Document:

Unassociated Document

Exhibit 10.6

 

THIS TRANSACTION FEE AGREEMENT (this “Agreement”) is made as of the 28th day of March, 2014.

BETWEEN:

LILIS ENERGY SYSTEMS, INC.

1900 Grant Street, Suite 720

Denver, CO 80203

(the “Company”)

OF THE FIRST PART

AND:

T.R. WINSTON & COMPANY, LLC

376 Main Street

Bedminster, New Jersey 07921

(the “Broker”)

OF THE SECOND PART

W H E R E A S:

A.           The Company will enter into a Securities Purchase Agreement (the “Purchase Agreement”) with the purchasers to be  identified on the signature pages of the Purchase Agreement (collectively, the “Investors”) in connection with the placement of convertible preferred stock (the “Preferred Stock”) and warrants of the Company to purchase a number of shares of common stock, par value $0.0001 per share, equal to 50% of the shares of common stock initially issuable upon conversion of the Preferred Stock (the “Investor Warrants”)  in the aggregate amount up to $20 million;

 

B.           The Broker is a licensed broker-dealer with the Financial Industry Regulatory Authority;

 

C.           The Broker introduced the Company to the Investors and assisted the Company in the transactions contemplated by the Purchase Agreement;

 

D.           If the Company closes the transaction contemplated herein, the Company wishes to reward the Broker for its services in the manner hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual covenants, promises, conditions, warranties and representations hereinafter set forth, the parties hereto agree as follows:

1.           The Company agrees to compensate the Broker as follows: (i) five percent (5%) of the gross proceeds of the offering, payable at the Closing (as defined in the Purchase Agreement) and (ii) shall reimburse the agent for its legal fees and expenses equal to $25,000.

 

  

  

  

 

2.           The Broker shall be entitled to a cash placement fee (“Tail Fee”), calculated in the manner provided for in Section 1 above, with respect to any subsequent public or private offering or other financing or capital-raising transaction of any kind (“Subsequent Financing”) to the extent that such financing or capital is provided to the Company, all or in part, by Investors whom the Broker had introduced, directly or indirectly, to the Company, if such Subsequent Financing is consummated at any time with the 18-month period following the Closing of the transaction contemplated herein.

 

3.           The parties hereto, and each of them, covenant and agree that each of them shall and will upon reasonable request by the other party, make, do, execute or cause to be made, done or executed all such further and other lawful acts, deeds, things, devices and assurances whatsoever for the better or more perfect and absolute performance of the terms and conditions of this Agreement.

 

4.           By execution hereof, the Company acknowledges that the Broker does not provide investment advice or financial planning services.  In that regard, the Broker is not registered as an investment adviser under the Investment Advisers Act of 1940, as amended, and cannot therefore provide any advice regarding the desirability or value of purchasing, selling, transacting in, investing in, or holding any security.  Rather, the Broker’s services will be limited to those properly provided by a licensed broker-dealer (T.R. Winston & Company, LLC is registered with the FINRA as an “Introducing Broker/Dealer” or “K” broker/ dealer in accordance with Section 15 of the Securities and Exchange Act of 1934, as amended.)

 

5.           The Company hereby agrees to indemnify and hold harmless the Broker, its managers, members, agents and employees (collectively referred to as the Broker for purposes of this Section 4) from and against any and all claims, actions, suits, proceedings (including those of shareholders), damages, liabilities and expenses as incurred by any of them (including the fees and expenses of counsel) which are related to or arise out of any actions taken or omitted to be taken (including any untrue statements made or omitted to be made) by the Company or any actions taken or omitted to be taken by the Broker (except in the case of gross negligence or willful misconduct on the part of such Broker) in connection with the transactions contemplated by the Purchase Agreement or otherwise related to or arising out of the Broker’s activities on behalf of the Company.  The Company shall reimburse Broker for all expenses (including the fees and expenses of counsel) incurred by such Broker in connection with investigating, preparing or defending any such claim, action, suit or proceeding, including in connection with pending or threatened litigation to which Broker is a party, except in the case of gross negligence or willful misconduct on the part of such Broker.

