Document:

avino_ex101.htm

EXHIBIT 10.1

SHARE PURCHASE AGREEMENT

 

THIS AGREEMENT made the 25th day of June, 2014

 

BETWEEN:

 

AVINO SILVER & GOLD MINES LTD., a body corporate incorporated under the laws of British Columbia, having an address at Suite 900, 570 Granville Street, Vancouver, British Columbia, V6C 3P1

 

(herein called the “Purchaser”)

 

OF THE FIRST PART

 

AND:

 

The Undersigned Persons listed on Schedule “A” to this Agreement

 

(herein together called the “Shareholders”, and individually called a “Shareholder”)

 

OF THE SECOND PART

 

WHEREAS:

 

A. The Shareholders are the holders of 9,500,000 common shares as set forth in Schedule “A” attached to this Agreement (the “Shares”) of Bralorne Gold Mines Ltd. (the “Company”), representing a control block of the voting shares of the Company, and in result the Shareholders are insiders of the Company;

 

B. The Purchaser wishes to acquire all of the Shares from the Shareholders and each Shareholder agrees to sell its respective Shares to the Purchaser by a separate transaction or transactions;

 

C. Maxwell A. Munday is the sole shareholder of the Shareholder Munday Home Sales Ltd., and Maxwell Munday controls and directs trading of the shareholdings of Munday Estates Ltd.;

 

D. The parties wish to structure the sale of the Shares as an exempt take-over bid pursuant to section 4.2 of Multilateral Instrument 62-104 Take-Over Bids and Issuer Bids; and

 

E. The parties wish to enter into this Agreement in order to set out the terms and conditions of the acquisition by the Purchaser of the Shares.

 

NOW THEREFORE THIS AGREEMENT WITNESSES that for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and of the premises, covenants and agreements herein set forth, the parties hereto covenant and agree each with the other as follows:

 

1. PURCHASE AND SALE

 

1.1 The Purchaser hereby agrees to acquire, subject to the terms and conditions in this Agreement, from each of the Shareholders, and each of the Shareholders agree to sell to the Purchaser on the Closing Date (as such term is defined in section 8 of this Agreement), all right, title and interest of the Shareholders in and to their respective Shares (the “Contemplated Transactions”).

 

  

1

  

 

1.2 In consideration for the Shares, the Purchaser shall pay to the Shareholders a purchase price of $0.28 per Share, being an aggregate purchase price of $2,660,000 (the “Purchase Price”), payable as follows:

 

	
(a)  

	
The first $10,000 as a non-refundable deposit upon the execution of this Agreement (the “Deposit”) by certified cheque or bank wire transfer, in trust, to Munday Home's Counsel (as defined below); and

 

	
(b)  

	
The balance of $2,650,000 (the “Balance of the Purchase Price”) on the Closing Date by certified cheque or bank wire transfer, in trust, to Munday Home's Counsel.

 

1.3 The Deposit shall be non-refundable even if the completion of the Contemplated Transactions (the “Closing”) does not occur; provided that if the Closing does not occur as a result of a material breach of this Agreement by the Shareholders or of any of them, then the Shareholders shall instruct Munday Home's Counsel to refund the Deposit without interest to the Purchaser. The Closing shall occur in the manner specified in section 8 of this Agreement.

 

2. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS

 

2.1 The Shareholders, with the knowledge and intent that the Purchaser is relying on such representations and warranties in entering into this Agreement, hereby jointly and severally warrant and represent to the Purchaser, each to the extent of their own Shares, as follows:

 

	
(a)  

	
the Shareholders have full right, power, authority and capacity to enter into this Agreement and any agreement or instrument referred to or contemplated by this Agreement;

 

	
(b)  

	
each of the Shareholders is the beneficial owner of the Shares denoted on Schedule “A” to this Agreement;

 

	
(c)  

	
each of the Shareholders has good and sufficient right and authority to enter into this Agreement on the terms and conditions herein set forth and to transfer all legal and beneficial right, title, interest and ownership in and to such Shares to the Purchaser without the consent of any other person, free and clear of any pre-emptive rights of first refusal or liens, charges or encumbrances whatsoever, in accordance with the terms hereof, and this Agreement is a legal, valid and binding obligation of such Shareholder enforceable against such Shareholder in accordance with its terms;

 

