Document:

EX-10.1

 Exhibit 10.1 

[IDENIX LETTERHEAD] 
 November 23, 2010 

CONFIDENTIAL 
 Paul Fanning 

17 Stable Way 
 Medway, MA 02053 

Dear Paul: 
 This restatement to your Employment Letter of
February 24, 2004, is made this 23rd day of November, 2010 between you and Idenix Pharmaceuticals, Inc., a corporation incorporated under the laws of the State of Delaware (together with its successors and assigns, the “Company”).

  

	1.	Position and Title. You will continue your role as Senior Vice President, Human Resources, reporting directly to me as the President and Chief Executive Officer. You will also continue as an executive officer of
Idenix within the meaning of Rule 16a-1 under the Securities Exchange Act and an executive officer within the meaning of Rule 3b-7 under the Exchange Act. 

  

	2.	Base Salary. Your semi-monthly base salary will be $10,000 (equivalent to an annualized rate of $240,000), subject to applicable withholding and payable in accordance with normal payroll practices of Idenix. The
Base Salary shall continue to be reviewed annually for additional increases, if any, which is the sole discretion of the Idenix Compensation Committee of the Board of Directors (the “Board”). After any such increase, the term “Base
Salary” as utilized herein shall thereafter refer to the increased amount. Base Salary shall not be reduced at any time without your express prior written consent. 

 

	3.	Equity. You are eligible for an annual target stock option award for the purchase of 40,000 shares of common stock of Idenix that will be granted pursuant to the terms of the Idenix Pharmaceuticals, Inc. 2005
Stock Incentive Plan and its standard option award agreement (the “Plan”). The number of shares for which such award is ultimately granted will be in the absolute discretion of the Compensation Committee of the Board of Directors.

  

	4.	Benefits. You will continue be eligible to participate in all benefit plans and programs Idenix provides generally to its senior level executives, subject to, and on a basis consistent with, the participation
requirements and other terms and conditions of such plans and programs. Such programs currently include medical, dental, disability, life insurance and a 401(k) plan. Of course, the Company reserves the right to modify or eliminate such programs
from time to time. 

  

	5.	Location. You will continue to be based at Idenix’ offices in Cambridge, Massachusetts. 

	6.	Incentive Based Compensation. You are eligible for an annual target cash bonus (“Target Bonus”) equal to 35% of your Base Salary. Your target bonus as a percentage of Base Salary may, at the discretion
of the Board, be periodically reviewed for increase. After any such increase, the term “Target Bonus” as used herein shall thereafter refer to the increased amount. The Target Bonus shall not be reduced at any time without your express
prior written consent. 

  

	7.	Termination. You and Idenix each agree that your employment with Idenix is that of an employee at will. Both you and Idenix have the right to terminate your employment relationship at any time for any or no
reason, subject to the provisions of this letter. 

 (A) If Idenix terminates your employment other than for Cause (as defined
in Appendix A hereto) or you terminate your employment for Good Reason (as defined in Appendix A hereto) you will be eligible to receive the following Severance Compensation. 

(i) Lump sum payment equivalent to the sum of (A) one year of Base Salary plus (B) the greater of: (i) target bonus for the year
in which your termination of employment occurs; or (ii) the bonus you earned for the year preceding the year in which the termination of your employment occurs, such sum to be reduced by any and all applicable taxes and withholdings; 

(ii) Immediate vesting and exercisability of all outstanding equity awards, subject to the terms of such awards; and 

(iii) Provided you timely elect and remain eligible for benefits continuation pursuant to the federal “COBRA” laws, continued payment
by Idenix of COBRA premiums for you (and your covered dependents) under the group health and dental insurance coverage at the active employee rates for a period of up to 12 months subsequent to the date of your termination. Any such payments and
related coverage shall be discontinued in the event that you cease to be eligible for or to elect such COBRA coverage during such 12 month period or if such payments are determined by the Company to be reasonably likely to result in any material tax
liability to you or the Company. You will also be eligible for continued premium payment by Idenix if you elect to continue the Idenix provided employee group life insurance coverage for a period of up to 12 months; provided that such continued
coverage is permitted under the terms of the life insurance plan. If any such benefit cannot be provided for any reason then the Company will not be obligated to pay you a cash equivalent in lieu of such benefit. 

(B) You shall not be eligible to receive the payments, benefits and entitlements provided in subsection (A) of this Section 7 unless
you timely execute and allow to become effective within 60 days following your termination (such 60th day, the “Payment Date”), a severance and release of claims agreement (the “Severance Agreement”) substantially similar to the
form attached hereto as Appendix C. The Severance Compensation shall begin on the Payment Date and shall be subject to the terms and conditions set forth on Appendix B. 

	8.	Termination Within One Year After a Change in Control. If your employment is terminated by Idenix (or any successor to Idenix) without Cause or you terminate your employment for Good Reason, in each case within
one (1) year following a Change in Control (all such terms as defined in Appendix A hereto) you shall be entitled to receive the benefits in Section 7(A)(i), (ii) and (iii) above plus a lump-sum payment equivalent to the sum of
(A) one times your Base Salary, and (B) the greater of (i) one times your Target Bonus for the year in which the termination of employment occurs, or (ii) one times the actual bonus payable to you for the year preceding the year
in which termination of employment occurs. Your eligibility to receive the payments, benefits and entitlements provided in this Section 8 shall be subject to the terms of Section 7(B). 

 

	9.	Excise Tax Provision. Anything herein to the contrary notwithstanding, to the extent that any payment, entitlement or benefit provided under this offer or any other agreement, plan, policy, program or arrangement
of the Company (the “Payments”) would be subject to the imposition of the excise tax imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), or any similar Federal or state law (an
“Excise Tax”), the Payments shall be reduced (but not below zero) to the maximum amount as will result in no portion of the Payments being subject to such Excise Tax (the “Safe Harbor Cap”), but only if the net after-tax amount
that would be received by you, taking into account all applicable Federal, state and local income taxes and the imposition of the Excise Tax, is greater than the net after-tax amount, similarly determined, that would be received by you if Payments
are not reduced to the Safe Harbor Cap. If there is a reduction, it shall be implemented as follows: (i) any cash payments, (ii) any taxable benefits, (iii) any nontaxable benefits, and (iv) any vesting of equity awards, in each
case in reverse order beginning with payments or benefits that are to be paid the farthest in time from the date of change in control, to the extent necessary to avoid imposition of the excise tax under Code Section 4999. 

 

	10.	Section 409A. All payment for which provision is made in this offer letter shall be subject to the terms set forth in Appendix B. 

