CONVERTIBLE NOTE
THIS
NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS
NOTE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS
NOTE
AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS NOTE OR THE COMMON SHARES ISSUABLE UPON
CONVERSION OF THIS NOTE UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO GOLDSPRING, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.
FOR
VALUE
RECEIVED, GOLDSPRING, INC., a Florida corporation (hereinafter called
"Borrower"), hereby promises to pay to __________________,
(the
"Holder") or its registered assigns or successors in interest or order, without
demand, the sum of _____________________ (“Principal
Amount”), with simple and unpaid interest thereon, on March 31, 2008 (the
"Maturity Date"), if not sooner paid.
This
Note
has been entered into pursuant to the terms of a settlement agreement, dated
March 19, 2005 (the “Settlement Agreement”) and a subscription agreement, dated
November 30, 2004 (the “Subscription Agreement”), both between the Borrower and
the Holder, (collectively, the “Transaction Documents”), and shall be subject to
the terms of such Transaction Documents. Unless otherwise separately defined
herein, all capitalized terms used in this Note shall have the same meaning
as
is set forth in the Subscription Agreement. The following terms shall apply
to
this Note:
ARTICLE
I
INTEREST
AND AMORTIZATION
1.1. Interest
Rate.
Subject
to Section 5.7 hereof, interest payable on this Note shall accrue at a rate
per
annum (the "Interest Rate") of eight percent (8%). Interest on the Principal
Amount shall be simple interest, payable monthly, in arrears, commencing
on
April 1, 2006 and on the first day of each consecutive calendar month thereafter
(each, a "Repayment Date") and on the Maturity Date, whether by acceleration
or
otherwise.
1.2. Minimum
Monthly Principal Payments.
Amortizing payments of the outstanding Principal Amount of this Note shall
commence on the first (1st) Repayment Date and shall recur on each succeeding
Repayment Date thereafter until the Principal Amount has been repaid in full,
whether by the payment of cash or by the conversion of such principal into
Common Stock pursuant to the terms hereof. Subject to Section 2.1 and Article
3
below, on each Repayment Date, the Borrower shall make payments to the Holder
in
the amount of one-twenty-fourth (1/24th) of the initial Principal Amount
(the
"Monthly Principal Amount"), together with any accrued and unpaid interest
then
due on such portion of the Principal Amount plus any and all other amounts
which
are then owing under this Note that have not been paid (the Monthly Principal
Amount, together with such accrued and unpaid interest and such other amounts,
collectively, the "Monthly Amount"). Amounts of Conversions of Principal
▇▇▇▇▇▇
made by the Holder or Borrower pursuant to Section 2.1 or Article III, and
Redemption Amounts actually paid to Borrower shall be applied to Monthly
Amounts
commencing with the Monthly Amounts first payable and then Monthly Amounts
thereafter in chronological order. Any Principal Amount that remains outstanding
on the Maturity Date shall be due and payable on the Maturity Date.
1
1.3. Default
Interest Rate.
Following the occurrence and during the continuance of an Event of Default,
subject to Section 5.7, the annual interest rate on this Note shall
automatically be increased to fifteen percent (15%), and all outstanding
obligations under this Note, including unpaid interest, shall continue to
accrue
interest from the date of such Event of Default at such interest rate applicable
to such obligations until such Event of Default is cured or waived.
ARTICLE
II
CONVERSION
AND REPAYMENT
2.1. (a)
Holder’s
Conversion Election.
The
Holder shall have the right from and after the date of the issuance of this
Note
and then at any time until this Note is fully paid, to convert any outstanding
and unpaid principal portion of this Note, and accrued interest, at the election
of the Holder (the date of giving of such notice of conversion being a
"Conversion Date") into fully paid and nonassessable shares of Common Stock
as
such stock exists on the date of issuance of this Note, or any shares of
capital
stock of Borrower into which such Common Stock shall hereafter be changed
or
reclassified, at the conversion price as defined in Section 2.1(b) hereof
(the
"Conversion Price"), determined as provided herein. Upon delivery to the
Borrower of a Notice of Conversion as described in Section 7 of the Subscription
Agreement of the Holder's written request for conversion, Borrower shall
issue
and deliver to the Holder within three (3) business days from the Conversion
Date (“Delivery Date”) that number of shares of Common Stock for the portion of
the Note converted in accordance with the foregoing. At the election of the
Holder, the Borrower will deliver accrued but unpaid interest on the Note
through the Conversion Date directly to the Holder on or before the Delivery
Date.
