Document:

Exhibit 10.27 3rd Amended HEP Invest Note

THIRD AMENDED AND RESTATED

SENIOR SECURED CONVERTIBLE PROMISSORY NOTE

$4,050,000

Keego Harbor, Michigan

March 17, 2014

FOR VALUE RECEIVED, HEALTH ENHANCEMENT PRODUCTS, INC., a Nevada corporation (“Borrower”), whose address is 2804 Orchard Lake Road, Suite 202, Keego Harbor, Michigan 48320, promises to pay to the order of HEP INVESTMENTS LLC, a Michigan limited liability company (“Lender”), whose address is 2804 Orchard Lake Road, Suite 205, Keego Harbor, Michigan 48320, or at such other place as Lender may designate in writing, in lawful money of the United States of America, the principal sum of up to Four Million Fifty Thousand Dollars ($4,050,000.00), or such lesser sum as shall have been advanced by Lender to Borrower under the loan agreement hereinafter described, together with interest as provided herein, in accordance with the terms of this Second Amended and Restated Senior Secured Convertible Promissory Note (this “Note”).  

In accordance with the terms of that certain Loan Agreement, dated December 1, 2011, by and between Lender and Borrower, as amended in the First Amendment to Loan Agreement dated April 15, 2013 and as s amended in the Second Amendment to Loan Agreement dated December 13, 2013 (as amended, the “Loan Agreement”), Lender has loaned Borrower Four Million Fifty Thousand Dollars ($4,050,000.00).  All advances made hereunder shall be charged to a loan account in Borrower's name on Lender's books, and Lender shall debit to such account the amount of each advance made to, and credit to such account the amount of each repayment made by Borrower.  From time to time but not less than quarterly, Lender shall furnish Borrower a statement of Borrower's loan account, which statement shall be deemed to be correct, accepted by, and binding upon Borrower, unless Lender receives a written statement of exceptions from Borrower within ten (10) days after such statement has been furnished. Terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Loan Agreement.   

1.

Payment.  The unpaid principal balance of this Note shall bear interest computed upon the basis of a year of 360 days for the actual number of days elapsed in a month at a rate of eleven percent (11%) per annum (the “Effective Rate”). Upon the occurrence and during the continuance of an Event of Default (as defined below), the unpaid principal balance of this Note shall bear interest, computed upon the basis of a year of 360 days for the actual number of days elapsed in a month, at a rate equal to the lesser of five percent (5%) over the Effective Rate or the highest rate allowed by applicable law.  The indebtedness represented by this Note shall be paid to Lender in an installment of interest only on the first anniversary of the date of this Note, and, if not sooner converted in accordance with the terms of this Note, the entire unpaid principal balance of this Note, together with all accrued and unpaid interest, shall be immediately due and payable in full (a) with respect to each tranche (a “Tranche”) listed in Exhibit 1 on the Due Date specified in Exhibit 1 and (b) with respect to any additional Tranche within 24 months of the full funding of such Tranche (with respect to each Tranche, a  “Due Date”).  

2.

Pre-payment Premium.  Borrower may prepay the principal balance of this Note, in whole or in part, plus all accrued interest then outstanding upon sixty (60) days prior written notice to Lender; provided, however, there shall be a pre-payment premium of five (5%) percent of each amount prepaid at any time during the term of this Note.

3.

Use of Proceeds.  The funds advanced pursuant to this Note shall be used by Borrower for working capital purposes in accordance with the operating budget of Borrower attached to the Loan Agreement as Exhibit B. 

4.

Conversion Right and Funding Provisions.  

(a)

At Lender’s option, at any time prior to the repayment in full of this Note, each Tranche of the outstanding indebtedness of this Note, with the exception of Tranche 1 as discussed below, (including all accrued and unpaid interest) may be converted into shares of common stock of Borrower (“Shares”) at the lesser of the conversion rate as listed in Exhibit 1 or a 25% discount to the then current ten day average trading price of Shares on the Over the Counter Securities Market (the “Conversion Price”); provided, however, that any Tranche funded after the date hereof shall be convertible at a Conversion Price of $0.30 per share.

(i)

Tranche 1 for $500,000 is extended until June 1, 2014.  Tranche 1 may be converted into shares of common stock of Borrower (“Shares”) at the lesser of the conversion rate as listed in Exhibit 1 or a 25% discount to the then current ten day average trading price of Shares on the Over the Counter Securities Market (the “Conversion Price”).

(b)

Upon conversion of this Note as provided herein, (i) the portion of this Note so converted shall be deemed cancelled and shall be converted into the Shares as specified above; (ii) Lender, by acceptance of this Note, agrees to deliver the executed original of this Note to Borrower within ten (10) days of the conversion of the entire outstanding indebtedness of this Note and to execute all governing documents of Borrower and such other agreements as are necessary to document the issuance of the Shares and to comply with applicable securities laws; and (iii) as soon as practicable after Borrower’s receipt of the documents referenced above, Borrower shall issue and deliver to Lender stock certificates evidencing the Shares.  