 

	11.	Disclosure of Inventions: You acknowledge and reaffirm your obligations as agreed to in your February 24, 2004 offer letter. You further acknowledge and represent that you have complied with all your
obligations pursuant thereto. 

  

	12.	Noncompetition and Non-Solicitation: In consideration of the benefits in this offer letter: 

(A) You agree that while you are employed by the Company and for a period of 12 months after the termination or cessation of such employment in
the event Idenix terminates your employment for reasons other than cause or you terminate your employment for Good Reason, you will not directly or indirectly: 

(i) in the geographic area where the Company does business, has done business, or plans to do business at the time of the termination or
cessation of 

 
your employment, engage or assist others in engaging in any business or enterprise (whether as an owner, partner, officer, director, employee, consultant, investor, lender or otherwise) that is
competitive with the Company’s business. For purposes of this offer, the term “Competitive Business” shall mean a commercial, for profit entity that discovers, develops and commercializes therapeutics for the treatment of HBV, HCV and
HIV; provided that the passive ownership of not more than 1% of the outstanding stock of a publicly-held company shall not, by itself, violate this provision; or 

(ii) either alone or in association with others, solicit, divert or take away, or attempt to solicit, divert or take away, the business or
patronage of any of the clients, customers, accounts or business partners or prospective clients, customers, accounts or business partners of the Company that were contacted, solicited, or served by the Company while you were employed by the
Company; or 
 (iii) either alone or in association with others solicit, induce or attempt to induce, any employee or independent contractor
of the Company to terminate his or her employment or other engagement with the Company, provided, that this provision shall not apply to the solicitation of any individual whose employment or other engagement with the Company has been terminated for
a period of six (6) months or longer; and 
 (B) You agree that during the non-competition and non-solicitation period, you will give
notice to the Board of each new business activity you plan to undertake, at least (10) business days prior to beginning any such activity. You further acknowledge and agree that the restrictions contained in this offer letter are necessary for
the protection of the business and goodwill of the Company and are considered by you to be reasonable for such purpose. You agree that any breach or threatened breach of this provision will cause the Company substantial and irrevocable damage that
is difficult to measure. Therefore, in the event of any such breach or threatened breach, you agree that the Company, in addition to such other remedies that may be available, shall have the right to seek specific performance and injunctive relief
without posting a bond. You further waive the adequacy of a remedy at law as a defense to such relief. 
  

	13.	Nondisparagement. You understand and agree that during your employment you shall not make any false, disparaging or derogatory statements to any person or entity, including, without limitation, any media outlet,
industry group, financial institution or current or former employee, consultant, client or customer of the Company, regarding the Company or any of its directors, officers, employees, agents or representatives or about the Company’s business
affairs or financial condition; provided, however, that nothing herein shall be construed as preventing you from making truthful disclosures to any governmental entity or in any litigation or arbitration or as otherwise required by applicable law.

	14.	Governing Law. This offer and your employment shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts (without reference to the conflict of laws provisions thereof.)

 If this offer letter correctly sets forth the terms under which you will continue to be employed by the Company, please sign the enclosed
duplicate of this letter in the space provided below and return it to me. 
 Very truly yours, 

/s/ Ronald C. Renaud, Jr. 
 Ronald C. Renaud 

President and Chief Executive Officer 
 Idenix Pharmaceuticals,
Inc. 
 The foregoing correctly sets forth the terms of my at-will employment with Idenix, Inc. I am not relying on any representations other than those set
forth above. 
 ACCEPTED as of this 23rd day of November, 2010 
  

	
	 /s/ Paul Fanning

	Paul Fanning

 Appendix A 

“Change in Control” shall mean: 

(i) any “person,” as such term is used in Sections 3(a)(9) and 13(d) of the Securities Exchange Act of 1934, becomes a
“beneficial owner,” as such term is used in Rule 13d-3 promulgated under that act, of fifty percent (50%) or more of the Voting Stock of the Company; 

(ii) the Company adopts any plan of liquidation providing for the distribution of all or substantially all of its assets; 

(iii) all or substantially all of the assets or business of the Company is disposed of pursuant to a merger, consolidation or other transaction
(unless the shareholders of the Company immediately prior to such merger, consolidation or other transaction beneficially own, directly or indirectly, at least fifty percent (50%) of the Voting Stock or other ownership interests of the entity
or entities, if any, that succeed to the business of the Company); or 
 (iv) the Company combines with another company and is the surviving
corporation but, immediately after the combination, the shareholders of the Company immediately prior to the combination hold, directly or indirectly, fifty percent (50%) or less of the Voting Stock of the combined company (there being excluded
from the number of shares held by such shareholders, but not from the Voting Stock of the combined company, any shares received by affiliates of such other company in exchange for stock of such other company). 

For purposes of this definition of “Change in Control” the “Company” shall include any entity that succeeds to all or substantially all of
the business of the Company and “Voting Stock” shall mean securities of any class or classes having general voting power under ordinary circumstances, in the absence of contingencies, to elect the directors of a corporation. 

“Good Reason to terminate your employment with Idenix shall be deemed to exist if, there is: (i) any adverse change in your title or a
material diminution in your authority or responsibilities; (ii) a reduction in your Base Salary, the Target Bonus or target equity amount; or (iii) the primary place of your employment is relocated by Idenix to a location more than 40
miles from Cambridge, Massachusetts. 
 “Termination for Cause” shall be the result of a good faith finding by the Company that you have
engaged in: (i) willful fraud or willful material dishonesty in connection with your employment by the Company; (ii) intentional failure by you to substantially perform your duties hereunder or gross neglect in the performance of such
duties; (iii) your gross misconduct that is materially detrimental to the Company’s reputation, goodwill or business operations; (iv) your breach of any of the covenants in this offer or attachments hereto; or (v) your conviction
of, or plea of nolo contendere to, a charge of commission of a felony; provided that prior to any Termination for Cause you are given written notice with specificity of any such reasons and a reasonable opportunity to cure if such a
cure is reasonably possible. 

