Blueprint








 






EXHIBIT 4.1



 



NEITHER
THIS 8% UNSECURED CONVERTIBLE PROMISSORY NOTE (THE
“NOTE”) NOR THE SECURITIES ISSUABLE IN CONNECTION WITH
THIS NOTE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (“ACT”), OR THE SECURITIES LAWS OF ANY STATE.
NEITHER THIS NOTE NOR THE SECURITIES ISSUABLE IN CONNECTION WITH
THIS NOTE MAY BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT
REGISTRATION UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS
OR DELIVERY TO TORCHLIGHT ENERGY RESOURCES, INC. OF AN OPINION OF
LEGAL COUNSEL SATISFACTORY TO TORCHLIGHT ENERGY RESOURCES, INC.
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT OR ANY
APPLICABLE STATE SECURITIES LAWS


 


8%
UNSECURED CONVERTIBLE PROMISSORY NOTE


OF


TORCHLIGHT ENERGY
RESOURCES, INC.


 


	
NOTE NO.
________  

	
  July ___,
2019







 




FOR
VALUE RECEIVED, TORCHLIGHT ENERGY RESOURCES, INC., a Nevada
corporation with its principal office located at 5700 Plano
Parkway, Ste. 3600, Plano, Texas 75093 (the “Company” or “Debtor”), unconditionally promises
to pay to ___________ whose address is
______________________________________________________, or the
registered assignee, upon presentation of this 8% Unsecured
Convertible Promissory Note (the “Note”) by the registered holder
hereof (the “Registered
Holder” or “Holder”) at the office of the
Company, the principal amount of $__________ (“Principal Amount”), together with
the accrued and unpaid interest thereon and other sums as
hereinafter provided, subject to the terms and conditions as set
forth below. The effective date of execution and issuance of this
Note is July ____, 2019 (“Original Issue
Date”).


 

1.           
Schedule for
Payment of Principal and Interest. The Principal Amount outstanding
hereunder shall be paid in one lump sum payment of $__________ on
or before May 31, 2021 (the “Maturity Date”), and the interest
on the Principal Amount outstanding hereunder shall be payable at
the rate of 8% per annum and shall be due and payable monthly, in
arrears, with the initial interest payment due July 1, 2019, and
continuing thereafter on the 1st day of each successive month
during the term of this Note. Accrual of interest on the
outstanding Principal Amount, payable in cash, shall commence on
the date of receipt of funds by the Company and shall continue
until payment in full of the outstanding Principal Amount has been
made hereunder. The interest so payable will be paid to the person
whose name is registered on the records of the Company regarding
registration and transfers of this Note (the “Note Register”).


 

2.           
Payment.
Payment of any sums due to the Holder under the terms of this Note
shall be made in United States Dollars by check or wire transfer at
the option of the Company. Payment shall be made at the address
last appearing on the Note Register of the Company as designated in
writing by the Holder hereof from time to time. If any payment
hereunder would otherwise become due and payable on a day on which
commercial banks in Plano, Texas, are permitted or required to be
closed, such payment shall become due and payable on the next
succeeding day on which commercial banks in Plano, Texas, are not
permitted or required to be closed (“Business Day”) and, with respect to payments of
Principal Amount, interest thereon shall be payable at the then
applicable rate during such extension, if any. The forwarding of
such funds shall constitute a payment of outstanding principal and
interest hereunder and shall satisfy and discharge the liability
for principal and interest on this Note to the extent of the sum
represented by such payment. Except as provided in Section 3
hereof, this Note may not be prepaid without the prior written
consent of the Holder.


 



 

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3.
        Company’s
Option to Redeem Note. On or after the Original Issue Date,
up to 100%, in whole or in part, of the outstanding Principal
Amount of the Note, plus any accrued and unpaid interest, will be
subject to redemption at the option of the Company. If the Company
elects to redeem before the first anniversary of the Original Issue
Date, however, the Company shall pay the Holder all unpaid interest
on the portion of the Principal Amount redeemed that would have
been earned from the Redemption Payment Date (as defined below)
through the first anniversary of the Original Issue Date. Any
amount of the Note subject to redemption, as set forth herein (the
“Redemption
Amount”), may be redeemed by the Company at any time
and from time to time, upon not less than 10 nor more than 30 days
notice to the Holder. The Company shall deliver to the Holder a
written Notice of Redemption (the “Notice of Redemption”) specifying
the date for the redemption (the “Redemption Payment Date”), which
date shall be at least 10 but not more than 30 days after the date
of the Notice of Redemption (the “Redemption Period”). A Notice of
Redemption shall not be effective with respect to any portion of
this Note for which the Holder has previously delivered a Notice of
Conversion (as defined in Section 4(b) below) or for conversions
elected to be made by the Holder pursuant to Section 4 during the
Redemption Period. The Redemption Amount shall be determined as if
the Holder’s conversion elections had been completed
immediately prior to the date of the Notice of Redemption. On the
Redemption Payment Date, the Redemption Amount must be paid in good
funds to the Holder.


