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Exhibit 10.1
 
SECOND AMENDMENT TO FORBEARANCE AGREEMENT

THIS SECOND AMENDMENT TO FORBEARANCE AGREEMENT (this “Amendment”) is dated March
9, 2016, and amends that certain Forbearance Agreement dated November 24, 2015
(as previously amended, the “Forbearance Agreement”) by and among (i) Brushy
Resources, Inc. (f/k/a Starboard Resources, Inc.), a Delaware corporation
(“Borrower”), (ii) ImPetro Resources, LLC, a Delaware limited liability company
(“ImPetro Resources”), (iii) ImPetro Operating, LLC, a Delaware limited
liability company (collectively with ImPetro Resources, the “Guarantors” and
each a “Guarantor”), and (iv) Independent Bank, a Texas state bank (“Lender”). 
Capitalized terms used but not defined herein have the meaning given such terms
in the Forbearance Agreement, if defined therein, and if not defined in the
Forbearance Agreement, then have the meaning given such terms in the Credit
Agreement (as defined below).

R E C I T A L S:

WHEREAS, the Borrower, the Guarantors and the Lender entered into the
Forbearance Agreement to set forth certain terms and conditions upon which the
Lender would agree to forbear from exercising certain remedies available to it
with respect to various Forbearance Defaults described in the Forbearance
Agreement, which had occurred in connection with that certain Credit Agreement
dated June 27, 2013 between the Borrower and the Lender (as previously amended,
the “Credit Agreement”);

WHEREAS, pursuant to the First Amendment to Forbearance Agreement, the
Forbearance Expiration Date was extended to February 26, 2016 (or such earlier
date on which a Critical Default occurred);

WHEREAS, the Lender is entitled to exercise its remedies with respect to various
Events of Default that have occurred; and

WHEREAS, the Borrower and Lilis Energy, Inc. (“Lilis”) have advised the Lender
that Lilis desires to purchase the Note and the Lender’s Liens on the Borrower’s
property which secure the Note (the “Lilis Sale”), and have requested that the
Lender continue to forbear from exercising its remedies until March 30, 2016 to
provide additional time for Lilis to facilitate such purchase and related
corporate transactions among Lilis and the Borrower;

NOW, THEREFORE, in consideration of the premises and the mutual covenants made
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Borrower, the Guarantors, the Lender and, as
applicable, Lilis agree as follows:

1.           The following definition is hereby added to Section 4.1.1 of the
Forbearance Agreement, and thereby, also to Section 1.1 of the Credit Agreement,
in the proper alphabetical order:

“Second Amendment to Forbearance Agreement” means the Second Amendment to
Forbearance Agreement dated March 9, 2016 by and among the Borrower, the
Guarantors and the Lender, and acknowledged and agreed by Lilis Energy, Inc.,
amending the Forbearance Agreement.

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2.           The following definitions located in Section 4.1.1 of the
Forbearance Agreement and Section 1.1 of the Credit Agreement are hereby amended
and restated in their respective entireties as follows:

“Critical Default” means any of the following:

(a)           the occurrence of an Event of Default under Section 8.1.4 or
Section 8.1.5 of the Credit Agreement;

(b)           the Borrower shall fail to observe or perform any covenant or
agreement contained in Section 2.6.2 of the Forbearance Agreement;

(c)           the Borrower shall fail to observe or perform any covenant or
agreement contained in Section 7.7 of the Credit Agreement;

(d)           any action, suit or proceeding shall be instituted which (i)
relates to the Credit Agreement and names the Lender as a party, or (ii)
prohibits or restricts the consummation of the Lilis Sale; or

(e)           any of the conditions to forbearance set forth in paragraph 4 of
the Second Amendment to Forbearance Agreement shall not be satisfied by the
applicable due date therefor.

“Scheduled Maturity Date” means March 30, 2016.

3.           Section 5.6 of the Forbearance Agreement is hereby amended and
restated in its entirety to read as follows:

“5.6           Expiration of Forbearance Period.  The Forbearance Period will
expire and terminate automatically and without notice upon the earlier to occur
of the Scheduled Maturity Date or the occurrence of any Critical Default (such
earlier date being the “Forbearance Expiration Date”).”

