Exhibit 10.5

SUBSCRIPTION AGREEMENT

     THIS SUBSCRIPTION AGREEMENT (this “Agreement”), dated as of November 30,
2004, by and among Goldspring, Inc., a Florida corporation (the “Company”), and
the subscribers identified on the signature pages hereto (each a “Subscriber”
and collectively “Subscribers”).

     WHEREAS, the Company and the Subscribers are executing and delivering this
Agreement in reliance upon an exemption from securities registration afforded by
the provisions of Section 3(a)(9) as promulgated by the United States Securities
and Exchange Commission (the “Commission”) under the Securities Act of 1933, as
amended (the “1933 Act”).

     WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the
Subscribers, as provided herein, and the Subscribers, in the aggregate, shall
purchase up to Twelve Million Dollars ($12,000,000) (the “Purchase Price”) of
principal amount of promissory notes of the Company (“Note” or “Notes”) in the
form attached hereto as Exhibit A convertible into shares of the Company’s
common stock, $0.000666 par value (the “Common Stock”) at a fixed per share
conversion price equal to $0.20, or for the first twenty (20) trading days after
the Closing Date (as defined in Section 13(b) hereof) at a per share conversion
price equal to seventy percent (70%) of the average of the five (5) lowest
closing prices of the Common Stock as reported by Bloomberg LP for the Principal
Market (as defined in Section 9.1(b) hereof) for the twenty (20) trading days
preceding but not including the Closing Date. The Subscribers will also receive
share purchase warrants (the “Warrants”) in the form attached hereto as
Exhibit B, to purchase shares of Common Stock (the “Warrant Shares”). The Notes,
shares of Common Stock issuable upon conversion of the Notes (the "Shares”), the
Warrants and the Warrant Shares are collectively referred to herein as the
“Securities”;

     WHEREAS, the aggregate consideration to be paid for the Notes and the
Warrants contemplated hereby shall be held in escrow pursuant to the terms of an
Escrow Agreement to be executed by the parties substantially in the form
attached hereto as Exhibit C (the “Escrow Agreement”).

     WHEREAS, the Subscribers and the Company had previously entered into a
Subscription Agreement dated as of March 22, 2004 (“First Subscription
Agreement”) relating to the sale by the Company to the Subscribers of common
stock (“First Common Stock”) and Class A and Green Shoe Common Stock Purchase
Warrants (collectively “First Warrants”) in the amounts set forth on the
signature pages hereto, and the Company has defaulted in certain of its
obligations to the Subscribers under the terms of the First Subscription
Agreement and First Warrants; and

     WHEREAS, the Subscribers are desirous of releasing the Company from damages
that have accrued under the First Subscription Agreement and First Warrants.

     NOW, THEREFORE, in consideration of the mutual covenants and other
agreements contained in this Agreement the Company and the Subscribers hereby
agree as follows:

               1. Closing. Subject to the satisfaction or waiver of the terms
and conditions of this Agreement, on the Closing Date, each Subscriber who signs
this Agreement shall purchase and the Company shall sell to each such Subscriber
a Note in the principal and the amount of Warrants determined pursuant to
Section 3 below. The aggregate principal amount of the Notes to be purchased by
the Subscribers on the Closing Date shall not exceed the Purchase Price. The
principal amount of the Note to be purchased by each Subscriber shall be equal
to the purchase price paid by each Subscriber for the First Common Stock and
First Warrants (“First Purchase Price”) designated on the signature page hereto
and

(Subscription Agreement)

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an additional amount equal to two percent (2%) of such amount for each thirty
(30) days or part thereof commencing from April 6, 2004 through April 21, 2004
and from June 20, 2004 through the Closing Date, which represent the liquidated
damages described in Section 11.4 of the First Subscription Agreement (“First
Liquidated Damages”). The aggregate principal amount of the Note to be received
by each Subscriber is set forth on the signature page hereto. This Agreement and
the Transaction Documents (as defined in Section 5(c) shall be binding upon the
Company and only those Subscribers who execute this Agreement and comply with
their obligations hereunder.

               2. Payments of Purchase Price. The Subscribers will pay the
Purchase Price for the Note and Warrants by surrender to the Company of the
First Common Stock and First Warrants, which will be deposited with the Escrow
Agent identified in the Escrow Agreement and held pursuant to the Escrow
Agreement which surrender shall be the entire payment required to be made by the
Subscribers. The Subscribers acknowledge and agree that provided a Closing under
this Agreement occurs then the Subscriber and their affiliates shall release
Company (a) from any other obligation to pay additional First Liquidated Damages
pursuant to Section 11.4 of the First Subscription Agreement and Section 9 of
each of the First Warrants; and (b) from any claims they may have against
Company in connection with the transactions contemplated by the First
Subscription Agreement, as set forth in Section 13. Each of the Subscribers and
the Company, by execution of this Agreement, hereby irrevocably releases the
other party from any claim or potential claim such party may have presently or
in the future arising from the First Subscription Agreement, First Warrants or
any state of facts extant prior to the Closing Date to the extent described in
Section 13 hereof.

               3. Warrants. On the Closing Date, the Company will issue and
deliver Class B Warrants to the Subscribers. Fifty (50) Class B Warrants will be
issued for each one hundred (100) Shares, which would be issued on the Closing
Date assuming the complete conversion of the Notes issued on the Closing Date at
an assumed Conversion Price of $.20. The per Warrant Share exercise price to
acquire a Warrant Share upon exercise of a Class B Warrant shall be $0.20. The
Class B Warrants shall be exercisable until four (4) years after the Issue Date
of the Class B Warrants.

               4. Subscriber’s Representations and Warranties. Each Subscriber
hereby represents and warrants to and agrees with the Company only as to such
Subscriber that:

                         (a) Information on Company. The Subscriber has been
furnished with or has had access at the EDGAR Website of the Commission to the
Company’s Form 10-KSB for the year ended December 31, 2004 as filed with the
Commission, together with all subsequently filed Forms 10-QSB, 8-K, and filings
made with the Commission available at the EDGAR website (hereinafter referred to
collectively as the “Reports”). In addition, the Subscriber has received in
writing from the Company such other information concerning its operations,
financial condition and other matters as the Subscriber has requested in writing
(such other information is collectively, the “Other Written Information”), and
considered all factors the Subscriber deems material in deciding on the
advisability of investing in the Securities.

                         (b) Information on Subscriber. The Subscriber is, and
will be at the time of the conversion of the Notes and exercise of the Warrants,
an “accredited investor”, as such term is defined in Regulation D promulgated by
the Commission under the 1933 Act, is experienced in investments and business
matters, has made investments of a speculative nature and has purchased
securities of United States publicly-owned companies in private placements in
the past and, with its representatives, has such knowledge and experience in
financial, tax and other business matters as to enable the Subscriber to utilize
the information made available by the Company to evaluate the merits and risks
of and to make an informed investment decision with respect to the proposed
purchase, which

(Subscription Agreement)

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represents a speculative investment. The Subscriber has the authority and is
duly and legally qualified to purchase and own the Securities. The Subscriber is
able to bear the risk of such investment for an indefinite period and to afford
a complete loss thereof. The information set forth on the signature page hereto
regarding the Subscriber is accurate.

