Exhibit 10.4

 

Execution Version

 

AMENDMENT NO. 4 TO CREDIT AGREEMENT

 

This Amendment No. 4 to Credit Agreement (this “Amendment”) dated as of January
31, 2018 (the “Effective Date”) is among Lilis Energy, Inc. (the “Borrower”),
certain subsidiaries of the Borrower party hereto (each, a “Guarantor” and
collectively, the “Guarantors”), Wilmington Trust, National Association, as
administrative agent (the “Administrative Agent”), Värde Partners, Inc.,
(“Värde”) in its capacity as the Lead Lender (as defined in the Credit Agreement
(as defined below)) and the other Lenders (as defined below) party hereto.

 

INTRODUCTION

 

Whereas, the Borrower, the Guarantors, the Administrative Agent, Värde as the
Lead Lender (as defined therein) and the other lenders party thereto from time
to time (the “Lenders”) are parties to that certain Credit Agreement dated as of
April 26, 2017 (as amended, restated, amended and restated, supplemented or
otherwise modified from time to time, the “Credit Agreement”).

 

Whereas, the Borrower has requested that Administrative Agent and the Lenders
amend the Credit Agreement in certain respects as set forth herein, and the
Administrative Agent and the Lenders have agreed to the foregoing, on the terms
and conditions set forth herein.

 

NOW THEREFORE, in consideration of the premises and the mutual covenants,
representations and warranties contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:

 

Section 1.          Defined Terms; Other Definitional Provisions. As used in
this Amendment, each of the terms defined in the opening paragraph and the
Recitals above shall have the meanings assigned to such terms therein. Each term
defined in the Credit Agreement and used herein without definition shall have
the meaning assigned to such term in the Credit Agreement, unless expressly
provided to the contrary. Article, Section, Schedule, and Exhibit references are
to Articles and Sections of and Schedules and Exhibits to this Amendment, unless
otherwise specified. The words “hereof”, “herein”, and “hereunder” and words of
similar import when used in this Amendment shall refer to this Amendment as a
whole and not to any particular provision of this Amendment. The term
“including” means “including, without limitation”. Paragraph headings have been
inserted in this Amendment as a matter of convenience for reference only and it
is agreed that such paragraph headings are not a part of this Amendment and
shall not be used in the interpretation of any provision of this Amendment.

 

Section 2.          Amendments to the Credit Agreement. Subject to the
satisfaction of the conditions set forth in Section 4 below, and in reliance on
the representations and warranties contained in Section 3 below, the Credit
Agreement is hereby amended as follows:

 

(a)          The Credit Agreement is hereby amended by deleting the following
definitions: “Existing Agent”, “Existing First Lien Debt” and all references
thereto (other than references set forth in Section 6.15 and Article VIII clause
(f), which shall be amended as set forth in clause (q) below), and “Existing
First Lien Loan Documents”.

 

(b)          Section 1.01 of the Credit Agreement is hereby amended by inserting
the following definitions in the appropriate alphabetical order:

 

“Amendment No. 4 Effective Date” means January 31, 2018.

 

 

 

 

“Permitted First Lien Credit Agreement” means that certain Credit Agreement,
dated as of the Amendment No. 4 Effective Date (as amended, restated, amended
and restated, supplemented or otherwise modified in accordance with the Approved
Permitted First Lien Intercreditor Agreement, in each case, from time to time)
among the Borrower, Permitted First Lien Credit Agreement Agent, as
administrative agent, the guarantors party thereto from time to time and the
lenders party thereto from time to time.

 

“Permitted First Lien Credit Agreement Agent” means Riverstone Credit Management
LLC and its successors, sub-agents and permitted assigns.

 

“Permitted First Lien Credit Agreement Liens” means Liens securing the Permitted
First Lien Credit Agreement Obligations.

 

“Permitted First Lien Credit Agreement Obligations” means the “Obligations” as
defined under the Permitted First Lien Credit Agreement.

 

“Permitted First Lien Debt” has the meaning assigned to such term in Section
6.02(i).

 

“Permitted First Lien Loan Documents” means the “Credit Documents” as defined
under the Permitted First Lien Credit Agreement.

 

“Specified Preferred Stock” means Capital Stock of the Borrower that (a) is
perpetual preferred stock, (b) is not Disqualified Stock, (c) does not require
the scheduled payments of dividends in cash, cash equivalents or Permitted
Investments prior to April 26, 2021 (it being understood, for the avoidance of
doubt, that dividends in the form of additional Specified Preferred Stock or
accrual to the stated value or liquidation preference thereof are permitted) and
(d) is not and does not become convertible into or exchangeable for Indebtedness
or any other Capital Stock that would (i) constitute Disqualified Stock or (ii)
provide for the required scheduled payments of dividends in cash, cash
equivalents or Permitted Investments prior to April 26, 2021.

 

(c)          Section 1.01 of the Credit Agreement is hereby amended by amending
and restating the following definitions in their entirety as set forth below:

 

“Approved Permitted First Lien Intercreditor Agreement” means that certain
Amended and Restated Intercreditor Agreement, dated as of the Amendment No. 4
Effective Date, by and among the Permitted First Lien Credit Agreement Agent,
the Administrative Agent and the Borrower.