 

6.           This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, administrators, successors and assigns.

 

7.           This Agreement shall be enforced, governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to be performed entirely within such State.  In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law.  Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision hereof.  The parties hereto hereby submit to the exclusive jurisdiction of the state courts or the United States Federal Courts located in New York with respect to any dispute arising under this Agreement or the transactions contemplated hereby.  The party which does not prevail in any dispute arising under this Agreement shall be responsible for all fees and expenses, including attorneys’ fees, incurred by the prevailing party in connection with such dispute.

 

  

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8.           This Agreement consists of a total of 3 pages.  This Agreement may be signed in any number of counterparts and the combination of the same shall constitute a binding agreement.  A signed copy of this Agreement received via facsimile shall be deemed an original signature of a party for purposes of making this Agreement a binding agreement.

IN WITNESS WHEREOF the parties hereto have hereunto executed this Agreement as of and from the day first above written.

	 	
LILIS ENERGY, INC.

	 	 
	 	
By:

	
/s/ A. Bradley Gabbard

	 	
Name:

	
A. Bradley Gabbard

	 	
Title:

	
Chief Operating Officer

 

	 	
T.R. WINSTON & COMPANY, LLC

	 	 
	 	
By:

	
/s/ G. Tyler Runnels

	 	
Name:

	
G. Tyler Runnels

	 	
Title:

	
Chairman & CEO

 

3Unassociated Document

Exhibit 10.7

 

Lilis Energy, Inc.

1900 Grant Street, Suite 720

Denver, CO 80203

April 29, 2014

 

T.R. Winston & Company, LLC

1999 Avenue of the Stars, Suite 2550

Log Angeles, CA  90067

Attention: Tyler Runnels and Karen Ting

Re:           Transaction Fee Agreement, dated March 28, 2014 (the “Agreement”)

Dear Sir or Madam:

As discussed, this letter, when executed in the space indicated below, shall constitute our amendment to the above-referenced Transaction Fee Agreement between Lilis Energy, Inc. and T.R. Winston & Company, LLC.

In consideration of our mutual efforts to pursue the transactions contemplated by the Transaction Fee Agreement, we hereby agree that Section 1 of the letter shall be amended and restated in its entirety as follows:

1.           The Company agrees to compensate the Broker as follows: (i) eight percent (8%) of the gross proceeds of the offering, payable at the Closing (as defined in the Purchase Agreement), (ii) one percent (1%) of the gross proceeds received by the Company at Closing, payable at Closing, for a non-accountable expense allowance, and (iii) shall reimburse the agent for its legal fees and expenses equal to $25,000.

The remaining terms and conditions of the Agreement shall continue in full force and effect.

If the foregoing meets your agreement, please execute a copy of this letter agreement in the space indicated below and return one original to the undersigned.

 

	  	
Lilis Energy, Inc.

	  	  	  
	  	
By:

	
/s/ A. Bradley Gabbard

	  	
Name:

	
A. Bradley Gabbard

	  	
Title:

	
Chief Financial Officer

 

Agreed and Accepted:

 

	
T.R. Winston & Company, LLC

	 
	  	  	 
	
By:

	
/s/ G. Tyler Runnels

	 
	
Name:

	
G. Tyler Runnels

	 
	
Title:

	
Chairman & CEOf10q0314ex10viii_lilisenergy.htm

Exhibit 10.8

 

 

March 20, 2014

Lilis Energy, Inc.

Avi Mirman

1900 Grant Street, Suite 720

Denver, CO 80203

 

	
Re:

	
Engagement Agreement for Financial Advisory Services

 

Dear Mr. Mirman:

 

MLV & Co. LLC (“MLV”) is pleased to provide this Engagement Agreement (the “Agreement”) to Lilis Energy, Inc. (the “Company”).  The purpose of this Agreement is to set forth the terms and conditions under which MLV will act as the Company’s exclusive financial advisor as set forth herein.

 

	
1.

	
Engagement.  The Company engages MLV (“Advisor” or “we” or “us”) to act as the Company’s exclusive financial advisor in connection with the following transactions:

 

	
  

	
a.

	
Fairness Opinion.  You agree to engage MLV to provide, if requested by the Company, a fairness opinion (the “Opinion”) for the Company in connection with the acquisition of Shoreline Energy Corp. (the “Acquisition”), which shall include, but not be limited to, determination of valuation ranges and potential pricing of the Acquisition.

 

	
  

	
b.