                         (c) Purchase of Notes and Warrants. On the Closing
Date, the Subscriber will purchase the Notes and Warrants as principal for its
own account for investment only and not with a view toward, or for resale in
connection with, the public sale or any distribution thereof.

                         (d) Compliance with Securities Act. The Subscriber
understands and agrees that the Securities have not been registered under the
1933 Act or any applicable state securities laws, by reason of their issuance in
a transaction that does not require registration under the 1933 Act (based in
part on the accuracy of the representations and warranties of Subscriber
contained herein), and that such Securities must be held indefinitely unless a
subsequent disposition is registered under the 1933 Act or any applicable state
securities laws or is exempt from such registration. In any event, and subject
to compliance with applicable securities laws and Section 4(l) hereof, the
Subscriber may enter into lawful hedging transactions.

                         (e) Shares Legend. The Shares and the Warrant Shares
shall bear the following or similar legend:

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THESE SHARES MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO GOLDSPRING, INC. THAT SUCH
REGISTRATION IS NOT REQUIRED.”

                         (f) Warrants Legend. The Warrants shall bear the
following or similar legend:

“THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT
AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS WARRANT OR THE COMMON SHARES ISSUABLE UPON
EXERCISE OF THIS WARRANT UNDER SAID ACT OR ANY APPLICABLE STATE SECURITIES LAW
OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO GOLDSPRING, INC. THAT SUCH
REGISTRATION IS NOT REQUIRED.”

                         (g) Note Legend. The Note shall bear the following
legend:

(Subscription Agreement)

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“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.”

                         (h) Communication of Offer. The offer to sell the
Securities was directly communicated to the Subscriber by the Company. At no
time was the Subscriber presented with or solicited by any leaflet, newspaper or
magazine article, radio or television advertisement, or any other form of
general advertising or solicited or invited to attend a promotional meeting
otherwise than in connection and concurrently with such communicated offer.

                         (i) Authority; Enforceability. This Agreement and other
agreements delivered together with this Agreement or in connection herewith have
been duly authorized, executed and delivered by the Subscriber and are valid and
binding agreements enforceable against the Subscriber in accordance with their
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors’ rights generally and to general principles of equity; and Subscriber
has full corporate power and authority necessary to enter into this Agreement
and such other agreements and to perform its obligations hereunder and under all
other agreements entered into by the Subscriber relating hereto.

                         (j) Restricted Securities. Subscriber understands that
the Securities have not been registered under the 1933 Act and such Subscriber
will not sell, offer to sell, assign, pledge, hypothecate or otherwise transfer
any of the Securities unless pursuant to an effective registration statement
under the 1933 Act. Notwithstanding anything to the contrary contained in this
Agreement, such Subscriber may transfer (without restriction and without the
need for an opinion of counsel) the Securities to its Affiliates (as defined
below) provided that each such Affiliate is an “accredited investor” under
Regulation D and such Affiliate agrees to be bound by the terms and conditions
of this Agreement. For the purposes of this Agreement, an “Affiliate” of any
person or entity means any other person or entity directly or indirectly
controlling, controlled by or under direct or indirect common control with such
person or entity. Affiliate includes each Subsidiary of the Company. For
purposes of this definition, “control” means the power to direct the management
and policies of such person or firm, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise.

                         (k) No Governmental Review. Each Subscriber understands
that no United States federal or state agency or any other governmental or state
agency has passed on or made recommendations or endorsement of the Securities or
the suitability of the investment in the Securities nor have such authorities
passed upon or endorsed the merits of the offering of the Securities.

                         (l) Restrictions on Short Sales. Subscriber represents,
warrants and covenants that neither Subscriber nor any person or entity,
directly or indirectly controlling, controlled by or under direct or indirect
common control with such Subscriber (“Affiliate”) which (x) has knowledge of the
transactions contemplated hereby, (y) has or shares discretion relating to such
Subscriber’s investments or trading or information concerning such Subscriber’s
investments, including in respect of the Securities,

(Subscription Agreement)

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or (z) is subject to such Subscriber’s review or input concerning such
Affiliate’s investments or trading, has or will, directly or indirectly, during
the period beginning on the date on which Subscriber was first contacted
regarding the transactions contemplated by this Agreement and ending on
December 31, 2004, engage in (i) any “short sales” (as such term is defined in
Rule 3b-3 promulgated under the 1934 Act) of the Shares and/or the Warrant
Shares, including, without limitation, the maintaining of any short position
with respect to, establishing or maintaining a “put equivalent position” (within
the meaning of Rule 16a-1(h) under the 1934 Act) with respect to, entering into
any swap, derivative transaction or other arrangement (whether any such
transaction is to be settled by delivery of Shares, other securities, cash or
other consideration) that transfers to another, in whole or in part, any
economic consequences or ownership, or otherwise dispose of, any of the
Securities by such Subscriber or (ii) any hedging transaction which establishes
a net short position with respect to the Securities (clauses (i) and
(ii) together, a “Short Sale”); except for (A) Short Sales by such Subscriber or
an Affiliate of such Subscriber which was, prior to the date on which such
Subscriber was first contacted regarding the transactions contemplated by this
Agreement, a market maker for the Shares, provided that such Short Sales are in
the ordinary course of business of such Subscriber or Affiliate of such
Subscriber and are in compliance with the 1933 Act, the rules and regulations of
the 1933 Act and such other securities laws as may be applicable, (B) Short
Sales by such Subscriber or an Affiliate of such Subscriber which by virtue of
the procedures of such Subscriber or an Affiliate of such Subscriber are made
without knowledge of the transactions contemplated by this Agreement or
(C) Short Sales by such Subscriber or an Affiliate of such Subscriber to the
extent that such Subscriber or Affiliate of such Subscriber is acting in the
capacity of a broker-dealer executing unsolicited third-party transactions.

                         (m) Correctness of Representations. Each Subscriber
represents as to such Subscriber that the foregoing representations and
warranties are true and correct as of the date hereof and, unless a Subscriber
otherwise notifies the Company prior to each Closing Date shall be true and
correct as of each Closing Date.

                         (n) Survival. The foregoing representations and
warranties shall survive the Closing Date for a period of two (2) years.

               5. Company Representations and Warranties. Except as set forth in
the Disclosure Schedule (attached hereto as Attachment 1) and the Reports, the
Company represents and warrants to and agrees with each Subscriber that:

                         (a) Due Incorporation. The Company and each of its
Subsidiaries identified on Schedule 5(a) hereto (individually a “Subsidiary” and
collectively “Subsidiaries”) is a corporation duly organized, validly existing
and in good standing under the laws of the respective jurisdictions of their
incorporation and have the requisite corporate power to own their properties and
to carry on their business as now being conducted. The Company and each of its
Subsidiaries is duly qualified as a foreign corporation to do business and is in
good standing in each jurisdiction where the nature of the business conducted or
property owned by them makes such qualification necessary, other than those
jurisdictions in which the failure to so qualify would not have a Material
Adverse Effect. For purpose of this Agreement, a “Material Adverse Effect” shall
mean a material adverse effect on the financial condition, results of
operations, properties or business of the Company taken as a whole.

