claims may be asserted
by obligors with respect to certain of the Receivables, that certain of the
Receivables may be or become uncollectable in whole or in part and that the
expense and probability of success in litigating a disputed Receivable may
exceed the amount that reasonably may be expected to be recovered with respect
to a Receivable. In view of the foregoing, Borrower agrees that Agent may at any
time and from time to time, if an Event of Default has occurred and is
continuing and upon the written instruction of the Majority Lenders, compromise
with the obligor on any Receivable, accept in full payment of any Receivable
such amount as Agent in its sole discretion shall determine or abandon any
Receivable, and any such action by Agent shall be commercially reasonable so
long as Agent acts in good faith based on information known to it at the time it
takes any such action.

SECTION 7.3. Secured Party Performance of Borrower Obligations. Without having
any obligation to do so, Agent may perform or pay any obligation which Borrower
has agreed to perform or pay in this Security Agreement and Borrower shall
reimburse Agent for any amounts paid by Agent pursuant to this Section 7.3.
Borrower’s obligation to reimburse Agent pursuant to the preceding sentence
shall be a Secured Obligation payable on demand.

SECTION 7.4. Authorization for Secured Party to Take Certain Action. Borrower
irrevocably authorizes Agent at any time and from time to time in the sole
discretion of Agent and appoints Agent as its attorney in fact (i) to file such
financing statements and financing statement amendments, without notice to
Borrower, in all jurisdictions Agent deems appropriate necessary or desirable in
Agent’s sole discretion to perfect and to maintain the perfection and priority
of Agent’s security interest in the Collateral, (ii) to indorse and collect any
cash proceeds of the Collateral, (iii) to file a carbon, photographic or other
reproduction of this Security Agreement or any financing statement with respect
to the Collateral as a financing statement in such offices as Agent in its sole
discretion deems necessary or desirable to perfect and to maintain the
perfection and priority of Agent’s security interest in the Collateral, (iv) to
contact and enter into one or more agreements with the issuers of uncertificated
securities which are Collateral and which are Securities or with financial
intermediaries holding other Investment Property as may be necessary or
advisable to give Agent Control over such Securities or other Investment
Property, (v) subject to the terms of Section 8.21 of the Credit Agreement, to
enforce payment of the Receivables in the name of Agent or Borrower, (vi) to
apply the proceeds of any Collateral received by Agent to the Secured
Obligations in such order as Agent shall determine in its sole discretion, and
(vii) to discharge past due taxes, assessments, charges, fees or Liens on the
Collateral (except for such Liens as are specifically permitted hereunder), and
Borrower agrees to reimburse Agent on demand for any payment made or any expense
incurred by Agent in connection therewith, provided that this authorization
shall not relieve Borrower of any of its obligations under this Security
Agreement or under the Credit Agreement.

SECTION 7.5. Specific Performance of Certain Covenants. Borrower acknowledges
and agrees that a breach of any of the covenants contained in Sections 4.1(e),
4.1(f), 4.4, 5.3, or 7.7 will cause irreparable injury to Agent and the Lenders,
that neither Agent nor any Lender has any adequate remedy at law in respect of
such breaches and therefore agrees, without limiting the right of Agent and the
Lenders to seek and obtain specific performance of other obligations of Borrower
contained in this Security Agreement, that the covenants of Borrower contained
in the Sections referred to in this Section 7.5 shall be specifically
enforceable against Borrower.

 

SECURITY AGREEMENT (Lilis Energy, Inc.) Page 13

 

 

SECTION 7.6. Use and Possession of Certain Premises. Upon the occurrence of an
Event of Default, Agent shall be entitled to occupy and use any premises owned
or leased by Borrower where any of the Collateral or any records relating to the
Collateral are located for a reasonable period in order to effectuate its rights
and remedies hereunder or under law, without any obligation to pay Borrower for
such use and occupancy.

SECTION 7.7. Dispositions Not Authorized. Borrower is not authorized to sell or
otherwise dispose of the Collateral except as set forth in Section 4.1(e) and
notwithstanding any course of dealing between Borrower, Agent and the Lenders or
other conduct of Agent or any Lender, no authorization to sell or otherwise
dispose of the Collateral (except as set forth in Section 4.1(e)) shall be
binding upon Agent or any Lender unless such authorization is in writing signed
by the Majority Lenders.

SECTION 7.8. Benefit of Agreement. The terms and provisions of this Security
Agreement shall be binding upon and inure to the benefit of Borrower, Agent and
the Lenders and their respective successors and assigns, except that Borrower
shall not have the right to assign its rights or delegate its obligations under
this Security Agreement or any interest herein, without the prior written
consent of the Majority Lenders.

SECTION 7.9. Survival of Representations. All representations and warranties of
Borrower contained in this Security Agreement shall survive the execution and
delivery of this Security Agreement.

SECTION 7.10. Taxes and Expenses. Any taxes (including income taxes) payable or
ruled payable by Federal or State authority in respect of this Security
Agreement shall be paid by Borrower, together with interest and penalties, if
any. Borrower shall reimburse Agent and any Lender for any and all out-of-pocket
expenses and internal charges (including reasonable attorneys’, auditors’ and
accountants’ fees and reasonable time charges of attorneys, paralegals, auditors
and accountants who may be employees of Agent or any Lender) paid or incurred by
Agent or any Lender in connection with the preparation, execution, delivery,
administration, collection and enforcement of this Security Agreement and in the
audit, analysis, administration, collection, preservation or sale of the
Collateral (including the expenses and charges associated with any periodic or
special audit of the Collateral). Any and all costs and expenses incurred by
Borrower in the performance of actions required pursuant to the terms hereof
shall be borne solely by Borrower.

SECTION 7.11. Headings. The title of and section headings in this Security
Agreement are for convenience of reference only, and shall not govern the
interpretation of any of the terms and provisions of this Security Agreement.

SECTION 7.12. Termination. This Security Agreement shall continue in effect
(notwithstanding the fact that from time to time there may be no Secured
Obligations outstanding) until (i) the Credit Agreement has terminated pursuant
to its express terms and (ii) all of the Secured Obligations have been
indefeasibly paid and performed in full and no commitments of any Lender which
would give rise to any Secured Obligations are outstanding. Upon the occurrence
of the events specified in the preceding sentence, the Collateral shall be
released from the Liens created hereby, and this Security Agreement and all
obligations (other than those expressly stated to survive such termination) of
Agent and Borrower hereunder shall terminate, all without delivery of any
instrument or any further action by any party, and all rights to the Collateral
shall revert to Borrower. Upon any such termination, the Agent shall deliver to
Borrower any Collateral held by the Agent hereunder, and execute and deliver to
Borrower such documents as Borrower shall reasonably request to evidence such
termination, all at Borrower’s sole cost and expense.

 

SECURITY AGREEMENT (Lilis Energy, Inc.) Page 14

 

 

SECTION 7.13. Entire Agreement. This Security Agreement embodies the entire
agreement and understanding between Borrower, Agent and the Lenders relating to
the Collateral and supersedes all prior agreements and understandings between
Borrower, Agent and the Lenders relating to the Collateral.

SECTION 7.14. GOVERNING LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ARKANSAS AND THE UNITED
STATES OF AMERICA.

ARTICLE VIII

NOTICES

SECTION 8.1. Sending Notices. Any notice required or permitted to be given under
this Security Agreement shall be sent (and deemed received) in the manner and to
the addresses set forth in Section 11.4 of the Credit Agreement.

SECTION 8.2. Change in Address for Notices. Each of Borrower and Agent may
change the address for service of notice upon it by a notice in writing to the
other parties or as otherwise permitted by the Credit Agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

SECURITY AGREEMENT (Lilis Energy, Inc.) Signature Page

 

 

IN WITNESS WHEREOF, Borrower and Agent have executed this Security Agreement as
of the date first above written.

  BORROWER:         LILIS, INC.,   a Delaware corporation         By:  /s/
Abraham Mirman   Name: Abraham Mirman   Title: CEO         AGENT:        
HEARTLAND BANK,   an Arkansas state bank         By:  /s/ Phil Thomas   Name:
Phil Thomas   Title: CLO/EVP

  

SECURITY AGREEMENT (Lilis Energy, Inc.) Page 16

 

 

 

SCHEDULE 3.5

 

Recovery Energy, Inc.

Universal Holdings, Inc.

 

SECURITY AGREEMENT (Lilis, Inc.) Page 17

 

 

 

EXHIBIT A

(See Sections 3.3, 3.4, and 4.1(g) of Security Agreement) 

Principal Place of Business and Mailing Address:

1900 Grant Street, Suite #720, Denver, CO, 80203

 

Location(s) of Receivables Records (if different from Principal Place of
Business above):

20 Broadhollow Road, Suite 3011B, Melville, NY, 11747

 

Locations of Inventory and Equipment and Fixtures: 

Lilis Lease # Lessor Lessee Twnshp Range Section Legal Description County /
State Recording Bk PG/Doc # 10003 Palmco, CW Palm Farms & Charles Wayne Palm
Edward Mike Davis, LLC 17 57 18 Lots 1(49.46), 2(49.73), NE,
E2NW, less 86.83, SE less 52.59 Banner, NE 2158 1331-1334       17 57 19 Lots
1(50.39), 2(50.73), E2NW Banner, NE           17 57 20 All Banner, NE          
              10004 Banner Farms, LLC Edward Mike Davis, LLC 17 58 4 Lots
3(42.93), 4(42.96), S/2NW/4 Banner, NE 132 238-240                     10016
Palm-Egle Land Company a/k/a Gust of Wind Edward Mike Davis, LLC 17 58 8 SW
Banner, NE 131 173-176       17 58 18 Lot 1(49.46), Lot
2(49.73),E/2NE Banner, NE                         10018 May, Judith Ann Edward
Mike Davis, LLC 15 60 28 All Laramie, WY 2159 466-468       17 58 9 All Banner,
NE                         10019 May, Shirley Edward Mike Davis, LLC 15 60 28
All Laramie, WY 2161 385-387       17 58 9 All Banner, NE                      
  10020 Stevens, Wilda May Edward Mike Davis, LLC 15 60 28 All Laramie, WY 2161
367-369       17 58 9 All Banner, NE                         10021 Young, James
S. Jr. Edward Mike Davis, LLC 17 58 10 NW Banner, NE 132 464-466                
    10025 Young, Donald J. and Clarissa (Tstee of Robert Gary Young & William
Thomas Young Trusts) Edward Mike Davis, LLC 17 58 28 NE/4NE/4, E/2SE/4,
SW/4SE/4,
S/2SW/4 Banner, NE 132 244-246                     10031 Vrtatko Inc., Etal
Edward Mike Davis, LLC 18 58 1 Lots 3(39.80), 4(39.72), S2NW,
SW Banner, NE 132 301-304       18 58 2 All Banner, NE    

 

SECURITY AGREEMENT (Lilis, Inc.) Page 18

 

 

 