 

“Approved Permitted RBL Intercreditor Agreement” means a customary intercreditor
agreement in form and substance satisfactory to the Lead Lender and the
Administrative Agent, which shall (a) at any time prior to the occurrence of the
Lender Conversions, limit the principal amount of the applicable Permitted First
Lien Debt to an amount not to exceed $50,000,000 (excluding, for the avoidance
of doubt, the amount of any customary secured hedge and cash management
obligations that are permitted under both the Permitted RBL Credit Agreement and
this Agreement), and (b) contain other customary terms and provisions acceptable
to the Lead Lender and the Administrative Agent; provided that any such Approved
Intercreditor Agreement shall contain a provision which permits the Lenders to
purchase the Indebtedness under the Permitted RBL Credit Agreement (which shall
include any hedge and cash management obligations thereunder), at par plus
accrued and unpaid interest and such buy-out right shall be triggered upon an
event of default under the Permitted RBL Credit Agreement that is not cured, or
waived by the lenders providing such Indebtedness, within a specified period and
will otherwise be on customary terms acceptable to the Lead Lender and the
Administrative Agent.

 

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“Change of Control” means:

 

(a)          any “person” or “group” (as such terms are used in sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)), other than any Lender or any Related Party thereof, is or becomes the
beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
except that such person or group shall be deemed to have “beneficial ownership”
(within the meaning of Rule 13d-3 under the Exchange Act) of all shares that
such person or group has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of more
than 35% of the total voting power of the outstanding Capital Stock (excluding
(i) any issuance or conversion of any debt securities or other debt convertible
into equity, and (ii) the issuance or conversion of any Specified Preferred
Stock) normally entitled to vote in the election of directors (“Voting Stock”)
of the Borrower (or its successor by merger, consolidation or purchase of all or
substantially all of its assets);

 

(b)          except as permitted by Section 6.04, a disposition by Borrower or a
Subsidiary pursuant to which Borrower or any Subsidiary sells, leases, licenses,
transfers, assigns or otherwise Disposes, in one transaction or a series of
related transactions, all or substantially all of the properties and assets of
Borrower and its Subsidiaries taken as a whole;

 

(c)          the Borrower’s stockholders approve any plan relating to the
liquidation or dissolution of the Borrower; or

 

(d)          the occurrence of a “Change of Control” as such term is defined in
the Permitted RBL Credit Agreement or the Permitted First Lien Credit Agreement.

 

“Control Agreement” means a deposit account, securities or commodity account
control agreement, as applicable, to be executed and delivered among any Credit
Party, the Administrative Agent, the Permitted First Lien Credit Agreement Agent
(prior to Payment in Full (as defined in the Permitted First Lien Credit
Agreement)) and each bank at which such Credit Party maintains, any deposit,
securities or commodity account, in each case, in form and substance reasonably
acceptable to the Administrative Agent and the Lead Lender, as the same may be
amended, restated, supplemented or otherwise modified from time to time.

 

“Disqualified Stock” means any Capital Stock which, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event (other than as a result of any
change of control or asset sale or if otherwise permitted pursuant to the terms
hereof (including as a result of any waiver or consent hereunder)), matures or
is mandatorily redeemable for any consideration other than other Capital Stock
(which would not constitute Disqualified Stock), pursuant to a sinking fund
obligation or otherwise, or is redeemable for any consideration other than other
Capital Stock (which would not constitute Disqualified Stock) at the sole option
of the holder thereof, in whole or in part, on or prior to the date that is
ninety one (91) days after the Maturity Date.

 

 3 

 

 

“Net Cash Proceeds” means, (A) with respect to any Casualty Event or any
Disposition or series of related Dispositions of any assets (including any Oil
and Gas Property and Capital Stock of any Subsidiary) by the Borrower or any
Subsidiary, the excess, if any, of (a) the sum of cash and Cash Equivalents
received in connection with such Casualty Event or such Disposition or
Dispositions, but only as and when so received, over (b) the sum of (i) the
principal amount of any Indebtedness and any repayment or prepayment premiums,
and any interest or fees (to the extent not provided for in clause (ii) below)
in respect thereof that is secured by such asset or assets and that is required
to be repaid in connection with such Casualty Event or such Disposition or
Dispositions (other than the Loans), (ii) the reasonable and documented
out-of-pocket expenses (including Taxes, brokers fees, commissions and legal
fees) incurred by the Borrower or such Subsidiary in connection with such
Casualty Event or such Disposition or Dispositions, and (iii) amounts provided
as a reserve, in accordance with GAAP, against any liabilities under
indemnification obligations or purchase price adjustments; provided that to the
extent that, and at the time that, any such amounts are released from such
reserves, such amounts shall constitute Net Cash Proceeds) (B) with respect to
any Hedge Modification by the Borrower or any Subsidiary, the excess, if any, of
(a) the sum of cash and Cash Equivalents received in connection with such Hedge
Modification (after giving effect to any netting arrangements), over (b) the
out-of-pocket expenses (including Taxes) incurred by the Borrower or such
Subsidiary in connection with such Hedge Modification, and (C) with respect to
any issuance or incurrence of Indebtedness that is not permitted by Section
6.02, the cash proceeds thereof, net of reasonable expenses (including Taxes,
brokers fees, commissions and legal fees) incurred by the Borrower or such
Subsidiary in connection therewith.

