Annual Report — Form 10-K — Sect. 13 / 15(d) – SEA’34 Filing Table of Contents
Document/ExhibitDescriptionPagesSize
1: 10-K Torchlight Energy Resources, Inc. 10-K HTML 927K
2: EX-10.12 Agreement and Plan of Reorganization and Plan of HTML 167K Merger With Line Drive Energy, LLC
3: EX-10.13 Purchase and Sale Agreement With Wolfbone HTML 65K
Investments, LLC
4: EX-21.1 Subsidiaries List HTML 19K
5: EX-23.1 Consent of Briggs & Veselka Co. HTML 20K
6: EX-23.2 Consent of Calvetti Fergusson HTML 20K
7: EX-23.3 Consent of Petech Enterprises, Inc. HTML 22K
11: EX-99.1 Report of Petech Enterprises, Inc. HTML 28K
8: EX-31.1 Certification of Principal Executive Officer HTML 23K
Required by Rule 13A - 14(1) or Rule 15D - 14(A)
of the Securities Exchange Act of 1934, as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
9: EX-31.2 Certification of Principal Financial Officer HTML 23K
Required by Rule 13A - 14(1) or Rule 15D - 14(A)
of the Securities Exchange Act of 1934, as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
10: EX-32.1 Certification of Principal Executive Officer and HTML 22K
Principal Financial Officer Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 and Section
1350 of 18 U.S.C. 63.
18: R1 Document and Entity Information HTML 46K
19: R2 Consolidated Balance Sheets HTML 104K
20: R3 Consolidated Balance Sheets (Parenthetical) HTML 42K
21: R4 Consolidated Statements of Operations HTML 66K
22: R5 Consolidated Statement of Stockholders' Equity HTML 95K
23: R6 Consolidated Statements of Cash Flow HTML 118K
24: R7 1. Nature of Business HTML 22K
25: R8 2. Going Concern HTML 22K
26: R9 3. Significant Accounting Policies HTML 48K
27: R10 4. Oil & Gas Properties HTML 28K
28: R11 5. Related Party Payables HTML 22K
29: R12 6. Commitments and Contingencies HTML 32K
30: R13 7. Stockholders' Equity HTML 104K
31: R14 8. Income Taxes HTML 38K
32: R15 9. Promissory Notes HTML 23K
33: R16 10. Asset Retirement Obligations HTML 26K
34: R17 11. Subsequent Events HTML 24K
35: R18 3. Significant Accounting Policies (Policies) HTML 95K
36: R19 4. Oil & Gas Properties (Tables) HTML 25K
37: R20 6. Commitments and Contingencies (Tables) HTML 23K
38: R21 7. Stockholders' Equity (Tables) HTML 91K
39: R22 8. Income Taxes (Tables) HTML 37K
40: R23 10. Asset Retirement Obligations (Tables) HTML 25K
41: R24 2. Going Concern (Details Narrative) HTML 24K
42: R25 3. Significant Accounting Policies (Details HTML 23K
Narrative)
43: R26 4. Oil & Gas Properties (Details) HTML 29K
44: R27 4. Oil & Gas Properties (Details Narrative) HTML 27K
45: R28 5. Related Party Payables (Details Narrative) HTML 21K
46: R29 6. Commitments and Contingencies (Details) HTML 28K
47: R30 6. Commitments and Contingencies (Details HTML 25K
Narrative)
48: R31 7. Stockholders' Equity (Details) HTML 73K
49: R32 7. Stockholders' Equity (Details 1) HTML 35K
50: R33 7. Stockholders' Equity (Details 2) HTML 33K
51: R34 7. Stockholders' Equity (Details Narrative) HTML 71K
52: R35 8. Income Taxes (Details) HTML 27K
53: R36 8. Income Taxes (Details 1) HTML 33K
54: R37 8. Income Taxes (Details Narrative) HTML 23K
55: R38 9. Promissory Notes (Details Narrative) HTML 26K
56: R39 10. Asset Retirement Obligations (Details) HTML 27K
58: XML IDEA XML File -- Filing Summary XML 90K
57: EXCEL IDEA Workbook of Financial Reports XLSX 47K
12: EX-101.INS XBRL Instance -- fil-20161231 XML 711K
14: EX-101.CAL XBRL Calculations -- fil-20161231_cal XML 128K
15: EX-101.DEF XBRL Definitions -- fil-20161231_def XML 162K
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13: EX-101.SCH XBRL Schema -- fil-20161231 XSD 148K
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‘EX-10.12’ — Agreement and Plan of Reorganization and Plan of Merger With Line Drive Energy, LLC
This
Agreement and Plan of Reorganization (the “Agreement”) is made and entered
into effective this 30th day of January,
2017 (the “Effective
Date”), by and among Line Drive Energy, LLC, a Texas
limited liability company (the “Company”), Greg McCabe, Sr., an
individual (the “Seller”), Torchlight Energy
Resources, Inc., a Nevada corporation (the “Purchaser”), and Torchlight
Acquisition Corporation, a Texas corporation (the
“Merger Sub”).
The Company, the Seller, the Purchaser, and the Merger Sub are
sometimes hereinafter collectively referred to as the
“Parties.”
WHEREAS, the respective Boards of
Directors of Purchaser and Merger Sub and the Seller, as both the
Manager and sole Member of the Company, have each determined that
the merger of the Merger Sub with and into the Company (the
“Merger”) upon
the terms and subject to the conditions set forth in this Agreement
is advisable, fair to and in the best interests of the Company and
Merger Sub, as the “Parties
to the Merger” and their respective owners and have
approved the Merger pursuant to the Plan of Merger attached hereto
as Exhibit A (the “Plan of
Merger”);
NOW, THEREFORE, in consideration of the
premises, the mutual covenants and agreements and the respective
representations and warranties herein contained, and on the terms
and subject to the conditions herein set forth, the parties hereto,
intending to be legally bound, hereby agree as
follows:
ARTICLE I
THE MERGER
1.1 The
Merger. At the Effective Time (as defined in
Section 1.2) and subject to the terms and conditions of this
Agreement and the Plan of Merger, Merger Sub shall be merged with
and into the Company and the separate existence of Merger Sub shall
thereupon cease, in accordance with the applicable provisions of
the Texas Business Organizations Code (the “Act”). the Company shall be the
surviving organization in the Merger (sometimes referred to herein
as the “Surviving
Organization”) and will continue to be governed by the
laws of the State of Texas, and the existence of the Company will
continue. The Merger will have the effects specified by the
Act.
1.2 Closing
and Effective Time of the Merger. The closing
(the “Closing”)
will take place at the Purchaser’s offices or at such other
place as agreed upon among the Parties on the later of (a) the
Effective Date or (b) as soon as practicable following fulfillment
or waiver of the conditions specified in Article VII of this
Agreement (the “Closing
Date”). In addition to the other actions contemplated
hereunder, the Parties to the Merger will cause a Certificate of
Merger (the “Certificate of
Merger”) to be filed with the office of the Secretary
of State of the State of Texas as provided in Section 10.151 of the
Act, and will cause this Plan of Merger to be on file at the
principal place of business of the Company. Subject to and in
accordance with the laws of the State of Texas, the Merger will
become effective upon the filing of the Certificate of Merger with
the office of the Secretary of State of the State of Texas, or such
later time or date as may be specified in the Certificate of Merger
(the “Effective
Time”).
1
C:
ARTICLE II
THE SURVIVING ORGANIZATION
2.1 Certificate
of Formation. The Certificate of Formation of
the Company, as in effect immediately prior to the Effective Time
shall be the Certificate of Formation of the Surviving Organization
until the same shall be altered or amended.
2.2. Company
Agreement. The
Company Agreement of the Company, as in effect immediately prior to
the Effective Time shall be the Company Agreement of the Surviving
Organization until the same shall be altered or
amended.
2.3. Manager. The
Manager of the Company, as the Surviving Organization, immediately
after the Effective Time shall be John Brda.
ARTICLE III
CONVERSION OF SECURITIES
3.1 Conversion
of Capital Stock of Merger Sub. As of the Effective Time, by
virtue of the Merger and without any action on the part of
Purchaser, Merger Sub, the Company or the respective shareholders
of members thereof, each share of the capital stock of Merger Sub
issued and outstanding immediately prior to the Effective Time
shall be automatically converted into and become one (1) validly
issued membership interest in the Surviving Organization, and such
membership interest in the Surviving Organization shall constitute
all of the issued and outstanding membership interests in the
Surviving Organization immediately following the Effective
Time.
3.2 Conversion
of Membership Interest in the Company.
