Document:

exhibit_4-1.htm

EXHIBIT 4.1

 

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE 1933 ACT, OR AN OPINION OF COUNSEL, SATISFACTORY TO THE ISSUER HEREOF, TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER THE 1933 ACT AS SOME OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND APPLICABLE LAWS IS AVAILABLE.

 

FIVE YEAR PURCHASE WARRANT

TO PURCHASE COMMON STOCK OF

TORCHLIGHT ENERGY RESOURCES, INC.

 

 

	Date of Issuance: August 14, 2014 	Warrant No. AUG-2014

 

This certifies that, for value received, TORCHLIGHT ENERGY RESOURCES, INC., a Nevada corporation (the "Company"), grants Castleton Commodities Opportunities Master Fund L.P., a limited partnership or its registered assigns (the "Registered Holder"), whose address is 2200 Atlantic Street, Suite 800, Stamford, Connecticut 06902-6834, the right to subscribe for and purchase from the Company, at the Exercise Price (as defined herein), from and after 9:00 a.m. Central Standard Time on August 14, 2014 (the "Exercise Date") and to and including 5:00 p.m., Central Standard Time, on August 14, 2019 (the "Expiration Date"), 1,400,000 shares, as such number of shares may be adjusted from time to time as described herein (the "Warrant Shares"), of the Company's common stock, par value $.001 per share (the "Common Stock"), subject to the provisions and upon the terms and conditions herein set forth. The "Exercise Price" per share of Common Stock with respect to 700,000 shares of Common Stock of the Company will be $4.50 per share, and with respect to 700,000 shares of Common Stock of the Company will be $7.00 per share.

 

This Warrant is issued in connection with the issuance to the Registered Holder of shares of Common Stock and in connection with that certain Securities Purchase Agreement between the Company and the Registered Holder dated as of August 14, 2014 (the "Subscription Agreement"). The Registered Holder of this Warrant is subject to the terms and conditions set forth in the Subscription Agreement.

 

Section 1.                     Recordation on Books of the Company. The Company shall record this Warrant, upon records to be maintained by the Company for that purpose (the "Warrant Records"), in the name of the Registered Holder. The Company may deem and treat the Registered Holder as the absolute owner of this Warrant for the purpose of any exercise hereof or any distribution to the Registered Holder.

 

 

 

 

 

  

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Section 2.                    Registration of Transfers and Exchanges.

 

(a)          Subject to Section 9 hereof, the Company shall register the transfer of this Warrant, in whole or in part, upon records to be maintained by the Company for that purpose, upon surrender of this Warrant, with the Form of Assignment attached hereto completed and duly endorsed by the Registered Holder, to the Company at the office specified in or pursuant to Section 3(b). Upon any such registration of transfer, a new Warrant, in substantially the form of this Warrant, evidencing the Common Stock purchase rights so transferred shall be issued to the transferee and a new Warrant, in similar form, evidencing the remaining Common Stock purchase rights not so transferred, if any, shall be issued to the Registered Holder.

 

(b)          This Warrant is exchangeable, upon the surrender hereof by the Registered Holder at the office of the Company specified in or pursuant to Section 3(b) hereof, for new Warrants, in substantially the form of this Warrant evidencing, in the aggregate, the right to purchase the number of Warrant Shares which may then be purchased hereunder, each of such new Warrants to be dated the date of such exchange and to represent the right to purchase such number of Warrant Shares as shall be designated by the Registered Holder at the time of such surrender.

 

Section 3. Duration and Exercise of this Warrant.

 

(a)          This Warrant shall be exercisable by the Registered Holder as to the Warrant Shares at any time during the period commencing on the Exercise Date and ending on the Expiration Date. At 5:00 p.m., Central Standard Time, on the Expiration Date, this Warrant, to the extent not previously exercised, shall become void and of no further force or effect.

 

(b)          Subject to Section 7 hereof, upon exercise or surrender of this Warrant, with the Form of Election to Purchase attached hereto completed and duly endorsed by the Registered Holder, to the Company at 5700 W. Plano Parkway, Suite 3600, Plano, Texas 75093, Attention: John Brda, President, or at such other address as the Company may specify in writing to the Registered Holder, and upon payment of the Exercise Price multiplied by the number of Warrant Shares then issuable upon exercise of this Warrant in lawful money of the United States of America, all as specified by the Registered Holder in the Form of Election to Purchase, the Company shall promptly issue and cause to be delivered to or upon the written order of the Registered Holder, and in such name or names as the Registered Holder may designate, a certificate for the Warrant Shares issued upon such exercise. Any person so designated in the Form of Election to Purchase, duly endorsed by the Registered Holder, as the person to be named on the certificates for the Warrant Shares, shall be deemed to have become holder of record of such Warrant Shares, evidenced by such certificates, as of the Date of Exercise (as hereinafter defined) of such Warrant.

