RESIGNATION AND SETTLEMENT AGREEMENT
Exhibit
10.22
This
Resignation and Settlement Agreement (the “Agreement”) is executed
among Torchlight Energy Resources, Inc., a Nevada corporation (the
“Company”), and
Xxxxxxx X. XxXxxxxx III
(“XxXxxxxx”) on
such date that both such parties executed the Agreement, being
September 28, 2016 (the “Execution Date”), to be effective
7 days thereafter (the “Effective Date”). The Company and
XxXxxxxx are collectively referred to hereinafter as the
“Parties.”
WHEREAS, XxXxxxxx is presently employed
as the Chief Operating Officer of the Company and serves as a
member of the Board of Directors of the Company;
WHEREAS, the Company and XxXxxxxx
entered into an Employment Agreement on June 16, 2015 (the
“Employment Agreement”);
WHEREAS, on June 11, 2016, the Company
granted XxXxxxxx certain stock options under a Stock Option
Agreement (the “Stock Options”), of which presently
2,250,000 Option Shares (as defined in the Stock Option Agreement)
are vested and 750,000 Option Shares are unvested;
WHEREAS, the Parties desire to accept
XxXxxxxx’x resignation, desire to terminate XxXxxxxx’x
employment and the Employment Agreement, and to settle and resolve
any and all disputes, claims and differences between them relating
to XxXxxxxx’x employment and the Employment
Agreement.
NOW, THEREFORE, for and in consideration
of the mutual promises, covenants and agreements hereinafter set
forth and other good and valuable consideration hereinafter set
forth, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereby covenant and agree as
follows:
1. Resignation and Termination of
Employment and Directorship. Effective 1 day after the Effective Date (the
“Termination Date”), (a) XxXxxxxx’x employment
with the Company, as well as his Employment Agreement, will
terminate with XxXxxxxx’x resignation as Chief Operating
Officer, except that with respect to the Employment Agreement, (i)
XxXxxxxx will continue to be bound by Section 5 of the Employment
Agreement as modified by Section 7(d) hereof, and (ii) for a period
ending 12 months after the Termination Date, XxXxxxxx will be bound
by Section 6 of the Employment Agreement as modified by Section
7(d) hereof; (b) XxXxxxxx’x employment, if any, with any of
the Company’s subsidiaries will terminate; and (c) XxXxxxxx
will resign as a director of the Company and any of the
Company’s subsidiaries for which he serves as a director.
Upon such termination and resignation, XxXxxxxx will hold no
position with the Company or any of its subsidiaries and will
continue to be a shareholder and holder of Company issued
derivative securities.
2. Consideration upon Resignation and
Termination. It is agreed that the following will occur on
the Effective Date:
(a)
The entire unvested
portion of the Stock Options, amounting to 750,000 Option Shares,
will not vest and will be null and void;
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(b)
XxXxxxxx will
surrender for cancellation a total of 250,000 of the Option Shares
of the vested portion of the Stock Options, whereby such
surrendered Option Shares will immediately be cancelled and
XxXxxxxx will have no further right thereto, leaving XxXxxxxx with
a total of 2,000,000 Option Shares underlying the Stock Options,
prior to giving effect to transaction set forth in Section 2(e)
below;
(c)
The Stock Options
will be modified to expire on June 11, 2019 with all remaining
Option Shares, after giving effect to the provisions of this
Section 2 of this Agreement, being vested in full;
(d)
As of the Effective
Date, the Company and XxXxxxxx agree that the Company will owe
XxXxxxxx a total amount of cash compensation (the “Cash
Compensation”) equal to $789,454.29, consisting of 2013
through 2014 bonuses and back-pay, balance of full salary for 2015
and through the Effective Date, and one year of salary and cash
value of health benefits, all owed pursuant to the Employment
Agreement; which Cash Compensation shall be paid by the Company to
XxXxxxxx pursuant to 2(e) below;
(e)
XxXxxxxx will apply
the entire amount of the Cash Compensation toward exercise of the
Stock Options and, accordingly, he will be issued a total of
502,837 shares of common stock equal to the Cash Compensation
divided by $1.57, it being acknowledged by the Company that this
exercise is deemed a cash exercise constituting full payment for
the Option Shares exercised hereunder. Immediately after such
exercise, the remaining number of Option Shares under the Stock
Options will be 1,497,163;
(f)
The delivery by
Company to XxXxxxxx of addendum 1 to the Stock Options, after
giving effect to all of the provisions of Section 2 of this
Agreement, in the form attached hereto as Exhibit A.