The
number of shares of Common Stock to be issued upon each conversion of this
Note
shall be determined by dividing that portion of the principal of the Note
and
interest to be converted, by the Conversion Price.
(b)
Conversion
Price.
Subject
to adjustment as provided in Section 3.4(b), the Conversion Price per share
shall be (i) $0.20 (“Maximum Base Price”).
(c) ▇▇▇▇▇▇▇▇’s
Repayment Election.
The
Monthly Amount due on a Repayment Date shall be paid by the Borrower at the
Borrower’s election (i) in cash at the rate of 102% of such Monthly Amount
otherwise due on such Repayment Date within three (3) business days of the
applicable Repayment Date, or (ii) subject to Section 3.2, with registered,
freely transferable Common Stock at an applied conversion rate equal to
eighty-five percent (85%) of the average of the five (5) lowest closing bid
prices of the Common Stock as reported by Bloomberg L.P. for the twenty (20)
trading days preceding such Repayment Date. Any portion of the Monthly Amount
that may not be paid pursuant to Section 2.1(c)(ii) by virtue of Sections
2.2,
3.2 or otherwise shall be paid pursuant to Section 2.1(c)(i).
(d) Application
of Conversion Amounts.
Any
amounts converted by the Holder pursuant to Section 2.1 or paid by the Borrower
shall be deemed to constitute payments of and applied, (i) first, against
outstanding fees, (ii) second, against accrued interest on the Principal
▇▇▇▇▇▇,
and (iii) third, against the Principal ▇▇▇▇▇▇.
2.2. No
Effective Registration.
Notwithstanding anything to the contrary herein, no amount payable hereunder
may
be converted into Common Stock by the Borrower without the Holder’s consent
unless (a) either (i) an effective current Registration Statement covering
the
shares of Common Stock to be issued in satisfaction of such obligations exists,
or (ii) an exemption from registration of the Common Stock is available pursuant
to Rule 144(k) of the Securities Act, and (b) no Event of Default hereunder
exists and is continuing, unless such Event of Default has been cured within
any
applicable cure period or is otherwise waived in writing by the Holder in
whole
or in part at the Holder's option.
2
2.3. Optional
Redemption of Principal Amount.
Provided an Event of Default has not occurred, whether or not such Event
of
Default has been cured, the Borrower will have the option of prepaying the
outstanding Principal Amount ("Optional Redemption"), in whole or in part,
by
paying to the Holder a sum of money equal to one hundred fifteen percent
(115%)
of the Principal Amount to be redeemed, together with accrued but unpaid
interest thereon and any and all other sums due, accrued or payable to the
Holder arising under this Note, the Subscription Agreement or any Transaction
Document through the Redemption Payment Date as defined below (the "Redemption
Amount"). ▇▇▇▇▇▇▇▇’s election to exercise its right to prepay must be by notice
in writing (“Notice of Redemption”). The Notice of Redemption shall specify the
date for such Optional Redemption (the "Redemption Payment Date"), which
date
shall be not less than thirty (30) business days after the date of the Notice
of
Redemption (the "Redemption Period"). A Notice of Redemption shall not be
effective with respect to any portion of the Principal Amount for which the
Holder has a pending election to convert pursuant to Section 3.1, or for
conversions initiated or made by the Holder pursuant to Section 3.1 during
the
Redemption Period. On the Redemption Payment Date, the Redemption Amount,
less
any portion of the Redemption Amount against which the Holder has exercised
its
rights pursuant to Section 3.1, shall be paid in good funds to the Holder.
In
the event the Borrower fails to pay the Redemption Amount on the Redemption
Payment Date as set forth herein, then (i) such Notice of Redemption will
be
null and void, (ii) Borrower will have no right to deliver another Notice
of
Redemption, and (iii) Borrower’s failure may be deemed by Holder to be a
non-curable Event of Default.
ARTICLE
III
CONVERSION
RIGHTS
3.1. Holder's
Conversion Rights.