5.

Default.  Each of the following constitutes an “Event of Default” under this Note:

(a)

Borrower’s failure to pay the outstanding indebtedness of this Note within ten (10) days of the date on which such payment is due hereunder, whether at maturity or otherwise;

(b)

Borrower’s breach of or failure to perform or observe any covenant, condition or agreement contained in this Note, the Loan Agreement or the Security Agreement (defined below), which breach or failure continues unremedied for a period of thirty (30) calendar days after receipt by Borrower of written notice specifying the nature of the default. Notwithstanding the foregoing, Borrower shall not be in default under this subsection (b) with respect to any non-monetary breach that can be cured by the performance of affirmative acts if Borrower promptly commences the performance of said affirmative acts and diligently prosecutes the same to completion within a period of forty-five (45) calendar days after receipt by Borrower of written notice specifying the nature of the default; 

(c)

Borrower files a voluntary petition in bankruptcy; 

(d)

Borrower makes a general assignment for the benefit of its creditors or Borrower’s creditors file against Borrower any involuntary petition under any bankruptcy or insolvency law that is not dismissed within ninety (90) days after it is filed; or

(e)

Any court appoints a receiver to take possession of substantially all of Borrower’s assets and such receivership is not terminated within ninety (90) days after its appointment.

Upon the occurrence and during the continuance of an Event of Default, at the election of Lender, the entire unpaid principal balance of this Note, together with all accrued and unpaid interest, shall be immediately due and payable in full.

6.

Security.  This Note is secured by all of the assets of Borrower pursuant to that certain Security Agreement, dated as of December 1, 2011 (the “Security Agreement”).

7.

Waivers.  Borrower and all endorsees, sureties and guarantors hereof hereby jointly and severally waive presentment for payment, demand, notice of non-payment, notice of protest or protest of this Note, and Lender diligence in collection or bringing suit, and do hereby consent to any and all extensions of time, renewals, waivers or modifications as may be granted by Lender with respect to payment or any other provisions of this Note.  The liability of Borrower under this Note shall be absolute and unconditional, without regard to the liability of any other party.  

8.

Usury. Notwithstanding anything herein to the contrary, in no event shall Borrower be required to pay a rate of interest in excess of the Maximum Rate.  The term “Maximum Rate” shall mean the maximum non-usurious rate of interest that Lender is allowed to contract for, charge, take, reserve or receive under the applicable laws of any applicable state or of the United States of America (whichever from time to time permits the highest rate for the use, forbearance or detention of money) after taking into account, to the extent required by applicable law, any and all relevant payments or charges hereunder, or under any other document or instrument executed and delivered in connection therewith and the indebtedness evidenced hereby.  

In the event Lender ever receives, as interest, any amount in excess of the Maximum Rate, such amount as would be excessive interest shall be deemed a partial prepayment of principal, and, if the principal hereof is paid in full, any remaining excess shall be returned to Borrower.  In determining whether or not the interest paid or payable, under any specified contingency, exceeds the Maximum Rate, Borrower and Lender shall, to the maximum extent permitted by law, (a) characterize any non-principal payment as an expense, fee, or premium rather than as interest; (b) exclude voluntary prepayments and the effects thereof; and (c) amortize, prorate, allocate and spread the total amount of interest through the entire contemplated term of such indebtedness until payment in full of the principal (including the period of any extension or renewal thereof) so that the interest on account of such indebtedness shall not exceed the Maximum Rate.

9.

Miscellaneous.

(a)

All modifications, consents, amendments or waivers of any provision of any this Note shall be effective only if in writing and signed by Lender and then shall be effective only in the specific instance and for the limited purpose for which given. 

 

(b)

All communications provided in this Note shall be personally delivered or mailed, postage prepaid, by registered or certified mail, return receipt requested, to the addresses set forth at the beginning of this Note or such other addresses as Borrower or Lender may indicate by written notice.

(c)

The headings used in this Note are for convenience of reference only and shall not in any way affect the meaning or interpretation of this Note.

(d)

This Note shall be binding upon and inure to the benefit of Borrower and Lender and their respective successors and assigns; provided, however, that neither party may, without the prior written consent of the other party, assign any rights, powers, duties or obligations under this Note.  

(e)

This Note shall be construed and enforced in accordance with the laws of the State of Michigan. All actions arising out of or relating to this Note shall be heard and determined exclusively by any state or federal court with jurisdiction in the Eastern District of the State of Michigan. Consistent with the preceding sentence, the parties hereto hereby irrevocably waive, and agree not to assert by way of motion, defense, or otherwise, in any such action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the action is brought in an inconvenient forum, that the venue of the action is improper, or that this Note or the transactions contemplated by this Note may not be enforced in or by any of the above-named courts.

