Exhibit 4.1


 


THIS NOTE HAS
NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION
OF THE UNITED STATES AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH
ACT AND SUCH LAWS


 


BRAZIL MINERALS,
INC.


 


SENIOR SECURED
CONVERTIBLE PROMISSORY NOTE


 


FOR VALUE RECEIVED,
the undersigned, BRAZIL MINERALS, INC. (OTCQB: BMIX), a company organized under the laws of the State of Nevada (the “Company”),
promises to pay to the order of Heather U. Baines and Lloyd McAdams AB Living Trust, or their respective assigns (the “Holder”)
the principal sum of $75,000, with interest from the date hereof at the rate of 10% per annum on the unpaid balance hereof until
paid (the “Note”).


 


The Note was issued
in connection with the Company's private offering (the "Offering") of units of the Company's securities (the "Units"),
each Unit consisting of $25,000 par value 10% Senior Secured Convertible Promissory Notes maturing May 31, 2014 and warrants to
purchase 50,000 shares of the Company's Common Stock until December 31, 2019 (a "Warrant Share”). Capitalized terms
used and not otherwise defined herein will have the respective meanings ascribed to such terms in the Memorandum.


 


1.            Payments;
Ranking; Security. (a) If not earlier converted pursuant to Section 3(a) hereof, the principal of this Note
shall be payable on May 31, 2014 ("Maturity Date") or
from the first $100,000 of proceeds from the closing of any subsequent financing, whichever is the earlier.  


 


(b)
This Note will rank senior to all debt of the Company.


 


(c)
This Note shall be secured by intellectual property of the Company such as patents, royalties, and receivables of the Company and
all equipment owned by the Company, except for equipment acquired with the proceeds from any future financing that is initially
secured by such equipment.


 


(d)
This Note will bear interest at a rate of 10.0% per year. Interest will be paid to the person in whose name the Note is registered
at the Maturity Date. Interest on the Note will accrue from the date of the original issuance of the Note.


 


2.            Redemption
of this Note before the Maturity Date.  All or any portion of the principal amount plus accrued interest on
this Note may be prepaid at any time upon 5 days prior written notice, without premium or penalty. 


 


3.            Conversion
Events and Mechanics of Conversion.


 


(a) Conversion.
The Note-holder may convert the principal and unpaid interest into the Company's common stock at any time (“Conversion Event”).
The Note’s initial Conversion Price is $0.125 per share at which price each $25,000 of principal of this Note can be converted
into 200,000 common shares.


 


(b) Mechanics
of Conversion. The Company shall not be obligated to issue certificates evidencing the common stock issuable upon a Conversion
Event unless this Note is either delivered to the Company, duly endorsed, at the office of the Company, or the Holder notifies
the Company that this Note has been lost, stolen or destroyed and executes an agreement satisfactory to the Company to indemnify
the Company from any loss incurred by it in connection with this Note. As soon as practicable after delivery of this Note, or delivery
of an agreement and indemnification in the case of a lost Note, the Company shall issue and deliver to the Holder a certificate
or certificates for the number of shares of common stock to which the Holder shall be entitled (the "Conversion Shares"),
and a check payable to the Holder in the amount equal to the cash amounts payable as a result of a conversion into fractional shares
of such common stock. Any Conversion Event shall be deemed to have occurred immediately prior to the close of business on the date
of the Conversion Event, and the Holder entitled to receive the common stock issuable upon such conversion shall be treated for
all purposes as the record holder of such common stock on such date.


 




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(c) Conversion
Price Adjustment. The conversion price of the Note (“Conversion Price” or “CP”) is subject to
adjustment for stock splits, dividends, and combinations.


 


Event of Default: An event of Principal
Payment Default shall occur if after the Maturity Date, the principal of the Note has been not paid in full. An event of Other
Payment Default shall occur if, after the date that any interest payment is due, the respective payment has been not paid in full.