 

“Permitted RBL Credit Agreement” means a conforming, reserve based revolving
credit facility in an aggregate principal amount not to exceed $50,000,000
(which shall be provided by one or more reserve-based lending financial
institutions who regularly provide such facilities (e.g., commercial banks,
investment banks and their affiliates but not hedge funds or other alternative
capital providers) and shall contain a borrowing base based on customary advance
rates for oil and gas reserves consistent with customary reserve based lending
practices); provided that such $50,000,000 cap shall only apply prior to the
occurrence of the Lender Conversions and, for the avoidance of doubt, shall not
be reduced by the amount of any customary secured hedge and cash management
obligations that are permitted under both the “Permitted RBL Credit Agreement”
and this Agreement; provided further, that the Borrower shall only be permitted
to incur any Indebtedness under the Permitted RBL Credit Agreement after or
substantially contemporaneously with the indefeasible payment in full of the
Permitted First Lien Credit Agreement Obligations and termination of the
Permitted First Lien Credit Agreement.

 

“Permitted Senior Liens” means (i) following the payment in full of the
Permitted First Lien Credit Agreement Obligations and termination of the
Permitted First Lien Credit Agreement, the Permitted RBL Liens and (ii) prior to
the payment in full of the Permitted First Lien Credit Agreement Obligations and
termination of the Permitted First Lien Credit Agreement, the Permitted First
Lien Credit Agreement Liens.

 

“Total Funded Debt” means, as of any date, the sum of any Indebtedness
outstanding consisting of Revolving Debt, Permitted First Lien Debt, the
Obligations and any other Indebtedness of the Credit Parties of the type
specified in clauses (a), (b), (d) (to the extent due and owing) and (e) of the
definition of Indebtedness.

 

(d)          Section 2.06(a) of the Credit Agreement is hereby amended by
replacing all references to “March 31, 2019” with “September 30, 2020”:

 

(e)          Section 2.07(a) of the Credit Agreement is hereby amended by
amending and restating such Section 2.07(a) in its entirety as set forth below:

 

 4 

 

 

(a)          Unless the Majority Lenders shall agree in writing that no
prepayment of the Loans is required pursuant to this Section 2.07, subject to
any Approved Intercreditor Agreement, if any Credit Party shall consummate any
Asset Sale, receive any Net Cash Proceeds from a Casualty Event or incur any
Indebtedness (other than Indebtedness expressly permitted under Section 6.02)
(each such event, a “Prepayment Event”), then, not later than two (2) Business
Days after such Prepayment Event, the Borrower shall provide written notice to
the Administrative Agent in accordance with Section 2.07(c) and, subject to
Section 2.07(d), (i) apply all or any portion of such Net Cash Proceeds to the
repayment of Loans and the payment of accrued and unpaid interest and the
Make-Whole Amount payable under Section 2.09, and/or (ii) in the case of any
Asset Sale or Casualty Event, elect (by written notice to the Administrative
Agent and the Lead Lender) to reinvest all or any portion of such Net Cash
Proceeds in Additional Assets; provided that if all or any portion of such Net
Cash Proceeds are not so used to reinvest in Additional Assets within 180 days,
the Borrower shall provide written notice to the Administrative Agent in
accordance with Section 2.07(c) and, subject to Section 2.07(d), the remaining
portion of such Net Cash Proceeds shall be applied on the last date of such
period to the prepayment of Loans; provided further that notwithstanding
anything herein to the contrary, any Net Cash Proceeds received from (1) any
Asset Sale or Casualty Event that are not reinvested pursuant to this Section
2.07(a) or reinvested as otherwise permitted pursuant to the Permitted First
Lien Credit Agreement, or (2) any Indebtedness (other than Indebtedness
expressly permitted under Section 6.02), shall be applied first to repay the
Permitted First Lien Obligations and when such Permitted First Lien Obligations
are repaid in full, any remaining Net Cash Proceeds shall, subject to Section
2.07(d), be applied to the repayment of Loans and the payment of accrued and
unpaid interest and the Make-Whole Amount payable under Section 2.09. The
provisions of this Section 2.07(a) do not constitute a consent to any
Disposition or the incurrence of any Indebtedness by any Credit Party.

 

(f)           Section 3.07 of the Credit Agreement is hereby amended by
restating the second sentence thereof in its entirety as set forth below:

 

As of the Amendment No. 4 Effective Date, the Borrower and each Subsidiary is in
compliance with the Permitted First Lien Loan Documents and the execution,
delivery and performance of the Loan Documents will not constitute a violation
of any Permitted First Lien Loan Document.