 

4.           
Conversion
Rights.


 

(a)           
Conversion. At any
time after the Original Issue Date, the Holder of this Note will
have the right, at the Holder's option, to convert all or any
portion of the Principal Amount hereof and any accrued but unpaid
interest thereon into shares of common stock, par value $.001 per
share, of the Company (“Common Stock”) in a manner and in
accordance with Section 4(b) below (unless earlier paid or
redeemed) at the conversion price as set forth below in Section
4(c) (subject to adjustment as described herein). The right to
convert the Principal Amount or interest thereon of this Note
called for redemption will terminate at the close of business on
the Business Day prior to the Redemption Payment Date for such
Note, unless the Company subsequently fails to pay the applicable
Redemption Amount. The shares of Common Stock to be issued upon
conversion under this Section 4 (or upon a conversion under Section
5 below) are hereinafter referred to as the “Conversion
Shares”.

 

 

 

 



 

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Convertible Promissory Note - Page 2 of 12







 





 

(b)           
Mechanics of
Holder’s Conversion. In the event that the Holder
elects to convert any portion of this Note into Common Stock, the
Holder shall give notice of such election by delivering an executed
and completed notice of conversion (“Notice of Conversion”) to the
Company. The Notice of Conversion will provide a breakdown in
reasonable detail of the Principal Amount and/or accrued interest
that is being converted and state the denominations in which such
Holder wishes the certificate or certificates for the Conversion
Shares to be issued. The Registered Holder must surrender this Note
to the Company with the Notice of Conversion, unless such Notice of
Conversion is only for accrued interest and no Principal Amount. On
each Conversion Date (as hereinafter defined) and in accordance
with its Notice of Conversion, the Company shall make the
appropriate reduction to the Principal Amount and/or accrued
interest as entered in its records and shall provide written notice
thereof to the Holder within five (5) Business Days after the
Conversion Date. Each date on which a Notice of Conversion is
delivered or telecopied to the Company in accordance with the
provisions hereof shall be deemed a Conversion Date (the
“Conversion
Date”). Pursuant to the terms of the Notice of
Conversion, the Company will issue instructions to its transfer
agent as soon as practicable thereafter, to cause to be issued and
delivered to the Holder certificates for the number of full shares
of Conversion Shares to which such Holder shall be entitled as
aforesaid and, if necessary, the Company shall cause to be issued
and delivered to the Holder a new promissory note representing any
unconverted portion of this Note. The Company shall not issue
fractional Conversion Shares upon conversion, but the number of
Conversion Shares to be received by any Holder upon conversion
shall be rounded down to the next whole number. In the case of the
exercise of the conversion rights set forth herein the conversion
privilege shall be deemed to have been exercised and the Conversion
Shares issuable upon such conversion shall be deemed to have been
issued upon the date of receipt by the Company of the Notice of
Conversion. The Holder shall be treated for all purposes as the
record holder of the Conversion Shares, unless the Holder provides
the Company written instructions to the contrary.


 

(c)           
Conversion Price.
The Conversion Price of the Common Stock into which the Principal
Amount, or the then outstanding interest due thereon, of this Note
is convertible shall be $1.10 per share (subject to adjustment
as described herein).


 


(d)           Adjustment
Provisions. The Conversion Price and number and kind of
shares or other securities to be issued upon conversion pursuant to
this Note shall be subject to adjustment from time to time upon the
happening of certain events while this conversion right remains
outstanding, as follows:


 

(i)           
Reclassification.
In case of any reclassification, consolidation or merger of the
Company with or into another entity or any merger of another entity
with or into the Company, or in the case of any sale, transfer or
conveyance of all or substantially all of the assets of the Company
(computed on a consolidated basis), the Note then outstanding will,
without the consent of any Holder, become convertible only into the
kind and amount of securities, cash or other property receivable
upon such reclassification, consolidation, merger, sale, transfer
or conveyance by a Holder of the number of shares of Common Stock
into which the Note was convertible immediately prior thereto,
after giving effect to any adjustment event.


