Document:

ex1048.htm

Exhibit 10.48

 

CONVERTIBLE NOTE

 

	
$10,000.00

	
July 11, 2011

	  	
St. Petersburg, Florida

 

 

FOR VALUE RECEIVED, US Natural Gas Corp a Florida corporation with offices at 1717 Dr. Martin Luther King Jr. St. N, St. Petersburg, Florida 33704 (hereinafter referred to as the “Payor” or the “Company”), agrees to pay to the order of Tangiers Investors, LP, a Delaware limited partnership with offices at 402 W Broadway Ste. 400 San Diego, California 92101 (hereinafter referred to as the “Payee” or “Tangiers”), on the Maturity Date set forth in Article “3” of this Convertible Note (the “Note”), unless earlier accelerated in accordance with the terms of this Note, the principal sum of ten thousand  dollars ($10,000) with interest on the aforesaid amount as set forth in Article “2” of this Note.

 

1. Funding.

 

Upon receipt of the executed original of this Note (“Closing Date”), Tangiers shall wire transfer to the Company pursuant to wire instructions from the Company,  ten thousand dollars ($10,000), less:

 

(A)           Any applicable wire transfer fees

 

2. Interest.

 

(A)           Interest on the unpaid principal balance of this Note shall be calculated commencing upon the Closing Date and shall be at the rate of nine percent (9%) per annum with accrued and unpaid interest being payable on the Maturity Date.

 

(B)           If an Event of Default occurs pursuant to Article “9” of this Note, this Note shall be immediately due and payable and interest shall accrue at the rate of 20%. The Payor acknowledges that it would be extremely difficult or impracticable to determine the Payee’s actual damages and costs resulting from a default and the inclusion herein of any such additional amounts are the agreed upon liquidated damages representing a reasonable estimate of those damages and costs and do not constitute a penalty.

 

(C)           It is the intent of the Payee and the Payor in the execution of this Note that the loan evidenced hereby comply with the restrictions of applicable state usury laws. If, for any reason, it should be determined that any usury law is applicable (which the parties do not believe to be the case), the Payor and the Payee stipulate and agree that (i) the interest (or any other consideration pursuant to this Note) pursuant to this Note or in any other instrument evidencing or securing the indebtedness evidenced herein shall be limited to the maximum permitted by such law, (ii) none of the terms and provisions contained herein shall ever be construed to create a contract for the use, forbearance or detention of money requiring payment of interest at a rate in excess of the maximum interest rate permitted to be charged by any state laws which are applicable, (iii) the obligation of the Payor shall be reduced to the maximum rate permitted to be charged by any state laws which are applicable, and (iv) the Payee shall not collect monies which would otherwise increase the effective interest rate on this Note to a rate in excess of the maximum rate permitted to be charged by any such applicable state law.  Any sums collected, which are in excess of such maximum rate, shall be credited to the payment of any other sums due hereunder. If no sums are due hereunder, then such excess shall be returned to the Payor.

 

 

  

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3. Maturity/Prepayment.

 

(A)           Subject to payment pursuant to Article “2” of this Note, all unpaid principal and any accrued and unpaid interest shall be due and payable on July 11, 2012 (the “Maturity Date”).

 

(B)           This Note may not be prepaid without the prior written consent of the Payee which consent shall be in the Payee’s sole and absolute discretion.

 

4. Conversion.

 

(A)           The Payee may elect to convert all or part of the principal of this Convertible Note and any accrued and unpaid interest at any time or times before July 11, 2012. The conversion price shall be sixty (60%) percent of the lowest trading price during the five (5) trading days prior to conversion, subject to adjustment pursuant to this Article “4” of this Note (the “Conversion Price”); provided, however, if an Event of Default pursuant to Article “9” of this Note occurs, this Note shall be subject to an interest rate of twenty (20%) percent and the Conversion Price formula shall be reduced to forty (40%) of the lowest trading price during the five (5) trading days prior to conversion.

 

(i.)           If the Payee does not provide written notice of its intention to convert some or all of the unpaid principal and any accrued and unpaid interest due, Payor shall pay the amount due on the Maturity Date.

 

(ii.)           If all or part of this Note is converted pursuant to Paragraph “A” of this Article “4” of this Note, the shares shall be delivered to the Payee within three (3) business days after the date upon which the Payor receives a Conversion Notice (such third (3rd) business day the “Conversion Share Due Date”), in the form attached hereto as Exhibit “A”; provided, however,  that a Conversion Notice delivered after 1:00 o’clock P.M. on any business day shall be deemed to be delivered on the next following business day.

 

(iii.)           If all or part of this Note is converted pursuant to Paragraph “A” of this Article “4” of this Note, all shares delivered to the Payee shall be free-trading if the shares are issued after six (6) months after the date of this Note. If any shares delivered to the Payee are not free-trading, on July 11, 2012, at its own cost, the Company shall cause its counsel to issue an opinion letter to the Company’s transfer agent, or its successor (the “Transfer Agent”), that the said shares may be sold or transferred without restriction or limitation in reliance on Rule 144 promulgated under the Securities Act of 1933, as amended, and direct the Transfer Agent to replace such shares with a certificate that does not contain a restrictive legend. After the receipt by the Transfer Agent of the certificate representing such shares from Tangiers (or its broker) requesting the issuance of an unrestricted certificate, the Company shall cooperate fully with the Transfer Agent. If the newly issued unrestricted stock is not delivered to Tangiers or its broker within four (4) business days after the receipt of the restricted shares, the Company shall pay an additional amount of one thousand dollars ($1,000) per calendar day for each day that delivery of the unrestricted stock certificate is delayed; provided, however, that receipt of the restricted certificate after 1:00 p.m. local time shall be deemed to be receipt on the next following business day. The Company acknowledges that it would be extremely difficult or impracticable to determine Tangiers’ actual damages and costs resulting from the delay in making delivery of the unrestricted stock certificate and the inclusion herein of any such additional amounts are the agreed upon liquidated damages representing a reasonable estimate of those damages and costs and do not constitute a penalty. These liquidated damages shall be added to the principal value of the note.

