EMPLOYMENT AGREEMENT

This AGREEMENT (the “Agreement”), dated as of October 10, 2013, with an
effective date of July 1, 2013 (the “Effective Date”), by and between Torchlight
Energy Resources, Inc., a Nevada corporation with principal executive offices at
5700 W. Plano Pkwy, Ste. 3600, Plano, Texas  75093 (the “Company”), and Opal
Marketing and Consulting, Inc. with its principal office at 590 West Meadow
Road, Evergreen, Colorado  (“Opal”).

 

W I T N E S S E T H:

WHEREAS, the Company desires to employ Opal for management and executive
services, and Opal desires to serve the Company in those capacities, upon the
terms and subject to the conditions contained in this Agreement;

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the parties hereto hereby agree as follows:

1.   Employment. (a)   Services. Opal will be employed by the Company to provide
the services of Thomas Lapinski to serve as its Chief Executive Officer (the
“Executive”).  For purposes of this agreement, the Executive and Opal will be
deemed to be one and the same.  The Executive will report to the Board of
Directors of the Company (the “Board”) with primary direction being given by the
Company’s Board.  The Executive agrees to perform such services as are
consistent with the position of Chief Executive Officer (the “Services”).  The
Executive agrees to perform such Services faithfully, to devote all of its
working time, attention and energies to the business of the Company, and while
remaining employed, not to engage in any other business activity that is in
conflict with his duties and obligations to the Company.   

(b)   Acceptance. The Executive hereby accepts such employment and agrees to
render the Services.

 

2.   Term.   The Executive’s employment under this Agreement (the "Term") shall
commence as of the Effective Date and shall continue until June 30, 2014, unless
sooner terminated pursuant to Section 9 of this Agreement. Notwithstanding
anything to the contrary contained herein, the provisions of this Agreement
governing protection of Confidential Information shall continue in effect as
specified in Section 5 hereof and survive the expiration or termination hereof.
The Term may be extended for additional one (1) year periods upon mutual written
consent of Opal and the Board.  

3.   Best Efforts; Place of Performance.   The Executive shall devote
substantially all of his business time, attention and energies to the business
and affairs of the Company, and shall use his best efforts to advance the
interests of the Company and shall not during the Term be actively engaged in
any other business activity that will interfere with the performance by the
Executive of his duties hereunder or the Executive’s availability to perform
such duties or that will adversely affect, or negatively reflect upon the
Company.  The duties to be performed by the Executive hereunder shall be
performed primarily at the office of the Company subject to reasonable travel
requirements on behalf of the Company.

4.   Compensation. As full compensation for the performance by the Executive of
the duties under this Agreement, the Company shall pay Opal as follows:

(a)   Base Fees.   The Company shall pay Opal a Base Fee (the “Base Fee”) equal
to $180,000 per year. Payment shall be made monthly, on the last day of each
calendar month.  Opal will be entitled to increases in Base Fee subject to the
following provisions:

a.

Opal will be entitled to an increase of $5,000.00 per month when the Company and
its affiliates achieve 500 Barrels of Oil or Gas Equivalent Per Day (BOEPD) in
net production to the Company and its affiliates;

b.

Opal will be entitled to an additional increase of $5,000.00 per month when the
Company and its affiliates achieve 750 Barrels of Oil or Gas Equivalent Per Day
(BOEPD) in net production to the Company and its affiliates; and

c.

Opal will be entitled to an additional increase of $5,000.00 per month when the
Company and its affiliates achieve 1000 Barrels of Oil or Gas Equivalent Per Day
(BOEPD) in net production to the Company and its affiliates.

Employment Agreement – Page 1

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The Company shall also calculate all applicable federal, state and local
employment taxes, as well as social security and such other amounts (the
“Employment Taxes”) as may be required by law from all amounts paid to Opal and
pay to Opal that amount on the last day of each calendar month.  Notwithstanding
the foregoing, after six months of the Company commencing ongoing operations,
the Board of Directors or any then existing compensation committee of the Board
of Directors shall review the Base Fee of the Executive to insure it is
consistent with other similarly situation companies within the industry.

