Contract
THIS WARRANT AND THE SHARES ISSUABLE
UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. EXCEPT AS OTHERWISE SET FORTH HEREIN OR IN
THE LOAN AGREEMENT, DATED AS OF DECEMBER __, 2009, NEITHER THIS WARRANT NOR ANY
OF SUCH SHARES MAY BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER SAID ACT OR, AN
OPINION OF COUNSEL, IN FORM, SUBSTANCE AND SCOPE, CUSTOMARY FOR OPINIONS OF
COUNSEL IN COMPARABLE TRANSACTIONS, THAT REGISTRATION IS NOT REQUIRED UNDER SUCH
ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.
SUBJECT TO THE PROVISIONS HEREOF, THIS
WARRANT SHALL BE VOID AFTER 5:00 P.M. EASTERN TIME ON __________, 2012 (THE
“EXPIRATION DATE”).
No.
__________
GOLDSPRING,
INC.
WARRANT
TO PURCHASE _________ SHARES OF
COMMON STOCK, PAR VALUE $
$0.000666 PER
SHARE
ISSUE
DATE: __________, 20__
For VALUE RECEIVED,
____________________ (“Warrantholder”), is entitled to purchase, subject to the
provisions of this Warrant, from GoldSpring Inc., a Nevada corporation
(“Company”), at any time not later than 5:00 P.M., Eastern time, on the
Expiration Date (as defined above), at an exercise price per share equal to
$0.0175 (the exercise price in effect being herein called the “Warrant Price”),
_______________ shares1
(“Warrant Shares”) of the Company’s Common Stock, par value $ $0.000666 per
share (“Common Stock”). The number of Warrant Shares purchasable upon
exercise of this Warrant and the Warrant Price shall be subject to adjustment
from time to time as described herein. This Warrant is being issued
pursuant to the Loan Agreement, dated as of December __, 2009 (the “Loan
Agreement”), among the Company and the initial holders of the Company Warrants
(as defined below). Capitalized terms used herein have the respective
meanings ascribed thereto in the Loan Agreement unless otherwise defined
herein.
Section
1. Registration. The
Company shall maintain books for the transfer and registration of the
Warrant. Upon the initial issuance of this Warrant, the Company shall
issue and register the Warrant in the name of the Warrantholder.
1
50% warrant coverage.
Section
2. Transfers. As
provided herein, this Warrant may be transferred only pursuant to a registration
statement filed under the Securities Act of 1933, as amended (the “Securities
Act”), or an exemption from such registration. Subject to such
restrictions, the Company shall transfer this Warrant from time to time upon the
books to be maintained by the Company for that purpose, upon surrender hereof
for transfer, properly endorsed or accompanied by appropriate instructions for
transfer and such other documents as may be reasonably required by the Company,
including, if required by the Company, an opinion of its counsel to the effect
that such transfer is exempt from the registration requirements of the
Securities Act, to establish that such transfer is being made in accordance with
the terms hereof, and a new Warrant shall be issued to the transferee and the
surrendered Warrant shall be canceled by the Company.
Section
3. Exercise of
Warrant.
(a) Subject
to the provisions hereof, the Warrantholder may exercise this Warrant, in whole
or in part, at any time prior to its expiration or sooner termination, upon
surrender of the Warrant, together with delivery of a duly executed Warrant
exercise form, in the form attached hereto as Appendix A (the
“Exercise Agreement”) and payment by cash, certified check or wire transfer of
funds, of the aggregate Warrant Price for
that number of Warrant Shares then being purchased (or by cashless exercise as provided in Section 3(c)
below), to the Company during normal business hours on any business day
at the Company’s principal executive offices (or such other office or agency of
the Company as it may designate by notice to the Warrantholder). The
Warrant Shares so purchased shall be deemed to be issued to the Warrantholder or
the Warrantholder’s designee, as the record owner of such shares, as of the
close of business on the date on which this Warrant shall have been surrendered
(or the date evidence of loss, theft or destruction thereof and security or
indemnity satisfactory to the Company has been provided to the Company), the
Warrant Price shall have been paid and the completed Exercise Agreement shall
have been delivered. Certificates for the Warrant Shares so purchased
shall be delivered to the Warrantholder within a reasonable time, not exceeding
three (3) business days, after this Warrant shall have been so
exercised. The certificates so delivered shall be in such
denominations as may be requested by the Warrantholder and shall be registered
in the name of the Warrantholder or such other name as shall be designated by
the Warrantholder, as specified in the Exercise Agreement. If this
Warrant shall have been exercised only in part, then, unless this Warrant has
expired, the Company shall, at its expense, at the time of delivery of such
certificates, deliver to the Warrantholder a new Warrant representing the right
to purchase the number of shares with respect to which this Warrant shall not
then have been exercised. As used herein, “business day” means a day,
other than a Saturday or Sunday, on which banks in New York City are open for
the general transaction of business. Each exercise hereof shall
constitute the re-affirmation by the Warrantholder that the representations and
warranties contained in Article III of the Loan Agreement are true and correct
in all material respects with respect to the Warrantholder as of the time of
such exercise.