Subject
to Section 2.2, the Holder shall have the right, but not the obligation,
to
convert all or any portion of the then aggregate outstanding Principal Amount
of
this Note, together with interest and fees due hereon, into shares of Common
Stock, subject to the terms and conditions set forth in this Article III.
The
Holder may exercise such right by delivery to the Borrower of a written Notice
of Conversion pursuant to Section 3.3.
3.2. Conversion
Limitation.
Notwithstanding anything contained herein to the contrary, the Holder shall
not
be entitled to convert pursuant to the terms of this Note nor may this Note
be
converted in whole or in part into an amount of Common Stock that would be
convertible into that number of Common Stock which would exceed the difference
between the number of shares of Common Stock beneficially owned by such Holder
and 4.99% of the outstanding shares of Common Stock. For the purposes of
the
immediately preceding sentence, beneficial ownership shall be determined
in
accordance with Section 13(d) of the Exchange Act and Regulation 13d-3
thereunder. The foregoing limitation shall be calculated as of each Conversion
Date. Aggregate Conversions over time shall not be limited to 4.99%. The
Holder
shall have the authority and obligation to determine whether the restriction
contained in this Section 10 will limit any conversion hereunder and to the
extent that the Holder determines that the limitation contained in this Section
applies, the determination of which portion of the Notes are convertible
shall
be the responsibility and obligation of the Holder. The Holder may void the
Conversion Share limitation described in this Section 3.2 upon 61 days prior
notice to the Borrower. The Holder may allocate which of the equity of the
Borrower deemed beneficially owned by the Holder shall be included in the
4.99%
amount described above and which shall be allocated to the excess above
4.99%.
3
3.3. Mechanics
of ▇▇▇▇▇▇'s Conversion.
(a) In
the
event that the Holder elects to convert any amounts outstanding under this
Note
into Common Stock, the Holder shall give notice of such election by delivering
an executed and completed notice of conversion (a "Notice of Conversion")
to the
Borrower, which Notice of Conversion shall provide a breakdown in reasonable
detail of the Principal Amount, accrued interest and fees being converted.
The
original Note is not required to be surrendered to the Borrower until all
sums
due under the Note have been paid. On each Conversion Date (as hereinafter
defined) and in accordance with its Notice of Conversion, the Holder shall
make
the appropriate reduction to the Principal Amount, accrued interest and fees
as
entered in its records and shall provide written notice thereof to the Borrower
within three (3) business days after the Conversion Date. Each date on which
a
Notice of Conversion is delivered or telecopied to the Borrower in accordance
with the provisions hereof shall be deemed a "Conversion Date". A form of
Notice
of Conversion to be employed by the Holder is annexed hereto as Exhibit
A.
(b) Pursuant
to the terms of a Notice of Conversion, the Borrower will issue instructions
to
the transfer agent accompanied by an opinion of counsel, if so required by
the
Borrower's transfer agent, within one (1) business day after the date of
the
delivery to Borrower of the Notice of Conversion and shall cause the transfer
agent to transmit the certificates representing the Conversion Shares to
the
Holder by crediting the account of the Holder's designated broker with the
Depository Trust Corporation ("DTC") through its Deposit Withdrawal Agent
Commission ("DWAC") system within three (3) business days after receipt by
the
Borrower of the Notice of Conversion (the "Delivery Date"). In the case of
the
exercise of the conversion rights set forth herein the conversion privilege
shall be deemed to have been exercised and the Conversion Shares issuable
upon
such conversion shall be deemed to have been issued upon the date of receipt
by
the Borrower of the Notice of Conversion. The Holder shall be treated for
all
purposes as the record holder of such shares of Common Stock, unless the
Holder
provides the Borrower written instructions to the contrary.
3.4. Conversion
Mechanics.
(a) The
number of shares of Common Stock to be issued upon each conversion of this
Note
pursuant to this Article III shall be determined by dividing that portion
of the
Principal Amount and interest and fees to be converted, if any, by the then
applicable Conversion Price.