(g)
The Company will
transmit via DWAC to a brokerage account identified by XxXxxxxx the
502,837 shares of common stock issued pursuant to Section 2(e)
hereof within 3 business days of the Effective Date.
3. Release by the Company. The
Company does hereby for itself, its officers, directors, agents,
representatives, affiliates, subsidiaries, predecessors, successors
and assigns, or any of them, fully and forever release and
discharge XxXxxxxx, including his agents, representatives,
affiliates, heirs, personal representatives and/or successors and
assigns, and all persons acting by, through, under or in concert
with any of them (the “XxXxxxxx Related Entities or
Persons”), of and from any and all cause or causes of
action, suits, claims, demands, obligations, liabilities, damages,
liens, contracts, agreements, promises, losses, costs or expenses,
of any nature whatsoever, known or unknown, foreseen or unforeseen,
fixed or contingent, at law or in equity, which the Company may
have or claim to have, now or in the future relating to his
employment with the Company (including pursuant to the Employment
Agreement), save and except for (i) the Company’s rights
against XxXxxxxx pursuant to this Agreement, and (ii) an act or
failure to act that constitutes a breach of XxXxxxxx’x
fiduciary duty as an officer under the Nevada Revised Statutes and
such breach of those duties involved intentional misconduct, fraud
or knowing violation of law.
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4. Release by XxXxxxxx. XxXxxxxx
does hereby for himself, his agents, representatives, affiliates,
heirs, personal representatives and/or successors and assigns, or
any of them, fully and forever release and discharge the Company,
including its officers, directors, agents, employees,
representatives, attorneys, affiliates, subsidiaries, predecessors,
successors and assigns, and all persons acting by, through, under
or in concert with it, or any of them (the “Company Related Entities or
Persons”), of and from any and all cause or causes of
action, suits, claims, demands, obligations, liabilities, damages,
liens, contracts, agreements, promises, losses, costs or expenses,
of any nature whatsoever, known or unknown, foreseen or unforeseen,
fixed or contingent, at law or in equity, which XxXxxxxx may have
or claim to have, now or in the future relating to his employment
with the Company (including pursuant to the Employment Agreement),
save and except for XxXxxxxx’x rights against the Company
pursuant to this Agreement.
5. Older Workers’ Benefit
Protection Act; Advice of Counsel; Revocation Period. THIS
AGREEMENT SPECIFICALLY WAIVES ALL OF XXXXXXXX’X RIGHTS AND
CLAIMS ARISING UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF
1967 (29 U.S.C. § 621 et seq.), AS AMENDED, AND THE OLDER
WORKERS’ BENEFIT PROTECTION ACT, AS AMENDED. In connection
with this waiver, XxXxxxxx understands and agrees
that:
(a)
XxXxxxxx is,
through this Agreement, releasing the Company and Company Related
Entities or Persons from any and all claims XxXxxxxx may have
against the Company and Company Related Entities or Persons,
relating to XxXxxxxx’x employment and separation, including
claims arising under the Age Discrimination in Employment Act of
1967 (29 U.S.C. § 621, et.
seq.) and the Older Workers’ Benefit Protection Act,
in exchange for consideration that is in addition to anything of
value to which XxXxxxxx is already entitled.
(b)
XxXxxxxx has had
ample opportunity to consult with an attorney prior to executing
this Agreement. The Company advised XxXxxxxx and encouraged
XxXxxxxx in writing in this Agreement to consult with an attorney
prior to signing this Agreement.
(c)
XxXxxxxx has
carefully read and fully understands all of the provisions and
effects of this Agreement and XxXxxxxx knowingly and voluntarily
(of XxXxxxxx’x own free will) entered into all of the terms
set forth in this Agreement.
(d)
XxXxxxxx knowingly
and voluntarily intends to be legally bound by all of the terms set
forth in this Agreement.