 

(c)          The Registered Holder may pay the applicable Exercise Price pursuant to Section 3(b), at the option of the Registered Holder, either (i) by cashier's or certified bank check payable to the Company, or (ii) by wire transfer of immediately available funds to the account which shall be indicated in writing by the Company to the Registered Holder, in either case, in an amount equal to the product of the Exercise Price multiplied by the number of Warrant Shares being purchased upon such exercise (the "Aggregate Exercise Price").

 

 

 

  

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(d)          The "Date of Exercise" of any Warrant means the date on which the Company shall have received (i) this Warrant, with the Form of Election to Purchase attached hereto appropriately completed and duly endorsed, and (ii) payment of the Aggregate Exercise Price as provided herein.

 

(e)          This Warrant will be exercisable either in its entirety or, from time to time, for part, only of the number of Warrant Shares which are issuable hereunder. If this Warrant shall have been exercised only in part, the Company shall, at the time of delivery of the certificates for the Warrant Shares issued pursuant to such exercise, deliver to the Registered Holder a new Warrant evidencing the rights to purchase the remaining Warrant Shares, which Warrant shall be substantially in the form of this Warrant.

 

(f)          Notwithstanding anything herein to the contrary, the Company will not effect the exercise, and the Registered Holder shall not have the right to exercise, any portion of this Warrant, to the extent that after giving effect to the exercise set forth on the applicable Form of Election to Purchase, the Registered Holder (together with the Registered Holder's affiliates, and any persons acting as a group together with the Registered Holder or any of the Registered Holder's affiliates) would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Registered Holder and its affiliates shall include the number of Warrant Shares issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of Warrant Shares that are issuable upon (i) exercise of the remaining, unexercised portion of this Warrant beneficially owned by the Registered Holder or any of its affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Registered Holder or any of its affiliates. Except as set forth in the preceding sentence, for purposes of this Section 3(f), beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder. The "Beneficial Ownership Limitation" shall be 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of Warrant Shares issuable upon exercise of this Warrant held by the Registered Holder. The Beneficial Ownership Limitation provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 3(f) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant, shall not be waivable by a holder of this Warrant, and shall apply to any successor of the Company. Any purported exercise of this Warrant other than subject to the limitations contained in this paragraph shall be void, and any issuance by the Company of any Warrant Shares otherwise than subject to the limitations contained in this paragraph shall be void, as shall any Warrant Shares issued otherwise than subject to the limitations contained in this paragraph.

 

Section 4.                    Payment of Expenses. The Company will pay all expenses (other than any federal or state taxes, including without limitation income taxes, or similar obligations of the Registered Holder) attributable to the preparation, execution, issuance and delivery of this Warrant, any new Warrant and the Warrant Shares.

 

Section 5.                    Mutilated or Missing Warrant Certificate. If this Warrant is mutilated, lost, stolen or destroyed, upon request by the Registered Holder, the Company will issue, in exchange for and upon cancellation of the mutilated Warrant, or in substitution for the lost, stolen or destroyed Warrant, a substitute Warrant, in substantially the form of this Warrant, of like tenor, but, in the case of loss, theft or destruction, only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction of this Warrant and, if requested by the Company, indemnity also reasonably satisfactory to it.

  

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Section 6.                     Reservation, Listing and Issuance of Warrant Shares.

 

(a)          The Company will at all times have authorized, and reserve and keep available, free from preemptive rights, for the purpose of enabling it to satisfy any obligation to issue Warrant Shares upon the exercise of the rights represented by this Warrant, the number of Warrant Shares deliverable upon exercise of this Warrant. The Company will, at its expense, use it best efforts to cause such shares to be included in or listed on (subject to issuance or notice of issuance of Warrant Shares) all markets or stock exchanges in or on which the Common Stock is included or listed not later than the date on which the Common Stock is first included or listed on any such market or exchange and will thereafter maintain such inclusion or listing of all shares of Common Stock from time to time issuable upon exercise of this Warrant.

