LILIS ENERGY, INC. (OTCMKTS:LLEX) Files An 8-K Entry into a Material Definitive Agreement

Item 1.01 Entry into a Material Definitive Agreement

First Lien Amendment

On April 24, 2017, Lilis Energy, Inc. (the Company) entered into
a first amendment and subsequently, on April 26, 2017, entered
into a second amendment (together, the Amendments) to its
existing first lien credit agreement, dated September 29, 2016
(the First Lien Credit Agreement), by and among the
Company, Brushy Resources, Inc., a Delaware corporation
(Brushy), ImPetro Operating, LLC, a Delaware limited
liability company (Operating) and ImPetro Resources, LLC,
a Delaware limited liability company (together with Brushy and
Operating, the Initial Guarantors), the lenders party
thereto (the Original Lenders) and T.R. Winston Company,
LLC, as initial collateral agent. to the Amendments, among other
things, certain lenders identified therein joined the Original
Lenders as lenders under the First Lien Credit Agreement, and the
lenders made further extensions of credit, in addition to the
existing loans under the First Lien Credit Agreement (the
Existing Loans), in the form of an additional bridge loans
in an aggregate principal amount of up to $15,000,000 (the
Bridge Loans). Under the terms of the Amendments, Lilis
Operating Company, LLC (Lilis Operating, and together with
the Initial Guarantors, the Guarantors) joined the Initial
Guarantors as a guarantor under the First Lien Credit Agreement.
The Bridge Loans were fully drawn on April 24, 2017.

On April 26, 2017, in connection with the closing of the Second
Lien Credit Agreement (as defined below), the Company paid off
the Existing Loans in full, including accrued and unpaid interest
thereon.

The Bridge Loans are secured by first priority liens on
substantially all of the Companys and Guarantors assets,
including their oil and gas properties located in the Permian
Basin, and all of the obligations thereunder are unconditionally
guaranteed by each of the Guarantors.

The First Lien Credit Agreement, as amended by the Amendments,
provides that the unpaid principal of the Bridge Loans will bear
cash interest at a rate per annum of (i) 6% for the first six
months after the execution of the Amendment and (ii) thereafter,
so long as any Bridge Loan is outstanding, a rate of 10%.
Additionally, the unpaid principal of the Bridge Loans will bear
interest at a rate per annum of 6%, payable only in-kind by
increasing the principal amount of the Bridge Loans by the amount
of such interest due on each interest payment date. The Bridge
Loans mature on October 24, 2018. The Bridge Loans may be repaid
in whole or part at any time at the option of the Company,
subject to the payment of certain specified prepayment premiums.
The Bridge Loans are subject to mandatory prepayment with the net
proceeds of certain asset sales and casualty events, subject to
the right of the Company to reinvest the net proceeds of asset
sales and casualty events within 180 days.

Second Lien Credit Agreement

On April 26, 2017, the Company entered into a credit agreement
(the Second Lien Credit Agreement) by and among the
Company, the Guarantors, Wilmington Trust, National Association,
as administrative agent, and the lenders party thereto (the
Lenders), including Vrde Partners, Inc., a Delaware
corporation, as lead lender (the Lead Lender), to which
the Lenders agreed to make convertible loans to the Company in an
aggregate initial principal amount of up to $125 million in two
tranches. The first tranche consists of an $80 million term loan
(the Initial loan), which was fully drawn and funded on
April 26, 2017. The second tranche consists of up to $45 million
of delayed draw term loans (the Delayed Draw Loans and,
together with the Initial loan, the Loans) to be funded
from time to time on or before February 28, 2019, as requested by
the Company, subject to certain conditions. Each tranche of Loans
will bear interest at a rate of 8.25%, compounded quarterly in
arrears and payable only in-kind by increasing the principal
amount of the Loans by the amount of the interest due on each
interest payment date.

The Loans are secured by second priority liens on substantially
all of the Companys and Guarantors assets, including their oil
and gas properties located in the Permian Basin, and all of the
obligations thereunder are unconditionally guaranteed by each of
the Guarantors.

The proceeds of the Loans will be used only to (a) to repay the
Existing Loans including any accrued and unpaid interest thereon,
(b) pay the fees, expenses and transaction costs of the
transactions and (c) finance the working capital needs of the
Company, including capital expenditures, and for general
corporate purposes of the Company and the Guarantors, including
the exploration, acquisition and development of oil and gas
property.