 

(ii)             
Stock Split,
Dividend. If the number of shares of Common Stock
outstanding at any time after the date hereof is increased by a
subdivision or split of Common Stock, or by the declaration of a
dividend on the Common Stock, which dividend is wholly or partially
in the form of additional shares of Common Stock or any other
securities of the Company, then immediately after the effective
date of such subdivision or split-up, or the record date with
respect to such dividend, as the case may be, the Conversion Price
shall be appropriately reduced so that the holder of this Note
thereafter exchanged shall be entitled to receive the percentage of
shares of Common Stock which such holder would have owned
immediately following such action had this Note been exchanged
immediately prior thereto;

 



 

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(iii)           
Reverse Split. If
the number of Common Stock outstanding at any time after the date
hereof is decreased by a combination of the outstanding Common
Stock or reverse split, then, immediately after the effective date
of such combination, the Conversion Price shall be appropriately
increased so that the holder of this Note thereafter exchanged
shall be entitled to receive the percentage of shares of Common
Stock which such holder would have owned immediately following such
action had this Note been exchanged immediately prior
thereto.

 


(e)           Issuance
of New Note. Upon any partial conversion of this Note, a new
promissory note containing the same date and provisions of this
Note shall be issued by the Company to the Holder for the principal
balance of this Note and interest which shall not have been
converted or paid. The Holder shall not pay any costs, fees or any
other consideration to the Company for the production and issuance
of a new promissory note.


 

(f)           
Reservation of
Shares. The Company shall at all times reserve for issuance
and maintain available, out of its authorized but unissued Common
Stock, solely for the purpose of effecting the full conversion of
the Note, the full number of shares of Common Stock deliverable
upon the conversion of the Note from time to time outstanding. The
Company shall from time to time (subject to obtaining necessary
director and stockholder action), in accordance with the laws of
the State of Nevada, increase the authorized number of shares of
its Common Stock if at any time the authorized number of shares of
its Common Stock remaining unissued shall not be sufficient to
permit the conversion of the Note.


 

5.           
Company’s
Option to Require Conversion. On or after the Original Issue
Date, if (i) there is an effective registration statement filed
with the Securities and Exchange Commission registering the
Conversion Shares to be issued upon conversion of the Note or such
Conversion Shares are eligible for resale under Rule 144 under the
Act, (ii) there is a 30-day average daily trading volume of 150,000
or more shares of common stock for the last 30 consecutive Trading
Days (as hereinafter defined), as reported by the NASDAQ Stock
Market and (iii) the closing price of the Common Stock on the
Trading Market (as hereinafter defined) is $1.75 (subject to
adjustment consistent with the adjustments set forth in Section
4(d) above) or more for 10 consecutive Trading Days while the
registration statement referred to in clause “(i)”
above is effective or while the Conversion Shares are eligible for
resale under Rule 144, then the Company may require the Registered
Holder to convert up to 100%, in whole or in part, of the
outstanding Principal Amount of the Note, plus any accrued and
unpaid interest. The Conversion Shares subject to such required
conversion are hereinafter referred to as the “Required Conversion
Shares”.


 


The
Company will have 10 Trading Days after all of the conditions set
forth in the preceding paragraph are met (subject to adjustment
consistent with the adjustments set forth in Section 4(d) above) to
deliver to the Registered Holder a written notice of required
conversion (the “Notice of
Required Conversion”). The Notice of Required
Conversion will also provide a breakdown in reasonable detail of
the Principal Amount and/or accrued interest that is being
converted. The date the Notice of Required Conversion is delivered
is deemed the “Required
Conversion Date,” on which date and in accordance with
its Notice of Required Conversion, the Company shall make the
appropriate reduction to the Principal Amount and/or accrued
interest as entered in its records. The Registered Holder must
surrender this Note to the Company within 5 Business Days of the
Required Conversion Date. Pursuant to the terms of the Notice of
Required Conversion, the Company will issue instructions to its
transfer agent as soon as practicable after receipt of the Note, to
cause to be issued and delivered to the Holder certificates for the
number of full shares of Conversion Shares to which such Holder
shall be entitled as aforesaid and, if necessary, the Company shall
cause to be issued and delivered to the Holder a new promissory
note representing any unconverted portion of this Note. The Company
shall not issue fractional Conversion Shares upon conversion, but
the number of Conversion Shares to be received by any Holder upon
conversion shall be rounded down to the next whole number and the
Holder shall be entitled to payment of the remaining principal
amount by a Company check. In the case of the exercise of the
Company’s option to require conversion set forth herein, the
conversion shall be deemed to have been effected and the Conversion
Shares issuable upon such conversion shall be deemed to have been
issued upon the Required Conversion Date.