 

(B)           The Payor shall pay any and all stock transfer fees. No fractions of shares or scrip representing fractions of shares will be issued upon conversion, but the number of shares issued shall be rounded to the nearest whole share, based upon the total number of shares of Common Stock to be issued to the Payee. The date upon which a Conversion Notice is received by the Payor shall be deemed to be the date upon which the Payee has delivered the conversion notice duly executed, to the Payor; provided, however, that a Conversion Notice delivered after 1:00 o’clock P.M. on any business day shall be deemed to be delivered on the next following business day. Upon receipt of the Shares for the full conversion and/or payment of this Note, the Payee shall deliver this Note to the Payor marked “cancelled.”

 

 

 

  

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(C)           If the Payor fails to deliver shares timely pursuant to this Article “4” of this Note, the Payor shall pay to the Payee an additional amount of shares equal in number to one (1%) percent of the number of shares of Common Stock required to be issued per calendar day for each calendar day that the shares are delayed after the Conversion Share Due Date. The Payor acknowledges that it would be extremely difficult or impracticable to determine the Payee’s actual damages and costs resulting from the delay in delivering the Shares on or prior to the Conversion Share Due Date and the inclusion herein of any such additional amounts are the agreed upon liquidated damages representing a reasonable estimate of those damages and costs and do not constitute a penalty.

 

(D)           If, upon Tangiers’ request to convert all or part of this Note pursuant to this Article “4” of this Note, the shares are not available by reason of the Payor not having enough authorized and unissued shares to issue the shares to Tangiers, the Payor shall take all necessary action to increase the number of authorized shares of the Company’s Common Stock to satisfy Tangiers’ request to convert all or part of this Note.

 

(E)           In order to preserve the conversion rights of the Payee, the conversion rate is subject to adjustment if certain events occur, including, but not limited to, any of the events that are set forth below:

 

(i.)           The issuance of any previously authorized or newly authorized shares (common or any other securities convertible into common) of the Payor for less than the conversion price per share at the time of conversion pursuant to this Article “4” of this Note;

 

(ii.)           A recapitalization of the outstanding shares of the Payor which has the effect of changing the percentage of shares which this Note may be converted into in relation to the total number of outstanding shares;

 

(iii.)          The payment of any stock dividends;

 

(iv.)          The distribution to any holders of shares of the Payor’s securities, evidences of indebtedness of the Payor or assets (excluding cash dividends paid from retained earnings);

 

(v.)           The issuance after the date hereof of any stock options, warrants or other rights to acquire shares in the Payor at a price less than the current market value of such shares; and

 

(vi.)          Any capital reorganization by the Payor, any reclassification or recapitalization of the Payor’s capital stock, or any transfer of all or substantially all the assets of the Payor to or consolidation or merger of the Payor with or into any other Person.

 

(F) Upon the occurrence of any of the above events (any of such events is hereinafter referred to as a “Dilution Event”), then, in such event, the Payor will immediately take whatever measures are necessary to insure that the percentage interest in the Payor which the Note may be converted into would not be increased or reduced. Any adjustment which is required by this Paragraph “F” of this Article “4” of this Note shall be deemed effective retroactive to the date of the Dilution Event. The provisions of this Paragraph “F” of this Article “4” of this Note shall be applicable to any Dilution Event which occurs at any time after the date of this Note. If any of the Dilution Events occur, the Payor will mail or cause to be mailed a notice pursuant to Paragraph “C” of Article “19,” to the Payee of this Note specifying the Dilution Event(s) which has occurred.

 

 

  

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(G)           As long as this Note is outstanding and no Event of Default has occurred, neither Tangiers nor its affiliates shall at any time engage in any short sale of, or sell put options or similar instruments with respect to, the Company’s stock.

 

5. Opinions. 

 

(A)           The Payee’s counsel shall provide the appropriate opinion letters to the Transfer Agent in compliance with the provisions of Rule 144 promulgated by the Securities and Exchange Commission pursuant to §4(1) of the Securities Act of 1933, as amended, with respect to the transfer or sale of the shares, if such transfer or sale is permissible under Rule 144.

 

(B)            Upon execution of this Note, the Payor shall deliver to Payee the Irrevocable Transfer Agent Instructions, in the form attached hereto as Exhibit “B”.

 

6. Registration.

 

 (A)           If the Payor shall at any time when Payee has not received a stock certificate evidencing the shares without a restrictive legend, seek to register or qualify any of its capital stock or the securities holdings of any of its controlling shareholders, on each such occasion it shall include all of the Payee’s shares pursuant to Article “4” of this Note in such registration or qualification at the Payor’s expense. The Payor shall keep the registration effective until such time as the Payee has sold its shares.

 

(B)           All expenses in connection with preparing and filing any registration statement under Paragraph “A” of this Article “6” of this Note (and any registration or qualification under the securities or “Blue Sky” laws of states in which the offering will be made under such registration statement) shall be borne in full by the Payor.

 

7. Affirmative Covenants of the Payor.

 

Unless and until this Note has been fully satisfied by payment or conversion, the Payor shall:

 

(A)           Increase the number of shares of the Company if the shares are not available by reason of the Payor not having enough authorized and unissued shares to issue the shares to Tangiers upon Payee’s request to convert all or part of this Note pursuant to Article “4” of this Note.