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(b) Conversion
Limitation. Notwithstanding anything in this Warrant to the contrary, in
no event shall the Warrantholder be entitled to exercise a number of Warrants
(or portions thereof) in excess of the number of Warrants (or portions thereof)
upon exercise of which the sum of (i) the number of shares of Common Stock
beneficially owned by the Warrantholder and its affiliates (other than shares of
Common Stock which may be deemed beneficially owned through the ownership of the
unexercised Warrants and the unexercised or unconverted portion of any other
securities of the Company (subject to a limitation on conversion or exercise
analogous to the limitation contained herein)) and (ii) the number of shares of
Common Stock issuable upon exercise of the Warrants (or portions thereof) with
respect to which the determination described herein is being made, would result
in beneficial ownership by the Warrantholder and its affiliates of more than
4.9% of the outstanding shares of the Company’s Common Stock. For
purposes of the immediately preceding sentence, beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended, and Regulation 13D-G thereunder, except as otherwise provided
in clause (i) of the preceding sentence. The Warrantholder may waive
the limitations set forth herein at its sole and absolute discretion by written
notice of not less than sixty-one (61) days to the Borrower.
(c) Cashless
Exercise. Notwithstanding any other provision contained herein
to the contrary the Warrantholder may elect to receive, without the payment by
the Warrantholder of the aggregate Warrant Price in respect of the shares of
Common Stock to be acquired, shares of Common Stock of equal value to the value
of this Warrant, or any specified portion hereof, by the surrender of this
Warrant (or such portion of this Warrant being so exercised) together with a Net
Issue Election Notice, in the form annexed hereto as Appendix B, duly
executed, to the Company. Thereupon, the Company shall issue to the
Warrantholder such number of fully paid, validly issued and nonassessable shares
of Common Stock as is computed using the following formula:
X = Y (A -
B)
A
where
X
= the number of shares of Common Stock
to which the Warrantholder is entitled upon such cashless exercise;
Y
= the total number of shares of Common
Stock covered by this Warrant for which the Warrantholder has surrendered
purchase rights at such time for cashless exercise (including both shares to be
issued to the Warrantholder and shares as to which the purchase rights are to be
canceled as payment therefor);
A
= the “Market Price” of one share of
Common Stock as at the date the net issue election is made; and
B
= the Warrant Price in effect
under this Warrant at the time the net issue election is made.
(d) Termination Upon Failure to
Make Loan. So long as there shall not have occurred and be a
continuing an Event of Default (as defined in Article VI, Section 1 of the Loan
Agreement), the failure of the Warrantholder to make a Loan to the Company when
required under Section 1(a) of the Loan Agreement shall result in the automatic
termination of the Warrants.
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Section
4. Compliance with the
Securities Act of 1933. Except as provided in the Loan Agreement, the
Company may cause the legend set forth on the first page of this Warrant to be
set forth on each Warrant, and a similar legend on any security issued or
issuable upon exercise of this Warrant, unless counsel for the Company is of the
opinion as to any such security that such legend is unnecessary.
Section
5. Payment of
Taxes. The Company will pay any documentary stamp taxes
attributable to the initial issuance of Warrant Shares issuable upon the
exercise of the Warrant; provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of any transfer
involved in the issuance or delivery of any certificates for Warrant Shares in a
name other than that of the Warrantholder in respect of which such shares are
issued, and in such case, the Company shall not be required to issue or deliver
any certificate for Warrant Shares or any Warrant until the person requesting
the same has paid to the Company the amount of such tax or has established to
the Company’s reasonable satisfaction that such tax has been
paid. The Warrantholder shall be responsible for income taxes due
under federal, state or other law, if any such tax is due.
Section
6. Mutilated or Missing
Warrants. In case this Warrant shall be mutilated, lost,
stolen, or destroyed, the Company shall issue in exchange and substitution of
and upon surrender and cancellation of the mutilated Warrant, or in lieu of and
substitution for the Warrant lost, stolen or destroyed, a new Warrant of like
tenor and for the purchase of a like number of Warrant Shares, but only upon
receipt of evidence reasonably satisfactory to the Company of such loss, theft
or destruction of the Warrant, and with respect to a lost, stolen or destroyed
Warrant, reasonable indemnity or bond with respect thereto, if requested by the
Company.
