Document:

Exhibit 10.10

 

SETTLEMENT
AGREEMENT

 

This
Settlement Agreement (this “Agreement”) dated as of September 2, 2014, is made by and between Lilis Energy,
Inc., a Nevada corporation formerly known as Recovery Energy, Inc. (“Lilis”) and Hexagon, LLC, a Colorado limited
liability company formerly known as Hexagon Investments, LLC (“Hexagon”). This Agreement is joined in by Labyrinth
Enterprises LLC, The Reiman Foundation, Conway J. Schatz and Scott J. Reiman (together with Hexagon, the “Hexagon Parties”)
and, solely for purposes of Section 7 hereof, Grandhaven Energy, LLC.

 

RECITALS

 

A.Lilis
and Hexagon entered into (i) a Credit Agreement, dated as of January 29, 2010, providing for a secured term loan in the original
principal amount of $4,500,000 (as amended, modified, supplemented, substituted or replaced, “Credit Agreement No. 1”);
(ii) a Credit Agreement, dated as of March 25, 2010, providing for a secured term loan in the original principal amount of $6,000,000
(as amended, modified, supplemented, substituted or replaced, “Credit Agreement No. 2”); and (iii) a Credit
Agreement, dated as of April 14, 2010, providing for a term loan in the original principal amount of $15,000,000 (as amended,
modified, supplemented, substituted or replaced, “Credit Agreement No. 3” and, together with Credit Agreement
No. 1 and Credit Agreement No. 2, the “Credit Agreements”).

 

B.In
connection with the Credit Agreements, Lilis executed, in favor of Hexagon, (i) a Promissory Note, dated as of January 29, 2010
(as amended, modified, supplemented, substituted or replaced, “Promissory Note No. 1”); (ii) a Promissory Note,
dated as of March 25, 2010 (as amended, modified, supplemented, substituted or replaced, “Promissory Note No. 2”);
and a Promissory Note, dated as of April 14, 2010 (as amended, modified, supplemented, substituted or replaced, “Promissory
Note No. 3” and, together with Promissory Note No. 1 and Promissory Note No. 2, the “Promissory Notes”).

 

C.The
obligations of Lilis under (i) Promissory Note No. 1 are secured by (a) that certain Mortgage, Security Agreement, Assignment
of Production and Proceeds, Financing Statement and Fixture Filing, dated as of January 29, 2010, by and between Lilis and Hexagon
(as amended, the “Colorado Mortgage”), and (b) that certain Deed of Trust, Mortgage, Security Agreement, Assignment
of Production and Proceeds, Financing Statement and Fixture Filing, dated as of January 29, 2010, by and among Lilis, Hexagon
and Jacob B. Mueller, Trustee (as amended, the “First Nebraska Mortgage”); (ii) Promissory Note No. 2 are secured
by (a) that certain Deed of Trust, Mortgage, Security Agreement, Assignment of Production and Proceeds, Financing Statement and
Fixture Filing, dated as of March 25, 2010, by and among Lilis, Hexagon and Jacob B. Mueller, Trustee (the “Second Nebraska
Mortgage”), and (b) that certain Mortgage, Security Agreement, Assignment of Production and Proceeds, Financing Statement
and Fixture Filing, dated as of March 25, 2010, by and between Lilis and Hexagon (the “First Wyoming Mortgage”);
(iii) Promissory Note No. 3 are secured by that certain Mortgage, Security Agreement, Assignment of Production and Proceeds, Financing
Statement and Fixture Filing, dated as of April 14, 2010, by and between Lilis and Hexagon (the “Second Wyoming Mortgage”);
and all of the Promissory Notes are additionally secured by (a) that certain Mortgage, Security Agreement, Assignment of Production
and Proceeds, Financing Statement and Fixture Filing, dated as of March 1, 2013, by and between Lilis and Hexagon (the “Third
Wyoming Mortgage”), and (b) that certain First Amendment to Deed of Trust, Mortgage, Security Agreement, Assignment
of Production and Proceeds, Financing Statement and Fixture Filing, dated as of March 1, 2013, by and between Lilis and Hexagon
(the “Amendment to Nebraska Mortgage” and, together with the Colorado Mortgage, the First Nebraska Mortgage,
the Second Nebraska Mortgage, the First Wyoming Mortgage, the Second Wyoming Mortgage and the Third Wyoming Mortgage, the “Mortgages”).

 

    	 

    	 

    

 

D.The
parties have agreed to fully settle the Promissory Notes, all amounts due thereunder, and other matters as set forth herein.