4.           Conditions to Forbearance.  The effectiveness of the agreements of
the Lender set forth in Section 5.1 of the Forbearance Agreement is subject to
the prior satisfaction of each of the following conditions:

(a)           The Lender shall have received a counterpart of this Amendment
duly executed by the Borrower, the Guarantors and Lilis not later than March 9,
2016.

(b)           The Lender shall have received, not later than March 9, 2016, an
estimated budget from the Borrower for the month of March 2016.

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(c)           The Borrower shall have made a payment to the Lender in
immediately available funds in the amount of $86,538.78 as a prepayment of the
non-default and default interest accrued and to be accrued under the Note
through March 29, 2016.  The foregoing payment shall be made in full not later
than March 9, 2016, notwithstanding the amendment of the definition of
“Forbearance Expiration Date” and the use of such defined term as the deadline
for interest payments that would otherwise apply under Section 2.3 of the
Forbearance Agreement.  If the Lilis Sale is consummated prior to March 29,
2016, Lilis will receive a credit on the purchase price for the Note and related
Liens with respect to such prepaid interest for the number of days prior to such
date that the Lilis Sale was consummated.

(d)           No later than March 9, 2016, the Lender shall have received a
payment from the Borrower equal to the total amount of all payments made by the
Lender between March 3, 2016 and March 7, 2016 and on March 9, 2016 to honor
checks written on, or wires originating from, the accounts of the Borrower or
either Guarantor that are maintained with the Lender, which total equals
$121,100.77.  Upon the Lender’s receipt of such payment, the Lender will apply
it, together with $45,691.73 from the Borrower’s deposit account maintained at
the Lender, to the Obligations.  The Borrower consents and agrees to the
Lender’s application of all such amounts toward the Obligations.

(e)           No later than March 9, 2016, the Lender shall have received
reimbursement from the Borrower of the estimated legal fees and expenses of
counsel to the Lender incurred in connection with this Amendment and the
transactions contemplated hereby, which total $17,562.11.

(f)           The Borrower shall liquidate all of its outstanding Hedging
Transactions with Cargill, Incorporated and shall take such actions as may be
necessary to cause Cargill, Incorporated to pay directly over to the Lender all
proceeds of such liquidation for application to the Obligations not later than
March 9, 2016.  The Borrower consents and agrees to the Lender’s application of
all such proceeds toward the Obligations.

(g)           The representations and warranties of the Borrower, the Guarantors
and Lilis contained in this Amendment are true and correct in all material
respects on and as of the date of this Amendment.

(h)           The consummation of this Amendment does not contravene, violate,
or conflict with any Requirements of Law.

(i)           All matters incident to the consummation of this Amendment are
satisfactory to the Lender.

5.           Lilis Actions.  As a material inducement to the Lender’s
willingness to enter into this Amendment and extend the Forbearance Period under
the terms and conditions set forth herein, by its execution hereof, Lilis agrees
to (i) use commercially reasonable efforts to consummate the Lilis Sale on or
prior to March 30, 2016 and (ii) fund the reasonable and necessary operating
expenses of the Borrower pending the closing of the Lilis Sale in an amount to
be agreed upon between Lilis and the Borrower.  The amounts contemplated by
clause (ii) preceding and clauses (c) and (e) of paragraph 4 of this Amendment
shall be in addition to the principal amount of the Note and the amount of the
Lender’s legal fees and expenses incurred in connection herewith which will be
included in the total purchase price for the Note and related Liens.  Lilis
acknowledges and agrees that the Lender would not be willing to enter into this
Amendment but for Lilis’s agreements set forth in this paragraph 5, and that
Lilis will derive material benefit from the extended forbearance period provided
herein in conjunction with the proposed Lilis Sale and related corporate
transactions among Lilis and the Borrower.  Furthermore, Lilis represents and
warrants that it is not aware of the basis for any claims by Lilis against any
of the Released Parties (defined below).

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6.           No Waiver.  No Forbearance Defaults or other Events of Default are
being waived hereby, and all such Forbearance Defaults and other Events of
Default which exist on the date of this Amendment shall continue to exist unless
waived in writing by the Lender after the date of execution of this Amendment.

