EXHIBIT 10.17

 
Note: November 18, 2015

NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

THIS NOTE DOES NOT REQUIRE PHYSICAL SURRENDER OF THE NOTE IN THE EVENT OF A
PARTIAL REDEMPTION OR CONVERSION. AS A RESULT, FOLLOWING ANY REDEMPTION OR
CONVERSION OF ANY PORTION OF THIS NOTE, THE OUTSTANDING PRINCIPAL SUM
REPRESENTED BY THIS NOTE MAY BE LESS THAN THE PRINCIPAL SUM AND ACCRUED INTEREST
SET FORTH BELOW.

10% CONVERTIBLE PROMISSORY NOTE

OF

CANNASYS, INC.

Issuance Date:  November 18, 2015
Total Face Value of Note: $240,000
Initial Consideration: $50,000
Initial Original Issue Discount: $10,000
Initial Principal Sum Due: $60,000

This Note is a duly authorized Convertible Promissory Note of CannaSys, Inc. a
corporation duly organized and existing under the laws of the State of Nevada
(the “Company”), designated as the Company's 10% Convertible Promissory Note in
the principal amount of $240,000 (the “Note”). This Note will become effective
only upon execution by both parties and delivery of the first payment of
consideration by the Lender (the “Effective Date”).
 
For Value Received, the Company hereby promises to pay to the order of Tangiers
Investment Group, LLC or its registered assigns or successors-in-interest
(“Holder”) the Principal Sum of $240,000 (the “Principal Sum”) and to pay
“guaranteed” interest on the principal balance hereof at an amount equivalent to
10% of the Principal Sum, to the extent such Principal Sum and “guaranteed”
interest and any other interest, fees, liquidated damages and/or items due to
Holder herein have been repaid or converted into the Company's Common Stock (the
“Common Stock”), in accordance with the terms hereof. Upon the execution of this
Note the sum of $50,000 shall be remitted and delivered to the Company, and
$10,000 shall be retained by the Purchaser through an original issue discount
(the “OID”) for due diligence and legal bills related to this transaction. The
OID is set at 20% of any consideration paid. The Holder may pay additional
Consideration to the Company in such amounts and at such dates (each, an
“Additional Consideration Date”) as the Holder and Company may choose at their
mutual discretion. The Principal Sum due to Holder shall be prorated based on
the Consideration actually paid by Holder (plus the “guaranteed” interest and
10% OID, both which are prorated based on the Consideration actually paid by the
Holder, as well as any other interest or fees) such that the Company is only
required to repay the amount funded and the Company is not required to repay any
unfunded portion of this Note. The Maturity Date is one year from the Effective
Date of each payment (the “Maturity Date”) and is the date upon which the
Principal Sum of this Note, as well as any unpaid interest and other fees, shall
be due and payable.
 
In addition to the “guaranteed” interest referenced above, and in the Event of
Default pursuant to Section 2(a), additional interest will accrue from the date
of the Event of Default at the rate equal to the lower of 20% per annum or the
highest rate permitted by law (the “Default Rate”).
 

 
 

--------------------------------------------------------------------------------

 

This Note will become effective only upon the execution by both parties,
including the execution of Exhibits B, C and D and the Irrevocable Transfer
Agent Instructions and delivery of the initial payment of consideration by the
Holder (the “Effective Date”).
 
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 60
130% of Principal Amount
61-120
140% of Principal Amount
121-180
150% of Principal Amount

 
After 180 days from the Effective Date this Note may not be prepaid without
written consent from Holder, which consent may be withheld, delayed, denied, or
conditions in Holder’s sole and absolute discretion. Whenever any amount
expressed to be due by the terms of this Note is due on any day which is not a
Business Day (as defined below), the same shall instead be due on the next
succeeding day which is a Business Day.
 
For purposes hereof the following terms shall have the meanings ascribed to them
below:
 
“Business Day” shall mean any day other than a Saturday, Sunday or a day on
which commercial banks in the City of New York are authorized or required by law
or executive order to remain closed.
 