 

AGREEMENT

 

In
consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

 

1.Settlement.
The parties hereby agree that in consideration of (a) the execution and delivery by the parties thereto of that certain Assignment,
Bill of Sale and Conveyance, effective as of September 1, 2014 (the “Effective Date”), by and between Lilis
and Grandhaven Energy, LLC (“Grandhaven”), substantially in the form attached hereto as Exhibit A (the
“Assignment”), conveying to Grandhaven one hundred percent (100%) of Lilis’s right, title and interest
in the collateral secured by the Mortgages (the “Collateral”) and the other documents to be delivered in connection
with the Assignment as provided in Section 7 below (the “Transfer Documents”), (b) the issuance by Lilis to
Hexagon of 2,000 shares of Lilis’s 6% Redeemable Preferred Stock (the “Preferred Stock”), on the terms
set forth in that certain Certificate of Designation of Preferences, Rights and Limitations of 6% Redeemable Preferred Stock,
adopted by the board of directors of Lilis and filed with the Secretary of State of the State of Nevada on or prior to the date
hereof, substantially in the form attached hereto as Exhibit B, and (c) the execution and delivery of that certain General
Release by Bristol Investment Fund, Ltd., effective as of August 29, 2014, and that certain General Release by T.R. Winston &
Company, LLC, on behalf of the holders of Lilis’s outstanding 8% Senior Secured Convertible Debentures (the “Debentures”),
effective as of August 28, 2014, substantially in the forms attached hereto as Exhibit C and Exhibit  D respectively
(together, the “Third-Party Releases” and, together with the Assignment, the Transfer Documents, the Preferred
Stock and the performance of Lilis’s obligations hereunder, the “Settlement Consideration”), all outstanding
obligations under the Credit Agreements and the Promissory Notes shall be deemed discharged and paid in full, and the Credit Agreements,
the Promissory Notes and the Mortgages shall be deemed terminated, released and discharged.

 

2.Release
and Termination.

 

(a)By
Lilis Energy, Inc. Without further action necessary by any party, upon execution of this Agreement by all parties, Lilis shall
unconditionally and irrevocably release and forever discharge the Hexagon Parties, and all of their respective present and former
officers, directors, principals, managers, members, employees, equity holders, agents and representatives, as well as their respective
successors and assigns, from any and all claims (whether known or unknown, absolute or contingent, liquidated or unliquidated,
matured or unmatured, foreseeable or unforeseeable, previously existing, presently existing or hereafter discovered, at law, equity,
or otherwise, whether arising by statute, common law, in contract, in tort, or otherwise, of any kind, character or nature whatsoever),
causes of action, damages, costs, losses, liens, and expenses which Lilis may have against the Hexagon Parties as of the effective
date hereof (collectively, the “Lilis Released Claims”). This release is specifically intended to operate and
be applicable even if it is alleged, charged, or proven that all or some of the Released Claims were solely and completely caused
by any acts or omissions, whether negligent, grossly negligent, intentional, or otherwise, of or by the Hexagon Parties. This
release and Lilis’s performance of its continuing obligations hereunder are subject to the performance by the Hexagon Parties
of all its obligations under this Agreement.

 

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(b)By
the Hexagon Parties. Without further action necessary by any party, upon Hexagon’s receipt of the Settlement Consideration,
the Hexagon Parties shall unconditionally and irrevocably release and forever discharge Lilis and its present and former officers,
directors, principals, managers, members, employees, equity holders, agents and representatives, as well as their respective successors
and assigns (together, the “Lilis Parties”), from any and all claims (whether known or unknown, absolute or
contingent, liquidated or unliquidated, matured or unmatured, foreseeable or unforeseeable, previously existing, presently existing
or hereafter discovered, at law, equity, or otherwise, whether arising by statute, common law, in contract, in tort, or otherwise,
of any kind, character or nature whatsoever), causes of action, damages, costs, losses, liens, and expenses which the Hexagon
Parties may have against the Lilis Parties, as of the effective date hereof, arising from or relating to any transactions or proposed
transactions, including loans and extensions of credit, between the Hexagon Parties and Lilis (collectively, the “Hexagon
Released Claims”). This release is not intended to apply to, and expressly does not apply to, any right to indemnification
or advancement that Conway J. Schatz may have against Lilis arising from or relating to his service on the Board of Directors
of Lilis. This release is specifically intended to operate and be applicable even if it is alleged, charged, or proven that all
or some of the Released Claims were solely and completely caused by any acts or omissions, whether negligent, grossly negligent,
intentional, or otherwise, of or by the Lilis Parties. This release and the Hexagon Parties’ agreement to accept the Settlement
Consideration is subject to the performance by Lilis of all of its obligations under this Agreement.

 

(c)Except
as required by law, each of the parties hereby irrevocably covenants to refrain from, directly or indirectly, asserting any Released
Claim, or commencing, instituting, encouraging, or causing to be commenced, or assisting any third party in the commencement of,
any action, proceeding, disclosure, arbitration, audit, hearing, investigation, or suit (whether civil, criminal, administrative,
investigative, or informal) of any kind against the other party based on or related to the Lilis Released Claims or the Hexagon
Released Claims.

 

3.Mortgage
Termination. Without limiting the generality of Section 2 hereof, Hexagon hereby agrees that upon receipt of the Settlement
Consideration, Hexagon shall automatically be deemed to authorize Lilis to file Uniform Commercial Code termination statements
and any other release documents necessary to evidence the release of the Mortgages.

 

4.Specific
Covenants of Hexagon. The Hexagon Parties hereby agree as follows:

 

(a)The
Hexagon Parties will not, for a period commencing on the date hereof and ending on February 29, 2016 (the “Release Date”),
offer, pledge, sell, contract to sell, grant any option or contract to purchase, purchase any option or contract to sell, or otherwise
dispose of, directly or indirectly, any shares of common stock, par value $0.0001 per share, of Lilis (“Common Stock”)
or any securities convertible into, exercisable for, or exchangeable for Common Stock.