 

(g)          Section 5.02(g) of the Credit Agreement is hereby amended by
amending and restating such Section 5.02(g) in its entirety as set forth below:

 

(g)          promptly following the execution and delivery thereof, copies of
(i) any amendment, modification, waiver or other change to the Permitted First
Lien Credit Agreement or the Permitted RBL Credit Agreement, together with a
certificate of a Responsible Officer certifying that such copies are true,
correct and complete as of the date of delivery and (ii) all certificates,
compliance certificates, reserve reports, financial statements, and required
notifications required to be delivered to the Permitted First Lien Credit
Agreement Agent under the Permitted First Lien Credit Agreement;

 

(h)          Section 5.02(h) of the Credit Agreement is hereby amended by
amending and restating such Section 5.02(h) in its entirety as set forth below:

 

(h)          promptly following the furnishing or receipt thereof, copies of any
default notices under the Permitted First Lien Credit Agreement or the Permitted
RBL Credit Agreement not otherwise required to be furnished to the Lenders
pursuant to any other provisions of this Agreement; and

 

 5 

 

 

(i)           Section 5.10 of the Credit Agreement is hereby amended by adding a
new Section 5.10(c), which shall read in its entirety as set forth below:

 

(c)          To the extent required by the Permitted First Lien Credit
Agreement, the Borrower will, and will cause each Subsidiary and each Affiliate
of the Borrower that is an operator of any Oil and Gas Properties of the
Borrower or any of its Subsidiaries to either (i) add the Administrative Agent
as a party to any operator lien waiver agreement executed in favor of the
Permitted First Lien Credit Agreement Agent, or (ii) provide a lien waiver to
the Administrative Agent in substantially the same form as has been provided to
the Permitted First Lien Credit Agreement.

 

(i)           Section 5.14 of the Credit Agreement is hereby amended by adding
the following sentence at the end thereof:

 

Notwithstanding the foregoing, and subject to the covenant set forth in Section
5.18(d), the requirements set forth in this Section 5.14 shall not apply to
ImPetro Oil & Gas, LLC, a New Mexico limited liability company.

 

(j)           Section 5.15 of the Credit Agreement is hereby amended by adding
the following sentence at the end thereof:

 

Notwithstanding the foregoing, and subject to the covenant set forth in Section
5.18(d), the requirements set forth in this Section 5.15 shall not apply to
ImPetro Oil & Gas, LLC, a New Mexico limited liability company.

 

(k)          Section 5.17(c) of the Credit Agreement is hereby amended by
amending and restating such Section 5.17(c) in its entirety as set forth below:

 

(c)          Notwithstanding anything herein to the contrary, (i) if at any time
any Collateral pledged to secure the Revolving Debt Obligations or Permitted
First Lien Credit Agreement Obligations is not also pledged to secure the
Obligations, the Borrower will, and will cause each Subsidiary to, pledge such
Collateral to secure the Obligations and (ii) if at any time any Subsidiary
guaranteeing any Revolving Debt Obligations or Permitted First Lien Credit
Agreement Obligations is not also Guaranteeing the Obligations, the Borrower
will cause such Subsidiary to Guarantee the Obligations, in each case, on the
terms set forth in the Approved Permitted First Lien Intercreditor Agreement.

 

(l)           Section 5.18 of the Credit Agreement is hereby amended by adding a
new clause (d) to the end thereof as set forth below:

 

(d)          Within 60 days after the Amendment No. 4 Effective Date (or such
longer time period as the Lead Lender may permit in its sole discretion), the
Borrower covenants and agrees to have caused either (i) ImPetro Oil & Gas, LLC,
a New Mexico limited liability company (“ImPetro Oil & Gas”), to execute and
deliver to the Administrative Agent a Counterpart Agreement in the form of
Exhibit C to the Credit Agreement or (ii) ImPetro Oil & Gas to dissolve and
cause all permits and licenses in the name thereof to have been transferred to
ImPetro Operating LLC, a Delaware limited liability company.

 

 6 

 

 

(m)         Section 6.02(i) of the Credit Agreement is hereby amended by
amending and restating such Section 6.02(i) in its entirety as set forth below:

 

(i)          (A) following the payment in full of the Permitted First Lien
Credit Agreement Obligations and termination of the Permitted First Lien Credit
Agreement, Indebtedness under the Permitted RBL Credit Agreement in an aggregate
principal amount not to exceed $50,000,000 plus any customary secured hedge and
cash management obligations that are permitted thereunder and hereunder (the
“Revolving Debt”) and (B) prior to the payment in full of the Permitted First
Lien Credit Agreement Obligations and termination of the Permitted First Lien
Credit Agreement, Indebtedness under the Permitted First Lien Credit Agreement
in an aggregate principal amount not to exceed $50,000,000 plus any customary
secured hedge obligations that are permitted thereunder and hereunder (the
“Permitted First Lien Debt”); provided that such Indebtedness permitted by this
Section 6.02(i) shall at all times be subject to an Approved Intercreditor
Agreement;

 

(n)          Section 6.03(g) of the Credit Agreement is hereby amended by
amending and restating such Section 6.03(g) in its entirety as set forth below:

 

(g)          the Permitted Senior Liens and any Liens securing any secured hedge
and cash management obligations that are permitted under the Permitted RBL
Credit Agreement or the Permitted First Lien Credit Agreement, as applicable,
and hereunder, in each case, subject to an Approved Intercreditor Agreement;

 

(o)          Section 6.09(a) of the Credit Agreement is hereby amended by
amending and restating such Section 6.09(a) in its entirety as set forth below:

 

(a)          the declaration and payment of dividends or distributions by the
Borrower (a) solely in Capital Stock (other than Disqualified Stock and
Specified Preferred Stock) of the Borrower, (b) solely in Capital Stock
constituting Specified Preferred Stock and (c) in cash in lieu of the issuance
of fractional shares of Capital Stock in connection with any transaction
permitted under this Agreement;