(e)
XxXxxxxx relied
solely and completely upon XxXxxxxx’x own judgment or the
advice of an attorney in entering into this Agreement.
(f)
XxXxxxxx has been
given at least 21 days to consider the terms of this Agreement
before signing it.
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(g)
If XxXxxxxx signs
this Agreement prior to the end of the 21-day time period, XxXxxxxx
certifies that, in accordance with 29 CFR §1625.22(e)(6),
XxXxxxxx knowingly and voluntarily decided to sign the Agreement
after considering it for less than 21 days and the decision to do
so was not induced by the Company or Company Related Entities or
Persons through fraud, misrepresentation, or a threat to withdraw
or alter the offer prior to the expiration of the 21-day time
period. XxXxxxxx has not been asked by the Company or Company
Related Entities or Persons to shorten the time-period for
consideration of whether to sign this Agreement. If XxXxxxxx
decides to sign this Agreement prior to the end of the 21-day time
period, the Company and Company Related Entities or Persons will
not provide different terms to XxXxxxxx as a result of this
decision. If XxXxxxxx waives some portion of the 21-day time
period, the Company and Company Related Entities or Persons may
expedite the processing of benefits provided to XxXxxxxx in exchange for signing this
Agreement.
(h)
XxXxxxxx may change
XxXxxxxx’x mind and revoke this Agreement at any time within
7 days after XxXxxxxx signs it and returns it to the Company. In
order to revoke this Agreement, XxXxxxxx must send the following
statement addressed to the Company: “I hereby revoke my
acceptance of the Termination and Settlement Agreement.” This
Agreement shall not become effective or enforceable until after the
7-day revocation period has expired.
(i)
Following the 7-day
revocation period, this Agreement will be final and binding.
XxXxxxxx will not pursue any claim that has been released in this
Agreement. If XxXxxxxx breaks this promise, XxXxxxxx agrees to pay
all of the Company and Company Related Entities or Persons’
costs and expenses (including reasonable attorney’s fees)
related to the defense of any claims.
6. Indemnity.
(a) XxXxxxxx
hereby agrees to and shall indemnify, and defend and hold the
Company and the Company Related Entities or Persons 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 injuries (including
reasonable attorney’s fees and costs of any suit related
thereto) suffered or incurred by any of the Company or the Company
Related Entities or Persons arising from: (a) any misrepresentation
by, or breach of any covenant or warranty or agreement of XxXxxxxx
contained in this Agreement; or (b) any non-fulfilment of any
agreement on the part of XxXxxxxx under this
Agreement.
(b) The
Company hereby agrees to and shall indemnify, and defend and hold
XxXxxxxx and the XxXxxxxx Related Entities or Persons 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
injuries (including reasonable attorney’s fees and costs of
any suit related thereto) suffered or incurred by any of XxXxxxxx
or the XxXxxxxx Related Entities or Persons arising from: (i) any
misrepresentation by, or breach of any covenant or warranty or
agreement of the Company contained in this Agreement; or (ii) any
non-fulfilment of any agreement on the part of the Company under
this Agreement.
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7. Representations and Warranties of the
Parties.
(a) The
Company hereby represents and warrants to XxXxxxxx the following:
(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 consummation of the
transactions contemplated herein have been taken by the Company as
of the Effective Date, including approval by the Board of Directors
of the Company of this Agreement; (ii) the Board of Directors of
the Company has authorized and approved each of the actions and
undertakings, including the Stock Options exercise, enumerated in
Section 2(a) through Section 2(g); (iii) the Company has the
requisite power and authority to execute and deliver this Agreement
and to perform their obligations hereunder and to consummate the
transactions contemplated hereby; (iv) this Agreement, when duly
executed and delivered in accordance with its terms, will
constitute a valid and binding obligation of the Company,
enforceable against the Company 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; (v) the indemnification agreement by and between the
Company and XxXxxxxx dated June 13, 2016 is a valid and binding
obligation of the Company and is in full force and effect as of the
Execution Date; (vi) the issuance of the Option Shares (including
without limitation the 502,837 shares to be issued pursuant to
Section 2(e) hereof) underlying the Stock Options is registered
under the Securities Act of 1933 pursuant to the effective
registration statement on Form S-8 filed with the Securities and
Exchange Commission on April 18, 2016 (333-210812); (vii) the
Company warrant providing for the purchase of 900,000 shares of
Company common stock at a purchase price of $2.09 per share dated
April 15, 2013 issued by the Company to WMDM Family, Ltd. has fully
vested and is a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms;
(viii) the Company option providing for the purchase of 1,500,000
shares of Company common stock at a purchase price of $2.09 per
share dated September 9, 2013 issued by the Company to XxXxxxxx
(and subsequently assigned by XxXxxxxx to WMDM Family, Ltd. with
the consent of the Company) has fully vested and is a valid and
binding obligation of the Company enforceable against the Company
in accordance with its terms; and (ix) the 10,000 shares of Company
common stock issued by the Company to XxXxxxxx on November 18, 2015
were validly issued and were fully paid for by
XxXxxxxx.