 

(b)          Before taking any action which could cause an adjustment pursuant to Section 7 hereof reducing the Exercise Price below the par value of the Warrant Shares, the Company will take any corporate action which may be necessary in order that the Company may validly and legally issue at the Exercise Price, as so adjusted, Warrant Shares that are fully paid and non-assessable.

 

(c)          The Company covenants that all Warrant Shares will, upon issuance in accordance with the terms of this Warrant, be (i) duly authorized, fully paid and nonassessable, and (ii) free from all liens, charges and security interests.

 

Section 7.                     Adjustment of Number of Warrant Shares.

 

(a)           The number of Warrant Shares to be purchased upon exercise hereof is subject tochange or adjustment from time to time as hereinafter provided:

 

(i)          Stock Dividends; Stock Splits; Reverse Stock Splits; Reclassifications. In case the Company shall (a) pay a dividend with respect to its Common Stock in shares of capital stock, (b) subdivide its outstanding shares of Common Stock, (c) combine its outstanding shares of Common Stock into a smaller number of shares of any class of Common Stock or (d) issue any shares of its capital stock in a reclassification of the Common Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing corporation), other than elimination of par value, a change in par value, or a change from par value to no par value (any one of which actions is herein referred to as an "Adjustment Event"), the number of Warrant Shares purchasable upon exercise of the Warrant immediately prior to the record date for such Adjustment Event shall be adjusted so that the Registered Holder shall thereafter be entitled to receive the number of shares of Common Stock or other securities of the Company (such other securities thereafter enjoying the rights of shares of Common Stock under this Warrant) that such Registered Holder would have owned or have been entitled to receive after the happening of such Adjustment Event, had such Warrant been exercised immediately prior to the happening of such Adjustment Event or any record date with respect thereto. An adjustment made pursuant to this Section 7(a)(i) shall become effective immediately after the effective date of such Adjustment Event retroactive to the record date, if any, for such Adjustment Event.

  

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(ii)           Adjustment of Exercise Price. Whenever the number of Warrant Shares purchasable upon the exercise of each Warrant is adjusted pursuant to Section 7(a)(i), the Exercise Price for each Warrant Share payable upon exercise of each Warrant shall be adjusted by multiplying such Exercise Price immediately prior to such adjustment by a fraction, the numerator of which shall be the number of shares of Common Stock purchasable upon the exercise of each Warrant immediately prior to such adjustment, and the denominator of which shall be the number of shares of Common Stock so purchasable immediately thereafter.

 

(iii)           Adjustments for Consolidation, Merger, Sale of Assets, Reorganization,  etc. In case the Company (a) consolidates with or merges into any other corporation and is not the continuing or surviving corporation of such consolidation of merger, or (b) permits any other corporation to consolidate with or merge into the Company and the Company is the continuing or surviving corporation but, in connection with such consolidation or merger, the Common Stock is changed into or exchanged for stock or other securities of any other corporation or cash or any other assets, or (c) transfers all or substantially all of its properties and assets to any other corporation, or (d) effects a capital reorganization or reclassification of the capital stock of the Company in such a way that holders of Common Stock shall be entitled to receive stock, securities, cash and/or assets with respect to or in exchange for Common Stock, then, and in each such case, proper provision shall be made so that, upon the basis and upon the terms and in the manner provided in this subsection 7(a)(iii), the Registered Holder, upon the exercise of this Warrant at any time after the consummation of such consolidation, merger, transfer, reorganization or reclassification, shall be entitled to receive (at the aggregate Exercise Price in effect for all shares of Common Stock issuable upon such exercise immediately prior to such consummation as adjusted to the time of such transaction), in lieu of shares of Common Stock issuable upon such exercise prior to such consummation, the stock and other securities, cash and/or assets to which such holder would have been entitled upon such consummation if the Registered Holder had so exercised this Warrant immediately prior thereto (subject to adjustments subsequent to such corporate action as nearly equivalent as possible to the adjustments provided for in this Section). In addition, in the event that the Company is sold, or substantially all of its properties and assets are sold, to another company at a price per share less than $7.50 per share, then the Company shall pay to the Registered Holder the difference between $7.50 per share and the actual sale's price per share, provided, however, that in no event shall such amount exceed $0.50 per share.

 

(iv)           De Minimis Adjustments. No adjustment in the Exercise Price and number of Warrant Shares purchasable hereunder shall be required unless such adjustment would require an increase or decrease of at least $0.05 in the Exercise Price; provided, however, that any adjustments which by reason of this Section 7(a)(iv) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations shall be made to the nearest full share.