 

(p)          Section 6.10(b) of the Credit Agreement is hereby amended by
amending and restating such Section 6.10(b) in its entirety as set forth below:

 

(b)          the Affiliate Transaction is on terms that are no less favorable to
the Borrower or the relevant Subsidiary than those that would have been obtained
in a comparable transaction by the Borrower or such Subsidiary with an unrelated
Person and the Borrower delivers to the Administrative Agent, if requested by
the Lead Lender, a resolution of the Board of Directors of the Borrower set
forth in an officers’ certificate certifying that such Affiliate Transaction or
series of related Affiliate Transactions complies with this covenant and that
such Affiliate Transaction or series of related Affiliate Transactions has been
approved by a majority of the disinterested members of the Board of Directors of
the Borrower (or by a committee formed by such Board of Directors).

 

(q)          Clause (i) of the proviso at the end of Section 6.11 of the Credit
Agreement is hereby amended by adding the words “the documentation evidencing
the Specified Preferred Stock,” immediately before “any Loan Documents,
Revolving Loan Documents or Existing First Lien Loan Documents”.

 

(r)           Section 6.11 of the Credit Agreement is hereby amended by
replacing the reference to “Existing First Lien Loan Documents” with “Permitted
First Lien Loan Documents”.

 

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(s)          Section 6.13 of the Credit Agreement is hereby amended by amending
and restating such Section 6.13 in its entirety as set forth below:

 

Section 6.13         Certain Amendments to Organizational Documents. The
Borrower will not, nor will it permit any of its Subsidiaries to enter into or
permit any modification or amendment of, or waive any material right or
obligation of any Person under its Organizational Documents if the effect
thereof would be materially adverse to the Administrative Agent or any Lender;
provided that nothing in this Section 6.13 shall prohibit any modification of
the organizational documents of the Borrower in connection with the issuance or
conversion of the Specified Preferred Stock.

 

(t)           Section 6.15 and Article VIII clause (f) of the Credit Agreement
is hereby amended by replacing all references to “Existing First Lien Debt” with
“Permitted First Lien Debt”.

 

(u)          Section 6.18 of the Credit Agreement is hereby amended by amending
and restating such Section 6.18 in its entirety as set forth below:

 

Section 6.18         Permitted First Lien Loan Documents. The Borrower will not,
nor will it permit any of its Subsidiaries to, enter into or permit any
modification or amendment of or waive any material right or obligation of any
Person under any Permitted First Lien Loan Document or Revolving Loan Document,
in each case, except in accordance with the applicable Approved Intercreditor
Agreement. Furthermore, the Borrower will not, nor will it permit any of its
Subsidiaries to, (a) enter into or permit any amendment or Replacement (as
defined in the applicable Approved Intercreditor Agreement) of, or waiver or
consent to, any Permitted First Lien Document or Revolving Loan Document or (b)
incur, create, assume or suffer to exist any Priority Lien Obligations (as
defined in the applicable Approved Intercreditor Agreement), including pursuant
to any Replacement, in each case, in violation of the applicable Approved
Intercreditor Agreement, including, without limitation, Sections 4.04 and 4.05
thereto.

 

(v)         Article VI of the Credit Agreement is hereby amended by adding a new
Section 6.19 after Section 6.18 as set forth below:

 

Section 6.19         Subsidiaries. The Borrower will not, and will not permit
any Subsidiary to, create or acquire any additional Subsidiary unless the
Borrower complies with Section 5.14. The Borrower will not, and will not permit
any Subsidiary to, sell, assign or otherwise dispose of any Capital Stock in any
Subsidiary except (a) to the Borrower or any other Subsidiary or (b) in
compliance with Section 6.05. The Borrower will not, and will not permit any
Person other than the Borrower or one of its Subsidiaries, to own any Capital
Stock in any Subsidiary.

 

(w)         Article VI of the Credit Agreement is hereby amended by adding a new
Section 6.20 after Section 6.19 as set forth below:

 

Section 6.20         Control Agreements. The Borrower will not, and will not
permit any of the Subsidiaries to, at any time (a) establish or maintain a
deposit account, securities account or commodity account (other than Excluded
Accounts) without executing and delivering to Administrative Agent a Control
Agreement in form and substance reasonably satisfactory to the Lead Lender and
the Administrative Agent covering the applicable deposit account, securities
account or commodity account as provided in Section 5.16 and (b) deposit
Collateral (including the proceeds thereof), cash receipts, or the proceeds of
Loans in a deposit account, securities account or commodity account (other than
Excluded Accounts) that is not subject to a Control Agreement; provided that, to
the extent not already in compliance in this Section 6.20 on the Amendment No. 4
Effective Date, the Borrower shall have thirty (30) days following the Amendment
No. 4 Effective Date (or such later date that the Leading Lender may agree in
its sole discretion) to get in compliance with this Section 6.20.