7.           Representation and Warranties.

(a)           Each of the Borrower and the Guarantors hereby represents and
warrants to the Lender, with the intention that the Lender shall rely thereon
without any investigation or verification by the Lender or its counsel, that
this Amendment has been duly executed and delivered on behalf of the Borrower
and the Guarantors, and that the execution, delivery and performance of this
Amendment has been duly authorized by all necessary action on the part of the
Borrower and the Guarantors.

(b)           Lilis hereby represents and warrants to the Lender, with the
intention that the Lender shall rely thereon without any investigation or
verification by the Lender or its counsel, that this Amendment has been duly
executed and delivered on behalf Lilis, and that the execution, delivery and
performance of this Amendment has been duly authorized by all necessary action
on the part of Lilis.

8.           Further Assurances.  The Borrower and the Guarantors hereby agree
to execute and deliver any and all documents, instruments and agreements, and to
take such other actions, as the Lender may reasonably require to effect the
transactions and arrangements contemplated by this Amendment.

9.           Amendments and Waivers.  Any provision of this Amendment may be
amended or waived (either generally or in a particular instance and either
retroactively or prospectively) by a written instrument signed by each party
hereto.  Delivery of an executed counterpart of such written instrument by
telecopy, e-mail, facsimile or other electronic means shall be effective
delivery of a manually executed counterpart of such written instrument.

10.           Highest Lawful Interest Rate.  Nothing in the Forbearance
Agreement, as amended hereby, shall be construed or interpreted to be in
violation of Section 9.2 of the Credit Agreement.

11.           Expenses.  The Borrower agrees to pay the expenses of the Lender
incurred in connection with the preparation and negotiation of this Amendment in
accordance with Section 9.4 of the Credit Agreement.

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12.           Conditions Precedent for the Benefit of Lender.  All of the
conditions precedent to the obligations of the Lender set forth in this
Amendment are solely for the benefit of the Lender, and no Person other than the
Lender may rely thereon or insist on compliance therewith.

13.           GOVERNING LAW.  This Amendment has been negotiated, is being
executed and delivered, and will be performed in whole or in part, in the State
of Texas.  This Amendment and any litigation between the parties (whether
grounded in contract, tort, statute, law or equity) shall be governed by,
construed in accordance with, and interpreted and enforced pursuant to the Laws
of the State of Texas (and the applicable federal Laws of the United States of
America) without giving effect to its choice of law principles.

14.           NO DEFENSES OF BORROWER OR GUARANTORS.  The Borrower and the
Guarantors each stipulate, warrant, represent and agree that, as of the date of
this Amendment, it has no defenses against its obligations to pay any of the
Obligations or to pay its Guaranty, as applicable, or to pay any other amount
due and owing to the Lender pursuant to the Loan Documents.  The Borrower and
the Guarantors each acknowledge, warrant and agree that the Lender has acted in
good faith in all respects as to the Loan Documents and this Amendment, and has
conducted in a commercially reasonable manner its relationship with the Borrower
and the Guarantors in connection with the Loan Documents and this Amendment, and
the Borrower and the Guarantors hereby waive and release any claims to the
contrary.

15.           RELEASE OF CLAIMS.  The Borrower and the Guarantors, each for
itself, its successors and assigns, and all those at interest therewith
(collectively, the “Releasing Parties”), jointly and severally, hereby
voluntarily and forever, RELEASE, DISCHARGE AND ACQUIT the Lender and its
officers, directors, shareholders, employees, agents, counsel, successors,
assigns, representatives, affiliates and insurers (sometimes referred to below
collectively as the “Released Parties”) and all those at interest therewith of
and from any and all claims, causes of action, liabilities, damages, costs
(including, without limitation, attorneys’ fees and all costs of court or other
proceedings), and losses of every kind or nature at this time known or unknown,
direct or indirect, fixed or contingent, which the Releasing Parties have or
hereafter may have arising out of any act, occurrence, transaction or omission
occurring from the beginning of time to the date of this Amendment if related to
the Note, the Credit Agreement or the other Loan Documents or any actions taken
by any of the Released Parties in connection therewith (the “Released Claims”),
except the future duties and obligations of the Lender under the Loan Documents
and the future rights of the Borrower and the Guarantors to their respective
funds on deposit with the Lender shall not be included in the term Released
Claims.  IT IS THE EXPRESS INTENT OF THE RELEASING PARTIES THAT THE RELEASED
CLAIMS SHALL INCLUDE ANY CLAIMS OR CAUSES OF ACTION ARISING FROM OR ATTRIBUTABLE
TO THE NEGLIGENCE, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY OF THE RELEASED
PARTIES.