                         (b) Outstanding Stock. All issued and outstanding
shares of capital stock of the Company and each of its Subsidiaries have been
duly authorized and validly issued and are fully paid and nonassessable.

(Subscription Agreement)

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                         (c) Authority; Enforceability. This Agreement, the
Note, the Warrants, the Escrow Agreement and any other agreements delivered
together with this Agreement or in connection herewith (collectively
“Transaction Documents”) have been duly authorized, executed and delivered by
the Company are valid and binding agreements enforceable in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors’ rights generally and to general principles of equity.
The Company and has full corporate power and authority necessary to enter into
and deliver the Transaction Documents and to perform its obligations thereunder.

                         (d) Additional Issuances. There are no outstanding
agreements or preemptive or similar rights affecting the Company’s common stock
or equity and no outstanding rights, warrants or options to acquire, or
instruments convertible into or exchangeable for, or agreements or
understandings with respect to the sale or issuance of any shares of common
stock or equity of the Company or other equity interest in any of the
Subsidiaries of the Company except as described on Schedule 5(d).

                         (e) Consents. No consent, approval, authorization or
order of any court, governmental agency or body or arbitrator having
jurisdiction over the Company, or any of its Affiliates, the OTC Bulletin Board
(“Bulletin Board”) nor the Company’s shareholders is required for the execution
by the Company of the Transaction Documents and compliance and performance by
the Company of its obligations under the Transaction Documents, including,
without limitation, the issuance and sale of the Securities.

                         (f) No Violation or Conflict. Assuming the
representations and warranties of the Subscribers in Section 4 are true and
correct, neither the issuance and sale of the Securities nor the performance of
the Company’s obligations under this Agreement and all other agreements entered
into by the Company relating thereto by the Company will:

                              (i) violate, conflict with, result in a breach of,
or constitute a default (or an event which with the giving of notice or the
lapse of time or both would be reasonably likely to constitute a default) under
(A) the articles or certificate of incorporation, charter or bylaws of the
Company, (B) to the Company’s knowledge, any decree, judgment, order, law,
treaty, rule, regulation or determination applicable to the Company of any
court, governmental agency or body, or arbitrator having jurisdiction over the
Company or any of its Subsidiaries or over the properties or assets of the
Company or any of its Affiliates, (C) the terms of any bond, debenture, note or
any other evidence of indebtedness, or any agreement, stock option or other
similar plan, indenture, lease, mortgage, deed of trust or other instrument to
which the Company or any of its Affiliates or Subsidiaries is a party, by which
the Company or any of its Affiliates or Subsidiaries is bound, or to which any
of the properties of the Company or any of its Affiliates or Subsidiaries is
subject, or (D) the terms of any “lock-up” or similar provision of any
underwriting or similar agreement to which the Company, or any of its Affiliates
or Subsidiaries is a party except the violation, conflict, breach, or default of
which would not have a Material Adverse Effect on the Company; or

                              (ii) result in the creation or imposition of any
lien, charge or encumbrance upon the Securities or any of the assets of the
Company, its Subsidiaries or any of its Affiliates; or

                              (iii) result in the activation of any
anti-dilution rights or a reset or repricing of any debt or security instrument
of any other creditor or equity holder of the Company, nor result in the
acceleration of the due date of any obligation of the Company; or

(Subscription Agreement)

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                              (iv) result in the activation of any piggy-back
registration rights of any person or entity holding securities of the Company or
having the right to receive securities of the Company.

                         (g) The Securities. The Securities upon issuance:

                              (i) are, or will be, free and clear of any
security interests, liens, claims or other encumbrances, subject to restrictions
upon transfer under the 1933 Act and any applicable state securities laws;

                              (ii) have been, or will be, duly and validly
authorized and on the date of issuance of the Shares and upon exercise of the
Warrants, the Shares and Warrant Shares will be duly and validly issued, fully
paid and nonassessable or if registered pursuant to the 1933 Act, and resold
pursuant to an effective registration statement will be free trading and
unrestricted);

                              (iii) will not have been issued or sold in
violation of any preemptive or other similar rights of the holders of any
securities of the Company; and

                              (iv) will not subject the holders thereof to
personal liability by reason of being such holders.

                         (h) Litigation. There is no pending or, to the best
knowledge of the Company, threatened action, suit, proceeding or investigation
before any court, governmental agency or body, or arbitrator having jurisdiction
over the Company, or any of its Affiliates that would affect the execution by
the Company or the performance by the Company of its obligations under the
Transaction Documents. Except as disclosed on the Disclosure Schedule annexed
hereto or in the Reports, there is no pending or, to the best knowledge of the
Company, basis for or threatened action, suit, proceeding or investigation
before any court, governmental agency or body, or arbitrator having jurisdiction
over the Company, or any of its Affiliates which litigation if adversely
determined would have a Material Adverse Effect on the Company.

                         (i) Reporting Company. The Company is a publicly-held
company subject to reporting obligations pursuant to Section 13 of the
Securities Exchange Act of 1934, as amended (the “1934 Act”) and has a class of
common shares registered pursuant to Section 12(g) of the 1934 Act. Pursuant to
the provisions of the 1934 Act, the Company has timely filed all reports and
other materials required to be filed thereunder with the Commission during the
preceding twelve months.

                         (j) No Market Manipulation. The Company has not taken,
and will not take, directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in stabilization or manipulation of
the price of the Common Stock of the Company to facilitate the sale or resale of
the Securities or affect the price at which the Securities may be issued or
resold.

                         (k) Information Concerning Company. The Reports contain
all material information relating to the Company and its operations and
financial condition as of their respective dates which information is required
to be disclosed therein. Since the date of the financial statements included in
the Reports, and except as modified in the Other Written Information or in the
Schedules hereto, there has been no Material Adverse Effect relating to the
Company’s business, financial condition or affairs not disclosed in the Reports.
The Reports do not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances when made.

(Subscription Agreement)

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                         (l) Stop Transfer. The Securities, when issued, will be
restricted securities. The Company will not issue any stop transfer order or
other order impeding the sale, resale or delivery of any of the Securities,
except as may be required by any applicable federal or state securities laws and
unless contemporaneous notice of such instruction is given to the Subscriber.

                         (m) Defaults. The Company and its Subsidiaries are not
in violation of their articles of incorporation or bylaws. The Company and its
Subsidiaries are (i) not in default under or in violation of any other material
agreement or instrument to which it is a party or by which it or any of its
properties are bound or affected, which default or violation would have a
Material Adverse Effect on the Company, (ii) not in default with respect to any
order of any court, arbitrator or governmental body or subject to or party to
any order of any court or governmental authority arising out of any action, suit
or proceeding under any statute or other law respecting antitrust, monopoly,
restraint of trade, unfair competition or similar matters, or (iii) to the
Company’s knowledge not in violation of any statute, rule or regulation of any
governmental authority which violation would have a Material Adverse Effect on
the Company or its Subsidiaries.

