Document:

uree_ex104.htm

Exhibit 10.4

 

  NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

 

OPTION AGREEMENT

 

This Option Agreement (the "Option Agreement"), dated as of the 20th day of May 2013 (the "Grant Date"), is made between U.S. Rare Earths, Inc., a Nevada corporation (the "Company"), and Postscriptum Ventures (the "Optionee").

 

WHEREAS, pursuant to that certain Subscription Agreement dated as of the date hereof between the Company and the Optionee, the Company desires to grant the Optionee the option to purchase shares

of common stock of the Company, par value $0.00001 per share, (the "Common Stock") in accordance l,

with the terms set forth herein.

 

NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties hereto, intending to be legally bound hereby, agree as follows:

 

1. Grant of Option.  The Company hereby grants to the Optionee the right and option (the "Option") to purchase up  to  $650,000  of  shares  of  Common  Stock  of  the  Company  (the  "Option Shares").  All such shares shall be deemed fully vested upon grant.

 

2. Exercise Price. The per share exercise price of the Option Shares covered by this Option shall be thegreater of (i) the product of (a) 75%, multiplied by (b) the average closing price for the Company's Common Stock as quoted on the OTC Bulletin Board (or such other exchange, market or quotation system on which the Common Stock is then traded or quoted) for any 10 consecutive trading days ending on the day preceding the Optionee's date of exercise of the Option (which 10-day period shall not have commenced until after the first trading day after the Grant Date and shall end on the last trading day preceding the Expiration Date) or (ii) $2.00, subject to adjustment hereunder (the "Per Share Exercise Price").

 

3. Term. This Option shall expire on December 30, 2013 (the "Expiration Date"). This Option shall not be exercisable on or after the Expiration Date.

 

 

4. Exercise of Option. Subject to compliance with the terms and conditions of this Option Agreement and applicable securities laws, the Option may be exercised in whole or in part at any time or from time to time after the tenth trading day after the Grant Date and on or before the Expiration Date by the delivery (including, without limitation, delivery by  facsimile) of the form of Notice of Exercise attached hereto as Exhibit 1 (the "Notice of Exercise"), duly executed by the Optionee, at the principal business address of the Company, and as soon as practicable after such date, (i) surrendering this Option Agreement at the address of the Company, and (ii) providing payment, by check or by wire transfer, of an amount equal to the aggregate amount paid for the exercise of the Option (the "Aggregate Exercise Price").

 

  

1

  

 

The number of Option Shares issuable upon exercise of the Option shall be the quotient of (i) the Aggregate Exercise Price, divided by (ii) the Per Share Exercise Price; provided that upon each exercise, the Aggregate Exercise Price together with the Aggregate Exercise Price of prior exercises of this Option, if any, shall not exceed $650,000.

 

By way of example only, if upon exercise of this Option the aggregate amount paid is $200,000 and the Per Share Exercise Price is calculated to be $2.50, the number of Option Shares issuable shall be 80,000. In such case, the holder of the Option may exercise a remaining amount of up to $450,000 of Option Shares, subject to the terms hereof.

 

As soon as practicable on or after the date of an exercise of the Option, the Company shall deliver to the person or persons entitled to receive the same a certificate or certificates for the number of whole shares of Common Stock issuable upon such exercise. No fractional shares or scrip representing fractional shares of Common Stock shall be issued upon an exercise of the Option.  As to any fraction of a share which the Optionee would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Per Share Exercise Price or round up to the next whole share.

 

In case of any partial exercise of the Option, the Optionee and the Company shall cancel this Option Agreement upon surrender hereof and shall execute and deliver a new Option Agreement of like tenor and date for the balance of the Option Shares purchasable hereunder. This Option Agreement shall be deemed to have been exercised on the close of business on the date of delivery of the Notice of Exercise as provided above. The Company acknowledges that the person entitled to receive the Option Shares issuable upon exercise of the Option shall be treated for all purposes as the holder of record of such shares as of the close of business on the date the Optionee is deemed to have exercised the Option.