 

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(b)Upon
receipt of the Settlement Consideration, Hexagon shall return to Lilis the original Promissory Notes marked “paid in full.”

 

5.Representations
and Warranties.

 

(a)Lilis
hereby represents and warrants to Hexagon that (i) Lilis has the corporate power and authority, and the legal right, to execute,
deliver and perform this Agreement including execution and delivery of the Assignment and the Transfer Documents, (ii) Lilis has
taken all necessary corporate action to authorize the execution, delivery and performance of this Agreement including execution
and delivery of the Assignment and the Transfer Documents, (iii) no consent or authorization of, filing with, notice to or other
act by, or in respect of, any governmental authority or any other person is required to be obtained by Lilis in connection with
this Agreement or the execution, delivery, performance, validity or enforceability of this Agreement, except consents, authorizations,
filings and notices which have been obtained or made and are in full force and effect; (iv) as of the date hereof Lilis is
not a debtor or a co-debtor in a bankruptcy or insolvency proceeding, Lilis does not intend to file a petition for relief under
the U.S. Bankruptcy Code or any other federal or state insolvency laws providing relief for debtors (“Insolvency Laws”),
nor to the knowledge of Lilis, are any of Lilis’s creditors threatening to file an involuntary petition under any Insolvency
Law with respect to Lilis as a debtor; and (v) the terms and conditions of this Agreement, including the Settlement Consideration,
(A) are fair and reasonable; (B) are valid, binding and enforceable obligations of Lilis except as limited by Insolvency
Laws; and (C) constitute reasonably equivalent value and fair consideration for the releases and other consideration granted
by Hexagon.

 

(b)Hexagon
hereby represents and warrants to Lilis that (i) Hexagon has the corporate power and authority, and the legal right, to execute,
deliver and perform this Agreement, (ii) Hexagon has taken all necessary corporate action to authorize the execution, delivery
and performance of this Agreement, (iii) no consent or authorization of, filing with, notice to or other act by, or in respect
of, any governmental authority or any other person is required to be obtained by Hexagon in connection with this Agreement or
the execution, delivery, performance, validity or enforceability of this Agreement, except consents, authorizations, filings and
notices which have been obtained or made and are in full force and effect, (iv) the terms and conditions of this Agreement
are valid, binding and enforceable obligations of Hexagon except as limited by Insolvency Laws, and (v) neither Hexagon nor any
of its affiliates have assigned, conveyed or otherwise transferred any of its interest under the Credit Agreements, the Promissory
Notes, the Mortgages or any other documents related thereto to any third party.

 

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6.Representations
and Warranties of Lilis Related to Preferred Stock.

 

Lilis
hereby represents and warrants to Hexagon as follows:

 

(a)Lilis
is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada. All corporate action
on the part of Lilis, its directors and its stockholders necessary for the authorization, issuance and delivery of the Preferred
Stock to Hexagon hereunder shall have been obtained and will be effective prior to the issuance thereof.

 

(b)All
consents, approvals, or authorizations of, or registrations, qualifications, designations, declarations, or filings with, any
third parties or governmental authority, required on the part of Lilis in connection with the issuance of the Preferred Stock
to Hexagon hereunder shall have been obtained and will be effective prior to the issuance thereof.

 

(c)The
authorized capital of Lilis consists, immediately prior to the issuance of the Preferred Stock hereunder, of the following:

 

(i)100,000,000
shares of common stock, $0.0001 par value per share (the “Common Stock”), of which 27,582,317 are issued and
outstanding immediately prior to the issuance of the Preferred Stock.

 

(ii)10,000,000
shares of preferred stock, $0.0001 par value per share (the “Preferred Shares”), 20,000 of which have been
designated as Series A Convertible Preferred Stock, of which 7,000 are issued and outstanding immediately prior to the issuance
of the Preferred Stock; and 2,000 of which have been designated as Preferred Stock, none of which are issued and outstanding immediately
prior to the issuance of the Preferred Stock to Hexagon under this Agreement. The rights, privileges and preferences of the Preferred
Stock are as stated in the Articles of Incorporation of the Company and certificates of designations executed in connection therewith
(collectively, the “Charter”) and as provided by the general corporation law of Nevada. When issued in compliance
with the provisions of this Agreement and the Charter, the Preferred Stock will be validly issued, fully paid and nonassessable,
and will be free of any liens or encumbrances other than liens and encumbrances created by or imposed upon Hexagon; provided,
however, that the Preferred Stock may be subject to restrictions on transfer under state and/or federal securities laws or as
otherwise required by such laws at the time a transfer is proposed. Lilis has obtained valid waivers of any rights by other parties
to purchase any of the Preferred Stock issued to Hexagon hereunder.

 

(d)There
is no claim, action, suit, proceeding, arbitration, complaint, charge or investigation pending or, to Lilis’s knowledge,
currently threatened in writing that questions the right of Lilis to issue the Preferred Stock to Hexagon hereunder.

 

7.Transfer
of Collateral Provisions.

 

(a)Terms.
Capitalized terms used in this Section 7 and not defined herein shall have the meaning given them in the Assignment.

 

(b)Lilis
Obligations. Lilis shall be entitled to all credits and proceeds of production from and accruing to the Assets received by
either Hexagon, Grandhaven or Lilis, attributable to periods prior to the Effective Time, and Lilis shall be responsible for all
costs, expenses and disbursements that are attributable to ownership and operation of the Assets for periods prior to the Effective
Time.