 

(b)   Discretionary Bonus. Opal shall be eligible to receive an additional
annual bonus (the “Discretionary Bonus”) in an amount up to 25% of the Base
Fees, based upon performance on behalf of the Company during the prior year.
Factors to be considered by the Board of Directors shall include, but not be
limited to, significant growth in the Company’s market capitalization, the
liquidity and performance of the Company’s Common Stock as well as any financing
received by the Company from third parties introduced to the Company by
Executive.  The Discretionary Bonus shall be payable either as a lump-sum
payment or in installments as determined by the Board of Directors of the
Company in its sole discretion.  In addition, the Board of Directors of the
Company shall annually review the Bonus to determine whether an increase in the
amount thereof is warranted. For the purposes of calculating the first year’s
bonus, the Effective Date shall be used as the starting point for calculation.  

 

(c)   Withholding. The Company shall not withhold applicable federal, state and
local taxes and social security and such other amounts as may be required by law
from all amounts payable to the Executive under this Section 4.  Payment of
these any other applicable taxes will be the responsibility of Opal.

 

(d)   Stock Options.  As additional compensation for the services to be rendered
by the Executive pursuant to this Agreement, the Company may grant to the
Executive stock options as determined by the Board of Directors in its sole
discretion.

 

(e)   Expenses. The Company shall reimburse the Executive for all normal, usual
and necessary expenses incurred by the Executive in furtherance of the business
and affairs of the Company, upon timely receipt by the Company of appropriate
vouchers or other proof of the Executive’s expenditures and otherwise in
accordance with any expense reimbursement policy as may from time to time be
adopted by the Company.

 

(f)   Other Benefits. The Executive shall be entitled to all rights and benefits
for which he would be eligible under any benefit or other plan (including,
without limitation, dental, medical, medical reimbursement and hospital plans,
pension plans, employee stock purchase plans, profit sharing plans, stock option
plans, bonus plans and other so-called "fringe" benefits) as the Company shall
make available to its senior executives from time to time.

 

(g)   Vacation. The Executive shall, during the Term, be entitled to a vacation
of four weeks (4) per annum, in addition to holidays observed by the Company.
The Executive shall not be entitled to carry any vacation forward to the next
year of employment and shall not receive any compensation for unused vacation
days.

 

5.   Confidential Information.

 

(a)   The Executive recognizes and acknowledges that in the course of his duties
he is likely to receive confidential or proprietary information owned by the
Company, its affiliates or third parties with whom the Company or any such
affiliates has an obligation of confidentiality.  Accordingly, during and after
the Term, Opal and the Executive agree to keep confidential and not disclose or
make accessible to any other person or use for any other purpose other than in
connection with the fulfillment of his duties under this Agreement, any
Confidential and Proprietary Information (as defined below) owned by, or
received by or on behalf of, the Company or any of its affiliates. “Confidential
and Proprietary Information” shall include, but shall not be limited to,
confidential or proprietary scientific or technical information, data, business
plans (both current and under development), trade secrets, or any other
confidential or proprietary business information relating to development
programs, costs, revenues, investments,  credit and financial data, financing
methods, or the business and affairs of the Company.  Opal and the Executive
agree to return immediately all Company material and reproductions (including
but not limited, to writings, correspondence, notes, drafts, records, invoices,
technical and business policies, computer programs or disks) thereof in their
possession to the Company upon request and in any event immediately upon
termination of employment.

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(b)   Except with prior written authorization by the Company, Opal and the
Executive agree not to disclose or publish any of the Confidential and
Proprietary Information, or any confidential, scientific, technical or business
information of any other party to whom the Company or any of its affiliates owes
an obligation of confidence, at any time during or after his employment with the
Company.