(b) The
Conversion Price and number and kind of shares or other securities to be
issued
upon conversion shall be subject to adjustment from time to time upon the
happening of certain events while this conversion right remains outstanding,
as
follows:
▇. ▇▇▇▇▇▇,
Sale of Assets, etc. If the Borrower at any time shall consolidate with or
merge
into or sell or convey all or substantially all its assets to any other
corporation, this Note, as to the unpaid principal portion thereof and accrued
interest thereon, shall thereafter be deemed to evidence the right to purchase
such number and kind of shares or other securities and property as would
have
been issuable or distributable on account of such consolidation, merger,
sale or
conveyance, upon or with respect to the securities subject to the conversion
or
purchase right immediately prior to such consolidation, merger, sale or
conveyance. The foregoing provision shall similarly apply to successive
transactions of a similar nature by any such successor or purchaser. Without
limiting the generality of the foregoing, the anti-dilution provisions of
this
Section shall apply to such securities of such successor or purchaser after
any
such consolidation, merger, sale or conveyance.
B. Reclassification,
etc. If the Borrower at any time shall, by reclassification or otherwise,
change
the Common Stock into the same or a different number of securities of any
class
or classes, this Note, as to the unpaid principal portion thereof and accrued
interest thereon, shall thereafter be deemed to evidence the right to purchase
an adjusted number of such securities and kind of securities as would have
been
issuable as the result of such change with respect to the Common Stock
immediately prior to such reclassification or other change.
4
C. Stock
Splits, Combinations and Dividends. If the shares of Common Stock are subdivided
or combined into a greater or smaller number of shares of Common Stock, or
if a
dividend is paid on the Common Stock in shares of Common Stock, the Conversion
Price shall be proportionately reduced in case of subdivision of shares or
stock
dividend or proportionately increased in the case of combination of shares,
in
each such case by the ratio which the total number of shares of Common Stock
outstanding immediately after such event bears to the total number of shares
of
Common Stock outstanding immediately prior to such event.
D. Share
Issuance. So long as this Note is outstanding, if the Borrower shall issue
any
Common Stock except for the Excepted Issuances (as defined in the Subscription
Agreement), prior to the complete conversion of this Note for a consideration
less than the Conversion Price that would be in effect at the time of such
issue, then, and thereafter successively upon each such issuance, the Conversion
Price shall be reduced to such other lower issue price. For purposes of this
adjustment, the issuance of any security or debt instrument of the Borrower,
except for the Excepted Issuances, carrying the right to convert such security
or debt instrument into Common Stock or of any warrant, right or option to
purchase Common Stock or the modification of any of the foregoing which may
be
outstanding shall result in an adjustment to the Conversion Price upon the
modification or issuance of the above-described security, debt instrument,
warrant, right, or option and again upon the issuance of shares of Common
Stock
upon exercise of such conversion or purchase rights if such issuance is at
a
price lower than the then applicable Conversion Price. The reduction of the
Conversion Price described in this paragraph is in addition to the other
rights
of the Holder described in the Subscription Agreement.
(c) Whenever
the Conversion Price is adjusted pursuant to Section 3.4 above, the Borrower
shall promptly mail to the Holder a notice setting forth the Conversion Price
after such adjustment and setting forth a statement of the facts requiring
such
adjustment.
3.5. Reservation.
During
the period the conversion right exists, Borrower will reserve from its
authorized and unissued Common Stock not less than one hundred fifty (150%)
of
the number of shares of Common Stock sufficient to provide for the issuance
of
Common Stock upon the full conversion of this Note. Borrower represents that
upon issuance, such shares will be duly and validly issued, fully paid and
non-assessable. ▇▇▇▇▇▇▇▇ agrees that its issuance of this Note shall constitute
full authority to its officers, agents, and transfer agents who are charged
with
the duty of executing and issuing stock certificates to execute and issue
the
necessary certificates for shares of Common Stock upon the conversion of
this
Note.
3.6 Issuance
of Replacement Note.
Upon
any partial conversion of this Note, provided an original Note is surrendered
to
the Company, a replacement Note containing the same date and provisions of
this
Note shall, at the written request of the Holder, be issued by the Borrower
to
the Holder for the remaining outstanding Principal Amount of this Note and
accrued interest which shall not have been converted or paid.
5
ARTICLE
IV
EVENT
OF DEFAULT
The
occurrence of any of the following events of default ("Event of Default")
shall,
at the option of the Holder hereof, make all sums of principal and interest
then
remaining unpaid hereon and all other amounts payable hereunder immediately
due
and payable, upon demand, without presentment, or grace period, all of which
hereby are expressly waived, except as set forth below:
4.1 Failure
to Pay Principal or Interest.