                         (n) No Integrated Offering. Neither the Company, nor
any of its Affiliates, nor any person acting on its or their behalf, has
directly or indirectly made any offers or sales of any security or solicited any
offers to buy any security under circumstances that would cause the offer of the
Securities pursuant to this Agreement to be integrated with prior offerings by
the Company for purposes of the 1933 Act or any applicable stockholder approval
provisions, including, without limitation, under the rules and regulations of
the Bulletin Board. Nor will the Company or any of its Affiliates or
Subsidiaries take any action or steps that would cause the offer or issuance of
the Securities to be integrated with other offerings. The Company will not
conduct any offering other than the transactions contemplated hereby that will
be integrated with the offer or issuance of the Securities.

                         (o) No General Solicitation. Neither the Company, nor
any of its Affiliates, nor to its knowledge, any person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D under the 1933 Act) in connection with the
offer or sale of the Securities.

                         (p) Listing. The Company’s common stock is quoted on
the Bulletin Board. The Company has not received any oral or written notice that
its common stock is not eligible nor will become ineligible for quotation on the
Bulletin Board nor that its common stock does not meet all requirements for the
continuation of such quotation and the Company satisfies all the requirements
for the continued quotation of its common stock on the Bulletin Board.

                         (q) No Undisclosed Liabilities. The Company and its
Subsidiaries have no liabilities or obligations which are material, individually
or in the aggregate, which are not disclosed in the Reports and Other Written
Information, other than those incurred in the ordinary course of the Company’s
businesses since December 31, 2003 and which, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect, other than as
set forth in Schedule 5(q).

                         (r) No Undisclosed Events or Circumstances. Since
December 31, 2003, no event or circumstance has occurred or exists with respect
to the Company or its Subsidiaries, businesses, properties, operations or
financial condition, that, under applicable law, rule or regulation, requires
public disclosure or announcement prior to the date hereof by the Company but
which has not been so publicly announced or disclosed in the Reports.

(Subscription Agreement)

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                         (s) Capitalization. The authorized and outstanding
capital stock of the Company as of the date of this Agreement and the Closing
Date (not including the Securities) are set forth on Schedule 5(s). Except as
set forth on Schedule 5(d), there are no options, warrants, or rights to
subscribe to, securities, rights or obligations convertible into or exchangeable
for or giving any right to subscribe for any shares of capital stock of the
Company or any of its Subsidiaries. All of the outstanding shares of Common
Stock of the Company have been duly and validly authorized and issued and are
fully paid and nonassessable.

                         (t) Dilution. The Company’s executive officers and
directors understand the nature of the Securities being sold hereby and
recognize that the issuance of the Securities will have a potential dilutive
effect on the equity holdings of other holders of the Company’s equity or rights
to receive equity of the Company. The board of directors of the Company has
concluded, in its good faith business judgment, that the issuance of the
Securities is in the best interests of the Company. The Company specifically
acknowledges that its obligation to issue the Shares upon conversion of the
Notes, and the Warrant Shares upon exercise of the Warrants is binding upon the
Company and enforceable regardless of the dilution such issuance may have on the
ownership interests of other shareholders of the Company or parties entitled to
receive equity of the Company.

                         (u) No Disagreements with Accountants. There are no
disagreements of any kind presently existing, or reasonably anticipated by the
Company to arise, between the Company and the accountants formerly or presently
employed by the Company, including but not limited to disputes or conflicts over
payment owed to such accountants.

                         (v) Correctness of Representations. The Company
represents that the foregoing representations and warranties are true and
correct as of the date hereof in all material respects, and, unless the Company
otherwise notifies the Subscribers prior to each Closing Date, shall be true and
correct in all material respects as of each Closing Date.

                         (w) DTC Status. The Company’s transfer agent is a
participant in and the Common Stock is eligible for transfer pursuant to the
Depository Trust Company Automated Securities Transfer Program.

                         (x) Investment Company. The Company is not an Affiliate
of an “investment company” within the meaning of the Investment Company Act of
1940, as amended.

                         (y) Survival. The foregoing representations and
warranties shall survive the Closing Date for a period of two (2) years.

               6. Regulation D Offering. The offer and issuance of the
Securities to the Subscribers is being made pursuant to the exemption from the
registration provisions of the 1933 Act afforded by Section 4(2) or Section 4(6)
and 3(a)(9) of the 1933 Act and/or Rule 506 of Regulation D promulgated
thereunder. On the Closing Date, the Company will provide an opinion reasonably
acceptable to Subscriber from the Company’s legal counsel opining on the
availability of an exemption from registration under the 1933 Act as it relates
to the offer and issuance of the Securities and other matters reasonably
requested by Subscribers. A form of the legal opinion is annexed hereto as
Exhibit D. The Company will provide, at the Company’s expense, such other legal
opinions in the future as are reasonably necessary for the issuance and resale
of the Common Stock issuable upon conversion of the Notes and exercise of the
Warrants pursuant to an effective registration statement.

               7.1. Conversion of Note.

(Subscription Agreement)

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                         (a) Upon the conversion of a Note or part thereof, the
Company shall, at its own cost and expense, take all necessary action, including
obtaining and delivering, an opinion of counsel to assure that the Company’s
transfer agent shall issue stock certificates in the name of Subscriber (or its
nominee) or such other persons as designated by Subscriber and in such
denominations to be specified at conversion representing the number of shares of
common stock issuable upon such conversion. The Company warrants that no
instructions other than these instructions have been or will be given to the
transfer agent of the Company’s Common Stock and that assuming the procedures
under Section 11.7 are complied with by the Subscriber, unless waived by the
Subscriber, the Shares will be free-trading, and freely transferable, and will
not contain a legend restricting the resale or transferability of the Shares
provided the Shares are being sold pursuant to an effective registration
statement covering the Shares or are otherwise exempt from registration.

                         (b) Subscriber will give notice of its decision to
exercise its right to convert the Note or part thereof by telecopying an
executed and completed Notice of Conversion (a form of which is annexed as
Exhibit A to the Note) to the Company via confirmed telecopier transmission or
otherwise pursuant to Section 13(a) of this Agreement. The Subscriber will not
be required to surrender the Note until the Note has been fully converted or
satisfied. Each date on which a Notice of Conversion is telecopied to the
Company in accordance with the provisions hereof shall be deemed a Conversion
Date. The Company will itself or cause the Company’s transfer agent to transmit
the Company’s Common Stock certificates representing the Shares issuable upon
conversion of the Note to the Subscriber via express courier for receipt by such
Subscriber within three (3) business days after receipt by the Company of the
Notice of Conversion (such third day being the “Delivery Date”). In the event
the Shares are electronically transferable, then delivery of the Shares must be
made by electronic transfer provided request for such electronic transfer has
been made by the Subscriber. A Note representing the balance of the Note not so
converted will be provided by the Company to the Subscriber if requested by
Subscriber, provided the Subscriber delivers an original Note to the Company.

