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EXHIBIT
10.17
PROMISSORY
NOTE
THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE
OFFERED OR SOLD UNLESS IT HAS BEEN REGISTERED UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM
REGISTRATION IS AVAILABLE AND THEN ONLY IN COMPLIANCE WITH THE
RESTRICTIONS ON TRANSFER SET FORTH HEREIN.
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$3,250,000.00
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December
1, 2017
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Torchlight Energy,
Inc., a Nevada corporation (together with its successors and
permitted assigns, “Maker”), for value
received, HEREBY PROMISES TO PAY to the order of McCabe Petroleum
Corporation, a Texas corporation (together with their successors
and assigns, the “Holder”), at the
Holder’s address set forth in Section 6 hereof or as
otherwise directed by Holder, the principal sum of THREE MILLION
TWO HUNDRED FIFTY THOUSAND AND NO/100 UNITED STATES DOLLARS
($3,250,000.00), together with an annual interest rate of
five-percent (5.00%), in strict accordance with these terms and
provisions in lawful currency of the United States of
America.
Interest on this
Promissory Note (“Note”) is due and payable
in 36 monthly, interest-only installments of $13,541.66 beginning
on January 1, 2018, and continuing thereafter the fifteenth day of
each following month. All unpaid principal will be due and payable
in full three years after the initial payment (“Maturity
Date”).
All
payments of the indebtedness evidenced by this Note will be applied
in the following order of priority: (a) to the payment or
reimbursement of any expenses, costs, or obligations (other than
the outstanding principal balance of and interest under this Note)
for which Maker is obligated or to which Holder is entitled under
this Note, (b) to any accrued but unpaid interest then due and
payable, and (c) to the principal amount then due and
payable.
1. Voluntary Prepayment of Note.
Maker may, from time to time and at any time without premium or
penalty, prepay all or any part of the principal amount of this
Note, together with all accrued and unpaid interest thereon through
the date of prepayment and all accrued and unpaid fees and expenses
then payable hereunder. In the event of such partial prepayment,
the Holder shall record the date and amount of any such prepayments
on the reverse side of this Note, and interest shall cease to
accrue on such prepaid principal amounts.
2. Events of Default. The
occurrence of any of the following events constitutes an event of
default hereunder (each, an “Event of
Default”):
(i) Maker defaults in
the payment of any portion of the principal of, interest on, or
other amounts owing under, this Note when due and payable as
provided herein; or
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(ii) Maker,
pursuant to or within the meaning of Title 11 of the United States
Code or any similar Federal or state law for the relief of debtors
(each, a “Bankruptcy
Law”), (A) commences a voluntary case in bankruptcy or
any other action or proceeding for any other similar relief under
any Bankruptcy Law, (B) consents by answer or otherwise to the
commencement against him of an involuntary case of bankruptcy, (C)
seeks or consents to the appointment of a receiver, trustee,
assignee, liquidator, custodian or similar official (collectively,
a “Custodian”) of him or for
all or substantially all of his assets, or (D) makes a general
assignment for the benefit of his creditors; or
(iii) a
court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that (A) is for relief against Maker in an
involuntary case of bankruptcy against Maker, (B) appoints a
Custodian of Maker for all or substantially all of Maker’s
assets, or (C) orders the liquidation of Maker’s assets,
and the order or decree remains undismissed or unstayed and in
effect for 60 days, or any dismissal, stay, rescission or
termination thereof ceases to remain in effect;
(iv) any
representation or warranty made by Maker in this Note shall be, or
shall prove to have been, false or misleading in any material
respect when so made; or
(v) this Note shall
cease, for any reason, to be in full force and effect; any
provision of this Note shall for any reason cease to be valid and
binding on or enforceable against Maker; the validity or
enforceability of this Note is contested by Maker or any other
person or entity; or Maker denies he has any further liability or
obligation under this Note.
(a) Upon the occurrence
and during the continuance of any Event of Default, if not cured
within ten business days following notice to Maker of such Event of
Default, the Holder shall have the right, without notice, demand,
presentment, notice of nonpayment or nonperformance, protest,
notice of protest, notice of intent to accelerate, notice of
acceleration or any other notice or action of any kind, ALL OF
WHICH MAKER HEREBY EXPRESSLY WAIVES AND RELINQUISHES, (i) by
notice to Maker, to declare the entire principal amount then
outstanding on this Note, and all accrued and unpaid interest
thereon and all other accrued and unpaid amounts under this Note,
immediately due and payable, whereupon all such principal, interest
and other amounts shall become immediately due and payable, and the
Holder may proceed to enforce the payment of such principal,
interest and other amounts, or part thereof, in such manner as the
Holder may elect and (ii) to exercise all rights and remedies
available to it at law or in equity; provided, however, upon the occurrence of
any Event of Default defined in Sections 2(a)(iii), upon the
expiration of the sixty (60) day period mentioned therein), the
unpaid principal amount of this Note, and all accrued and unpaid
interest thereon and all other accrued and unpaid amounts
hereunder, shall automatically become due and payable without
further act of the Holder. Provided, however, that in the Event of
Default, Holder’s right to enforce the obligations under this
Note are fully subordinate to all debt Maker has with any bank,
whether secured or unsecured.