Lilis Lease # Lessor Lessee Twnshp Range Section Legal Description County /
State Recording Bk PG/Doc #       18 58 3 SE Banner, NE           18 58 4 W2E2,
W2 Banner, NE           18 58 5 Lots 1(36.65), 2(36.51), S2NE,
SE (aka "E2") Banner, NE           18 58 7 Lots 1(31.82), 2(31.82),
3(31.82), 4(31.82), E2E2 Banner, NE           18 58 8 S/2 Banner, NE          
18 58 9 NE, S2 Banner, NE           18 58 10 All Banner, NE           18 58 11
All Banner, NE           18 58 12 NW Banner, NE           18 58 14 W2 Banner, NE
          18 58 15 All Banner, NE           18 58 17 NE Banner, NE           18
58 21 A five acre tract in NE/4NE/4 Banner, NE           18 58 22 N2 Banner, NE
          18 58 23 All Banner, NE           18 58 24 W2E2, W2 Banner, NE        
  19 57 31 All Banner, NE           19 58 28 S2 Banner, NE           19 58 29
All Banner, NE           19 58 30 Lots 1(32.26), 2(32.61),
3(32.96), 4(33.31), E2E2 Banner, NE           19 58 31 Lots 1(33.41), 2(33.24),
3(33.06), 4(32.81), E2E2 Banner, NE           19 58 32 All Banner, NE          
              10032 3 P Ranch, LLC Edward Mike Davis, LLC 20 62 23 E2NE Goshen,
WY 132 452-454       20 62 24 part of the W2NE, NW, S2 Goshen, WY           18
58 3 Lots 1(38.34), 2(38.07), S2NE, SW Banner, NE           18 58 4 Lot
1(37.31), SENE, E2SE Banner, NE                         10033 Dunn, James Wayne
Edward Mike Davis, LLC 18 58 3 Lots 3(37.80), 4(37.53), S2NW Banner, NE 133
149-151                     10034 Conger, Larry B. and Nancy E. Edward Mike
Davis, LLC 18 58 5 Lots 3(36.37), 4(36.23), S2NW, SW Banner, NE 132 385-387    
  18 58 6 Lots 1(36.08), 2(29.45),
3(32.53), 4(32.29), 5(32.04),
SENE, E2SE Banner, NE           18 58 8 N2N2 Banner, NE    

 

SECURITY AGREEMENT (Lilis, Inc.) Page 19

 

 

 

Lilis Lease # Lessor Lessee Twnshp Range Section Legal Description County /
State Recording Bk PG/Doc #                     10035 Anderson, Charles, E.
Edward Mike Davis, LLC 18 58 8 S2N2 Banner, NE 2080 1136-1138       18 58 9 NW
Banner, NE           18 58 28 ALL Banner, NE           18 58 29 E2, E2E2NW, SW
Banner, NE                         10041 Two Kings Farms LLC Edward Mike Davis,
LLC 18 58 21 All Banner, NE 132 360-362                     10047 Person,
Richard A. & Louise E. Edward Mike Davis, LLC 18 58 31 Lots 1(33.04), Lot
2(33.01),Lot 3(32.98), Lot 4(32.95),  E2E2 Banner, NE 131 339-341              
      10048 Malm, Lee R. and Charlene R. Edward Mike Davis, LLC 18 58 32 All
Banner, NE           18 58 33 45.117 acres in the W 1/3 Banner, NE              
          10052 Lerwick, Alton C. and Elinor Edward Mike Davis, LLC 19 57 34 E2
Banner, NE 132 402-404                     10054 Round House Farm & Ranch, LC
Edward Mike Davis, LLC 19 58 3 Lots 1(40.99), 2(41.23), S2NE Banner, NE 132
417-419       20 58 34 S2 Banner, NE                         10055 Nighsonger,
Charles Galen Edward Mike Davis, LLC 19 58 6 Lots 4(30.35), 5(35.03), E2SE
Banner, NE 789 111       19 58 7 Lots 1(30.17), 2(30.24), E2NE Banner, NE      
    19 60 10 N2 Goshen, WY                         10056 Nighsonger, Dennis
Edward Mike Davis, LLC 19 58 6 Lots 4(30.35), 5(35.03), E2SE Banner, NE 789 207
      19 58 7 Lots 1(30.17), 2(30.24), E2NE Banner, NE           19 60 10 N2
Goshen, WY                         10057 Nighswonger, Wendell & Anna R. Edward
Mike Davis, LLC 19 58 6 Lots 4(30.35), 5(35.03), E2SE Banner, NE 789 206      
19 58 7 Lots 1(30.17), 2(30.24), E2NE Banner, NE           19 60 10 N2 Goshen,
WY                         10058 Pile, Elaine A. & Robert E. Edward Mike Davis,
LLC 19 58 6 NE Banner, NE 132 348-350       20 58 29 W2 Banner, NE           20
58 30 E2 Banner, NE           20 58 31 E2 Banner, NE                        
10059 Round House Farm and Ranch, LC Edward Mike Davis, LLC 19 58 6 Lots
4(30.35), 5(35.03), E2SE Banner, NE 132 405-407       19 58 7 Lots 1(30.17),
2(30.24), E2NE Banner, NE    

 

SECURITY AGREEMENT (Lilis, Inc.) Page 20

 

 

 

Lilis Lease # Lessor Lessee Twnshp Range Section Legal Description County /
State Recording Bk PG/Doc #                     10060 Ward, Norma LaVonne Edward
Mike Davis, LLC 19 58 6 Lots 4(30.35), 5(35.03), E2SE Banner, NE 789 105      
19 58 7 Lots 1(30.17), 2(30.24), E2NE Banner, NE           19 60 10 N2 Goshen,
WY                         10061 Ackerson, Elva O. Edward Mike Davis, LLC 19 58
11 S2SW Banner, NE 132 461-463       19 58 14 All Banner, NE           19 58 23
NE Banner, NE           19 58 24 N2, SW Banner, NE                         10062
Fickel Family Ltd Partnership Edward Mike Davis, LLC 19 58 18 Lots 3(31.07),
4(31.34), E2SE Banner, NE 789 108       19 58 19 NE, W2SE, SESE Banner, NE      
    19 60 10 SE Goshen, WY           19 60 15 All, Less NWSE Goshen, WY        
  19 60 21 SW, S2SE Goshen, WY           19 60 22 NWNW, S/2N/2, S/2SW, SE
Goshen, WY           19 60 27 All, Less NWSE Goshen, WY           19 60 28 NW
Goshen, WY           19 60 33 E2NE Goshen, WY           19 60 34 N2S2, S2NE,
E2SE Goshen, WY                         10063 Pleasant Valley Land, Inc. Edward
Mike Davis, LLC 20 57 30 SE Banner, NE 132 357-359       20 57 31 All Banner, NE
          20 58 26 W2 Banner, NE           20 58 13 SE Banner, NE              
          10064 Clearview Dairy, Inc. Edward Mike Davis, LLC 20 58 19 E2  
Banner, NE 132 345-347       20 58 20 All Banner, NE           20 58 21 W2
Banner, NE           20 58 23 NW Banner, NE                         10065 Bolin,
Douglas R. Edward Mike Davis, LLC 20 58 23 SW Banner, NE 132 354-356       20 58
25 W2, less tract in SW Banner, NE           20 58 26 E2 Banner, NE    

 

SECURITY AGREEMENT (Lilis, Inc.) Page 21

 

 

 

Lilis Lease # Lessor Lessee Twnshp Range Section Legal Description County /
State Recording Bk PG/Doc #                     10066 Sundin, Milton L. & Joan
A. (Sundin Living Trust) Edward Mike Davis, LLC 20 58 23 E2 Banner, NE 132
351-353       20 58 24 All Banner, NE           20 58 25 E2 Banner, NE          
              10067 Round House Farm and Ranch, LC Edward Mike Davis, LLC 20 58
33 NE, S2 Banner, NE 123 414-416                     10068 Round House Farm and
Ranch, LC Edward Mike Davis, LLC 20 58 34 N2 Banner, NE 132 411-413            
        10069 Coggins, Arnold & Jo Ann Morgan Oil Company 6S 64W 10 W2SE Elbert,
CO   234816                     10070 Rasmussen, Henry A. & Harriett Morgan Oil
Company 6S 64W 10 W2SE Elbert, CO   234131                     10071 Rasmussen,
Raymond F. & Della Morgan Oil Company 6S 64W 10 W2SE Elbert, CO   234130        
            10072 Sullivan, Martha M. Morgan Oil Company 6S 64W 10 W2SE Elbert,
CO   2341132                     10073 Warner, Mildred Mae Family Trust Edward
Mike Davis, LLC 19 60 2 Lots 1(0.91), 3(4.55), 4(6.37),
except 1.25 acres… Goshen, WY 789 110       19 60 3 Lots 1(42.12), 2(42.57),
3(43.03), 4(43.49), except 1.65
acres…… Goshen, WY           19 60 4 Lots 1(43.83), 2(44.05), SE Goshen, WY    
      19 60 9 NE4 Goshen, WY           20 60 27 Lots 1(41.47), 2(41.44),
3(41.44), 4(41.46), W2NE Goshen, WY           20 60 28 S2SE Goshen, WY          
20 60 33 NE, N2SE Goshen, WY           20 60 34 Lots 1(41.13), 2(40.80),
3(40.47), 4(40.14), S2SW, W2SE Goshen, WY                         10074 Ward,
Robert L. & Nina J. Edward Mike Davis, LLC 19 60 10 NE, 18.26 acres lying in the
NW Goshen, WY 789 106                     10075 Nighsonger, Wendell & Anna R.
Edward Mike Davis, LLC 19 61 1 Lots 3(42.00), 4(42.80), N2SW, S2NW Goshen, WY
793 79       19 61 2 Lot 1(43.31), NESE, SENE, W2NW, W2SE, E2SW Goshen, WY      
                  10076 Double D Kaufman Company Edward Mike Davis, LLC 20 60 4
SWSE Goshen, WY 793 80       20 60 8 NENE, S2NE, E2SW, SE Goshen, WY          
20 60 9 All Goshen, WY           20 60 10 SENE, N2NW, SWNW, NWSW, E2SE Goshen,
WY           20 60 15 Lot 1(41.30) Goshen, WY    

 

SECURITY AGREEMENT (Lilis, Inc.) Page 22

 

 

 