 

5.          Transferability. The Optionee agrees that, absent an effective registration statement filed with the SEC under the Securities Act, covering the disposition or sale of the Option or the Option Shares issued  or issuable upon exercise thereof, as the case may be, and registration or qualification under applicable state securities laws, it will not sell, transfer, pledge, or hypothecate any or all such Option or Option Shares, as the case may be, unless either (i) the Company has received an opinion of counsel, in form and substance reasonably satisfactory to the Company, to the effect that such registration is not required in connection with such disposition or (ii) the sale of such securities is made pursuant to Rule 144. Each transferee of the Option shall by its acceptance thereof be bound by the terms of this Option Agreement. The Optionee acknowledges that the certificates evidencing the Option Shares shall bear the following legend:

 

THE  SECURITIES  REPRESENTED  HEREBY  HAVE  NOT  BEEN  REGISTERED UNDER  THE  SECURITIES  ACT  OF  1933,  AS  AMENDED   (THE  "ACT"),  OR UNDER THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER TI-IE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFUR OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

 

6. No Rights  in the  Option  Shares. This Option Agreement shall not entitle the Optionee to any voting rights or other rights as a shareholder of the Company. In the absence of affirmative action by such Optionee to purchase  Option  Shares by  exercise  of  the  Option,  no  provisions  of  this  Option Agreement, and no enumeration herein of the rights or privileges of the Optionee hereof shall cause such Optionee hereof to be a shareholder of the Company for any purpose.

 

  

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7. Ad justments. In the event that there is any change in the shares of the Company arising through merger, consolidation, reorganization, recapitalization,  stock dividend, stock split or combination thereof, the Board of Directors of the Company shall make such adjustments in the aggregate number of Option Shares subject  to this Agreement and/or the exercise price of such Option Shares in order to prevent dilution or enlargement of the Optionee's  rights  and  of  the  value  represented  by  the Option. Upon any adjustment in the number or exercise price of Option Shares, a new Option may be granted in place of such Option which has been so adjusted.

 

8. Entire Agreement. This Option Agreement and the agreement referred to in  the preamble herein constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior negotiations, agreements and understandings of the parties of any nature, whether oral or written, relating thereto.

 

9. Amendment Waiver. This Option Agreement cannot be amended, modified, supplemented, waived except by a written agreement making specific reference hereto executed by the Company and Optionee.

 

10. Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Option Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflict of laws thereof.

 

11. Severability. If any term, provision, covenant or restriction of this Option Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Option Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

 

  

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IN WITNESS WHEREOF, the parties hereto have duly executed this Option Agreement as of the first date set forth above.

U.S. Rare Earths, Inc.

/s/ Kevin Cassidy

By: Kevin Cassidy

CEO

Postscriptum Ventures Ltd.

 

/s/ Cosign Services Ltd

By: Cosign Services Ltd

Director

/s/ Spread Services Ltd

Spread Services Ltd

Director

 

  

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EXHIBIT 1 NOTICE OF EXERCISE

 

(To be executed upon exercise of Option)

 

Any terms used herein shall bear such meanings ascribed to them in the Option Agreement  to which this Notice of Exercise is attached.

 

(1)          The undersigned hereby elects to pay an Aggregate Exercise Price of $for Option Shares based on a Per Share Exercise Price of $ 2. 00 pursuant to the terms of the attached Option Agreement, and tenders herewith payment of the Aggregate Exercise Price in full, together with all applicable transfer taxes, if any.

 

(2)          Please issue a certificate or certificates representing said Option Shares in the name of the undersigned or in such other name as is specified below:

 

  Note:  The  above  signature  should  correspond  exactly  with  the first  page  of this Option Agreement.

 

If said number of shares shall not be all the shares purchasable under the within Option Agreement, a new Option Agreement is to be issued in the name of said unddersigned for the balance remaining of the shares purchasable thereunder rounded up to the next higher whole number of shares.

 

 

5froz_ex1036.htm

Exhibit 10.36

 

­Note: June 1, 2013

 

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

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

 

10% CONVERTIBLE PROMISSORY NOTE

OF

FROZEN FOOD GIFT GROUP, INC.

 

Issuance Date: June 1, 2013

Total Face Value of Note: $12,000

This Note (“Note” or “Note”) is a duly authorized Convertible Promissory Note of FROZEN FOOD GIFT GROUP, INC., a corporation duly organized and existing under the laws of the State of Delaware (the “Company”), designated as the Company's 10% Convertible Promissory Note Due June 1 2014 (“Maturity Date”) in the original principal amount of Twelve Thousand Dollars ($12,000.00) (the “Note”).