 Appendix B 

Payments Subject to Section 409A 

Subject to the provisions in this Appendix B, any Severance Compensation or benefits under this offer of employment shall be made only upon the date of your
“separation from service” (determined as set forth below) which occurs on or after the date of termination of your employment. The following rules shall apply with respect to distribution of the Severance Compensation, if any, to be
provided to you under this letter: 
 (i) It is intended that each installment of the Severance Compensation shall be treated as a separate
“payment” for purposes of Section 409A of the Internal Revenue Code of 1986, as amended, and the guidance issued thereunder (“Section 409A”). Neither the Company nor you shall have the right to accelerate or defer the
delivery of any such payments or benefits except to the extent specifically permitted or required by Section 409A. 
 (ii) If, as of the
date of your “separation from service” from the Company, you are not a “specified employee” (within the meaning of Section 409A), then each installment of the Severance Compensation shall be made on the dates and terms set
forth in this letter. 
 (iii) If, as of the date of your “separation from service” from the Company, you are a “specified
employee” (within the meaning of Section 409A), then: 
 (a) each installment of the Severance Compensation due under this letter
that, in accordance with the dates and terms set forth herein, will in all circumstances, regardless of when the separation from service occurs, be paid within the short-term deferral period (as defined under Section 409A) shall be treated as a
short-term deferral within the meaning of Treasury Regulation § 1.409A 1(b)(4) to the maximum extent permissible under Section 409A, and shall be made on the dates and terms set forth in this letter; and 

(b) each installment of the Severance Compensation due under this letter that is not described in this Appendix, (iii)(a) above and that
would, absent this subsection, be paid within the six-month period following your “separation from service” from the Company shall not be paid until the date that is six months and one day after such separation from service (or, if
earlier, your death), with any such installments that are required to be delayed being accumulated during the six-month period and paid in a lump sum on the date that is six months and one day following your separation from service and any
subsequent installments, if any, being paid in accordance with the dates and terms set forth herein; provided, however, that the preceding provisions of this sentence shall not apply to any installment of Severance Compensation if and
to the maximum extent that that such installment is deemed to be paid under a separation pay plan 

 
that does not provide for a deferral of compensation by reason of the application of Treasury Regulation § 1.409A-1(b)(9)(iii) (relating to separation pay upon an involuntary separation from
service). Any installments that qualify for the exception under Treasury Regulation § 1.409A-1(b)(9)(iii) must be paid no later than the last day of your second taxable year following the taxable year in which the separation from service
occurs. 
 (iv) The determination of whether and when your separation from service from the Company has occurred shall be made and in a
manner consistent with, and based on the presumptions set forth in, Treasury Regulation § 1.409A-1(h). Solely for purposes of this Appendix B, (iv), “Company” shall include all persons with whom the Company would be considered a
single employer as determined under Treasury Regulation Section 1.409A-1(h)(3). 
 (v) All reimbursements and in-kind benefits provided
under this letter shall be made or provided in accordance with the requirements of Section 409A to the extent that such reimbursements or in-kind benefits are subject to Section 409A, including, where applicable, the requirements that
(i) any reimbursement is for expenses incurred during your lifetime (or during a shorter period of time specified in this letter), (ii) the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses
eligible for reimbursement in any other calendar year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the calendar year following the year in which the expense is incurred and (iv) the right to
reimbursement is not subject to set off or liquidation or exchange for any other benefit. 
 (vi) Notwithstanding anything herein to the
contrary, the Company shall have no liability to you or to any other person if the payments and benefits provided hereunder that are intended to be exempt from or compliant with Section 409A are not so exempt or compliant. 

 Appendix C 

Form of Severance and General Release Agreement 

[Insert Date] 
 [Insert Employee Name] 

[Insert Employee Address] 
 Dear [Insert Employee Name]: 

As we have discussed, your employment with Idenix, Inc. (the “Company”) will end on [Insert Termination Date]. The Company will
provide you with the severance benefits described in paragraph 2 below if you sign and return this letter agreement (the “Agreement”) to me on or before [Insert Return Date] and it becomes binding between you and the Company. By timely
signing and returning this Agreement and not revoking your acceptance, you will be entering into a binding agreement with the Company and will be agreeing to the terms and conditions set forth in the numbered paragraphs below, including the release
of claims set forth in paragraph 3. Therefore, you are advised to consult with an attorney before signing this Agreement and you have been given at least twenty-one (21) days to do so. If you sign this Agreement, you may change your mind and
revoke your agreement during the seven (7) day period after you have signed it by notifying me in writing. If you do not so revoke, this Agreement will become a binding agreement between you and the Company upon the expiration of the seven
(7) day period. 
 If you choose not to sign and return this Agreement in a timely manner as set forth above, or if you timely revoke
your acceptance in writing, you shall not receive any of the severance payments or benefits under your restated employment letter dated as of                  ,
     (your “Employment Letter”) from the Company. Whether or not this Agreement becomes effective, you will receive payment on your Termination Date, as defined herein, for (i) your final wages and (ii) any
unused vacation time accrued through the Termination Date. You may also, if eligible, elect to continue receiving group medical insurance pursuant to the federal “COBRA” law, 29 U.S.C. § 1161 et seq. Please consult the
COBRA materials to be provided by the Company under separate cover for details regarding these benefits. Except as provided for herein, all other benefits and all unvested stock rights will be cancelled on the Termination Date. 

The following numbered paragraphs set forth the terms and conditions that will apply if you timely sign and return this Agreement and do not
revoke it in writing within the seven (7) day period. 
  

	1.	Termination Date. Your effective date of termination from the Company is [Insert Termination Date] (the “Termination Date”). As of the Termination Date, all salary payments from the Company will cease
and any benefits you had as of the Termination Date under Company-provided benefit plans, programs, or practices will terminate, except as required by federal or state law. 

 

	2.	 Description of Severance Compensation. If you timely sign and return this Agreement and do not revoke your acceptance, the Company will provide
the severance benefits in 

	 	
accordance with Section(s)     of your Employment Letter with the Company dated
                ,      (the “Severance Benefits”). You will not be eligible for, nor shall you have a right to receive, any payments or
benefits from the Company following the Termination Date other than as described in this paragraph 2. 