	
(d)  

	
the Shares are not subject to any hold period, escrow, pooling or other resale restrictions on their transfer, other than control block restrictions for which the Shareholders, or one of them as may be required, will file a Notice of Intention to Distribute Securities in Form 45-102F1 (the “Notice Form”) at least seven (7) days (and not more than thirty (30) days) before the Closing Date, and each of the Shareholders has held its Shares for at least 4 months and a day;

 

	
(e)  

	
no person has any agreement, option, understanding or commitment, or any right or privilege (whether by law, pre-emptive or contractual right), capable of becoming an agreement, option or commitment for the purchase from any Shareholder of any of, or the realization of a security interest over, the Shares;

 

	
(f)  

	
none of the Shareholders is under any obligation, contractual or otherwise to request or obtain the consent of any person, and no permits, licenses, certifications, authorizations or approval of, or notifications to, any federal, provincial, state, municipal or local government or governmental agency, board, commission or authority is required to be obtained by the Shareholders, in connection with the execution, delivery or performance by the Shareholders of this Agreement or completion of the Contemplated Transactions;

 

  

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(g)  

	
neither the execution nor delivery of this Agreement, the completion of the Contemplated Transactions, or the observance and performance by the Shareholders of their respective covenants and obligations herein will conflict with, or result in a breach of, or violate any of the terms, conditions or provisions of any law, judgment, order, statute, injunction, decree, regulation or ruling of any court or governmental authority to which any of the Shareholders is subject; and

 

	
(h)  

	
each of the Shareholders is a company duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation.

 

3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

 

3.1 The Purchaser, with the knowledge and intent that the Shareholders are relying on such representations and warranties in entering into this Agreement, hereby warrants and represents to the Shareholders that:

 

	
(a)  

	
it is a company duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation;

 

	
(b)  

	
neither the execution nor delivery of this Agreement, the completion of the Contemplated Transactions, or the observance and performance by the Purchaser of its covenants and obligations herein will conflict with, or result in a breach of, or violate any of the terms, conditions or provisions of any law, judgment, order, statute, injunction, decree, regulation or ruling of any court or governmental authority to which the Purchaser is subject;

 

	
(c)  

	
it has full right, power, capacity and authority to enter into this Agreement and any agreement or instrument referred to or contemplated by this Agreement; and

 

	
(d)  

	
it has good and sufficient right and authority to enter into this Agreement on the terms and conditions herein set forth and to purchase the Shares from the Shareholders, in accordance with the terms hereof, and this Agreement is a legal, valid and binding obligation of the Purchaser enforceable against the Purchaser in accordance with its terms.

 

4. COVENANTS OF THE SHAREHOLDERS

 

4.1 The Shareholders covenant and agree that they will, from the execution of this Agreement until the Closing Date or termination of this Agreement, in respect of their Shares:

 

	
(a)  

	
file a Notice Form with the British Columbia Securities Commission and the TSX Venture Exchange (the “Exchange”), in the manner and as required by section 2.8 of National Instrument 45-102, Resale of Securities, at least seven (7) days (and not more than thirty (30) days) before the Closing Date;

 

	
(b)  

	
not permit the transfer, assignment, sale, encumbrance or hypothecation of their Shares, other than any transfers that do not impact beneficial ownership and are designed to facilitate the transfer of the Shares to the Purchaser under this Agreement;

 

  

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(c)  

	
not, and will not cause to, grant or agree to grant any proxy or other right to vote any Shares, or enter into any voting trust, vote pooling or other agreement with respect to the right to vote, call meetings of shareholders or give consents or approval of any kind as to the Shares;

 

	
(d)  

	
not take or permit to be taken or suffer any action which would in any way impair or derogate from the right of the Purchaser to acquire on the Closing Date all right, title and interest, both real and beneficial, in and to the Shares, free and clear of all liens, changes and encumbrances whatsoever;

 

	
(e)  

	
not take or permit to be taken or suffer any action which would in any way impair or impede any discussions, negotiations or transactions between the Purchaser and the Company, or impair or impede the Purchaser from acquiring any other securities of the Company; and

 

	
(f)  

	
execute all stock powers of attorney, undertakings and any and all other documents which may be required in order to transfer the Shares to the Purchaser on the Closing Date, and will comply with all requirements of all applicable regulatory authorities which may be reasonably necessary to obtain the necessary approvals of such regulatory authorities to the transfer of its Shares to the Purchaser.