 



 

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“Trading Day” means a day on which
the principal Trading Market is open for business.
“Trading Market”
means the following markets or exchanges on which the Common Stock
is listed or quoted for trading on the date in question: The Nasdaq
Stock Market, the New York Stock Exchange, the NYSE MKT LLC or the
OTC Markets.


 


6.           Representations
and Warranties of the Company. The Company represents and
warrants to the Holder that:


 

(a)           
Organization. The
Company is validly existing and in good standing under the laws of
the state of Nevada and has the requisite power to own, lease and
operate its properties and to carry on its business as now being
conducted. The Company is duly qualified to do business and is in
good standing in each jurisdiction in which the character or
location of the properties owned or leased by the Company or the
nature of the business conducted by the Company makes such
qualification necessary or advisable, except where the failure to
do so would not have a material adverse effect on the
Company.


 


(b)           Power
and Authority. The Company has the requisite power to
execute, deliver and perform this Note, and to consummate the
transactions contemplated hereby. The execution and delivery of
this Note by the Company and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company. This Note has been
duly executed and delivered by the Company and constitutes a legal,
valid and binding obligation of the Company and is enforceable
against the Company in accordance with its terms except (i) that
such enforcement may be subject to bankruptcy, insolvency,
moratorium or similar laws affecting creditors' rights and (ii)
that the remedy of specific performance and injunctive and other
forms of equitable relief are subject to certain equitable defenses
and to the discretion of the court before which any proceedings
therefor may be brought.


 


(c)           Approvals.
No authorization, approval or consent of any court, governmental
body, regulatory agency, self-regulatory organization, or stock
exchange or market is required to be obtained by the Company for
the issuance and sale of the Notes and common stock as contemplated
by this Note, except such authorizations, approvals and consents
that have been obtained.


 


(d)           SEC
Documents, Financial Statements. The Common Stock of the
Company is registered pursuant to Section l2(b) of the Securities
Exchange Act of 1934 (“Exchange Act”), and the Company,
to the best of its knowledge, has filed all reports, schedules,
forms, statements and other documents required to be filed by it
with the SEC pursuant to the reporting requirements of Section
13(a) or l5(d) (all of the foregoing including filings incorporated
by reference therein being referenced to herein as the “SEC
Documents”).


 



 

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7.           
Events
of Defaults and Remedies. The following are deemed to be an
event of default (“Event of
Default”) hereunder: (i) the failure by the Company to
pay any installment of interest on this Note as and when due and
payable and the continuance of any such failure for 10 days; (ii)
the failure by the Company to pay all or any part of the principal
on this Note when and as the same become due and payable as set
forth above, at maturity, by acceleration or otherwise; (iii) the
failure of the Company to perform any conversion of Notes required
under this Note and the continuance of any such failure for 10
days; (iv) the failure by the Company to observe or perform any
covenant or agreement contained in this Note, the Subscription
Agreement and the continuance of such failure for a period of 30
days after the written notice is given to the Company; (v) the
assignment by the Company for the benefit of creditors, or an
application by the Company to any tribunal for the appointment of a
trustee or receiver of a substantial part of the assets of the
Company, or the commencement of any proceedings relating to the
Company under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debts, dissolution or other liquidation
law of any jurisdiction; or the filing of such application, or the
commencement of any such proceedings against the Company and an
indication of consent by the Company to such proceedings, or the
appointment of such trustee or receiver, or an adjudication of the
Company bankrupt or insolvent, or approval of the petition in any
such proceedings, and such order remains in effect for 60 days;
(vi) the declaration of an event of default or default, occurring
after the Original Issue Date, under any other contract, agreement,
debt or obligation of the Company with a monetary amount in excess
of $1,000,000; or (vii) the entry of a judgment against the
Company, which is not otherwise appealable, or for which all
appeals have been exhausted and for which the Company has not
posted a bond to satisfy the amount of the judgment in excess of
$2,500,000.