 


After an Event of Default: If it
is an Event of Principal Payment Default, a Note Holder may request in writing that a part or all of the Holder’s Note be
converted into the Company’s common stock at an adjusted conversion price of $0.02 cents per share, or equal to 50% of the
common stock’s VWAP during the 15 days prior to the date of written conversion request; whichever is equal to the lesser
of the two stock prices. Commencing 5 days after the occurrence of any Event of Default which will result in acceleration of the
Note, interest on the Note shall accrue at the compounded penalty rate of 30% per annum until the whole of the principal and any
unpaid interest is paid in full. In addition, and as a penalty, the Company shall be required to issue to the holder of the Note
an additional 50,000 shares of its common stock for each 30 day period or part thereof until the Note and any unpaid interest is
paid in full (the “Additional Consideration”).


 


(d) Rule 144. Current regulations
provide that if on any date of conversion of convertible securities like the Note, these convertible securities have been held
for: (i) more than six months by non-affiliates of the Company, the common shares issued by the Company shall be issued with a
legal opinion at the Company’s expense from counsel allowing the public resale of these shares pursuant to Rule 144(d)(1)(i),
and (ii) more than twelve months by non-affiliates of the Company, the common shares issued by the Company shall be issued free
to trade and without restriction as proscribed by Rule 144(b)(1)(i).


 


If (i) after 10 days from the receipt by
the Company of any request for note conversion or unrestricting warrant shares which are restricted and (ii) the shares can validly
be issued without a restriction and (iii) the Company fails to issue the unrestricted common shares; the number of shares issuable
shall then increase 1% per day until receipt of the unrestricted shares.


 


(e) Fractional
Shares. No fractional shares of common stock shall be issued upon conversion of this Note. In lieu of any fractional shares
to which the Holder would otherwise be entitled, the Company shall pay cash equal to such fraction multiplied by the Conversion
Price.


 


4.            Transfer
Restrictions. The Holder shall not transfer the Note (except to its own affiliate, subsidiary, or shareholders) until (a)
it has first given written notice to the Company, describing briefly the manner of any such proposed transfer; and (b) (i) the
Company has at its expense received from counsel satisfactory to the Company an opinion that such transfer can be made without
compliance with the registration requirements of the Securities Act of 1933, as amended (the "1933 Act"), and applicable
state securities laws, or (ii) a registration statement covering the transfer of this Note is filed by the Company under the 1933
Act and applicable state securities laws is declared effective by the Securities and Exchange Commission and state securities commissions
having jurisdiction.


 


5.            Currency;
Payments. All references herein to "dollars" or "$" are to U.S. dollars, and all payments of principal
of, and interest on, this Note shall be made in lawful money of the United States of America in immediately available funds. If
the date on which any such payment is required to be made pursuant to the provisions of this Note occurs on a Saturday or Sunday
or legal holiday observed in the State of California, such payments shall be due and payable on the immediately succeeding date
which is not a Saturday or Sunday or legal holiday so observed.


 




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6.            Representations
and Warranties of Holder. Holder hereby represents and warrants that:


 


(a) Securities
Not Registered. Holder is acquiring this Note for its own account, not as an agent or nominee, and not with a view to, or for
sale in connection with, any distribution thereof in violation of applicable securities laws. By executing this Note, Holder further
represents with respect to this Note that Holder does not have any present contract, undertaking, understanding or arrangement
with any person to sell, transfer or grant participations to such persons or any third person.


 


(b) Access
to Information. The Company has made available to Holder the opportunity to ask questions of and to receive answers from the
Company's officers, directors and other authorized representatives concerning the Company and its business and prospects, and Holder
has been permitted to have access to all information which it has requested in order to evaluate the merits and risks of the purchase
of the Note.


 


(c) Investment
Experience. Holder is an investor in securities of companies in the development stage and acknowledges that it is able to fend
for itself, can bear the economic risk of its investment, and has such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of the purchase of the Note.


 


(d) Regulation
D. Holder is an "accredited investor" as defined in Rule 501 under the 1933 Act. In the normal course of business,
Holder invests in or purchases securities similar to the Note and has such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of purchasing the Note.