(c)   The provisions of this Section 5 shall survive any termination of this
Agreement.

 

6.   Non-Competition, Non-Solicitation and Non-Disparagement.

 

(a)   The Executive understands and recognizes that his services to the Company
are special and unique and that in the course of performing such services the
Executive will have access to and knowledge of Confidential and Proprietary
Information (as defined in Section 6) and the Executive agrees that, during the
Term and for a period of twelve ( 12 ) months thereafter, he shall not in any
manner, directly or indirectly, on behalf of himself or any person, firm,
partnership, joint venture, corporation or other business entity (“Person”),
enter into or engage in any business which is engaged in any business directly
or indirectly competitive with the business of the Company, either as an
individual for his own account, or as a partner, joint venturer, owner,
executive, employee, independent contractor, principal, agent, consultant,
officer, director or shareholder of a Person in a business competitive with the
Company within the geographic area of the Company’s business.   The Company
acknowledges the need for the Executive to be employed in his profession and
will consider whether there is a specific conflict.  

 

(b)   During the Term and for a period of 12 months thereafter, the Executive
shall not, directly or indirectly, without the prior written consent of the
Company:

 

(i)   solicit or induce any employee of the Company or any of its affiliates to
leave the employ of the Company or any such affiliate; or hire for any purpose
any employee of the Company or any affiliate or any employee who has left the
employment of the Company or any affiliate within one year of the termination of
such employee’s employment with the Company or any such affiliate or at any time
in violation of such employee’s non-competition agreement with the Company or
any such affiliate; or

 

(ii)   solicit or accept employment or be retained by any Person who, at any
time during the term of this Agreement, was an agent, client or customer of the
Company or any of its affiliates where his position will be related to the
business of the Company or any such affiliate; or (iii)   solicit or accept the
business of any agent, client or customer of the Company or any of its
affiliates with respect to products or services similar to those provided or
supplied by the Company or any of its affiliates.

 

(c)   The Company and the Executive each agree that both during the Term and at
all times thereafter, neither party shall directly or indirectly disparage,
whether or not true, the name or reputation of the other party or any of its
affiliates, including but not limited to, any officer, director, employee or
shareholder of the Company or any of its affiliates.

 

(d)   In the event that the Executive breaches any provisions of Section 5 or
this Section 6 or there is a threatened breach, then, in addition to any other
rights which the Company may have, the Company shall (i) be entitled, without
the posting of a bond or other security, to injunctive relief to enforce the
restrictions contained in such Sections and (ii) have the right to require the
Executive to account for and pay over to the Company all compensation, profits,
monies, accruals, increments and other benefits (collectively “Benefits”)
derived or received by the Executive as a result of any transaction constituting
a breach of any of the provisions of Sections 5 or 6 and the Executive hereby
agrees to account for and pay over such Benefits to the Company.

Employment Agreement – Page 3

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(e)   Each of the rights and remedies enumerated in Section 6(d) shall be
independent of the others and shall be in addition to and not in lieu of any
other rights and remedies available to the Company at law or in equity.  If any
of the covenants contained in this Section 6, or any part of any of them, is
hereafter construed or adjudicated to be invalid or unenforceable, the same
shall not affect the remainder of the covenant or covenants or rights or
remedies which shall be given full effect without regard to the invalid
portions.  If any of the covenants contained in this Section 6 is held to be
invalid or unenforceable because of the duration of such provision or the area
covered thereby, the parties agree that the court making such determination
shall have the power to reduce the duration and/or area of such provision and in
its reduced form such provision shall then be enforceable.  No such holding of
invalidity or unenforceability in one jurisdiction shall bar or in any way
affect the Company’s right to the relief provided in this Section 6 or otherwise
in the courts of any other state or jurisdiction within the geographical scope
of such covenants as to breaches of such covenants in such other respective
states or jurisdictions, such covenants being, for this purpose, severable into
diverse and independent covenants.