 

8.           
The
Holder’s Rights and Remedies upon the Occurrence of an Event
of Default. If an Event of Default occurs and is continuing
(other than an Event of Default specified in Section 7 (v) above
with respect to the Company), then in every such case, unless the
Principal Amount of the Note shall have already become due and
payable, the Holder of the Note then outstanding, by notice in
writing to the Company (an “Acceleration Notice”), may
declare all principal and accrued and unpaid interest thereon to be
due and payable immediately. If an Event of Default specified in
Section 7 (v) above occurs with respect to the Company, all
principal and accrued and unpaid interest thereon will be
immediately due and payable on the Note without any declaration or
other act on the part of the Holder. The Holder may rescind such
acceleration if the existing Event of Default has been cured or
waived.


 

9.           
Default
Interest. The Company agrees that if the Company defaults in
the payment of any payment required hereunder, whether payment of
Principal Amount or interest, the Company promises to pay, on
demand, interest on any such unpaid amounts, from the date the
payment is due to the date of actual payment, at the rate (the
“Default Rate) of the
lessor of (i) 12% per annum; and (ii) the maximum nonusurious rate
permitted by applicable law.

 

 



 

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10.           
Limitation on
Merger, Sale or Consolidation. The Company may not, directly
or indirectly, consolidate with or merge into another person or
sell, lease, convey or transfer all or substantially all of its
assets (computed on a consolidated basis), whether in a single
transaction or a series of related transactions, to another person
or group of affiliated persons, unless either (i) in the case of a
merger or consolidation, the Company is the surviving entity or
(ii) the resulting, surviving or transferee entity expressly
assumes by supplemental agreement all of the obligations of the
Company in connection with the Notes. Upon any consolidation or
merger or any transfer of all or substantially all of the assets of
the Company in accordance with the foregoing, the successor entity
formed by such consolidation or into which the Company is merged or
to which such transfer is made, shall succeed to, and be
substituted for, and may exercise every right and power of the
Company under the Note with the same effect as if such successor
entity had been named therein as the Company, and the Company will
be released from its obligations under the Note, except as to any
obligations that arise from or as a result of such
transaction.


 

11.           
Listing
of Registered Holder of Note. This Note will be registered
as to principal amount in the Holder’s name on the books of
the Company at its principal office in Plano, Texas (the
“Note
Register”), after which no transfer hereof shall be
valid unless made on the Company’s books at the office of the
Company, by the Holder hereof, in person, or by attorney duly
authorized in writing, and similarly noted hereon.


 

12.           
Registered Holder
Not Deemed a Stockholder.No Holder, as such, of this Note shall
be entitled to vote or receive dividends or be deemed the holder of
shares of the Company for any purpose, nor shall anything contained
in this Note be construed to confer upon the Holder hereof, as
such, any of the rights of a stockholder of the Company or any
right to vote, give or withhold consent to any corporate action
(whether any reorganization, issue of stock, reclassification of
stock, consolidation, merger, conveyance or otherwise), receive
notice of meetings, receive dividends or subscription rights, or
otherwise.


 

13.           
Waiver
of Demand, Presentment, Etc. The Company hereby expressly waives
demand and presentment for payment, notice of nonpayment, protest,
notice of protest, notice of dishonor, notice of acceleration or
intent to accelerate, bringing of suit and diligence in taking any
action to collect amounts called for hereunder and shall be
directly and primarily liable for the payment of all sums owing and
to be owing hereunder, regardless of and without any notice,
diligence, act or omission as or with respect to the collection of
any amount called for hereunder.


 

14.           
Attorney’s
Fees. The Company
agrees to pay all costs and expenses, including without limitation
reasonable attorney’s fees, which may be incurred by the
Holder in collecting any amount due under this Note.


 

15.           
Enforceability.
In case any provision of this Note is held by a court of competent
jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided,
if possible, so that it is enforceable to the maximum extent
possible, and the validity and enforceability of the remaining
provisions of this Note will not in any way be affected or impaired
thereby.