 

(B)           Use the loan proceeds for working capital of the Company, provided, however that the Payor shall not use any portion of the loan proceeds to pay any debts or compensation to the management of the Company.

 

 

  

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(C)           Promptly pay and discharge all lawful taxes, assessments and governmental charges or levies imposed upon the Payor or upon its business income and profits; or upon any of its property, before the same shall become in default, as well as all lawful claims for labor, materials and supplies which, if unpaid, might become a lien or charge upon such properties or any part thereof; provided however, that the Payor shall not be required to pay and discharge any such tax, assessment, charge, levy or claim as long as the validity thereof shall be contested in good faith by the Payor, or where the failure to so pay would not have a material adverse effect on the Payor;

 

(D)           Promptly notify the Payee of the commencement of all proceedings and investigations by or before and/or the receipt of any notices from, any governmental or non-governmental body including, but not limited to, any court or arbitrator, against or in any way materially affecting any of the Payor’s properties, assets or business;

 

(E)           Promptly notify the Payee of any material change in the Payor’s business, assets, liabilities, condition (financial or otherwise), results of operations or business prospects;

 

(F)           Promptly notify the Payor of any default or any event which, with the passage of time or giving of notice or both, would constitute a default under any agreement to which the Payor is a party or by which the Payor or any of the Payor’s properties may be bound;

 

(G)           At all times reasonably maintain, preserve, protect and keep its property used in the conduct of its business in good repair, working order and condition, normal wear and tear excepted, except where the failure to comply would not have a material adverse effect on the Payor;

 

(H)           To the extent necessary for the operation of its business, keep adequately insured by reputable insurers, all property of a character usually insured by similar corporations and carry such other insurance as is usually carried by similar corporations, except where the failure to obtain insurance would not have a material adverse effect on the Payor;

 

(I)             Promptly notify the Payee of any delay in the Payor’s performance of any of its obligations to any secured lender and of any assertion of any claims by any secured lender of the Payor;

 

(J)             Promptly notify the Payee of the occurrence of any Event of Default (as defined in Article “9” of this Note);

 

(K)            Remain current in its filings pursuant to the Securities Exchange Act of 1934 (the “Exchange Act”); (i) continuously remain a reporting company under the Exchange Act; and (ii) file with the SEC in a timely manner all reports, statements and other materials required to be filed by it to remain a reporting company under the Exchange Act;

 

(L)            The Common Stock of the Payor shall continuously be listed on the Over the Counter Bulletin Board (the “OTCBB”), OTC Markets OTCQB ("OTCQB") or  a stock exchange;

 

(M)          Continue to be a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction and qualified to do business in any jurisdiction where such qualification is required; and

 

 

  

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(N)           At all times keep true and correct books, records and accounts. The Payee expressly agrees to maintain any and all material, non-public information provided by the Payor pursuant to this Article “8” of this Note, in confidence within the meaning of Regulation FD promulgated by the U.S. Securities and Exchange Commission and shall not purchase or sell the Payor’s common stock on the basis of such information until such information has been publicly disclosed.

 

8. Negative Covenants of the Payor.

 

Unless and until this Note has been paid in full, the Payor shall not:

 

(A)           Conduct its business in any manner other than in the ordinary course;

 

(B)           Make any change in its Certificate of Incorporation or Bylaws which will adversely affect the Payor’s ability to perform its obligations hereunder;

 

(C)           Declare or pay any dividend or make any other payment or distribution to its stockholders, or purchase or redeem any of its securities;

 

(D)           Sell, liquidate, or otherwise dispose of any of its assets, other than in the ordinary course of business, except in the event that the Payor shall reach an agreement to sell any of its subsidiaries;

 

(E)           Enter into any agreement or merger, reorganization or consolidation of the Payor with or into another entity or entities, regardless of whether the Payor is the surviving entity;

 

(F)           Increase the compensation payable or to become payable by the Payor to any officer and/or director or any of the immediate family of any officer and/or director including, but not limited to, the following: any spouse, parent, spouse of a parent, mother-in-law, father-in-law, child, spouse of a child, sibling, spouse of a sibling, grandparent, spouse of a grandparent or any issue of the foregoing; and

 

(G)           Pay back loans (not including reimbursement of expenses incurred in discharge of employment duties) to officers, directors and affiliates of the Payor (not including obligations originating in acquisitions) and their related parties until all principal and accrued interest has been paid in full satisfaction of this Note.

 

9. Events of Default.

 

The term “Event of Default” as used herein shall mean the occurrence of any one or more of these following events:

 

(A)           The failure of the Payor to make payment of Principal and/or interest on the Maturity Date;

 

(B)            The breach by the Payor of any other provisions of this Note other than failure to make payment on the Maturity Date and after the Payee has given the Payor two (2) business days written notice of such default pursuant to Paragraph “(C)” of Article “19” of this Note;

 

(C)           The filing by the Payor of a petition in bankruptcy;

 

(D)           The making of an assignment by the Payor for the benefit of its creditors;

 

(E)           Consent by the Payor to the appointment of, or possession by, a custodian for itself or for all or substantially all of its property;

 

(F)           The filing of a petition in bankruptcy against the Payor with the consent of the Payor;

 

(G)           The filing of a petition in bankruptcy against the Payor without the consent of the Payor, and the failure to have such petition dismissed within ten (10) days from the date upon which such petition is filed;

 

 

 

  

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(H)           Notwithstanding the ten (10) day provision in Paragraph “(G)” of this Article “9” of this Note, on a petition in bankruptcy filed against Payor, Payor is adjudicated bankrupt prior to the expiration of ten (10) days; and

 

(I)             The entry by a court of competent jurisdiction of a final non-appealable order, judgment or decree appointing, without the consent of the Payor, a receiver, trustee or custodian for the Payor or for all or substantially all of the property or assets of the Payor.