Section
7. Reservation of Common
Stock. The Company and the Warrantholder acknowledge that the
Company does not currently have a sufficient number of authorized shares of
Common Stock available to issue the shares of Common Stock it is required to
issue pursuant to the terms of the Loan Agreement. The Company has agreed to
promptly take all action necessary to obtain the stockholder approval required
to effect an amendment to its Articles of Incorporation to increase its number
of shares of authorized Common Stock to such number as is necessary to meet it
obligations under the Loan Agreement (the “Amendment”). The Company warrants and
represents that the Amendment will be filed with the Secretary of State of the
State of Nevada within 120 days from the execution date of the Loan Agreement
(the “Required Filing Date”). Following the filing of the Amendment, the Company
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of providing for the exercise of
the Company Warrants, such number of shares of Common Stock as shall from time
to time equal the number of shares sufficient to permit the exercise of the
Company Warrants in accordance with their respective terms. The
Company agrees that all Warrant Shares issued upon due exercise of the Warrant
shall be, at the time of delivery of the certificates for such Warrant Shares,
duly authorized, validly issued, fully paid and non-assessable shares of Common
Stock of the Company.
Section
8. Adjustments. Subject
and pursuant to the provisions of this Section 8, the Warrant Price and number
of Warrant Shares subject to this Warrant shall be subject to adjustment from
time to time as set forth hereinafter.
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(a) If
the Company shall, at any time or from time to time while this Warrant is
outstanding, pay a dividend or make a distribution on its Common Stock in shares
of Common Stock, subdivide its outstanding shares of Common Stock into a greater
number of shares or combine its outstanding shares of Common Stock into a
smaller number of shares or issue by reclassification of its outstanding shares
of Common Stock any shares of its capital stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation), then (i) the Warrant Price in effect
immediately prior to the date on which such change shall become effective shall
be adjusted by multiplying such Warrant Price by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding immediately
prior to such change and the denominator of which shall be the number of shares
of Common Stock outstanding immediately after giving effect to such change and
(ii) the number of Warrant Shares purchasable upon exercise of this Warrant
shall be adjusted by multiplying the number of Warrant Shares purchasable upon
exercise of this Warrant immediately prior to the date on which such change
shall become effective by a fraction, the numerator of which is shall be the
Warrant Price in effect immediately prior to the date on which such change shall
become effective and the denominator of which shall be the Warrant Price in
effect immediately after giving effect to such change, calculated in accordance
with clause (i) above. Such adjustments shall be made successively
whenever any event listed above shall occur.
(b) If
any capital reorganization or reclassification of the capital stock of the
Company, consolidation or merger of the Company with another corporation in
which the Company is not the survivor, or sale, transfer or other disposition of
all or substantially all of the Company’s assets to another corporation shall be
effected, then, as a condition of such reorganization, reclassification,
consolidation, merger, sale, transfer or other disposition, lawful and adequate
provision shall be made whereby each Warrantholder shall thereafter have the
right to purchase and receive upon the basis and upon the terms and conditions
herein specified and in lieu of the Warrant Shares immediately theretofore
issuable upon exercise of the Warrant, such shares of stock, securities or
assets as would have been issuable or payable with respect to or in exchange for
a number of Warrant Shares equal to the number of Warrant Shares immediately
theretofore issuable upon exercise of the Warrant, had such reorganization,
reclassification, consolidation, merger, sale, transfer or other disposition not
taken place, and in any such case appropriate provision shall be made with
respect to the rights and interests of each Warrantholder to the end that the
provisions hereof (including, without limitation, provision for adjustment of
the Warrant Price) shall thereafter be applicable, as nearly equivalent as may
be practicable in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise hereof. The Company shall
not effect any such consolidation, merger, sale, transfer or other disposition
unless prior to or simultaneously with the consummation thereof the successor
corporation (if other than the Company) resulting from such consolidation or
merger, or the corporation purchasing or otherwise acquiring such assets or
other appropriate corporation or entity shall assume the obligation to deliver
to the Warrantholder, at the last address of the Warrantholder appearing on the
books of the Company, such shares of stock, securities or assets as, in
accordance with the foregoing provisions, the Warrantholder may be entitled to
purchase, and the other obligations under this Warrant. The
provisions of this paragraph (b) shall similarly apply to successive
reorganizations, reclassifications, consolidations, mergers, sales, transfers or
other dispositions.