 

5. COVENANT OF THE PURCHASER

 

5.1 The Purchaser shall take all such steps and proceedings as may be reasonably required to obtain all necessary consents or approvals from any regulatory authorities with respect to the transactions contemplated hereunder, including, if applicable, the approval of the Contemplated Transactions by the Exchange.

 

6. CLOSING CONDITIONS

 

6.1 The obligation of the Purchaser to carry out the terms of this Agreement and to complete the purchase of the Shares is subject to the fulfilment, on or before the Closing Date, of each of the following conditions, each of which is for the exclusive benefit of the Purchaser other than paragraphs (b) and (e), which are for the exclusive benefit of the Shareholders and paragraph (d), which is for the benefit of all parties:

 

	
(a)  

	
the warranties and representations of each of the Shareholders as set forth in section 2 of this Agreement shall be true and correct in every material aspect on the Closing Date as if such warranties and representations had been made by each of the Shareholders on the Closing Date;

 

	
(b)  

	
the warranties and representations of the Purchaser as set forth in section 3 of this Agreement shall be true and correct in every material aspect on the Closing Date as if such warranties and representations had been made by the Purchaser on the Closing Date;

 

	
(c)  

	
all covenants set forth in section 4 of this Agreement have been complied with;

 

	
(d)  

	
the acceptance of the Contemplated Transactions by all necessary regulatory authorities having jurisdiction and the issuance of all other necessary regulatory approvals, exemptions and consents, including the acceptance of this Agreement by the Exchange in respect of the Purchaser;

 

  

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(e)  

	
the Shareholders shall have received the relevant documents, and the Deposit and the Balance of the Purchase Price, as specified in section 8.1 hereof

 

	
(f)  

	
the Purchaser shall have received the relevant documents specified in section 8.1 hereof;

 

	
(g)  

	
there shall not have occurred prior to the Closing Date, any material adverse change in the position (business, financial or otherwise) or condition or assets of the Company; and

 

	
(h)  

	
the Shareholders and their principals will keep their personal views on the merits of any other potential transaction involving the Company and the Purchaser confidential until the Closing Date.

 

6.2 The conditions set forth in section 6.1, other than in paragraphs 6.1(b), 6.1(d), and 6.1(e) may be waived by the Purchaser in writing in whole or in part at any time on or before the Closing Date.

 

6.3 The condition set forth in paragraph 6.1(b) and 6.1(e) may be waived by the Shareholders in writing in whole or in part at any time on or before the Closing Date.

 

7. CLOSING DATE

 

7.1 Subject to section 8, the Closing Date will be, and the Closing of the Contemplated Transactions will take place either:

 

	
 (a)  

	
as soon as reasonably practicable after the Shareholders’ filing of the Notice Form and receipt of any required approval of the Exchange in respect of the acquisition of the Shares by the Purchaser; or

 

	
(b)  

	
but in any event no later than July 10, 2014;

 

or this Agreement may be terminated by the Shareholders upon written notice to the Purchaser in accordance with the provisions of section 9.6 below.

 

7.2 The Closing will take place by electronic and physical exchange of the documents specified in, and in accordance with, section 8 below.

 

8. DELIVERIES ON CLOSING

 

8.1 The Closing shall occur in the following manner, subject to such procedural alterations as may be consented to by the Shareholders and the Purchaser:

 

	
(a)  

	
the Purchaser will designate in writing to the Shareholders an account for the electronic transfer to the Purchaser of the Shares;

 

	
(b)  

	
the Purchaser will deliver or cause to be delivered to DuMoulin Black LLP, 10th Floor, 595 Howe St. Vancouver, BC V6C 2T5, Fax No.: (604) 687-8772, Attn: Kristopher Britch (“Munday Home's Counsel”), in trust, the Balance of the Purchase Price by certified cheque or wire transfer;

 

  

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(c)  

	
upon Munday Home’s Counsel receiving the Balance of the Purchase Price in trust, Munday Home's Counsel will notify the Shareholders (the “Notification”), and the Shareholders will transfer the Shares to the Purchaser’s designated account;

 

	
(d)  