 

(J)            Any failure by the Company to deliver the shares due to Tangiers upon conversion of all or a part of this Note pursuant to Article “4” of this Note

 

10. Remedies Upon Default.

 

(A)           Upon the occurrence of an Event of Default and any time thereafter while such Event of Default is continuing, the entire unpaid principal balance which is due pursuant to this Note shall, at the Payee’s option, be accelerated and become and be immediately due and payable along with unpaid interest and late fees without presentment, demand, protest or further notice of any kind, all of which are expressly waived by the Payor, except as set forth in Paragraphs “(A)” and “(B)” of this Article “10” of this Note.

 

 (B)           Upon the occurrence of an Event of Default and any time thereafter while such Event of Default is continuing, the Payor shall pay to the Payee an interest rate of 20% and the Conversion Price formula shall be reduced to 40% of the lowest trading price during the five (5) trading days prior to conversion. The Payor acknowledges that it would be extremely difficult or impracticable to determine the Payee’s actual damages and costs resulting from the delay in making payment on the Maturity Date and the inclusion herein of any such additional amounts are the agreed upon liquidated damages representing a reasonable estimate of those damages and costs and do not constitute a penalty.

 

11. Non-Exclusive Remedy.

 

Any remedy that is set forth in this Note is not exclusive of any other remedies provided for herein, in the accompanying documents or that are provided by law.

 

12. Liability Upon Default.

 

The liability of the Payor upon default shall be unconditional and shall not be in any manner affected by any indulgence whatsoever granted or consented to by the Payee including, but not limited to, any extension of time, renewal, waiver or other modification.

 

13. Exercise of Remedy Upon Default.

 

No failure on the part of the Payee to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right.

 

 

  

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14. Collection Costs.

 

Payor shall pay or otherwise reimburse to Payee all legal fees, costs and expenses incurred by Payee in any manner in connection with this Note, including, but not limited to, any administration, negotiations, disputes, litigation or collection pursuant to the terms and conditions of this Note and agrees to pay interest thereupon at the rate of two percent (2%) per month from the date paid or incurred by Payee until such expenses are actually paid by the Payor.  Such obligation shall be binding upon Payor regardless of whether or not any legal action has been commenced or is ever commenced.

 

15. Full Recourse.

 

Anything in this Note to the contrary notwithstanding, the Payor hereunder shall be liable on this Note for the full amount of the principal, interest and all obligations pursuant to this Note.

 

16. No Defenses or Set-Off.

 

Payor acknowledges and agrees that there are, and shall be, no claims, defenses, set-offs, equities, or counterclaims, whether legal or equitable, available to it or any other person or entity affiliated with it or against the enforcement of this Note, including, but not limited to, any such defenses, set-offs, equities, claims, counterclaims, or others legal or equitable defenses or claims including, but not limited to, the statute of limitations, which arise out of this Note, the obligation of the Payor to repay this Note, as the case may be, or in the course of dealings between the Payor and the Payee and any representatives or affiliates thereof, and any such defenses, set-offs, equities, counterclaims or other claims, legal or equitable, available to Payor, or any entity affiliated with Payor, whether known or unknown, arising out of this Note, the administration of this Note are hereby forever waived, released and discharged.

 

17. Indemnity.

 

Payor agrees to indemnify and hold harmless the Payee, its officers, directors, heirs, executors, administrators, personal representatives, successors and assigns, from any and all claims, actions, suits, demands, costs or liability of any kind relating to the making of this Note, the administration of this Note and any business relations and/or other dealings with the Payor and each of them with respect to the subject matter hereof, it being understood and agreed that such indemnification and agreement to hold harmless are a material inducement to the Payee to secure its consent to this Note.

 

18. Replacement of Note.

 

Upon receipt of evidence satisfactory to the Payor of the loss, theft, destruction or mutilation of the Note, and if requested in the case of any such loss, theft or destruction, upon delivery of an indemnity bond or other agreement or security reasonably satisfactory to the Payor, or, in the case of any such mutilation, upon surrender and cancellation of such Note, the Payor will issue a new Note, of like tenor and amount and dated the date of issuance of the original Note, in lieu of such lost, stolen, destroyed or mutilated Note.

 

19. Miscellaneous.

 

(A            Headings.  Headings contained in this Note are for reference purposes only and shall not affect in any way the meaning or interpretation of this Note.

 

(B)           Enforceability.  If any provision which is contained in this Note should, for any reason, be held to be invalid or unenforceable in any respect under the laws of any jurisdiction, such invalidity or unenforceability shall not affect any other provision of this Note and this Note shall be construed as if such invalid or unenforceable provision had not been contained herein.

 

(C)           Notices.  Any notice or other communication required or permitted hereunder shall be sufficiently given if sent by certified mail, postage prepaid, return receipt requested addressed as follows:

 

  

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	 To the Payee: 	Tangiers Investors, LP	 	 
	 	402 W Broadway Ste. 400	 	 
	 	San Diego, California 92101	 	 
	 	Attn:  Michael Sobeck	 	 
	 	 	 	 
	To the Payor:     	US Natural Gas Corp	 	 
	 	1717 Dr. Martin Luther King Jr. St. N	 	 
	 	St. Petersburg, FL 33704	 	 
	 	Attn:  Wayne Anderson, President	 	 

 

or in each case to such other address as shall have last been furnished by like notice.  If the method of notice set forth in this Paragraph “(C)” of this Article “19” of this Note is impossible for any reason, notice shall be in writing and personally delivered to the aforesaid addresses.  Each notice or communication shall be deemed to have been given as of the date so mailed or delivered as the case may be.