                         (c) The Company understands that a delay in the
delivery of the Shares in the form required pursuant to Section 7.1 hereof, or
the Mandatory Redemption Amount described in Section 7.2 hereof, later than the
Delivery Date or later than the Mandatory Redemption Payment Date (as
hereinafter defined) could result in economic loss to the Subscriber. As
compensation to the Subscriber for such loss, the Company agrees to pay (as
liquidated damages and not as a penalty) to the Subscriber for late issuance of
Shares in the form required pursuant to Section 7.1 hereof upon Conversion of
the Note in the amount of $100 per business day after the Delivery Date for each
$10,000 of Note principal amount being converted of the corresponding Shares
which are not timely delivered. The Company shall pay any payments incurred
under this Section in immediately available funds upon demand. Furthermore, in
addition to any other remedies which may be available to the Subscriber, in the
event that the Company fails for any reason to effect delivery of the Shares by
the Delivery Date or make payment by the Mandatory Redemption Payment Date, the
Subscriber will be entitled to revoke all or part of the relevant Notice of
Conversion or rescind all or part of the notice of Mandatory Redemption by
delivery of a notice to such effect to the Company whereupon the Company and the
Subscriber shall each be restored to their respective positions immediately
prior to the delivery of such notice, except that the liquidated damages
described above shall be payable through the date notice of revocation or
rescission is given to the Company.

                         (d) Nothing contained herein or in any document
referred to herein or delivered in connection herewith 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 or dividends required to be paid or other charges hereunder exceed the
maximum permitted by such law,

(Subscription Agreement)

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any payments in excess of such maximum shall be credited against amounts owed by
the Company to the Subscriber and thus refunded to the Company.

               7.2. Mandatory Redemption at Subscriber’s Election. In the event
the Company is prohibited from issuing Shares, or fails to timely deliver Shares
on a Delivery Date, or upon the occurrence of any other Event of Default (as
defined in the Note or in this Agreement) or for any reason other than pursuant
to the limitations set forth in Section 7.3 hereof, then at the Subscriber’s
election, the Company must pay to the Subscriber ten (10) business days after
request by the Subscriber, at the Subscriber’s election, a sum of money
determined by (i) multiplying up to the outstanding principal amount of the Note
designated by the Subscriber by 120%, or (ii) multiplying the number of Shares
otherwise deliverable upon conversion of an amount of Note principal and/or
interest designated by the Subscriber (with the date of giving of such
designation being a “Deemed Conversion Date”) at the then Conversion Price that
would be in effect on the Deemed Conversion Date by the highest closing price of
the Common Stock on the principal market for the period commencing on the Deemed
Conversion Date until the day prior to the receipt of the Mandatory Redemption
Payment, whichever is greater, together with accrued but unpaid interest thereon
(“Mandatory Redemption Payment”). The Mandatory Redemption Payment must be
received by the Subscriber on the same date as the Company Shares otherwise
deliverable or within ten (10) business days after request, whichever is sooner
(“Mandatory Redemption Payment Date”). Upon receipt of the Mandatory Redemption
Payment, the corresponding Note principal and interest will be deemed paid and
no longer outstanding. Liquidated damages calculated pursuant to Section 7.1(c)
hereof, that have been paid or accrued for the twenty day period prior to the
actual receipt of the Mandatory Redemption Payment by the Subscriber shall be
credited against the Mandatory Redemption Payment.

               7.3. Maximum Conversion. The Subscriber shall not be entitled to
convert on a Conversion Date that amount of the Note in connection with that
number of shares of Common Stock which would be in excess of the sum of (i) the
number of shares of common stock beneficially owned by the Subscriber and its
Affiliates on a Conversion Date, and (ii) the number of shares of Common Stock
issuable upon the conversion of the Note with respect to which the determination
of this provision is being made on a Conversion Date, which would result in
beneficial ownership by the Subscriber and its Affiliates of more than 4.99% of
the outstanding shares of common stock of the Company on such Conversion Date.
For the purposes of the provision to 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-3 thereunder.
Subject to the foregoing, the Subscriber shall not be limited to aggregate
conversions of only 4.99% and aggregate conversions by the Subscriber may exceed
4.99%. The Subscriber shall have the authority and obligation to determine
whether the restriction contained in this Section 7.3 will limit any conversion
hereunder and to the extent that the Subscriber 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
Subscriber. The Subscriber may void the conversion limitation described in this
Section 7.3 upon and effective after 61 days prior written notice to the
Company. The Subscriber may allocate which of the equity of the Company deemed
beneficially owned by the Subscriber shall be included in the 4.99% amount
described above and which shall be allocated to the excess above 4.99%.

               7.4. Injunction — Posting of Bond. In the event a Subscriber
shall elect to convert a Note or part thereof or exercise the Warrant in whole
or in part, the Company may not refuse conversion or exercise based on any claim
that such Subscriber or any one associated or affiliated with such Subscriber
has been engaged in any violation of law, or for any other reason, unless, an
injunction from a court, on notice, restraining and or enjoining conversion of
all or part of said Note or exercise of all or part of said Warrant shall have
been sought and obtained by the Company and the Company has posted a surety bond
for the benefit of such Subscriber in the amount of 130% of the amount of the
Note, or aggregate purchase

(Subscription Agreement)

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price of the Warrant Shares which are sought to be subject to the injunction,
which bond shall remain in effect until the completion of arbitration/litigation
of the dispute and the proceeds of which shall be payable to such Subscriber to
the extent Subscriber obtains judgment.

               7.5. Buy-In. In addition to any other rights available to the
Subscriber, if the Company fails to deliver to the Subscriber such shares
issuable upon conversion of a Note by the Delivery Date and if seven
(7) business days after the Delivery Date the Subscriber purchases (in an open
market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by such Subscriber of the Common Stock which the
Subscriber was entitled to receive upon such conversion (a “Buy-In”), then the
Company shall pay in cash to the Subscriber (in addition to any remedies
available to or elected by the Subscriber) the amount by which (A) the
Subscriber’s total purchase price (including brokerage commissions, if any) for
the shares of Common Stock so purchased exceeds (B) the aggregate principal
and/or interest amount of the Note for which such conversion was not timely
honored, together with interest thereon at a rate of 15% per annum, accruing
until such amount and any accrued interest thereon is paid in full (which amount
shall be paid as liquidated damages and not as a penalty). For example, if the
Subscriber purchases shares of Common Stock having a total purchase price of
$11,000 to cover a Buy-In with respect to an attempted conversion of $10,000 of
note principal and/or interest, the Company shall be required to pay the
Subscriber $1,000, plus interest. The Subscriber shall provide the Company
written notice indicating the amounts payable to the Subscriber in respect of
the Buy-In.

               7.6 Adjustments. The Conversion Price, Warrant exercise price and
amount of Shares issuable upon conversion of the Notes and exercise of the
Warrants shall be adjusted as described in this Agreement, the Notes and
Warrants.