Lilis Lease # Lessor Lessee Twnshp Range Section Legal Description County /
State Recording Bk PG/Doc #                     10077 Jones, Raymond E. &
Elizabeth P. Edward Mike Davis, LLC 20 60 10 SWNE, SENW, NESW, S2SW, W2SE
Goshen, WY 789 109       20 60 15 NWNE, NWNW, W2SW, SESW, SWSE Goshen, WY      
    20 60 17 SWNW, S2 Goshen, WY           20 60 18 E2SWNE, E2NWSE, E2SE Goshen,
WY           20 60 20 N2NE, E2SW, S2SE Goshen, WY           20 60 21 E2, N2NW,
E2SW Goshen, WY           20 60 22 Lots 1(41.10), 2(41.12), W2NE, W2NW, NWSW
Goshen, WY           20 60 27 S2NW, SW, W2SE Goshen, WY           20 60 28 W2,
N2SE Goshen, WY           20 60 29 N2SE Goshen, WY           20 60 33 N2NW
Goshen, WY           20 60 34 NW, N2SW, E2NE Goshen, WY                        
10078 Ward, Robert L. & LaVonne Edward Mike Davis, LLC 20 61 30 7 acres lying in
the SWSW Goshen, WY 789 205       20 62 25 S2SW, SWSE Goshen, WY                
        10079 Kaufman, Paul Edward Mike Davis, LLC 20 62 4 Lots 1(53.75),
2(52.97), 3(52.19), 4(51.40), S2N2, SW Goshen, WY 789 81                    
10081 Round House Farm & Ranch Edward Mike Davis, LLC 21 60 22 Lots 3(38.28),
4(38.26), W2SE, SW, being all of the S2 Goshen, WY 793 4                    
1082 McCallan, Eric Alan & Christop Recovery Energy, Inc. 25N 62W 7 N/2NE, SENE,
NESE Goshen, WY 814 911945       25N 62W 8 N/2NW, SWNW, NWSW Goshen, WY        
  25N 62W 16 SW Goshen, WY           25N 62W 20 SESE, THE EAST 2 RODS OF THE
NESE. Goshen, WY           25N 62W 26 NW Goshen, WY           25N 62W 28 SWNW,
W/2SW Goshen, WY           25N 62W 29 E/2E/2 Goshen, WY           25N 62W 32
N/2NE Goshen, WY           25N 63W 18 LOTS 1-4 Goshen, WY           25N 64W 11
W/2SE Goshen, WY           25N 64W 13 E/2, E/2W/2 Goshen, WY           25N 64W
14 LOTS 1-3, 5-7, W/2NE, W/2, NWSE Goshen, WY           25N 64W 23 LOTS 3-4,
7-8, NWNE, N/2NW, NWSE Goshen, WY           25N 64W 24 NWSW Goshen, WY    

 

SECURITY AGREEMENT (Lilis, Inc.) Page 23

 

 

 

Lilis Lease # Lessor Lessee Twnshp Range Section Legal Description County /
State Recording Bk PG/Doc #                     1083 Crossed Arrows Ranch, Inc.
Recovery Energy, Inc. 26N 62W 1 LOTS 3-4, S/2NW, SW Goshen, WY 812 911047      
26N 62W 2 LOTS 1-4, S/2N/2, S2 Goshen, WY           26N 62W 3 LOTS 1-2, S/2NE
Goshen, WY           27N 61W 31 LOTS 1-4, E/2W/2 Goshen, WY           27N 62W 7
LOT 4 Goshen, WY           27N 62W 15 SW, N/2SE Goshen, WY           27N 62W 17
SWNE, NWNW, S/2NW, S/2 Goshen, WY           27N 62W 18 Lots 1, 4, N/2NE, SENE,
E/2NW, NESW, NESE Goshen, WY           27N 62W 19 LOT 1 Goshen, WY           27N
62W 20 NWNE, NENW Goshen, WY           27N 62W 21 SENE, E/2SE Goshen, WY        
  27N 62W 22 W/2, W/2SE Goshen, WY           27N 62W 25 W/2 Goshen, WY          
27N 62W 26 ALL Goshen, WY           27N 62W 27 E/2, N/2NW Goshen, WY          
27N 62W 28 NE, SESW, SE Goshen, WY           27N 62W 29 S/2SW, SWSE Goshen, WY  
        27N 62W 30 SESE Goshen, WY           27N 62W 32 NW Goshen, WY          
27N 62W 34 N/2NE Goshen, WY           27N 62W 35 N/2NE, W/2, SE Goshen, WY      
    27N 63W 11 SESW, SWSE Goshen, WY           27N 63W 12 LOT 4, S/2SW, SWSE
Goshen, WY           27N 63W 13 LOT 1, W/2NW, SW, SESE Goshen, WY           27N
63W 14 NWNE, S/2NE, NENW, N/2SE Goshen, WY           27N 63W 23 E/2SE Goshen, WY
          27N 63W 24 NE, SW, NW Goshen, WY           27N 63W 25 W/2 Goshen, WY  
        27N 63W 26 NENE, S/2NE, SW, NWSE, S/2SE Goshen, WY           27N 63W 27
S/2SE Goshen, WY    

 

SECURITY AGREEMENT (Lilis, Inc.) Page 24

 

 

 

Lilis Lease # Lessor Lessee Twnshp Range Section Legal Description County /
State Recording Bk PG/Doc #                     10084 Vrtatko, Inc. Edward Mike
Davis, LLC 14 54 29 W2, W2SE Kimball, NE 209 430-434       13 54 5 N2, SW
Kimball, NE           13 54 6 All Kimball, NE           13 54 7 All Kimball, NE
          13 54 17 SE Kimball, NE           13 54 22 NE, NW, S2 Kimball, NE    
      13 55 1 All Kimball, NE           13 55 11 All Kimball, NE           13 55
12 All Kimball, NE           14 54 30 All Kimball, NE           14 54 31 All
Kimball, NE           14 54 32 All Kimball, NE           14 54 33 All Kimball,
NE           15 55 29 A 3.627 tract om SWNW Kimball, NE                        
10085 Irwin, Thomas W. (Ttee of the Thomas W. Irwin Family Trust) Edward Mike
Davis, LLC 16 60 32 NW, less 5.0 acres in NWNW Laramie, WY 2161 435-437        
            10086 Mays, Judith J. Edward Mike Davis, LLC 15 56 1 Lots
1(40.28),2(40.29),3(40.30),4(40.31) S2N2, S2 Kimball, NE 207 16-18       15 56 3
ALL, less N2NWNW Kimball, NE                         10087 Payne, Marian J.
Edward Mike Davis, LLC 15 56 1 Lots 1(40.28),2(40.29),3(40.30),4(40.31), S2N2,
S2 Kimball, NE 206 487-489       15 56 3 ALL, less N2NWNW Kimball, NE          
              10089 Bingaman, Rita J. & Gary P. Edward Mike Davis, LLC 15 56 3
ALL, less N2 Lot 4   Kimball, NE 206 29-32     Edward Mike Davis, LLC 15 56 4
Lots 3, 4, S/2NW/4, (ada NW/4) Kimball, NE         Edward Mike Davis, LLC 15 56
5 Lots 1, 2, S/2NE/4 (ada NE/4) Kimball, NE                         10090
Knigge, Marla (fka Marla Teasley) Edward Mike Davis, LLC 15 56 3 ALL, less N2
Lot 4 Kimball, NE 208 769-771                     10091 Knigge, Steven Edward
Mike Davis, LLC 15 56 3 ALL, less N2 Lot 4 Kimball, NE 208 763-765              
      10092 McDowall, Linda Edward Mike Davis, LLC 15 56 3 ALL, less N2 Lot 4
Kimball, NE 208 766-768                     10093 Smith, William O. & Rita Marie
Edward Mike Davis, LLC 15 56 3 ALL, less N2 Lot 4 Kimball, NE 206 33-36       15
56 4 Lots 3, 4, S/2NW/4, (ada NW/4) Kimball, NE           15 56 5 Lots 1, 2,
S/2NE/4 (ada NE/4) Kimball, NE    

 

SECURITY AGREEMENT (Lilis, Inc.) Page 25

 

 

 

Lilis Lease # Lessor Lessee Twnshp Range Section Legal Description County /
State Recording Bk PG/Doc #                     10094 Soper, Mary L. Edward Mike
Davis, LLC 15 56 3 ALL, less N2 Lot 4 Kimball, NE 208 760-762                  
  10099 Dalton, Bruce J. Edward Mike Davis, LLC 15 56 6 N/2 Kimball, NE 206
755-757                     10100 Dalton, Catherine M. Edward Mike Davis, LLC 15
56 6 N/2 Kimball, NE 206 739-741                     10101 Dalton-Taylor,
Barbara J. Edward Mike Davis, LLC 15 56 6 N/2 Kimball, NE 208 578-580          
          10102 Fanganello, Beverly S. Edward Mike Davis, LLC 15 56 6 N/2
Kimball, NE 206 733-735                     10103 Irwin, Laura Edward Mike
Davis, LLC 15 56 6 S/2 Kimball, NE 206 745-747                     10104 Kosch,
Daniel G. Edward Mike Davis, LLC 15 56 6 S/2 Kimball, NE 206 736-738            
        10105 Kosch, Gregory J. Edward Mike Davis, LLC 15 56 6 S/2 Kimball, NE
206 748-750                     10106 Kosch, John J.  (Trustee of the John J.
Kosch Trust, dated 6-1-1998 Edward Mike Davis, LLC 15 56 6 S/2 Kimball, NE 206
742-744                     10107 Lukassen, Frances Mary Edward Mike Davis, LLC
15 56 7 ALL Kimball, NE 206 752-754       15 56 18 E/2 Kimball, NE              
          10114 Booker, Mary Joyce Edward Mike Davis, LLC 15 58 20  A Tract in
the N2 Kimball, NE 210 395-398                     10116 Cutler, Robert E. and
Joanne S. Edward Mike Davis, LLC 15 59 1 Lots 3,4, S2NW, SW Kimball, NE 210
14-17                     10117 Jessen, Ronald S. and Brenda L. Edward Mike
Davis, LLC 15 59 1 Lots 1, 2, S2NE, SE Kimball, NE 209 538-541                  
  10118 Jessop, Roger Edward Mike Davis, LLC 15 59 2 Lots 1-4 Kimball, NE 210
7-9       16 59 26 Tract in Lots 1 and 2 Kimball, NE                        
10119 Jessen, Jimmy Lee and Gwen Lynn Edward Mike Davis, LLC 15 59 11 Lots 1-4
Kimball, NE 2159 460-462                     10120 Jessen, Terry Lynn and
Katherine J. Edward Mike Davis, LLC 15 59 11 Lots 1-4 Kimball, NE 2159 463-464  
                  10121 Willoughby, Jeff and Marnie Edward Mike Davis, LLC 15 59
11 Lots 1-4 Kimball, NE 210 10-13

 

SECURITY AGREEMENT (Lilis, Inc.) Page 26

 

 

 