The
Borrower fails to pay any installment of Principal Amount, interest or other
sum
due under this Note or any Transaction Document when due and such failure
continues for a period of five (5) business days after the due
date.
4.2 Breach
of Covenant.
The
Borrower breaches any material covenant or other term or condition of the
Subscription Agreement, this Note or Transaction Document in any material
respect and such breach, if subject to cure, continues for a period of ten
(10)
business days after written notice to the Borrower from the Holder.
4.3 Breach
of Representations and Warranties.
Any
material representation or warranty of the Borrower made herein, in the
Subscription Agreement, Transaction Document or in any agreement, statement
or
certificate given in writing pursuant hereto or in connection herewith or
therewith shall be false or misleading in any material respect as of the
date
made and a Closing Date.
4.4 Receiver
or Trustee.
The
Borrower or any Subsidiary of Borrower shall make an assignment for the benefit
of creditors, or apply for or consent to the appointment of a receiver or
trustee for them or for a substantial part of their property or business;
or
such a receiver or trustee shall otherwise be appointed.
4.5 Judgments.
Any
money judgment, writ or similar final process shall be entered or filed against
Borrower or any subsidiary of Borrower or any of their property or other
assets
for more than $50,000, and shall remain unvacated, unbonded or unstayed for
a
period of forty-five (45) days.
4.6 Non-Payment.
A
default by the Borrower under any one or more obligations in an aggregate
monetary amount in excess of $50,000 for more than twenty days after the
due
date.
4.7 Bankruptcy.
Bankruptcy, insolvency, reorganization or liquidation proceedings or other
proceedings or relief under any bankruptcy law or any law, or the issuance
of
any notice in relation to such event, for the relief of debtors shall be
instituted by or against the Borrower or any Subsidiary of Borrower and if
instituted against them are not dismissed within 45 days of
initiation.
4.8 Ineligibility
of Quotation.
The
Common Stock of Borrower becomes ineligible for quotation on the OTC Bulletin
Board (“Bulletin Board”) or such other principal exchange on which the Common
Stock is quoted or listed for trading; failure to comply with the requirements
for continued quotation on the Bulletin Board for a period of seven consecutive
trading days; or notification from the Bulletin Board or any Principal Market
that the Borrower is not in compliance with the conditions for continued
quotation or listing on the Bulletin Board or other Principal
Market.
4.9 Stop
Trade.
An SEC
or judicial stop trade order or Principal Market trading suspension that
lasts
for five or more consecutive trading days.
6
4.10 Failure
to Deliver Common Stock or Replacement Note.
▇▇▇▇▇▇▇▇'s failure to timely deliver Common Stock to the Holder pursuant
to and
in the form required by this Note of the Subscription Agreement, or, if
requested by Borrower pursuant to Section 3.6, a replacement Note.
4.11 Non-Registration
Event.
The
occurrence of a Non-Registration Event as described in the Subscription
Agreement that is not cured within five (5) business days after notice from
Holder.
4.12 Reverse
Splits.
The
Borrower effectuates a reverse split of its Common Stock without the prior
written consent of Holders representing not less than 75% of the aggregate
Principal Amounts outstanding under all Notes issued pursuant to the
Subscription Agreement.
4.13 Cross
Default.
A
default by the Borrower of a material term, covenant, warranty or undertaking
of
any Transaction Document or other agreement to which the Borrower and Holder
are
parties, or the occurrence of a material event of default under any such
other
agreement which is not cured after any required notice and/or cure
period.
ARTICLE
V
MISCELLANEOUS
5.1 Failure
or Indulgence Not Waiver.
No
failure or delay on the part of Holder hereof in the exercise of any power,
right or privilege hereunder shall operate as a waiver thereof, nor shall
any
single or partial exercise of any such power, right or privilege preclude
other
or further exercise thereof or of any other right, power or privilege. All
rights and remedies existing hereunder are cumulative to, and not exclusive
of,
any rights or remedies otherwise available.