 


(e) Unregistered.
Holder has been advised that (i) neither this Note nor the common stock issuable upon conversion of this Note has been registered
under the 1933 Act or other applicable securities laws, (ii) the common stock issuable upon conversion of the Note may need to
be held indefinitely, and Holder must continue to bear the economic risk of the investment in the common stock issuable upon conversion
of this Note is subsequently registered under the 1933 Act or an exemption from such registration is available, (iii) when and
if the common stock issuable upon conversion of this Note may be disposed of without registration in reliance on Rule 144 promulgated
under the 1933 Act, such disposition can be made only in limited amounts in accordance with the terms and conditions of such Rule,
and the Company at its expense may require an opinion of counsel to the Company and in form substance and scope reasonably acceptable
to the Company to the effect that the common stock may be sold or transferred under an exemption from such registration, and (iv)
if the Rule 144 exemption is not available, public sale without registration will require compliance with an exemption under the
1933 Act.


 


(g) Pre-Existing
Relationship. Holder has either (1) a pre-existing personal or business relationship with the Company or any of its officers,
directors or controlling persons, or (2) has sufficient business or financial experience or (3) have reviewed the Offering with
financial advisors, other than Syndicated Capital, who have sufficient business or financial experience and are unaffiliated with
and are not compensated by the Company; in such degree that, directly or indirectly, the Holder could be reasonably assumed to
have the capacity to protect his/its own interest in connection with the acquisition of the Note and the common stock into which
it converts.


 


(h) No
Advertisement. Holder acknowledges that the offer and sale of this Note or the common stock into which it converts was not
accomplished by the publication of any advertisement.


 


(i) No
Review. Holder understands that no arbitration board or panel, court or federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, has passed upon or made any recommendation or endorsement
of the common stock into which it converts.


 


(j) Holder understands
that the common stock into which this Note may convert shall bear a restrictive legend in substantially the following form:


 


THESE SECURITIES
HAVE NOT 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"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES.
THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED OR SOLD IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER APPLICABLE SECURITIES LAWS UNLESS OFFERED, SOLD OR TRANSFERRED UNDER AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THOSE LAWS.


 




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7.            Survival
of Representation and Warranties. All representations and warranties made by Holder shall survive the earlier of the Maturity
Date and shall remain effective and enforceable until the earlier to occur of the Maturity Date or the date on which claims based
thereon shall have been barred by the applicable statutes of limitation.


 


8.            Waiver. The
Company expressly waives presentment, protest, demand, notice of dishonor, notice of nonpayment, notice of maturity, notice of
protest, presentment for the purpose of accelerating maturity, and diligence in collection.


 


9.            Attorneys'
Fees and Costs. In the event of any legal proceedings in connection with this Note, all expenses in connection with such
legal proceedings of the prevailing party, including reasonable legal fees and applicable costs and expenses, shall be reimbursed
by the non-prevailing party upon demand. This provision shall not merge with any enforcement order or judgment on this Note and
shall be applicable to any proceeding to enforce or appeal any judgment relating to the Note.


 


10.          Severability. If
any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and enforceability of any such provisions hereof shall not
be in any way impaired, unless the provisions held invalid, illegal or unenforceable shall substantially impair the benefits of
the remaining provisions hereof.


 


11.          Successors
and Assigns. This Note shall inure to the benefit of the Holder and its successors and permitted assigns and shall be binding
upon the undersigned and its successors and permitted assigns. As used herein, the term "Holder" shall mean and include
the successors and permitted assigns of the Holder.


 


12.          Governing
Law. The parties acknowledge and agree that this Note and the rights and obligations of all parties hereunder shall
be governed by and construed under the laws of the State of California, without regard to conflict of laws principles.


 


13.          Modification. This
Note may not be modified or amended orally, but only by an agreement in writing signed by the party against whom such agreement
is sought to be enforced.


 


14.          Entire
Agreement. This Note constitutes the entire agreement between the parties with respect to the subject matter hereof and
supersedes any and all prior written or oral agreements and understandings with respect to the matters covered hereby.


 


 IN
WITNESS WHEREOF, the Company has caused this Note to be executed by its officers thereunto duly authorized as of the date first
written above, and the Holder has executed this Note through its authorized persons.


 


	 	BRAZIL MINERALS, INC.	 
	 	 	 	 
	 	By:	/s/ Marc Fogassa	 
	 	 	Marc Fogassa	 
	 	 	Chairman and Chief Executive Officer	 


 


	 	/s/ Llyod McAdams, Trustee	 
	 	Heather U. Baines and Lloyd McAdams AB Living Trust	 


  




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