 

For Value Received, the Company hereby promises to pay to the order of Tangiers Investors, LP or its registered assigns or successors-in-interest (“Holder”) the principal sum of Twelve Thousand Dollars ($12,000.00) together with all accrued but unpaid interest thereon, if any, on the Maturity Date, to the extent such principal amount and interest has not been repaid or converted into the Company's Common Stock, $0.00001 par value per share (the “Common Stock”), in accordance with the terms hereof.

 

Interest on the unpaid principal balance hereof shall accrue at the rate of 10% per annum from the date of original issuance hereof (the “Issuance Date”) until the same becomes due and payable on the Maturity Date, or such earlier date upon acceleration or by conversion or redemption in accordance with the terms hereof or of the other Agreements. Notwithstanding anything contained herein, this Note shall bear interest on the due and unpaid Principal Amount from and after the occurrence and during the continuance of an Event of Default pursuant to Section 2(h) at the rate (the “Default Rate”) equal to the lower of twenty (20%) per annum or the highest rate permitted by law. Unless otherwise agreed or required by applicable law, payments will be applied first to any unpaid collection costs, then to unpaid interest and fees and any remaining amount to principal.

 

 

Convertible Note

Frozen Food Gift Group, Inc.

Tangiers Investors, LP

  

1

  

 

For purposes hereof the following terms shall have the meanings ascribed to them below:

 

“Bankruptcy Event” means any of the following events: (a) the Company commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Company thereof; (b) there is commenced against the Company any such case or proceeding that is not dismissed within 60 days after commencement; (c) the Company is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered; (d) the Company suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within 60 days; (e) the Company makes a general assignment for the benefit of creditors; (f) the Company fails to pay, or states that it is unable to pay or is unable to pay, its debts generally as they become due; (g) the Company calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; or (h) the Company, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.

 

“Business Day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the City of New York are authorized or required by law or executive order to remain closed.

 

“Change in Control Transaction” will be deemed to exist if (i) there occurs any consolidation, merger or other business combination of the Company with or into any other corporation or other entity or person (whether or not the Company is the surviving corporation), or any other corporate reorganization or transaction or series of related transactions in which in any of such events the voting stockholders of the Company prior to such event cease to own 50% or more of the voting power, or corresponding voting equity interests, of the surviving corporation after such event (including without limitation any “going private” transaction under Rule 13e-3 promulgated pursuant to the Exchange Act or tender offer by the Company under Rule 13e-4 promulgated pursuant to the Exchange Act for 20% or more of the Company's Common Stock), (ii) there is a replacement of more than one-half of the members of the Company’s Board of Directors which is not approved by those individuals who are members of the Company's Board of Directors on the date thereof, (iii) in one or a series of related transactions, there is a sale or transfer of all or substantially all of the assets of the Company, determined on a consolidated basis, or (iv) the Company enters into any agreement providing for an event set forth in (i), (ii), (iii) or (iv) above.

 

“Conversion Ratio” means, at any time, a fraction, of which the numerator is the entire outstanding Principal Amount of this Note (or such portion thereof that is being redeemed or repurchased), and of which the denominator is the Conversion Price as of the date such ratio is being determined.

 

“Conversion Price” shall be equal to fifty percent (50%) of the lowest trading price of any day during the twenty (20) consecutive trading days prior to the date on which Holder elects to convert all or part of the Note.

 

 

Convertible Note

Frozen Food Gift Group, Inc.

Tangiers Investors, LP

  

2

  

 

“Floor Price” is not applicable

 

“Convertible Securities” means any convertible securities, warrants, options or other rights to subscribe for or to purchase or exchange for, shares of Common Stock.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

 “Market Price” shall equal the closing sale price per share of the Common Stock on the Principal Market on the Trading Day next preceding the date on which such price is being determined.

 

 “Principal Amount” shall refer to the sum of (i) the original principal amount of this Note, (ii) all accrued but unpaid interest hereunder, and (iii) any default payments owing under the Agreements but not previously paid or added to the Principal Amount.

 

“Principal Market” shall mean the OTC Bulletin Board or such other principal market or exchange on which the Common Stock is then listed for trading.

 

“Securities Act” shall mean the Securities Act of 1933, as amended.

“Trading Day” shall mean a day on which there is trading on the Principal Market.

