Exhibit 10.1

 

THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
OF ANY STATE. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT WITH RESPECT HERETO OR THERETO UNDER SAID ACT
OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.

 

LI3 ENERGY, INC.
UNSECURED CONVERTIBLE PROMISSORY NOTE

 

Principal Amount: $_______  Issue Date: May 13, 2016

 

Li3 Energy, Inc., a Nevada corporation (the “Company”), for value received,
promises to pay to the order of ______________ or its permitted assigns (the
“Holder”), the principal sum of ____________ ($______) plus simple interest at
the rate of ten percent (10%) per annum, or such lesser rate of interest as may
be required by applicable laws regulating the legal rate of interest, on the
Maturity Date (defined below), to the extent the principal and interest have not
previously been converted into common stock of the Company pursuant to Section 5
hereof.

 

1.           Maturity. This Note shall mature and the entire outstanding
principal amount, together with all interest accrued under this Note, shall be
due and payable on the date that is one (1) year from the date hereof (the
“Maturity Date”) unless this Note, prior to such date, has been converted into
shares of common stock of the Company pursuant to Section 5 hereof.

 

2.           Payment of Principal and Interest. Interest on the Note shall
accrue, beginning from the date hereof, at an interest rate of 10% per annum
(the “Interest Rate”) and shall accrue until the Note is converted or the
Maturity Date. All payments are to be made at the address of Holder set forth
under Section 17(i) of this Note or at such other place as Holder designates to
the Company in writing. Interest under this Note shall be computed on the basis
of a 365-day year. Interest shall be paid in cash or restricted shares of the
Company’s common stock, par value $0.001 per share (the “Common Stock”),

 

3.           Prepayment. Subject to conversion of this Note pursuant to Section
5, this Note may be prepaid in whole or in part at any time by the Company prior
to the Maturity Date, without penalty. Any prepayment shall be first applied
against any accrued and unpaid interest and then to reduce the amount of
principal due under this Note. In the event of a prepayment, the Holder will
have the right to convert the unpaid principal and accrued interest owing under
this Note, in whole or in part, into fully-paid and non-assessable restricted
shares of common stock of the Company at the Conversion Price (defined below),
pursuant to Section 5.

  

4.           Waiver of Presentment. 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.

  

5.           Conversion of Note. This Note may be converted into shares of
common stock of the Company (the “Conversion Shares”) as set forth below.

 

a.Conversion by the Holder. At any time prior to the Maturity Date, the Holder
shall have the right to convert the unpaid principal and accrued interest owing
under this Note, in whole or in part, into fully-paid and non-assessable
restricted shares of common stock of the Company at the Conversion Price. The
number of such shares of common stock that Holder shall be entitled to receive,
and shall receive, upon such conversion shall be determined by dividing the
amount of unpaid principal and accrued interest under this Note so being
converted by the Conversion Price, with interest computed as of the Voluntary
Conversion Date (defined below). The Holder’s election to convert this Note, in
whole or in part, shall be irrevocable.

  

 

 

 

The Holder shall exercise its right of conversion by forwarding the original
Note, together with a Notice of Conversion, in the form attached hereto as
Exhibit A, signed by the Holder, to the Company to notify the Company that the
Holder is exercising its right to convert all or part of the unpaid principal
and accrued interest due under this Note into restricted shares of common stock
of the Company. The effective date of the conversion pursuant to this Section
5(a) shall be the date the Company receives the Notice of Conversion or the
original Note (or if the original Note has been lost or destroyed, an affidavit
of Holder certifying to such loss or destruction), whichever is later (such
later date, being referred to herein as the “Voluntary Conversion Date”). Within
five (5) business days of the Voluntary Conversion Date, the Company shall issue
and deliver, or cause to be issued and delivered to the Holder, a certificate or
certificates for the number of shares due to the Holder.

  

b.Wealth Minerals Ltd. Transaction; Automatic Conversion; Failure of Transaction
to Close; Change of Terms to Transaction. If the Company consummates a merger,
share exchange, asset sale or the like (collectively, referred to as the “Sale”)
with Wealth Minerals Ltd., the unpaid principal and accrued interest owing under
this Note, in whole or in part, shall automatically convert into fully-paid and
non-assessable restricted shares of common stock of the Company at the
Conversion Price at the closing of the Sale. If the Sale does not occur,
thereafter if the Company enters into any other debt transaction prior to this
Note being paid in full (through conversion or otherwise), the Holder shall have
the right to approve such debt transaction. Such approval such be in proportion
to the principal amount of the Note with other Note Holders that have executed
Notes with the Company as part of this series of financings (collectively, the
“Financing”) and shall only require approval from a majority of the principal
amount of the Financing. In addition, during the period that this Note is
outstanding, if the Company enters into any debt transaction whereby the
conversion price is lower than the Conversion Price set forth herein below, the
Conversion Price of this Note shall be reduced so that it equals such lower
conversion price.