(f)    Notwithstanding any provision contained herein to the contrary, the
provisions of this Section 6 shall immediately terminate, shall be void and of
no force or effect if (i) the Executive is terminated by the Board of Directors
of the Company upon the occurrence of a Change of Control as set forth in
Section 8(c) herein or (ii) if the Executive terminates this Agreement pursuant
to Section 8(d) herein.

 

(g)   The provisions of this Section 6 shall survive any termination of this
Agreement.

 

7.   Representations and Warranties by Opal and the Company.

 

(a)

Opal hereby represents and warrants to the best of its knowledge and belief to
the Company as follows:

 

(i)   Neither the execution or delivery of this Agreement nor the performance by
the Executive of his duties and other obligations hereunder violate or will
violate any statute, law, determination or award, or conflict with or constitute
a default or breach of any covenant or obligation under (whether immediately,
upon the giving of notice or lapse of time or both) any prior employment
agreement, contract, or other instrument to which the Executive is a party or by
which he is bound.  

(ii) Opal has the full right, power and legal capacity to enter and deliver this
Agreement and to perform the duties and other obligations hereunder.  This
Agreement constitutes the legal, valid and binding obligation of Opal
enforceable against Opal in accordance with its terms.  No approvals or consents
of any persons or entities are required for Opal to execute and deliver this
Agreement or perform its duties and other obligations hereunder.

(b)

The Company hereby represents and warrants to the best of its knowledge and
belief to Opal as follows:

(i)   Neither the execution or delivery of this Agreement nor the performance by
the Company of its duties and other obligations hereunder violate or will
violate any statute, law, determination or award, or conflict with or constitute
a default or breach of any covenant or obligation by the Company under any
agreement, contract, or other instrument to which the Company is a party or by
which it is bound.  

(ii) The Company has the full right, power and legal capacity to enter and
deliver this Agreement and to perform the duties and other obligations
hereunder.  This Agreement constitutes the legal, valid and binding obligation
of the Company enforceable against the Company in accordance with its terms.  No
approvals or consents of any persons or entities are required for the Company to
execute and deliver this Agreement or perform its duties and other obligations
hereunder.

Employment Agreement – Page 4

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8.   Termination. Opal’s employment hereunder may be terminated as follows:

 

(a)   Opal’s employment hereunder may be terminated by the Board of Directors of
the Company for Cause. Any of the following actions by Opal shall constitute
“Cause”:

 

(i)   The willful failure, disregard or refusal by the Executive to perform his
duties hereunder;

(ii)   Any willful, intentional or grossly negligent act by the Executive having
the effect of injuring, in a material way (whether financial or otherwise and as
determined in good-faith by a majority of the Board of Directors of the
Company), the business or reputation of the Company or any of its affiliates,
including but not limited to, any officer, director, executive or shareholder of
the Company or any of its affiliates;

 

(iii)   Willful misconduct by the Executive in respect of the duties or
obligations of the Executive under this Agreement, including, without
limitation, insubordination with respect to directions received by the Executive
from the Board of Directors of the Company ;

 

(iv)   The Executive’s conviction of any felony or a misdemeanor involving moral
turpitude (including entry of a nolo contendere plea);

 

(v)   The determination by the Company, after a reasonable and good-faith
investigation by the Company following a written allegation by another employee
of the Company, that the Executive engaged in some form of harassment prohibited
by law (including, without limitation, verbal harassment, age, sex or race
discrimination), unless the Executive’s actions were specifically directed by
the Board of Directors of the Company;

(vi)   Any misappropriation or embezzlement of the property of the Company or
its affiliates (whether or not a misdemeanor or felony);

 

(vii)   Breach by the Executive of any of the provisions of Sections 5, 6 or 7
of this Agreement; and

(viii)   Breach by the Executive of any provision of this Agreement other than
those contained in Sections 5, 6 or 7 which is not cured by the Executive within
thirty (30) days after notice thereof is given to the Executive by the Company.