 

(b)           Notice of Adjustment. Whenever the number of Warrant Shares purchasable upon the exercise of each Warrant or the Exercise Price is adjusted, as herein provided, the Company shall promptly notify the Registered Holder in writing (such writing referred to as an "Adjustment Notice") of such adjustment or adjustments and shall deliver to such Registered Holder a statement setting forth the number of shares of Common Stock purchasable upon the exercise of each Warrant and the Exercise Price after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made.

  

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(c)           Other Notices. In case at any time:

 

(i)           the Company shall declare any cash dividend on its Common Stock;

 

(ii)           the Company shall pay any dividend payable in stock upon its Common Stock or make any distribution (other than regular cash dividends) to the holders of its Common Stock;

 

(iii)           the Company shall offer for subscription pro rata to all of the holders of its Common Stock any additional shares of stock of any class or other rights;

 

(iv)           the Company shall authorize the distribution to all holders of its Common Stock of evidences of its indebtedness or assets (other than cash dividends or cash distributions payable out of earnings or earned surplus or dividends payable in Common Stock);

 

(v)           there shall be any capital reorganization, or reclassification of the capital stock of the Company, or consolidation or merger of the Company with another corporation (other than a subsidiary of the Company in which the Company is the surviving or continuing corporation and no change occurs in the Company's Common Stock), or sale of all or substantially all of its assets to another corporation; or

 

(vi)           there shall be a voluntary or involuntary dissolution, liquidation, bankruptcy, assignment for the benefit of creditors, or winding up of the Company;

 

then, in any one or more of said cases the Company shall give written notice, addressed to the Registered Holder at the address of such Registered Holder as shown on the books of the Company, of (1) the date on which the books of the Company shall close or a record shall be taken for such dividend, distribution or subscription rights, or (2) the date (or, if not then known, a reasonable approximation thereof by the Company) on which such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation, bankruptcy, assignment for the benefit of creditors, winding up or other action, as the case may be, shall take place. Such notice shall also specify (or, if not then known, reasonably approximate) the date as of which the holders of Common Stock of record shall participate in such dividend, distribution or subscription rights, or shall be entitled to exchange their Common Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation, bankruptcy, assignment for the benefit of creditors, winding up, or other action, as the case may be. Such written notice shall be given (except as to any bankruptcy proceeding) at least five (5) days prior to the action in question and not less than five (5) days prior to the record date or the date on which the Company's transfer books are closed in respect thereto. Such notice shall also state that the action in question or the record date is subject to the effectiveness of a registration statement under the 1933 Act, or to a favorable vote of stockholders, if either is required.

 

(d)           Statement on Warrants. The form of this Warrant need not be changed because of any change in the Exercise Price or in the number or kind of shares purchasable upon the exercise of a Warrant. However, the Company may at any time in its sole discretion make any change in the form of the Warrant that it may deem appropriate and that does not affect the substance thereof and any Warrant thereafter issued, whether in exchange or substitution for any outstanding Warrant or otherwise, may be in the form so changed.

 

 

  

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(e)            Fractional Interest. The Company will not be required to issue fractional Warrant Shares on the exercise of the Warrants. The number of full Warrant Shares which shall be issuable upon such exercise shall be computed on the basis of the aggregate number of whole shares of Common Stock purchasable on the exercise of the Warrants so presented. If any fraction of a share of Common Stock would, except for the provisions of this Section 7(e) be issuable on the exercise of the Warrants (or specified proportion thereof), the Company shall pay an amount in cash calculated by it to be equal to the then fair value of one share of Common Stock, as determined by the Board of Directors of the Company in good faith, multiplied by such fraction computed to the nearest whole cent.

 

Section 8.                     No Rights or Liabilities as a Stockholder. The Registered Holder shall not be entitled to vote or be deemed the holder of Common Stock or any other securities of the Company which may at any time be issuable on the exercise hereof, nor shall anything contained herein be construed to confer upon the holder of this Warrant, as such, the rights of a stockholder of the Company or the right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or give or withhold consent to any corporate action or to receive notice of meetings or other actions affecting stockholders (except as provided herein), or to receive dividends or subscription rights or otherwise, until the Date of Exercise shall have occurred. No provision of this Warrant, in the absence of affirmative action by the Registered Holder hereof to purchase shares of Common Stock, and no mere enumeration herein of the rights and privileges of the Registered Holder, shall give rise to any liability of such holder for the Exercise Price or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

Section 9.                     Transfer Restrictions; Registration of the Warrant and Warrant Shares.