  

	3.	Release. In consideration of the Severance Benefits, which you acknowledge you would not otherwise be entitled to receive, you hereby fully, forever, irrevocably and unconditionally release, remise and discharge
the Company, its affiliates, subsidiaries, parent companies, predecessors, and successors, and all of their respective past and present officers, directors, stockholders, partners, members, employees, agents, representatives, plan administrators,
attorneys, insurers and fiduciaries (each in their individual and corporate capacities) (collectively, the “Released Parties”) from any and all claims, charges, complaints, demands, actions, causes of action, suits, rights, debts, sums of
money, costs, accounts, reckonings, covenants, contracts, agreements, promises, doings, omissions, damages, executions, obligations, liabilities, and expenses (including attorneys’ fees and costs), of every kind and nature that you ever had or
now have against any or all of the Released Parties, including, but not limited to, any and all claims arising out of or relating to your employment with and/or separation from the Company, including, but not limited to, all claims under Title VII
of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., the Americans With Disabilities Act of 1990, 42 U.S.C. § 12101 et seq., the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq., the Genetic Information
Nondiscrimination Act of 2008, 42 U.S.C. § 2000ff et seq., the Family and Medical Leave Act, 29 U.S.C. § 2601 et seq., the Worker Adjustment and Retraining Notification Act (“WARN”), 29 U.S.C. § 2101 et seq., 18 U.S.C.
1514(A), the Rehabilitation Act of 1973, 29 U.S.C. § 701 et seq., Executive Order 11246, Executive Order 11141, the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq., and the Employee Retirement Income Security Act of 1974
(“ERISA”), 29 U.S.C. § 1001 et seq., all as amended; all claims arising out of the Massachusetts Fair Employment Practices Act., Mass. Gen. Laws ch. 151B, § 1 et seq., the Massachusetts Civil Rights Act, Mass. Gen. Laws ch. 12,
§§ 11H and 11I, the Massachusetts Equal Rights Act, Mass. Gen. Laws. ch. 93, § 102 and Mass. Gen. Laws ch. 214, § 1C, the Massachusetts Labor and Industries Act, Mass. Gen. Laws ch. 149, § 1 et seq., Mass. Gen. Laws ch. 214,
§ 1B (Massachusetts right of privacy law), the Massachusetts Maternity Leave Act, Mass. Gen. Laws ch. 149, § 105D, and the Massachusetts Small Necessities Leave Act, Mass. Gen. Laws ch. 149, § 52D, all as amended; all common law
claims including, but not limited to, actions in defamation, intentional infliction of emotional distress, misrepresentation, fraud, wrongful discharge, and breach of contract; all claims to any non-vested ownership interest in the Company,
contractual or otherwise, and any claim or damage arising out of your employment with and/or separation from the Company (including a claim for retaliation) under any common law theory or any federal, state or local statute or ordinance not
expressly referenced above; provided, however, that nothing in this Agreement prevents you from filing a charge with, cooperating with, or participating in any proceeding before the Equal Employment Opportunity Commission or a state fair employment
practices agency (except that you acknowledge that you may not recover any monetary benefits in connection with any such claim, charge or proceeding). 

 Notwithstanding any provision of this Agreement to the contrary, by executing this Agreement, you
are not releasing (i) any claims that cannot be waived by law, (ii) your right of indemnification as provided by, and in accordance with the terms of, the Company’s by-laws or a Company insurance policy providing such coverage, as any
of such may be amended from time to time, or (iii) any claims relating to your rights as an equity holder of the Company. 
  

	4.	Post-Separation Obligations. You acknowledge and reaffirm your obligation to keep confidential and not to disclose any and all non-public information concerning the Company that you acquired during the course of
your employment with the Company, including, but not limited to, any non-public information concerning the Company’s business affairs, business prospects, and financial condition. Your further acknowledge and reaffirm your obligations under
Sections      and      of the Employment Letter, which remain in full force and effect. 

  

	5.	Non-Disparagement. You understand and agree that, in consideration of the Severance Benefits, you shall not make any false, disparaging or derogatory statements to any person or entity, including, without
limitation, any media outlet, industry group, financial institution or current or former employee, consultant, client or customer of the Company, regarding the Company or any of its directors, officers, employees, agents or representatives or about
the Company’s business affairs or financial condition; provided, however, that nothing herein shall be construed as preventing you from making truthful disclosures to any governmental entity or in any litigation or arbitration or as otherwise
required by applicable law. 

  

	6.	Cooperation. To the extent permitted by law, you agree to cooperate with the Company in the defense or prosecution of any claims or actions which already have been brought, are currently pending, or which may be
brought in the future against or on behalf of the Company, whether before a state or federal court, any state or federal government agency, or a mediator or arbitrator. In addition, the Company shall reimburse you for reasonable out-of-pocket
expenses incurred at the request of the Company with respect to your compliance with this paragraph. Your full cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with counsel to
prepare its claims or defenses, to prepare for trial or discovery or an administrative hearing or a mediation or arbitration and to act as a witness when requested by the Company at reasonable times mutually agreed to by you and the Company. You
agree that you will notify the Company promptly in the event that you are served with a subpoena or in the event that you are asked to provide a third party with information concerning any actual or potential complaint or claim against the Company.

  

	7.	Return of Company Property. You represent and confirm that you have returned to the Company all Company-owned property in your possession or control and that you have left intact all electronic Company documents,
including, without limitation, those that you developed or helped to develop during your employment. You further confirm that you have cancelled all accounts for your benefit, if any, in the Company’s name, including, without limitation, credit
cards, telephone charge cards, cellular phone and/or pager accounts, and computer accounts. 

	8.	Business Expenses and Final Compensation. You acknowledge that you have been reimbursed by the Company for all business expenses incurred in conjunction with the performance of your employment and that no other
reimbursements are owed to you. You further acknowledge that you have received payment in full for all services rendered in conjunction with your employment by the Company, including, without limitation, payment for all wages, bonuses, equity,
commissions and accrued, unused vacation time, and that no other compensation is owed to you. 

  

	9.	Amendment and Waiver. This Agreement shall be binding upon the parties and may not be modified in any manner, except by an instrument in writing of concurrent or subsequent date signed by duly authorized
representatives of the parties hereto. This Agreement is binding upon and shall inure to the benefit of the parties and their respective agents, assigns, heirs, executors, successors and administrators. No delay or omission by the Company in
exercising any right under this Agreement shall operate as a waiver of that or any other right. A waiver or consent given by the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar to or waiver of
any right on any other occasion. 

  

	10.	Validity. Should any provision of this Agreement be declared or be determined by any court of competent jurisdiction to be illegal or invalid, the validity of the remaining parts, terms or provisions shall not be
affected thereby and said illegal or invalid part, term or provision shall be deemed not to be a part of this Agreement. 

  

	11.	Tax Provision. In connection with the Severance Benefits to be provided to you pursuant to this Agreement, the Company shall withhold and remit to the tax authorities the amounts required under applicable law,
and you shall be responsible for all applicable taxes with respect to such Severance Benefits under applicable law. You acknowledge that you are not relying upon advice or representation of the Company with respect to the tax treatment of any of the
Severance Benefits. 

  

	12.	Compliance with Section 409A. The severance payments and benefits shall be subject to and compliant with any requirements provided under Section 409A of the Internal Revenue Code of 1986, as amended
(“Section 409A”). The Company shall have no liability to you or any other person if the payments and benefits provided that are intended to be exempt from or compliant with Section 409A are not so exempt or compliant.