(a) Aggregate
Merger Consideration. The aggregate merger consideration
payable for the issued and outstanding membership interest in the
Company (the “Merger
Consideration”) shall be 3,301,739 restricted shares
of common stock, par value $0.001 per share, of Purchaser (the
“Purchaser Common
Stock”). The issuance of the Purchaser Common Stock
will not be registered.
(b) Cancellation
of the Company Membership Interest. As of the Effective
Time, by virtue of the Merger and without any action on the part of
Purchaser, Merger Sub, the Company or the respective shareholders
of members thereof, the membership interest in the Company issued
and outstanding immediately prior to the Effective Time (the
“Company Membership
Interest”) shall cease to exist; provided, however,
that the holder of the Company Membership Interest shall be
entitled to the Merger Consideration in the form of Purchaser
Common Stock.
(c)
Payment of Merger
Consideration. At the Closing, Purchaser will deliver to
Seller stock certificates evidencing the Purchaser Common
Stock.
2
3.3 Tax
Consequences. The Parties intend for the Merger
to constitute a reorganization within the meaning of Sections
368(a)(1)(A) and (a)(2)(E) of the Internal Revenue Code of 1986, as
amended (the “Code”). The Parties adopt this
Agreement as a plan of reorganization with the meaning of Treasury
Regulations Section 1.368-2(g). “Treasury Regulations”
shall mean the temporary and final Income Tax Regulations
promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding
Treasury Regulations). The Parties agree to satisfy the tax return
reporting requirements of Treasury Regulations
§1.368-3.
The
Company and the Seller, jointly and severally, hereby represent and
warrant to Purchaser as follows:
Section
4.1. Organization, Good Standing and
Qualification of the Company.
(i) The
Company is a Texas limited liability company, duly organized and
validly existing under the laws of the state of Texas, (ii) has all
requisite power and authority to carry on its business, and (iii)
is duly qualified to transact business and is in good standing in
all jurisdictions where its ownership, lease or operation of
property or the conduct of its business requires such
qualification, except where the failure to do so would not have a
material adverse effect to the Company.
(ii) The
Company Membership Interest is the sole ownership interest in the
Company. There is no other class of equity interest authorized or
issued by the Company. The Company Membership Interest is owned
beneficially and of record by the Seller free and clear of any
liens, claims, equities, charges, options, rights of first refusal
or encumbrances. The Company has no obligation to repurchase,
reacquire, or redeem any of its outstanding equity interests. There
are no outstanding securities convertible into or evidencing the
right to purchase or subscribe for any equity interests of the
Company, there are no outstanding or authorized options, warrants,
calls, subscriptions, rights, commitments or any other agreements
of any character obligating the Company to issue any securities
convertible into or evidencing the right to purchase or subscribe
for any security of the Company, and there are no agreements or
understandings with respect to the voting, sale, transfer or
registration of any equity interests of the Company.
Section
4.3
Ownership of the
Assets. Subject to that certain Participation Agreement set
forth in Schedule 4.16, at Closing, the Company will own all of the
assets listed in Schedule
4.3 (“Assets”).
Section
4.4 Ownership
of the Company Membership Interest. The Seller has the
unrestricted right and power to transfer, convey and deliver full
ownership of the Company Membership Interest without the consent or
agreement of any other person and without any designation,
declaration or filing with any governmental authority. Upon the
transfer of the Company Membership Interest to Purchaser as
contemplated herein, Purchaser will receive good and valid title
thereto, free and clear of any liens, claims, equities, charges,
options, rights of first refusal, encumbrances or other
restrictions.
3
Section
4.5
Authorization.
(i) All
action on the part of the Company necessary for the authorization,
execution, delivery and performance of this Agreement and all
documents related to consummate the transactions contemplated
herein have been taken by the Company. The Company has the
requisite power and authority to execute and deliver this Agreement
and to perform its obligations hereunder and to consummate the
transactions contemplated hereby. This Agreement, when duly
executed and delivered in accordance with its terms, will
constitute a valid and binding obligation of the Company,
enforceable against each in accordance with its terms, except as
may be limited by bankruptcy, insolvency, reorganization, and other
similar laws of general application relating to or affecting
creditors’ rights and to general equitable
principles.
(ii) The
Seller represents that he is a person of full age of majority, with
full power, capacity, and authority to enter into this Agreement
and perform the obligations contemplated hereby by and for himself.
All action on the part of the Seller necessary for the
authorization, execution, delivery and performance of this
Agreement by him has been taken, or will be taken by them prior to
the Closing Date. This Agreement, when duly executed and delivered
in accordance with its terms, will constitute legal, valid and
binding obligation of the Seller enforceable against him in
accordance with the terms, except as may be limited by bankruptcy,
insolvency, reorganization and other similar laws of general
application affecting creditors’ rights generally or by
general equitable principles.
Section
4.6
No Breaches or
Defaults. The execution, delivery, and performance of this
Agreement by the Company and the Seller does not: (i) conflict
with, violate, or constitute a breach of or a default under any
other outstanding agreements or the constituent documents of the
Company, (ii) result in the creation or imposition of any lien,
claim, or encumbrance of any kind upon the Company or the Assets or
(iii) require any authorization, consent, approval, exemption, or
other action by or filing with any third party or Governmental
Authority (as defined below) under any provision of: (a) any
applicable Legal Requirement (as defined below), or (b) any credit
or loan agreement, promissory note, or any other agreement or
instrument to which the Seller or the Company is a party or by
which the Company or the Assets may be bound or affected. For
purposes of this Agreement, “Governmental Authority” means any
foreign governmental authority, the United States of America, any
state of the United States, and any political subdivision of any of
the foregoing, and any agency, department, commission, board,
bureau, court, or similar entity, having jurisdiction over the
parties hereto or their respective assets or properties. For
purposes of this Agreement, “Legal Requirement” means any law,
statute, injunction, decree, order or judgment (or interpretation
of any of the foregoing) of, and the terms of any license or permit
issued by, any Governmental Authority.
Section
4.7
Consents. No
permit, consent, approval or authorization of, or designation,
declaration or filing with, any Governmental Authority or any other
person or entity is required on the part of the Seller or the
Company in connection with the execution and delivery by the Seller
or the Company of this Agreement or the consummation and
performance of the transactions contemplated hereby.
4
Section
4.8
Pending Claims.
There is no claim, suit, arbitration, investigation, action,
litigation or other proceeding, whether judicial, administrative or
otherwise, now pending or, to the Seller’s or the
Company’s knowledge, contemplated or threatened against the
Seller, the Company or the Assets before any court, arbitration,
administrative or regulatory body or any governmental agency which
may result in any judgment, order, award, decree, liability or
other determination which will or could reasonably be expected to
have any material effect upon the Seller, the Company, or the
Assets, and there is no basis known to the Seller or the Company
for any such action. No litigation is pending, or, to the
Seller’s or the Company’s knowledge, threatened against
the Seller or the Company, or the Assets which seeks to restrain or
enjoin the execution and delivery of this Agreement or any of the
documents referred to herein or the consummation of any of the
transactions contemplated thereby or hereby. Neither the Seller nor
the Company is subject to any judicial injunction or mandate or any
quasi-judicial or administrative order or restriction directed to
or against them or which would affect the Company or the
Assets.
Section
4.9
Taxes. Tthe Company
has timely and accurately prepared and filed all federal, state,
foreign and local tax returns and reports required to be filed
prior to such dates and has timely paid all taxes shown on such
returns as owed for the periods of such returns, including all
sales taxes and withholding or other payroll related taxes shown on
such returns. The Company is not delinquent in the payment of any
tax or governmental charge of any nature. Neither the Company nor
the Seller have any knowledge of any liability for any tax to be
imposed by any taxing authorities upon the Company as of the
Effective Date and as of the Closing that is not adequately
provided for. No assessments or notices of deficiency or other
communications have been received by the Seller or the Company with
respect to any tax return which has not been paid, discharged or
fully reserved against and no amendments or applications for refund
have been filed or are planned with respect to any such return.
None of the federal, state, foreign and local tax returns of the
Company have been audited by any taxing authority. Neither the
Seller nor the Company have any knowledge of any additional
assessments, adjustments or contingent tax liability (whether
federal or state) of any nature whatsoever, whether pending or
threatened against the Company for any period, nor of any basis for
any such assessment, adjustment or contingency. There are no
agreements between the Company and any taxing authority, including,
without limitation, the Internal Revenue Service, waiving or
extending any statute of limitations with respect to any tax
return.