Lilis Lease # Lessor Lessee Twnshp Range Section Legal Description County /
State Recording Bk PG/Doc #                     10122 Gardner Bros Partnership
Edward Mike Davis, LLC 15 59 26 Lots 1-4 Kimball, NE 2159 475-477       15 59 35
Lots 1-4 Kimball, NE           15 60 26 Lots 1 (35.04), 2 (35.12), 3
(35.20), 4 (36.27), W2W2 (aka "All) Laramie, WY           15 60 34 E2, less
18.45 Laramie, WY           15 60 35 Lots 1 (34.63), 2 (34.89), 3
(35.15), 4(35.42), W2W2 Laramie, WY                         10124 Langseth, Eric
Craig and Carla Marie Edward Mike Davis, LLC 15 59 26 Lots 1-4 Kimball, NE 2159
478       15 59 35 Lots 1-4 Kimball, NE           15 60 26 Lots 1 (35.04), 2
(35.12), 3
(35.20), 4 (36.27), W2W2 (aka "All) Laramie, WY           15 60 34 E2, less
18.45 Laramie, WY           15 60 35 Lots 1 (34.63), 2 (34.89), 3
(35.15), 4(35.42), W2W2 Laramie, WY                         10125
Wilkerson,Janice Leah Edward Mike Davis, LLC 15 59 26 Lots 1-4 Kimball, NE 2181
1512       15 59 35 Lots 1-4 Kimball, NE           15 60 26 Lots 1 (35.04), 2
(35.12), 3
(35.20), 4 (36.27), W2W2 (aka "All) Laramie, WY           15 60 34 E2, less
18.45 Laramie, WY           15 60 35 Lots 1 (34.63), 2 (34.89), 3(35.15),
4(35.42), W2W2 Laramie, WY                         10130 Antelope Energy
Company. LLC Edward Mike Davis, LLC 16 56 34 S2, less S1/2SWSW Kimball, NE 206
647-650                     10133 Anderson Livestock Inc. Edward Mike Davis, LLC
16 58 17 SE Kimball, NE 2158 1303-1305       16 59 17 SE Kimball, NE          
16 59 11 Lots 1-4 Kimball, NE           16 59 14 Lots 1-4, in SE, except 14.50
acres. Kimball, NE           16 59 26 South 2/3 (Lots 1-4, except tract in lots
1 and 2) Kimball, NE           16 60 11 Lots 1(34.12), 2(34.15), 3(34.17),
4(34.19) Laramie, WY           16 60 14 Lots 1(34.25), 2(34.35), 3(34.45),
4(34.55) Laramie, WY           16 60 15 NW Laramie, WY           16 60 22 SE
Laramie, WY           16 60 23 North 130 acres of the W2 Laramie, WY            
            10134 Freeburg, Travis J. and Natalie Edward Mike Davis, LLC 16 58
17 SE Kimball, NE 209 684-687

 

SECURITY AGREEMENT (Lilis, Inc.) Page 27

 

 

 

Lilis Lease # Lessor Lessee Twnshp Range Section Legal Description County /
State Recording Bk PG/Doc #                     10135 Knigge, Alice Edward Mike
Davis, LLC 16 58 20 All Kimball, NE 210 4-6                     10136 West, Rex
E., Trustee of the Rex E. West Trust Evertson Energy Partners, LLC 16 58 22 All
Kimball, NE 209 542-544                     10137 Freeburg, Ray and Kathy Edward
Mike Davis, LLC 16 58 23 All, Less 21.533 acres in SENE Kimball, NE ? 794-796  
    16 59 13 SW Kimball, NE           16 59 25 E2, less 10.418 in S2SE Kimball,
NE                         10139 West, Rex E., Trustee of the Rex E. West Trust
Evertson Energy Partners, LLC 16 58 26 All Kimball, NE 209 548-550              
      10140 Lockood, Jack E. and Joan L. Evertson Energy Partners, LLC 16 58 27
All Kimball, NE 209 567-568                     10141 Lockood, Scott E. and
Susan L. Evertson Energy Partners, LLC 16 58 27 All Kimball, NE 209 545-547    
                10142 Duclo, Rhonda Marie Edward Mike Davis, LLC 16 58 29 E2
Kimball, NE 210 1-3                     10143 Freeburg, Troy and Lorretta Edward
Mike Davis, LLC 16 58 29 W2 Kimball, NE 209 797-800                     10144
Canaday, Ralph & Judith Edward Mike Davis, LLC 16 58 30 SE Kimball, NE 211
146-148                     10145 Corum, Jean Wolf Edward Mike Davis, LLC 16 58
30 SE Kimball, NE 211 718-721                     10146 Harner, Lori Edward Mike
Davis, LLC 16 58 30 SE   Kimball, NE 211 714-717                     10147 Wolf,
David Edward Mike Davis, LLC 16 58 30 SE Kimball, NE 211 394-396                
    10148 Wolf, Robert Edward Mike Davis, LLC 16 58 30 SE Kimball, NE 211
391-393                     10150 Sannes, Jill Edward Mike Davis, LLC 16 58 31
Lots 1, 2, 3, 4, E2, E2W2 Kimball, NE 210 107-109       16 59 24 N2, SW Kimball,
NE                         10151 Sannes, Kimberly Edward Mike Davis, LLC 16 58
31 Lots 1, 2, 3, 4, E2, E2W2 Kimball, NE 210 101-103       16 59 24 N2, SW
Kimball, NE 210 101-103                     10153 Sannes, Stephen Edward Mike
Davis, LLC 16 58 31 Lots 1, 2, 3, 4, E2, E2W2 Kimball, NE 210 104-106       16
59 24 N2, SW Kimball, NE 210 104-106                     10154 Satterthwaite, R.
Jolene Edward Mike Davis, LLC 16 59 24 N2, SW Kimball, NE 210 95-97

 

SECURITY AGREEMENT (Lilis, Inc.) Page 28

 

 

 

Lilis Lease # Lessor Lessee Twnshp Range Section Legal Description County /
State Recording Bk PG/Doc #                     10155 Tinsley, Stacey Edward
Mike Davis, LLC 16 58 31 Lots 1, 2, 3, 4, E2, E2W2 Kimball, NE 210 110-112      
16 59 24 N2, SW Kimball, NE 210 110-112                     10156 Werlich, Kelly
Edward Mike Davis, LLC 16 58 31 Lots 1, 2, 3, 4, E2, E2W2 Kimball, NE 210
113-115       16 59 24 N2, SW Kimball, NE 210 113-115                     10157
Jessen Wheat Company, LLC Edward Mike Davis, LLC 16 59 14 14.50 acres in Lots
1-4 in SE Kimball, NE 2158 1299-1302       16 59 23 Lots 1-4 Kimball, NE        
  16 60 28 SE Laramie, WY                         10179 Anderson, Dean V. Edward
Mike Davis, LLC 15 60 2 Lots 1 (34.66), 2 (40.12), 3 (34.63), SWNW Laramie, WY
2159 451-453                     10180 Anderson, Dennis E. Edward Mike Davis,
LLC 15 60 2 Lots 1 (34.66), 2 (40.12), 3 (34.63), SWNW Laramie, WY 2159 448-450
                    10181 Anderson, Dwayne A. Edward Mike Davis, LLC 15 60 2
Lots 1 (34.66), 2 (40.12), 3 (34.63), SWNW Laramie, WY 2159 454-456            
        10182 Jessen, Michael (Guardian for Rose Jessen) Edward Mike Davis, LLC
15 60 2 Lots 4 (34.60), 5 (34.57), W2SW Laramie, WY 2158 1296-1298              
      10184 Rochelle Energy LP Edward Mike Davis, LLC 15 60 8 NE Laramie, WY
2179 1230-1232       15 60 15 All Laramie, WY           15 60 21 NE Laramie, WY
                        10185 Herman, David Edward Mike Davis, LLC 15 60 9 E2
Laramie, WY 2149 503-505       16 60 20 NE Laramie, WY                        
10186 Cooney, Phyllis A., Trusttee Edward Mike Davis, LLC 15 60 10 N2 Laramie,
WY 2158 1292-1294                     10187 Randol, Emmy Lou Edward Mike Davis,
LLC 15 60 15 All Laramie, WY 2158 1357-1359       15 60 17 S2 Laramie, WY      
    15 60 20 NW, NE Laramie, WY           15 60 21 All Laramie, WY              
          10191 Mattson Ranch Company Edward Mike Davis, LLC 15 60 16 All, less
a 10.925 acre tract Laramie, WY 2161 376-378       15 60 22 All Laramie, WY    
      15 60 23 Lots 1 (35.04), 2 (35.12), 3
(35.20), 4 (36.27), W2W2 Laramie, WY           16 60 32 NW, less 5.0 acres in
NWNW Laramie, WY    

 

SECURITY AGREEMENT (Lilis, Inc.) Page 29

 

 

 

Lilis Lease # Lessor Lessee Twnshp Range Section Legal Description County /
State Recording Bk PG/Doc #                     10192 Bunger, Peggy Edward Mike
Davis, LLC 15 60 20 E2NE Laramie, WY 2161 388-390                     10193
Ford, Lana Edward Mike Davis, LLC 15 60 20 E2NE Laramie, WY 2161 355-357        
            10194 King, Judy Edward Mike Davis, LLC 15 60 20 E2NE Laramie, WY
2158 1348-1350                     10196 Simmons, Diana Edward Mike Davis, LLC
15 60 20 E/2NE Laramie, WY 2165 1338-1340                     10197 Skirrow,
Linda Edward Mike Davis, LLC 15 60 20 E/2NE Laramie, WY 2158 1351-1353          
          10198 Soderquist, Sharon Edward Mike Davis, LLC 15 60 20 E/2NE
Laramie, WY 2165 1341-1343                     10199 Young, Donald J.and
Clarrisa Edward Mike Davis, LLC 15 60 20 E/2NE Laramie, WY 2158 1354-1356      
              10200 Young, Irene Edward Mike Davis, LLC 15 60 20 E/2NE Laramie,
WY 2159 472-474                     10201 Young, Larry Edward Mike Davis, LLC 15
60 20 E/2NE Laramie, WY 2161 358-360                     10202 Gross, John
Edward Mike Davis, LLC 15 60 27 NE, S2 Laramie, WY 2192 1549-1551              
      10203 May, Lee Edward Mike Davis, LLC 15 60 28 All Laramie, WY 2192
1551-1553       17 58 9 All Banner, NE                         10204 Sorensen,
Melanie Edward Mike Davis, LLC 15 60 28 All Laramie, WY 2179 1224-1226       17
58 9 All Banner, NE                         10206 Bulkley, Robert (Heir of
Estate of Beverly Bulkley) Edward Mike Davis, LLC 16 60 28 SW Laramie, WY 2169
985-987                     10207 Reher, Ilene M. Edward Mike Davis, LLC 16 60
28 NE Laramie, WY 2161 379-381       16 60 28 NW, less two tracts Laramie, WY  
                      10208 Smith, Dorothy W. Edward Mike Davis, LLC 16 60 28 SW
Laramie, WY 2169 982-984                     10209 Smith, Helen J. (Heir to
estate of Barry B. Smith) Edward Mike Davis, LLC 16 60 28 SW Laramie, WY 2169
978-980                     10210 Smith, Richard E. Edward Mike Davis, LLC 16 60
28 SW Laramie, WY 2165 1350-1352                     10211 Fornstrom Farms, LLC
Land Right Services, LLC 16N 60W 32 SW, Less a tract Laramie, WY 2206
1144/562548

 

SECURITY AGREEMENT (Lilis, Inc.) Page 30

 

 

 

