Exhibit 10.6
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.
CONVERTIBLE NOTE
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 Dollars
($ ) (“Principal Amount”), with simple and unpaid interest thereon,
on November 30, 2006 (the “Maturity Date”), if not sooner paid.
This Note has been entered into pursuant to the terms of a subscription
agreement between the Borrower and the Holder, dated of even date herewith (the
“Subscription Agreement”), and shall be subject to the terms of such
Subscription Agreement. 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 [First day of the first calendar
month after 120 days after closing] 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-twentieth (1/20th) 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
Xxxxxx 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.
(Convertible Note)
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”) or at the Holder’s election (ii) for the initial twenty (20) trading
days after the issue date of this Note, at seventy (70%) of the average of the
five (5) lowest closing bid prices for the Common Stock for the twenty (20)
trading days prior to but not including the issue date of this Note for the
Common Stock on the OTC Pink Sheets, NASD OTC Bulletin Board, NASDAQ SmallCap
Market, NASDAQ National Market System, American Stock Exchange, or New York
Stock Exchange, as applicable, or if not then trading on any of the foregoing,
such other principal market or exchange where the Common Stock is listed or
traded (whichever of the foregoing is at the time the principal trading
exchange or market for the Common Stock, the “Principal Market”). Closing bid
price shall mean the closing bid price as reported by Bloomberg L.P. The
Conversion set forth in Section 2.1(b)(ii) may be elected by the Holder
provided the entire principal and outstanding interest on this Note is
converted at such Conversion Price.
(c) Xxxxxxxx’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).
(Convertible Note)
2
(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 Xxxxxx, and (iii) third,
against the Principal Xxxxxx.
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.
2.3. 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”). Xxxxxxxx’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
(Convertible Note)
3
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. Mechanics of Holder’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:
X. Xxxxxx, 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
(Convertible Note)
4
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.
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. Xxxxxxxx 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
(Convertible Note)
5
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.
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.
(Convertible Note)
6
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.
4.10 Failure to Deliver Common Stock or Replacement Note. Xxxxxxxx’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., 0000 X. Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxx, XX 00000,
Attn: Xxxxxx X. Xxxxx, President & CEO, telecopier: (000) 000-0000, with a copy
by telecopier only to: Xxxxxxxxx Xxxxxxx LLP, 0000 X. Xxxxxxxxx Xxxx, Xxxxx
000, Xxxxxxx, XX 00000, Attn: Xxxxxx X. Xxxx, Esq., telecopier: (000) 000-0000,
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 &
(Convertible Note)
7
Xxxxxxx, P.C., 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000,
telecopier number: (000) 000-0000.
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.
IN WITNESS WHEREOF, Xxxxxxxx has caused this Note to be signed in its name
by an authorized officer as of the 30th day of November, 2004.
(Convertible Note)
8
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GOLDSPRING, INC.
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By: |
/s/ Xxxxxx X. Xxxxx |
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Name: |
Xxxxxx X. Xxxxx |
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Title: |
President & CEO |
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WITNESS:
(Convertible Note)
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
November 30, 2004 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.
(Convertible Note)
10