Section
4.10
Acquisition of Stock for
Investment. The Seller understands that the issuance of the
Purchaser Common Stock (as referenced in Section 3.2 herein) will
not have been registered under the Securities Act of 1933, as
amended (the “Securities
Act”), or any state securities acts, and accordingly,
are restricted securities, and the Seller represents and warrants
to the Purchaser that the present intention of the Seller is to
receive and hold the Purchaser Common Stock for investment only and
not with a view to the distribution or resale thereof. Additionally, the Seller
understands that any sale of any of the issued Purchaser Common
Stock will require, under current law, either (a) the registration
of the such Purchaser Common Stock under the Securities Act and
applicable state securities acts; (b) compliance with Rule 144 of
the Securities Act; or (c) the availability of an exemption from
the registration requirements of the Securities Act and applicable
state securities acts.
5
To
assist in implementing the above provisions, the Seller hereby
consents to the placement of the legend, or a substantially similar
legend, set forth below, on all certificates representing ownership
of the Purchaser Common Stock acquired hereby until the Purchaser
Common Stock have been sold, transferred, or otherwise disposed of,
pursuant to the requirements hereof. The legend shall read
substantially as follows:
“THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES ACTS. THESE
SECURITIES HAVE
BEEN ACQUIRED FOR INVESTMENT, ARE RESTRICTED AS TO
TRANSFERABILITY, AND MAY NOT BE SOLD, HYPOTHECATED, OR OTHERWISE
TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION AND
QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES
LAWS OR APPLICABLE EXEMPTIONS THEREFROM.”
Section
4.11
Access to
Information. The Seller hereby confirms and represents that
he (a) has access to and has reviewed all current information about
the Purchaser filed with the Securities and Exchange Commission
(the “SEC”)
(which filings can be accessed by going to
www.sec.gov/edgar/searchedgar/companysearch.html, typing
“Torchlight Energy Resources” in the “Company
name” field, and clicking the “Search” button)
(collectively, the “SEC
Reports”); (b) has been afforded the opportunity to
ask questions of and receive answers from representatives of the
Purchaser concerning the business and financial condition,
properties, operations and prospects of the Purchaser and all such
questions have been answered to the full satisfaction of the
Seller; (c) has such knowledge and experience in financial and
business matters so as to be capable of evaluating the relative
merits and risks of the transactions contemplated hereby; (d) has
had an opportunity to engage and is represented by an attorney of
his choice; (e) has had an opportunity to negotiate the terms and
conditions of this Agreement; (f) has been given adequate time to
evaluate the merits and risks of the transactions contemplated
hereby; and (g) has been provided with and given an opportunity to
review all current information about the Purchaser.
Section
4.12
Purchase for Investment
– Accredited Investor. The Seller is acquiring the
Purchaser Common Stock for his own account, for investment purposes
only and not with view to any public resale or other distribution
thereof. The Seller represents and warrants that it is an
“accredited investor” as that term is defined in Rule
501(a) of Regulation D of the Securities Act. The Seller and/or his
representatives have received, or have had access to, and have had
sufficient opportunity to review, all books, records, financial
information and other information which each of them consider
necessary or advisable to enable them to make a decision concerning
its acquisition of the Purchaser Common Stock, and that each of
them possesses such knowledge and experience in financial and
business matters that each is capable of evaluating the merits and
risks of his investment hereunder.
Section
4.13
Labor Matters. The
Company is not a party or otherwise subject to any collective
bargaining agreement with any labor union or association. There are
no discussions, negotiations, demands or proposals that are pending
or have been conducted or made with or by any labor union or
association, and there are not pending or threatened against the
Company any labor disputes, strikes or work stoppages. To the
Company’s and the Seller’s knowledge, the Company is in
compliance with all federal and state laws respecting employment
and employment practices, terms and conditions of employment and
wages and hours, and, to their knowledge, is not engaged in any
unfair labor practices. The Company is not a party to any written
or oral contract, agreement or understanding for the employment of
any officer, director or employee of the Company.
6
Section
4.14
Compliance with
Laws. To Sellers knowledge, the Company is in compliance
with all statutes, orders, rules, ordinances and regulations
applicable to it or to the ownership of its assets or the operation
of its businesses. Neither the Seller nor the Company has any basis
to expect, nor have they received, any order or notice of any such
violation or claim of violation of any such statute, order, rule,
ordinance or regulation by the Company. The Company owns, holds,
possesses or lawfully uses in the operation of its business all
permits and licenses which are in any manner necessary or required
for it to conduct its operation and business as now being
conducted.
Section
4.15
No Conflicts. The
execution and delivery of this Agreement by the Company does not,
and the performance and consummation of the transactions
contemplated hereby by the Company, will not (i) conflict with the
articles of organization or regulations of the Company as
appropriate; (ii) conflict with or result in a breach or violation
of, or default under, or give rise to any right of acceleration or
termination of, any of the terms, conditions or provisions of any
note, bond, lease, license, agreement or other instrument or
obligation to which the Company is a party or by which the
Company’s assets or properties are bound; or (iii) result in
the creation of any encumbrance on any of the assets or properties
of the Company.
Section
4.16
Title to Properties;
Encumbrances. At Closing, to Seller’s knowledge, the
Assets are free and clear of all mortgages, claims, liens, security
interests, charges, leases, encumbrances and other restrictions of
any kind and nature, except (i) as disclosed in Schedule 4.16, (ii) statutory
liens not yet delinquent, and (iii) such liens consisting of zoning
or planning restrictions, imperfections of title, easements and
encumbrances, if any, as do not materially detract from the value
or materially interfere with the present use of the property or
assets subject thereto or affected thereby.
Section
4.17
No Liabilities. As
of the Closing Date, the Company does not and shall not have any
obligation or liability (contingent or otherwise) or unpaid bill to
any third party, except as set forth herein in Schedule 4.17.
Section
4.18
Contracts
and Leases. Except as shown on
Exhibit 4.18, the Company does not (i) have any leases of personal
property relating to the Assets, whether as lessor or lessee; (ii)
have any contractual or other obligations relating to the Assets,
whether written or oral; and (iii) have given any power of attorney
to any person or organization for any purpose relating to the
Assets. The Company shall provide to Purchaser prior to the Closing
Date each and every contract, lease or other document relating to
the Assets to which it is subject or is a party or a beneficiary.
To the Company’s and the Seller’s knowledge, such
contracts, leases or other documents are valid and in full force
and effect according to their terms and constitute legal, valid and
binding obligations of the Company and the other respective parties
thereto and are enforceable in accordance with their terms. The
Seller and the Company have no knowledge of any default or breach
under such contracts, leases or other documents or of any pending
or threatened claims under any such contracts, leases or other
documents. Neither the execution of this Agreement, nor the
consummation of all or any of the transactions contemplated under
this Agreement, will constitute a breach or default under any such
contracts, leases or other documents which would have a material
adverse effect on the financial condition of the Company or the
Assets after the Closing.
7
Section
4.19
No Pending
Transactions. Except for the transactions contemplated by
this Agreement, the Company is not a party to or bound by or the
subject of any agreement, undertaking, commitment or discussions or
negotiations with any person that could result in: (i) the sale,
merger, consolidation or recapitalization of the Company; (ii) the
sale of any of the Assets; (iii) the sale of any outstanding equity
interest of the Company; (iv) the acquisition by the Company of any
operating business or the capital stock of any other person or
entity; (v) the borrowing of money; (vi) any agreement with any of
the respective officers, managers or affiliates of the Company; or
(vii) any expenditures or the performance by the Company extending
for a period more than one year from the date hereof.
Section
4.20
Material Agreements;
Action. Except for the transactions contemplated by this
Agreement and as set forth in Schedule 4.16, there are no
contracts, agreements, commitments, understandings or proposed
transactions, whether written or oral, to which the Company is a
party or by which it is bound that involve or relate to (i) any of
the respective officers, directors, stockholder or partners of the
Company or (ii) covenants of the Seller or the Company not to
compete in any line of business or with any person in any
geographical area or covenants of any other person not to compete
with the Company in any line of business or in any geographical
area.
Section
4.21
Insurance
Policies.
Copies of all insurance policies maintained by the Company have
been or will be delivered or made available to Purchaser. The
policies of insurance held by the Company are in such amounts, and
insure against such losses and risks, as the Company reasonably
deems appropriate for their property and business operations. All
such insurance policies are in full force and effect and all
premiums due thereon have been paid and will be paid through the
Closing.
