Item 1.01 Entry into a Material Definitive Agreement.
Joint Venture and Construction Financing
On July 23, 2021, Comstock Mining Inc. (the “Company”), purchased 500,000 Class A Units, representing 50% of the issued and outstanding voting equity of LP BIOSCIENCES LLC, a Wyoming limited liability company (“LPB”), from LP NUTRITION LLC, a Delaware limited liability company (“Nutrition”), a subsidiary of LAKEVIEW ENERGY LLC, a Delaware limited liability company (“Lakeview”), with plans to retrofit LPB’s pre-existing solvent extraction facility located in Merrill, Iowa (“Facility”) to extract oil from industrial hemp (“Facility Retrofit”); and, entered into a Note Purchase Agreement (the “Note Purchase Agreement”) to purchase a secured note with a face value of $17,000,000 from LPB (the “LPB Note”) in exchange for a purchase price of $15,000,000 to fund the completion of the Facility Retrofit. The Company issued 3,500,000 restricted shares of its common stock, paid $826,258 in cash, and agreed to pay an initial $1,500,000 in cash in connection with its foregoing equity purchase and financing commitments. The funds loaned to LPB will be derived from the sale of the Company’s common stock held by LPB and discretionary cash advances by the Company. The LPB Note matures on July 31, 2026 and the interest rate is 13.5% per annum. In connection with the LPB Note, LPB granted a leasehold security interest in the Facility to the Company, subject to a mortgage of approximately $4.6 million on the Facility held by LPB’s landlord for the benefit of the landlord’s lender. The Company, Nutrition, and LPB simultaneously entered into a Partnership Interest Purchase Agreement (“Equity Purchase Agreement”) and a Limited Liability Company Operating Agreement for LPB (the “Operating Agreement”), pursuant to which, among other terms, LPB agreed to pay Nutrition the first $3,000,000 of cash proceeds received from the sale of the Company’s common stock, and a $5,000,000 preferred distribution at the same time and in the same proportion as principal prepayments on the LPB Note, with up to 20% of LPB’s after debt net cash flow commencing 90 days after LPB commences ordinary course operations. Securities Exchange Agreement
On July 23, 2021, the Company also entered into a Securities Exchange Agreement (“Securities Exchange Agreement”) to purchase 100% of the issued and outstanding equity of MANA Corporation, an Oklahoma registered public benefit corporation (“MANA”), in exchange for 4,200,000 restricted shares of the Company’s common stock. Such shares are subject to a five-year transfer restriction (the Lock-Up”), of which 28% will be released from the Lock-Up 180 days after closing, and the remaining 72% will be released in eight (8) equal installments of 9% every six months thereafter. Upon acquisition of MANA, the Company assigned its Class A Units in LPB to MANA.
The foregoing descriptions of the Securities Exchange Agreement, the Equity Purchase Agreement, the Operating Agreement, the Note Purchase Agreement, and the LPB Note , are qualified in their entirety by reference to such documents in their entirety attached to this Current Report on Form 8-K and filed herewith as Exhibits 10.1, 10.2, 10.3, 10.4 and 10.5, respectively, and the Company’s press release related to such transactions, which exhibits are incorporated herein by reference. Item 9.01 Financial Statements and Exhibits.
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