 

(D)           Litigation.  This Note shall in all respects be construed, governed, applied and enforced in accordance with the laws of the State of New York applicable to contracts made and to be performed therein, without giving effect to the principles of conflicts of law.  The parties hereby consent to and irrevocably and exclusively submit to personal jurisdiction over each of them by the courts of the State of New York in any action or proceeding, irrevocably waive trial by jury and personal service of any and all process and specifically consent that in any such action or proceeding, any service of process may be effectuated upon any of them by certified mail, return receipt requested, in accordance with Paragraph "(C)" of this Article “19” of this Note.  If the Payee commences legal action to interpret or enforce any of the terms of this Note, the Payor shall pay all legal fees in full and costs incurred by the Payee with respect to such action. If the parties dispute any term or condition of this Note, Payor shall pay all legal fees of Payee actually incurred within five (5) business days of receipt of the legal bill of Payee’s counsel.

 

(E)           Assignment.  This Note may not be assigned or transferred by the Payor.

 

(F)           Construction.  Each of the parties hereto hereby further acknowledges and agrees that (i) each has had significant input in the development of this Note and (ii) this Note shall not, therefore, be construed more strictly against any party responsible for its drafting regardless of any presumption or rule requiring construction against the party who drafted this Note.

 

(G)           Entire Agreement.  This Note and all documents and instruments referred to herein (i) constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof and thereof, and (ii) are not intended to confer upon any person other than the parties hereto any rights or remedies hereunder.

 

(H)           Further Assurances.  The parties agree to execute any and all such other further instruments and documents, and to take any and all such further actions which are reasonably required to effectuate this Note and the intents and purposes hereof.

 

(I)             Binding Agreement.  This Note shall be binding upon and inure to the benefit of the parties hereto and their heirs, executors, administrators, personal representatives, successors and assigns.

 

(J)            Non-Waiver.  Except as otherwise expressly provided herein, no waiver of any covenant, condition, or provision of this Note shall be deemed to have been made unless expressly in writing and signed by the party against whom such waiver is charged; and (i) the failure of any party to insist in any one or more cases upon the performance of any of the provisions, covenants or conditions of this Note or to exercise any option herein contained shall not be construed as a waiver or relinquishment for the future of any such provisions, covenants or conditions, (ii) the acceptance of performance of anything required by this Note to be performed with knowledge of the breach or failure of a covenant, condition or provision hereof shall not be deemed a waiver of such breach or failure, and (iii) no waiver by any party of one breach by another party shall be construed as a waiver of any other or subsequent breach.

 

(K)           Modifications.  This Note may not be changed, modified, extended, terminated or discharged orally, but only by an agreement in writing, which is signed by the Payor and the Payee of this Note.

 

(L)           Exhibits.  All Exhibits annexed or attached to this Note are incorporated into this Note by reference thereto and constitute an integral part of this Note.

 

(M)         Severability.  The provisions of this Note shall be deemed separable.  Therefore, if any part of this Note is rendered void, invalid or unenforceable, such rendering shall not affect the validity or enforceability of the remainder of this Note.

 

 

  

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IN WITNESS WHEREOF, Payor has executed this Note as of the 11th day of July, 2011.

 

	 	
US Natural Gas Corp

	 
	 	 	 	 
	
 

	
By: 

	/s/ Wayne Anderson	 
	 	 	Wayne Anderson, President	 
	 	 	 	 
	 	 	 	 

 

Payee has executed this Note solely with respect to Paragraph “G” of Article “4”.

 

Tangiers Investors, LP

 

 

By: /s/ Michael Sobeck

Name: Michael Sobeck

Title: Managing Member

 

 

 

Enclosures: 2

 

  

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EXHIBIT A

 

NOTICE OF CONVERSION

 

 

To: US Natural Gas Corp

 

 

Attention: Chief Financial Officer

 

1.  The undersigned hereby elects to convert $________________ principal amount and $__________ of accrued and unpaid interest of that certain convertible promissory Note dated July 11, 2011 in the original principal amount of $10,000.00 at a conversion factor of sixty (60%) percent of the lowest trading price during the five (5) trading days prior to conversion of Common Stock of US Natural Gas Corp pursuant to the terms of the said Note.  If this is a total conversion or a final partial conversion of said note, then the undersigned herewith tenders the original note, marked paid and satisfied.

 

2.  Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below:

 

_________________________________ (Name)

 

_________________________________

 

_________________________________(Address)

 

 

3.  The undersigned hereby represents and warrants that the aforesaid shares of Common Stock are being acquired for the account of the undersigned for investment and not with a view to, or for resale, in connection with the distribution thereof, and that the undersigned has no present intention of distributing or reselling such shares.

 

 

______________________________

 

By:  _________________________

 

Its:  __________________________

 

Date:________________,_________ex1049.htm

Exhibit 10.49

 

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THIS WARRANT UNDER SUCH ACT AND REGISTRATION OR QUALIFICATION UNDER ANY AND ALL APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED.