Section
4.22
No Default. The
Company is not in default under any term or condition of any
instrument evidencing, creating or securing any indebtedness of the
Company, and there has been no default in any material obligation
to be performed by the Company under any other contract, lease,
agreement, commitment or undertaking to which the Company is a
party or by which it or its assets or properties are bound, nor has
the Company waived any material right under any such contract,
lease, agreement, commitment or undertaking.
Section
4.23
Books and Records.
The books of account, minute books, stock record books and other
records of the Company, all of which have been made available to
Purchaser, are accurate and complete and have been maintained in
accordance with sound business practices.
Section
4.24
Environmental. To
Seller’s knowledge, the Company is not in violation of any
state, local or federal statutes, laws, regulations, ordinances, or
rules pertaining to health or the environment requirements
affecting the Assets. Neither the Company nor the Seller have
received any citation, directive, letter or other communication,
written or oral, or any notice of any proceeding, claim or lawsuit
relating to any environmental issue arising out of the ownership of
any of the Assets, and there is no basis known to the Company or
the Seller for any such action.
8
Section
4.25
Disclosure. No representation
or warranty of the Seller or the Company contained in this
Agreement (including the exhibits hereto) contains any untrue
statement or omits to state a material fact necessary in order to
make the statements contained herein or therein, in light of the
circumstances under which they were made, not
misleading.
Section
4.26
Employee Benefit
Plans. The Company is not a party to any employee-benefit
plan.
Section
4.27
Brokerage
Commission. No broker or finder has acted on behalf of the
Seller or the Company in connection with this Agreement or the
transactions contemplated hereby and no person is entitled to any
brokerage or finder’s fee or compensation in respect thereto
based in any way on agreements, arrangements or understandings made
by or on behalf of the Seller or the Company.
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES
OF
PURCHASER AND MERGER SUB
The
Purchaser and Merger Sub hereby represent and warrant to the
Company and the Seller as follows:
Section
5.1
Organization, Good
Standing and Qualification.
(a) The
Purchaser (i) is a corporation duly organized, validly existing and
in good standing under the laws of the state of Nevada, (ii) has
all requisite power and authority to carry on its business, and
(iii) is duly qualified to transact business and is in good
standing in all jurisdictions where its ownership, lease or
operation of property or the conduct of its business requires such
qualification, except where the failure to do so would not have a
material adverse effect to the Purchaser.
(b) The
Merger Sub (i) is a corporation duly organized, validly existing
and in good standing under the laws of the state of Texas, (ii) has
all requisite power and authority to carry on its business, and
(iii) is duly qualified to transact business and is in good
standing in all jurisdictions where its ownership, lease or
operation of property or the conduct of its business requires such
qualification, except where the failure to do so would not have a
material adverse effect to the Merger Sub.
Section
5.2 Authorization.
All action on the part of the Purchaser and the Merger Sub
necessary for the authorization, execution, delivery and
performance of this Agreement and all documents related to
consummate the transactions contemplated herein has been taken by
the respective corporation. Each of the Purchaser and the Merger
Sub has the requisite power and authority to execute and deliver
this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. This Agreement,
when duly executed and delivered in accordance with its terms, will
constitute a valid and binding obligation of each of the Purchaser
and the Merger Sub, enforceable against such corporation in
accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, and other similar laws of general
application relating to or affecting creditors’ rights and to
general equitable principles.
9
Section 5.3
No Breaches or
Defaults. The execution, delivery, and performance of this
Agreement by each of Purchaser and Merger Sub does not: (i)
conflict with, violate, or constitute a breach of or a default
under or (ii) require any authorization, consent, approval,
exemption, or other action by or filing with any third party or
Governmental Authority under any provision of: (a) any applicable
Legal Requirement, or (b) any credit or loan agreement, promissory
note, or any other agreement or instrument to which any of
Purchaser and Merger Sub is a party.
Section
5.4
Consents. No
permit, consent, approval or authorization of, or designation,
declaration or filing with, any Governmental Authority or any other
person or entity is required on the part of any of Purchaser and
Merger Sub in connection with the execution and delivery by
Purchaser and Merger Sub of this Agreement or the consummation and
performance of the transactions contemplated hereby.
Section
5.5
Disclosure.
No representation or warranty of Purchaser and Merger Sub contained
in this Agreement (including the exhibits hereto) contains any
untrue statement or omits to state a material fact necessary in
order to make the statements contained herein or therein, in light
of the circumstances under which they were made, not
misleading.
Section
5.6
Brokerage
Commission. No broker or finder has acted on behalf of any
of Purchaser and Merger Sub in connection with this Agreement or
the transactions contemplated hereby and no person is entitled to
any brokerage or finder’s fee or compensation in respect
thereto based in any way on agreements, arrangements or
understandings made by or on behalf of any of Purchaser and Merger
Sub.
Each
obligation of the Seller and the Company to be performed on the
Closing Date shall be subject to the satisfaction of each of the
conditions stated in this Article VII, except to the extent that
such satisfaction is waived by the Seller and the Company in
writing:
Section
7.1
Payment of Merger
Consideration. Purchaser shall have tendered the Merger
Consideration as referenced in Section 3.2 hereof to the Company
concurrently with the Closing, in the form of certificates
evidencing the Purchaser Common Stock duly endorsed to Seller or
accompanied by duly executed stock powers in form and substance
satisfactory to the Seller.
Section
7.2
Corporate
Resolutions. Purchaser and Merger Sub shall provide a
corporate resolution of its respective Board of Directors which
approves the transactions contemplated herein and authorizes the
execution, delivery and performance of this Agreement and the
documents referred to herein to which it is or is to be a party
dated as of the Closing Date.
10
Section
7.3
Absence of
Proceedings. No action, suit or proceeding by or before any
court or any governmental or regulatory authority shall have been
commenced and no investigation by any governmental or regulatory
authority shall have been commenced seeking to restrain, prevent or
challenge the transactions contemplated hereby or seeking judgments
against Purchaser.
ARTICLE
VIII
CONDITIONS
TO CLOSING OF
THE
PURCHASER AND MERGER SUB
Each
obligation of Purchaser and Merger Sub to be performed on the
Closing Date will be subject to the satisfaction of each of the
conditions stated in this Article VIII, except to the extent that
such satisfaction is waived by Purchaser in writing.
Section
8.1
Delivery of Purchaser
Warrants. The Company shall have delivered certificates
evidencing the Warrants to acquire shares of common stock of the
Purchaser held by the Company and listed on Schedule 4.3 duly
endorsed to the Company.
Section
8.2
Company
Resolutions. The Company shall provide to Purchaser
resolutions of its sole Member and Manager, the Seller, which
approves all of the transactions contemplated herein and authorizes
the execution, delivery and performance of this Agreement and the
documents referred to herein to which it is or is to be a party
dated as of the Closing Date.
Section
8.3
No Assumption of
Liabilities. The Purchaser will not assume any liabilities
of the Company as of the Closing Date.
Section
8.4
Absence of
Proceedings. No action, suit or proceeding by or before any
court or any governmental or regulatory authority will have been
commenced and no investigation by any governmental or regulatory
authority will have been commenced seeking to restrain, prevent or
challenge the transactions contemplated hereby or seeking judgments
against the Company or any of the Assets.
ARTICLE IX
INDEMNIFICATION
Section
9.1
Indemnification from the
Seller. Seller hereby agrees to and shall indemnify, defend
(with legal counsel reasonably acceptable to Purchaser), and hold
Purchaser, its officers, directors, shareholders, employees,
affiliates, parent, agents, legal counsel, successors and assigns
(collectively, the “Purchaser
Group”) harmless at all times after the date of this
Agreement, from and against any and all actions, suits, claims,
demands, debts, liabilities, obligations, losses, damages, costs,
expenses, penalties or injury (including reasonable
attorneys’ fees and costs of any suit related thereto)
suffered or incurred by any of the Purchaser Group arising from:
(a) any misrepresentation by, or breach of any covenant or warranty
of the Seller or the Company contained in this Agreement, or any
exhibit, certificate, or other instrument furnished or to be
furnished by the Seller or the Company hereunder; (b) any
nonfulfillment of any agreement on the part of the Seller under
this Agreement; or (c) any suit, action, proceeding, claim or
investigation against Purchaser Group which arises from or which is
based upon or pertaining to the Seller’s or the
Company’s conduct or the operation or liabilities of the
business of the Company or the Assets prior to the Closing
Date.