Lilis Lease # Lessor Lessee Twnshp Range Section Legal Description County /
State Recording Bk PG/Doc #                     10212 Moffit, Juanita Edward
Mike Davis, LLC 16 60 32 NE, less 1.0 acre tract Laramie, WY 2161 382-384      
              10213 Holgerson Ranch Company Edward Mike Davis, LLC 17 60 4
S/2NE/4, N/2SE/4 Laramie, WY 2067 80-82       17 60 20 W2 Laramie, WY          
              10216 Wenzel, F. Bernard and et al Edward Mike Davis, LLC 17 60 10
NE/4 Laramie, WY 2054 877-879                     10217 Rabou Land Company, LLC
Edward Mike Davis, LLC 17 60 18 Lots 1(45.04), 2(44.80), 3(44.56), 4(44.32), E2,
E2W2 Laramie, WY 2165 1347-1349                     10218 Albin Baptist Church
Edward Mike Davis, LLC 17 60 20 SE, less a 16.80 acre tract and a 6.17 acre
tract Laramie, WY 2159 469-471                     10219 Anderson, James S. &
Connie Louise (Heir to Charles, R. Anderson estate) Edward Mike Davis, LLC 17 60
20 NE, less 6.13 acres Laramie, WY 2161 364-366                     10220
Anderson, Norma Jean Edward Mike Davis, LLC 17 60 20 NE, less 6.13 acres
Laramie, WY 2161 391-393                     10221 Anderson, Sam Edward Mike
Davis, LLC 17 60 20 NE, less 6.13 acres Laramie, WY 2161 361-363                
    10222 Freeburg Farms, Inc. Edward Mike Davis, LLC 17 60 20 NE, less 6.13
acres Laramie, WY 2161 370-372                     10223 Laird, Joan Edward Mike
Davis, LLC 17 60 20 NE, less 6.13 acres Laramie, WY 2161 373-375                
    10224 Nordyke, Marie Edward Mike Davis, LLC 17 60 20 NE, less 6.13 acres
Laramie, WY 2169 975-977                     10226 Bowman, Darlene M. (Trustee
of the Dale A. Bowman Living Trust) Edward Mike Davis, LLC 18 60 27 N/2NW/4SW/4
Laramie, WY 2136 1323-1325                     10227 Dorigatti, Debra Kay Edward
Mike Davis, LLC 18 60 27 N/2NW/4SW/4 Laramie, WY 2144 690-692                  
  10228 Flohr, Shelly Edward Mike Davis, LLC 18 60 27 N/2NW/4SW/4 Laramie, WY
2144 687-689                     10229 Willoughby, Mark James Edward Mike Davis,
LLC 18 60 27 N/2NW/4SW/4 Laramie, WY 2144 684-686                     10254
Hedges, Mary Jean Edward Mike Davis, LLC 19N 67W 23 W/2SE, SW Laramie, WY 1924
1330/436304       19N 67W 25 NE, E/2NW, SWNW             19N 67W 26 W/2NE, NENE,
W/2, NWSE             19N 67W 27 SE             19N 67W 35 E/2SE, E/2W/2SE      

 

SECURITY AGREEMENT (Lilis, Inc.) Page 31

 

 

 

Lilis Lease # Lessor Lessee Twnshp Range Section Legal Description County /
State Recording Bk PG/Doc #                     10256 Tank, Dan A. & Donna L.
Edward Mike Davis, LLC 20 58 13 SW Scottsbluff, NE   1354       20 58 14 SE
Scottsbluff, NE                         10257 Greathouse, Marjorie M. Edward
Mike Davis, LLC 20 58 14 SW Scottsbluff, NE   5421       20 58 15 S2
Scottsbluff, NE                         10261 Haienm, Maryellen Sawyer Zoey
Exploration, Ltd 1N 65W 32 SE less the East 210 feet and the North 210 feet
Weld, CO   2164208                     10266 Sawyer, John & Adele, Trustees Zoey
Exploration, Ltd 1N 65W 32 SE less the East 210 feet and the North 210 feet
Weld, CO   2164207                     10283 Wyoming, State of; WY Lease #1 Land
Rights Services, LLC 15N 60W 17 NE, E/2NW, PART OF THE W/2NW LARAMIE   551592  
                  10284 Wyoming, State of; WY Lease #1 Land Rights Services, LLC
21N 60W 31 SE GOSHEN   905372                     10285 Wyoming, State of; WY
Lease #1 Land Rights Services, LLC 21N 60W 32 SW GOSHEN   905373                
    10286 Wyoming, State of; WY Lease #1 Land Rights Services, LLC 25N 65W 10
ALL GOSHEN   905374                     10287 Wyoming, State of; WY Lease #1
Land Rights Services, LLC 27N 65W 16 ALL PLATTE   590514                    
10288 Wyoming, State of; WY Lease #1 Land Rights Services, LLC 29N 65W 36 ALL
GOSHEN   905375                     10289 Wyoming, State of; WY Lease #1 Land
Rights Services, LLC 17N 67W 23 NW LARAMIE   551593                     10290
Wyoming, State of; WY Lease #1 Land Rights Services, LLC 26N 67W 16 ALL PLATTE  
590515                     10291 Wyoming, State of; WY Lease #1 Land Rights
Services, LLC 22N 66W 6 LOT 3 PLATTE   594945                     10292 Wyoming,
State of; WY Lease #1 Land Rights Services, LLC 18N 88W 16 ALL CARBON   943206  
                  10293 Wyoming, State of; WY Lease #1 Land Rights Services, LLC
18N 88W 36 ALL CARBON   943207                     10294 Wyoming, State of; WY
Lease #1 Land Rights Services, LLC 18N 90W 36 ALL CARBON   943208              
      10295 Wyoming, State of; WY Lease #1 Land Rights Services, LLC 29N 62W 14
SWNW PLATTE   UNK                     10296 Wyoming, State of; WY Lease #1 Land
Rights Services, LLC 29N 62W 15 SWSE PLATTE   UNK                     10297
Wyoming, State of; WY Lease #1 Land Rights Services, LLC 29N 62W 15 SENE, NESE
PLATTE   UNK

 

SECURITY AGREEMENT (Lilis, Inc.) Page 32

 

 

 

Lilis Lease # Lessor Lessee Twnshp Range Section Legal Description County /
State Recording Bk PG/Doc #                     10298 Wyoming, State of; WY
Lease #1 Land Rights Services, LLC 29N 62W 16 ALL PLATTE   UNK                  
  10299 Wyoming, State of; WY Lease #1 Land Rights Services, LLC 19N 67W 29 ALL
LARAMIE   UNK                     10300 Wyoming, State of; WY Lease #1 Land
Rights Services, LLC 19N 67W 26 SENE, NESE LARAMIE   UNK                    
10304 Nebraska, State of; NE Lease #7527 Bear Oil and Gas, Inc. 18 58 16 All
Banner, NE   7527                     10307 Fornstrom, K. James & E.A. (Trustees
of the K. James Fornstrom Trust and E. A. Fornstrom Trust) Recovery Energy, Inc.
16N 60W 32 SE LARAMIE   568977                     10309 Colson, Sharon K.
Recovery Energy, Inc. 13N 54W 22 S/2 Kimball, NE 214 709                    
10310 Baranek, George W. Recovery Energy, Inc. 13N 54W 22 S/2 Kimball, NE 214
695                     10311 Griffith, Mildred Recovery Energy, Inc. 13N 54W 22
S/2 Kimball, NE 214 677                     10312 Hinshaw, John Mills & Sherry A
Recovery Energy, Inc. 13N 55W 12 ALL Kimball, NE 214 679                    
10313 Marcum, Rodney S. Recovery Energy, Inc. 13N 54W 22 S/2 Kimball, NE 214 681
                    10314 Potter, Virginia R. Recovery Energy, Inc. 13N 54W 22
S/2 Kimball, NE 214 683                     10315 Ramsey, Beverly J. Recovery
Energy, Inc. 14N 54W 30 ALL Kimball, NE 214 685                     10316 Shaw,
Lyle Recovery Energy, Inc. 14N 54W 30 ALL Kimball, NE 214 687                  
  10317 Shaw, Ramona Recovery Energy, Inc. 14N 54W 30 ALL Kimball, NE 214 689  
                  10318 Tobler, Dale & Elda Recovery Energy, Inc. 14N 54W 30 ALL
Kimball, NE 214 691                     10319 Tobler, Lawrence Duane & Mildr
Recovery Energy, Inc. 14N 54W 30 ALL Kimball, NE 214 693                    
10320 State of Colorado Martin J. Freedman 5N 63W 18 N/2, N/2S/2 Weld, CO  
1848224

 

SECURITY AGREEMENT (Lilis, Inc.) Page 33

 

 

 

Lilis Lease # Lessor Lessee Twnshp Range Section Legal Description County /
State Recording Bk PG/Doc #                     10321 Olson, Ruth A. Recovery
Energy, Inc. 14N 54W 30 ALL Kimball, NE 215 98                     10322 Eugene
Hanson & Son, Inc. Interzone Energy, Inc. 16N 61W 26 N2 Laramie, WY   417796    
                10323 Tracy, Joyce Ann GFL & Associates, LLC 7N 64W 34 NW Weld,
CO   3702389                     10324 Lyon, William R. & Patricia A. Terry Land
Services Company 15N 61W 14 E/2 Laramie, WY   599101                     10325
Lyon, Jack R. & Barbara E. Terry Land Services Company 15N 61W 14 E/2 Laramie,
WY   599100                     10326 Public Service Company of Colo Recovery
Energy, Inc. 1N 65W 32 NORTH 210' OF THE S/2 AND
THE EAST 210' OF THE SE Weld, CO                         10327 Lang, Larry F.
Gene F. Lang & Co 7N 64W 34 Lot B of RE 2965 IN THE NW1/4 Weld, CO   3874411    
                10328 Hagstrom, Steven Dean Terry Land Services Company 15N 63W
14 SE/4 Laramie, WY   600691                     10329 Smith, William O. and
Rita Marie Recovery Energy, Inc. 15N 56W 18 E/2 Kimball, NE 218 29              
      10330 Bingaman, Rita J. and Gary P. Recovery Energy, Inc. 15N 56W 18 E/2
Kimball, NE` 218 32                     10331 Wyoming, State of; WY
Lease #12-00477 Land Rights Services, LLC 21N 61W 3 LOTS 1-2, S/2NE, SW, N/2SE
Goshen, WY Unk                       10332 Wyoming, State of; WY
Lease #12-00478 Land Rights Services, LLC 22N 61W 36 ALL Goshen, WY Unk        
              10333 Wyoming, State of; WY
Lease #12-00479 Land Rights Services, LLC 27N 62W 16 ALL Goshen, WY Unk        
              10334 Wyoming, State of; WY
Lease #12-00481 Land Rights Services, LLC 22N 64W 19 SENE Goshen, WY Unk        
              10335 Wyoming, State of; WY
Lease #12-00483 Land Rights Services, LLC 23N 67W 27 S/2NW, SW Goshen, WY Unk  
                    10336 Wyoming, State of; WY
Lease #12-00484 Land Rights Services, LLC 23N 67W 28 NWNE, S/2NE, NW, N/2S/2
Goshen, WY Unk                       10337 Wyoming, State of; WY
Lease #12-00485 Land Rights Services, LLC 23N 67W 32 SENE, S/2 Goshen, WY Unk  
                    10338 Wyoming, State of; WY
Lease #12-00486 Land Rights Services, LLC 23N 67W 33 NENE, S/2N/2, N/2S/2, SWSW
Goshen, WY Unk  