The Loans mature on April 26, 2021. The Loans are subject to
mandatory prepayment with the net proceeds of certain asset
sales, casualty events and debt incurrences, subject to the right
of the Company to reinvest the net proceeds of asset sales and
casualty events within 180 days and, in the case of asset sales
and casualty events, prepayment of the Bridge Loans. The Company
may not voluntarily prepay the Loans prior to March 31, 2019
except (a) in connection with a Change of Control (as defined in
the Second Lien Credit Agreement) or (b) if the closing price of
the Companys common stock (the Common Stock) on the
principal exchange on which it is traded has been equal to or
greater than 110% of the Conversion Price (as defined below) for
at least 20 of the 30 trading days immediately preceding the
prepayment. The Company will be required to pay a customary
make-whole premium in connection with any mandatory or voluntary
prepayment of the Loans.

The Second Lien Credit Agreement contains certain customary
representations and warranties and affirmative and negative
covenants, including covenants relating to: maintenance of books
and records, financial reporting and notification, compliance
with laws, maintenance of properties and insurance; limitations
on incurrence of indebtedness, investments, dividends and other
restricted payments, lease obligations, hedging and capital
expenditures; and maintenance of a specified asset coverage
ratio. The Second Lien Credit Agreement also provides for events
of default, including failure to pay any principal or interest
when due, failure to perform or observe covenants, cross-default
on certain outstanding debt obligations, the failure of a
Guarantor to comply with the provisions of its Guaranty, and
bankruptcy or insolvency events, subject to certain specified
cure periods. The amounts under the Second Lien Credit Agreement
could be accelerated and be due and payable upon an event of
default.

Each tranche of the Loans is separately convertible at any time,
in full and not in part, at the option of the Lead Lender, as
follows:

The terms of the Take Back Loans will be substantially the same
as the terms of the Loans, except that the Take Back Loans will
not be convertible and will bear interest at a rate of LIBOR plus
9% (subject to a 1% LIBOR floor).

Additionally, the Company will have the option to convert the
Loans, in whole or in part, into shares of Common Stock at any
time or from time to time if, at the time of exercise of the
Companys conversion option, the closing price of the Common Stock
on the principal exchange on which it is traded has been at least
150% of the Conversion Price then in effect for at least 20 of
the 30 immediately preceding trading days. The number of shares
of Common Stock issuable upon exercise of the Companys conversion
option will be determined by dividing the principal amount of the
Loans converted, plus accrued and unpaid interest on such
principal amount, by the Conversion Price.

The Conversion Price will be subject to proportionate adjustment
in connection with stock splits and combinations, dividends paid
in stock and similar events affecting the outstanding common
stock. Additionally, the Conversion Price will be adjusted, based
on a broad-based weighted average formula, if the Company issues,
or is deemed to issue, additional shares of common stock for
consideration less than the Conversion Price in effect from time,
subject to certain exceptions. However, unless the Shareholder
Approval (as defined below) has been obtained, these price
protection anti-dilution adjustments cannot reduce the Conversion
Price to a price less than (a) in the case of the Conversion
Price for the Initial loan, $4.26, which was the closing price of
the common stock on April 25, 2017 or (b) in the case of the
Conversion Price for the Delayed Draw Loans, the last closing
price of the Common Stock prior to the time the Company becomes
bound to incur any Delayed Draw Loan (the Conversion Price
Floor).

Prior to obtaining Shareholder Approval, the number of shares of
Common Stock issuable to any Lender upon conversion of Loans will
be capped at a number of shares that would not result in that
Lender, together with its affiliates and the other members of any
group (as such term is used in sections 13(d) and 14(d) of the
Securities Exchange Act of 1934) including such Lender, owning in
excess of 19.999% of the outstanding shares of Common Stock or
voting power of the Company on the date of conversion, after
giving effect to the conversion (the Share Cap).

If the Share Cap applies to any Lender on any conversion of
Loans, instead of issuing shares of Common Stock in excess of the
Share Cap, the Company will be required to issue to the Lender
affected by the Share Cap shares of a new series of preferred
stock of the Company to be established if required to the terms
of the Credit Agreement (the Lender Preferred Stock).
Holders of shares of Lender Preferred Stock, if any are issued:

The shares of Lender Preferred Stock issued to any Lender as a
result of the Share Cap will be convertible into the number of
shares of Common Stock that were not issued to the Lender as a
result of the Share Cap, but such conversion would be permitted
or be mandatory only (i) after the Shareholder Approval is
obtained, (ii) if such conversion would not result in the holder
of the Lender Preferred Stock so converted, together with its
affiliates and the other members of any group including such
holder, owning in excess of 19.999% of the outstanding shares of
Common Stock or voting power of the Company on the date of
conversion, after giving effect to the conversion, or (iii) in
connection with a Change of Control Transaction (as such term
will defined in the certificate of designations creating the
Lender Preferred Stock).