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(c) In
case the Company shall fix a payment date for the making of a distribution to
all holders of Common Stock (including any such distribution made in connection
with a consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness or assets (other than cash dividends
or cash distributions payable out of consolidated earnings or earned surplus or
dividends or distributions referred to in Section 8(a)), or subscription rights
or warrants, the Warrant Price to be in effect after such payment date shall be
determined by multiplying the Warrant Price in effect immediately prior to such
payment date by a fraction, the numerator of which shall be the total number of
shares of Common Stock outstanding multiplied by the Market Price (as defined
below) per share of Common Stock immediately prior to such payment date, less
the fair market value (as determined by the Company’s Board of Directors in good
faith) of said assets or evidences of indebtedness so distributed, or of such
subscription rights or warrants, and the denominator of which shall be the total
number of shares of Common Stock outstanding multiplied by such Market Price per
share of Common Stock immediately prior to such payment date. “Market
Price” as of a particular date (the “Valuation Date”) shall mean the following:
(a) if the Common Stock is then listed on a national stock exchange, the closing
sale price of one share of Common Stock on such exchange on the last trading day
prior to the Valuation Date; (b) if the Common Stock is then quoted on the
Financial Industry Regulatory Authority’s OTC Bulletin Board (the “Bulletin
Board”) or such similar quotation system or association, the closing sale price
of one share of Common Stock on the Bulletin Board or such other quotation
system or association on the last trading day prior to the Valuation Date or, if
no such closing sale price is available, the average of the high bid and the low
asked price quoted thereon on the last trading day prior to the Valuation Date;
or (c) if the Common Stock is not then listed on a national stock exchange or
quoted on the Bulletin Board or such other quotation system or association, the
fair market value of one share of Common Stock as of the Valuation Date, as
determined in good faith by the Board of Directors of the Company and the
Warrantholder. If the Common Stock is not then listed on a national
securities exchange, the Bulletin Board or such other quotation system or
association, the Board of Directors of the Company shall respond promptly, in
writing, to an inquiry by the Warrantholder prior to the exercise hereunder as
to the fair market value of a share of Common Stock as determined by the Board
of Directors of the Company. In the event that the Board of Directors
of the Company and the Warrantholder are unable to agree upon the fair market
value in respect of subpart (c) of this paragraph, the Company and the
Warrantholder shall jointly select an appraiser, who is experienced in such
matters. The decision of such appraiser shall be final and
conclusive, and the cost of such appraiser shall be borne equally by the Company
and the Warrantholder. Such adjustment shall be made successively
whenever such a payment date is fixed.
(d) An
adjustment to the Warrant Price shall become effective immediately after the
payment date in the case of each dividend or distribution and immediately after
the effective date of each other event which requires an
adjustment.
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(e) In
the event that, as a result of an adjustment made pursuant to this Section 8,
the Warrantholder shall become entitled to receive any shares of capital stock
of the Company other than shares of Common Stock, the number of such other
shares so receivable upon exercise of this Warrant shall be subject thereafter
to adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Warrant Shares contained in
this Warrant.
(f) Except
as provided in subsection (g) hereof, if and whenever the Company shall issue or
sell, or is, in accordance with any of subsections (f)(l) through (f)(7) hereof,
deemed to have issued or sold, any Additional Shares of Common Stock for no
consideration or for a consideration per share less than the Warrant Price in
effect immediately prior to the time of such issue or sale, then and in each
such case (a “Trigger
Issuance”) the then-existing Warrant Price shall be reduced, as of the
close of business on the effective date of the Trigger Issuance, to a price
determined as follows:
Adjusted
Warrant Price = (A x
B) + D
A+C
where
“A” equals the number of shares of
Common Stock outstanding, including Additional Shares of Common Stock (as
defined below) deemed to be issued hereunder, immediately preceding such Trigger
Issuance;
“B” equals the Warrant Price in effect
immediately preceding such Trigger Issuance;
“C” equals the number of Additional
Shares of Common Stock issued or deemed issued hereunder as a result of the
Trigger Issuance; and
“D” equals the aggregate consideration,
if any, received or deemed to be received by the Company upon such Trigger
Issuance;
provided,
however, that in no event shall the Warrant Price after giving effect to such
Trigger Issuance be greater than the Warrant Price in effect prior to such
Trigger Issuance.
For purposes of this subsection (f),
“Additional Shares of Common Stock” shall mean all shares of Common Stock issued
by the Company or deemed to be issued pursuant to this subsection (f), other
than Excluded Issuances (as defined in subsection (g) hereof).