 



 

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16.           Intent
to Comply with Usury Laws. In no event will the interest to be
paid on this Note exceed the maximum rate provided by law. It is
the intent of the parties to comply fully with the usury laws of
the State of Texas; accordingly, it is agreed that notwithstanding
any provisions to the contrary in this Note, in no event shall such
Note require the payment or permit the collection of interest
(which term, for purposes hereof, shall include any amount which,
under Texas law, is deemed to be interest, whether or not such
amount is characterized by the parties as interest) in excess of
the maximum amount permitted by the laws of the State of Texas. If
any excess of interest is unintentionally contracted for, charged
or received under this Note, or in the event the maturity of the
indebtedness evidenced by the Note is accelerated in whole or in
part, or in the event that all of part of the Principal Amount or
interest of this Note shall be prepaid, so that the amount of
interest contracted for, charged or received under this Note, on
the amount of the Principal Amount actually outstanding from time
to time under this Note shall exceed the maximum amount of interest
permitted by the applicable usury laws, then in any such event (i)
the provisions of this paragraph shall govern and control, (ii)
neither the Company nor any other person or entity now or hereafter
liable for the payment thereof, shall be obligated to pay the
amount of such interest to the extent that it is in excess of the
maximum amount of interest permitted by such applicable usury laws,
(iii) any such excess which may have been collected shall be either
applied as a credit against the then unpaid principal amount
thereof or refunded to the Company at the Holder’s option,
and (iv) the effective rate of interest shall be automatically
reduced to the maximum lawful rate of interest allowed under the
applicable usury laws as now or hereafter construed by the courts
having jurisdiction thereof. It is further agreed that without
limitation of the foregoing, all calculations of the rate of
interest contracted for, charged or received under the Note which
are made for the purpose of determining whether such rate exceeds
the maximum lawful rate of interest, shall be made, to the extent
permitted by applicable laws, by amortizing, prorating, allocating
and spreading in equal parts during the period of the full stated
term of the Note evidenced thereby, all interest at any time
contracted for, charged or received from the Company or otherwise
by the Holders in connection with this Note.


 

17.           
Governing Law;
Consent to Jurisdiction. This Note shall be governed by and
construed in accordance with the laws of the State of Texas without
regard to the conflict of laws provisions thereof. In any action
between or among any of the parties, whether rising out of this
Note or otherwise, each of the parties irrevocably consents to the
exclusive jurisdiction and venue of the federal and/or state courts
located in Collin County, Texas.


 

18.           
Amendment and
Waiver. Any waiver or amendment hereto shall be in writing
signed by the Holder. No failure on the part of the Holder to
exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof, nor shall any single or partial
exercise by the Holder of any right hereunder preclude any other or
further exercise thereof or the exercise of any other rights. The
remedies herein provided are cumulative and not exclusive of any
other remedies provided by law.


 

19.           
Restrictions
Against Transfer or Assignment. Neither this Note nor any of
the shares issuable in connection with this Note may be sold,
transferred, assigned, pledged, hypothecated or otherwise disposed
of by the Registered Holder hereof, in whole or in part, unless and
until either (i) the Note or the shares issuable in connection with
the Note have been duly and effectively registered for resale under
the Securities Act of 1933, as amended, and under any then
applicable state securities laws; or (ii) the Registered Holder
delivers to the Company a written opinion acceptable to the
Company’s counsel that an exemption from such registration
requirements is then available with respect to any such proposed
sale or disposition. Any transfer of this Note otherwise
permissible hereunder shall be made only at the principle office of
the Company upon surrender of this Note for cancellation and upon
the payment of any transfer tax or other government charge
connected therewith, and upon any such transfer a new Note will be
issued to the transferee in exchange therefor. The transferee of
this Note shall be bound by the provisions of this Note. The
register of the transfer of this Note shall occur upon the delivery
of this Note, endorsed by the registered Holder or his duly
authorized attorney, signature guaranteed, to the Company or its
transfer agent. Each Note instrument issued upon the transfer of
this Note shall have the restrictive legend contained herein
conspicuously imprinted on it.