  

The Sale is presently contemplated to provide that the Company’s shareholders
shall receive 50% of the combined companies after the Sale (hereinafter referred
to as the “Sales Proportion”). If the Sales Proportion changes whereby the
Company receives 40% or less of the Combined Companies, the Conversion Price
hereinafter defined in Section 5.c. shall be reduced to $0.0100. 

 

If the Sale does not occur and the Company enters into another potential
transaction (hereinafter referred to as the “New Transaction”) similar to the
Sale, the Company and Holder shall negotiate, in good faith, similar terms set
forth above taking into consideration the fact that the New Transaction may not
be on the same terms and conditions as the Sale. 

 

c.Conversion Price. Subject to adjustment as provided below, the “Conversion
Price” shall equal $0.0125 per share.

  

d.Partial Conversion. If the Holder elects to convert only a portion of the
unpaid principal and accrued interest owing under this Note, the Company shall
issue and deliver, or cause to be issued and delivered to the Holder, a new note
of like tenor for the remaining unpaid principal and accrued interest of this
Note. The Holder and the Company shall maintain records showing the principal
and interest so converted and the dates of such conversions.

  

e.Stock Certificates. Upon conversion into common stock, the Company shall issue
and deliver to Holder, or to Holder’s nominee or nominees, a certificate or
certificates representing the number of restricted shares of common stock to
which Holder shall be entitled as a result of conversion as provided herein. The
certificate shall bear the following legend:

  

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND
MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE ASSIGNED EXCEPT PURSUANT
TO A REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH IS EFFECTIVE
UNDER SUCH ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAWS UNLESS, IN THE
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND STATE SECURITIES LAWS IS AVAILABLE.”

 

 

  

f.Adjustment for Stock Splits and Combinations. If the Company, at any time
while this Note is outstanding: (A) pays a stock dividend or otherwise makes a
distribution or distributions in shares of its common stock or any other equity
or equity equivalent securities payable in shares of common stock, (B)
subdivides outstanding shares of common stock into a larger number of shares,
(C) combines (including by way of reverse stock split) outstanding shares of
common stock into a smaller number of shares, or (D) issues by reclassification
of shares of the common stock any shares of capital stock of the Company, then
the Conversion Price shall be multiplied by a fraction of which the numerator
shall be the number of shares of common stock (excluding treasury shares, if
any) outstanding before such event and of which the denominator shall be the
number of shares of common stock outstanding after such event. Any adjustment
made pursuant to this section shall become effective immediately after the
record date for the determination of stockholders entitled to receive such
dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or reclassification.

  

g.Effect of Conversion. Upon conversion of this Note in full in the manner
provided by this Section 5, this Note shall be deemed fully satisfied and
cancelled.

  

h.Disputes. In the event of a dispute as to the number of shares of common stock
issuable to the Holder in connection with a conversion of this Note, the Company
shall issue to the Holder the number of shares of common stock not in dispute
and resolve such dispute in accordance with Section 13.

 

6.             No Rights as Stockholder. This Note does not entitle Holder to
voting rights or any other right as a shareholder of the Company prior to the
conversion hereof.

 

7.             Event of Default. An “Event of Default” shall exist if any of the
following conditions or events shall occur and be continuing:

 

a.                   Notice, written or oral, to the Holder of the Note,
including by way of public announcement or through any of its agents, at any
time, of its intention not to comply with a request for conversion of the Note
into shares of common stock that is tendered in accordance with the provisions
of the Note;

 

b.                   The Company defaults in the performance of or compliance
with its obligations under this Note or the Subscription Agreement and such
default has not been cured for thirty (30) days after written notice of default
is given to the Company;

 

c.                    Any representation or warranty made by or on behalf of the
Company in this Note, or the Subscription Agreement proves to have been false or
incorrect in any material respect on the date as of which made, and such
condition has not been cured for sixty (60) Business Days after written notice
of default is given to the other party;

