EXHIBIT 4.1
NEITHER THE ISSUANCE AND SALE OF
THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE
OF (I) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR (II) AN OPINION OF
COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT. NOTWITHSTANDING
THE FOREGOING, THIS NOTE MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED
BY THIS NOTE. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY
REVIEW THE TERMS OF THIS NOTE. THE PRINCIPAL AMOUNT
REPRESENTED BY THIS NOTE AND, ACCORDINGLY, THE SECURITIES ISSUABLE
UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON
THE FACE HEREOF PURSUANT TO THIS NOTE.
TOUCHSTONE MINING
LIMITED
8.25% CONVERTIBLE
PROMISSORY NOTE
Issuance Date: May 8,
2009
|
Principal Amount: U.S.
$80,000.00
|
FOR
VALUE RECEIVED, Touchstone Mining Limited , a Nevada
corporation (the " Company "), hereby promises to pay to
MILESTONE ENHANCED FUND LTD . or registered assigns ("
Holder ") the amount set out above as the Original Principal
Amount (as reduced pursuant to the terms hereof pursuant to
redemption, conversion or otherwise, the " Principal ") when
due, whether upon the Maturity Date (as defined below),
acceleration, redemption or otherwise (in each case in accordance
with the terms hereof) and to pay interest at the rate of 8.25% per
annum (" Interest ") from the date set out above
as the Issuance Date (the " Issuance Date ") until the same
becomes due and payable on the Maturity Date.
2. PREPAYMENT.
The Company and the Holder understand and agree that
the principal amount of the Note and any interest accrued thereon
be prepaid by the Company at any time without penalty.
3. CONVERSION OF
NOTE . This Note shall be convertible into shares of the
Company’s common stock (the " Shares "), on the terms
and conditions set forth in this Section 3.
(a) Conversion
Right . Subject to the provisions of Section 3(c)(i)
hereof and pursuant to terms to be mutually agreed upon by the
Company and the Holder in writing at a later date, the Holder shall
be entitled to convert any portion of the outstanding and unpaid
principal and interest balance due on the Note in accordance with
Section 3 of this Note into Shares at a conversion price to be
mutually determined by the Company and the Holder (the “
Conversion Price ”). The Company
shall not issue any fractions of a Share upon any conversion.
If the issuance would result in the issuance of a fraction of
a Share, the Company shall round such fraction of a Share up to the
nearest whole Share. The Company shall pay any and all taxes
that may be payable with respect to the issuance and delivery of
Shares upon conversion of any conversion amount.
(b) Mechanics of
Conversion .
(i) Notice of
Conversion. To
convert this Note, the Holder hereof shall deliver written notice
thereof, substantially in the form of Exhibit A to this
Note, with appropriate insertions (the “ Conversion
Notice ”), to the Company at its address as set forth
herein. The date upon which the conversion shall be
effective (the “ Conversion Date ”) shall be
deemed to be the date set forth in the Conversion
Notice. Except as otherwise provided herein, the Company
shall not have the right to object to the conversion or the
calculation of the applicable conversion price, absent manifest
error. Any conversion of any portion of the Note to
Shares shall be deemed to be a pre-payment of principal, without
any penalty, and shall be credited against any future payments of
principal in the order that such payments become due and
payable
(ii) Disputes
. In the event of a dispute as to the number of Shares
issuable to the Holder in connection with a conversion of this
Note, the Company shall issue to the Holder the number of Shares
not in dispute and resolve such dispute using good faith efforts
with the Holder.
(c) Limitations on
Conversions .
Beneficial Ownership
. The Holder of
this Note (including any successor, transferee or assignee) shall
not have the right or obligation to convert any portion of this
Note pursuant to Section 3(b)(i) hereof to the extent that, after
giving effect to such conversion, the Holder (together with the
Holder's Affiliates) would beneficially own in excess of 4.99% (as
may be adjusted in the