The Second Lien Credit Agreement requires the Company to submit
to its shareholders for their approval (the Shareholder
Approval) the following matters as promptly as practicable
after April 26, 2017:

If the Shareholder Approval is obtained, the Conversion Price
Floor and the Share Cap will no longer apply.

The Second Lien Credit Agreement provides that the Lead Lender is
entitled to appoint one observer to the Board of Directors of the
Company during the period prior to the conversion of the Initial
loan. The board observer is not entitled to vote on any matter
and is entitled to participate only in meetings of the full Board
of Directors and not any of its committees (other than any
executive or similar committee) and to receive materials
distributed to all members of the Board of Directors. The board
observer may be excluded from board meetings and distributions of
board materials if the Board of Directors determines in good
faith that (i) such exclusion is necessary to preserve any
privilege or (i) the subject matter thereof involves an actual or
potential conflict of interest with respect to the board observer
or any of its affiliates. The right to appoint the board observer
will terminate upon conversion of the Initial loan.

Following the conversion of the Initial loan, the Lenders,
collectively, will have the right to appoint two members of the
Board of Directors as long as they continue to own at least 20%
of the outstanding Common Stock and one member of the Board of
Directors as long as they continue to own at least 12.5% (but
less than 20%) of the outstanding Common Stock. The number of
directors constituting the entire Board of Directors will be
increased by the number of directors the Lenders are entitled to
appoint. The number of directors the Lenders have the right to
appoint will be reduced if necessary so that the percentage of
the number of directors constituting the entire Board of
Directors represented by the directors appointed by the Lenders
does not exceed the percentage of the outstanding Common Stock or
voting power of the Company represented by the Common Stock held
by the Lenders.

Registration Rights Agreement

In connection with the execution of Second Lien Credit Agreement
and funding of the Initial Loan, the Company and the Lenders
entered into a Registration Rights Agreement dated as of April
26, 2017 (the Registration Rights Agreement) to which,
among other matters, the Company will be required to file with
the Securities and Exchange Commission a registration statement
under the Securities Act of 1933 registering for resale the
shares of Common Stock issuable upon conversion of the Loans or
any shares of Lender Preferred Stock issued. The Registration
Rights Agreement entitles the lenders to certain demand rights
and piggyback rights with respect to underwritten offerings in
Common Stock and contains customary covenants and indemnification
and contribution provisions.

Series B 6% Convertible Preferred Stock Conversion
Agreement

On April 25, 2017, the Company entered into a Series B 6.0%
Convertible Preferred Stock Conversion Agreement, dated April 25,
2017 (the Conversion Agreement), with all of the holders
(the Series B Holders) of the Companys outstanding Series
B 6% Convertible Preferred Stock (the Series B Preferred
Stock). The transaction provided for in the Conversion
Agreement and described below is referred to as the
Conversion.

to the terms of the Conversion Agreement, the Company and the
Series B Holders mutually agreed that, immediately upon the
effectiveness of the amended and restated Certificate of
Designations of Preferences, Rights and Limitations of Series B
6% Convertible Preferred Stock (the AR COD), as described
in Item 5.03 below, the Series B Holders will be deemed to have
automatically converted all outstanding shares of Series B
Preferred Stock held by them into approximately 14.3 million
shares of the Companys common stock, par value $0.0001 per share
(the Common Stock), to the terms of the AR COD, such
amount representing the number of shares of Common Stock into
which the outstanding shares of Series B Preferred Stock held by
the Series B Holders would be convertible to the terms of the AR
COD, with such Conversion including an increase in the stated
value of the Series B Preferred Stock to reflect dividends that
would have accrued through December 31, 2017. The Conversion
Agreement contains customary representations and warranties by
the Series B Holders and other agreements and obligations of the
parties.

The foregoing descriptions of the terms of the Amendments, the
Second Lien Credit Agreement, the Registration Rights Agreement
and the Conversion Agreement are not complete and are qualified
in their entirety by reference to the terms of the Amendments,
the Second Lien Credit Agreement, the Registration Rights
Agreement and the Conversion Agreement filed as Exhibits 10.1,
10.2, 10.3, 10.4 and 10.5 hereto, respectively.

The information set forth in Item 1.01 of this Current Report on
Form 8-K is hereby incorporated by reference into this Item 2.03.