	
Munday Home's Counsel shall hold the funds representing the Balance of the Purchase Price in trust on its undertaking not to release the Deposit or the Balance of the Purchase Price to the Shareholders or, subject to this section 8, any other person until Munday Home's Counsel has received written confirmation (the “Transfer Confirmation”) of the transfer of the Shares in the form of an affidavit from Maxwell A. Munday (or any other authorized signatory of the Shareholders) attesting to the fact that the Shareholders have caused the Shares to be electronically transferred to the Purchaser’s designated account and Munday Home's Counsel has sent a copy of the Transfer Confirmation to the Purchaser and, unless otherwise directed by an order of a court of competent jurisdiction or earlier directed by a joint written direction of the Shareholders and the Purchaser in a form satisfactory to Munday Home's Counsel which confirms that the Purchaser has received the Shares, Munday Home's Counsel shall cause to be delivered the Deposit and the Balance of the Purchase Price to the Shareholders by solicitor’s trust cheque or wire transfer five (5) business days after Munday Home's Counsel has sent a copy of the Transfer Confirmation to the Purchaser.

 

	
(e)  

	
upon delivery by Munday Home's Counsel of the Deposit and the Balance of the Purchase Price to the Shareholders as noted immediately above, Munday Home's Counsel will be released from its undertaking with respect to the release of the Deposit and the Balance of the Purchase Price and such delivery will be an effective discharge of any obligations of Munday Home's Counsel pursuant to this section 8, and the Contemplated Transactions shall be deemed to be completed;

 

	
(f)  

	
in the event that Munday Home's Counsel has not received the Transfer Confirmation within ten (10) business days of receipt of the Notification, and provided the Shareholders and the Purchaser have not otherwise jointly directed Munday Home's Counsel in writing in a form satisfactory to Munday Home's Counsel, Munday Home's Counsel shall return the Deposit and the Balance of the Purchase Price to the Purchaser and upon such return, Munday Home's Counsel will be released from its undertaking with respect to the release of the Deposit and the Balance of the Purchase Price and such return will be an effective discharge of any obligations of Munday Home's Counsel pursuant to this section 8;

 

	
(g)  

	
notwithstanding anything to the contrary contained herein, in the event of any dispute arising between the Purchaser and the Shareholders, this Agreement or any matters arising thereto, Munday Home's Counsel may, unless the Shareholders and the Purchaser otherwise agree in writing in a form satisfactory to Munday Home's Counsel, deliver and interplead the Deposit and the Balance of the Purchase Price into court and upon such delivery and interpleading, Munday Home's Counsel will be released from its undertaking with respect to the release of the Deposit and the Balance of the Purchase Price and such delivery and interpleading will be an effective discharge of any obligations of Munday Home's Counsel pursuant to this section 8; and

 

	
(h)  

	
the Purchaser shall agree to such other trust and/or escrow arrangements as may be proposed by Munday Home's Counsel, acting reasonably, from time to time.

 

  

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9. GENERAL PROVISIONS

 

9.1 Time is and will be of the essence of each and every provision of this Agreement.

 

9.2 Each party will, at its own expense, execute and deliver all such further documents and instruments, give all such further assurances, and do all such acts and things as the other parties may, either before or after the Closing Date, reasonably require to carry out the full intent and meaning of this Agreement, but without payment of any consideration therefor.

 

9.3 This Agreement contains the whole agreement between the Shareholders and the Purchaser in respect of the subject matter hereof and supersedes and replaces all prior negotiations, communications and correspondence. There are no warranties, representations, terms conditions or collateral agreements, express or implied, statutory or otherwise, other than as expressly set forth in this Agreement.

 

9.4 This Agreement will enure to the benefit of and be binding upon the Shareholders and each of them and their respective heirs, successors, liquidators, executors and assigns and upon the Purchaser and its heirs, successors, liquidators, executors and assigns, as the case may be. No Shareholder may assign any of its right, title or interest in, to or under this Agreement. The Purchaser, or any of its assigns, may assign his rights and obligations under this Agreement upon written notice to the Shareholders.

 

9.5 This Agreement is being delivered in and is intended to be performed in British Columbia, and shall be construed and interpreted in accordance with the laws of British Columbia and the laws of Canada applicable therein. The parties irrevocably attorn to the jurisdiction of the courts of British Columbia and the venue for any actions or arbitrations arising out of this Agreement will be Vancouver, British Columbia.

 

9.6 Any notices, required or permitted to be given under this Agreement will be in writing and will be duly and properly given and received if delivered or telecopied, in each case addressed to the intended recipient at its respective address appearing below for the Purchaser and at the address appearing on Schedule “A” for the Shareholders, (or at such other address as a party may from time to time designate by notice in writing to the other parties in accordance with this subsection), and any such notice will be deemed to have been given and received, if delivered, when delivered to such address, and if telecopied, on the next business day after the telecopying of the same:

 

To the Purchaser:

 

Avino Silver & Gold Mines Ltd.