               7.7. Redemption. The Note and Warrants shall not be redeemable or
callable except as described in the Note.

               8. Broker/Legal Fees.

                         (a) Broker’s Fee. The Company on the one hand, and each
Subscriber (for itself only) on the other hand, agree to indemnify the other
against and hold the other harmless from any and all liabilities to any persons
claiming brokerage commissions or finder’s fees on account of services purported
to have been rendered on behalf of the indemnifying party in connection with
this Agreement or the transactions contemplated hereby and arising out of such
party’s actions. The Company represents that there are no parties entitled to
receive fees, commissions, or similar payments in connection with the
transactions described in this Subscription Agreement (the “Offering”).

                         (b) Legal Fees. The Company, upon closing, shall pay to
Grushko & Mittman, P.C., a fee of $25,000 (“Legal Fees”) as reimbursement for
services rendered to the Subscribers in connection with the Offering and acting
as Escrow Agent for the Offering. The Company will deposit the Legal Fees with
the Escrow Agent prior to Closing. The Legal Fees will be payable by the Company
out of funds held pursuant to the Escrow Agreement.

               9.1. Covenants of the Company. The Company covenants and agrees
with the Subscribers as follows:

                         (a) Stop Orders. The Company will advise the
Subscribers, promptly after it receives notice of issuance by the Commission,
any state securities commission or any other regulatory authority of any stop
order or of any order preventing or suspending any offering of any securities of
the

(Subscription Agreement)

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Company, or of the suspension of the qualification of the Common Stock of the
Company for offering or sale in any jurisdiction, or the initiation of any
proceeding for any such purpose.

                         (b) Listing. The Company shall promptly secure the
listing of the shares of Common Stock and the Warrant Shares upon each national
securities exchange, or automated quotation system upon which they are or become
eligible for listing (subject to official notice of issuance) and shall maintain
such listing so long as any Warrants are outstanding. The Company will maintain
the listing or quotation of its Common Stock on the American Stock Exchange,
Nasdaq SmallCap Market, Nasdaq National Market System, Bulletin Board, or New
York Stock Exchange (whichever of the foregoing is at the time the principal
trading exchange or market for the Common Stock (the “Principal Market”)), and
will comply in all respects with the Company’s reporting, filing and other
obligations under the bylaws or rules of the Principal Market, as applicable.
The Company will provide the Subscribers copies of all notices it receives
notifying the Company of the threatened and actual delisting of the Common Stock
from any Principal Market. As of the date of this Agreement and the Closing
Date, the Bulletin Board is and will be the Principal Market.

                         (c) Market Regulations. The Company shall notify the
Commission, the Principal Market and applicable state authorities, in accordance
with their requirements, of the transactions contemplated by this Agreement, and
shall take all other necessary action and proceedings as may be required and
permitted by applicable law, rule and regulation, for the legal and valid
issuance of the Securities to the Subscribers and promptly provide copies
thereof to Subscriber.

                         (d) Reporting Requirements. From the date of this
Agreement and until the sooner of (i) two (2) years after the Closing Date, or
(ii) until all the Shares and Warrant Shares have been resold or transferred by
all the Subscribers pursuant to the Registration Statement or pursuant to
Rule 144, without regard to volume limitation, the Company will (A) cause its
Common Stock to continue to be registered under Section 12(b) or 12(g) of the
1934 Act, (B) comply in all material respects with its reporting and filing
obligations under the 1934 Act, (C) comply with all reporting requirements that
are applicable to an issuer with a class of shares registered pursuant to
Section 12(b) or 12(g) of the 1934 Act, as applicable, and (D) comply with all
requirements related to any registration statement filed pursuant to this
Agreement. The Company will use its best efforts not to take any action or file
any document (whether or not permitted by the 1933 Act or the 1934 Act or the
rules thereunder) to terminate or suspend such registration or to terminate or
suspend its reporting and filing obligations under said acts until three (3)
years after the Closing Date. Until the earlier of the resale of the Common
Stock and the Warrant Shares by each Subscriber or two (2) years after the
Warrants have been exercised, the Company will use its best efforts to continue
the listing or quotation of the Common Stock on a Principal Market and will
comply in all respects with the Company’s reporting, filing and other
obligations under the bylaws or rules of the Principal Market. The Company
agrees to timely file a Form D with respect to the Securities if required under
Regulation D and to provide a copy thereof to each Subscriber promptly after
such filing.

                         (e) Reserved.

                         (f) Reservation. Prior to the Closing Date, the Company
undertakes to reserve, pro rata, on behalf of each holder of a Note or Warrant,
from its authorized but unissued common stock, a number of common shares equal
to 150% of the amount of Common Stock necessary to allow each holder of a Note
to be able to convert all such outstanding Notes and interest and reserve the
amount of Warrant Shares issuable upon exercise of the Warrants. Failure to have
sufficient shares reserved pursuant to this Section 9.1(f) for three (3)
consecutive business days or ten (10) days in the aggregate shall be a material
default of the Company’s obligations under this Agreement.

(Subscription Agreement)

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                         (g) Taxes. From the date of this Agreement and until
the sooner of (i) three (3) years after the Closing Date, or (ii) until all the
Shares and Warrant Shares have been resold or transferred by all the Subscribers
pursuant to the Registration Statement or pursuant to Rule 144, without regard
to volume limitations, the Company will promptly pay and discharge, or cause to
be paid and discharged, when due and payable, all lawful taxes, assessments and
governmental charges or levies imposed upon the income, profits, property or
business of the Company; provided, however, that any such tax, assessment,
charge or levy need not be paid if the validity thereof shall currently be
contested in good faith by appropriate proceedings and if the Company shall have
set aside on its books adequate reserves with respect thereto, and provided,
further, that the Company will pay all such taxes, assessments, charges or
levies forthwith upon the commencement of proceedings to foreclose any lien
which may have attached as security therefore.

                         (h) Insurance. From the date of this Agreement and
until the sooner of (i) three (3) years after the Closing Date, or (ii) until
all the Shares and Warrant Shares have been resold or transferred by all the
Subscribers pursuant to the Registration Statement or pursuant to Rule 144,
without regard to volume limitations, the Company will keep its assets which are
of an insurable character insured by financially sound and reputable insurers
against loss or damage by fire, explosion and other risks customarily insured
against by companies in the Company’s line of business, in amounts sufficient to
prevent the Company from becoming a co-insurer and not in any event less than
one hundred percent (100%) of the insurable value of the property insured; and
the Company will maintain, with financially sound and reputable insurers,
insurance against other hazards and risks and liability to persons and property
to the extent and in the manner customary for companies in similar businesses
similarly situated and to the extent available on commercially reasonable terms.

                         (i) Books and Records. From the date of this Agreement
and until the sooner of (i) three (3) years after the Closing Date, or
(ii) until all the Shares and Warrant Shares have been resold or transferred by
all the Subscribers pursuant to the Registration Statement or pursuant to
Rule 144, without regard to volume limitations, the Company will keep true
records and books of account in which full, true and correct entries will be
made of all dealings or transactions in relation to its business and affairs in
accordance with generally accepted accounting principles applied on a consistent
basis.