 

(a)           Neither the Warrant nor the Warrant Shares have been registered under the 1933 Act. The Registered Holder, by acceptance hereof, represents that it is acquiring this Warrant to be issued to it for its own account and not with a view to the distribution thereof, and agrees not to sell, transfer, pledge or hypothecate this Warrant, any purchase rights evidenced hereby or any Warrant Shares unless a registration statement is effective for this Warrant or the Warrant Shares under the 1933 Act, or in the opinion of such Registered Holder's counsel reasonably satisfactory to the Company, a copy of which opinion shall be delivered to the Company, such registration is not required as some other exemption from the registration requirement of the 1933 Act and applicable laws is available.

 

(b)           Subject to the provisions of the following paragraph of this Section 9, each Certificate for Warrant Shares shall be stamped or otherwise imprinted with a legend in substantially the following form:

 

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE 1933 ACT, AN OPINION OF COUNSEL, SATISFACTORY TO THE ISSUER HEREOF, TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER THE 1933 ACT AS SOME OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND APPLICABLE LAWS IS AVAILABLE.

  

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(c)           The restrictions and requirements set forth in the foregoing paragraph shall apply with respect to Warrant Shares unless and until such Warrant Shares are sold or otherwise transferred pursuant to an effective registration statement under the 1933 Act or are otherwise no longer subject to the restrictions of the 1933 Act, at which time the Company agrees to promptly cause such restrictive legends to be removed and stop transfer restrictions applicable to such Warrant Shares to be rescinded.

 

Section 10. Registration Rights. If at any time when there is not an effective registration statement covering the resale of the Warrant Shares, the Company shall determine to prepare and file with the SEC a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans, the Company shall send to each holder of the Warrants written notice of such determination and, if within seven (7) days after receipt of such notice, or within such shorter period of time as may be specified by the Company in such written notice as may be necessary for the Company to comply with its obligations with respect to the timing of the filing of such registration statement, any such holder will so request in writing (which request will specify which Warrant Shares are intended to be disposed of by the holder), the Company will cause the registration under the Securities Act of such Warrant Shares which the Company has been so requested to register by the holder, to the extent requisite to permit the disposition of such shares to be registered, provided that if at any time after giving written notice of its intention to register any securities and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to register or to delay registration of such securities, the Company may, at its election, and, thereupon, (i) in the case of a determination not to register, shall be relieved of its obligation to register any securities in connection with such registration, and (ii) in the case of a determination to delay registering, shall be permitted to delay registering any securities being registered. The Company shall include in such registration statement all such Warrant Shares that holder requests to be registered; provided, however, that the Company will not be required to register any securities that are eligible for sale pursuant to Rule 144 of the Securities Act.

 

Section 11. Notices. All notices and other communications relating to this Warrant shall be in writing and shall be deemed to have been duly given if delivered personally or sent by United States certified or registered first-class mail, postage prepaid, return receipt requested, or overnight air courier guaranteeing next day delivery to the parties hereto at the following addresses or at such other address as any party hereto shall hereafter specify by notice to the other party hereto:

 

(a)           If to the Registered Holder of this Warrant or the holder of the Warrant Shares, addressed to the address of such Registered Holder or holder as set forth on books of the Company or otherwise furnished by the Registered Holder or holder to the Company.

 

 

 

  

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(b)           If to the Company, addressed to:

 

Torchlight Energy Resources, Inc. 

5700 W. Plano Parkway, Suite 3600 

Plano, Texas 75093

Attn: John Brda, President

 

A notice or communication will be effective (i) if delivered in person or by overnight courier, on the business day it is received, and (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.

 

Section 12.                  Binding Effect. This Warrant shall be binding upon and inure to the sole and exclusive benefit of the Company, its successors and assigns, and the holder or holders from time to time of this Warrant and the Warrant Shares.

 

Section 13.                  Survival of Rights and Duties. This Warrant shall terminate and be of no further force and effect on the earlier of (i) 5:00 p.m., Central Standard Time, on the Expiration Date and (ii) the date on which this Warrant and all purchase rights evidenced hereby have been exercised, except that the provisions of Sections 6(c) and 9 hereof shall continue in full force and effect after such termination date.

 

Section 14.                  Governing Law. This Warrant shall be governed and controlled as to the validity, enforcement, interpretations, construction and effect and in all other aspects by the substantive laws of the State of Texas. In any action between or among any of the parties, whether arising out of this Warrant or otherwise, each of the parties irrevocably consents to the exclusive jurisdiction and venue of the federal and state courts located in Dallas County, Texas.