 

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(c)Hexagon
Obligations. Grandhaven shall be entitled to all credits and proceeds of production from and accruing to the Assets, received
by either Grandhaven or Lilis, attributable to periods after the Effective Time, and Grandhaven shall be responsible for all costs,
expenses and disbursements attributable to ownership and operation of the Assets for periods after the Effective Time.

 

(d)Indemnification
as to Assets.

 

(i)Lilis
Indemnity. Lilis shall fully protect, indemnify, and defend Grandhaven, and all of its present and former officers, directors,
principals, managers, members, equity holders, agents and/or employees and hold them harmless from any and all claims, losses,
damages, demands, suits, causes of action, and liabilities (including reasonable attorneys’ fees, costs of litigation and/or
investigation and other costs associated therewith) (collectively referred to hereafter as “Claims”) of every
kind, including, without limitation, those relating to injury or death of any person or persons whomsoever, compliance with express
or implied terms of leases or other agreements pertaining to the Assets and/or damage to or loss of property (real or personal)
or resource, of any kind, arising out of or connected, directly or indirectly, with the ownership or operation of the Assets (or
any part thereof) accruing at or before the Effective Time.

 

(ii)Grandhaven
Indemnity. Grandhaven shall fully protect, indemnify, and defend Lilis, and all of its present and former officers, directors,
principals, managers, members, equity holders, agents and/or employees and hold them harmless from any and all Claims of every
kind, including, without limitation, those relating to injury or death of any person or persons whomsoever, compliance with express
or implied terms of leases or other agreements pertaining to the Assets and/or damage to or loss of property (real or personal)
or resource, of any kind, arising out of or connected, directly or indirectly, with the ownership or operation of the Assets (or
any part thereof) accruing after the Effective Time.

 

(e)Asset
Claims or Litigation. Lilis represents and warrants to Grandhaven that there are no claims, legal actions, suits, arbitrations,
governmental investigations, condemnation proceedings or, to the best of Lilis’s knowledge, other legal or administrative
proceedings, or any orders, decrees or judgments in progress, pending or in effect, or to the best of Lilis’s knowledge
threatened, against or relating to the Assets or the transactions contemplated by this Agreement.

 

(f)Letters
in Lieu. On or before Friday, September 5, 2014, Lilis shall prepare, execute and deliver to Grandhaven letters in lieu of
transfer orders addressed to each purchaser of production from the Assets, in form acceptable to Grandhaven in its reasonable
discretion, directing all purchasers of production to make payment to Grandhaven of proceeds attributable to production from the
Assets after the Effective Time.

 

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(g)Records.
On or before Friday, September 5, 2014 Lilis shall make available for pick up by Grandhaven originals or copies of all of
the Records, including without limitation a list of current vendors, LOS data, and all well files including logs, completion reports
(including fracs), drilling reports, DST’s, mud logs and workover reports. By such date Lilis also shall provide to Grandhaven
all accounting records (including expense/revenue decks with owner names and addresses and a complete list of landowners with
addresses and Tax ID numbers) in appropriate electronic format sufficient to allow Grandhaven to assume expenditure, joint interest
billing and royalty payment functions, as currently conducted by Lilis.

 

(h)Transfer
of Operations. As to the wells included in the Assets located in Nebraska and Wyoming, Grandhaven’s designated operator
will coordinate with Lilis to accomplish the designated operator’s takeover of operations as soon as reasonably possible
after the execution of this Agreement. As to the two wells located in Colorado, Grandhaven will cause its designated operator
to use reasonable efforts to make all filings with the COGCC as necessary to take over operations on such wells, and will coordinate
with Lilis to accomplish the designated operator’s takeover of operations as soon as such filings are completed. With respect
to each well, from the Effective Time until Grandhaven’s designated operator has taken over the operation of such well,
as evidenced by written confirmation delivered to Lilis, (i) Lilis shall continue to operate such wells for the benefit of Grandhaven,
(ii) Grandhaven will compensate Lilis at a rate of $800 per month per well, prorated for the period of time during which Lilis
operates such well, and (iii) Lilis shall have the right to net the amounts due pursuant to (ii) above, as well as all costs,
expenses and disbursements for which Grandhaven is responsible pursuant to Section 7(c) above, from the proceeds of production
from such well. Notwithstanding the foregoing, in no event shall Lilis continue to operate any well for the benefit of Grandhaven
for more than thirty (30) days after the Effective Time unless otherwise agreed in writing by Grandhaven and Lilis.

 

(i)Governmental
Assignment Forms.On or before Friday, September 5, 2014, Lilis shall prepare, and Lilis and Hexagon shall execute and
deliver assignments on appropriate forms of all Federal and State leases included in the Assets, in sufficient counterparts to
facilitate filing with the applicable governmental authority.

 

(j)Survival.
The provisions of this Section 7 shall survive the execution and delivery of the Assignment.

 

8.Further
Assurances. Lilis and Hexagon each agree that, from time to time after the date hereof, upon the reasonable request of the
other party, it shall cooperate with the other party in executing and delivering any and all such further instruments and documents
and take such further action as may be necessary to carry out the intent of this Agreement and the terms hereof.