 

SECURITY AGREEMENT (Lilis, Inc.) Page 34

 

 

 

Lilis Lease # Lessor Lessee Twnshp Range Section Legal Description County /
State Recording Bk PG/Doc # 10339 Wyoming, State of; WY Lease #12-00487 Land
Rights Services, LLC 23N 67W 34 N/2NW, E/2SW, N/2SE Goshen, WY Unk              
        10340 Anderson, Mark W., Trustee
of Mark W. Anderson Living
Trust dtd 3/24/98 Delta Petroleum Corporation 15N 63W 2 Lots 1-4, S/2N/2
Laramie, WY   495436                     10341 Anderson, Mark W., Trustee
of Mark W. Anderson Living
Trust dtd 3/24/98 Peterson Energy Management, Inc. 15N 63W 2 SE/4 Laramie, WY  
279547                     10342 Seaver, Evelyn M. Peterson Energy Management,
Inc. 15N 63W 2 SE/4 Laramie, WY   279548                     10343 Vikings, LLC
Edward Mike Davis, LLC 15N 63W 2 Lots 1-2, S/2NE/4 (NE/4) Laramie, WY   592432  
                  10344 Anderson, Leonard & Norma J. Edward Mike Davis, LLC 15N
63W 2 N/2SW, SWSW Laramie, WY   611788                     10346 Trimble,
Claudia M., Gladys
Woods, as AIF Delta Petroleum Corporation 15N 63W 10 N/2, W/2NESE, NWSE, S/2SE,
SW/4 Laramie, WY   506306                     10347 Wymer, Peggy Land Rights
Services, LLC 15N 63W 2 N/2SW, SWSW Laramie, WY   617752                    
10348 Wisroth, Donald G. and Sandra Recovery Energy, Inc. 14N 60W 4 ALL Laramie,
Wy   626483       14N 60W 5 LOTS 1-2, S/2NE, SE Laramie, Wy                    
    10349 Wisroth, Robert W. & Elsie Recovery Energy, Inc. 14N 60W 4 ALL
Laramie, Wy   628810       14N 60W 5 LOTS 1-2, S/2NE, SE Laramie, Wy            
            10350 Moore, Esther M. & John D. Recovery Energy, Inc. 14N 60W 4 ALL
Laramie, WY   628811       14N 60W 5 LOTS 1-2, S/2NE, SE Laramie WY            
            10351 Christiansen, Edith &
Double Arrow Energy Company Lilis Energy, Inc. 7N 64W 34 Lot B of RE 2965 IN THE
NW1/4 Weld, CO   3989163                     10352 TRS Equities, Highlands, et
al Land Rights Services, LLC 1N 65W 32 NE/4 Weld, CO   3953463                  
  10353 Christiansen, Edith, Double
Arrow Energy Company et al Lilis Energy, Inc. 7N 64W 34 Lot A of RE 2965, Lot
A  and B of
RE 2630(Part of NW) Weld, CO   Unk

 

A. Properties Owned by Borrower:

None.

 

SECURITY AGREEMENT (Lilis, Inc.) Page 35

 

 

 

B. Properties Leased by Borrower (Include Landlord’s Name):

Complete Street and Mailing Address,

including County and Zip Code

Company/ Subsidiary Owned/Leased Real Estate Recording Office Information
Landlord Lease Description See the table above immediately under the caption
“Locations of Inventory and Equipment and Fixtures” in this Exhibit A. Lilis
Energy, Inc. Leased       1900 Grant Street, Suite #720, Denver, CO, 80203 Lilis
Energy, Inc. Leased N/A Legacy First Range JV-T, LLC Office Lease 20 Broadhollow
Road, Suite 3011B, Melville, NY, 11747 Lilis Energy, Inc. Leased N/A J.K.
Associates Realty, LLC Office Lease

  

C. Public Warehouses or other Locations pursuant to Bailment or Consignment
Arrangements (include name of Warehouse Operator or other Bailee or Consignee):

None.

 

SECURITY AGREEMENT (Lilis, Inc.) Page 36

 

 

 

EXHIBIT B

(See Section 3.8 of Security Agreement)

A. Vehicles subject to certificates of title:

 

Description Title Number & State Where Issued

 

None.

 

B. Aircraft/engines, ships, railcars and other vehicles governed by federal
statute:

 

Description Registration Number

 

None.

 

C. Patents, copyrights, trademarks protected under federal law:

 

None.

 

SECURITY AGREEMENT (Lilis, Inc.) Page 37

 

 

 

EXHIBIT C

(See Section 3.8 of Security Agreement)

Legal description, county and street address of property on which

MORTGAGED LANDS             ------------ ---------
-------------------------------------- ----- --- -----
------------------------------------------ ---------------- -------------------
LEASE EXPIRE LEASE NAME TSHP RGE SEC METES & BOUNDS COUNTY PROSPECT NUMBER DATE
              ------------ --------- --------------------------------------
----- --- ----- ------------------------------------------ ----------------
-------------------                 TOTAL 10003 3/15/2015 Palmco, CW Palm Farms,
et al 18N 57W 3 LOTS 1-2, S/2NE LESS 3 ACRES BANNER State Line 10003 3/15/2015
Palmco, CW Palm Farms, et al 17N 57W 18 LOTS 1-2, NE, E/2NW LESS 86.83 ACRES, SE
LESS 52.59 ACRES BANNER State Line 10003 3/15/2015 Palmco, CW Palm Farms, et al
17N 57W 19 LOTS 1-2, E/2NW BANNER State Line 10003 3/15/2015 Palmco, CW Palm
Farms, et al 17N 57W 20 ALL BANNER State Line 10004 9/19/2015 Banner Farms, LLC
17N 58W 4 LOTS 3-4, S/2NW BANNER State Line 10005 9/16/2014 Krcmarik, Colleen
and Leonard 17N 58W 4 LOTS 1-2, S/2NE BANNER State Line 10006 9/16/2014
Mumgaard, Sharon and Jon 17N 58W 4 SE BANNER State Line 10007 9/16/2014
Nicholls, Jerry R. and Merrily 17N 58W 4 SW BANNER State Line 10019 3/20/2015
May, Shirley 15N 60W 28 ALL LARAMIE State Line 10032 4/12/2015 3 P Ranch, LLC
20N 62W 23 E/2NE GOSHEN State Line 10032 4/12/2015 3 P Ranch, LLC 20N 62W 24
PART OF THE W/2NE, NW GOSHEN State Line 10032 4/12/2015 3 P Ranch, LLC 20N 62W
24 S/2 GOSHEN State Line 10058 1/11/2015 Pile, Elaine A. & Robert E. 19N 58W 6
NE BANNER State Line 10058 1/11/2015 Pile, Elaine A. & Robert E. 20N 58W 29 W/2
BANNER State Line 10058 1/11/2015 Pile, Elaine A. & Robert E. 20N 58W 30 E/2
BANNER State Line 10058 1/11/2015 Pile, Elaine A. & Robert E. 20N 58W 31 E/2
BANNER State Line 10061 4/5/2015 Ackerson, Elva O. 19N 58W 11 S/2SW BANNER State
Line 10061 4/5/2015 Ackerson, Elva O. 19N 58W 24 N/2, SW BANNER State Line 10063
1/18/2015 Pleasant Valley Land, Inc. 20N 57W 30 SE BANNER State Line

 

SECURITY AGREEMENT (Lilis, Inc.) Page 38

 

 

 

10063 1/18/2015 Pleasant Valley Land, Inc. 20N 57W 31 ALL BANNER State Line
10063 1/18/2015 Pleasant Valley Land, Inc. 20N 58W 26 W/2 BANNER State Line
10064 1/9/2015 Clearview Dairy, Inc. 20N 58W 20 ALL BANNER State Line 10064
1/9/2015 Clearview Dairy, Inc. 20N 58W 21 W/2 BANNER State Line 10064 1/9/2015
Clearview Dairy, Inc. 20N 58W 23 NW BANNER State Line 10065 1/18/2015 Bolin, R.
Douglas and Joy E. 20N 58W 23 SW BANNER State Line 10065 1/18/2015 Bolin, R.
Douglas and Joy E. 20N 58W 25 W/2, LESS TRACT IN THE SW BANNER State Line 10065
1/18/2015 Bolin, R. Douglas and Joy E. 20N 58W 26 E/2 BANNER State Line 10066
1/14/2015 Sundin, Milton & Joan (Living Trust) 20N 58W 23 E/2 BANNER State Line
10066 1/14/2015 Sundin, Milton & Joan (Living Trust) 20N 58W 24 ALL BANNER State
Line 10066 1/14/2015 Sundin, Milton & Joan (Living Trust) 20N 58W 25 E/2 BANNER
State Line 10073 3/26/2015 Mildred Mae Family Trust 19N 60W 4 LOTS 1-2, SE
GOSHEN State Line 10073 3/26/2015 Mildred Mae Family Trust 19N 60W 9 NE GOSHEN
State Line 10073 3/26/2015 Mildred Mae Family Trust 20N 60W 27 LOTS 1-4, W/2NE
GOSHEN State Line 10073 3/26/2015 Mildred Mae Family Trust 20N 60W 28 S/2SE
GOSHEN State Line 10073 3/26/2015 Mildred Mae Family Trust 20N 60W 33 NE, N/2SE
GOSHEN State Line 10073 3/26/2015 Mildred Mae Family Trust 20N 60W 34 LOTS 1-4,
S/2SW, W/2SE GOSHEN State Line 10082 2/9/2016 McCallan, Eric Alan & Christopher
P. 25N 62W 7 N/2NE, SENE, NESE GOSHEN Red Cloud 10082 2/9/2016 McCallan, Eric
Alan & Christopher P. 25N 62W 8 N/2NW, SWNW, NWSW GOSHEN Red Cloud 10082
2/9/2016 McCallan, Eric Alan & Christopher P. 25N 64W 11 W/2SE GOSHEN Red Cloud
10082 2/9/2016 McCallan, Eric Alan & Christopher P. 25N 64W 13 E/2, E/2W/2
GOSHEN Red Cloud 10082 2/9/2016 McCallan, Eric Alan & Christopher P. 25N 64W 14
LOTS 1-3, 5-7, W/2NE, W/2, NWSE GOSHEN Red Cloud 10082 2/9/2016 McCallan, Eric
Alan & Christopher P. 25N 62W 16 SW GOSHEN Red Cloud 10082 2/9/2016 McCallan,
Eric Alan & Christopher P. 25N 63W 18 LOTS 1-4 GOSHEN Red Cloud 10082 2/9/2016
McCallan, Eric Alan & Christopher P. 25N 62W 20 SESE, THE EAST 2 RODS OF THE
NESE. GOSHEN Red Cloud 10082 2/9/2016 McCallan, Eric Alan & Christopher P. 25N
64W 23 LOTS 3-4, 7-8, NWNE, N/2NW, NWSE GOSHEN Red Cloud 10082 2/9/2016
McCallan, Eric Alan & Christopher P. 25N 64W 24 NWSW GOSHEN Red Cloud 10082
2/9/2016 McCallan, Eric Alan & Christopher P. 25N 62W 26 NW GOSHEN Red Cloud
10082 2/9/2016 McCallan, Eric Alan & Christopher P. 25N 62W 28 SWNW, W/2SW
GOSHEN Red Cloud 10082 2/9/2016 McCallan, Eric Alan & Christopher P. 25N 62W 29
E/2E/2 GOSHEN Red Cloud 10082 2/9/2016 McCallan, Eric Alan & Christopher P. 25N
62W 32 N/2NE GOSHEN Red Cloud 10083 1/1/2015 Crossed Arrows Ranch, Inc. 26N 62W
1 LOTS 3-4, S/2NW, SW GOSHEN Red Cloud 10083 1/1/2015 Crossed Arrows Ranch, Inc.
26N 62W 2 LOTS 1-4, S/2N/2, S/2 GOSHEN Red Cloud 10083 1/1/2015 Crossed Arrows
Ranch, Inc. 26N 62W 2 S/2 GOSHEN Red Cloud