11
Section
9.2
Indemnification from
Purchaser. Purchaser agrees to and shall indemnify, defend
(with legal counsel reasonably acceptable to the Seller) and hold
the Seller and its officers, directors, affiliates, agents, legal
counsel, successors and assigns (collectively, the
“Seller Group”)
harmless at all times after the date of the Agreement from and
against any and all actions, suits, claims, demands, debts,
liabilities, obligations, losses, damages, costs, expenses,
penalties or injury (including reasonable attorney’s fees and
costs of any suit related thereto) suffered or incurred by any of
Seller Group, arising from (a) any misrepresentation by, or breach
of any covenant or warranty of Purchaser contained in this
Agreement or any exhibit, certificate, or other agreement or
instrument furnished or to be furnished by Purchaser hereunder or;
(b) any nonfulfillment of any agreement on the part of Purchaser
under this Agreement.;
Section
9.3
Defense of Claims.
If any lawsuit enforcement action or any attempt to collect on an
alleged liability is filed against any party entitled to the
benefit of indemnity hereunder, written notice thereof shall be
given to the indemnifying party within ten (10) business days after
receipt of notice or other date by which action must be taken;
provided that the failure of any indemnified party to give timely
notice shall not affect rights to indemnification hereunder except
to the extent that the indemnifying party demonstrates damage
caused by such failure. After such notice, the indemnifying party
shall be entitled, if it so elects, to take control of the defense
and investigation of such lawsuit or action and to employ and
engage attorneys of its own choice to handle and defend the same,
at the indemnifying party's cost, risk and expense; and such
indemnified party shall cooperate in all reasonable respects, at
its cost, risk and expense, with the indemnifying party and such
attorneys in the investigation, trial and defense of such lawsuit
or action and any appeal arising therefrom; provided, however, that
the indemnified party may, at its own cost, participate in such
investigation, trial and defense of such lawsuit or action and any
appeal arising therefrom. The indemnifying party shall not, without
the prior written consent of the indemnified party, effect any
settlement of any proceeding in respect of which any indemnified
party is a party and indemnity has been sought hereunder unless
such settlement of a claim, investigation, suit, or other
proceeding only involves a remedy for the payment of money by the
indemnifying party and includes an unconditional release of such
indemnified party from all liability on claims that are the subject
matter of such proceeding.
Section
9.4
Default of Indemnification
Obligation. If an entity or individual having an
indemnification, defense and hold harmless obligation, as above
provided, shall fail to assume such obligation, then the party or
entities or both, as the case may be, to whom such indemnification,
defense and hold harmless obligation is due shall have the right,
but not the obligation, to assume and maintain such defense
(including reasonable counsel fees and costs of any suit related
thereto) and to make any settlement or pay any judgment or verdict
as the individual or entities deem necessary or appropriate in such
individuals or entities absolute sole discretion and to charge the
cost of any such settlement, payment, expense and costs, including
reasonable attorneys’ fees, to the entity or individual that
had the obligation to provide such indemnification, defense and
hold harmless obligation and same shall constitute an additional
obligation of the entity or of the individual or both, as the case
may be.
12
Section
9.5
Survival of
Representations and Warranties. The respective
representations, warranties and indemnities given by the parties to
each other pursuant to this Agreement shall survive the Closing for
a period ending twelve (12) months from the Closing Date
(“Survival
Date”). Notwithstanding anything to the contrary
contained herein, no claim for indemnification may be made against
the party required to indemnify (the “Indemnitor”)
under this Agreement unless the party entitled to indemnification
(the “Indemnitee”) shall have given the Indemnitor
written notice of such claim as provided herein on or before the
Survival Date. Any claim for which notice has been given prior to
the expiration of the Survival Date shall not be barred
hereunder.
ARTICLE X
MISCELLANEOUS
Section
10.1
Amendment; Waiver.
Neither this Agreement nor any provision hereof may be amended,
modified or supplemented unless in writing, executed by all the
parties hereto. Except as otherwise expressly provided herein, no
waiver with respect to this Agreement shall be enforceable unless
in writing and signed by the party against whom enforcement is
sought. Except as otherwise expressly provided herein, no failure
to exercise, delay in exercising, or single or partial exercise of
any right, power or remedy by any party, and no course of dealing
between or among any of the parties, shall constitute a waiver of,
or shall preclude any other or further exercise of, any right,
power or remedy.
Section
10.2
Notices. Any
notices or other communications required or permitted hereunder
shall be sufficiently given if in writing and delivered in Person
or sent by registered or certified mail (return receipt requested)
or nationally recognized overnight delivery service, postage
pre-paid, addressed as follows, or to such other address has such
party may notify to the other parties in writing:
A
notice or communication will be effective (i) if delivered in
Person or by overnight courier, on the business day it is delivered
and (ii) if sent by registered or certified mail, three (3)
business days after dispatch.
Section
10.3
Severability.
Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to
be prohibited by or invalid under applicable law, such provision
will be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of this
Agreement.
Section
10.4
Assignment;
Successors and
Assigns. Except as otherwise provided herein, the provisions
hereof shall inure to the benefit of, and be binding upon, the
successors and permitted assigns of the parties hereto. No party
hereto may assign its rights or delegate its obligations under this
Agreement without the prior written consent of the other parties
hereto, which consent will not be unreasonably
withheld.
Section
10.5
Public
Announcements. The parties hereto agree that prior to making
any public announcement or statement with respect to the
transactions contemplated by this Agreement, the party desiring to
make such public announcement or statement shall consult with the
other parties hereto and exercise their best efforts to agree upon
the text of a public announcement or statement to be made by the
party desiring to make such public announcement; provided, however,
that if any party hereto is required by law to make such public
announcement or statement, then such announcement or statement may
be made without the approval of the other parties. Provided,
however, that this section shall not apply post-Closing to
Purchaser or Company.
Section
10.6
Entire Agreement.
This Agreement, the Plan of Merger and the other documents
delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the
subject matter hereof and thereof and supersede and cancel all
prior representations, alleged warranties, statements,
negotiations, undertakings, letters, acceptances, understandings,
contracts and communications, whether verbal or written among the
parties hereto and thereto or their respective agents with respect
to or in connection with the subject matter hereof.
Section
10.7
Choice of Law. This
Agreement shall be governed by, and construed in accordance with,
the laws of the State of Texas without regard to principles of
conflict of laws. In any action between or among any of the
parties, whether arising out of this Agreement or otherwise, each
of the parties irrevocably consents to the exclusive jurisdiction
and venue of the federal and state courts located in Collin County,
Texas.
14
Section
10.8
Execution. This Agreement may
be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall
become effective when counterparts have been signed by each party
and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any
signature is delivered by facsimile transmission or by e-mail
delivery of a “.pdf” format data file, such signature
shall create a valid and binding obligation of the party executing
(or on whose behalf such signature is executed) with the same force
and effect as if such facsimile or “.pdf” signature
page were an original thereof.
Section
10.9
Costs
and Expenses. Each party shall pay their own respective
fees, costs and disbursements incurred in connection with this
Agreement.
Section
10.10
Section Headings.
The section and subsection headings in this Agreement are used
solely for convenience of reference, do not constitute a part of
this Agreement, and shall not affect its
interpretation.
Section
10.11
No
Third-Party Beneficiaries. Nothing in this Agreement will
confer any third party beneficiary or other rights upon any person
(specifically including any employees of The Company) or any entity
that is not a party to this Agreement.
Section
10.12
Further Assurances.
Each party covenants that at any time, and from time to time, after
the Closing Date, it will execute such additional instruments and
take such actions as may be reasonably be requested by the other
parties to confirm or perfect or otherwise to carry out the intent
and purposes of this Agreement.
Section
10.13
Exhibits Not
Attached. Any exhibits not attached hereto on the date of
execution of this Agreement shall be deemed to be and shall become
a part of this Agreement as if executed on the date hereof upon
each of the parties initialing and dating each such exhibit, upon
their respective acceptance of its terms, conditions and/or
form.
Section
10.14
Attorney Review -
Construction. In connection with the negotiation and
drafting of this Agreement, the parties represent and warrant to
each other that they have had the opportunity to be advised by
attorneys of their own choice and, therefore, the normal rule of
construction to the effect that any ambiguities are to be resolved
against the drafting party shall not be employed in the
interpretation of this Agreement or any amendments
hereto.
Section
10.15
Gender. All
personal pronouns used in this Agreement shall include the other
genders, whether used in the masculine, feminine or neuter gender
and the singular shall include the plural and vice versa, wherever
appropriate.
[SIGNATURES
APPEAR ON THE FOLLOWING PAGE.]
15
IN
WITNESS WHEREOF, the undersigned have executed this Agreement and
Plan of Reorganization to become effective as of the Effective
Date.
