Item 1.01 Entry into a Material Definitive Agreement.
Extension of Promissory Notes
On April 23, 2013, First Colombia Gold Corp. (“The Company”) the Company and Asher Enterprises, Inc. (“Asher”) agreed to amend the already issued and outstanding convertible notes held by Asher to change the conversion rights as follows:
“ The Holder shall have the right from time to time, and at any time during the period beginning on the date which is one hundred eighty (180) days following the date of this Note and ending on the later of: (i) the Maturity Date and (ii) the date of payment of the Default Amount each in respect of the remaining outstanding principal amount of this Note to convert all or any part of the outstanding and unpaid principal amount of this Note into fully paid and non- assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or any shares of capital stock or other securities of the Borrower into which such Common Stock shall hereafter be changed or reclassified at the conversion price…”
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 January 2, 2014. 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.