                         (j) Governmental Authorities. From the date of this
Agreement and until the sooner of (i) three (3) years after the Closing Date, or
(ii) until all the Shares and Warrant Shares have been resold or transferred by
all the Subscribers pursuant to the Registration Statement or pursuant to
Rule 144, without regard to volume limitations, the Company shall duly observe
and conform in all material respects to all valid requirements of governmental
authorities relating to the conduct of its business or to its properties or
assets.

                         (k) Intellectual Property. From the date of this
Agreement and until the sooner of (i) three (3) years after the Closing Date, or
(ii) until all the Shares and Warrant Shares have been resold or transferred by
all the Subscribers pursuant to the Registration Statement or pursuant to
Rule 144, without regard to volume limitations, the Company shall maintain in
full force and effect its corporate existence, rights and franchises and all
licenses and other rights to use intellectual property owned or possessed by it
and reasonably deemed to be necessary to the conduct of its business.

                         (l) Properties. From the date of this Agreement and
until the sooner of (i) three (3) years after the Closing Date, or (ii) until
all the Shares and Warrant Shares have been resold or transferred by all the
Subscribers pursuant to the Registration Statement (as defined in
Section 11.1(iv) hereof) or pursuant to Rule 144, without regard to volume
limitations, the Company will keep its properties in good repair, working order
and condition, reasonable wear and tear excepted, and from time to time

(Subscription Agreement)

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make all necessary and proper repairs, renewals, replacements, additions and
improvements thereto; and the Company will at all times comply with each
provision of all leases to which it is a party or under which it occupies
property if the breach of such provision could reasonably be expected to have a
Material Adverse Effect.

                         (m) Confidentiality/Public Announcement. From the date
of this Agreement and until the sooner of (i) three (3) years after the Closing
Date, or (ii) until all the Shares and Warrant Shares have been resold or
transferred by all the Subscribers pursuant to the Registration Statement or
pursuant to Rule 144, without regard to volume limitations, the Company agrees
that except in connection with a Form 8-K or the Registration Statement, it will
not disclose publicly or privately the identity of the Subscribers unless
expressly agreed to in writing by a Subscriber or only to the extent required by
law and then only upon five days prior notice to Subscriber. In any event and
subject to the foregoing, the Company undertakes to file a Form 8-K or make a
public announcement describing the Offering not later than the first business
day after the Closing Date. In the Form 8-K or public announcement, the Company
will specifically disclose the amount of common stock outstanding immediately
after the Closing. A form of the proposed Form 8-K or public announcement to be
employed in connection with the Offering is annexed hereto as Exhibit E.

                         (n) Further Registration Statements. Except for a
registration statement filed on behalf of the Subscribers pursuant to Section 11
of this Agreement, the Company will not file any registration statements or
amend any already filed registration statement, including but not limited to
Form S-8, with the Commission or with state regulatory authorities without the
consent of the Subscriber until the sooner of (i) the Registration Statement
shall have been current and available for use in connection with the public
resale of the Shares and Warrant Shares for 180 days, (ii) until all the Shares
have been resold or transferred by the Subscribers pursuant to the Registration
Statement or Rule 144, without regard to volume limitations, or (iii) the date
the Note has been fully paid (“Exclusion Period”). The Exclusion Period shall be
tolled during the pendency of an Event of Default.

                         (o) Blackout. The Company undertakes and covenants that
until the end of the Exclusion Period the Company will not enter into any
acquisition, merger, exchange or sale or other transaction that could have the
effect of delaying the effectiveness of any pending registration statement or
causing an already effective registration statement to no longer be effective or
current for a period of fifteen (15) or more days.

                         (p) Non-Public Information. The Company covenants and
agrees that neither it nor any other person acting on its behalf will provide
any Subscriber or its agents or counsel with any information that the Company
believes constitutes material non-public information, unless prior thereto such
Subscriber shall have agreed in writing to receive such information. The Company
understands and confirms that each Subscriber shall be relying on the foregoing
representations in effecting transactions in securities of the Company.

                         9.2. Covenants of the Subsidiaries. The Company makes
the same covenants contained in Section 9.1(g) through 9.1(l) on behalf of each
of its Subsidiaries as if such covenants were made by the Subsidiaries.

               10. Covenants of the Company and Subscriber Regarding
Indemnification.

                         (a) The Company agrees to indemnify, hold harmless,
reimburse and defend the Subscribers, the Subscribers’ officers, directors,
agents, Affiliates, control persons, and principal shareholders, against any
claim, cost, expense, liability, obligation, loss or damage (including
reasonable

(Subscription Agreement)

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legal fees) of any nature, incurred by or imposed upon the Subscriber or any
such person which results, arises out of or is based upon (i) any material
misrepresentation by Company or breach of any warranty by Company in this
Agreement or in any Exhibits or Schedules attached hereto, or other agreement
delivered pursuant hereto; or (ii) after any applicable notice and/or cure
periods, any breach or default in performance by the Company of any covenant or
undertaking to be performed by the Company hereunder, or any other agreement
entered into by the Company and Subscriber relating hereto.

                         (b) Each Subscriber agrees to indemnify, hold harmless,
reimburse and defend the Company and each of the Company’s officers, directors,
agents, Affiliates, control persons against any claim, cost, expense, liability,
obligation, loss or damage (including reasonable legal fees) of any nature,
incurred by or imposed upon the Company or any such person which results, arises
out of or is based upon (i) any material misrepresentation by such Subscriber in
this Agreement or in any Exhibits or Schedules attached hereto, or other
agreement delivered pursuant hereto; or (ii) after any applicable notice and/or
cure periods, any breach or default in performance by such Subscriber of any
covenant or undertaking to be performed by such Subscriber hereunder, or any
other agreement entered into by the Company and Subscribers, relating hereto.

                         (c) In no event shall the liability of any Subscriber
or permitted successor hereunder or under any Transaction Document or other
agreement delivered in connection herewith be greater in amount than the dollar
amount of the net proceeds actually received by such Subscriber upon the sale of
Registrable Securities (as defined herein).

                         (d) The procedures set forth in Section 11.6 shall
apply to the indemnification set forth in Sections 10(a) and 10(b) above.

               11.1. Registration Rights. The Company hereby grants the
following registration rights to holders of the Securities.

                         (i) On one occasion, for a period commencing
seventy-five (75) days after the Closing Date, but not later than two (2) years
after the Closing Date (“Request Date”), upon a written request therefore from
any record holder or holders of more than 50% of the Shares issued and issuable
upon conversion of the Notes and Warrant Shares actually issued upon exercise of
the Warrants, the Company shall prepare and file with the Commission a
registration statement under the 1933 Act registering the Shares, Warrant Shares
issuable upon exercise of the Warrants (collectively “Registrable Securities”)
which are the subject of such request for unrestricted public resale by the
holder thereof. For purposes of Sections 11.1(i) and 11.1(ii), Registrable
Securities shall not include (A) Securities which are registered for resale in
an effective registration statement, (B) included for registration in a pending
registration statement, or (C) which have been issued without further transfer
restrictions after a sale or transfer pursuant to Rule 144 under the 1933 Act.
Upon the receipt of such request, the Company shall promptly give written notice
to all other record holders of the Registrable Securities that such registration
statement is to be filed and shall include in such registration statement
Registrable Securities for which it has received written requests within ten
(10) days after the Company gives such written notice. Such other requesting
record holders shall be deemed to have exercised their demand registration right
under this Section 11.1(i).