COMPANY
LINE
DRIVE ENERGY, LLC, a Texas limited liability company
By:
/s/
Greg
McCabe, Sr.
Greg McCabe, Sr.,
Manager
SELLER
By:
/s/
Greg
McCabe, Sr.
GREG
MCCABE, SR.
PARENT
TORCHLIGHT ENERGY
RESOURCES, INC., a Nevada corporation
By:
/s/
John
Brda
John Brda,
CEO
MERGER
SUB
TORCHLIGHT
ACQUISITION CORPORATION, a Texas corporation
This
PLAN OF MERGER (the "Plan of
Merger") is made as of the 30th day of January,
2017 by and among TORCHLIGHT ENERGY
RESOURCES, INC., a Nevada corporation
(“Purchaser”), TORCHLIGHT ACQUISITION CORPORATION, a
Texas corporation (“Merger Sub”), and LINE DRIVE ENERGY, LLC, a Texas limited
liability company (“Target”) (Merger Sub and Target
being hereinafter collectively referred to as the “Parties to
the Merger”).
RECITALS
A.
Prior to the execution of this Plan of Merger, Purchaser, Merger
Sub, and Target have entered into an Agreement and Plan of
Reorganization dated as of January 30, 2017 (the “Plan of
Reorganization”) providing for certain representations,
warranties, and agreements in connection with the transaction
contemplated.
B. The
Boards of Directors of Purchaser and Merger Sub and the Manager and
Member of Target have approved the acquisition of Target by
Parent.
C. The
Boards of Directors of Purchaser and Merger Sub and the Manager and
Member of Target have approved the merger of Merger Sub into Target
(the “Merger”) upon the terms and subject to the
conditions set forth herein and in the Plan of
Reorganization.
D. For
federal income tax purposes, it is intended that the Merger shall
qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the
“Code”).
WITNESSETH
Now,
therefore, in consideration of the premises and the mutual promises
and covenants contained herein, and subject to the conditions
hereinafter set forth, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The
Merger. At the Effective Time (as defined in
Section 1.2) and subject to the terms and conditions of this Plan
of Merger and the Plan of Reorganization, Merger Sub shall be
merged with and into Target and the separate existence of Merger
Sub shall thereupon cease, in accordance with the applicable
provisions of the Texas Business Organizations Code (the
“Act”). Target shall be the surviving organization in
the Merger (sometimes referred to herein as the “Surviving
Entity”) and will continue to be governed by the laws of the
State of Texas, and the existence of Target will continue. The
Merger will have the effects specified by the Act.
17
1.2 Effective
Time. As soon as practicable following
fulfillment or waiver of the conditions specified in Article VII of
the Plan of Reorganization and provided that this Plan of Merger
has not been terminated or abandoned pursuant to Article IV hereof,
the Parties to the Merger will cause a Certificate of Merger (the
“Certificate of Merger”) to be filed with the office of
the Secretary of State of the State of Texas as provided in Section
10.151 of the Act, and will cause this Plan of Merger to be on file
at the principal place of business of the Target. Subject to and in
accordance with the laws of the State of Texas, the Merger will
become effective upon the filing of the Certificate of Merger with
the office of the Secretary of State of the State of Texas , or
such later time or date as may be specified in the Certificate of
Merger (the “Effective Time”).
ARTICLE II
THE SURVIVING ORGANIZATION
2.1 Certificate
of Formation. The Certificate of Formation of
Target, as in effect immediately prior to the Effective Time shall
be the Certificate of Formation of the Surviving Organization until
the same shall be altered or amended.
2.2. Company
Agreement. The
Company Agreement of Target, as in effect immediately prior to the
Effective Time shall be the Company Agreement of the Surviving
Organization until the same shall be altered or
amended.
2.3. Manager. The
Manager of Target, as the Surviving Organization, immediately after
the Effective Time shall be John Brda.
ARTICLE III
CONVERSION OF SECURITIES
3.1 Conversion
of Capital Stock of Merger Sub. As of the Effective Time, by
virtue of the Merger and without any action on the part of
Purchaser, Merger Sub, Target or the respective shareholders or
members thereof, each share of the capital stock of Merger Sub
issued and outstanding immediately prior to the Effective Time
shall be automatically converted into and become one (1) validly
issued membership interest in the Surviving Organization, and such
membership interest in the Surviving Organization shall constitute
all of the issued and outstanding membership interests in the
Surviving Organization immediately following the Effective
Time.
3.2 Conversion
of Membership Interest in Target.
(a) Aggregate
Merger Consideration. The aggregate merger consideration
payable for the issued and outstanding membership interest in
Target (the “Merger Consideration”) shall be 3,301,739
restricted shares of common stock, par value $0.0001 per share, of
Purchaser (“Purchaser Common Stock”). The issuance of
the Purchaser Common Stock will be made without registration under
the Securities Act of 1933, as amended, or any securities
“blue sky” or other similar laws of any
state.
18
(b) Cancellation
of Target Membership Interest. As of the Effective Time, by
virtue of the Merger and without any action on the part of
Purchaser, Merger Sub, Target or the respective shareholders of
members thereof, the membership interest in Target issued and
outstanding immediately prior to the Effective Time (the
“Target Membership Interest”) shall cease to exist;
provided, however, that the holder of the Target Membership
Interest shall be entitled to the Merger Consideration in the form
of Purchaser Common Stock.
(c)
Payment of Merger
Consideration. At the Closing (as defined in the Plan of
Reorganization), Purchaser will deliver stock certificates
evidencing the Purchaser Common Stock.
4.2 Amendment.
This Plan of Merger may not be amended except by an instrument in
writing signed on behalf of each of the parties
hereto.
4.3 Severability.
Whenever possible, each provision of this Plan of Merger shall be
interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Plan of Merger is held
to be prohibited by or invalid under applicable law, such provision
will be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of this Plan of
Merger.
4.4 Assignment,
Successors and Assigns. The provisions hereof shall inure to
the benefit of, and be binding upon, the successors and permitted
assigns of the parties hereto. No party hereto may assign its
rights or delegate its obligations under this Plan of Merger
without the prior written consent of the other parties hereto,
which consent will not be unreasonably withheld.
4.5 Entire
Agreement. This Agreement and the Plan of Reorganization
constitute the full and entire understanding and agreement between
the parties with regard to the subject matter hereof and thereof
and supersede and cancel all prior representations, alleged
warranties, statements, negotiations, undertakings, letters,
acceptances, understandings, contracts and communications, whether
verbal or written among the parties hereto and thereto or their
respective agents with respect to or in connection with the subject
matter hereof.
4.6 Choice
of Law. This Plan of Merger shall be governed by, and
construed in accordance with, the laws of the State of Texas
without regard to principles of conflict of laws. In any action
between or among any of the parties, whether arising out of this
Plan of Merger or otherwise, each of the parties irrevocably
consents to the exclusive jurisdiction and venue of the federal and
state courts located in Collin County, Texas.
4.7 Execution.
This Plan of Merger may be executed in two or more counterparts,
all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have
been signed by each party and delivered to the other party, it
being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a
“.pdf” format data file, such signature shall create a
valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect
as if such facsimile or “.pdf” signature page were an
original thereof.
19
4.8 Section
Headings. The section and subsection headings in this Plan
of Merger are used solely for convenience of reference, do not
constitute a part of this Plan of Merger, and may not affect its
interpretation.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
20
IN WITNESS WHEREOF, the parties, by and
through their respective authorized representatives, have executed
this Plan of Merger effective as of the day first written
above.
TORCHLIGHT ENERGY
RESOURCES, INC., a Nevada corporation
By:
/s/
John
Brda
Name:
John
Brda
Title:
President
TORCHLIGHT
ACQUISITION CORPORATION, a Texas corporation
By:
/s/
John
Brda
John Brda,
President
LINE
DRIVE ENERGY, LLC, a Texas limited liability company
By:
/s/
Greg
McCabe, Sr.
Name:
Greg McCabe, Sr.,
Manager
21
Schedules
Schedule
4.3 -- Assets
Warrant
to Purchase 521,739 shares of common stock of Torchlight Energy
Resources, Inc., warrant certificate number W-SAP-004
All of
Section 73 Block 6, Abstract 1005, Tom Green County, 640
acres.