Suite 900, 570 Granville Street

Vancouver, BC, V6C 3P1

 

Attention: David Wolfin, President & CEO

Fax: 604-682-3600

 

To the Shareholders:

 

Munday Home Sales Ltd.

200 – 4400 Dominion Street

Burnaby, BC V5G 4G3

 

Attention: Maxwell A. Munday, President

Fax: 604-430-5617

  

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With a copy to:

DuMoulin Black LLP

10th Floor 595 Howe Street

Vancouver, BC V6C 2T5

Attention: Kristopher Britch

Fax: 604-687-8772

 

9.7 If any provision of this Agreement shall be determined by any court of competent jurisdiction to be illegal, invalid or unenforceable, that provision shall be severed from this Agreement and the remaining provisions shall continue in full force and effect.

 

9.8 This Agreement may at any time and from time to time not later than the Closing Date, be amended by mutual agreement of the Shareholders and the Purchaser. The parties agree that if the Shareholders or the Purchaser, as the case may be, proposes any amendments to this Agreement, the other will act reasonably in considering such amendments and if the other is not prejudiced by reason of any such amendments, the other will co-operate in a reasonable fashion with the Shareholders or the Purchaser, as the case may be, so that such amendments can be effected subject to applicable laws.

 

9.9 The parties acknowledge and agree that it is their intent to structure and complete the Contemplated Transactions in a manner that makes the Contemplated Transactions exempt from the formal takeover bid requirements under applicable securities laws. The parties agree to take such actions, within reason, as are necessary to carry out this intent.

 

The parties hereto agree to execute such further and other assurances and/or documents as may be necessary to complete the true intent and meaning of this Agreement.

 

9.10 In this Agreement, any payment to be made by the Purchaser to the Shareholders may be mailed or delivered to the Shareholders at their address for notice purposes as provided herein, or in the case of any cash payment deposited for the account of the Shareholders at such bank or other financial institution in Canada as the Shareholders may designate from time to time by notice to the Purchaser. The designated bank or other financial institution will be deemed the agent of the designating party for the purposes of receiving, collecting, and receipting such payment, and the Shareholders will bear all risks, costs and expenses associated with such deposit, including any wire transfer fees.

 

[BALANCE OF THIS PAGE LEFT INTENTIONALLY BLANK]

 

  

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10. COUNTERPARTS

 

10.1 This Agreement and any certificates or other writing delivered in connection herewith, may be executed in any number of counterparts with the same effect as if all parties had all signed the same documents, and all such counterparts and adopting instruments will be construed together and will constitute one and the same instrument. The execution of this Agreement and any other writing by any party hereto or thereto will not become effective until counterparts hereof or thereof, as the case may be, have been executed by all the parties hereto or thereto.

 

IN WITNESS WHEREOF the parties have executed and delivered this Agreement as of the day and year first above written.

 

 

	AVINO SILVER & GOLD MINES LTD.	 	)
	
by its authorized signatories:

	 	)
	 	 	)
	 	 	)
	 	 	)
	
Authorized Signatory

	 	)
	 	 	)
	 	 	)
	
Authorized Signatory

	 	)
	 	 	)
	 	 	 
	
MUNDAY HOME SALES LTD.

	 	)
	by its authorized signatory:	 	)
	 	 	)
	 	 	)
	 	 	)
	
Maxwell A. Munday, President

	 	)
	 	 	)
	 	 	 
	MUNDAY ESTATES LTD.	 	)
	by its authorized signatory:	 	)
	 	 	)
	 	 	)
	 	 	)
	Authorized Signatory	 	)

  

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SCHEDULE “A”

 

LIST OF SHAREHOLDERS

 

	
Name of Beneficial Owners of Shares

	
Address of Beneficial Owners

	
Number of Shares being Sold

	
Purchase Price

	
Munday Home Sales Ltd.

	
200 – 4400 Dominion Street

Burnaby, BC V5G 4G3

	
9,200,000

	
$2,576,000

	
Munday Estates Ltd.

	
200 – 4400 Dominion Street

Burnaby, BC V5G 4G3

	
300,000

	
$84,000

	
TOTAL

	  	
9,500,000

	
$2,660,000

 

 

10Exhibit 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.

 

 

    	3

    	 

    

 

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

 

    	4

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