 

Section 15.                  Section Headings. The Section headings in this Warrant are for purposes of convenience only and shall not constitute a part hereof.

 

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

 

 

 

 

 

 

 

  

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

 

 

	 	

TORCHLIGHT ENERGY RESOURCES, INC.

	 	 
	 	 	 	 	 
	
 

	
By: 

	/s/  John Brda	 	 
	 	 	John Brda, President	 	 
	 	 	 	 	 
	 	Date:	 	 	 

 

 

  

  

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FORM OF ELECTION TO PURCHASE

 

(To Be Executed Upon Exercise of this Warrant) 

 

 

To Torchlight Energy Resources, Inc.:

 

The undersigned, the record holder of this Warrant (Warrant No. ___________), hereby irrevocably elects to exercise the right, represented by this Warrant, to purchase ___________ of the Warrant Shares and herewith and hereby tenders payment for such Warrant Shares to the order of Torchlight Energy Resources, Inc. of $_______________, representing the full purchase price for such shares at the price per share provided for in such Warrant and the delivery of any applicable taxes payable by the undersigned pursuant to such Warrant.

 

The undersigned requests that certificates for such shares be issued in the name of:

 

	 	 	 	 
	
 

 

 

	 	 	 
	 	 	 	 
	 	 	 	 
	(Please print name and address) 	 	Social Security or Tax Identification No.	 

 

In the event that not all of the purchase rights represented by the Warrant are exercised, a new Warrant, substantially identical to the attached Warrant, representing the rights formerly represented by the attached Warrant which have not been exercised, shall be issued in the name of and delivered to:

 

	 	 	 	 	 	 
	
  

	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	(Please print name and address) 	 	Social Security or Tax Identification No.	 
	 	 	 	 	 	 
	Dated:	 	 	Name of Holder (Print):	 
	 	 	 	 	 	 
	 	 	 	By:	 	 
	 	 	 	(Name):	 	 
	 	 	 	(Title): 	 	 

 

 

 

 

 

 

Form of Election to Purchase

 

 

  

  

  

 

FORM OF ASSIGNMENT

 

FOR VALUE RECEIVED, _____________________ hereby sells, assigns and transfers to each assignee set forth below all of the rights of the undersigned under the attached Warrant (Warrant No.) with respect to the number of shares of Common Stock covered thereby set forth opposite the name of such assignee unto:

 

 

	

Name of Assignee

	Address 	

Number of Shares of

Common Stock

 

 

 

 

If the total of said purchase rights represented by the Warrant shall not be assigned, the undersigned requests that a new Warrant Certificate evidencing the purchase rights not so assigned be issued in the name of and delivered to the undersigned.

 

 

	Dated:	 	 	Name of Holder (Print):	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	(Signature of Holder)	 	 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Form of AssignmentExhibit 4.1

AMENDING AGREEMENT TO 

TRUST DEED

THIS AMENDING AGREEMENT TO TRUST
DEED (this “Agreement”) is made as of the 15th day of August, 2014.

BETWEEN:

		a)	THE BANK OF NOVA SCOTIA, a bank named in Schedule I to the Bank Act, whose executive office
is at Scotia Plaza, 44 King Street West, Toronto, Ontario, M5H 1H1, in its capacity as the Issuer;

		b)	SCOTIABANK COVERED BOND GUARANTOR LIMITED PARTNERSHIP, a limited partnership formed under
the laws of the Province of Ontario, whose registered office is at 100 King Street West, Suite 6100, 1 First Canadian Place, Toronto,
Ontario, M5X 1B8, by its managing general partner, Scotiabank
Covered Bond GP Inc. (in its capacity as the Guarantor); and

		c)	COMPUTERSHARE TRUST COMPANY OF CANADA, a trust company incorporated under the laws
of Canada, whose registered office is at 100 University Avenue, 11th Floor, North Tower, Toronto, Ontario M5J 2Y1, in
its capacity as Bond Trustee.