 

“Underlying Shares” means the shares of Common Stock into which the Note is convertible (including interest or principal payments in Common Stock as set forth herein) in accordance with the terms hereof.

 

The following terms and conditions shall apply to this Note:

 

Section 1.00 Conversion.

 

(a) Conversion Right. Subject to the terms hereof and restrictions and limitations contained herein, the Holder shall have the right, at the Holder's option, at any time and from time to time to convert the outstanding Principal Amount and Interest under this Note in whole or in part by delivering to the Company, or directly to Company’s Transfer Agent, a fully executed notice of conversion in the form of conversion notice attached hereto as Exhibit A (the “Conversion Notice”), which may be transmitted by facsimile.

 

 

Convertible Note

Frozen Food Gift Group, Inc.

Tangiers Investors, LP

  

3

  

 

(b) The date of any Conversion Notice hereunder and any Payment Date shall be referred to herein as the “Conversion Date”. If the Holder is converting less than all of the outstanding Principal Amount hereunder pursuant to a Conversion Notice, the Company shall promptly deliver to the Holder (but no later than five Trading Days after the Conversion Date) a Note for such outstanding Principal Amount as has not been converted if this Note has been surrendered to the Company for partial conversion. The Holder and the Company shall maintain records showing the outstanding Principal Amount so converted and repaid and the dates of such conversions or repayments or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Note upon each such conversion or repayment.

 

(i) Stock Certificates or DWAC. The Company will deliver to the Holder, or Holder’s authorized designee) not later than two (2) Trading Days after the Conversion Date, a certificate or certificates (which certificate(s) shall be free of restrictive legends and trading restrictions) representing the number of shares of Common Stock being acquired upon the conversion of this Note. In lieu of delivering physical certificates representing the shares of Common Stock issuable upon conversion of this Note, provided the Company's transfer agent is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer (“FAST”) program, upon request of the Holder, the Company shall use commercially reasonable efforts to cause its transfer agent to electronically transmit such shares issuable upon conversion to the Holder (or its designee), by crediting the account of the Holder’s (or such designee’s) prime broker with DTC through its Deposits and Withdrawal at Custodian (DWAC) program (provided that the same time periods herein as for stock certificates shall apply). If in the case of any conversion hereunder, such certificate or certificates are not delivered to or as directed by the Holder by the fifth Trading Day after the Conversion Date, the Holder shall be entitled by notice to the Company at any time on or before its receipt of such certificate or certificates thereafter, to rescind such conversion, in which event the Company shall immediately return this Note tendered for conversion.

 

If the Company fails to deliver to the Holder such certificate or certificates (or shares through DTC) pursuant to this Section (free of any restrictions on transfer or legends) in accordance herewith, prior to the third Trading Day after the Conversion Date, the Company shall pay to the Holder as liquidated damages, in cash, an amount equal to One Thousand Dollars ($1,000) per day, until such certificate or certificates are delivered. Such liquidated damages will be added to the principal value of the Note. 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.

 

(c) Conversion Price Adjustments.

 

(i) Stock Dividends, Splits and Combinations. If the Company or any of its subsidiaries, at any time while this First Note is outstanding (A) shall pay a stock dividend or otherwise make a distribution or distributions on any equity securities (including instruments or securities convertible into or exchangeable for such equity securities) in shares of Common Stock, (B) subdivide outstanding Common Stock into a larger number of shares, or (C) combine outstanding Common Stock into a smaller number of shares, then each Affected Conversion Price (as defined below) shall be multiplied by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding before such event and the denominator of which shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision or combination.

 

 

Convertible Note

Frozen Food Gift Group, Inc.

Tangiers Investors, LP

  

4

  

 

(ii) Distributions. If the Company or any of its subsidiaries, at any time while the Note is outstanding, shall distribute to all holders of Common Stock evidences of its indebtedness or assets or cash or rights or warrants to subscribe for or purchase any security of the Company or any of its subsidiaries (excluding those referred to in the Section above), then concurrently with such distributions to holders of Common Stock, the Company shall distribute to the Holder the amount of such indebtedness, assets, cash or rights or warrants which the Holder would have received had the Note been converted into Common Stock at the Conversion Price immediately prior to the record date for such distribution.

