Document:

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.

 

 

8% Unsecured
Convertible Promissory Note - Page 1 of 12

 

 

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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Convertible Promissory Note - Page 3 of 12

 

 

(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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Convertible Promissory Note - Page 4 of 12

 

 

“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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Convertible Promissory Note - Page 5 of 12

 

 

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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Convertible Promissory Note - Page 6 of 12

 

 

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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Convertible Promissory Note - Page 7 of 12

 

 

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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Convertible Promissory Note - Page 8 of 12

 

 

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 12Blueprint

 

EXHIBIT
4.2

 

 

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.

 

WARRANT
TO PURCHASE

COMMON
STOCK OF

TORCHLIGHT
ENERGY RESOURCES, INC.

 

 

	

Date of Issuance: July ___,
2019                                                                                                 

	

Warrant No. E-______

This
certifies that, for value received, TORCHLIGHT ENERGY RESOURCES,
INC., a Nevada corporation (the “Company”), grants
__________, an _________ or ____ registered assigns (the
“Registered Holder”), 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 July
____, 2019 (the “Exercise Date”) and to and including
5:00 p.m., Central Standard Time, on July ____, 2022 (the
“Expiration Date”), _________________________ 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 will be $1.35 per
share.

 

This
Warrant is issued in connection with the issuance to the Registered
Holder of an 8% Unsecured Convertible Promissory Note and in
connection with that certain Subscription Agreement between the
Company and the Registered Holder dated as of July ____, 2019 (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.

 

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.

 

 

Warrant
- Page 1

 

 

(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”).

 

(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.

 

 

Warrant
- Page 2

 

 

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.

 

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 to change 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.

 

 

Warrant
- Page 3

 

 

(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).

 

(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.

 

 

Warrant
- Page 4

 

 

(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.

 

 

Warrant
- Page 5

 

 

(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.

 

 

Warrant
- Page 6

 

 

(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.            
Company’s Option to Require
Exercise. On or after the Exercise Date and until the
Expiration Date, if (i) there is an effective Registration
Statement filed with the Securities and Exchange Commission
registering the Warrant Shares to be issued upon exercise of the
Warrant and (ii) the closing price of the Common Stock on the
Trading Market (as hereinafter defined) is $2.00 (subject to adjustment consistent
with the adjustments set forth in Section 7(a) above) for more for
20 consecutive Trading Days (as hereinafter defined) while the
Registration Statement referred to in clause (i) above is
effective, then the Company may require the Registered Holder to
subscribe for and purchase from the Company up to 100%, in whole or
in part, of the outstanding Warrant Shares, at the option of the
Company. Any Warrant Shares subject to such required exercise upon
notice from the Company (the “Required Exercise
Shares”), must be subscribed for and purchased from the
Company within 10 Trading Days from such notice to the Registered
Holder.

 

The
Company will have 10 Trading Days after the 20th consecutive Trading
Day when the closing price of the Common Stock is $2.00 (subject to adjustment consistent
with the adjustments set forth in Section 7(a) above) to deliver to
the Registered Holder a written Notice of Required Exercise (the
“Notice of Required Exercise”) specifying the date by
which the Required Exercise Shares must be purchased (the
“Required Exercise Payment Date”), which date will be
10 Trading Days after the date of the Notice of Required Exercise
(the “Required Exercise Period”). The Registration
Statement registering the Required Exercise Shares must remain
effective throughout the Required Exercise Period. On or before the
Required Exercise Payment Date, the Required Exercise Shares must
be purchased from the Company at the Exercise Price. In the event
the Registered Holder fails to purchase the Required Exercise
Shares by the Required Exercise Payment Date as set forth herein,
then the Registered Holder’s right to purchase all such
Warrant Shares specified as Required Exercise Shares in the Notice
of Required Exercise shall be automatically terminated, and as
such, the Registered Holder will no longer have the right to
purchase any such Warrant Shares pursuant to this
Warrant.

 

“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.

 

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.

 

 

Warrant
- Page 7

 

 

(b)           
If to the Company, addressed to:

 

Torchlight Energy
Resources, Inc.

5700 W.
Plano Parkway, Suite 3600

Plano,
Texas 75093

Attn:
John Brda, CEO

 

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 Collin 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.

 

[Signature
page follows.]

 

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.

	

 

	

 

	

 

	

 

	

 

	
Date

	
By:  

	

	

 

	

 

	

 

	
       
John
Brda, CEO

	

 

	

 

	

 

	
       
 

	

 

	

 

	

Date:

	
       
 

	

 

 

                 

Warrant
- Page 8

 

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:

 

	
 

	
 

	

Number of Shares of

	

Name of Assignee

	

Address

	

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 Assignment

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