(b) XxXxxxxx
represents and warrants to the Company the following: (i) 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; (ii) all action on the part
of XxXxxxxx necessary for the authorization, execution, delivery
and performance of this Agreement by him has been taken as of the
Effective Date; (iii) this Agreement, when duly executed and
delivered in accordance with its terms, will constitute legal,
valid and binding obligations of XxXxxxxx 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; and (iv) XxXxxxxx has not
transferred or encumbered any portion of the Stock
Options.
(c) The
Company will file a registration statement on Form S-1 or other
applicable form to register for resale the 2.4 million shares of
Company common stock underlying the warrant and option owned by
WMDM Family, Ltd., as described in Section 7(a)(vii) and Section
7(a)(viii) above, within 90 days from the Effective Date and will
use its best efforts to obtain effectiveness of such registration
statement as soon as practicable.
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(d) The
Company represents to XxXxxxxx that the non-competition provision
in Section 6(a) of the Employment Agreement shall be limited to two
oil and gas opportunities, each in a defined area of mutual
interest, being the Orogrande Project (as defined below) and the
Xxxxx Project (as defined below). The Orogrande Project means
prospects located in the geographical boundaries of the Area of
Mutual Interest or AMI which is specifically defined in that
certain Participation Agreement, dated June 4th, 2014, by and
between XxXxxx Petroleum Corporation, Xxxx XxXxxx and Xxxxxxxx Oil
Corporation. The Xxxxx Project means prospects located in the
geographical boundaries of the Area of Mutual Interest or AMI which
is specifically defined in that certain Participation Agreement,
dated effective May 1, 2016, by and between XxXxxx Petroleum
Corporation, Imperial Exploration, LLC and Torchlight Energy, Inc.
The Company understands that XxXxxxxx intends to pursue oil and gas
opportunities in Xxxxxx County, Kansas, the Ring project in Xxxxxx,
Grey and Xxxxxx Counties, Kansas, and the Xxxxxxxxx Creek project
in Xxxxxx County, Texas and the Company acknowledges that such oil
and gas opportunities are not corporate opportunities that the
Company desires to pursue (whether or not currently owned by the
Company), that pursuit by XxXxxxxx of such oil and gas
opportunities will not breach any fiduciary duty that XxXxxxxx may
owe the Company, and do not constitute Confidential and Proprietary
Information (as defined in Section 5 of the Employment Agreement
and Section 6(a) of the Employment Agreement). The Company consents
to XxXxxxxx’x hiring of Xxxxx Xxxxx, a former employee of the
Company, and further acknowledges that XxXxxxxx will continue to
conduct business with non-employee third parties that he may have
had a relationship with prior to, and/or during, his employment
with the Company.
8. Non-Disparagement. Each of the
Parties and their respective, as applicable, officers and directors
will not expressly make any negative, disparaging, detrimental,
derogatory or defamatory comments, oral or written, to any other
person or entity, concerning or related to the Company or
XxXxxxxx.
9. Notice.
All notices required or permitted under this Agreement shall be in
writing and shall be served on each party at the following address
for such party:
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To the Company:
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Torchlight Energy Resources, Inc.