 

(b)   Opal’s employment hereunder may be terminated by the Board of Directors of
the Company due to the Executive’s Disability or Death. For purposes of this
Agreement, a termination for “Disability” shall occur when the Board of
Directors of the Company has provided a written termination notice to the
Executive after the Executive has been unable to substantially perform his
duties hereunder for 90 or more consecutive days, or more than 120 days in any
consecutive twelve month period, by reason of any physical or mental illness or
injury. For purposes of this Section 9(b), the Executive agrees to make himself
available and to cooperate in any reasonable examination by a reputable
independent physician retained by the Company.

(c)   The Executive’s employment hereunder may be terminated by the Board of
Directors of the Company (or its successor) upon the occurrence of a Change of
Control.  For purposes of this Agreement, “Change of Control” means (i) the
acquisition, directly or indirectly, following the date hereof by any person (as
such term is defined in Section 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934, as amended), in one transaction or a series of related
transactions, of securities of the Company representing in excess of fifty
percent (50%) or more of the combined voting power of the Company’s then
outstanding securities if such person or his or its affiliate(s) do not own in
excess of 50% of such voting power on the date of this Agreement, or (ii) the
future disposition by the Company (whether direct or indirect, by sale of assets
or stock, merger, consolidation or otherwise) of all or substantially all of its
business and/or assets in one transaction or series of related transactions
(other than a merger effected exclusively for the purpose of changing the
domicile of the Company).

Employment Agreement – Page 5

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(d)   The Executive’s employment hereunder may be terminated by the Executive
for Good Reason. For purposes of this Agreement, “Good Reason” shall mean any of
the following: (i) the assignment to the Executive of duties inconsistent with
the Executive's position, duties, responsibilities, titles or offices as
described herein; (ii) any material reduction by the Corporation of the
Executive's duties and responsibilities; or (iii) any reduction by the
Corporation of the Executive's compensation or benefits payable hereunder (it
being understood that a reduction of benefits applicable to all employees of the
Corporation, including the Executive, shall not be deemed a reduction of the
Executive's compensation package for purposes of this definition).

 

9.   Compensation upon Termination.

 

(a)   If the Executive’s employment is terminated as a result of his Death or
Disability, the Company shall pay to Opal, as applicable, the Base Fee,
Employment taxes and any accrued but unpaid Bonus and expense reimbursement
amounts through the date of the Death or Disability. All Stock Options that are
scheduled to vest within one calendar year in which such termination occurs
shall be accelerated and deemed to have vested as of the termination date.  All
Stock Options that have not vested (or been deemed pursuant to the immediately
preceding sentence to have vested) as of the date of termination shall be deemed
to have expired as of such date.

 

(b)   If Opal’s employment is terminated by the Board of Directors of the
Company for Cause, then the Company shall pay to Opal the Base Fee through the
date of termination.  All Stock Options that are vested as of the date of
termination shall be retained.  All other Stock Options that have been granted
shall be deemed to have expired and terminated as of the date of termination and
Opal shall have no further entitlement to any other compensation or benefits
from the Company.

 

(c)   If Opal’s employment is terminated by the Company (or its successor) upon
the occurrence of a Change of Control, the Company (or its successor, as
applicable) shall continue to pay to Opal the  Base Fee, Employment Taxes,
Discretionary Bonus and benefits until the earlier to occur of (1) the end of
the Term and (2) the date that is one year following such termination.  All
Stock Options that have not vested as of the date of such termination shall be
accelerated and deemed to have vested as of such date.

 

(d)   This Section 9 sets forth the only obligations of the Company with respect
to the termination of Opal’s employment with the Company, and Opal acknowledges
that, upon the termination of its employment, it shall not be entitled to any
payments or benefits which are not explicitly provided in Section 9.