WHEREAS the parties hereto entered
into an amended and restated trust deed made as of January 22, 2014 (the “Trust Deed”);

AND WHEREAS the parties hereto
have agreed to amend the Trust Deed pursuant to the terms of this Agreement;

NOW THEREFORE IT IS HEREBY AGREED
that in consideration of the mutual covenants and agreements herein set forth, the parties agree as follows:

Article 1
– Amendments

		1.01	Amendments

(1) Any
and all references to the defined terms “Bearer Covered Bond(s)”, “Bearer Definitive Covered
Bond(s)”, “Bearer Global Covered Bond(s)”, “Coupon(s)”, “Couponholder(s)”,
“Talon(s)” as well as any and all references to the Covered Bonds being “in bearer form” contained in
Part I of Schedule 1 of the Trust Deed are not applicable to U.S. Registered Covered Bonds.

(2) The
text of each of Conditions 4.2, 4.3, 4.4, 4.5, 5.2, 5.3, 5.8, 5.9 and 12 contained in Part I of Schedule 1 of the Trust Deed
is hereby deleted in its entirety and replaced with “[Reserved]”.

(3) The
text of Condition 4.1 contained in Part I of Schedule 1 of the Trust Deed is hereby deleted in its entirety and replaced with
the following:

“Each Fixed Rate Covered Bond
bears interest on its Principal Amount Outstanding from (and including) the Interest Commencement Date at the rate(s) per annum
equal

    	 

    	- 2 -

    

to the Rate(s) of Interest. Interest
will be payable, subject as provided in these Terms and Conditions, in arrears on the Interest Payment Date(s) in each year up
to (and including) the Final Maturity Date.

 

If the Covered Bonds are in definitive
form, except as provided in the applicable Final Terms Document, the amount of interest payable on each Interest Payment Date in
respect of the Interest Period ending on (but excluding) such date will amount to the Fixed Coupon Amount. Payments of interest
on any Interest Payment Date will, if so specified in the applicable Final Terms Document, amount to the Broken Amount so specified.

 

Except in the case of Covered Bonds
in definitive form where a Fixed Coupon Amount or Broken Amount is specified in the applicable Final Terms Document, interest will
be calculated in respect of any period by applying the Rate of Interest to (i) in the case of Fixed Rate Covered Bonds which are
represented by a Global Covered Bond, the aggregate outstanding nominal amount of the Fixed Rate Covered Bonds represented by such
Global Covered Bond, or (ii) in the case of Fixed Rate Covered Bonds in definitive form, the Calculation Amount; and in each case,
multiplying such sum by the applicable Day Count Fraction, and rounding the resultant figure to the nearest sub-unit of the relevant
Specified Currency, half of any such sub-unit being rounded upwards or otherwise in accordance with applicable market convention.
Where the Specified Denomination of a Fixed Rate Covered Bond in definitive form comprises more than one Calculation Amount, the
amount of interest payable in respect of such Fixed Rate Covered Bond will be the aggregate of the amounts (determined in the manner
provided above) for each Calculation Amount comprising the Specified Denomination without any further rounding.

 

The applicable Final Terms Document
may provide that if the payment of the Final Redemption Amount of a Series of Fixed Rate Covered Bonds on its Final Maturity Date
is deferred until the applicable Extended Due for Payment Date in accordance with the Terms and Conditions, interest will accrue
and be payable on the unpaid portion of the Final Redemption Amount up to the Extended Due for Payment Date at the Rate of Interest
specified in the applicable Final Terms Document which may provide that such Series of Fixed Rate Covered Bonds will continue to
bear interest at a Fixed Rate or at a Floating Rate despite the fact that interest accrued and was payable on such Covered Bonds
prior to the Final Maturity Date at a Fixed Rate.

 

“30/360”, “360/360”
or “Bond Basis” means as defined in Day Count Fraction.

 

“Actual/360” means
as defined in Day Count Fraction.

 

“Day Count Fraction”
means, in respect of the calculation of an amount of interest for any Interest Period:

 

		(i)	if “Actual/360” is specified in the applicable Final Terms Document, the actual number of days in the Interest
Period divided by 360;

    	 

    	- 3 -

    

		(ii)	if “30/360”, “360/360” or “Bond Basis” is specified in the applicable Final Terms Document,
the number of days in the Interest Period divided by 360, calculated on a formula basis as follows:

	 	 	[360 x (Y2 –Y1)]
    + [30 x (M2 – M1)] +
	Day Count Fraction	=	D2
    – D1
	 	 	360

where:

“Y1” is the
year, expressed as a number, in which the first day of the Interest Period falls;

 

“Y2” is the
year, expressed as a number, in which the day immediately following the last day included in the Interest Period falls;

 

“M1” is the
calendar month, expressed as a number, in which the first day of the Interest Period falls;

 

“M2” is the
calendar month, expressed as a number, in which the day immediately following the last day included in the Interest Period falls;

 

“D1” is the
first calendar day, expressed as a number, of the Interest Period, unless such number would be 31, in which case D1
will be 30; and

 

“D2” is the
calendar day, expressed as a number, immediately following the last day included in the Interest Period, unless such number would
be 31 and D1 is greater than 29, in which case D2 will be 30; or

 

		(iii)	such other Day Count Fraction as may be specified in the applicable Final Terms Document.