 

(iii) Rounding of Adjustments. All calculations under this Section 1 or any other provision of this Note shall be made to 4 decimal places for dollar amounts or the nearest 1/100th of a share, as the case may be.

 

(iv) Notice of Certain Events. If:

 

	
  

	
A.

	
the Company shall declare a dividend (or any other distribution) on its Common Stock; or

	
  

	
B.

	
the Company shall declare a special nonrecurring cash dividend on or a redemption of its Common Stock; or

	
  

	
C.

	
the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights; or

	
  

	
D.

	
the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock of the Company, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, of any compulsory share of exchange whereby the Common Stock is converted into other securities, cash or property; or

	
  

	
E.

	
the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company;

then the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of this Note, and shall cause to be mailed to the Holder at its last address as it shall appear upon the books of the Company, on or prior to the date notice to the Company's stockholders generally is given, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange.

 

 

Convertible Note

Frozen Food Gift Group, Inc.

Tangiers Investors, LP

  

5

  

 

(d) Reservation and Issuance of Underlying Securities. The Company covenants that it will at all times reserve and keep available out of its authorized and unissued Common Stock solely for the purpose of issuance upon conversion of this Note (including repayments in stock), free from preemptive rights or any other actual contingent purchase rights of persons other than the Holder, not less than three times (3x) the number of shares of Common Stock as shall be issuable (taking into account the adjustments under this Section 1 but without regard to any ownership limitations contained herein) upon the conversion of this Note hereunder in Common Stock (including repayments in stock). The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully-paid, non-assessable and freely-tradable. The Company agrees that this is a material term of this Note.

 

(e) Charges, Taxes and Expenses. Issuance of certificates for shares of Common Stock upon the conversion of this Note (including repayment in stock) shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder.

 

(f) Cancellation. After all of the Principal Amount (including accrued but unpaid interest and default payments at any time owed on this Note) have been paid in full or converted into Common Stock, this Note shall automatically be deemed canceled and the Holder shall promptly surrender the Note to the Company at the Company’s principal executive offices.

 

(g) Conversion Limitation. Notwithstanding anything to the contrary contained herein, the number of shares of Common Stock that may be acquired by the Holder upon conversion pursuant to the terms hereof shall not exceed a number that, when added to the total number of shares of Common Stock deemed beneficially owned by the Holder (other than by virtue of the ownership of securities or rights to acquire securities (including this Note) that have limitations on the Holder’s right to convert, exercise or purchase similar to the limitation set forth herein), together with all shares of Common Stock deemed beneficially owned at such time (other than by virtue of the ownership of securities or rights to acquire securities that have limitations on the right to convert, exercise or purchase similar to the limitation set forth herein) by the Holder’s “affiliates” at such time (as defined in Rule 144 of the Act) (“Aggregation Parties”) that would be aggregated for purposes of determining whether a group under Section 13(d) of the Securities Exchange Act of 1934 as amended, exists, would exceed 9.99% of the total issued and outstanding shares of the Common Stock (the “Restricted Ownership Percentage”) unless the Holder elects to exceed said percentage amount, as noted below. The Holder shall have the right (w) at any time and from time to time to reduce its Restricted Ownership Percentage immediately upon notice to the Company and (x) (subject to waiver) at any time and from time to time, to increase its Restricted Ownership Percentage immediately in the event of the announcement as pending or planned, of a Change in Control Transaction.

 

 

Convertible Note

Frozen Food Gift Group, Inc.

Tangiers Investors, LP

  

6

  

 

Section 2.00 Defaults and Remedies.

 

(h) Events of Default. Events of Default. An “Event of Default” is: (i) a default in payment of any amount due hereunder which default continues for more than two (2) business days after the due date thereof; (ii) a default in the timely issuance of Underlying Shares upon and in accordance with terms hereof, which default continues for two (2) Business Days after the Company has received notice informing the Company that it has failed to issue shares or deliver stock certificates within the second (2nd) day following the Conversion Date; (iii) failure by the Company for two (2) days after notice has been received by the Company to comply with any material provision of the Exchange Agreement (including without limitation the failure to issue the requisite number of shares of Common Stock upon conversion hereof and the failure to redeem Notes upon the Holder’s request following a Change in Control Transaction pursuant to Section 1(c); (iv) any default after any cure period under, or acceleration prior to maturity of, any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Company in excess of $50,000 or for money borrowed the repayment of which is guaranteed by the Company in excess of $50,000, whether such indebtedness or guarantee now exists or shall be created hereafter; (v) any failure of the Company to satisfy its “filing” obligations under the rules and guidelines issued by OTC Markets News Service, OTC Markets.com and their affiliates; (vi) any failure of the Company to issue all of the shares of the Company’s Common Stock due the Holder upon conversion of this Note; (vii) failure to have sufficient number of authorized and non-reserved but unissued shares of the Company’s Common Stock available for any said conversion; (ix) any delisting for any reason; (viii) any trading suspension imposed by the Securities and Exchange Commission under Sections 12(j) or 12(k) of the 1934 Act; or (x) if the Company is subject to any Bankruptcy Event.