 

SECURITY AGREEMENT (Lilis, Inc.) Page 39

 

 

 

10083 1/1/2015 Crossed Arrows Ranch, Inc. 26N 62W 3 LOTS 1-2, S/2NE GOSHEN Red
Cloud 10083 1/1/2015 Crossed Arrows Ranch, Inc. 27N 62W 7 LOT 4 GOSHEN Red Cloud
10083 1/1/2015 Crossed Arrows Ranch, Inc. 27N 63W 11 SESW, SWSE GOSHEN Red Cloud
10083 1/1/2015 Crossed Arrows Ranch, Inc. 27N 63W 12 LOT 4, S/2SW, SWSE GOSHEN
Red Cloud 10083 1/1/2015 Crossed Arrows Ranch, Inc. 27N 63W 13 LOT 1, W/2NW, SW
GOSHEN Red Cloud 10083 1/1/2015 Crossed Arrows Ranch, Inc. 27N 63W 13 SESE
GOSHEN Red Cloud 10083 1/1/2015 Crossed Arrows Ranch, Inc. 27N 63W 14 NWNE,
S/2NE, NENW, N/2SE GOSHEN Red Cloud 10083 1/1/2015 Crossed Arrows Ranch, Inc.
27N 62W 15 SW, N/2SE GOSHEN Red Cloud 10083 1/1/2015 Crossed Arrows Ranch, Inc.
27N 62W 17 SWNE, NWNW, S/2NW, S/2 GOSHEN Red Cloud 10083 1/1/2015 Crossed Arrows
Ranch, Inc. 27N 62W 18 N/2NE, SENE, E/2NW, NESW GOSHEN Red Cloud 10083 1/1/2015
Crossed Arrows Ranch, Inc. 27N 62W 18 LOT 1 GOSHEN Red Cloud 10083 1/1/2015
Crossed Arrows Ranch, Inc. 27N 62W 18 LOT 4 GOSHEN Red Cloud 10083 1/1/2015
Crossed Arrows Ranch, Inc. 27N 62W 19 LOT 1 GOSHEN Red Cloud 10083 1/1/2015
Crossed Arrows Ranch, Inc. 27N 62W 20 NWNE, NENW GOSHEN Red Cloud 10083 1/1/2015
Crossed Arrows Ranch, Inc. 27N 62W 21 SENE, E/2SE GOSHEN Red Cloud 10083
1/1/2015 Crossed Arrows Ranch, Inc. 27N 62W 22 W/2, W/2SE GOSHEN Red Cloud 10083
1/1/2015 Crossed Arrows Ranch, Inc. 27N 63W 23 E/2SE GOSHEN Red Cloud 10083
1/1/2015 Crossed Arrows Ranch, Inc. 27N 63W 24 NESW GOSHEN Red Cloud 10083
1/1/2015 Crossed Arrows Ranch, Inc. 27N 63W 24 NE, SENW GOSHEN Red Cloud 10083
1/1/2015 Crossed Arrows Ranch, Inc. 27N 63W 24 N/2NW, SWNW GOSHEN Red Cloud
10083 1/1/2015 Crossed Arrows Ranch, Inc. 27N 63W 24 W/2SW, SESW GOSHEN Red
Cloud 10083 1/1/2015 Crossed Arrows Ranch, Inc. 27N 62W 25 W/2 GOSHEN Red Cloud
10083 1/1/2015 Crossed Arrows Ranch, Inc. 27N 63W 25 N/2NW GOSHEN Red Cloud
10083 1/1/2015 Crossed Arrows Ranch, Inc. 27N 63W 25 S/2NW, SW GOSHEN Red Cloud
10083 1/1/2015 Crossed Arrows Ranch, Inc. 27N 62W 26 ALL GOSHEN Red Cloud 10083
1/1/2015 Crossed Arrows Ranch, Inc. 27N 63W 26 NENE GOSHEN Red Cloud 10083
1/1/2015 Crossed Arrows Ranch, Inc. 27N 63W 26 S/2NE, SW, NWSE, S/2SE GOSHEN Red
Cloud 10083 1/1/2015 Crossed Arrows Ranch, Inc. 27N 62W 27 E/2, N/2NW GOSHEN Red
Cloud 10083 1/1/2015 Crossed Arrows Ranch, Inc. 27N 63W 27 S/2SE GOSHEN Red
Cloud 10083 1/1/2015 Crossed Arrows Ranch, Inc. 27N 62W 28 NWNE, S/2NE, SESW, SE
GOSHEN Red Cloud 10083 1/1/2015 Crossed Arrows Ranch, Inc. 27N 62W 28 NENE
GOSHEN Red Cloud 10083 1/1/2015 Crossed Arrows Ranch, Inc. 27N 62W 29 S/2SW,
SWSE GOSHEN Red Cloud 10083 1/1/2015 Crossed Arrows Ranch, Inc. 27N 62W 30 SESE
GOSHEN Red Cloud

 

SECURITY AGREEMENT (Lilis, Inc.) Page 40

 

 

 

10083 1/1/2015 Crossed Arrows Ranch, Inc. 27N 61W 31 LOTS 1-4, E/2W/2 GOSHEN Red
Cloud 10083 1/1/2015 Crossed Arrows Ranch, Inc. 27N 62W 32 NW GOSHEN Red Cloud
10083 1/1/2015 Crossed Arrows Ranch, Inc. 27N 62W 34 N/2NE GOSHEN Red Cloud
10083 1/1/2015 Crossed Arrows Ranch, Inc. 27N 62W 35 N/2NE, W/2, SE GOSHEN Red
Cloud 10107 8/19/2013 Lukassen, Frances Mary 15N 56W 7 E/2 KIMBALL Wilke 10115
4/30/2016 Goranson, Dennis L. 15N 59W 25 ALL KIMBALL Pine Bluffs 10115 4/30/2016
Goranson, Dennis L. 15N 58W 30 LOTS 1-4, E/2, E/2W/2 KIMBALL Pine Bluffs 10115
4/30/2016 Goranson, Dennis L. 15N 58W 31 LOTS 1-4, E/2, E/2W/2 KIMBALL Pine
Bluffs 10116 2/19/2015 Cutler, Robert R. and Joanne S. 15N 59W 1 LOTS 3-4,
S/2NW, SW KIMBALL Pine Bluffs 10117 1/6/2015 Jessen, Ronald S. and Brenda L. 15N
59W 1 LOTS 1-2, S/2NE, SE KIMBALL Pine Bluffs 10118 2/4/2015 Jessop, Roger R.
15N 59W 2 LOTS 1-4 KIMBALL Pine Bluffs 10118 2/4/2015 Jessop, Roger R. 16N 59W
26 TRACT IN LOTS 1-2 KIMBALL Pine Bluffs 10119 3/18/2015 Jessen, Jimmy Lee and
Gwen Lynn 15N 59W 11 LOTS 1-4 KIMBALL Pine Bluffs 10120 3/18/2015 Jessen, Terry
Lynn 15N 59W 11 LOTS 1-4 KIMBALL Pine Bluffs 10121 2/8/2015 Willoughby, Jeff and
Marnie 15N 59W 11 LOTS 1-4 KIMBALL Pine Bluffs 10122 4/1/2015 Gardner Bros
Partnership 15N 59W 35 LOTS 1-4 KIMBALL Pine Bluffs 10122 4/1/2015 Gardner Bros
Partnership 15N 60W 26 LOTS 1-4, W/2W/2 KIMBALL Pine Bluffs 10122 4/1/2015
Gardner Bros Partnership 15N 60W 26 LOTS 1-4, W/2W/2 LARAMIE Pine Bluffs 10122
4/1/2015 Gardner Bros Partnership 15N 60W 34 E/2, LESS 18.45 ACRES LARAMIE Pine
Bluffs 10122 4/1/2015 Gardner Bros Partnership 15N 60W 35 LOTS 1-4, W/2W/2
LARAMIE Pine Bluffs 10124 4/1/2015 Langseth, Eric Craig and Carla Marie 15N 59W
26 LOTS 1-4 KIMBALL Pine Bluffs 10124 4/1/2015 Langseth, Eric Craig and Carla
Marie 15N 59W 35 LOTS 1-4 KIMBALL Pine Bluffs 10124 4/1/2015 Langseth, Eric
Craig and Carla Marie 15N 60W 26 LOTS 1-4, W/2W/2 LARAMIE Pine Bluffs 10124
4/1/2015 Langseth, Eric Craig and Carla Marie 15N 60W 34 E/2, LESS 18.45 ACRES
LARAMIE Pine Bluffs 10124 4/1/2015 Langseth, Eric Craig and Carla Marie 15N 60W
35 LOTS 1-4, W/2W/2 LARAMIE Pine Bluffs 10125 3/26/2015 Wilkerson,Janice Leah
15N 59W 26 LOTS 1-4 KIMBALL Pine Bluffs 10125 3/26/2015 Wilkerson,Janice Leah
15N 59W 35 LOTS 1-4 KIMBALL Pine Bluffs 10125 3/26/2015 Wilkerson,Janice Leah
15N 60W 26 LOTS 1-4, W/2W/2 LARAMIE Pine Bluffs 10125 3/26/2015 Wilkerson,Janice
Leah 15N 60W 27 ALL LARAMIE Pine Bluffs 10125 3/26/2015 Wilkerson,Janice Leah
15N 60W 34 E/2 LARAMIE Pine Bluffs 10125 3/26/2015 Wilkerson,Janice Leah 15N 60W
35 LOTS 1-4, W/2W/2 LARAMIE Pine Bluffs 10133 3/2/2015 Anderson Livestock Inc.
16N 59W 11 LOTS 1-4 KIMBALL Pine Bluffs

 