 

US NATURAL GAS CORP

WARRANT TO PURCHASE COMMON STOCK

 

	
No. 2011-TI-003

	
Warrant to Purchase

	
July 20, 2011

	  	
500,000 Shares of Common Stock

	  
	  	
(subject to adjustment)

	  

 

THIS CERTIFIES THAT, for value received, the Holder identified below is entitled, subject to the terms and conditions of this Warrant, to purchase from US Natural Gas Corp, a Florida corporation with an address at 1717 Dr. Martin Luther King Jr. St. N., St. Petersburg, FL 33704 (the “Company”) up to the number of fully paid, non-assessable shares (the “Warrant Shares”) of the Common Stock of the Company set forth below, in whole or in part at any time and from time to time on or after the date first above written (the “Warrant Issue Date”, but not after 5:00 o’clock p.m. EST on the expiration date set forth below (the “Warrant Expiration Date”), upon surrender hereof, at the principal office of the Company referred to below, with the Notice of Exercise attached hereto duly completed and executed, and simultaneous payment of the price below in the Notice of Exercise in lawful money of the United States in cash or by check acceptable to the Company.  The number of Warrant Shares for which this Warrant is exercisable and the Warrant Exercise Price are subject to adjustment as provided below.  The term “Warrant” as used herein shall include this Warrant and any warrant(s) delivered in substitution or exchange, as provided herein.

 

	
Name of Holder:

	
Tangiers Investors, LP

	
Initial address of Holder:

	
402 West Broadway, Suite 400, San Diego, CA 92101

	
Number of Warrant Shares:

	
Five Hundred Thousand (500,000)

	
Warrant Exercise Price per Share:

	
Four One Thousandths ($.004)

	
Warrant Expiration Date:

	
July 20, 2016

	
At 5:00 p.m. local time of transfer agent.

	
Check  o  if rider of additional terms and conditions is attached.

 

  

1

  

 

 

1.  Definitions.  The following words and terms as used in this Warrant shall have the following meanings:

 

Except as otherwise specified herein, all references herein (A) to any person other than the Company, shall be deemed to include such person’s successors and assigns, (B) to the Company, shall be deemed to include the Company’s successors and (C) to any applicable law defined or referred to herein, shall be deemed references to such applicable law as the same may have been or may be amended or supplemented from time to time.

 

When used in this Warrant, the words “herein,” “hereof,” and “hereunder,” and words of similar import, shall refer to this Warrant as a whole and not to any provision of this Warrant, and the words “Section,” “Schedule,” and “Exhibit” shall refer to Sections of, and Schedules and Exhibits to, this Warrant unless otherwise specified.

 

Whenever the context so requires the neuter gender includes the masculine or feminine, and the singular number includes the plural, and vice versa.

 

2.  No Fractional Shares or Scrip.  No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant.  In lieu of any fractional share to which the Holder would otherwise be entitled, the Company shall make a cash payment equal to the Exercise Price multiplied by such fraction.

 

3.  Replacement of Warrant.  On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and substance to the Company or, in the case of mutilation, on surrender and cancellation of this Warrant, the Company at its expense shall execute and deliver, in lieu of this Warrant, a new warrant of like tenor and amount.

 

4.  No stockholders rights until exercised.

 

(a) Warrant Holder is Not a Stockholder. The Holder shall not be entitled to vote or receive dividends or be deemed the holder of Common Stock or any other securities of the Company that may at any time be issuable on the exercise hereof for any purpose, nor shall anything contained herein be construed to confer upon the Holder, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value, or change of stock to no par value, consolidation, merger, conveyance, or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until this Warrant shall have been exercised as provided herein.

 

(b) Rights Offering.  Notwithstanding the foregoing, in the event the Company should offer to all the Company’s stockholders the right to purchase any securities of the Company, then all of the Warrant Shares shall be deemed for such purpose to be outstanding and owned by the Holder as of the subscription date and the Holder shall be entitled to participate in such rights offering as if it were a stockholder.

 

5.  Transfer of Warrant.

 

(a)  Warrant Register.  The Company will maintain a register (the “Warrant Register”) containing the name and address of the Holder of the Warrant any and any permitted transferee.  The Holder may change his address as shown on the Warrant Register by written notice to the Warrant Agent, named below, and requesting such change.  Any notice or written communication required or permitted to be given to the Holder may be delivered or given by mail to such Holder as shown on the Warrant Register and at the address shown on the Warrant Register.  Until this Warrant is transferred on the Warrant Register of the Company, the Company may treat the Holder as shown on the Warrant Register as the absolute owner of this Warrant for all purposes, notwithstanding any notice to the contrary.

 

 

 

  

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(b)  Warrant Agent.  The Company does hereby appoint its transfer agent as the Warrant Agent for the purpose of maintaining the Warrant Register referred to in Section 5(a) above, issuing the Warrant Shares, exchanging this Warrant, replacing this Warrant, or any or all of the foregoing.  Thereafter, any such re-registration, change of address, issuance, exchange, or replacement, as the case may be, shall be made at the office of the Warrant Agent.

 

(c)  Transferability of Warrant.  THIS WARRANT MAY ONLY BE TRANSFERRED UPON COMPLIANCE WITH THE TERMS OF SECTIONS 5 and 9(f) AND ALL APPLICABLE SECURITIES LAWS.  Subject to the provisions of this Section 5, this Warrant or the Warrant Shares may be transferred, in whole or in part, to any person or business entity, by presentation of the Warrant or the Warrant Shares to the Company with written instructions for such transfer; provided, however, that the Company shall have the right to refuse to transfer any portion of this Warrant to any person who directly competes with the Company or is affiliated with any such competitor.  Upon such presentation for transfer, the Company or its Warrant Agent shall promptly execute and deliver a new Warrant or Warrants in the form hereof in the name of the assignee or assignees and in the denominations specified in such instructions. The Holder or his transferee shall pay all expenses in connection with the preparation, transfer, issuance and delivery of Warrants under this Section 5.

 

(d)  Exchange of Warrant Upon a Transfer.  On surrender of this Warrant for transfer or exchange, with valid transfer instructions properly endorsed, and subject to the provisions of this Warrant with respect to compliance with applicable federal and state securities laws (the “Securities Laws”), and with the limitations on assignments and transfers contained in this Section 5, the Company at the Holder’s expense shall issue to or on the order of the Holder a new warrant or warrants of like tenor, in the name of the Holder or as the Holder (on payment by the Holder of any applicable transfer taxes) may direct, for the number of shares issuable upon exercise hereof, or a portion hereof.