For purposes of this subsection (f),
the following subsections (f)(l) to (f)(7) shall also be
applicable:
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(f)(1) Issuance
of Rights or Options. In case at any time the Company shall in
any manner grant (directly and not by assumption in a merger or otherwise)
any warrants or other rights to subscribe for or to purchase, or any
options for the purchase of, Common Stock or any stock or security
convertible into or exchangeable for Common Stock (such warrants, rights
or options being called “Options” and such convertible or exchangeable
stock or securities being called “Convertible Securities”) whether or not
such Options or the right to convert or exchange any such Convertible
Securities are immediately exercisable, and the price per share for which
Common Stock is issuable upon the exercise of such Options or upon the
conversion or exchange of such Convertible Securities (determined by
dividing (i) the sum (which sum shall constitute the applicable
consideration) of (x) the total amount, if any, received or receivable by
the Company as consideration for the granting of such Options, plus (y)
the aggregate amount of additional consideration payable to the Company
upon the exercise of all such Options, plus (z), in the case of such
Options which relate to Convertible Securities, the aggregate amount of
additional consideration, if any, payable upon the issue or sale of such
Convertible Securities and upon the conversion or exchange thereof, by
(ii) the total maximum number of shares of Common Stock issuable upon the
exercise of such Options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such Options) shall
be less than the Warrant Price in effect immediately prior to the time of
the granting of such Options, then the total number of shares of Common
Stock issuable upon the exercise of such Options or upon conversion or
exchange of the total amount of such Convertible Securities issuable upon
the exercise of such Options shall be deemed to have been issued for such
price per share as of the date of granting of such Options or the issuance
of such Convertible Securities and thereafter shall be deemed to be
outstanding for purposes of adjusting the Warrant Price. Except
as otherwise provided in subsection 8(f)(3), no adjustment of the Warrant
Price shall be made upon the actual issue of such Common Stock or of such
Convertible Securities upon exercise of such Options or upon the actual
issue of such Common Stock upon conversion or exchange of such Convertible
Securities.
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(f)(2) Issuance
of Convertible Securities. In case the Company shall in any
manner issue (directly and not by assumption in a merger or otherwise) or
sell any Convertible Securities, whether or not the rights to exchange or
convert any such Convertible Securities are immediately exercisable, and
the price per share for which Common Stock is issuable upon such
conversion or exchange (determined by dividing (i) the sum (which sum
shall constitute the applicable consideration) of (x) the total amount
received or receivable by the Company as consideration for the issue or
sale of such Convertible Securities, plus (y) the aggregate amount of
additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (ii) the total number of shares of
Common Stock issuable upon the conversion or exchange of all such
Convertible Securities) shall be less than the Warrant Price in effect
immediately prior to the time of such issue or sale, then the total
maximum number of shares of Common Stock issuable upon conversion or
exchange of all such Convertible Securities shall be deemed to have been
issued for such price per share as of the date of the issue or sale of
such Convertible Securities and thereafter shall be deemed to be
outstanding for purposes of adjusting the Warrant Price, provided that (a)
except as otherwise provided in subsection 8(f)(3), no adjustment of the
Warrant Price shall be made upon the actual issuance of such Common Stock
upon conversion or exchange of such Convertible Securities and (b) no
further adjustment of the Warrant Price shall be made by reason of the
issue or sale of Convertible Securities upon exercise of any Options to
purchase any such Convertible Securities for which adjustments of the
Warrant Price have been made pursuant to the other provisions of
subsection 8(f).
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(f)(3)
Change in Option Price or Conversion Rate. Upon the happening
of any of the following events, namely, if the purchase price provided for
in any Option referred to in subsection 8(f)(l) hereof, the additional
consideration, if any, payable upon the conversion or exchange of any
Convertible Securities referred to in subsections 8(f)(l) or 8(f)(2), or
the rate at which Convertible Securities referred to in subsections
8(f)(l) or 8(f)(2) are convertible into or exchangeable for Common Stock
shall change at any time (including, but not limited to, changes under or
by reason of provisions designed to protect against dilution), the Warrant
Price in effect at the time of such event shall forthwith be readjusted to
the Warrant Price which would have been in effect at such time had such
Options or Convertible Securities still outstanding provided for such
changed purchase price, additional consideration or conversion rate, as
the case may be, at the time initially granted, issued or
sold. On the termination of any Option for which any adjustment
was made pursuant to this subsection 8(f) or any right to convert or
exchange Convertible Securities for which any adjustment was made pursuant
to this subsection 8(f) (including without limitation upon the redemption
or purchase for consideration of such Convertible Securities by the
Company), the Warrant Price then in effect hereunder shall forthwith be
changed to the Warrant Price which would have been in effect at the time
of such termination had such Option or Convertible Securities, to the
extent outstanding immediately prior to such termination, never been
issued.