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Attn: Xxxx Xxxx, CEO
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0000 X. Xxxxx Xxxxxxx, Xxxxx 0000
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Xxxxx, Xxxxx 00000
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To XxXxxxxx:
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Xxxxxxx X. XxXxxxxx III
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0000 Xxxxxx Xxxxx
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Xxxxx, XX 00000
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Any such notices shall be either (a) sent by certified mail, return
receipt requested, in which case notice shall be deemed delivered
three business days after deposit, postage prepaid in the U.S.
mail, or (b) sent next day delivery by a nationally-recognized
overnight courier, in which case it shall be deemed delivered one
business day after deposit with such courier, or (c) delivered by
hand delivery, in which case it shall be deemed delivered upon
receipt by the party to which such notice was sent. The notice
addresses may be changed by written notice to the other Parties
sent in accordance with the foregoing provisions.
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10. Modifications.
This Agreement cannot be changed orally, and no executory agreement
shall be effective to waive, change, modify or discharge it in
whole or in part unless such executory agreement is in writing and
is signed by the Parties against whom enforcement of any waiver,
change, modification or discharge is sought.
11. Governing
Law, and Agreement Subject to Binding
Arbitration. If any
dispute should arise between the Parties pursuant to this
Agreement, all claims, disputes, controversies, differences or
other matters in question arising out of our relationship to each
other shall be resolved by binding arbitration in Collin County,
Texas, in accordance with the rules for expedited, documents only
proceedings of the American Arbitration Association (the
“Rules”). This agreement to arbitrate shall be
specifically enforceable only in the District Court of Collin
County, Texas.
12. Counterparts.
This Agreement may be executed in two or more counterparts, each of
which when taken together shall be one and the same agreement and
shall become effective when counterparts have been signed by each
party and delivered to the other Parties it being understood that
all Parties need not sign the same counterpart. If 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.
13. Entire
Agreement. This Agreement
contains the entire agreement between the parties with respect to
the subject matter of this Agreement and fully supersedes all prior
agreements and understandings, written or oral, between the Parties
pertaining to such subject matter; notwithstanding the above, (i)
the Stock Options shall remain in effect and shall be modified by
the addendum attached hereto as Exhibit A and by the terms of this
Agreement, (ii) sections 5 and 6 of the Employment Agreement shall
remain in effect and shall be modified by the provisions of Section
7(d) of this Agreement, and (iii) the indemnification agreement
identified by Section 7(a)(v), the warrant agreement identified in
Section 7(a)(vii), and the option agreement identified in Section
7(a)(viii) shall each remain in effect.
14. Successors
and Assigns. The terms and
conditions of this Agreement shall be binding upon and shall inure
to the benefit of the Parties to this Agreement, their successors,
and permitted assigns. No party shall assign its rights or
obligations under this Agreement without the prior written consent
of the other Parties, which consent may be given or withheld in the
sole discretion of the other Parties.
15. Captions.
The captions used for the paragraphs of this Agreement are inserted
only as a matter of convenience and in no way define, limit or
describe the scope or intent of this Agreement or any paragraph
hereof.
16. Construction
of Terms. In this Agreement,
the use of the singular form of any word includes the plural, and
vice versa. The Parties acknowledge that each of the Parties has
had the opportunity and right to engage legal counsel and their
counsel has had the opportunity to review and revise this Agreement
and that 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 exhibits
hereto.
17. Severability.
In the event any provision of this Agreement shall be determined to
be void, unlawful or otherwise unenforceable, such provision shall
be deemed severable from the remainder of this Agreement and such
void, unlawful or unenforceable provision shall be replaced
automatically by a provision containing terms as nearly like the
void, unlawful or unenforceable provision but which still remains
valid and enforceable; and this Agreement, as so modified, shall
continue to be in full force and effect.
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18. Further
Assurances. The Parties agree
to execute such further and additional documents and instruments
and take such actions as are necessary or reasonably requested by
the other party to effect the provisions of this
Agreement.
19. Costs
and Expenses. Each party shall pay their own respective fees,
costs and disbursements incurred in connection with this
Agreement.
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TORCHLIGHT ENERGY RESOURCES, INC.
By: /s/ Xxxx
Brda_______________________
Xxxx Xxxx, Chief Executive Officer
/s/ Xxxxxxx X. XxXxxxxx III ________________
Xxxxxxx X. XxXxxxxx III, Individually
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