 

(e)  Compliance With Securities Laws.

 

(i)  The Holder of this Warrant, by acceptance hereof, acknowledges that this Warrant and the shares of Common Stock to be issued upon exercise hereof are being acquired solely for the Holder’s own account and not as a nominee for any other party, and for investment and not with a view towards distribution or resale, and that the Holder will not offer, sell or otherwise dispose of this Warrant or any Warrant Shares except under circumstances that will not result in a violation of the Securities Laws.  The Holder represents and warrants that he understands and agrees that the Warrants and Warrant Shares are “restricted securities”, as defined in Rule 144 under the Securities Act of 1933, as amended, and are subject to a minimum holding period and other requirements that must be satisfied before and in connection with the sale of the Warrants or the Warrant Shares into the public securities market.  Upon exercise of this Warrant, the Holder shall, if requested by the Company, confirm in writing, in a form satisfactory to the Company, that the shares of Common Stock so purchased are being acquired solely for the Holder’s own account and not as a nominee for any other party, for investment, and not with a view toward distribution or resale.  If such Holder cannot make such representations because they would be factually incorrect, it shall be a condition to such Holder’s exercise of the Warrant that the Company receive such other representations as shall be reasonably necessary to assure the Company that the issuance of its securities upon exercise of the Warrant shall not violate the United States’ or any state securities laws.

 

 

(ii) The Company covenants and agrees that all Warrant Shares that may be issued upon exercise of this Warrant will, upon issuance and payment therefore, be legally and validly issued and outstanding, fully paid and nonassessable.  The Company shall at all times reserve and keep available for issuance upon the exercise of this Warrant such number of authorized but unissued shares of Common Stock as will be sufficient to permit the exercise in full of this Warrant.

 

 

  

3

  

 

(iii)  All Warrant Shares issued upon exercise hereof shall be stamped or imprinted with a legend in substantially the following form (in addition to any legend required by state securities laws):

 

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THIS SECURITY UNDER SUCH SECURITIES ACT AND REGISTRATION OR QUALIFICATION UNDER ANY AND ALL APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED.

 

6.  Increase in Number of Shares of Authorized Stock.  The Company covenants that during the term this Warrant is exercisable, the Company will, if necessary, amend its Articles of Incorporation or otherwise take such necessary action as to reserve sufficient reserves of shares of Common Stock for issuance upon exercise of this Warrant.

 

7.  Amendments.

 

(a)  Any term of this Warrant may be amended and the observance of any term of this Warrant may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Holder.

 

(b)  No waivers of, or exceptions to, any term, condition or provision of this Warrant, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, condition or provision.

 

8.  Adjustments.  The Exercise Price and the number of Warrant Shares purchasable hereunder are subject to adjustment from time to time as follows:

 

(a)  Split, Subdivision or Combination of Shares.  If the Company at any time while this Warrant, or any portion hereof, remains outstanding and unexpired, shall split, subdivide or combine the securities as to which purchase rights under this Warrant exist, into a different number of securities of the same class, the Exercise Price for such securities shall be proportionately decreased in the case of a split or subdivision or proportionately increased in the case of a combination and the number of such securities for which this Warrant is exercisable shall be proportionately increased in the case of a split or subdivision or proportionately decreased in the case of a combination.

 

(b)  Reorganization, Reclassification, etc.  In case of any capital reorganization, or of any reclassification of the capital stock, of the Company (other than a change as a result of a split-up or combination) or in case of the consolidation or merger of the Company with or into any other corporation (other than a consolidation or merger in which the Company is the continuing corporation and which does not result in the Common Stock being changed into or exchanged for stock or other securities or property of any other person), or of the sale of the properties and assets of the Company as, or substantially as, an entirety to any other corporation, this Warrant shall, after such capital reorganization, reclassification of capital stock, consolidation, merger or sale, entitle the Holder hereof to purchase the kind and number of shares of stock or other securities or property of the Company, or of the corporation resulting from such consolidation or surviving such merger or to which such sale shall be made, as the case may be, to which the Holder hereof would have been entitled if the Holder had held the Common Stock issuable upon the exercise hereof immediately prior to such capital reorganization, reclassification of capital stock, consolidation, merger or sale, and in any such case appropriate provision shall be made with respect to the rights and interests of the Holder of this warrant to the end that the provisions hereof (including, without limitation, provisions for adjustment of the Warrant Exercise Price and of the number of Warrant Shares) shall thereafter be applicable, as nearly as may be in relation to any shares of stock, securities or assets thereafter deliverable upon the exercise of the rights represented hereby.  The Company shall not effect any such consolidation, merger or sale, unless prior to or simultaneously with the consummation thereof the successor corporation (if other than the Company) resulting from such consolidation or merger or the corporation purchasing such assets shall assume by written instrument executed and mailed or delivered to the Holder hereof at the address of such Holder appearing in the Warrant Register, the obligation to deliver to such Holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, such Holder may be entitled to purchase.

 

 

  

4

  

 

(c)  Notice of Adjustment of Warrant Exercise Price.  Upon any adjustment of the Warrant Exercise Price and the number of Warrant Shares, then the Company shall give notice thereof to the registered Holder of this Warrant, which notice shall state the Warrant Exercise Price in effect after such adjustment and the increase, or decrease, if any, in the number of Warrant Shares purchasable at the Warrant Exercise Price upon the exercise of this Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based.