 

(k) Remedies. If an Event of Default occurs and is continuing with respect to the Note, the Holder may declare all of the then outstanding Principal Amount of this Note, including any interest due thereon, to be due and payable immediately, except that in the case of an Event of Default arising from events described in Section 2(h), this Note shall become due and payable without further action or notice. In the event of such acceleration, the amount due and owing to the Holder shall be the 150% of the outstanding Principal Amount of the Notes held by the Holder plus all accrued and unpaid interest, fees, and liquidated damages, if any. Additionally, this Note shall bear interest on any unpaid principal from and after the occurrence and during the continuance of an Event of Default pursuant to Section 2(h) at the Default Rate. Finally, the Note will accrue liquidated damages of five hundred dollars ($500) per day from and after the occurrence and during the continuance of an Event of Default pursuant to Section 2(h). 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. The remedies under this Note shall be cumulative and added to the principal value of the Note.

 

 

Convertible Note

Frozen Food Gift Group, Inc.

Tangiers Investors, LP

  

7

  

Section 3.00 General.

 

(i) Payment of Expenses. The Company agrees to pay all reasonable charges and expenses, including attorneys' fees and expenses, which may be incurred by the Holder in successfully enforcing this Note and/or collecting any amount due under this Note.

 

(j) Savings Clause. In case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby. In no event shall the amount of interest paid hereunder exceed the maximum rate of interest on the unpaid principal balance hereof allowable by applicable law. If any sum is collected in excess of the applicable maximum rate, the excess collected shall be applied to reduce the principal debt. If the interest actually collected hereunder is still in excess of the applicable maximum rate, the interest rate shall be reduced so as not to exceed the maximum allowable under law.

 

(k) Amendment. Neither this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the Company and the Holder.

 

(l) Assignment, Etc. The Holder may assign or transfer this Note to any transferee only with the prior written consent of the Company, which may not be unreasonably withheld or delayed, provided that (i) the Holder may assign or transfer this Note to any of such Holder's affiliates without the consent of the Company and (ii) upon any Event of Default, the Holder may assign or transfer this Note without the consent of the Company. The Holder shall notify the Company of any such assignment or transfer promptly. This Note shall be binding upon the Company and its successors and shall inure to the benefit of the Holder and its successors and permitted assigns.

 

(m) No Waiver. No failure on the part of the Holder to exercise, and no delay in exercising any right, remedy or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by the Holder of any right, remedy or power hereunder preclude any other or future exercise of any other right, remedy or power. Each and every right, remedy or power hereby granted to the Holder or allowed it by law or other agreement shall be cumulative and not exclusive of any other, and may be exercised by the Holder from time to time.

 

(n) Governing Law; Jurisdiction.

 

(i) Governing Law. THIS NOTE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO ANY CONFLICTS OF LAWS PROVISIONS THEREOF THAT WOULD OTHERWISE REQUIRE THE APPLICATION OF THE LAW OF ANY OTHER JURISDICTION.

 

 

Convertible Note

Frozen Food Gift Group, Inc.