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(f)(4)
Stock Dividends. Subject to the provisions of this Section
8(f), in case the Company shall declare or pay a dividend or make any
other distribution upon any stock of the Company (other than the Common
Stock) payable in Common Stock, Options or Convertible Securities, then
any Common Stock, Options or Convertible Securities, as the case may be,
issuable in payment of such dividend or distribution shall be deemed to
have been issued or sold without
consideration.
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(f)(5)
Consideration for Stock. In case any shares of Common Stock,
Options or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the net amount
received by the Company therefor, after deduction therefrom of any
expenses incurred or any underwriting commissions or concessions paid or
allowed by the Company in connection therewith. In case any
shares of Common Stock, Options or Convertible Securities shall be issued
or sold for a consideration other than cash, the amount of the
consideration other than cash received by the Company shall be deemed to
be the fair value of such consideration as determined in good faith by the
Board of Directors of the Company, after deduction of any expenses
incurred or any underwriting commissions or concessions paid or allowed by
the Company in connection therewith. In case any Options shall
be issued in connection with the issue and sale of other securities of the
Company, together comprising one integral transaction in which no specific
consideration is allocated to such Options by the parties thereto, such
Options shall be deemed to have been issued for such consideration as
determined in good faith by the Board of Directors of the
Company. If Common Stock, Options or Convertible Securities
shall be issued or sold by the Company and, in connection therewith, other
Options or Convertible Securities (the “Additional Rights”) are issued,
then the consideration received or deemed to be received by the Company
shall be reduced by the fair market value of the Additional Rights (as
determined using the Black-Scholes option pricing model or another method
mutually agreed to by the Company and the Warrantholder). The
Board of Directors of the Company shall respond promptly, in writing, to
an inquiry by the Warrantholder as to the fair market value of the
Additional Rights. In the event that the Board of Directors of
the Company and the Warrantholder are unable to agree upon the fair market
value of the Additional Rights, the Company and the Warrantholder shall
jointly select an appraiser, who is experienced in such
matters. The decision of such appraiser shall be final and
conclusive, and the cost of such appraiser shall be borne evenly by the
Company and the Warrantholder.
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(f)(6)
Record Date. In case the Company shall take a record of the
holders of its Common Stock for the purpose of entitling them (i) to
receive a dividend or other distribution payable in Common Stock, Options
or Convertible Securities or (ii) to subscribe for or purchase Common
Stock, Options or Convertible Securities, then such record date shall be
deemed to be the date of the issue or sale of the shares of Common Stock
deemed to have been issued or sold upon the declaration of such dividend
or the making of such other distribution or the date of the granting of
such right of subscription or purchase, as the case may
be.
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(f)(7)
Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or
for the account of the Company or any of its wholly-owned subsidiaries,
and the disposition of any such shares (other than the cancellation or
retirement thereof) shall be considered an issue or sale of Common Stock
for the purpose of this subsection
(f).
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(g) Anything herein to the contrary notwithstanding, the
Company shall not be required to make any adjustment of the Warrant Price in the
case of the issuance of (A) capital stock, Options or Convertible
Securities issued to directors, officers, employees or consultants of the
Company in connection with their service as directors of the Company, their
employment by the Company or their retention as consultants by the Company
pursuant to an equity compensation program approved by the Board of Directors of
the Company or the compensation committee of the Board of Directors of the
Company, (B) shares of Common Stock issued upon the conversion or exercise of
Options or Convertible Securities issued prior to the date hereof, provided such
securities are not amended after the date hereof to increase the number of
shares of Common Stock issuable thereunder or to lower the exercise or
conversion price thereof, (C) securities issued pursuant to the Loan Agreement
and securities issued upon the exercise or conversion of those securities, (D)
shares of Common Stock issued or issuable by reason of a dividend, stock split
or other distribution on shares of Common Stock (but only to the extent that
such a dividend, split or distribution results in an adjustment in the Warrant
Price pursuant to the other provisions of this Warrant), and (E) capital stock,
Options or Convertible Securities issued to strategic partners of the Company in
connection with transactions consummated with such strategic partners in
furtherance of the Company’s business objectives (collectively, “Excluded
Issuances”).
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(h) Upon
any adjustment to the Warrant Price pursuant to Section 8(f) above, the number
of Warrant Shares purchasable hereunder shall be adjusted by multiplying such
number by a fraction, the numerator of which shall be the Warrant Price in
effect immediately prior to such adjustment and the denominator of which shall
be the Warrant Price in effect immediately thereafter.