	
Debt Restructuring.  You agree to retain MLV to assist the Company with the proposed restructuring of the Company’s debt assuming consummation of the Acquisition of approximately $60,000,000 (the “Debt Transaction”).

 

	
  

	
c.

	
Equity Transaction.  You agree engage MLV to assist the Company with an equity financing (“Equity Transaction”); provided, that MLV’s acceptance of such engagement shall be subject to the final determination of the type of equity financing.

 

	
  

	
d.

	
Financial Advisory Services in connection with Business Combination Transactions.  You agree to engage MLV to provide financial advisory services and assist the Company with respect to the Acquisition (a “Business Combination Transaction”).

 

Term. The initial term of the MLV’s engagement hereunder shall extend for a period of six months (the “Initial Term”), commencing with the signing of this Agreement. If neither party has terminated the Agreement prior to the expiration of the Initial Term by written notice sent 30-days prior to the expiration of the Initial Term, the term of this Agreement shall extend for additional consecutive one-month periods (the “Extended Term”). The Initial Term and Extended Term is herein called the “Term”. Notwithstanding the foregoing, this Agreement may be terminated by either party, with or without cause, on ten (10) days' written notice (which shall be given in accordance with the provisions of Section 7) during the Term.

 

1251 Avenue of the Americas, 41st Floor, New York, NY 10020 | 212-542-5880 | mlvco.com

  

  

 

	
2.

	
Fees.

 

	
  

	
a.

	
A fee of twenty-five thousand dollars ($25,000) (the “Advisory Fee”) per month for the first six months of the Term; provided, that upon payment of the Opinion Fee the obligation to make Advisory Fee payments shall cease.  The initial Advisory Fee shall be payable by wire transfer, to an account designated by MLV, within three (3) business days of the effective date of this Agreement, and thereafter the Advisory Fee shall be payable by wire transfer on the first business day of each subsequent month.  The Advisory Fee payments are non-refundable and will be credited toward any success fee paid to MLV pursuant to Section 3(c) and (d) below.

	
  

	
b.

	
Fairness Opinion Fee.  The Company shall pay MLV an amount equal to two hundred thousand dollars ($200,000) for issuance of the Opinion (the “Opinion Fee”).  The Opinion Fee shall be payable by wire transfer, to an account designated by MLV, within three (3) business days of the delivery of the Opinion by MLV to the Company.  For the avoidance of doubt, the Opinion Fee shall be payable to MLV irrespective of the conclusion reached in the Opinion rendered by MLV.  The Opinion Fee is non-refundable and will be credited toward any success fee paid to MLV pursuant to Section 3(e) below.

	
  

	
c.

	
Debt Restructuring Fee.  If, during the Term of this Agreement the Company enters into a Debt Transaction with any party the Company shall pay to MLV a success fee equal to 1% of the total senior/first lien debt funded, and 3% of total subordinated/second lien/unsecured/mezzanine debt issued or incurred by the Company in the Debt Transaction, payable in cash (the “Cash Fee”). The obligation to pay the Cash Fee shall also apply to a Debt Transaction consummated within six (6) months of expiration or termination of this Agreement with a party or parties identified by MLV as a party contacted by MLV in connection with the Debt Restructuring and who has entered into a non-disclosure agreement with the Company in respect thereof (which list of parties shall be mutually agreed upon promptly following such expiration or termination).  The Cash Fee shall be paid to MLV by wire transfer, to an account designated by MLV, on the closing date of the Debt Transaction.

	
  

	
d.

	
Equity Fee.  The fees payable to MLV in connection with an Equity Transaction shall be negotiated in good faith based on the type of Equity Transaction consummated and shall be in accordance with general industry standards for such transaction.

	
  

	
e.

	
Business Combination Fee.  If, during the term of this Agreement and for a period of six (6) months from the expiration or termination of this Agreement, the Company enters into a Business Combination Transaction, the Company shall pay to MLV a success fee equal to three hundred and fifty thousand dollars $350,000, payable in cash (the “Business Combination Fee”).  The Business Combination Fee shall be paid to MLV by wire transfer, to an account designated by MLV, on the closing date of the Business Combination Transaction.

 

1251 Avenue of the Americas, 41st Floor, New York, NY 10020 | 212-542-5880 | mlvco.com

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f.