  

	13.	Nature of Agreement. You understand and agree that this Agreement is a severance agreement and does not constitute an admission of liability or wrongdoing on the part of the Company. 

 

	14.	 Acknowledgments. You acknowledge that you have been given at least twenty-one (21) days to consider this Agreement, and that the Company
advised you to consult with an attorney of your own choosing prior to signing this Agreement. You understand that you 

	 	
may revoke this Agreement for a period of seven (7) days after you sign it by notifying me in writing, and the Agreement shall not be effective or enforceable until the expiration of this
seven (7) day revocation period. You understand and agree that by entering into this Agreement, you are waiving any and all rights or claims you might have under the Age Discrimination in Employment Act, as amended by the Older Workers Benefits
Protection Act, and that you have received consideration beyond that to which you were previously entitled. 

  

	15.	Voluntary Assent. You affirm that no other promises or agreements of any kind have been made to or with you by any person or entity whatsoever to cause you to sign this Agreement, and that you fully understand
the meaning and intent of this Agreement. You state and represent that you have had an opportunity to fully discuss and review the terms of this Agreement with an attorney. You further state and represent that you have carefully read this Agreement,
understand the contents herein, freely and voluntarily assent to all of the terms and conditions hereof, and sign your name of your own free act. 

  

	16.	Applicable Law. This Agreement shall be interpreted and construed by the laws of the Commonwealth of Massachusetts, without regard to conflict of laws provisions. You hereby irrevocably submit to and acknowledge
and recognize the jurisdiction of the courts of the Commonwealth of Massachusetts, or if appropriate, a federal court located in the Commonwealth of Massachusetts (which courts, for purposes of this Agreement, are the only courts of competent
jurisdiction), over any suit, action or other proceeding arising out of, under or in connection with this Agreement or the subject matter hereof. 

  

	17.	Entire Agreement – This Agreement contains and constitutes the entire understanding and agreement between the parties hereto with respect to your severance benefits and the settlement of claims against the
Company and cancels all previous oral and written negotiations, agreements, and commitments in connection therewith. Nothing in this paragraph, however, shall modify, cancel or supersede your obligations set forth in paragraph 4 above.

 If you have any questions about the matters covered in this Agreement, please call
                    . 
  

			
	Very truly yours,
		
	By:	 	  

		 	[Name]
		 	[Title]

 I hereby agree to the terms and conditions set forth above. I have been given at least twenty-one (21) days to
consider this Agreement and I have chosen to execute this on the date below. I intend that this Agreement will become a binding agreement between me and the Company if I do not revoke my acceptance in seven (7) days. 

 

					
	  
	 		 	  

	[Insert Employee Name]	 		 	DateUnassociated Document

Exhibit 4.1

THIS WARRANT AND THE UNDERLYING SHARES OF COMMON STOCK HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY OTHER SECURITIES LAWS, HAVE BEEN TAKEN FOR INVESTMENT, AND MAY NOT BE SOLD OR TRANSFERRED OR OFFERED FOR SALE OR TRANSFER UNLESS A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS WITH RESPECT TO SUCH SECURITIES IS THEN IN EFFECT, OR IN THE OPINION OF COUNSEL TO THE ISSUER OF THESE SECURITIES, SUCH REGISTRATION UNDER THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS IS NOT REQUIRED.

	  	
Date: January 17, 2014

	  

WARRANT FOR THE PURCHASE OF SHARES OF

COMMON STOCK OF LILIS ENERGY, INC.

THIS IS TO CERTIFY that, for value received, David E. Castaneda and his successors and assigns (collectively, the “Holder” or “Holders”), are entitled to purchase, subject to the terms and conditions hereinafter set forth, One Hundred Thousand (100,000) shares of Lilis Energy, Inc., a Nevada corporation (the “Company”) common stock, $0.0001 par value per share (the “Common Stock”), and to receive certificates for the Common Stock so purchased.  The exercise price of this Warrant is $2.00 (two dollars and zero cents) per share (the “Exercise Price”).  This Warrant is issued in connection with the Management Consulting Agreement between Holder and the Company dated January 17, 2014 (the “Consulting Agreement”).

1.             Exercise Period. This Warrant is fully vested and exercisable by the Holders until 5:00 p.m., New York, New York time, five (5) years from the date of this Warrant (the “Exercise Period”).  This Warrant will terminate automatically and immediately upon the expiration of the Exercise Period.

 

2.             Exercise of Warrant; Cashless Exercise.

 

(a)           Exercise. This Warrant may be exercised, in whole or in part, at any time and from time to time during the Exercise Period.  Such exercise shall be accomplished by tender to the Company of an amount equal to the Exercise Price multiplied by the number of underlying shares being purchased (the “Purchase Price”), either (a) in cash, by wire transfer or by certified check or bank cashier’s check, payable to the order of the Company, or (b) by surrendering such number of shares of Common Stock received upon exercise of this Warrant with an aggregate Fair Market Value (as defined below) equal to the Purchase Price (as described in the following paragraph, a “Cashless Exercise”), together with presentation and surrender to the Company of this Warrant with an executed subscription agreement in substantially the form attached hereto as Exhibit A (the “Subscription”). Upon receipt of the foregoing, the Company will deliver to the Holders, as promptly as possible, a certificate or certificates representing the shares of Common Stock so purchased, registered in the name of the Holders or its transferee (as permitted under Section 3 below).  With respect to any exercise of this Warrant, the Holders will for all purposes be deemed to have become the holder of record of the number of shares of Common Stock purchased hereunder on the date the Subscription has been properly executed and delivered to the Company and payment of the Purchase Price has been received by the Company (the “Exercise Date”), irrespective of the date of delivery of the certificate evidencing such shares of the Common Stock, except that, if the date of such receipt is a date on which the stock transfer books of the Company are closed, such person will be deemed to have become the holder of such shares at the close of business on the next succeeding date on which the stock transfer books are open.  Fractional shares of Common Stock will not be issued upon the exercise of this Warrant.  In lieu of any fractional shares that would have been issued but for the immediately preceding sentence, the Holders will be entitled to receive cash equal to the current Fair Market Value (as defined below) of such fraction of a share of Common Stock on the trading day immediately preceding the Exercise Date.  In the event this Warrant is exercised in part, the Company shall issue a new Warrant to the Holders covering the aggregate number of shares of Common Stock as to which this Warrant remains exercisable for.