 

9. Exercise of Warrant.  This Warrant may be exercised, in whole at any time or in part from time to time, commencing prior to its expiration date by the Holder by the surrender of this Warrant (with the Notice of Exercise form at the end hereof duly executed) at the address set forth in Subsection 10(g) hereof, together with proper payment of the aggregate Warrant Exercise Price, or the proportionate part thereof if this Warrant is exercised in part. Payment for Warrant Shares shall be made by valid check payable to the order of the Company or by wire transfer of funds. If this Warrant is exercised in part, this Warrant must be exercised for a number of whole shares of the Common Stock, and the Holder is entitled to receive a new Warrant covering the Warrant Shares which have not been exercised and setting forth the proportionate part of the aggregate Warrant Price applicable to such Warrant Shares. Upon such surrender of this Warrant, the Company will (a) issue a certificate or certificates in the name of the Holder for the largest number of whole shares of the Common Stock to which the Holder shall be entitled and, if this Warrant is exercised in whole, in lieu of any fractional share of the Common Stock to which the Holder shall be entitled, pay to the Holder cash in an amount equal to the fair value of such fractional share (determined in such reasonable manner as the Board of Directors of the Company shall determine), and (b) deliver the other securities and properties receivable upon the exercise of this Warrant, or the proportionate part thereof if this Warrant is exercised in part, pursuant to the provisions of this Warrant.

 

10.  Miscellaneous.

 

(a)  Governing Law.  The internal laws of the State of Florida (irrespective of its choice of law principles) will govern the validity of this Warrant, the construction of its terms, and the interpretation and enforcement of the rights and duties of the parties hereto.

 

(b)  Business Day.  In the event the Expiration Date of this Warrant falls on a Saturday, Sunday or nationally recognized holiday, then the Holder shall have until the next business day to exercise this Warrant.

 

(c)  Severability.  If any provision of this Warrant is for any reason and to any extent held to be invalid or unenforceable, the remainder of this Warrant shall remain in full force and effect and shall be interpreted so as reasonably to effect the intent of the parties hereto.  The parties further agree to replace such void or unenforceable provision of this Warrant with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of the void or unenforceable provision.

 

(d)  No Waiver.  The failure of any party to enforce any of the provisions hereof will not be construed to be a waiver of the right of such party thereafter to enforce such provisions.

 

(e)  Successors.  The terms and conditions of this Warrant shall apply to and bind the heirs, successors, legal representatives and assigns of the parties.

 

(f)  Assignment.  This Warrant, and any right or obligation under this Warrant, may not be assigned or otherwise transferred by the Holder without the prior written consent of the Company.

 

(g)  Notice.  All notices and other communications under this Warrant shall be in writing and (i) if given to the Company or the transfer agent, sent by registered or certified mail, postage prepaid, return receipt requested, or delivered by hand or (ii) if given to the Holder, sent by first class mail, postage prepaid, in each case, to the following address:

 

	
If to the Company:

	
If to the Company’s transfer agent:

	
US Natural Gas Corp

	
Olde Monmouth Stock Transfer

	
1717 Dr. MLK Jr. St N

	
200 Memorial Parkway

	
St. Petersburg, FL 33704

	
Atlantic Highlands, NJ 07716

	
Fax: 727-824-2881

	
Fax: 732-872-2728

	  	  
	
If to the Holder:

	  
	
The most recent address set forth on the

	  
	
Warrant Register

	  

 

The Company’s address shall automatically change, without notice the Holder, to the address set forth in the Company’s most recent filing with the U.S. Securities and Exchange Commission.

 

  

5

  

 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as of the Issue Date first above written.

 

	 	
US NATURAL GAS CORP

	 
	 	 	 	 
	
 

	
By: 

	/s/ Wayne Anderson	 
	 	 	
Wayne Anderson, President

	 
	 	 	 	 
	 	 	 	 

 

  

6

  

 

 

NOTICE OF WARRANT EXERCISE

 

 

To:           US Natural Gas Corp

 

1. The undersigned hereby elects to purchase __________ Warrant Shares, par value $.001 per share, of US Natural Gas Corp, pursuant to the terms of the attached Warrant No. 2011-TI-003, attached hereto for cancellation with respect to such number of Warrant Shares with respect to which this Notice of Exercise is delivered.

 

2. The undersigned tenders concurrently herewith $__________________* as payment in full for the purchase price of the Warrant Shares being purchased, in cash or official bank check (unless the undersigned has made arrangements with US Natural Gas Corp for a wire transfer of the Warrant Exercise Price.

*See attached evidence to payment (check, wire instructions, evidence of payment to third party(ies), etc.).

 

3. In exercising this Warrant, the undersigned hereby confirms and acknowledges that the shares of Common Stock to be issued upon exercise hereof are being acquired solely for the account of the undersigned and not as a nominee for any other party, and for investment, and that the undersigned will not offer, sell or otherwise dispose of any such shares of Common Stock except under circumstances that will not result in a violation of the Securities Act of 1933, as amended, (the “Securities Act”) or any state securities laws.  The undersigned acknowledges that the Warrant Shares are “restricted securities” as defined in Rule 144 under the Securities Act, and may be resold to the public only in compliance with the restrictive legend to be printed thereon.

 

4. Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below:

 

	
Date:

	
è

	  
	
Print name of Warrant Holder:

	
è

	  
	
Signature of or for Warrant Holder:

	
è

	  
	
Print name and title of signer if signing as officer of Warrant Holder:

	
 

è

	  
	
Social security or taxpayer id. number:

	
è

	  
	
Print address for registration of Common Stock:

	
è

	  
	  
	
Phone number of signer:

	
è

	  
	
Fax number of signer

	
è

	  
	
E-mail address of signer

	
è

	  

 

 

7

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