 

9.Severability.
If any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party. Upon such
determination that any term or other provision is invalid, illegal, or incapable of being enforced, the parties shall negotiate
in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.

 

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10.GOVERNING
LAW. ALL ISSUES AND QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF COLORADO, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW
OR CONFLICT OF LAW RULES OR PROVISIONS (WHETHER OF THE STATE OF COLORADO OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION
OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF COLORADO.

 

11.Submission
to Jurisdiction. Each of the Hexagon Parties, on the one hand, and Lilis, on the other hand, submits to the jurisdiction of
any state or federal court sitting in the City and County of Denver, in any action or proceeding arising out of or relating to
this Agreement and agrees that all claims in respect of the action or proceeding may be heard and determined in any such court.
Each of the Hexagon Parties and Lilis waives any defense of inconvenient forum to the maintenance of any action or proceeding
so brought and waives any bond, surety, or other security that might be required of the other party with respect thereto.

 

12.Indemnification.

 

(a)If
after receipt of the Collateral, Hexagon is for any reason compelled to surrender such Collateral to any person or entity, because
transfer of such Collateral to Hexagon is determined to be void or voidable as a preference, impermissible setoff, or diversion
of trust funds, or for any other reason, this Agreement will continue in full force and effect and Lilis will be liable to, and
will indemnify, save and hold Hexagon, its officers, directors, attorneys, and employees harmless of and from the value of such
Collateral surrendered. The provisions of this Section 12(a) will be and remain effective notwithstanding any contrary action
which may have been taken by Hexagon in reliance on receipt of such Collateral, and any such contrary action so taken will be
without prejudice to Hexagon’s rights under this Agreement and will be deemed to have been conditioned upon transfer of
such Collateral becoming final, indefeasible and irrevocable.

 

(b)Lilis
will indemnify, defend, save and hold harmless the Hexagon Parties, and their respective present and former officers, directors,
principals, managers, equity holders, attorneys, and employees, of, from and against all claims, demands, liabilities, judgments,
losses, damages, costs and expenses, joint or several (including all accounting fees and attorneys’ fees reasonably incurred),
made by a third party against the other party or parties, or any such indemnified party, in connection with the Credit Agreements,
the Promissory Notes, the Mortgages or this Agreement.

 

(c)In
no event shall the Hexagon Parties or Lilis be liable to any other party or parties for any consequential, incidental, indirect,
punitive, special or similar damages of any nature whatsoever, even if such party has been advised of the possibility of such
damages occurring.

 

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(d)The
provisions of this Section 12 will survive the termination of this Agreement.

 

13.Waiver
of Jury Trial. The parties hereto acknowledge and agree that there may be a constitutional right to a jury trial in connection
with any claim, dispute or lawsuit arising between or among them, but that such right may be waived. Accordingly, the parties
agree that, notwithstanding such constitutional right, in this commercial matter the parties believe and agree that it shall be
in their best interests to waive such right, and, accordingly, hereby waive such right to a jury trial, and further agree that
the best forum for hearing any claim, dispute, or lawsuit, if any, arising in connection with this Settlement Agreement or the
relationship between the parties hereto, in each case whether now existing or hereafter arising, or whether sounding in contract
or tort or otherwise, shall be a court of competent jurisdiction sitting without a jury.

 

14.Miscellaneous.
This Agreement, including the exhibits hereto: (a) contain the entire agreement among the parties, (b) may not be amended nor
may any rights hereunder or thereunder be waived except by an instrument in writing signed by the party sought to be charged with
such amendment or waiver, (c) will be binding upon and will inure to the benefit of the parties and their respective personal
representatives, successors and assigns, (d) may be executed in any number of counterparts and by different parties on separate
counterparts, each of which will be deemed an original, but all of which, when taken together, shall be deemed to constitute one
agreement, and (e) signatures delivered by facsimile, pdf or other electronic means shall constitute original signatures.

 

15.Confidentiality.
Hexagon and Lilis agree to keep the terms of this Agreement and the Releases executed in connection herewith confidential
and shall not publicly disclose such terms without the prior consent of the other party, except as disclosure may be required
by applicable securities laws. Lilis further agrees, to the extent possible in compliance with applicable securities laws, to
not disclose the terms of the Releases in its required filings under securities laws.

 

[REMAINDER
OF THE PAGE IS INTENTIONALLY BLANK.]

 

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IN
WITNESS WHEREOF, the parties have caused this Settlement Agreement to be duly executed and effective as of the date first set
forth above.