16.           Access to Counsel; Understanding of Terms; No Commitment to
Renew.  By execution of this Amendment, each of the Borrower, the Guarantors and
Lilis severally (but not jointly) warrants and represents to the Lender that (i)
it was represented by (or had the opportunity to be represented by) counsel of
its own selection; (ii) it understands the terms of this Amendment; and (iii)
there is no commitment of the Lender or any other party for a renewal,
extension, or modification of the Credit Agreement, the Note or the Forbearance
Agreement in the future on any terms whatsoever.  This Amendment has been
reviewed and negotiated by sophisticated parties with access to legal counsel,
and no rule of construction shall apply hereto or thereto which would require or
allow this Amendment to be construed against any party because of its role in
drafting this Amendment.

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17.           Conditions to Effectiveness.  This Amendment shall be effective
upon its execution by the Borrower, the Guarantors, the Lender and Lilis and the
receipt thereof by the Lender.

18.           Counterparts.  This Amendment may be executed in a number of
counterparts, each of which shall be an original and all of which together shall
constitute one and the same instrument.  Delivery of an executed counterpart of
a signature page of this Amendment by telecopy, e-mail, facsimile or other
electronic means shall be effective as a delivery of a manually executed
counterpart of this Amendment.

19.           Effect.  This Amendment is one of the Loan Documents.  Except as
expressly provided hereby, the Credit Agreement, the Forbearance Agreement and
the other Loan Documents shall remain unchanged and in full force and effect.

[Signature page follows]

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ENTIRE AGREEMENT.  THE FORBEARANCE AGREEMENT, AS AMENDED BY THIS AMENDMENT,
CONSTITUTES THE ENTIRE AGREEMENT BETWEEN THE PARTIES HERETO WITH RESPECT TO THE
SUBJECT HEREOF AND SHALL SUPERSEDE ANY PRIOR AGREEMENT BETWEEN THE PARTIES
HERETO, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT HEREOF.  FURTHERMORE,
IN THIS REGARD, THIS FORBEARANCE AGREEMENT, AS AMENDED BY THIS AMENDMENT, 
REPRESENTS THE FINAL AGREEMENT AMONG THE PARTIES THERETO AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF SUCH PARTIES.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG SUCH PARTIES.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed as of the date first set forth above.

 
BORROWER:
 
BRUSHY RESOURCES, INC.
       
By:
/s/ Michael J. Pawelek
 
Name:
Michael J. Pawelek
 
Title:
Chief Executive Officer
       
GUARANTORS:
 
IMPETRO RESOURCES, LLC
       
By:
/s/ Michael J. Pawelek
 
Name:
Michael J. Pawelek
 
Title:
President and Chief Executive Officer
       
IMPETRO OPERATING, LLC
       
By
/s/ Michael J. Pawelek
 
Name:
Michael J. Pawelek
 
Title:
Chief Executive Officer

[Signature pages continue]
Signature Page to Brushy Resources, Inc.
Second Amendment to Forbearance Agreement
(Independent Bank)

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LENDER:
 
INDEPENDENT BANK
       
By:
/s/ John E. Davis
 
Name:
John E. Davis
 
Title:
Executive Vice President

[Signature pages continue]

Signature Page to Brushy Resources, Inc.
Second Amendment to Forbearance Agreement
(Independent Bank)

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Executed and agreed for purposes of being bound by the provisions of the
foregoing Amendment, including without limitation paragraph 5 thereof:

 
LILIS ENERGY, INC.
       
By:
     
/s/ Abraham Mirman
 
Name:
Abraham Mirman
 
Title:
Chief Executive Officer

 
Signature Page to Brushy Resources, Inc.
Second Amendment to Forbearance Agreement
(Independent Bank)

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