 

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(x)          Article VIII clause (p) of the Credit Agreement is hereby amended
by amending and restating such clause (p) in its entirety as set forth below:

 

(p)          an “Event of Default” under and as defined in the Permitted RBL
Credit Agreement or the Permitted First Lien Credit Agreement, as applicable,
shall have occurred and be continuing, it being understood that if any such
“Event of Default” has occurred as a result of the Borrower’s breach of a
financial covenant, and the Borrower elects to cure and does cure such breach
using its equity cure rights under the Permitted RBL Credit Agreement or the
Permitted First Lien Credit Agreement, as applicable, in accordance with the
terms thereof, such breach of such financial covenant shall not constitute an
Event of Default hereunder; or

 

(y)          Clause (a)(ii) of Section 10.01(a) of the Credit Agreement is
hereby amended by amending and restating the information immediately after “with
a copy to” in such clause (a)(ii) in its entirety as set forth below:

 

Ballard Spahr LLP

Attention: Mark Dietzen

2000 IDS Center, 80 South 8th St.

Minneapolis, MN 55402

Facsimile: (612) 371-3207

Email: dietzenm@ballardspahr.com

 

(z)          Clause (a)(iii) of Section 10.01(a) of the Credit Agreement is
hereby amended by amending and restating the information immediately after “with
a copy to” in such clause (a)(iii) in its entirety as set forth below:

 

Kirkland & Ellis LLP

Attn: Lucas E. Spivey, P.C.

609 Main Street, Suite 4700

Houston, TX 77002

Tel: 713 836 3640

Email: lucas.spivey@kirkland.com; and

 

(aa)        The first sentence of the second paragraph of Section 10.18 of the
Credit Agreement is hereby amended by adding the following immediately before
the period at the end of such sentence: “provided, however, that,
notwithstanding the foregoing, if the Borrower issues any Specified Preferred
Stock to the Lead Lender and/or any of its Affiliates, then the number of
directors the Lenders shall have the right to appoint pursuant to this Section
10.18 shall in no event exceed one (1)”.

 

(bb)       Schedule 11.01 of the Credit Agreement is hereby amended by inserting
the following definition in the appropriate alphabetical order:

 

“Public Offering Amount” shall mean (i) at any time prior to the issuance of any
Specified Preferred Stock to the Lead Lender and/or any of its Affiliates,
$50,000,000, and (ii) at any time on or after the issuance of any Specified
Preferred Stock to the Lead Lender and/or any of its Affiliates, $100,000,000.

 

 9 

 

 

(cc)        The definition of “Additional Shares of Common Stock” in Schedule
11.01 to the Credit Agreement is hereby amended by:

 

(i)          amending and restating clause (v) of such definition in its
entirety as set forth below:

 

(v)         shares of Common Stock, Options or Convertible Securities issued by
the Borrower in one or more underwritten public offerings for cash following the
Effective Date for gross proceeds in an amount up to the Public Offering Amount;

 

(iii)        amending and restating clause (vi) of such definition in its
entirety as set forth below:

 

(vi)        shares of Common Stock, Options or Convertible Securities issued
pursuant to the acquisition by the Borrower or any of its Subsidiaries of
another Person or any assets of any other Person, whether by merger, purchase or
otherwise which issuance either (A) is consented to by the Lead Lender or (B)
consists of Common Stock issued as consideration for the Specified Transaction
(as defined in the Permitted First Lien Credit Agreement as in effect on the
Amendment No. 4 Effective Date); or

 

; and

 

(iv)        adding a new clause (vii) at the end of such definition as set forth
below:

 

(vii)       (A) shares of Specified Preferred Stock issued to the Lead Lender
and/or any of its Affiliates, (B) shares of Common Stock or Convertible
Securities issued upon conversion of shares of Specified Preferred Stock issued
to the Lead Lender and/or any of its Affiliates or any such Convertible
Securities or (C) shares of Specified Preferred Stock, Common Stock, Options or
Convertible Securities issued (or increases in the stated (or similar) amount
thereof) as a dividend or distribution on shares of such Specified Preferred
Stock or on any Convertible Securities issued upon conversion of shares of such
Specified Preferred Stock.

 

Section 3.          Representations and Warranties. Each Credit Party hereby
represents and warrants that: (a) after giving effect to this Amendment, the
representations and warranties contained in Article III of the Credit Agreement
and in each other Loan Document are true and correct in all material respects,
except for any representation and warranty that is qualified by materiality or
reference to Material Adverse Effect, which such representation and warranty
shall be true and correct in all respects, on and as of the Effective Date,
except to the extent that such representations and warranties specifically refer
to an earlier date, in which case they shall be true and correct in all material
respects, except for any representation and warranty that is qualified by
materiality or reference to Material Adverse Effect, which such representation
and warranty shall be true and correct in all respects, as of such earlier date;
(b) after giving effect to this Amendment, no Default has occurred and is
continuing; (c) the execution, delivery and performance of this Amendment are
within the corporate or limited liability company power and authority of such
Credit Party and have been duly authorized by appropriate corporate or limited
liability company action and proceedings; (d) this Amendment constitutes the
legal, valid, and binding obligation of such Credit Party enforceable in
accordance with its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting the rights of
creditors generally and general principles of equity; (e) there are no
governmental or other third party consents, licenses and approvals required in
connection with the execution, delivery, performance, validity and
enforceability of this Amendment; and (f) the Liens under the Loan Documents are
valid and subsisting and secure the Credit Parties’ obligations under such Loan
Documents.