“Conversion Price” shall be equal 55% of the lowest trading price of the
Company’s common stock during the 25 consecutive trading days prior to the date
on which Holder elects to convert all or part of the Note. For the purpose of
calculating the Conversion Price only, any time after 4:00 pm Eastern Time (the
closing time of the Principal Market) shall be considered to be the beginning of
the next Business Day. If the Company is placed on “chilled” status with the
Depository Trust Company (“DTC”), the discount shall be increased by 10%, i.e.,
from 45% to 55%, until such chill is remedied. If the Company is not Deposits
and Withdrawal at Custodian (“DWAC”) eligible through their Transfer Agent and
DTC’s Fast Automated Securities Transfer (“FAST”) system, the discount will be
increased by 5%, i.e., from 45% to 50%. In the case of both, the discount shall
be a cumulative increase of 15%, i.e., from 45% to 60%. Any default of this Note
not remedied within the applicable cure period will result in a permanent
additional 10% increase, i.e., from 45% to 55%, in addition to any other
discount, as provided above, to the Conversion Price discount.
 
“Principal Amount” shall refer to the sum of (i) the original principal amount
of this Note (including the original issue discount, prorated if the Note has
not been funded in full), (ii) any additional payments made by the Holder
towards the Principal Sum (iii) all guaranteed and other accrued but unpaid
interest hereunder, (iv) any fees due hereunder, (v) liquidated damages, and
(vi) any default payments owing under the Note, in each case previously paid or
added to the Principal Amount.
 
“Principal Market” shall refer to the primary exchange on which the Company’s
common stock is traded or quoted.
 
“Trading Day” shall mean a day on which there is trading or quoting for any
security on the Principal Market.
 
“Underlying Shares” means the shares of common stock into which the Note is
convertible (including interest, fees, liquidated damages and/or principal
payments in common stock as set forth herein) in accordance with the terms
hereof.
 

 
 

--------------------------------------------------------------------------------

 

The following terms and conditions shall apply to this Note:
 
Section 1.00                      Conversion.
 
(a)           Conversion Right. Subject to the terms hereof and restrictions and
limitations contained herein, the Holder shall have the right, at the Holder's
sole option, at any time and from time to time after six months from the
Effective Date, to convert in whole or in part the outstanding and unpaid
Principal Amount under this Note into shares of Common Stock as per the
Conversion Formula. The date of any conversion notice (“Conversion Notice”)
hereunder shall be referred to herein as the “Conversion Date”.
 
(b)           Stock Certificates or DWAC. The Company will deliver to the
Holder, or Holder’s authorized designee, no later than 2 Trading Days after the
Conversion Date, a certificate or certificates (which certificate(s) shall be
free of restrictive legends and trading restrictions if the shares of Common
Stock underlying the portion of the Note being converted are eligible under a
resale exemption pursuant to Rule 144(b)(1)(ii) and Rule 144(d)(1)(ii) of the
Securities Act of 1933, as amended) representing the number of shares of Common
Stock being acquired upon the conversion of this Note. In lieu of delivering
physical certificates representing the shares of Common Stock issuable upon
conversion of this Note, provided the Company's transfer agent is participating
in DTC’s FAST program, the Company shall instead use commercially reasonable
efforts to cause its transfer agent to electronically transmit such shares
issuable upon conversion to the Holder (or its designee), by crediting the
account of the Holder’s (or such designee’s) broker with DTC through its DWAC
program (provided that the same time periods herein as for stock certificates
shall apply).
 
(c)           Charges and Expenses. Issuance of Common Stock to Holder, or any
of its assignees, upon the conversion of this Note shall be made without charge
to the Holder for any issuance fee, transfer tax, postage/mailing charge or any
other expense with respect to the issuance of such Common Stock. Company shall
pay all Transfer Agent fees incurred from the issuance of the Common stock to
Holder. Any such charges related to the issuance of Common Stock required to be
paid by the Holder (whether from the Company’s delays or outright refusal to
pay) will be automatically added to the Principal Sum of the Note and tack back
to the Effective Date for purposes of Rule 144.
 