Tangiers Investors, LP

  

8

  

 

(ii) Jurisdiction. Any dispute or claim arising to or in any way related to this Note or the rights and obligations of each of the parties hereto shall be settled by binding arbitration in San Diego, California. All arbitration shall be conducted in accordance with the rules and regulations of the American Arbitration Association ("AAA"). AAA shall designate an arbitrator from an approved list of arbitrators following both parties' review and deletion of those arbitrators on the approved list having a conflict of interest with either party. Each party shall pay its own expenses associated with such arbitration. A demand for arbitration shall be made within a reasonable time after the claim, dispute or other matter has arisen and in no event shall such demand be made after the date when institution of legal or equitable proceedings based on such claim, dispute or other matter in question would be barred by the applicable statutes of limitations. The decision of the arbitrators shall be rendered within 60 days of submission of any claim or dispute, shall be in writing and mailed to all the parties included in the arbitration. The decision of the arbitrator shall be binding upon the parties and judgment in accordance with that decision. The Company agrees that the service of process upon it mailed by certified or registered mail (and service so made shall be deemed complete three days after the same has been posted as aforesaid) or by personal service shall be deemed in every respect effective service of process upon it in any such suit or proceeding. Nothing herein shall affect the Holder's right to serve process in any other manner permitted by law. The Company agrees that a final non-appealable judgement in any such suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on such judgment or in any other lawful manner.

 

(II) NO JURY TRIAL. THE COMPANY HERETO KNOWINGLY AND VOLUNTARILY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS NOTE.

 

(o) Replacement Notes. This Note may be exchanged by the Holder at any time and from time to time for a Note or Notes with different denominations representing an equal aggregate outstanding Principal Amount, as reasonably requested by the Holder, upon surrendering the same. No service charge will be made for such registration or exchange. In the event that Holder notifies the Company that this Note has been lost, stolen or destroyed, a replacement Note identical in all respects to the original Note (except for registration number and Principal Amount, if different than that shown on the original Note), shall be issued to the Holder, provided that the Holder executes and delivers to the Company an agreement reasonably satisfactory to the Company to indemnify the Company from any loss incurred by it in connection with this Note. If such replacement occurs, the term “Note” as used herein shall be deemed to refer to any such replacement Note.

 

 

Convertible Note

Frozen Food Gift Group, Inc.

Tangiers Investors, LP

  

9

  

 

IN WITNESS WHEREOF, the Company has caused this Convertible Promissory Note to be duly executed on the day and in the year first above written.

 

	 	
FROZEN FOOD GIFT GROUP, INC.

	 
	 	 	 	 
	 	By: 	/s/ Jonathan Irwin	 
	 	Name:	Jonathan Irwin	 
	 	Title:	CEO	 
	 	Date: 	
June 1, 2013

	 

 

This Note is acknowledged as: Note of June 1, 2013

 

 

Convertible Note

Frozen Food Gift Group, Inc.

Tangiers Investors, LP

  

10

  

 

EXHIBIT A

 

FORM OF CONVERSION NOTICE

 

(To be executed by the Holder in order to convert that certain $12,000 Convertible Promissory Note identified as the Note)

	
DATE: 

	
____________________________

	
FROM: 

	
Tangiers Investors, LP

	
  

	
Re:

	
$12,000 Note (this “Note”) originally issued by FROZEN FOOD GIFT GROUP, INC., a Delaware corporation, to Tangiers Investors, LP on June 1, 2013.

The undersigned on behalf of Tangiers Investors, LP, hereby elects to convert $_______________________ of the aggregate outstanding Principal Amount (as defined in the Note) indicated below of this Note into shares of Common Stock, $0.00001 par value per share, of FROZEN FOOD GIFT GROUP, INC. (the “Company”) according to the conditions hereof, as of the date written below. If shares are to be issued in the name of a person other than undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes, if any. The undersigned represents as of the date hereof that, after giving effect to the conversion of this Note pursuant to this Conversion Notice, the undersigned will not exceed the “Restricted Ownership Percentage” contained in this Note.

 

	
Conversion information:

	_____________________________________________________________________
	 	
Date to Effect Conversion

	 	 
	 	_____________________________________________________________________
	 	
Aggregate Principal Amount of Note Being Converted

	 	 
	 	_____________________________________________________________________
	 	
Aggregate Interest on Amount Being Converted

	 	 
	 	_____________________________________________________________________
	 	
Number of Shares of Common Stock to be Issued

	 	 
	 	_____________________________________________________________________
	 	
Applicable Conversion Price

	 	 
	 	_____________________________________________________________________
	 	
Signature

	 	 
	 	_____________________________________________________________________
	 	
Name

	 	 
	 	_____________________________________________________________________
	 	
Address

 

 

Convertible Note

Frozen Food Gift Group, Inc.

Tangiers Investors, LP

 

11

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