	
Expenses.  The Company shall reimburse MLV for all reasonable out-of-pocket expenses, including reasonable attorney’s fees, incurred by MLV in performing its services hereunder up to an aggregate of $50,000 (the “Capped Amount”) without prior approval of the Company. Any out-of-pocket expenses incurred by MLV above the Capped Amount shall be pre-approved by the Company in writing.  These expenses (except attorney’s fees which shall be billed upon the closing of the Debt Transaction) shall be billed monthly and MLV shall provide copies of receipts for such expenses.

 

	
3.

	
Future Financings.  The Company hereby grants MLV the right to participate in any subsequent public or private equity financings that are commenced within twelve (12) months of the completion of a debt or equity financing hereunder on terms to be negotiated.

 

	
4.

	
Indemnification and Contribution.  Exhibit A is hereby incorporated into this Agreement by reference and made a part of this Agreement.

 

	
5.

	
Termination.  Section 3 (Fees), Section 4 (Future Financings), Section 5 (Indemnification and Contribution), Section 6 (Termination) and Section 8 (Miscellaneous) will survive any termination of our engagement under this Agreement.

 

	
6.

	
Notices.  Any notice provided for or permitted under this Agreement will be treated as having been given (a) when delivered personally, (b) when sent by commercial overnight courier with written verification of receipt, on the next business day after its delivery to the courier during normal business hours, or (c) when mailed postage prepaid by certified or registered mail, return receipt requested, on the fifth (5) business day after its date of posting.  Notices shall be sent to the addresses set forth below, or at such other place of which the other party has been notified in accordance with the provisions of this Section:

 

	
  

	
If to MLV:

	
MLV & Co. LLC

	
  

	
1251 Avenue of the Americas, 41st Floor

	
  

	
New York, NY  10020

Attention: Dean Colucci, President

Telephone: (212) 542-5870

If to Company:                     Lilis Energy, Inc.

1900 Grant Street, Suite 720

Denver, CO 80203

 

	
7.

	
Miscellaneous.  This Agreement will be governed by and construed in accordance with the laws of New York, without regard to its conflict of law principles.  This Agreement embodies the entire agreement and understanding between you and us and supersedes all prior agreements and understandings relating to the subject matter of this Agreement.  This Agreement may be executed in any number of counterparts.  The invalidity or unenforceability of any provision of this Agreement will not affect the validity or enforceability of any other provisions of this Agreement, which will remain in full force and effect.  This Agreement is solely for the benefit of you and us, and no other person (other than the Indemnified Persons set forth in Exhibit A hereto) will acquire or have any rights by virtue of this Agreement.  This Agreement may not be amended without the written consent of each of the parties hereto.

 

1251 Avenue of the Americas, 41st Floor, New York, NY 10020 | 212-542-5880 | mlvco.com

3

  

 

MLV and the Company hereby irrevocably waive all right to trial by jury in any action, proceeding, or counterclaim (whether based upon contract, tort or otherwise) in connection with any dispute arising out of this Agreement or any matters contemplated by this Agreement.  In addition, MLV and the Company each hereby irrevocably submits to the jurisdiction of the courts of the State of New York and the Federal courts of the United States of America located in the Borough of Manhattan, The City of New York in respect of the interpretation and enforcement of the terms of this Agreement, and hereby waives, and agrees not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof, that it is not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in said courts or that the venue thereof may not be appropriate or that this Agreement may not be enforced in or by such courts, and MLV and the Company hereby irrevocably agrees that all claims with respect to such action or proceeding shall be heard and determined in such a New York State or Federal court.

 

	
  

	
We are delighted to accept this engagement and look forward to working with you on this assignment.  Please confirm that the foregoing is in accordance with your understanding by signing and returning to us the enclosed duplicate of this Agreement.

 

	
  

	
You acknowledge that we are not an advisor as to legal, tax, accounting or regulatory matters in any jurisdiction.  You should consult with your own advisors concerning such matters and are responsible for making your own independent investigation and appraisal of the transactions contemplated by this Agreement, and we have no responsibility or liability to you with respect to such matters.

 

[Remainder of the page intentionally left blank]

 

1251 Avenue of the Americas, 41st Floor, New York, NY 10020 | 212-542-5880 | mlvco.com

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Sincerely,

	
MLV & Co. LLC

	 
	  	  	 
	
By:

	
/s/ Dean Colucci

	 
	
Name:

	
Dean Colucci

	 
	
Title:

	
President

	 

Agreed and accepted as of the date first above written.