All of
Section 41, Block 7, Abstract 950(TG) & 237(S), Tom Green and
Sterling County, 640 acres
All of
Section 86, Block 6, Abstract 8472(TG) & 1119(S), Tom Green and
Sterling County, 640 acres
All of
Section 87, Block 6, Abstract 1012(TG) & 191(S), Tom Green and
Sterling County, 640 acres
All of
Section 88, Block 6, Abstract 8345(TG) & 1076(S), Tom Green and
Sterling County, 640 acres**
All of
Section 90, Block 6, Abstract 1075, Sterling County, 640
acres
All of
Section 91, Block 6, Abstract 193, Sterling County, 640
acres
Total
acres: 4,480 gross acres
** Save
and Except 40 acres in the form of a square around the wellbore of
the EXCO PNR-Harris Heirs “88” #1 Well (API No.
42-431-33263) located 850 feet FNL and 1320 feet FWL of Section 88,
as to depths from the surface down to 5,482 feet.
Lessor: Cotten Resources, LTD
Lessee: Oxy USA, Inc.
Date: 4/12/13
V/P: 71/345
Legal Description:
All of
Section 73 Block 6, Abstract 1005, Tom Green County, 640
acres.
All of
Section 41, Block 7, Abstract 950(TG) & 237(S), Tom Green and
Sterling County, 640 acres
All of
Section 86, Block 6, Abstract 8472(TG) & 1119(S), Tom Green and
Sterling County, 640 acres
All of
Section 87, Block 6, Abstract 1012(TG) & 191(S), Tom Green and
Sterling County, 640 acres
All of
Section 88, Block 6, Abstract 8345(TG) & 1076(S), Tom Green and
Sterling County, 640 acres**
All of
Section 90, Block 6, Abstract 1075, Sterling County, 640
acres
All of
Section 91, Block 6, Abstract 193, Sterling County, 640
acres
22
Total
acres: 4,480 gross acres
** Save
and Except 40 acres in the form of a square around the wellbore of
the EXCO PNR-Harris Heirs “88” #1 Well (API No.
42-431-33263) located 850 feet FNL and 1320 feet FWL of Section 88,
as to depths from the surface down to 5,482 feet.
All of
Section 70, Block 6, Abstract 8592(TG) & 1187(I), Irion and Tom
Green County, 644.20 acres
All of
Section 71, Block 6, Abstract 1004(TG) & 347(I), Irion and Tom
Green County, 640 acres
All of
Section 72, Block 6, Abstract 8662(TG) & 1214(I), Irion and Tom
Green County, 644.20 acres
All of
Section 73 Block 6, Abstract 1005, Tom Green County, 640
acres
All of
Section 74, Block 6, Abstract 8344, Tom Green County, 645.9
acres
All of
Section 75, Block6, Abstract 1006, Tom Green County, 640
acres
All of
Section 41, Block 7, Abstract 950(TG) & 237(S), Tom Green and
Sterling County, 640 acres
All of
Section 86, Block 6, Abstract 8472(TG) & 1119(S), Tom Green and
Sterling County, 640 acres
All of
Section 87, Block 6, Abstract 1012(TG) & 191(S), Tom Green and
Sterling County, 640 acres
All of
Section 88, Block 6, Abstract 8345(TG) & 1076(S), Tom Green and
Sterling County, 640 acres**
Total
acres: 6,414.3
All of
Section 89, Block 6, Abstract 192, Sterling County, 640
acres
All of
Section 90, Block 6, Abstract 1075, Sterling County, 640
acres
All of
Section 91, Block 6, Abstract 193, Sterling County, 640
acres
All of
Section 102, Block 6, Abstract 1170, Sterling County, 649
acres
All of
Section 103, Block 6, Abstract 199, Sterling County, 640
acres
All of
Section 104, Block 6, Abstract 1169, Sterling County, 649.3
acres
All of
Section 105, Block 6, Abstract 201, Sterling County, 640
acres
All of
Section 106, Block 6, Abstract 1072, Sterling County, 650
acres
All of
Section 107, Block 6, Abstract 202, Sterling County, 640
acres
Total
acres: 5,788.30 gross acres
** Save
and Except 40 acres in the form of a square around the wellbore of
the EXCO PNR-Harris Heirs “88” #1 Well (API No.
42-431-33263) located 850 feet FNL and 1320 feet FWL of Section 88,
as to depths from the surface down to 5,482 feet.
Lessor: LAJ Corporation
Lessee: Oxy USA, Inc.
Date: 4/11/13
V/P: 71/366
23
Legal Description:
All of
Section 70, Block 6, Abstract 8592(TG) & 1187(I), Irion and Tom
Green County, 644.20 acres
All of
Section 71, Block 6, Abstract 1004(TG) & 347(I), Irion and Tom
Green County, 640 acres
All of
Section 72, Block 6, Abstract 8662(TG) & 1214(I), Irion and Tom
Green County, 644.20 acres
All of
Section 73 Block 6, Abstract 1005, Tom Green County, 640
acres
All of
Section 74, Block 6, Abstract 8344, Tom Green County, 645.9
acres
All of
Section 75, Block6, Abstract 1006, Tom Green County, 640
acres
All of
Section 41, Block 7, Abstract 950(TG) & 237(S), Tom Green and
Sterling County, 640 acres
All of
Section 86, Block 6, Abstract 8472(TG) & 1119(S), Tom Green and
Sterling County, 640 acres
All of
Section 87, Block 6, Abstract 1012(TG) & 191(S), Tom Green and
Sterling County, 640 acres
All of
Section 88, Block 6, Abstract 8345(TG) & 1076(S), Tom Green and
Sterling County, 640 acres**
Total
acres: 6,414.3
All of
Section 89, Block 6, Abstract 192, Sterling County, 640
acres
All of
Section 90, Block 6, Abstract 1075, Sterling County, 640
acres
All of
Section 91, Block 6, Abstract 193, Sterling County, 640
acres
All of
Section 102, Block 6, Abstract 1170, Sterling County, 649
acres
All of
Section 103, Block 6, Abstract 199, Sterling County, 640
acres
All of
Section 104, Block 6, Abstract 1169, Sterling County, 649.3
acres
All of
Section 105, Block 6, Abstract 201, Sterling County, 640
acres
All of
Section 106, Block 6, Abstract 1072, Sterling County, 650
acres
All of
Section 107, Block 6, Abstract 202, Sterling County, 640
acres
Total
acres: 5,788.30 gross acres
** Save
and Except 40 acres in the form of a square around the wellbore of
the EXCO PNR-Harris Heirs “88” #1 Well (API No.
42-431-33263) located 850 feet FNL and 1320 feet FWL of Section 88,
as to depths from the surface down to 5,482 feet.
Lessor: Sigmar, Inc.
Lessee: Oxy USA, Inc.
Date: 4/11/13
V/P: 71/354
Legal Description:
All of
Section 70, Block 6, Abstract 8592(TG) & 1187(I), Irion and Tom
Green County, 644.20 acres
All of
Section 71, Block 6, Abstract 1004(TG) & 347(I), Irion and Tom
Green County, 640 acres
All of
Section 72, Block 6, Abstract 8662(TG) & 1214(I), Irion and Tom
Green County, 644.20 acres
All of
Section 73 Block 6, Abstract 1005, Tom Green County, 640
acres
All of
Section 74, Block 6, Abstract 8344, Tom Green County, 645.9
acres
All of
Section 75, Block6, Abstract 1006, Tom Green County, 640
acres
24
All of
Section 41, Block 7, Abstract 950(TG) & 237(S), Tom Green and
Sterling County, 640 acres
All of
Section 86, Block 6, Abstract 8472(TG) & 1119(S), Tom Green and
Sterling County, 640 acres
All of
Section 87, Block 6, Abstract 1012(TG) & 191(S), Tom Green and
Sterling County, 640 acres
All of
Section 88, Block 6, Abstract 8345(TG) & 1076(S), Tom Green and
Sterling County, 640 acres**
Total
acres: 6,414.3
All of
Section 89, Block 6, Abstract 192, Sterling County, 640
acres
All of
Section 90, Block 6, Abstract 1075, Sterling County, 640
acres
All of
Section 91, Block 6, Abstract 193, Sterling County, 640
acres
All of
Section 102, Block 6, Abstract 1170, Sterling County, 649
acres
All of
Section 103, Block 6, Abstract 199, Sterling County, 640
acres
All of
Section 104, Block 6, Abstract 1169, Sterling County, 649.3
acres
All of
Section 105, Block 6, Abstract 201, Sterling County, 640
acres
All of
Section 106, Block 6, Abstract 1072, Sterling County, 650
acres
All of
Section 107, Block 6, Abstract 202, Sterling County, 640
acres
Total
acres: 5,788.30 gross acres
** Save
and Except 40 acres in the form of a square around the wellbore of
the EXCO PNR-Harris Heirs “88” #1 Well (API No.