(i) To
the extent permitted by applicable law and the listing requirements of any stock
market or exchange on which the Common Stock is then listed, the Company from
time to time may decrease the Warrant Price by any amount for any period of time
if the period is at least twenty (20) days, the decrease is irrevocable during
the period and the Board shall have made a determination that such decrease
would be in the best interests of the Company, which determination shall be
conclusive. Whenever the Warrant Price is decreased pursuant to the
preceding sentence, the Company shall provide written notice thereof to the
Warrantholder at least five (5) days prior to the date the decreased Warrant
Price takes effect, and such notice shall state the decreased Warrant Price and
the period during which it will be in effect.
Section
9. Call
Provision.
(a) In
the event that the closing price of a share of Common Stock as traded on the
Over-the-Counter Bulletin Board (or such other exchange or stock market on which
the Common Stock may then be listed or quoted) equals or exceeds $0.02625
(appropriately adjusted for any stock split, reverse stock split, stock dividend
or other reclassification or combination of the Common Stock occurring after the
date hereof) for at least ten (10) consecutive trading days (the “Trading
Condition”), the Company, upon thirty (30) days prior written notice (the
“Notice Period”) given to the Warrantholder within one business day immediately
following the end of such ten (10) trading day period, may call this Warrant at
a redemption price equal to $0.000001 per share of Common Stock then purchasable
pursuant to this Warrant; provided that (i) the Company simultaneously calls all
Company Warrants (as defined below) on the same terms, and (ii) this Warrant is
fully exercisable for the full amount of Warrant Shares covered
hereby. Notwithstanding any such notice by the Company, the
Warrantholder shall have the right to exercise this Warrant prior to the end of
the Notice Period.
Section
10. Fractional
Interest. The Company shall not be required to issue fractions
of Warrant Shares upon the exercise of this Warrant. If any
fractional share of Common Stock would, except for the provisions of the first
sentence of this Section 10, be deliverable upon such exercise, the Company, in
lieu of delivering such fractional share, shall pay to the exercising
Warrantholder an amount in cash equal to the Market Price of such fractional
share of Common Stock on the date of exercise.
-11-
Section
11. Benefits. Nothing
in this Warrant shall be construed to give any person, firm or corporation
(other than the Company and the Warrantholder) any legal or equitable right,
remedy or claim, it being agreed that this Warrant shall be for the sole and
exclusive benefit of the Company and the Warrantholder.
Section
12. Notices to
Warrantholder. Upon the happening of any event requiring an
adjustment of the Warrant Price, the Company shall promptly give written notice
thereof to the Warrantholder at the address appearing in the records of the
Company, stating the adjusted Warrant Price and the adjusted number of Warrant
Shares resulting from such event and setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is
based. Failure to give such notice to the Warrantholder or any defect
therein shall not affect the legality or validity of the subject
adjustment.
Section
13. Identity of Transfer
Agent. The Transfer Agent for the Common Stock is
____________________. Upon the appointment of any subsequent transfer
agent for the Common Stock or other shares of the Company’s capital stock
issuable upon the exercise of the rights of purchase represented by the Warrant,
the Company will mail to the Warrantholder a statement setting forth the name
and address of such transfer agent.
Section
14. Notices. Unless
otherwise provided, any notice required or permitted under this Warrant shall be
given in writing and shall be deemed effectively given as hereinafter described
(i) if given by personal delivery, then such notice shall be deemed given upon
such delivery, (ii) if given by telex or facsimile, then such notice shall be
deemed given upon receipt of confirmation of complete transmittal, (iii) if
given by mail, then such notice shall be deemed given upon the earlier of (A)
receipt of such notice by the recipient or (B) three days after such notice is
deposited in first class mail, postage prepaid, and (iv) if given by an
internationally recognized overnight air courier, then such notice shall be
deemed given one business day after delivery to such carrier. All
notices shall be addressed as follows: if to the Warrantholder, at its address
as set forth in the Company’s books and records and, if to the Company, at the
address as follows, or at such other address as the Warrantholder or the Company
may designate by ten days’ advance written notice to the other:
If to the Company:
GoldSpring,
Inc.
0000
Xxxxxxxx Xxxx Xxxx
X.X. Xxx
0000
Xxxxxxxx
Xxxx, XX 00000
With a copy to:
Jolie X. Xxxx, Esq.
00 Xxxxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
-12-
Section
15. Successors. All
the covenants and provisions hereof by or for the benefit of the Warrantholder
shall bind and inure to the benefit of its respective successors and assigns
hereunder.