 

	
Lilis Energy, Inc.

	 
	  	  	 
	
By:

	
/s/ Avi Mirman

	 
	
Name:

	
Avi Mirman

	 
	
Title:

	
President

	 

1251 Avenue of the Americas, 41st Floor, New York, NY 10020 | 212-542-5880 | mlvco.com

5

  

 

Exhibit A to Engagement Letter

 

The Company shall:

	
  

	
(a)

	
indemnify MLV and hold it harmless against any and all losses, claims, damages or liabilities to which MLV may become subject arising in any manner out of or in connection with the rendering of services by MLV hereunder (including any services rendered prior to the date hereof) or the rendering of additional services by MLV as requested by the Company that are related to the services rendered hereunder, unless it is finally judicially determined that such losses, claims, damages or liabilities resulted  from the gross negligence, willful misconduct of MLV or MLV’s breach of any provision of this Agreement; and

	
  

	
(b)

	
reimburse MLV promptly for any reasonable legal or other expenses reasonably incurred by it in connection with investigating, preparing to defend or defending, or providing evidence in or preparing to serve or serving as a witness with respect to, or otherwise relating to, any lawsuits, investigations, claims or other proceedings arising in any manner out of or in connection with the rendering of services by MLV hereunder or the rendering of additional services by MLV as requested by The Company that are related to the services rendered hereunder (including, without limitation, in connection with the enforcement of this Agreement and the indemnification obligations set forth herein); provided, however, that in the event a final judicial determination is made adverse to MLV to the effect specified at the conclusion of paragraph (a) above, MLV will remit to the Company any amounts reimbursed under this paragraph (b).  MLV agrees that if a claim for whatever reason shall be brought or asserted against an Indemnified Person (as defined below), such Indemnified Person shall promptly notify the Company, and the Company shall be entitled to assume the defense thereof, including the employment of counsel and the payment of all reasonable fees and expenses.

The Company agrees that the indemnification and reimbursement commitments set forth in this Exhibit A shall apply regardless of whether the Company or MLV is a formal party to any such lawsuits, investigations, claims or other proceedings and that such commitments shall extend upon the terms set forth in this paragraph to any controlling person, affiliate, director, officer, employee or consultant of MLV (each, with MLV, an “Indemnified Person”). The Company further agrees that, without MLV’s prior written consent, it will not enter into any settlement of a lawsuit, claim or other proceeding arising out of the transactions contemplated by this Agreement (whether or not MLV or any other Indemnified Person is an actual or potential party to such lawsuit, claim or proceeding) unless such settlement includes an explicit and unconditional release from the party bringing such lawsuit, claim or other proceeding of all Indemnified Persons. The Company shall not be required to indemnify any Indemnified Person for any amount paid or payable by such party in the settlement or compromise of any claim or action against such Indemnified Person without the Company’s express prior written consent.

The Company further agrees that the Indemnified Persons are entitled to retain (at their own expense) a single separate counsel of their choice in connection with any of the matters in respect of which indemnification, reimbursement or contribution may be sought under this Agreement.

1251 Avenue of the Americas, 41st Floor, New York, NY 10020 | 212-542-5880 | mlvco.com

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The Company and MLV agree that if any indemnification or reimbursement sought pursuant to this Exhibit A is judicially determined to be unavailable for a reason other than the gross negligence, willful misconduct or breach of contract of MLV, then, whether or not MLV is the Indemnified Person, the Company and MLV shall contribute to the losses, claims, damages, liabilities and expenses for which such indemnification or reimbursement is held unavailable (i) in such proportion as is appropriate to reflect the relative benefits to the Company on the one hand, and MLV on the other hand, in connection with the transactions to which such indemnification or reimbursement relates, or (ii) if the allocation provided by clause (i) above is judicially determined not to be permitted, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) but also the relative faults of the Company on the one hand, and MLV on the other hand, as well as any other equitable considerations; provided, however, that in no event shall the amount to be contributed by MLV pursuant to this paragraph exceed the amount of the fees actually received by MLV hereunder.

 

 

1251 Avenue of the Americas, 41st Floor, New York, NY 10020 | 212-542-5880 | mlvco.com

7

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