 

 10 

 

 

Section 4.          Conditions to Effectiveness. This Amendment shall become
effective on the Effective Date and enforceable against the parties hereto upon
the satisfaction of the following conditions precedent:

 

(a)          the Administrative Agent and the Lead Lender shall have received
this Amendment duly executed by the Borrower, the Guarantors, the Administrative
Agent, the Lenders party hereto (which constitute all Lenders party to the
Credit Agreement) and the Lead Lender;

 

(b)          the Borrower shall have paid on or about the Effective Date all
costs and expenses which are payable pursuant to Section 10.03 of the Credit
Agreement and which have been invoiced no later than one Business Days prior to
the date hereof; and

 

(c)          the Lead Lender and the Administrative Agent shall have received
executed copies of the Permitted First Lien Credit Agreement and all Credit
Documents (as defined therein).

 

Section 5.          Acknowledgments and Agreements.

 

(a)          RESERVED.

 

(b)          The Lead Lender and the Lenders party hereto hereby waive (i) any
Default or Event of Default that has occurred solely as a result of (A) the
Borrower’s failure to list ImPetro Oil & Gas, LLC, a New Mexico limited
liability company (one if its Subsidiaries) (“ImPetro Oil & Gas”) on Schedule
3.13 of the Credit Agreement on the Closing Date or otherwise notify the Lenders
of ImPetro Oil & Gas or (B) the Borrower’s failure to comply with Section 5.14
or Section 5.15 with respect to ImPetro Oil & Gas (each, a “Subject Default”) or
(ii) any Default or Event of Default that otherwise has occurred solely as a
result of any failure to deliver notice of any Subject Default (the consents and
waivers set forth in this Section 5(a), collectively, the “Consent and Waiver”).

 

(c)          The Consent and Waiver is limited to the extent expressly described
herein and shall not be construed to be a consent to or a waiver of any terms,
provisions, covenants, warranties or agreements contained in the Credit
Agreement or in any of the other Loan Documents except to the extent expressly
described herein. The Secured Parties reserve the right to exercise any rights
and remedies available to them in connection with any other present or future
Defaults or Events of Default with respect to the Credit Agreement or any other
provision of any Loan Document.

 

(d)          Each Credit Party acknowledges that on the date hereof, all
outstanding Obligations are payable in accordance with their terms and each
Credit Party waives any defense, offset, counterclaim or recoupment, in each
case existing on the date hereof, with respect to such Obligations. Each Credit
Party does hereby adopt, ratify, and confirm the Credit Agreement and
acknowledges and agrees that the Credit Agreement is and remains in full force
and effect, and each Credit Party acknowledges and agrees that its respective
liabilities and obligations under the Credit Agreement are not impaired in any
respect by this Amendment.

 

(e)          This Amendment is a Loan Document for the purposes of the
provisions of the other Loan Documents. Without limiting the foregoing, any
breach of representations, warranties, and covenants under this Amendment shall
be a Default or Event of Default, as applicable, under the Credit Agreement.

 

 11 

 

 

Section 6.          Reaffirmation of Guaranty. Each Guarantor hereby ratifies,
confirms, and acknowledges that its obligations under the Credit Agreement are
in full force and effect and that each Guarantor continues to unconditionally
and irrevocably, jointly and severally, guarantee the full and punctual payment,
when due, whether at stated maturity or earlier by acceleration or otherwise, of
all of the Obligations, and its execution and delivery of this Amendment does
not indicate or establish an approval or consent requirement by the Guarantors
in connection with the execution and delivery of amendments, consents or waivers
to the Credit Agreement or any of the other Loan Documents.

 

Section 7.          Reaffirmation of Liens. Each Credit Party (a) is party to
certain Security Documents securing and supporting the Obligations under the
Loan Documents, (b) represents and warrants that it has no defenses to the
enforcement of the Security Documents and that according to their terms the
Security Documents will continue in full force and effect to secure the
Obligations under the Loan Documents, as the same may be amended, supplemented,
or otherwise modified, and (c) acknowledges, represents, and warrants that the
liens and security interests created by the Security Documents are valid and
subsisting and create an acceptable security interest in the collateral to
secure the Obligations under the Loan Documents, as the same may be amended,
supplemented, or otherwise modified.

 

Section 8.          Counterparts. This Amendment may be signed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Transmission by facsimile
or other electronic transmission of an executed counterpart of this Amendment
shall be deemed to constitute due and sufficient delivery of such counterpart.

 

Section 9.          Successors and Assigns. This Amendment shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns permitted pursuant to the Credit Agreement.

 

Section 10.         Invalidity. In the event that any one or more of the
provisions contained in this Amendment shall for any reason be held invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Amendment.

 

Section 11.         Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York. Section 10.09 of
the Credit Agreement is hereby incorporated by reference herein mutatis
mutandis.

 

Section 12.         Instruction to Administrative Agent. The Lenders hereby (i)
authorize and instruct the Administrative Agent to execute and deliver this
Amendment and the Approved Permitted First Lien Intercreditor Agreement (as
defined in the Credit Agreement after giving effect to this Amendment) and (ii)
acknowledge and agree that the instruction set forth in this Section 12
constitutes an instruction from the Lenders under the Loan Documents, including
Section 9.03 and Section 9.04 of the Credit Agreement.