Section
16. Governing Law; Consent to
Jurisdiction; Waiver of Jury Trial. This Warrant shall be
governed by, and construed in accordance with, the internal laws of the State of
New York, without reference to the choice of law provisions
thereof. The Company and, by accepting this Warrant, the
Warrantholder, each irrevocably submits to the exclusive jurisdiction of the
courts of the State of New York located in New York County and the United States
District Court for the Southern District of New York for the purpose of any
suit, action, proceeding or judgment relating to or arising out of this Warrant
and the transactions contemplated hereby. Service of process in
connection with any such suit, action or proceeding may be served on each party
hereto anywhere in the world by the same methods as are specified for the giving
of notices under this Warrant. The Company and, by accepting this
Warrant, the Warrantholder, each irrevocably consents to the jurisdiction of any
such court in any such suit, action or proceeding and to the laying of venue in
such court. The Company and, by accepting this Warrant, the
Warrantholder, each irrevocably waives any objection to the laying of venue of
any such suit, action or proceeding brought in such courts and irrevocably
waives any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum. EACH OF THE COMPANY AND, BY ITS
ACCEPTANCE HEREOF, THE WARRANTHOLDER HEREBY WAIVES ANY RIGHT TO REQUEST A TRIAL
BY JURY IN ANY LITIGATION WITH RESPECT TO THIS WARRANT AND REPRESENTS THAT
COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.
Section
17. No Rights as
Stockholder. Prior to the exercise of this Warrant, the
Warrantholder shall not have or exercise any rights as a stockholder of the
Company by virtue of its ownership of this Warrant.
Section
18. Amendment;
Waiver. This Warrant is one of a series of Warrants of like
tenor issued by the Company pursuant to the Loan Agreement and covering an
aggregate of 225,000,000 shares of Common Stock (collectively, the “Company
Warrants”). Any term of this Warrant may be amended or waived
(including the adjustment provisions included in Section 8 of this Warrant) upon
the written consent of the Company and the holders of Company Warrants
representing at least 50% of the number of shares of Common Stock then subject
to all outstanding Company Warrants (the “Majority Holders”);
provided, that
(x) any such amendment or waiver must apply to all Company Warrants; and (y) the
number of Warrant Shares subject to this Warrant, the Warrant Price and the
Expiration Date may not be amended, and the right to exercise this Warrant may
not be altered or waived in any manner adverse to the Warrantholder, without the
written consent of the Warrantholder.
-13-
Section
19. Section
Headings. The section headings in this Warrant are for the
convenience of the Company and the Warrantholder and in no way alter, modify,
amend, limit or restrict the provisions hereof.
-14-
IN WITNESS WHEREOF, the
Company has caused this Warrant to be duly executed, as of the ___ day of
__________, 20__.
|
GOLDSPRING,
INC.
|
||
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
-15-
APPENDIX
A
GOLDSPRING,
INC.
WARRANT
EXERCISE FORM
To
GoldSpring, Inc.:
The undersigned hereby irrevocably
elects to exercise the right of purchase represented by the within Warrant
(“Warrant”) for, and to purchase thereunder by the payment of the Warrant Price
and surrender of the Warrant, _______________ shares of Common Stock (“Warrant
Shares”) provided for therein, and requests that certificates for the Warrant
Shares be issued as follows:
|
Name
|
|
Address
|
|
Federal
Tax ID or Social Security No.
|
and delivered by (certified mail to the
above address, or (electronically (provide DWAC
Instructions:___________________), or
(other
(specify): __________________________________________).
and, if
the number of Warrant Shares shall not be all the Warrant Shares purchasable
upon exercise of the Warrant, that a new Warrant for the balance of the Warrant
Shares purchasable upon exercise of this Warrant be registered in the name of
the undersigned Warrantholder or the undersigned’s Assignee as below indicated
and delivered to the address stated below.
Dated:
___________________, ____
Note: The
signature must correspond with
Signature:______________________________
|
the
name of the Warrantholder as written
|
||
|
on
the first page of the Warrant in every
|
||
|
particular,
without alteration or enlargement
|
Name
(please print)
|
|
|
or
any change whatever, unless the Warrant
|
||
|
has
been assigned.
|
||
|
Address
|
||
|
Federal
Identification or
|
||
|
Social
Security No.
|
||
|
Assignee:________________________________________
|
||
-00-
XXXXXXXX
X
GOLDSPRING,
INC.
NET ISSUE
ELECTION NOTICE
To:
GoldSpring, Inc.
Date:[_________________________]
The
undersigned hereby elects under Section __ of this Warrant to surrender the
right to purchase [____________] shares of Common Stock pursuant to this Warrant
and hereby requests the issuance of [_____________] shares of Common
Stock. The certificate(s) for the shares issuable upon such net issue
election shall be issued in the name of the undersigned or as otherwise
indicated below.
|
Signature
|
|
Name
for Registration
|
|
Mailing
Address
|
-17-