42-431-33263) located 850 feet FNL and 1320 feet FWL of Section 88,
as to depths from the surface down to 5,482 feet.
Lessor: Wayne H. Bellows; Marilyn L. Bellows; Andrew Paul
Smith and wife, Bonnie Smith; Andrew P. Smith, Trustee; Andrew P.
Smith, JR., Trustee of the Andrew P. Smith, Jr., Mineral Trust
dated September 19, 2008; Clayton H. Smith, Trustee of the Clayton
H. Smith Mineral Trust dated September 19, 2008; Shannon Fraser
Smith Stephens, Successor Trustee of the David M. Smith Family
Trust U/W/O of David Malcolm Smith, Deceased; Frank Harris Smith
and wife, Gloria Grubb Smith, Wells Fargo Bank N.A., Successor
Trustee of the Keith French Ellwanger Trust; Stephen Martin Samuel;
Daniel H. Barrow, Kenneth H. Wanamaker, Trustee of the Townes
Trust; Robin Mourning and Deborah Jeanne Crownover, Trustee of the
Crownover Revocable Trust dated October 7, 1993, as Amended and
Restated in Restated Declaration of Trust dated May 22,2012
Lessee: Oxy USA, Inc.
Date: 7/12/12
V/P: 63/350
Legal Description:
All of
Section 70, Block 6, Abstract 8592(TG) & 1187(I), Irion and Tom
Green County, 644.20 acres
All of
Section 71, Block 6, Abstract 1004(TG) & 347(I), Irion and Tom
Green County, 640 acres
All of
Section 72, Block 6, Abstract 8662(TG) & 1214(I), Irion and Tom
Green County, 644.20 acres
All of
Section 73 Block 6, Abstract 1005, Tom Green County, 640
acres
All of
Section 74, Block 6, Abstract 8344, Tom Green County, 645.9
acres
25
All of
Section 75, Block6, Abstract 1006, Tom Green County, 640
acres
All of
Section 41, Block 7, Abstract 950(TG) & 237(S), Tom Green and
Sterling County, 640 acres
All of
Section 86, Block 6, Abstract 8472(TG) & 1119(S), Tom Green and
Sterling County, 640 acres
All of
Section 87, Block 6, Abstract 1012(TG) & 191(S), Tom Green and
Sterling County, 640 acres
All of
Section 88, Block 6, Abstract 8345(TG) & 1076(S), Tom Green and
Sterling County, 640 acres**
Total
acres: 6,414.3
All of
Section 89, Block 6, Abstract 192, Sterling County, 640
acres
All of
Section 90, Block 6, Abstract 1075, Sterling County, 640
acres
All of
Section 91, Block 6, Abstract 193, Sterling County, 640
acres
All of
Section 102, Block 6, Abstract 1170, Sterling County, 649
acres
All of
Section 103, Block 6, Abstract 199, Sterling County, 640
acres
All of
Section 104, Block 6, Abstract 1169, Sterling County, 649.3
acres
All of
Section 105, Block 6, Abstract 201, Sterling County, 640
acres
All of
Section 106, Block 6, Abstract 1072, Sterling County, 650
acres
All of
Section 107, Block 6, Abstract 202, Sterling County, 640
acres
Total
acres: 5,788.30 gross acres
** Save
and Except 40 acres in the form of a square around the wellbore of
the EXCO PNR-Harris Heirs “88” #1 Well (API No.
42-431-33263) located 850 feet FNL and 1320 feet FWL of Section 88,
as to depths from the surface down to 5,482 feet.
Lessor: Wesley Z. Hodges and wife, Karen G.
Hodges
Lessee: Oxy USA, Inc.
Date: 7/18/13
V/P: 73/355
Legal Description:
33.96
acres, more or less, situated in Sterling County, TX out of what is
known and designated as Survey No 1H out of the J.E. Beavers Survey
No 1, described in Warranty Deed dated January 28, 1942 from W.B.
Atkinson to L.F. Hodges, recorded in Volume 35, Page 101, Deed
Records of Sterling County, TX and more particularly described as
follows:
Beginning
at a rock mound made for the S. Common corner of Sections 37 and
38, G.C.&S.F.Ry. Co. for N.E. Corner of this survey and N.W.
Corner of Sur. 1-A in name of W.B. Atkinson.
Thence
South 87°41’W. with the S. line of said Section38, 1903
vrs. to an old rock mound at a fence corner for the S. common
corner of Sections 38 and 39 for N.W. Corner of this
survey:
Thence
South 4°45’E, with a division fence 89 vrs. to a stake
for S.W. corner of this survey and N.W. corner of Survey N. 2A in
the name of W.B Atkinson;
Thence
East with the N. line of Section 136, Block 6, H. & T.C. Ry.
Co. 1896 vrs. to a point in the N. line of said Section 136, for
the SE corner of this survey and S.W. corner of Survey No. 1-A,
W.B. Atkinson;
Thence
North 130 vrs. to the place of the beginning.
Lessor: James Clinton Hodges and wife, Joyce G.
Hodges
26
Lessee: Oxy USA, Inc.
Date: 7/25/13
V/P: 73/667
Legal Description:
52.52
acres more or less, situated in Sterling County, TX out of what is
known and designated as Survey No. 2H out of the J.E. Beavers
Survey No. 1, described in Warranty Deed dated January 28, 1942
from W.B. Atkinson to L.F. Hodges, recorded in Volume 35, Page 101,
deed records of Sterling County, Tx and more particularly described
as follows:
Beginning
at an old rock mound made for the S. Common corner of Sections 38
and 39, G.C.&S.F. Ry. Co. for the Northerly corner of this
survey.
Thence
South 4°41’E, with the division fence 1947 vrs. a rock
mound for the SW corner of Section136, Blk 6, H.&T.C. Ry. Co.,
a mesquite stump brs. S, 27-1/2° E 79 vrs. DO. Brs. S.
41-1/2° E, ff-1/2° vrs.
Thence
West at 1915 vrs. a rock mound for the N common corner of Section 7
and 8, Blk 7, .&T.C. Ry. Co., at 3828 vrs. a rock mound for N
common corner of Section 6 and 7 in said Blk 7. A mesquite 8”
brs. S 33° E, 55 vrs. at 4048 vrs. a stake in the N line of
Section6 in said Blk 7, At a point 220 vrs, West of its NE corner
for SW corner of this survey;
Thence
North 33vrs. to the S common corner of Sections 41 and 44,
G.C.&S.F. Ry Co. for NW corner of this survey;
Thence
North 89° 40’E 1937 vrs. to SE corner of Section 40,
G.C.&S.F. Ry Co., which is 159 vrs. W and 40 vrs. N of the SW
corner of said Section 136.
Thence
North 1900 vrs. to the place of beginning.
Lessor: Hudson Management, Ltd.
Lessee: Oxy USA, Inc.
Date: 1/25/13
V/P: 203/624
Legal Description:
510
acre portion of Section 70, Block 6, Abstract 8592(TG) &
1187(I), Irion and Tom Green County
400
acre portion of Section 71, Block 6, Abstract 1004(TG) &
347(I), Irion and Tom Green County
All of
Section 74, Block 6, Abstract 8344, Tom Green County, 645.9
acres
All of
Section 75, Block 6, Abstract 1006, Tom Green County, 640
acres
Schedule
4.16 – Encumbrances
The
Assets are specifically subject to that certain Participation
Agreement, dated effective May 1, 2016, by and between McCabe
Petroleum Corporation, Imperial Exploration, LLC, and Torchlight
Energy, Inc., and all amendments and modifications thereto. The
Participation Agreement also includes a joint operating agreement
that is binding on the assets.
Schedule
4.17 -- Liabilities
27
1.
The Assets are
specifically subject to that certain Participation Agreement, dated
effective May 1, 2016, by and between McCabe Petroleum Corporation,
Imperial Exploration, LLC, and Torchlight Energy, Inc., and all
amendments and modifications thereto. The Participation Agreement
also includes a joint operating agreement that is binding on the
assets.
2.
Its proportionate
share of the costs incurred in drilling the Flying B Ranch #2 Well
(API Number 42-451-32852).
The
Assets are specifically subject to that certain Participation
Agreement, dated effective May 1, 2016, by and between McCabe
Petroleum Corporation, Imperial Exploration, LLC, and Torchlight
Energy, Inc., and all amendments and modifications thereto. The
Participation Agreement also includes a joint operating agreement
that is binding on the assets.
28
Dates Referenced Herein and Documents Incorporated by Reference
