Item
1.01 Entry into a Material Definitive Agreement
Convertible
Note issued to Tangiers Global, LLC
The
Company has issued on October 17, 2017, a 12% Fixed Convertible Promissory Note (the “Note”) in the principal amount
of $306,804 due July 13, 2018 to Tangiers Global, LLC (sometimes referred to as the “Holder”). The proceeds from the
Note are being used exclusively to pay off two outstanding convertible notes. Tangiers Global, the Holder of the convertible
note, has been a financial partner with the Company for some time and, through the convertible note, is continuing to support
the Company. The Company plans to continue to raise outside equity capital investments through private placements of our common
stock to finance its Baja California project.
The
amount of $17,366.50 was retained by the Holder through an original issue discount (the “
OID
”) for due diligence
and legal bills related to this transaction, and the Company received net proceeds of $289,437.50. In the Event of Default under
this Note, additional interest will accrue from the date of the Event of Default at the rate equal to the lower of 22% per annum
or the highest rate permitted by law. The Company has agreed that that within one month of the Effective Date of the Note, it
shall utilize approximately $289,437.50 of the proceeds of the Note to pay off in full existing debt comprised of an outstanding
note to Tangiers Global, LLC ($140,437.50) and an outstanding note of the Company to EMA Financial, LLC ($149,000.00).
The
Note is convertible at any time after 180 days from date of the funding of the Note (the “Effective Date”) at a conversion
price equal to 55% of the lowest trading price of the Company’s common stock during the 15 consecutive Trading Days prior
to the date on which Holder elects to convert all or part of the Note.
This
Note may be prepaid by the Company, in whole or in part, according to the following schedule:
Days
Since Effective Date
|
|
Prepayment
Amount
|
Under
90
|
|
115%
of Principal Amount
|
90-150
|
|
120%
of Principal Amount
|
151-180
|
|
125%
of Principal Amount
|
After
180 days from the Effective Date the Note may not be prepaid without written consent from Holder, which consent may be withheld,
delayed or denied in Holder’s sole and absolute discretion. If the Note is in default, the Company may not prepay the Note
without written consent of the Holder.
Under
the Note, events of default include a default in payment of any amount due under the Note; a default in the timely issuance of
underlying shares upon and in accordance with the terms of the Note; failure by the Company for 10 days after notice from the
Holder has been received by the Company to comply with any material provision of the Note; failure of the Company to remain compliant
with DTC, thus incurring a “chilled” status with DTC; (vi) any default of any mortgage, indenture or instrument in
the amount of $100,000 or in excess thereof, which may be issued, or by which there may be secured or evidenced any indebtedness,
for money borrowed by the Company or for money borrowed the repayment of which is guaranteed by the Company, whether such indebtedness
or guarantee now exists or shall be created hereafter; if the Company is subject to any Bankruptcy Event; any failure of the Company
to satisfy its “filing” obligations relating the filing of annual and quarterly reports under the Securities Exchange
Act of 1934, as amended; failure to maintain a required reserve for conversions of the Note with the Company’s transfer
agent; failure of the Company to remain in good standing with its state of domicile, which is not corrected within 30 days; failure
of Company’s Common Stock to maintain a closing bid price in its Principal Market for more than 3 consecutive Trading Days;
delisting from a Principal Market for any reason; any trading suspension imposed by the SEC; or failure by the Company to meet
all requirements necessary to satisfy the availability of Rule 144 to the Holder or its assigns, including but not limited to
the timely fulfillment of its filing requirements as a fully-reporting issuer registered with the SEC, requirements for XBRL filings,
and requirements for disclosure of financial statements on its website.
If
an Event of Default occurs, the outstanding Principal Amount of the Note owing in respect thereof through the date of acceleration,
shall become, at the Holder’s election, immediately due and payable in cash at the Mandatory Default Amount of 130% of the
outstanding Principal Amount of this Note, which will be automatically added to the Principal Sum of the Note and tack back to
the Effective Date for purposes of Rule 144. Commencing 5 days after the occurrence of any Event of Default that results in the
eventual acceleration of this Note, the Note will accrue additional interest, in addition to the Note’s “guaranteed”
interest, at a rate equal to the lesser of 22% per annum or the maximum rate permitted under applicable law, and commencing 5
days after the occurrence of any Event of Default that results in the eventual acceleration of this Note, an additional permanent
10% increase to the Conversion Price discount will go into effect.
The
Company has agreed to provisions of the Note granting the Holder “piggyback” registration rights and rights of refusal
with respect to certain types of financings, as well as a “most favored nation” type of provision with regard to future
convertible debt financings by the Company.
The
foregoing description of the Convertible Note does not purport to be complete and is qualified in its entirety by reference to
the FORM OF Convertible Note, which is filed as Exhibit 10.58 to this Current Report on Form 8-K and IS incorporated herein by
reference. DEFINED TERMS USED IN THE DESCRIPTIONS IN THIS CURRENT REPORT SHALL HAVE THE MEANINGS PROVIDED IN THE convertible note,
UNLESS SPECIFICALLY DEFINED ABOVE IN THIS REPORT.