On April 26, 2017, the Company announced that its Common Stock
has been approved for listing on the NYSE MKT. The Common Stock
is expected to begin trading on NYSE MKT under its current symbol
LLEX, beginning at the open of market trading on May 9, 2017. On
April 26, 2017, the Company notified the Nasdaq Capital Market
that it intends to terminate the listing of its Common Stock on
the NASDAQ Capital Market in connection with the transfer of
listing to the NYSE MKT. The Company intends to file with SEC a
Form 25 related to the delisting from the NASDAQ Capital Market
prior to or at the commencement of trading on the NYSE MKT, and
the delisting will be effective ten days after the filing of the
Form 25.

The information set forth in Item 1.01 of this Current Report on
Form 8-K is hereby incorporated by reference into this Item 3.02.

The disclosures contained in Item 1.01 above concerning the AR
COD is incorporated into this Item 5.03 by this reference. The
Company and the Series B Holders agreed to adopt the AR COD in
order to remove certain restrictions contained therein with
respect to beneficial ownership limitations. The Company filed
the AR COD with the Secretary of State of the State of Nevada on
April 25, 2017.

The foregoing description of the terms of the AR COD is not
complete and is qualified in its entirety by reference to the
terms of the AR COD, a copy of which is attached as Exhibit 3.1
hereto.

On April 26, 2017, the Company issued a press release announcing
the transactions described above, a copy of which is furnished as
Exhibit 99.1 hereto. The press release shall not constitute an
offer to sell or the solicitation of an offer to buy any of the
securities described therein, nor shall there be any sale of
these securities in any state or jurisdiction in which such
offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any
such state or jurisdiction. Also on April 26, 2017, the Company
issued a press release announcing the transfer of the listing of
its Common Stock from the Nasdaq Capital Market to the NYSE MKT,
a copy of which is furnished as Exhibit 99.2 hereto.

The above information (including Exhibits 99.1 and 99.2) is
furnished to Item 7.01 of Form 8-K and shall not be deemed to be
filed for purposes of Section 18 of the U.S. Securities Exchange
Act of 1934, as amended, or otherwise subject to the liabilities
of that Section, nor shall it be deemed to be incorporated by
reference in any filing under the Securities Act, except as may
be expressly set forth by specific reference in such filing.

Redemption of 6% Redeemable Preferred Stock

As previously disclosed, the Company and Hexagon, LLC (f/k/a
Hexagon Investments, LLC) (Hexagon)are parties to a
Settlement Agreement, dated September 2, 2014, to which the
Company (i) assigned to Hexagon certain of its oil and gas
properties (the Oil and Gas Properties) and (ii) issued to
Hexagon $2.0 million in the Companys Series 6% Redeemable
Preferred Stock (the Hexagon Shares), in exchange for full
extinguishment of all amounts payable to certain credit
agreements and related promissory notes previously entered into
between the Company and Hexagon.

On April 20, 2017, the Company entered into a Settlement and
Release Agreement with Hexagon, dated April 20, 2017 (the
Settlement and Release Agreement). to the Settlement and
Agreement, effective as of April 21, 2017, the Company redeemed,
in full, the Hexagon Shares. In addition, the Settlement and
Release Agreement resolved certain other issues related to
liability reimbursements on the Oil and Gas Properties that had
previously been alleged by Hexagon. Accordingly, all prior issues
with Hexagon have been resolved and the Hexagon Shares have been
redeemed in full.

Item 9.01 Financial Statements and Exhibits.

About LILIS ENERGY, INC. (OTCMKTS:LLEX)

Lilis Energy, Inc. is an upstream independent oil and gas company. The Company is engaged in the acquisition, drilling and production of oil and natural gas properties and prospects. The Company drills for, operates and produces oil and natural gas wells through its land holdings located in Wyoming, Colorado, and Nebraska. Its total net acreage in the Denver-Julesburg (DJ) Basin is approximately 7,200 acres. The Company’s primary targets within the DJ Basin are the conventional Dakota and Muddy J formations. In addition to its DJ Basin holdings, it focuses on the Permian’s Delaware Basin in Winkler and Loving Counties, Texas and Lea County, New Mexico. The Company’s net acreage in the Delaware Basin is approximately 4,433 net acres. The vertical well produces approximately 690 net million cubic feet (mcf) per day. The well holds the lease to all depths, from surface down to approximately 22,000 feet, including the Wolfcamp, Bone Springs, and Avalon formations.

LILIS ENERGY, INC. (OTCMKTS:LLEX) Recent Trading Information

LILIS ENERGY, INC. (OTCMKTS:LLEX) closed its last trading session up +0.30 at 4.56 with 651,565 shares trading hands.