 

	 	LILIS
    ENERGY, INC., a Nevada corporation
	 	 	 
	 	By:	/s/
    Abraham Mirman
	 	Name:	Abraham
    Mirman
	 	Title:	Chief
    Executive Officer
	 	 	 
	 	THE
    HEXAGON PARTIES
	 	 	 
	 	Hexagon,
    LLC, a Colorado limited liability company
	 		By:
    Hexagon, Inc., its Manager 
	 	 	 
	 	By:	/s/
    Scott Reiman
	 	Name:	Scott
    Reiman
	 	Title:	President
	 	 	 
	 	Labyrinth
    Enterprises LLC, a Colorado

limited liability company
	 	 	 
	 	By:	/s/
    Scott Reiman
	 	Name:	Scott
    Reiman
	 	Title:	President
	 	 	 
	 	The
    Reiman Foundation
	 	 	 
	 	By:	/s/
    Scott Reiman
	 	Name:	Scott
    Reiman
	 	Title:	President
	 	 	 
	 	/s/
    Scott Reiman
	 	Scott
    J. Reiman

 

	For
    purposes of Section 7 only:	Grandhaven
Energy, LLC, a Wisconsin

limited liability company

	 	 	By:
        Hexagon, Inc., its Manager 
	 	 	 
	 	By:	/s/
    Scott Reiman
	 	Name:	Scott
    Reiman
	 	Title:	President
	 	 	 
	 	/s/
    Conway Schatz
	 	Conway
    Schatz

 

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Exhibit
A

 

Form
of Assignment, Bill of Sale and Conveyance

 

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Exhibit
B

 

Form
of Certificate of Designations

 

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Exhibit
C

 

Form
of Bristol Release

 

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Exhibit
D

 

Form
of T.R. Winston Release

 

 

14Exhibit
10.11

 

CONSULTING
AGREEMENT

 

This
Consulting Agreement (the “Agreement”) is made as of this 2nd day of September 2014 by and between Bristol Capital,
LLC, a Delaware limited liability company with principal offices at 1100 Glendon Avenue, Suite 850, Los Angeles, California 90024
(“Consultant”) and Lilis Energy, Inc., a Nevada corporation with its principal place of business at 1900 Grant Street,
Suite #720, Denver, Colorado 80203 (the “Company”).

 

WHEREAS,
Consultant has substantial expertise that may be useful to the Company, which the Company desires to obtain; and

 

WHEREAS,
the Company desires Consultant to provide certain consulting services to the Company and Consultant is agreeable to performing
such services for the Company;

 

NOW,
THEREFORE, in consideration of the mutual covenants hereinafter stated, and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

1.APPOINTMENT.

 

The
Company hereby engages Consultant and Consultant agrees to render services to the Company as a consultant upon the terms and conditions
hereinafter set forth.

 

2.TERM.

 

The
term of this Agreement shall commence on the date of this Agreement as set forth above and shall terminate on the third year anniversary
of the date of this Agreement, unless terminated or extended in accordance with a valid provision contained herein or by a subsequent
agreement between the parties.

 

3.SERVICES.

 

During
the term of this Agreement, Consultant shall assist the Company in general corporate activities including but not limited to strategic
planning; management and business operations; introductions to further its business goals; provide advice and services related
to the Company’s growth initiatives; any other consulting or advisory services which the Company reasonably requests that
Consultant provide to the Company. Consulting Services rendered pursuant to this Agreement shall be rendered to the President
or Chief Executive Officer of the Company, or to the Board of Directors of the Company. The sole compensation for such services
shall be as set forth in Section 5 hereof.

 

4.DUTIES
OF THE COMPANY.

 

The
Company shall provide Consultant, on a regular and timely basis, with all approved data and information about it, its subsidiaries,
its management, its products and services and its operations as shall be reasonably requested by Consultant, and shall advise
Consultant of any facts which would materially affect the accuracy of any data and information previously supplied pursuant to
this paragraph. The Company shall promptly, at Consultant's written request, supply Consultant with full and complete copies of
all financial reports, all filings with all federal and state securities agencies; with all data and information supplied by any
financial analyst, and with all brochures or other sales materials relating to its products or services.

 

    	 

    	 

    

 

5.COMPENSATION.

 

Upon
the execution of this Agreement, Company agrees to pay Consultant the following as consideration for the services rendered under
this Agreement, which shall be deemed earned as of the date of this Agreement:

 

(a)The
Company shall issue to Consultant or its designees (i) a warrant (the “Warrant”) to purchase 1,000,000 shares of common
stock of the Company (the “Warrant Shares”) at a price per share of $2.00 (the “Warrant Exercise Price”),
exercisable for a period of five (5) years, subject to the restrictions in Section 5(c) below, and (ii) an option (the “Option”)
to purchase 1,000,000 shares of common stock of the Company (the “Option Shares”) at a price per share of $2.00 (the
“Option Exercise Price”) exercisable for a period of five (5) years, subject to termination and the restrictions set
forth in Section 5(b) through (d) below. The Warrant Exercise Price and Option Exercise Price shall be adjusted upon the Company’s
issuance of securities to any third party providing consulting services to the Company (other than Consultant or its affiliates)
at a price per share that is lower than the Warrant Exercise Price or Option Exercise Price (the “Lower Price”) to
equal such Lower Price.

 

(b)The
Warrant Shares shall be included in the next registration statement to be filed by the Company (the “Registration Statement”),
provided such Registration Statement is not filed on Form S-8. In consideration of Consultant’s agreement to engage in various
efforts on behalf of the Company, the Company hereby agrees to exercise "best efforts" to effectuate the effectiveness
of the Registration Statement as soon practicable following the filing of such Registration Statement. The Option shall automatically
terminate on the date that the Registration Statement is declared effective. Notwithstanding the foregoing, if the Company determines
in its best judgment that it should not include the Warrant Shares in the next Registration Statement due to the request of underwriters
or placement agents in connection with a Company financing, the Company may delay the inclusion of the Warrant Shares, in which
case the Option shall remain in full force and effect.