 

  

  

  

 

(b)           Cashless Exercise. If the Holders elect to conduct a Cashless Exercise, the Company shall cause to be delivered to the Holder a certificate or certificates representing the number of shares of Common Stock computed using the following formula:

 

X = Y (A-B) 

             A

 

Where:

	 	
X    = 

	
the number of shares of Common Stock to be issued to Holder;

 

	 	
Y    =  

	
the portion of this Warrant (in number of shares of Common Stock) being exercised by Holder (at the date of such calculation);

 

	 	
A   = 

	
the Fair Market Value (as defined below) of one share of Common Stock on the Exercise Date, calculated by taking the average Fair Market Value over the last 10 trading days (not including the Exercise Date); and

 

	 	
B    = 

	
Exercise Price (as adjusted to the date of such calculation).

 

(c)           Definition of Fair Market Value. For purposes of this Warrant, “Fair Market Value” shall mean:  (i) if the principal trading market for such securities is a national securities exchange including The Nasdaq Stock Market or the Over-the-Counter Bulletin Board (or a similar system then in use), the last reported sales price on the principal market on the trading day immediately prior to such Exercise Date; or (ii) if clause (i) is not  applicable, and if bid and ask prices for shares of Common Stock are reported by the principal trading market or the Pink Sheets, the average of the high bid and low ask prices so reported for the trading day immediately prior to such Exercise Date.  Notwithstanding the foregoing, if there is no last reported sales price or bid and ask prices, as the case may be, for the day in question, then Fair Market Value shall be determined as of the latest day prior to such day for which such last reported sales price or bid and ask prices, as the case may be, are available, unless such securities have not been traded on an exchange or in the over-the-counter market for 30 or more days immediately prior to the day in question, in which case the Fair Market Price shall be determined in good faith by, and reflected in a formal resolution of, the board of directors of the Company.

 

  

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(d)           Limitations on Exercise. Notwithstanding anything to the contrary contained herein, the number of shares that may be acquired by the Holder upon any exercise of this Warrant (or otherwise in respect hereof) shall be limited to the extent necessary to insure that, following such exercise (or other issuance), the total number of shares of Common Stock then beneficially owned by such Holder and its affiliates and any other persons whose beneficial ownership of Common Stock would be aggregated with the Holder's for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the “Exchange Act”), does not exceed 4.999% of the total number of issued and outstanding shares of Common Stock (including for such purpose the shares of Common Stock issuable to the Holder upon exercise of this Warrant and other derivative securities).  For such purposes, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.  This provision shall not restrict the number of shares of Common Stock which a Holder may receive or beneficially own in order to determine the amount of securities or other consideration that such Holder may receive in the event of a Fundamental Transaction as contemplated in Section 4(e) of this Warrant.  This restriction may not be waived or amended by agreement of the parties.

3.             Recording, Transferability, Exchange and Obligations to Issue Common Stock.

 

(a)           Registration of Warrant.  The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time.  The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary from the transferee and transferor.

(b)           Registration of Transfers.  The Company shall register the transfer of any portion of this Warrant in the Warrant Register, upon surrender of this Warrant, with the Form of Assignment attached hereto as Exhibit B duly completed and signed, to the Company at its address specified herein.  As a condition to the transfer, the Company may request a legal opinion as contemplated by the legend.  Upon any such registration or transfer, a new Warrant to purchase Common Stock, in substantially the form of this Warrant (any such new Warrant, a “New Warrant”), evidencing the portion of this Warrant so transferred shall be issued to the transferee and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any, shall be issued to the transferring Holder. The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance by such transferee of all of the rights and obligations of a holder of a Warrant.

  

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(c)           Exchange of Warrant. This Warrant is exchangeable upon its surrender by the Holders to the Company for new Warrants of like tenor and date representing in the aggregate the right to purchase the number of shares purchasable hereunder, each of such new Warrants to represent the right to purchase such number of shares as may be designated by the Holders at the time of such surrender (not to exceed the aggregate number of shares underlying this Warrant).

(d)           Obligation to Deliver Common Stock. The Company’s obligations to issue and deliver Common Stock in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of Common Stock.  Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of this Warrant  as required pursuant to the terms hereof.

 4.            Adjustments to Exercise Price and Number of Shares Subject to Warrant.  The Exercise Price and the number of shares of Common Stock purchasable upon the exercise of this Warrant are subject to adjustment from time to time upon the occurrence of any of the events specified in this Section 4.  For the purpose of this Section 4, “Common Stock” means shares now or hereafter authorized of any class of common stock of the Company, however designated, that has the right to participate in any distribution of the assets or earnings of the Company without limit as to per share amount (excluding, and subject to any prior rights of, any class or series of preferred stock).

(a)           In case the Company shall (i) pay a dividend or make a distribution in shares of Common Stock to holders of shares of Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a smaller number of shares, or (iv) issue by reclassification of its shares of Common Stock other securities of the Company, then the Exercise Price in effect at the time of the record date for such dividend or on the effective date of such subdivision, combination or reclassification, and/or the number and kind of securities issuable on such date, shall be proportionately adjusted so that the Holders of this Warrant thereafter exercised shall be entitled to receive the aggregate number and kind of shares of Common Stock (or such other securities other than Common Stock) of the Company, at the same aggregate Exercise Price, that, if such Warrant had been exercised immediately prior to such date, the Holders would have owned upon such exercise and been entitled to receive by virtue of such dividend, distribution, subdivision, combination or reclassification. Such adjustment shall be made successively whenever any event listed above shall occur.

(b)           In case the Company shall fix a record date for the making of a distribution to all holders of Common Stock (including any such distribution made in connection with a consolidation or merger in which the Company is the surviving corporation) of cash, evidences of indebtedness or assets, or subscription rights or warrants, the Exercise Price to be in effect after such record date shall be determined by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the Fair  Market Value  per share of Common Stock on such record date, less the amount of cash so to be distributed or the Fair Market Value (as determined in good faith by, and reflected in a formal resolution of, the board of directors of the Company) of the portion of the assets or evidences of indebtedness so to be distributed, or of such subscription rights or warrants, applicable to one share of Common Stock, and the denominator of which shall be the  Fair Market Value per share of Common Stock.  Such adjustment shall be made successively whenever such a record date is fixed; and in the event that such distribution is not so made, the Exercise Price shall again be adjusted to be the Exercise Price which would then be in effect if such record date had not been fixed.