5.2 Notices.
All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or permitted
to be
given hereunder shall be deemed effective (a) upon hand delivery or delivery
by
facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or
the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be: (i) if to the Company, to: Goldspring, Inc., ▇▇▇▇
▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
President & CEO, telecopier: (▇▇▇) ▇▇▇-▇▇▇▇, with a copy by telecopier only
to: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇,
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq., telecopier: (▇▇▇) ▇▇▇-▇▇▇▇, and (ii) if to the
Subscribers, to: the one or more addresses and telecopier numbers indicated
on
the signature pages hereto, with an additional copy by telecopier only to:
Grushko & ▇▇▇▇▇▇▇, P.C., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, telecopier number: (▇▇▇) ▇▇▇-▇▇▇▇.
7
5.3 Amendment
Provision.
The
term "Note" and all reference thereto, as used throughout this instrument,
shall
mean this instrument as originally executed, or if later amended or
supplemented, then as so amended or supplemented.
5.4 Assignability.
This
Note shall be binding upon the Borrower and its successors and assigns, and
shall inure to the benefit of the Holder and its successors and
assigns.
5.5 Cost
of Collection.
If
default is made in the payment of this Note, Borrower shall pay the Holder
hereof reasonable costs of collection, including reasonable attorneys'
fees.
5.6 Governing
Law.
This
Note shall be governed by and construed in accordance with the laws of the
State
of New York, without regard to principles of conflicts of laws. Any action
brought by either party against the other concerning the transactions
contemplated by this Agreement shall be brought only in the state courts
of New
York or in the federal courts located in the state of New York. Both parties
and
the individual signing this Note on behalf of the Borrower agree to submit
to
the jurisdiction of such courts. The prevailing party shall be entitled to
recover from the other party its reasonable attorney's fees and costs. In
the
event that any provision of this Note is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any such provision
which
may prove invalid or unenforceable under any law shall not affect the validity
or unenforceability of any other provision of this Note. Nothing contained
herein shall be deemed or operate to preclude the Holder from bringing suit
or
taking other legal action against the Borrower in any other jurisdiction
to
collect on the Borrower's obligations to Holder, to realize on any collateral
or
any other security for such obligations, or to enforce a judgment or other
court
in favor of the Holder.
5.7 Maximum
Payments.
Nothing
contained herein shall be deemed to establish or require the payment of a
rate
of interest or other charges in excess of the maximum permitted by applicable
law. In the event that the rate of interest required to be paid or other
charges
hereunder exceed the maximum permitted by such law, any payments in excess
of
such maximum shall be credited against amounts owed by the Borrower to the
Holder and thus refunded to the Borrower.
5.8. Construction.
Each
party acknowledges that its legal counsel participated in the preparation
of
this Note and, therefore, stipulates that the rule of construction that
ambiguities are to be resolved against the drafting party shall not be applied
in the interpretation of this Note to favor any party
against
the other.
5.9 Redemption.
This
Note may not be redeemed or called without the consent of the Holder except
pursuant to the terms of this Note.
5.10 Shareholder
Status.
The
Holder shall not have rights as a shareholder of the Borrower with respect
to
unconverted portions of this Note. However, the Holder will have the right
of a
shareholder of the Borrower with respect to the Shares of Common Stock to
be
received after delivery by the Holder of a Conversion Notice to the
Borrower.
8
IN
WITNESS WHEREOF,
▇▇▇▇▇▇▇▇ has caused this Note to be signed in its name by an authorized officer
as of the 19th day of March, 2005.
GOLDSPRING,
INC.
By:________________________________
Name:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title:
President & CEO
WITNESS:
______________________________________
9
NOTICE
OF CONVERSION
(To
be
executed by the Registered Holder in order to convert the Note)
The
undersigned hereby elects to convert $_________ of the principal and $_________
of the interest due on the Note issued by Goldspring, Inc. on
_________________,
2005
into Shares of Common Stock of Goldspring, Inc. (the "Borrower") according
to
the conditions set forth in such Note, as of the date written
below.
Date
of
Conversion:____________________________________________________________________
Conversion
Price:______________________________________________________________________
Shares
To
Be
Delivered:_________________________________________________________________
Signature:____________________________________________________________________________
Print
Name:__________________________________________________________________________
Address:____________________________________________________________________________
____________________________________________________________________________
10