(e)

In the event that the employment of Executive is terminated for any reason other
than as set forth in Section 8 hereof, then the Executive shall immediately
receive upon such termination all of the remaining Base Fee, Employment Taxes,
Discretionary Bonus and benefits for the remaining Term of this Agreement.  In
addition, all Stock Options that have not vested as of the date of such
termination shall be accelerated and deemed to have vested as of such date.

 

(f)   The provisions of this Section 9 shall survive any termination of this
Agreement.

 

10.   Miscellaneous.

 

(a)   This Agreement shall be governed by, and construed and interpreted in
accordance with, the laws of the State of Texas, without giving effect to its
principles of conflicts of laws.

 

(b)   Any dispute arising out of, or relating to, this Agreement or the breach
thereof (other than Sections 5 or 6 hereof), or regarding the interpretation
thereof, shall be finally settled by arbitration conducted in Galveston County,
TX in accordance with the rules of the American Arbitration Association then in
effect before a single arbitrator appointed in accordance with such rules.
Judgment upon any award rendered therein may be entered and enforcement obtained
thereon in any court having jurisdiction. The arbitrator shall have authority to
grant any form of appropriate relief, whether legal or equitable in nature,
including specific performance. For the purpose of any judicial proceeding to
enforce such award or incidental to such arbitration or to compel arbitration
and for purposes of Sections 5 and 6 hereof, the parties hereby irrevocably
consent to the exclusive jurisdiction and venue of the federal or state courts
located in Galveston County, Texas, and agree that service of process in such
arbitration or court proceedings shall be satisfactorily made upon it if sent in
accordance with Section 10(g) below.  The costs of such arbitration shall be
borne proportionate to the finding of fault as determined by the arbitrator.
 Judgment on the arbitration award may be entered by any court of competent
jurisdiction.

Employment Agreement – Page 6

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(c)

This Agreement shall be binding upon and inure to the benefit of the parties
hereto, and their respective heirs, legal representatives, successors and
assigns.

(d)

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.

(e)   This Agreement cannot be amended orally, or by any course of conduct or
dealing, but only by a written agreement signed by the parties hereto.

 

(f)   The failure of either party to insist upon the strict performance of any
of the terms, conditions and provisions of this Agreement shall not be construed
as a waiver or relinquishment of future compliance therewith, and such terms,
conditions and provisions shall remain in full force and effect.  No waiver of
any term or condition of this Agreement on the part of either party shall be
effective for any purpose whatsoever unless such waiver is in writing and signed
by such party.

 

(g)   All notices, requests, consents and other communications, required or
permitted to be given hereunder, shall be in writing and shall be delivered
personally or by an overnight courier service or sent by registered or certified
mail, postage prepaid, return receipt requested, to the parties at the addresses
set forth on the first page of this Agreement, and shall be deemed given when so
delivered personally or by overnight courier, or, if mailed, five days after the
date of deposit in the United States mails.  Either party may designate another
address, for receipt of notices hereunder by giving notice to the other party in
accordance with this paragraph (g).

 

(h)   This Agreement sets forth the entire agreement and understanding of the
parties relating to the subject matter hereof.  No representation, promise or
inducement has been made by either party that is not embodied in this Agreement,
and neither party shall be bound by or liable for any alleged representation,
promise or inducement not so set forth.

 

 

(i)   The section headings contained herein are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Agreement.

 

(j)   This Agreement may be executed in any number of counterparts, each of
which shall constitute an original, but all of which together shall constitute
one and the same instrument.

(Intentionally left blank)

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

 

TORCHLIGHT ENERGY RESOURCES, INC.

By:

/s/ John A. Brda

John A. Brda, President

Date:

October 10, 2013

OPAL MARKETING AND CONSULTING SERVICES. INC.

By:

/s/ Thomas Lapinski

Thomas Lapinski

Date:

October 10, 2013

Employment Agreement – Page 8