  

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(c)           In the case the Company shall sell or grant any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or announces any sale, grant or any option to purchase or other disposition) any Common Stock or Common Stock Equivalent (as defined below) entitling any person to acquire shares of Common Stock at an effective price per share that is lower than the then Exercise Price (such lower price, the “Base Exercise Price” and such issuances, collectively, a “Dilutive Issuance”) (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is lower than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price on such date of the Dilutive Issuance), then the Exercise Price shall be reduced to equal the Base Exercise Price. If the Company enters into a Variable Rate Transaction (as defined below), the Company shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible price at which such securities may be converted or exercised.  Notwithstanding the foregoing, no adjustment will be made under this Section 4(c) in respect of an Exempt Issuance (as defined below).

“Common Stock Equivalent” means any securities of the Company which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

“Variable Rate Transaction” means a transaction in which the Company (a) issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive, additional shares of Common Stock either (i) at a conversion price, exercise price or exchange rate or other price that is based upon, and/or varies with, the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities or (ii) except for standard anti-dilution adjustments similar to those in this Warrant, with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock or (b) enters into any agreement, including, but not limited to, an equity line of credit, whereby the Company may sell securities at a future determined price.

 

  

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“Exempt Issuance” means the issuance of (a) shares of Common Stock or options as compensation to employees, officers or directors of the Company which issuance is approved by a majority of the non-employee members of the Board of Directors of the Company or a majority of the members of a committee of non-employee directors established for such purpose, (b) securities upon the exercise or exchange of or conversion of any securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding as of the date of this Warrant, and/or securities issued as interest pursuant to any securities outstanding as of the date hereof, issued hereunder or issued in connection with an Exempt Issuance, provided that such securities have not been amended since the date of this Warrant to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities, (c) securities issued to vendors or the landlord of the Company’s corporate headquarters which issuance is approved by a majority of the disinterested directors of the Company, and (d) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a person (or to the equityholders of a person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities.

(d)           Notwithstanding any provision herein to the contrary, no adjustment in the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least 1% in the Exercise Price; provided, however, that any adjustments which by reason of this Section 4(d) are not required to be made shall be carried forward and taken into account in any subsequent adjustment.  All calculations under this Section 4 shall be made to the nearest cent or the nearest one-hundredth of a share, as the case may be.

(e)           In the event that at any time, as a result of an adjustment made pursuant to Section 4(a) above, the Holders of any Warrant thereafter exercised shall become entitled to receive any shares of capital stock of the Company other than shares of Common Stock, thereafter the number of such other shares so receivable upon exercise of any Warrant shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the shares of Common Stock contained in this Section 4, and the other provisions of this Warrant shall apply on like terms to any such other shares.

(f)            Fundamental Transactions.  If, at any time while this Warrant is outstanding, (i) the Company effects any merger or consolidation of the Company with or into another company, (ii) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (iii) any tender offer or exchange offer (whether by the Company or another company or person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (iv) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a “Fundamental Transaction”), then the Holder shall have the right thereafter to receive, upon exercise in full of this Warrant, the same amount and kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the number of Common Stock then issuable upon exercise in full of this Warrant (the “Alternate Consideration”). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.  If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction.  At the Holder’s option and request, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new warrant substantially in the form of this Warrant and consistent with the foregoing provisions and evidencing the Holder’s right to purchase the Alternate Consideration for the aggregate Exercise Price upon exercise thereof.  Any such successor or surviving entity shall be deemed to be required to comply with the provisions of this Section 4(f) and shall insure that this Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.

 

  

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(g)           In case any event shall occur as to which the other provisions of this Section 4 are not strictly applicable but the failure to make any adjustment would not fairly protect the purchase rights represented by this Warrant in accordance with the essential intent and principles hereof, then, in each such case, the Company shall effect such adjustment, on a basis consistent with the essential intent and principles established in this Section 4, as may be necessary to preserve, without dilution, the purchase rights represented by this Warrant.

(h)           Upon the occurrence of each adjustment pursuant to this Section 4, the Company at its expense will promptly compute such adjustment in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment, including a statement of the adjusted Exercise Price and adjusted number or type of Common Stock or other securities issuable upon exercise of this Warrant (as applicable), describing the transactions giving rise to such adjustments and showing in detail the facts upon which such adjustment is based.  Upon written request, the Company will promptly deliver a copy of each such certificate to the Holder and to the Company’s Transfer Agent.

5.             No Registration Rights.  Neither this Warrant nor the shares of Common Stock underlying this Warrant have been registered under the Securities Act of 1933, as amended (the “Securities Act”).  When exercised, the stock certificates shall bear the following legend unless all of the shares may be publicly sold under Rule 144(b)(1) of the Securities Act (or successor rule).

“The securities represented by this certifi­cate have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and may not be offered for sale or sold except pursuant to (i) an effective registration statement under the Securities Act, or (ii) an opinion of counsel, if such opinion and counsel shall be reasonably satis­factory to counsel to the issuer, that an exemption from registration under the Securities Act is available.”

 

  

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The Company may elect to file a registration statement with the SEC, registering the resale of the Common Stock issued or issuable upon exercise of the Warrant under the Securities Act (the “Registration Statement”); however it is under no obligation to do so.

6.             Reservation of Common Stock. The Company covenants that it will at all times reserve and keep available out of the aggregate of its authorized but unissued and otherwise unreserved Common Stock, solely for the purpose of enabling it to issue Common Stock upon exercise of this Warrant as herein provided, the number of shares of Common Stock which are then issuable and deliverable upon the exercise in full of this Warrant, free from preemptive rights or any other contingent purchase rights of persons other than the Holder (taking into account the adjustments and restrictions of Section 4). The Company covenants that all Common Stock so issuable and deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance with the terms hereof, be duly and validly authorized, issued and fully paid and nonassessable.

7.             Replacement of Warrant. If this Warrant is mutilated, lost, stolen or  destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only upon receipt of  evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity (which may include a surety bond), if requested.  Applicants for a New Warrant under such circumstances shall also comply with such other reasonable regulations and procedures and pay such other reasonable third-party costs as the Company may prescribe.  If a New Warrant is requested as a result of a mutilation of this Warrant, then the Holder shall deliver such mutilated Warrant to the Company as a condition precedent to the Company's obligation to issue the New Warrant.

8.             Charges, Taxes and Expenses. Issuance and delivery of certificates for shares of Common Stock upon exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax, withholding tax, transfer agent fee or other incidental tax or expense in respect of the issuance of such certificates, all of which taxes and expenses shall be paid by the Company; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the registration of any certificates for Common Stock or Warrants in a name other than that of the Holder.  The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Common Stock upon exercise hereof.

