Section 1 - Registrant’s Business and Operations
Item 1.01 Entry into a Material Definitive Agreement.
On December 18, 2012, First Columbia Gold Corp. (“the Company”) entered into a Securities Purchase Agreement (“Purchase Agreement”) with Asher Enterprises, Inc., a Delaware corporation (“Asher”), relating to the issuance and sale to Asher of an unsecured convertible promissory note (the “Note”) in a private transaction (the “Transaction”) with a principal amount of $27,500.
On January 23, 2013, the Company received net proceeds of $27,500 from the Transaction, which it intends to use to meet its short-term obligations and work requirements. The Purchase Agreement includes customary representations, warranties and covenants.
The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the Purchase Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Convertible Promissory Note
In connection with the Transaction, the Company issued Asher the Note. Interest on the Note accrues at a rate of 8% annually and is to be paid with principal in full on the maturity date of September 20, 2013. The principal amount of the Note together with interest may be converted into shares of the Company's restricted at the option of the Asher at a conversion price equal to forty-five percent (45%) of the Market Price of the Company’s common stock during the 10 trading days prior to the conversion notice.
The Note contains a “blocker” provision limiting the number of shares of common stock into which the Note is convertible to 4.99% of the outstanding shares of the Company’s common stock. However, the blocker provision in the Note may be waived by Asher upon 61-days’ prior notice.
The Company has a right of prepayment of the Note anytime from the date of the Note until one hundred eighty (180) days thereafter, subject to a prepayment penalty in the amount of 140% to 150% of the outstanding principal and interest of the Note based on the date of prepayment.
The Note provides for customary events of default such as failing to timely make payment under the Note when due.
The foregoing description of the Note does not purport to be complete and is qualified in its entirety by reference to the Form of Note, which is filed as Exhibit 4.1 to this Current Report on Form 8-K and is incorporated herein by reference.