 

 12 

 

 

Section 13.         RELEASE. For good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, each Credit Party hereby, for
itself and its successors and assigns, fully and without reserve, releases,
acquits, and forever discharges each Secured Party, its respective successors
and assigns, officers, directors, employees, representatives, trustees,
attorneys, agents and affiliates (collectively the “Released Parties” and
individually a “Released Party”) from any and all actions, claims, demands,
causes of action, judgments, executions, suits, debts, liabilities, costs,
damages, expenses or other obligations of any kind and nature whatsoever, direct
and/or indirect, at law or in equity, whether now existing or hereafter
asserted, whether absolute or contingent, whether due or to become due, whether
disputed or undisputed, whether known or unknown (INCLUDING, WITHOUT LIMITATION,
ANY OFFSETS, REDUCTIONS, REBATEMENT, CLAIMS OF USURY OR CLAIMS WITH RESPECT TO
THE NEGLIGENCE OF ANY RELEASED PARTY) (collectively, the “Released Claims”), for
or because of any matters or things occurring, existing or actions done, omitted
to be done, or suffered to be done by any of the Released Parties, in each case,
on or prior to the Effective Date and are in any way directly or indirectly
arising out of or in any way connected to any of this Amendment, the Credit
Agreement, any other Loan Document, or any of the transactions contemplated
hereby or thereby (collectively, the “Released Matters”). Each Credit Party, by
execution hereof, hereby acknowledges and agrees that the agreements in this
Section 13 are intended to cover and be in full satisfaction for all or any
alleged injuries or damages arising in connection with the Released Matters
herein compromised and settled. Each Credit Party hereby further agrees that it
will not sue any Released Party on the basis of any Released Claim released,
remised and discharged by the Credit Parties pursuant to this Section 13. In
entering into this Amendment, each Credit Party consulted with, and has been
represented by, legal counsel and expressly disclaim any reliance on any
representations, acts or omissions by any of the Released Parties and hereby
agrees and acknowledges that the validity and effectiveness of the releases set
forth herein do not depend in any way on any such representations, acts and/or
omissions or the accuracy, completeness or validity hereof. The provisions of
this Section 13 shall survive the termination of this Amendment, the Credit
Agreement and the other Loan Documents and payment in full of the Obligations.

 

Section 14.         Entire Agreement. This Amendment, the Credit Agreement and
the other Loan Documents constitute the entire understanding among the parties
hereto with respect to the subject matter hereof and supersede any prior
agreements, written or oral, with respect thereto.

 

THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

 

[The remainder of this page has been left blank intentionally.]

 

 13 

 

 

EXECUTED to be effective as of the date first above written.

 

  BORROWER:         LILIS ENERGY, INC.         By: /s/ Joseph C. Daches   Name:
Joseph C. Daches   Title: EVP, Chief Financial Officer and Treasurer        
GUARANTORS:       BRUSHY RESOURCES, INC.   HURRICANE RESOURCES LLC   LILIS
OPERATING COMPANY, LLC   IMPETRO OPERATING, LLC   IMPETRO RESOURCES, LLC        
By: /s/ Joseph C. Daches   Name: Joseph C. Daches   Title: Chief Financial
Officer and Treasurer

 

Signature Page to Amendment No. 4 to Credit Agreement

 

 

 

 

  ADMINISTRATIVE AGENT:       WILMINGTON TRUST, NATIONAL ASSOCIATION,   as
Administrative Agent         By: /s/ Alisha Clendaniel   Name: Alisha Clendaniel
  Title: Banking Officer         LEAD LENDER:       VÄrde Partners, Inc.        
By: /s/ Markus Specks   Name: Markus Specks   Title: Managing Director

 

Signature Page to Amendment No. 4 to Credit Agreement

 

 

 

 

  SEVERALLY AND NOT JOINTLY FOR EACH ENTITY LISTED BELOW:         By: /s/ Markus
Specks   Name: Markus Specks   Title: Managing Director         The Värde Fund
VI-A, L.P.   By Värde Investment Partners G.P., LLC, Its General Partner   By
Värde Partners, L.P., Its Managing Member   By Värde Partners, Inc., Its General
Partner       Värde INVESTMENT PARTNERS, L.P.   By Värde Investment Partners
G.P., LLC, Its General Partner   By Värde Partners, L.P., Its Managing Member  
By Värde Partners, Inc., Its General Partner       THE Värde FUND XI (MASTER),
L.P.   By Värde Fund XI G.P., LLC, Its General Partner   By Värde Partners,
L.P., Its Managing Member   By Värde Partners, Inc., Its General Partner      
Värde investment partners (offshore) master, L.p.   By Värde Investment Partners
G.P., LLC, Its General Partner   By Värde Partners, L.P., Its Managing Member  
By Värde Partners, Inc., Its General Partner       THE VÄRDE SKYWAY Master fund,
L.P.   By The Värde Skyway Fund G.P., LLC, Its General Partner   By Värde
Partners, L.P., Its Managing Member   By Värde Partners, Inc., Its General
Partner       THE VÄRDE FUND XII (mASTER), L.P.   By The Värde Fund XII G.P.,
L.P., Its General Partner   By: The Värde Fund XII UGP, LLC, its General Partner
  By Värde Partners, L.P., Its Managing Member   By Värde Partners, Inc., Its
General Partner

 

Signature Page to Amendment No. 4 to Credit Agreement