“Interest Payment Date”
means, in respect of Fixed Rate Covered Bonds, as provided in the second paragraph of Condition 4.7 and, in respect of Floating
Rate Covered Bonds, as provided under the heading “U.S. Registered Covered Bonds that are Floating Rate Covered Bonds –
Interest Payment Dates” in Condition 4.7.

 

“Principal Amount Outstanding”
means, in respect of a Covered Bond, on any day, the principal amount of that Covered Bond on the relevant Issue Date thereof less
principal amounts received by the relevant Covered Bondholder in respect thereof on or prior to that day.

 

“sub-unit” means,
with respect to any currency other than euro, the lowest amount of such currency that is available as legal tender in the country
of such currency and, with respect to euro, €0.01.”

 

    	 

    	- 4 -

    

(4) 
The first line under the heading “U.S. Registered Covered Bonds that are Floating Rate Covered Bonds –
Special Rate Calculation Terms” in Condition 4.7 contained in Part I of Schedule 1 of the Trust Deed is hereby deleted
in entirety and replaced with the following:

“For the
purposes of this Condition 4.7:”.

(5) The
definition of “Interest Period” under the heading “U.S. Registered Covered Bonds that are Floating Rate
Covered Bonds – Special Rate Calculation Terms” in Condition 4.7 contained in Part I of Schedule 1 of the
Trust Deed is hereby deleted in its entirety and replaced with the following:

““Interest
Period” has the meaning given to such term in Condition 4.6.”

(6) The
text of paragraph 2 (including sub-paragraphs (a), (b) and (c)) in Condition 5.5 contained in Part I of Schedule 1 of the
Trust Deed is hereby deleted in its entirety.

(7) The
text of paragraph (a) in Condition 6.10 contained in Part I of Schedule 1 of the Trust Deed is hereby deleted in its entirely
and replaced with the following:

“(a) in
the case of a Covered Bond other than a Zero Coupon Covered Bond, at the rate determined in accordance with Condition 4.1; and”.

Article 2–
miscellaneous

		2.01	Further Assurances

Each of the parties
hereto will from time to time execute and deliver all such further documents and instruments and do all acts and things as any
of the other parties may reasonably require to effectively carry out or better evidence or perfect the full intent and meaning
of this Agreement.

		2.02	Other Amendments

Except as expressly
amended, modified and supplemented hereby, the provisions of the Trust Deed are and shall remain in full force and effect and shall
be read with this Agreement, mutatis mutandis. Where the terms of this Agreement are inconsistent with the terms of the
Trust Deed (prior to its amendment hereby), the terms of this Agreement shall govern to the extent of such inconsistency.

		2.03	Governing Law

This Agreement is
governed by and will be construed in accordance with the laws of Ontario and the federal laws of Canada applicable therein.

		2.04	Interpretation

Capitalized terms
used herein and not otherwise defined shall have the meanings ascribed thereto in the Trust Deed (prior to its amendment hereby).

    	 

    	 

    

IN WITNESS WHEREOF the parties
hereto have executed this Agreement on the day and year first before written.

	 	THE BANK OF NOVA SCOTIA, in its capacity as
    Issuer
	 	 
	 	By:	/s/ Ian Berry
	 	 	Name:
                                         Ian Berry

                                         Title: Managing Director & Head, Funding

         

         

	 	SCOTIABANK COVERED BOND GUARANTOR LIMITED PARTNERSHIP
    by its managing general partner SCOTIABANK COVERED BOND GP INC.
	 	 
	 	By:	/s/ Christy Bunker
	 	 	Name:  Christy Bunker

    Title: Vice-President

 

	 	COMPUTERSHARE TRUST COMPANY OF CANADA, in
    its capacity as Bond Trustee
	 	 
	 	By:	/s/ Sean Pigott
	 	 	Name: Sean Pigott

    Title: Corporate Trust Officer
	 	 
	 	By:	/s/ Ann Samuel
	 	 	Name: Ann Samuel

    Title: Associate Trust Officer

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