 

(c)If
the Company elects to file a registration statement on Form S-8 prior to filing the Registration Statement referred to in Section
5(c) above (the “S-8 Registration Statement”), the Company shall include the Option Shares in the S-8 Registration
Statement and the Warrant shall automatically terminate on the date that such S-8 Registration Statement is declared effective.

 

(d)In
the event that the Company fails to file any registration statement within six (6) months following the execution of this Agreement,
Consultant may elect to terminate either the Warrant or the Option and retain either the Warrant or the Option, but in any case
may only retain one or the other. In no event will Consultant have the right to exercise, in whole or in part, the Warrant and
Option for a number of shares in excess of 1,000,000. The Company shall instruct its counsel to issue a legal opinion to Consultant
providing that the Warrant Shares or Option Shares (as applicable) may be sold pursuant to Rule 144 starting on the sixth month
anniversary of the date of this Agreement, or otherwise on the earliest date (which may be later than the six month anniversary
date) on which the Holder and Company meet the requirements to permit the Warrant Shares or Option Shares to be sold under Rule
144 (the “144 Opinion”). The Company shall be responsible for all costs associated with obtaining and delivering the
144 Opinion.

 

(e)
In the event that Consultant exercises its Warrant or Option following the effectiveness of either the Registration Statement
referred to in Section 5(b) above or the S-8 Registration Statement referred to in Section 5(c) above (the “Exercise”),
the Company shall within three (3) business days of such Exercise execute a written request to its transfer agent to issue and
deliver to Consultant, or its agent, a common stock certificate for the number of freely tradable shares of the Company’s
common stock that Consultant is entitled to pursuant to the Exercise, which shall bear no restrictive legend.

 

    	2

    	 

    

 

6.BENEFICIAL
OWNERSHIP OF SHARES.

 

Consultant’s
beneficial ownership of common stock of the Company shall not exceed 9.9% of the outstanding shares of the Company’s common
stock; as such, the Warrant or Option, as applicable, shall not be exercisable for a number of shares in excess of that which
would put Consultant’s beneficial ownership in excess of that threshold. For purposes of this paragraph, beneficial ownership
shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulations 13D-G
thereunder. Consultant may waive the limitations set forth herein by sixty-one (61) days written notice to the Company.

 

7.COSTS
AND EXPENSES.

 

Subject
to the prior written approval of the Company, which approval shall not be unreasonably withheld, Consultant in providing the foregoing
services shall not be responsible for any out-of-pocket costs, including, without limitation, travel, lodging, telephone, postage
and Federal Express charges. Consultant shall provide the Company with a detailed accounting of monthly expenses related to the
Agreement. Payment for these expenses shall be made to Consultant within 30 days after submission to the Company.

 

8.INDEMNIFICATION.

 

(a)The
Company agrees to indemnify, defend, and shall hold harmless Consultant and/or any of its agents, officers, directors, employees,
stockholders, representatives, affiliates, and to defend any action brought against said parties with respect to any claim, demand
cause of action, debt or liability, including reasonable attorneys' fees to the extent that such action is based upon a claim
that: (i) is true, (ii) would constitute a breach of any of the Company's representations, warranties, or agreements hereunder,
or (iii) arises out of the negligence or willful misconduct of the Company, or any of the Company’s content to be provided
by the Company and does not violate any rights of third parties, including, without limitation, rights of publicity, privacy,
patents, copyrights, trademarks, trade secrets, and/or licenses. The Company agrees that it will not prosecute any action or proceeding
against Consultant and/or any of its agents, officers, directors, employees, stockholders, representatives, affiliates except
where such claim is based solely on the gross negligence or willful misconduct of Consultant (“the Claim”), provided
such Claim is made prior to the date that Consultant exercises the Warrant or Option (the “Exercise Date”). No Claim
can be made after the Exercise Date.

 

(b)Consultant
agrees to indemnify, defend, and shall hold harmless the Company, its directors, employees and agents, and defend any action brought
against same with respect to any claim, demand, cause of action, or liability, including reasonable attorneys' fees, to the extent
that such an action arises out of the gross negligence or willful misconduct of Consultant.

 

(c)Notice.
In claiming indemnification hereunder, the indemnified party shall promptly provide the indemnifying party with written notice
of any claim, which the indemnified party believes falls within the scope of the foregoing paragraphs. The indemnified party may,
at its expense, assist in the defense if it so chooses, provided that the indemnifying party shall control such defense, and all
negotiations relative to the settlement of any such claim. Any settlement intended to bind the indemnified party shall not be
final without the indemnified party's written consent, which shall not be unreasonably withheld.

 

    	3

    	 

    

 

9.INDEPENDENT
CONTRACTOR STATUS AND OTHER BUSINESS OPPORTUNITIES.

 

It
is understood and agreed that Consultant will for all purposes hereof be deemed to be an independent contractor and will not,
unless otherwise expressly authorized by the Company, have any authority to act for or represent the Company in any way, execute
any transaction on behalf of the Company or otherwise be deemed an agent of the Company. No federal, state or local withholding
deductions will be withheld from any amounts owed by the Company to Consultant hereunder unless otherwise required by law.

 

Consultant
represents and warrants to the Company that its performance hereunder complies with all applicable laws, rules and
regulations.