3. No Waiver; Cumulative Remedies.
No failure to exercise and no delay in exercising, on the part of
the Holder, any right, remedy, power or privilege hereunder shall
operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder or
thereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The
rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and
privileges provided by law, in equity or otherwise.
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4. Representations and Warranties.
Maker hereby represents and warrants to the Holder that
(a) Maker has the requisite power, authority and legal
capacity to enter into and perform his obligations under this Note;
(b) this Note has been duly executed and delivered to the
Holder by Maker; and (c) this Note is the legal, valid and
binding obligation of Maker, enforceable against him in accordance
with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
enforceability of creditors’ rights generally and by general
principles of equity.
5. Right of Set-off. If an Event
of Default shall have occurred and be continuing, the Holder is
hereby authorized at any time and from time to time, to the fullest
extent permitted by applicable law, to set off and apply any and
all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by
the Holder to or for the credit or the account of Maker against any
and all of the obligations of Maker now or hereafter existing under
this Note, although such obligations may be unmatured. The Holder
agrees promptly to notify Maker after any such set-off and
application, provided that the failure to give such notice shall
not affect the validity of such set-off and application. The rights
of the Holder under this Section 8 are in addition
to other rights and remedies (including, without limitation, other
rights of set-off) which the Holder may have.
6. Notices. All notices, requests
and other communications required or permitted under this Note
shall be in writing and shall be personally delivered or sent by a
recognized overnight delivery service, certified mail, postage
prepaid, return receipt requested, or by facsimile or other
electronic delivery to Maker or the Holder, as the case may be, at
its address set forth below:
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If to
Holder:
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If to
Maker:
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Greg
McCabe
McCabe
Petroleum Company, Inc.
500 W
Texas Ave Ste. 890
Midland,
Texas 79702
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John
Brda
Torchlight
Energy, Inc.
5700 W.
Plano Pkwy., Ste. 3600
Plano,
Texas 75093
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7. Relationship of the Parties.
Notwithstanding any business or personal relationship between Maker
and the Holder, that may exist or have existed, the relationship
between Maker and the Holder under and with respect to this Note is
solely that of debtor and creditor, the Holder has no fiduciary or
other special relationship with Maker by virtue of this Note, Maker
and the Holder are not partners or joint venturers, and no term or
condition of any of this Note shall be construed so as to deem the
relationship between Maker and the Holder to be other than that of
debtor and creditor.
8. Modification and Waiver of this
Note. None of the provisions of this Note may be waived,
amended, supplemented or otherwise modified except in a writing
signed by Maker and the Holder.
9. Successors and Assigns;
Transfer. This Note shall be binding upon the successors and
assigns of Maker and Holder, and shall inure to the benefit of
their successors, assigns, heirs and beneficiaries; provided, however, that neither Maker or
Holder may assign, delegate or otherwise transfer any of its rights
or obligations under this Note without the prior written consent of
the other, which will not be unreasonably withheld. No transfer,
assignment, or pledge of this Note shall be valid unless made in
compliance with any applicable state and Federal securities laws
restrictions and effected on the register. Any transfer,
assignment, or pledge of this Note in violation of this paragraph
is void ab
initio.
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10. Severability. Any provision of
this Note which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the
remaining provisions hereof or thereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other
jurisdiction.
11. Governing Law. This Note shall
be governed by, and for all purposes construed in accordance with,
the laws of the State of Texas, without regard to conflicts of law
principles thereof.
12. Jurisdiction, Etc. THIS
NOTE SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE STATE
OF TEXAS. Maker and Holder hereby irrevocably and unconditionally
submit to the exclusive jurisdiction of the United States District
Court for the Southern District of Texas and of any Texas State
court sitting in Harris County, Texas, and any appellate court from
any thereof, for purposes of any action or proceeding arising out
of or relating to this Note, or for recognition or enforcement of
any judgment, and Maker and Holder hereby irrevocably and
unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in any such court.
Maker and Holder agree that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Note shall affect any right that
the Holder may otherwise have to bring any action or proceeding
relating to this Note in the courts of any jurisdiction to collect
on a judgment for this Note.
IN
WITNESS WHEREOF, Maker has caused this instrument to be duly
executed and delivered to the Holder as of the Issuance
Date.
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MAKER:
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TORCHLIGHT ENERGY, INC. |
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By:
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/s/
John
Brda
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John
Brda
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Chief
Executive Officer
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