SECURITY AGREEMENT (Lilis, Inc.) Page 41

 

 

 

10133 3/2/2015 Anderson Livestock Inc. 16N 60W 11 LOTS 1-4 LARAMIE Pine Bluffs
10133 3/2/2015 Anderson Livestock Inc. 16N 59W 14 LOTS 1-4, LESS 14.5 ACRES
KIMBALL Pine Bluffs 10133 3/2/2015 Anderson Livestock Inc. 16N 60W 14 LOTS 1-4
LARAMIE Pine Bluffs 10133 3/2/2015 Anderson Livestock Inc. 16N 60W 15 NW LARAMIE
Pine Bluffs 10133 3/2/2015 Anderson Livestock Inc. 16N 58W 17 SE KIMBALL Pine
Bluffs 10133 3/2/2015 Anderson Livestock Inc. 16N 60W 22 SE LARAMIE Pine Bluffs
10133 3/2/2015 Anderson Livestock Inc. 16N 60W 23 NORTH 130 ACRES IN THE W/2
LARAMIE Pine Bluffs 10133 3/2/2015 Anderson Livestock Inc. 16N 59W 26 SOUTH
2/3RDS KIMBALL Pine Bluffs 10134 1/25/2015 Freeburg, Travis 16N 58W 17 SE
KIMBALL Pine Bluffs 10135 1/28/2015 Knigge, Alice 16N 58W 20 ALL KIMBALL Pine
Bluffs 10142 1/26/2015 Duclo, Rhonda Marie 16N 58W 29 E/2 KIMBALL Pine Bluffs
10143 1/25/2015 Freeburg, Troy and Lorretta 16N 58W 29 W/2 KIMBALL Pine Bluffs
10144 8/18/2015 Canaday, R. & Wolf, J. (BWANA Trust) 16N 58W 30 SE KIMBALL Pine
Bluffs 10145 8/26/2015 Corum, Jean Wolf 16N 58W 30 SE KIMBALL Pine Bluffs 10146
8/26/2015 Harner, Lori 16N 58W 30 SE KIMBALL Pine Bluffs 10147 8/26/2015 Wolf,
David 16N 58W 30 SE KIMBALL Pine Bluffs 10148 8/26/2015 Wolf, Robert 16N 58W 30
SE KIMBALL Pine Bluffs 10150 4/2/2015 Sannes, Jill 16N 58W 31 LOTS 1-4, E/2,
E/2W/2 KIMBALL Pine Bluffs 10150 4/2/2015 Sannes, Jill 16N 59W 24 N/2, SW
KIMBALL Pine Bluffs 10151 4/2/2015 Sannes, Kimberly 16N 58W 31 LOTS 1-4, E/2,
E/2W/2 KIMBALL Pine Bluffs 10151 4/2/2015 Sannes, Kimberly 16N 59W 24 N/2, SW
KIMBALL Pine Bluffs 10153 4/2/2015 Sannes, Stephen 16N 58W 31 LOTS 1-4, E/2,
E/2W/2 KIMBALL Pine Bluffs 10153 4/2/2015 Sannes, Stephen 16N 59W 24 N/2, SW
KIMBALL Pine Bluffs 10154 4/1/2015 Satterthwaite, R. Jolene (Trust) 16N 59W 24
N/2, SW KIMBALL Pine Bluffs 10155 4/2/2015 Tinsley, Stacey 16N 58W 31 LOTS 1-4,
E/2, E/2W/2 KIMBALL Pine Bluffs 10155 4/2/2015 Tinsley, Stacey 16N 59W 24 N/2,
SW KIMBALL Pine Bluffs 10156 4/2/2015 Werlich, Kelly 16N 58W 31 LOTS 1-4, E/2,
E/2W/2 KIMBALL Pine Bluffs 10156 4/2/2015 Werlich, Kelly 16N 59W 24 N/2, SW
KIMBALL Pine Bluffs 10179 2/8/2015 Anderson, Dean V. 15N 60W 2 LOTS 1-3, SWNW
LARAMIE Pine Bluffs 10180 2/8/2015 Anderson, Dennis E. 15N 60W 2 LOTS 1-3, SWNW
LARAMIE Pine Bluffs 10181 2/8/2015 Anderson, Dwayne A. 15N 60W 2 LOTS 1-3, SWNW
LARAMIE Pine Bluffs 10182 2/8/2015 Jessen, Michael (Rose Jessen) 15N 60W 2 LOTS
4-5, W/2SW LARAMIE Pine Bluffs

 

SECURITY AGREEMENT (Lilis, Inc.) Page 42

 

 

 

10185 12/23/2014 Herman, David 15N 60W 9 E/2 LARAMIE Pine Bluffs 10185
12/23/2014 Herman, David 16N 60W 20 NE LARAMIE Pine Bluffs 10186 1/25/2015
Phyllis A. Cooney Trust Agreement 15N 60W 10 N/2 LARAMIE Pine Bluffs 10187
3/17/2015 Randol, Emmy Lu 15N 60W 15 ALL LARAMIE Pine Bluffs 10187 3/17/2015
Randol, Emmy Lu 15N 60W 17 S/2 LARAMIE Pine Bluffs 10187 3/17/2015 Randol, Emmy
Lu 15N 60W 20 NWNE, NW LARAMIE Pine Bluffs 10187 3/17/2015 Randol, Emmy Lu 15N
60W 20 NENE LARAMIE Pine Bluffs 10187 3/17/2015 Randol, Emmy Lu 15N 60W 20 SWNE
LARAMIE Pine Bluffs 10187 3/17/2015 Randol, Emmy Lu 15N 60W 20 SENE LARAMIE Pine
Bluffs 10187 3/17/2015 Randol, Emmy Lu 15N 60W 21 NW, S/2 LARAMIE Pine Bluffs
10187 3/17/2015 Randol, Emmy Lu 15N 60W 21 NE LARAMIE Pine Bluffs 10191
3/12/2015 Mattson Ranch Company 15N 60W 16 WEST 102 RODS, EAST 118 RODS LARAMIE
Pine Bluffs 10191 3/12/2015 Mattson Ranch Company 15N 60W 16 EAST 100 RODS
LARAMIE Pine Bluffs 10191 3/12/2015 Mattson Ranch Company 15N 60W 22 ALL LARAMIE
Pine Bluffs 10191 3/12/2015 Mattson Ranch Company 15N 60W 23 W/2 LARAMIE Pine
Bluffs 10191 3/12/2015 Mattson Ranch Company 16N 60W 32 NW, LESS 3 TRACTS
DESCRIBED BY M&B's LARAMIE Pine Bluffs 10212 3/17/2015 Moffitt, Juanita 16N 60W
32 NE LARAMIE Pine Bluffs 10217 5/8/2015 Rabou Land Company, LLC 17N 60W 18 LOTS
1-4, E/2, E/2W/2 LARAMIE State Line 10218 3/30/2015 Albin Baptist Church 17N 60W
20 SE, LESS 2 TRACTS LARAMIE State Line 10219 4/8/2015 Anderson, James S. &
Connie Louise 17N 60W 20 NE LARAMIE State Line 10220 4/8/2015 Anderson, Norma
Jean 17N 60W 20 NE LARAMIE State Line 10221 4/8/2015 Anderson, Sam 17N 60W 20 NE
LARAMIE State Line 10256 1/20/2015 Tank, Dan A. & Donna L. 20N 58W 13 SW SCOTTS
BLUFF State Line 10256 1/20/2015 Tank, Dan A. & Donna L. 20N 58W 14 SE SCOTTS
BLUFF State Line 10257 8/4/2015 Greathouse, Marjorie M. 20N 58W 14 SW SCOTTS
BLUFF State Line 10257 8/4/2015 Greathouse, Marjorie M. 20N 58W 15 S/2 SCOTTS
BLUFF State Line 10261 11/16/1991 Haien, Maryellen Sawyer 1N 65W 32 SE, LESS THE
EAST 210' AND THE NORTH 210' WELD East Denver 10266 11/16/1991 Sawyer, John &
Adele (Family Trust) 1N 65W 32 SE, LESS THE EAST 210' AND THE NORTH 210' WELD
East Denver 10320 6/18/1985 State of Colorado 5N 63W 18 N/2, N/2S/2 WELD East
Denver 10322 7/27/2013 Eugene Hanson & Son, Inc. 16N 61W 26 NE LARAMIE Pine
Bluffs

 

SECURITY AGREEMENT (Lilis, Inc.) Page 43

 

 

 

10322 7/27/2013 Eugene Hanson & Son, Inc. 16N 61W 26 NW LARAMIE Pine Bluffs
10323 9/28/2015 Tracy, Joyce Ann 7N 64W 34 NW WELD Tracy 10324 1/22/2018 Lyon,
William R. & Patricia A. 15N 61W 14 E/2 LARAMIE Pine Bluffs 10325 1/22/2018
Lyon, Jack R. & Barbara E. 15N 61W 14 E/2 LARAMIE Pine Bluffs 10327 11/30/2015
Lang, Larry F. 7N 64W 34 Lot B of RE 2965 IN THE NW1/4 WELD Tracy 10328
12/29/2017 Hagstrom, Steven Dean 15N 63W 14 SE/4 LARAMIE Pine Bluffs            
                      TOTAL                   MORTGAGED WELLS            
LUKASSEN 44-7               HANSEN 42-26               SLW STATE PC BB18-67HN  
          SLW STATE PC BB18-65HN             VINCE STATE B13-63HN            

 

SECURITY AGREEMENT (Lilis, Inc.) Page 44

 

 

 

EXHIBIT D

(See Sections 3.9 and 4.1(f) of Security Agreement)

EXISTING LIENS ON THE COLLATERAL

Those certain mortgages and/or deeds of trust pursuant to which the Collateral
set forth on Exhibit C hereto was pledged as collateral for those certain 8%
Senior Secured Convertible Debentures of the Borrower.

 

SECURITY AGREEMENT (Lilis, Inc.) Page 45

 

 

 

EXHIBIT E

List of Pledged Securities

(See Section 3.11 of Security Agreement)

A. STOCKS:

 

None.

 

B. BONDS:

 

None.

 

C. GOVERNMENT SECURITIES:

 

None.

 

D. OTHER SECURITIES OR OTHER INVESTMENT PROPERTY

(CERTIFICATED AND UNCERTIFICATED):

 

None.

  

SECURITY AGREEMENT (Lilis, Inc.) Page 46

 

 

 

EXHIBIT F

List of Bank Accounts

(See Section 3.12 of Security Agreement)

 

Wells Fargo:   3932368123 Corporate Account 3932368149 Operations Account
3932368156 Revenue Account 3932368164 Payroll Account 3932368172 Land Account
3932368180 Tax Account   US Bank: 103690303179 Corporate Account 103690303161
Operations Account 103690303203 Revenue Account 103690303187 Payroll Account
103690303195 Land Account 103690303211 Tax Account   Chase: 000002989363870
Money Market Account 000000870117611 Tax Account

  

SECURITY AGREEMENT (Lilis, Inc.) Page 47