 

The
doctrine of corporate opportunity shall not apply with respect to Consultant, and Consultant (which for purposes of this
Section 9 shall include its affiliates, shareholders, directors, officers, employees and agents) may, without limitation, (i)
engage in the same or similar activities or lines of business as the Company or its subsidiaries or develop or market any
products or services that compete, directly or indirectly, with those of the Company and its subsidiaries, (ii) invest or own
any interest publicly or privately in, or develop a business relationship with, any person engaged in the same or similar
activities or lines of business as, or otherwise in competition with, the Company or its subsidiaries; (iii) do business with
any current or former client or customer of the Company or its subsidiaries, or (iv) employ or otherwise engage a former
officer or employee of the Company or its subsidiaries. Neither the Company nor any of its subsidiaries shall have any right
by virtue of this Agreement in or to, or to be offered any opportunity to participate or invest in, any venture engaged in by
Consultant or any right by virtue of this Agreement in or to any income or profits derived therefrom.

 

The
Company acknowledges that a conflict of interests between the Company and Consultant may arise during the term of this Agreement.
The Company expressly waives any and all claims against Consultant that arise out of or relate to any conflicts of interests between
the Company and Consultant.

 

The
Company acknowledges that Consultant may provide services to other consulting clients (the “Other Clients”) and that
Consultant may be subject to the terms of certain agreements with the Other Clients that have provisions concerning consulting,
competition, confidentiality, and intellectual property.

 

10.CONFIDENTIALITY.

 

The
Company agrees that it will not disclose, and will not include in any public announcement, the name of the Consultant, unless
expressly agreed to by the Consultant or unless and until such disclosure is required by law or applicable regulation, and then
only to the extent of such requirement.

 

11.MISCELLANEOUS.

 

(a)Termination.
Subsequent to and no less than 30 days after the execution of this Agreement, this Agreement may be terminated by the Company
upon written notice to the other Party for any reason. The termination shall be effective within five (5) business days from the
date of such notice. Termination of this Agreement shall cause Consultant to cease providing services under this Agreement; however,
termination for any reason whatsoever shall not decrease or eliminate the compensatory obligations of the Company as outlined
in Section 5 of this Agreement.

 

(b)Modification.
This Agreement sets forth the entire understanding of the Parties with respect to the subject matter hereof. This Agreement may
be amended only in writing signed by both Parties.

 

    	4

    	 

    

 

(c)Notices.
Any notice required or permitted to be given hereunder shall be in writing and shall be mailed or otherwise delivered in person
or by facsimile transmission at the address of such party set forth above or to such other address or facsimile telephone number
as the party shall have furnished in writing to the other party.

 

(d)Waiver.
Any waiver by either party of a breach of any provision of this Agreement shall not operate as or be construed to be a waiver
of any other breach of that provision or of any breach of any other provision of this Consulting Agreement. The failure of a party
to insist upon strict adherence to any term of this Agreement on one or more occasions will not be considered a waiver or deprive
that party of the right thereafter to insist upon adherence to that term of any other term of this Agreement.

 

(e)Assignment.
The Option Shares granted under this Agreement are assignable at the sole discretion of the Consultant.

 

(f)Severability.
If any provision of this Agreement is invalid, illegal, or unenforceable, the balance of this Agreement shall remain in effect,
and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons
and circumstances.

 

(g)Disagreements.
Any dispute, disagreement, conflict of interpretation or claim arising out of or relating to this Agreement, or its enforcement,
shall be governed by the laws of the State of California. The Consultant and the Company hereby irrevocably and unconditionally
submit themselves and their property to the nonexclusive jurisdiction of federal and state courts of the State of California and
any appellate court thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement
of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agree that all claims in respect of any
such action or proceeding may be heard and determined in California, or, to the extent permitted by law, in such federal court.
Each of the parties hereto agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on the judgment or in any other manner provided by law. Each of the parties hereto irrevocably
and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred
to above. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court. Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices above. Nothing in this Agreement will affect the right of any party to this
Agreement to serve process in any other manner permitted by law. Each party hereto hereby waives, to the fullest extent permitted
by applicable law, any right it may have to a trial by jury in any legal proceeding directly or indirectly arising out of or relating
to this agreement or the transactions contemplated hereby (whether based on contract, tort or any other theory). If either party
shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or
proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses including
but not limited to court costs incurred with the investigation, preparation and prosecution of such action or proceeding.

 

(h)
Each party may sign identical counterparts of this Agreement with the same effect as if both parties signed the same document.
A copy of this Agreement signed by one party and delivered by facsimile or electronic transmission to the other party shall have
the same effect as the delivery of an original of this Agreement containing the original signature of such party.

 

[SIGNATURE
PAGE TO FOLLOW]

 

    	5

    	 

    

 

IN
WITNESS WHEREOF, this Agreement has been executed by the Parties as of the date first above written.

 

	LILIS
    ENERGY, INC.	 	BRISTOL
    CAPITAL, LLC
	 	 	 
	/s/
    Abraham Mirman	 	/s/
    Paul     Kessler
	Name:	Abraham
    Mirman	 	Name:	Paul
    Kessler
	Title:	Chief
    Executive Officer	 	Title:	Manager

 

 

6

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