 

d.                   The Company (i) admits in writing its inability to pay, its
debts as they become due, (ii) files, or consents by answer or otherwise to the
filing against it of, a petition for relief or reorganization or arrangement or
any other petition in bankruptcy, for liquidation or to take advantage of any
bankruptcy, insolvency, reorganization, moratorium or other similar law of any
jurisdiction, (iii) makes an assignment for the benefit of its creditors, (iv)
consents to the appointment of a custodian, receiver, trustee or other officer
with similar powers with respect to it or with respect to any substantial part
of its property, (v) is adjudicated as insolvent or to be liquidated, or (vi)
takes corporate action for the purpose of any of the foregoing;

 

 

 

 

e.                    A court or governmental authority of competent
jurisdiction enters an order appointing, without consent by the Company, a
custodian, receiver, trustee or other officer with similar powers with respect
to it or with respect to any substantial part of its property, or constituting
an order for relief or approving a petition for relief or reorganization or any
other petition in bankruptcy or for liquidation or to take advantage of any
bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution,
winding-up or liquidation of the Company, or any such petition shall be filed
against such party and such petition shall not be dismissed within six (6)
months; or  

 

f.                    A final judgment or judgments for the payment of money in
excess of $500,000 are rendered against the Company, which judgments are not,
within six (6) months after entry thereof, bonded, discharged or stayed pending
appeal, or are not discharged within six (6) months after the expiration of such
stay.

 

8.             Remedies Following an Event of Default. Upon occurrence of an
Event of Default defined in subsection (a) to (f) of Section 7, this Note and
all accrued interest to the date of such default shall, at the option of the
Holder, and following any applicable cure period shall immediately become due
and payable without presentment, protest or notice of any kind, all of which are
waived by the Company.

 

9.             Vote to Issue, or Change the Terms of, the Note. The written
consent of the Holder shall be required for any change or amendment to any of
the Note.

 

10.           Transfer. This Note and any shares of common stock issued upon
conversion of this Note may not be offered, sold, assigned or transferred by the
Holder without the consent of the Company.

 

11.           Noncircumvention. The Company hereby covenants and agrees that the
Company will not, by amendment of its articles of incorporation, bylaws or
through any reorganization, transfer of assets, consolidation, merger, scheme of
arrangement, dissolution, issue or sale of securities, or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of this Note, and will at all times in good faith carry out all of the
provisions of this Note and take all action as may be required to protect the
rights of the Holder of this Note

 

12.           Payment of Collection, Enforcement and Other Costs. If (a) this
Note is placed in the hands of an attorney for collection or enforcement or is
collected or enforced through any legal proceeding or the Holder otherwise takes
action to collect amounts due under this Note or to enforce the provisions of
this Note or (b) there occurs any bankruptcy, reorganization, receivership of
the Company or other proceedings affecting Company creditors’ rights and
involving a claim under this Note, then the Company shall pay the costs incurred
by the Holder for such collection, enforcement or action or in connection with
such bankruptcy, reorganization, receivership or other proceeding, including,
but not limited to, attorneys’ fees and disbursements.

 

13.           Dispute Resolution. In the case of a dispute as to the arithmetic
calculation of the Conversion Price or number of Conversion Shares to be issued
(the “Conversion Amount”), the Company shall submit the disputed determinations
or arithmetic calculations via facsimile within one (1) Business Day of receipt,
or deemed receipt, of the Conversion Notice or other event giving rise to such
dispute, as the case may be, to the Holder. If the Holder and the Company are
unable to agree upon such determination or calculation within one (1) Business
Day of such disputed determination or arithmetic calculation being submitted to
the Holder, then the Company shall, within one Business Day submit via facsimile
the disputed arithmetic calculation of the Conversion Price or Conversion Amount
to the Company’s independent, outside accountant. The Company shall cause the
accountant to perform the determinations or calculations and notify the Company
and the Holder of the results no later than five (5) Business Days from the time
it receives the disputed determinations or calculations. Such accountant’s
determination or calculation shall be binding upon all parties absent
demonstrable error. The party whose calculation is furthest from the
accountant’s determination or calculation, shall be obligated to pay the fees
and expenses of such accountant.

 

14.           Loss, Theft or Destruction of Note. Upon receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft or
destruction of this Note and of indemnity or security reasonably satisfactory to
the Company, the Company shall make and deliver a new Note that shall carry the
same rights to interest (unpaid and to accrue) carried by this Note, stating
that such Note is issued in replacement of this Note, dated as of the original
date of issuance of this Note (and any successor hereto), in lieu of this Note.

 

 

 

 

15.           Cancellation. After this Note has been converted or all principal
and other amounts at any time owed on this Note have been paid in full, this
Note shall automatically be deemed canceled, shall be surrendered to the Company
for cancellation and shall not be reissued.