 



 

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20.           
Entire
Agreement; Headings. This Note and Subscription Agreement
constitute the entire agreement between the Holder and the Company
pertaining to the subject matter hereof and supersedes all prior
and contemporaneous agreements, representations and understandings,
written or oral, of such parties. The headings are for reference
purposes only and shall not be used in construing or interpreting
this Note.


 

21.           
No
Personal Liability of Shareholders, Officers, Directors. No
recourse shall be had for the payment of the Principal Amount or
the interest on this Note, or for any claim based thereon, or
otherwise in respect thereof, or based on or in respect of any Note
supplemental thereto, against any incorporator, stockholder,
officer, or director (past, present, or future) of the Company,
whether by virtue of any constitution, statute, or rule of law, or
by the enforcement of any assessment or penalty or otherwise, all
such liability being by the acceptance hereof, and as part of the
consideration for the issue hereof, expressly waived and
released.


 

22.           
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 recognized overnight delivery service, postage pre-paid, or sent
by email addressed as follows, or to such other address as such
party may notify to the other parties in writing:


 

(a)           
If to the Company, to it at the following address:


 


5700
Plano Parkway, Ste. 3600


Plano,
Texas 75093


Attn:
John Brda, CEO


Email:                                                         


 


(b)           If
to Registered Holder, then to the address listed on the front of
this Note, unless changed, by notice in writing as provided for
herein.


 


A
notice or communication will be effective (i) if delivered in
person or by overnight courier, on the Business Day it is
delivered, (ii) if sent by registered or certified mail, the
earlier of the date of actual receipt by the party to whom such
notice is required to be given or three (3) days after deposit in
the United States mail and (iii) if sent by email, on the date
sent. If any notice or other communication is sent by email, the
party providing such notice shall, no later than the next business
day after such emailed notice is sent, send a written notice by
registered or certified mail (return receipt requested) or
recognized overnight delivery service, postage
pre-paid.


 



 

8% Unsecured
Convertible Promissory Note - Page 9 of 12







 






 



23.           
Use of
Proceeds. The Company intends to use the net proceeds from
the funds received hereunder to finance the acquisition,
exploration, drilling or improvements of the Company or its
subsidiaries’ oil and gas properties or for other customary
general corporate purposes.


 

24.           
Survival.
The representations, warranties, obligations and covenants of the
Company shall survive execution of this Note.


 


[Remainder of page
intentionally left blank. Signature page follows.]


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 



 

8% Unsecured
Convertible Promissory Note - Page 10 of 12







 








IN WITNESS WHEREOF, Torchlight Energy
Resources, Inc. has caused this Note to be duly executed in its
corporate name by the manual signature of its
President/CEO.


 


 


	

 

	
TORCHLIGHT ENERGY RESOURCES,
INC.

	

 


	

 

	

 

	

 

	

 


	



	
By:  

	
 

	

 


	

 

	

 

	
     
John
Brda, CEO  

	

 







 




 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 



 

8% Unsecured
Convertible Promissory Note - Page 11 of 12







 






 


ANNEX
A


NOTICE
OF CONVERSION


 


 


The
undersigned hereby elects to convert principal and/or accrued
interest under the 8% Unsecured Convertible Promissory Note due May
31, 2021 of Torchlight Energy Resources, Inc., a Nevada corporation
(the “Company”), into shares of common stock, par value
$0.001 per share (the “Common Stock”) of the Company,
according to the conditions hereof, as of the date written below.
If shares of Common Stock are to be issued in the name of a person
other than the undersigned, the undersigned will pay all transfer
taxes payable with respect thereto and is delivering herewith such
certificates and opinions as reasonably requested by the Company in
accordance therewith. No fee will be charged to the Holder for any
conversion, except for such transfer taxes, if any.


 




	


Conversion Calculations:

	
 


	
 

	


Date to Effect Conversion:


	
 

	
 


	
 

	
 


	
 

	


Principal Amount of 8% Unsecured Convertible Promissory Note to be
Converted:


	
 

	
 


	
 

	
 


	
 

	


Accrued Interest Amount of 8% Unsecured Convertible Promissory Note
to be Converted:


	
 

	
 


	
 

	
 


	
 

	


Number of Shares of Common Stock to be Issued:


	
 

	


 







 


 


 


	


Signature:

	
 


	
 

	
 


	


Name:

	
 


	
 

	
 


	


Address:

	
 







 




 

8% Unsecured
Convertible Promissory Note - Page 12 of 12