(f)

This Note is intended to amend and restate, and is not intended to be in substitution for or a novation of, that certain Senior Secured Convertible Promissory Note, dated December 1, 2011, executed and delivered by Borrower in favor of Lender in the original principal amount of $2,000,000.00, as previously amended and restated (the “Original Note”).   This Note shall continue to be secured by the security instruments and UCC statements executed and filed with the Original Note, and otherwise as set forth in the loan documentation executed in connection with the Original Note.

[Signature on the following page]

IN WITNESS WHEREOF, the undersigned has duly executed this Second Amended and Restated Senior Secured Convertible Promissory Note as of the day and year first written above.

BORROWER:

HEALTH ENHANCEMENT PRODUCTS, INC.

By:   /s/ Philip M. Rice                                                               

Print Name:  Philip M. Rice                                                       

Its:   Chief Financial Officer                                                      

EXHIBIT 1

							
	 
	 
	 
	 
	 Conversion Rate 

	 Interest Rate 

	 Warrant Coverage ("cashless") 

	 
	 
	 
	 

	 Date Invested 

	 Tranche # 

	 Amount 

	 Due Date 

	December 1, 2011

	1

	 $     500,000 

	June 1, 2014

	 $         0.12 

	11%

	10%

	April 4, 2012

	2

	        250,000 

	April 4, 2014

	            0.12 

	11%

	10%

	May 8, 2012

	3

	        250,000 

	May 18, 2014

	            0.12 

	11%

	10%

	March 18, 2013

	4

	        500,000 

	March 18, 2015

	            0.12 

	11%

	10%

	April 10, 2013

	5

	        250,000 

	April 10, 2015

	            0.12 

	11%

	10%

	April 16, 2013

	6

	        250,000 

	April 16, 2013

	            0.12 

	11%

	10%

	April 29, 2013

	7

	        250,000 

	April 29, 2015

	            0.12 

	11%

	10%

	May 7, 2013

	8

	        250,000 

	May 7, 2015

	            0.12 

	11%

	10%

	July 15, 2013

	9A

	        160,000 

	July 15, 2013

	            0.12 

	11%

	10%

	July 15, 2013

	9B

	          90,000 

	July 15, 2013

	            0.22 

	11%

	10%

	July 25, 2013

	10

	        250,000 

	July 25, 2015

	            0.22 

	11%

	10%

	September 30, 2013

	11

	        300,000 

	September 30, 2015

	            0.22 

	11%

	10%

	October 28, 2013

	12

	        250,000 

	October 28, 2015

	            0.30 

	11%

	10%

	December 30, 2013

	13

	        500,000 

	December 30, 2015

	            0.30 

	11%

	10%

	Total

	 
	 $  4,050,000Exhibit 10.5 Amendment to Employment Agreement

AMENDMENT TO EMPLOYMENT AGREEMENT

THIS AMENDMENT TO EMPLOYMENT AGREEMENT (“Amendment Agreement”) is executed on March 24, 2014 with an effective date of January 1, 2014, by and among John A. Brda, an individual (“Employee”), and Torchlight Energy Resources, Inc., a Nevada corporation (the “Company”).  The Employee and the Company are sometimes hereinafter collectively referred to as the “Parties”.  

Recitals

A.

Employee and the Company entered into an Employment Agreement on October 10, 2013 with an effective date of July 1, 2013 (the “Contract”). 

B.

Reference is here made to the Contract as if such Contract were written herein verbatim.    

C.

The Parties now wish to amend the Contract to change certain terms of the Contract.

Agreements

NOW, THEREFORE, in consideration of the foregoing, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1.

All capitalized terms used herein shall have the meanings assigned to them in the Contract, unless expressly defined otherwise in this Amendment Agreement.

2.

Except as otherwise specifically provided herein, all terms and conditions of the Contract shall apply to the interpretation and enforcement of this Amendment Agreement as if explicitly set forth herein.

3.

Amendment to Subsection (a), “Base Fees” of Section 4, “Compensation”:

Subsection (a) of Section 4 of the Contract is amended and replaced in its entirety to read as follows:

“(a)

Base Fees.  The Company shall pay Employee Base Fees (the “Base Fees”) equal to $300,000 per year, effective January 1, 2014. Payment shall be made monthly, on the last day of each calendar month.

4.

This Amendment Agreement will be of no force and effect until receipt and execution of this Amendment Agreement by all the undersigned parties hereto.  This Amendment Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which shall be deemed one instrument, by signature delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, each of which shall be deemed an original for all purposes.

5.

Except as expressly amended hereby, the Contract remains in full force and effect.  Any references to the Contract shall refer to the Contract as amended hereby.

Amendment to Employment Agreement - Page 1

IN WITNESS WHEREOF, the undersigned have executed this Amendment Agreement on the date set forth above.

TORCHLIGHT ENERGY RESOURCES, INC.

/s/ Thomas Lapinski                                           

By:  Thomas Lapinski, Chief Executive Officer

/s/ John A. Brda                                                 

John A. Brda

Amendment to Employment Agreement - Page 2

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