 

16.           Severability. Every provision of this Note is intended to be
severable. If any term or provision hereof is declared by a court of competent
jurisdiction to be illegal or invalid for any reason whatsoever, such illegality
or invalidity shall not affect the balance of the terms and provisions hereof,
which terms and provisions shall remain binding and enforceable.

 

17.           Miscellaneous.

 

(a)            No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the conversion of this Note.
In lieu of any fractional shares to which Holder otherwise would be entitled,
the Company shall round up to the nearest whole share.

 

(b)            Governing Law and Jurisdiction. The terms and provisions hereof
shall be construed in accordance with and governed by the laws of the State of
New York. Any dispute which may arise between the parties arising out of or in
connection with this Note shall be adjudicated before a court of competent
jurisdiction in the State of New York located in the City of New York and they
hereby submit to the exclusive jurisdiction of the state and federal courts
sitting in the City of New York, Borough of Manhattan with respect to any action
or legal proceeding commenced by any party and irrevocably waive any objection
they now or hereafter may have respecting the venue of any such action or
proceeding brought in such a court or respecting the fact that such court is an
inconvenient forum.

 

(c)            Compliance with Usury Laws. The Company and Holder intend to
comply with all applicable usury laws. In fulfilling this intention, all
agreements between the Company and Holder are expressly limited so that the
amount of interest paid or agreed to be paid to Holder for the use, forbearance,
or detention of money under this Note shall not exceed the maximum amount
permissible under applicable law.

 

If for any reason payment of any amount required under this Note shall be
prohibited by law, then the obligation shall be reduced to the maximum allowable
by law. If for any reason Holder receives as interest an amount that would
exceed the highest lawful rate, then the amount which would constitute excessive
interest shall be applied to the reduction of the principal of this Note and not
to the payment of interest. If any conflict arises between this provision and
any provision of any other agreement between the Company and Holder, then this
provision shall control.

 

(d)            Legal Representation. Holder agrees and represents that such
party has been represented by such party's own legal counsel with regard to all
aspects of this Note, or if such party is acting without legal counsel, that
such party has had adequate opportunity and has been encouraged to seek the
advice of such party's own legal counsel prior to the execution of this Note.

 

(e)            Restrictions. Holder acknowledges that all shares of common stock
acquired upon the conversion of this Note shall be subject to restrictions on
resale imposed by state and federal securities laws.

 

(f)             Assignment. Subject to restrictions on resale imposed by state
and federal securities laws, Holder may assign this Note or any of the rights,
interests or obligations hereunder, by operation of law or otherwise, in whole
or in part, to any person or entity so long as such assignee agrees to be bound
by the terms and conditions of the agreement (including the representations and
warranties of the Holder therein). Effective upon any such assignment, the
person or entity to whom such rights, interests and obligations are assigned
shall have and exercise all of Holder’s rights, interests and obligations
hereunder as if such person or entity were the original Holder of this Note.

 

(g)            Construction; Headings. This Note shall be deemed to be jointly
drafted by the Company and the Holder and shall not be construed against any
Person as the drafter hereof. The headings of this Note are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Note.

 

 

 

 

(h)            Failure or Indulgence Not Waiver. No failure or delay on the part
of the Holder in the exercise of any power, right or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege. No waiver shall be effective unless it is
in writing and signed by an authorized representative of the waiving party.

 

(i)             Notices. All notices, demands, consents, requests, instructions
and other communications to be given or delivered or permitted under or by
reason of the provisions of this Note shall be in writing and shall be deemed to
be delivered and received by the intended recipient as follows: (i) if
personally delivered, on the business day of such delivery (as evidenced by the
receipt of the personal delivery service), (ii) if delivered by overnight
courier (with all charges having been prepaid), on the business day of such
delivery (as evidenced by the receipt of the overnight courier service of
recognized standing), or (iii) if delivered by facsimile or electronic
transmission, on the business day of such delivery if sent by 6:00 p.m. in the
time zone of the recipient, or if sent after that time, on the next succeeding
business day (as evidenced by the printed confirmation of delivery generated by
the sending party’s telecopier machine). If any notice, demand, consent,
request, instruction or other communication cannot be delivered because of a
changed address of which no notice was given (in accordance with this Section
17(i)), or the refusal to accept same, the notice, demand, consent, request,
instruction or other communication shall be deemed received on the second
business day the notice is sent (as evidenced by a sworn affidavit of the
sender). All such notices, demands, consents, requests, instructions and other
communications will be addressed to the parties hereto as follows:

 

  To the Company: Li3 Energy, Inc.     Matias Cousiño 82, Of 806     Santiago de
Chile, 8320269     Chile         To Holder: At the address set forth on the
signature page hereto or at such other place as     Holder designates to the
Company in writing.