(d)           Delivery Timeline. If the Company fails to deliver to the Holder
such certificate or certificates (or shares through the DWAC program) pursuant
to this Section (free of any restrictions on transfer or legends, if eligible)
prior to 3 Trading Days after the Conversion Date, the Company shall pay to the
Holder as liquidated damages an amount equal to $2,000 per day, until such
certificate or certificates are delivered. The Company acknowledges that it
would be extremely difficult or impracticable to determine the Holder’s actual
damages and costs resulting from a failure to deliver the Common Stock and the
inclusion herein of any such additional amounts are the agreed upon liquidated
damages representing a reasonable estimate of those damages and costs. Such
liquidated damages will be automatically added to the Principal Sum of the Note
and tack back to the Effective Date for purposes of Rule 144.
 
(e)           Reservation of Underlying Securities. The Company covenants that
it will at all times reserve and keep available for Holder, out of its
authorized and unissued Common Stock solely for the purpose of issuance upon
conversion of this Note, free from preemptive rights or any other actual
contingent purchase rights of persons other than the Holder, five times the
number of shares of Common Stock as shall be issuable (taking into account the
adjustments under this Section 1, but without regard to any ownership
limitations contained herein) upon the conversion of this Note (consisting of
the Principal Amount) to Common Stock (the “Required Reserve”), provided,
however, that the Required Reserve shall be reduced to not less than four times
the number of shares of Common Stock (as calculated above) upon one or more such
conversions as shall have caused the Required Reserve to be reduced to such
“four times” level. The Company covenants that all shares of Common Stock that
shall be issuable will, upon issue, be duly authorized, validly issued,
fully-paid, non-assessable and freely-tradable (if eligible). If the amount of
shares on reserve in Holder’s name at the Company’s transfer agent for this Note
shall drop below the Required Reserve, the Company will, within 2 Trading Days
of notification from Holder, instruct the transfer agent to increase the number
of shares so that the Required Reserve is met. In the event that the Company
does not instruct the transfer agent to increase the number of shares so that
the Required Reserve is met, the Holder will be allowed, if applicable, to
provide this instruction as per the terms of the Irrevocable Transfer Agent
Instructions attached to this Note. The Company agrees that the maintenance of
the Required Reserve is a material term of this Note and any breach of this
Section 1.00(e) will result in a default of the Note.
 

 
 

--------------------------------------------------------------------------------

 

(f)           Conversion Limitation. The Holder will not submit a conversion to
the Company that would result in the Holder owning more than 9.99% of the then
total outstanding shares of the Company (“Restricted Ownership Percentage”).
 
(g)           Conversion Delays. If the Company fails to deliver shares in
accordance with the timeframe stated in Section 1.00(b), the Holder, at any time
prior to selling all of those shares, may rescind any portion, in whole or in
part, of that particular conversion attributable to the unsold shares. The
rescinded conversion amount will be returned to the Principal Sum with the
rescinded conversion shares returned to the Company, under the expectation that
any returned conversion amounts will tack back to the Effective Date.
 
(h)           Shorting and Hedging. Holder may not engage in any “shorting” or
“hedging” transaction(s) in the Common Stock prior to conversion.
 
(i)           Conversion Right Unconditional. If the Holder shall provide a
Conversion Notice as provided herein, the Company's obligations to deliver
Common Stock shall be absolute and unconditional, irrespective of any claim of
setoff, counterclaim, recoupment, or alleged breach by the Holder of any
obligation to the Company.
 
Section 2.00                      Defaults and Remedies.
 