9.             Notices to Holders. In the event of (a) any fixing by the Company of a record date with respect to the holders of any class of securities of the Company for the purpose of determining which of such holders are entitled to dividends or other distributions, or any rights to subscribe for, purchase or otherwise acquire any shares of capital stock of any class or any other securities or property, or to receive any other right, (b) any capital reorganization of the Company, or reclassification or recapitalization of the capital stock of the Company or any transfer of all or substantially all of the assets or business of the Company to, or consolidation or merger of the Company with or into, any other entity or person, or (c) any voluntary or involuntary dissolution or winding up of the Company, then and in each such event the Company will give the Holders a written notice specifying, as the case may be (i) the record date for the purpose of such dividend, distribution, or right, and stating the amount and character of such dividend, distribution, or right; or (ii) the date on which any such reorganization, reclassification, recapitalization, transfer, consolidation, merger, conveyance, dissolution, liquidation, or winding up is to take place and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such capital stock or securities receivable upon the exercise of this Warrant) shall be entitled to exchange their shares of Common Stock (or such other stock securities) for securities or other property deliverable upon such event.  Any such notice shall be given at least ten (10) days prior to the earliest date therein specified.

  

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10.           No Rights as a Stockholder.  This Warrant does not entitle the Holders to any voting rights or other rights as a stockholder of the Company, nor to any other rights whatsoever except the rights herein set forth; provided, however, that the Company shall not close any merger agreement in which it is not the surviving entity, or sell all or substantially all of its assets unless the Company shall have first provided the Holders with at least ten (10) days’ prior written notice.

11.           Additional Covenants of the Company.

(a)           If upon issuance of any shares for which this Warrant is exercisable, the Common Stock is listed for trading or trades on any national securities exchange including The Nasdaq Stock Market, the Company shall, at its expense, promptly obtain and maintain the listing or qualifications for trading of such shares.

(b)           The Company shall comply with the reporting requirements of Section 13 of the Exchange Act for so long as and to the extent that such requirements apply to the Company.

(c)           The Company shall not, by amendment of its Articles of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issuance or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant. Without limiting the generality of the foregoing, the Company (i) will at all times reserve and keep available, solely for issuance and delivery upon exercise of this Warrant, shares of Common Stock issuable from time to time upon exercise of this Warrant, (ii) will not increase the par value of any shares of Common Stock issuable upon exercise of this Warrant above the amount payable therefor upon such exercise, and (c) will take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable stock.

12.           Successors and Assigns.  This Warrant shall be binding upon and inure to the benefit of the Company, the Holders and their respective successors and permitted assigns.

13.           Severability. Every provision of this Warrant is intended to be severable. If any term or provision hereof is illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the remainder of this Warrant.

14.           Governing Law.  This Warrant shall be governed by and construed in accordance with the laws of the state where the Company is incorporated as of the time of construction without giving effect to the principles of choice of laws thereof.

 

  

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15.           Attorneys’ Fees.  In any action or proceeding brought to enforce any provision of this Warrant, the prevailing party shall be entitled to recover reasonable attorneys’ fees in addition to its costs and expenses and any other available remedies.

16.           Good Faith. The Company will at all times act in good faith assist in the carrying out of all terms and obligations set forth in this Warrant, and in the taking of all such action as may be necessary or appropriate  in order to protect the rights of the holder of this Warrant against such impairment.

  

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its duly authorized officer as of the date first set forth above.

 

	 	
LILIS ENERGY, INC.

	 	 
	  	
By:

	
/s/ A. Bradley Gabbard

	  	  	
A. Bradley Gabbard, Chief Financial Officer

  

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EXHIBIT A (cont’d)

Warrant Exhibit A

SUBSCRIPTION FORM

The undersigned hereby irrevocably subscribes for _______ shares of the Common Stock (the “Stock”) of Lilis Energy, Inc.  (the “Company”) pursuant to and in accordance with the terms and conditions of the attached Warrant (the “Warrant”), and hereby makes payment of $_______ therefore by [tendering cash, wire transferring or delivering a certified check or bank cashier’s check, payable to the order of the Company] [surrendering _______ shares of Common Stock received upon exercise of the Warrant, which shares have an aggregate Fair Market Value equal to such payment as required in Section 2 of the Warrant].  The undersigned requests that a certificate for the Stock be issued in the name of the undersigned and be delivered to the undersigned at the address stated below.  If the Stock is not all of the shares purchasable pursuant to the Warrant, the undersigned requests that a new Warrant of like tenor for the balance of the remaining shares purchasable thereunder be delivered to the undersigned at the address stated below.

In connection with the issuance of the Stock, I hereby represent to the Company that I am (i) acquiring the Stock for my own account for investment and not with a view to, or for resale in connection with, a distribution of the shares within the meaning of the Securities Act of 1933, as amended (the “Securities Act”) and (ii) an “accredited investor” within the meaning of Rule 501 under the Securities Act.

I understand that if at this time the Stock has not been registered under the Securities Act, I must hold such Stock indefinitely unless the Stock is subsequently registered and qualified under the Securities Act or is exempt from such registration and qualification. I shall make no transfer or disposition of the Stock unless (a) such transfer or disposition can be made without registration under the Securities Act by reason of a specific exemption from such registration and such qualification, or (b) a registration statement has been filed pursuant to the Securities Act and has been declared effective with respect to such disposition.  I agree that each certificate representing the Stock delivered to me shall bear substantially the same as set forth on the front page of the Warrant.

I further agree that the Company may place stop transfer orders with its transfer agent same effect as the above legend.  The legend and stop transfer notice referred to above shall be removed only upon my furnishing to the Company an opinion of counsel (reasonably satisfactory to the Company) to the effect that such legend may be removed.

	
Date:_______________________________

	
Signed: _______________________________

Print Name:____________________________

Address:______________________________

 

  

 

  

 

EXHIBIT A (cont’d)

Warrant Exhibit B

ASSIGNMENT

 

For Value Received ___________ hereby sells, assigns and transfers to _________________________ the Warrant attached hereto and the rights represented thereby to purchase _________ shares of Common Stock in accordance with the terms and conditions hereof, and does hereby irrevocably constitute and appoint ___________________________ as attorney to transfer such Warrant on the books of the Company with full power of substitution.

                                                                         

	
Dated:________________________

Please print or typewrite

name and address of

assignor:

	
Signed: _____________________________

Please insert Social Security

or other Tax Identification

Number of Assignor:

                                                                       

	
Dated:________________________

Please print or typewrite

name and address of

assignee:

	
Signed: _____________________________

Please insert Social Security

or other Tax Identification

Number of Assignee:

 

2

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