  

 

[Signature page follows]

 

 

 

 

 

IN WITNESS WHEREOF, Li3 Energy, Inc. has caused this Unsecured Convertible
Promissory Note to be executed by its officer thereunto duly authorized.

 

  LI3 ENERGY, INC.             By: /s/ Luis Saenz     Name: Luis Saenz    
Title:   Chief Executive Officer

 

 

 

 

 

 

 

EXHIBIT A

 

NOTICE OF CONVERSION BY HOLDER

 

 

 

Li3 Energy, Inc.

Matias Cousiño 82, Of 806

Santiago de Chile, 8320269

Chile

 

This Notice (the “Notice”) is being provided to inform Li3 Energy, Inc., a
Nevada corporation (the “Company”), that the undersigned (the “Holder”)
irrevocably elects to convert the unpaid principal and accrued interest set
forth below owed by the Company under the Unsecured Convertible Promissory Note
dated May 13, 2016 (the “Note”), into restricted shares of common stock of the
Company as provided in Section 5 of the Note. The conversion shall be effective
as of the Voluntary Conversion Date, as defined in the Note.

 

The number of restricted shares of common stock of the Company to which the
Holder shall be entitled to receive shall be determined by dividing (i) the
amount of unpaid principal and accrued interest that the Holder hereby elects to
convert, as set forth below, by (ii) the Conversion Price as provided in Section
5 of the Note. The Holder shall receive a stock certificate of Li3 Energy, Inc.,
representing the number of restricted shares of common stock due to the Holder
upon conversion.

 

Effective as of the Voluntary Conversion Date, subject to the Company’s receipt
of the original Note, the Note is cancelled and terminated only as to the amount
of principal and accrued interest set forth below. If the Holder has elected to
convert only a portion of the unpaid principal and accrued interest due under
the Note, the Company shall issue and deliver, or cause to be issued and
delivered to the Holder, a new note of like tenor for the remaining unpaid
principal and accrued interest of the Note.

 

Date:

 

Signature

 

Print Name

 

Address:

 

Principal to be converted: $_____________________________

Accrued interest to be converted: $_______________________

Conversion Price: $___________________________________

Number of Shares of Common Stock to be

Issued upon Conversion:_______________________________

 

 

 

  

EXHIBIT B

 

NOTICE OF CONVERSION BY COMPANY

 

This Notice (the “Notice”) is being provided to inform you that Li3 Energy,
Inc., a Nevada corporation (the “Company”), has completed a Mandatory Conversion
Event, as such term is defined in the Unsecured Convertible Promissory Note
dated May 13, 2016 (the “Note”), and has irrevocably elected (the “Mandatory
Conversion Decision”) to convert the amount of unpaid principal and accrued
interest set forth below owing to you under the Note into restricted shares of
common stock of the Company as provided in Section 5 of the Note. The conversion
shall be effective as of the date written below (the “Mandatory Conversion
Date”).

 

Upon your receipt of this Notice, please surrender the original Note to the
Company within the next thirty (30) days (or if the original Note has been lost
or destroyed, please provide an affidavit certifying to such loss or
destruction).

 

As a result of the Mandatory Conversion Decision, enclosed herein is a stock
certificate of Li3 Energy, Inc., representing the number of restricted shares of
common stock due to you as a result thereof. The Company calculated the number
of restricted shares of common stock of the Company to which you are entitled to
receive by dividing (i) the amount of unpaid principal and accrued interest that
the Company hereby elects to convert, as set forth below, by (ii) the Conversion
Price, as provided in Section 5 of the Note.

 

Following the Mandatory Conversion Date, the Note shall be cancelled and
terminated only as to the amount of principal and accrued interest set forth
below. If the Company has elected to convert only a portion of the unpaid
principal and accrued interest due under the Note, the Company shall issue and
deliver, or cause to be issued and delivered to you, a new note of like tenor
for the remaining unpaid principal and accrued interest of the Note.

 

Date:

 

        By:     Title:  

 

Principal to be converted: $______________________________

Accrued interest to be converted: $________________________

Conversion Price: $____________________________________

Number of Shares of Common Stock to be

Issued upon Conversion:_______________________________

Mandatory Conversion Date: ____________________________