(a)           Events of Default. An “Event of Default” is:  (i) a default in
payment of any amount due hereunder which default continues for more than 5
Trading Days after the due date; (ii) a default in the timely issuance of
underlying shares upon and in accordance with terms of Section 2.00, which
default continues for 2 Trading Days after the Company has failed to issue
shares or deliver stock certificates within the 3rd Trading Day following the
Conversion Date; (iii) failure by the Company for 3 days after notice has been
received by the Company to comply with any material provision of this Note; (iv)
failure of the Company to remain compliant with DTC, thus incurring a “chilled”
status with DTC; (v) if the Company is subject to any Bankruptcy Event; (vi) any
failure of the Company to satisfy its “filing” obligations under Securities
Exchange Act of 1934, as amended (the “1934 Act”) and the rules and guidelines
issued by OTC Markets News Service, OTCMarkets.com and their affiliates; (vii)
any failure of the Company to provide the Holder with information related to its
corporate structure including, but not limited to, the number of authorized and
outstanding shares, public float, etc. within 1 Trading Day of request by
Holder; (viii) failure by the Company to maintain the Required Reserve in
accordance with the terms of Section 1.00(e); (ix) failure of Company’s Common
Stock to maintain a closing bid price in its Principal Market for more than 3
consecutive Trading Days; (x) any delisting from a Principal Market for any
reason; (xi) failure by Company to pay any of its Transfer Agent fees in excess
of $2,000 or to maintain a Transfer Agent of record; (xii) any trading
suspension imposed by the Securities and Exchange Commission (“SEC”) under
Sections 12(j) or 12(k) of the 1934 Act; or (xiii) 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.
 
(b)           Remedies. If an event of default occurs, the outstanding Principal
Amount of this 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”. The Mandatory Default Amount means 150% of the
outstanding Principal Amount of this Note. Commencing 5 days after the
occurrence of any Event of Default that results in the eventual acceleration of
this Note, this Note shall accrue additional interest, in addition to the Note’s
“guaranteed” interest, at a rate equal to the lesser of 20% per annum or the
maximum rate permitted under applicable law. Finally, 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. In connection with such acceleration described
herein, the Holder need not provide, and the Issuer hereby waives, any
presentment, demand, protest or other notice of any kind, and the Holder may
immediately and without expiration of any grace period enforce any and all of
its rights and remedies hereunder and all other remedies available to it under
applicable law. Such acceleration may be rescinded and annulled by the Holder at
any time prior to payment hereunder and the Holder shall have all rights as a
holder of the note until such time, if any, as the Holder receives full payment
pursuant to this Section 2.00(b). No such rescission or annulment shall affect
any subsequent event of default or impair any right consequent thereon. Nothing
herein shall limit the Holder's right to pursue any other remedies available to
it at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Issuer's failure to
timely deliver certificates representing shares of Common Stock upon conversion
of the Note as required pursuant to the terms hereof.
 
 
 
 

--------------------------------------------------------------------------------

 
 
Section 3.00                      General.
 
(a)           Payment of Expenses. The Company agrees to pay all reasonable
charges and expenses, including attorneys' fees and expenses, which may be
incurred by the Holder in successfully enforcing this Note and/or collecting any
amount due under this Note.
 
(b)           Assignment, Etc. The Holder may assign or transfer this Note to
any transferee at its sole discretion. This Note shall be binding upon the
Company and its successors and shall inure to the benefit of the Holder and its
successors and permitted assigns.
 
(c)           Funding Window. The Company agrees that it will not enter into a
convertible debt financing transaction, including 3(a)9 and 3(a)10 transactions,
with any party other than the Holder for a period of 10 Trading Days following
the Effective Date and each Additional Consideration Date, as relevant. The
Company agrees that this is a material term of this Note and any breach of this
Section 3.00(c) will result in a default of the Note.
 
(d)           Piggyback Registration Rights. Deleted.
 
(e)           Terms of Future Financings. So long as this Note is outstanding,
upon any issuance by the Company or any of its subsidiaries of any convertible
debt security (whether such debt begins with a convertible feature or such
feature is added at a later date) with any term more favorable to the holder of
such security or with a term in favor of the holder of such security that was
not similarly provided to the Holder in this Note, then the Company shall notify
the Holder of such additional or more favorable term and such term, at the
Holder's option, shall become a part of this Note and its supporting
documentation.. The types of terms contained in the other security that may be
more favorable to the holder of such security include, but are not limited to,
terms addressing conversion discounts, conversion look back periods, interest
rates, original issue discount percentages and warrant coverage.
 
(f)           Governing Law; Jurisdiction.
 
(i)           Governing Law. This Note will be governed by and construed in
accordance with the laws of the state of California without regard to any
conflicts of laws or provisions thereof that would otherwise require the
application of the law of any other jurisdiction.
 
(ii)           Jurisdiction and Venue. Any dispute or claim arising to or in any
way related to this Note or the rights and obligations of each of the parties
shall be brought only in the state courts of California or in the federal courts
located in San Diego County, California.
 
(iii)           No Jury Trial. The Company hereto knowingly and voluntarily
waives any and all rights it may have to a trial by jury with respect to any
litigation based on, or arising out of, under, or in connection with, this Note.
 
(iv)           Delivery of Process by the Holder to the Company. In the event of
an action or proceeding by the Holder against the Company, and only by the
Holder against the Company, service of copies of summons and/or complaint and/or
any other process that may be served in any such action or proceeding may be
made by the Holder via U.S. Mail, overnight delivery service such as FedEx or
UPS, email, fax, or process server, or by mailing or otherwise delivering a copy
of such process to the Company at its last known attorney as set forth in its
most recent SEC filing.
 
(v)           Notices. Any notice required or permitted hereunder (including
Conversion Notices) must be in writing and either personally served, sent by
facsimile or email transmission, or sent by overnight courier. Notices will be
deemed effectively delivered at the time of transmission if by facsimile or
email, and if by overnight courier the business day after such notice is
deposited with the courier service for delivery.
 
 
 
 

--------------------------------------------------------------------------------

 
 
(g)           No Bad Actor. No officer or director of the Company would be
disqualified under Rule 506(d) of the Securities Act of 1933, as amended, on the
basis of being a “bad actor” as that term is established in the September 13,
2013 Small Entity Compliance Guide published by the SEC.
 
(h)           Usury. If it shall be found that any interest or other amount
deemed interest due hereunder violates any applicable law governing usury, the
applicable rate of interest due hereunder shall automatically be lowered to
equal the maximum rate of interest permitted under applicable law. The Company
covenants (to the extent that it may lawfully do so) that it will not seek to
claim or take advantage of any law that would prohibit or forgive the Company
from paying all or a portion of the principal, fees, liquidated damages or
interest on this Note.
 
IN WITNESS WHEREOF, the Company has caused this Convertible Promissory Note to
be duly executed on the day and in the year first above written.
 

CANNASYS, INC.

By: /s/ Michael A. Tew
Name: Michael A. Tew
Title: CEO
Email: michael.tew@cannasys.com
Address:

This Convertible Promissory Note of November 18, 2015 is accepted this 18 day of
November, 2015 by

Tangiers Investment Group, LLC
 
By: /s/ Michael Sobeck
Name: Michael Sobeck
Title: Managing Member

 
 

--------------------------------------------------------------------------------

 

EXHIBIT A

FORM OF CONVERSION NOTICE

(To be executed by the Holder in order to convert all or part of that certain
$240,000 Convertible Promissory Note identified as the Note)

DATE:                      ____________________________
FROM:                      Tangiers Investment Group, LLC

 
Re:
$240,000 Convertible Promissory Note (this “Note”) originally issued by
CannaSys, Inc., a Nevada corporation, to Tangiers Investment Group, LLC on
November 19, 2015.

The undersigned on behalf of Tangiers Investment Group, LLC, hereby elects to
convert $_______________________ of the aggregate outstanding Principal Sum (as
defined in the Note) indicated below of this Note into shares of Common Stock,
$0.001 par value per share, of CannaSys, Inc. (the “Company”), according to the
conditions hereof, as of the date written below. If shares are to be issued in
the name of a person other than 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. The undersigned represents as of the date hereof
that, after giving effect to the conversion of this Note pursuant to this
Conversion Notice, the undersigned will not exceed the “Restricted Ownership
Percentage” contained in this Note.

Conversion information:
   
Date to Effect Conversion
     
Aggregate Principal Sum of Note Being Converted
     
Aggregate Interest/Fees Being Converted
     
Remaining Principal Balance
     
Number of Shares of Common Stock to be Issued
     
Applicable Conversion Price
     
Signature
     
Name
     
Address

 
EXHIBITS B THROUGH D NOT PRODUCED BECAUSE THEY CONTAIN PRIVILEGED INFORMATION

 
 

--------------------------------------------------------------------------------