                         (ii) If the Company at any time proposes to register
any of its securities under the 1933 Act for sale to the public, whether for its
own account or for the account of other security holders or both, except with
respect to registration statements on Forms S-4, S-8 or another form not
available for registering the Registrable Securities for sale to the public,
provided the Registrable Securities are not otherwise registered for resale by
the Subscribers or Holder pursuant to an effective registration statement,

(Subscription Agreement)

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each such time it will give at least fifteen (15) days’ prior written notice to
the record holder of the Registrable Securities of its intention so to do. Upon
the written request of the holder, received by the Company within ten (10) days
after the giving of any such notice by the Company, to register any of the
Registrable Securities not previously registered, the Company will cause such
Registrable Securities as to which registration shall have been so requested to
be included with the securities to be covered by the registration statement
proposed to be filed by the Company, all to the extent required to permit the
sale or other disposition of the Registrable Securities so registered by the
holder of such Registrable Securities (the “Seller” or “Sellers”). In the event
that any registration pursuant to this Section 11.1(ii) shall be, in whole or in
part, an underwritten public offering of common stock of the Company, the number
of shares of Registrable Securities to be included in such an underwriting may
be reduced by the managing underwriter if and to the extent that the Company and
the underwriter shall reasonably be of the opinion that such inclusion would
adversely affect the marketing of the securities to be sold by the Company
therein; provided, however, that the Company shall notify the Seller in writing
of any such reduction. Notwithstanding the foregoing provisions, or Section 11.4
hereof, the Company may withdraw or delay or suffer a delay of any registration
statement referred to in this Section 11.1(ii) without thereby incurring any
liability to the Seller.

                         (iii) If, at the time any written request for
registration is received by the Company pursuant to Section 11.1(i), the Company
has determined to proceed with the actual preparation and filing of a
registration statement under the 1933 Act in connection with the proposed offer
and sale for cash of any of its securities for the Company’s own account and the
Company actually does file such other registration statement, such written
request shall be deemed to have been given pursuant to Section 11.1(ii) rather
than Section 11.1(i), and the rights of the holders of Registrable Securities
covered by such written request shall be governed by Section 11.1(ii).

                         (iv) The Company shall file with the Commission a Form
SB-2 registration statement, or an amendment to a pending registration statement
(the “Registration Statement”) (or such other form that it is eligible to use)
in order to register the Registrable Securities for resale and distribution
under the 1933 Act not later than thirty (30) days after the Closing Date (the
“Filing Date”), and cause to be declared effective not later than February 14,
2005 (the “Effective Date”). The Company will register not less than a number of
shares of common stock in the Registration Statement that is equal to 150% of
the Shares issuable upon conversion of the Notes and all of the Warrant Shares
issuable pursuant to this Agreement upon exercise of the Warrants. The
Registrable Securities shall be reserved and set aside exclusively for the
benefit of each Subscriber and Warrant holder, pro rata, and not issued,
employed or reserved for anyone other than each such Subscriber and Warrant
holder. The Registration Statement will immediately be amended or additional
registration statements will be immediately filed by the Company as necessary to
register additional shares of Common Stock to allow the public resale of all
Common Stock included in and issuable by virtue of the Registrable Securities.
Without the written consent of the Subscriber, no securities of the Company
other than the Registrable Securities will be included in the Registration
Statement. It shall be deemed a Non-Registration Event if at any time after the
date the Registration Statement is declared effective by the Commission (“Actual
Effective Date”) the Company has registered for unrestricted resale on behalf of
the Subscriber fewer than 125% of the amount of Common Shares issuable upon full
conversion of all sums due under the Notes and 100% of the Warrant Shares
issuable upon exercise of the Warrants.

               11.2. Registration Procedures. If and whenever the Company is
required by the provisions of Section 11.1(i), 11.1(ii), or (iv) to effect the
registration of any Registrable Securities under the 1933 Act, the Company will,
as expeditiously as possible:

(Subscription Agreement)

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                         (a) subject to the timelines provided in this
Agreement, prepare and file with the Commission a registration statement
required by Section 11, with respect to such securities and use its best efforts
to cause such registration statement to become and remain effective for the
period of the distribution contemplated thereby (determined as herein provided),
and promptly provide to the holders of the Registrable Securities copies of all
filings and Commission letters of comment and notify Subscribers (by telecopier
and by e-mail addresses provided by Subscribers) and Grushko & Mittman, P.C. (by
telecopier and by email to Counslers@aol.com) on or before 6 pm EST on the same
business day that the Company receives notice that (i) the Commission has no
comments or no further comments on the Registration Statement, and (ii) the
registration statement has been declared effective, (failure to timely provide
notice as required by this Section 11.2(a) shall be a material breach of the
Company’s obligation and an Event of Default as defined in the Notes and a
Non-Registration Event as defined in Section 10.4 of this Agreement);

                         (b) prepare and file with the Commission such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective until such registration statement has been effective for a
period of two (2) years, and comply with the provisions of the 1933 Act with
respect to the disposition of all of the Registrable Securities covered by such
registration statement in accordance with the Sellers’ intended method of
disposition set forth in such registration statement for such period;

                         (c) furnish to the Sellers, at the Company’s expense,
such number of copies of the registration statement and the prospectus included
therein (including each preliminary prospectus) as such persons reasonably may
request in order to facilitate the public sale or their disposition of the
securities covered by such registration statement;

                         (d) use its best efforts to register or qualify the
Registrable Securities covered by such registration statement under the
securities or “blue sky” laws of such jurisdictions as the Sellers shall request
in writing, provided, however, that the Company shall not for any such purpose
be required to qualify generally to transact business as a foreign corporation
in any jurisdiction where it is not so qualified or to consent to general
service of process in any such jurisdiction;

                         (e) if applicable, list the Registrable Securities
covered by such registration statement with any securities exchange on which the
Common Stock of the Company is then listed;

                         (f) immediately notify the Sellers when a prospectus
relating thereto is required to be delivered under the 1933 Act, of the
happening of any event of which the Company has knowledge as a result of which
the prospectus contained in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing; and

                         (g) provided same would not be in violation of the
provision of Regulation FD under the 1934 Act, make available for inspection by
the Sellers, and any attorney, accountant or other agent retained by the Seller
or underwriter, all publicly available, non-confidential financial and other
records, pertinent corporate documents and properties of the Company, and cause
the Company’s officers, directors and employees to supply all publicly
available, non-confidential information reasonably requested by the seller,
attorney, accountant or agent in connection with such registration statement.

               11.3. Provision of Documents. In connection with each
registration described in this Section 11, each Seller will furnish to the
Company in writing such information and representation letters

(Subscription Agreement)

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with respect to itself and the proposed distribution by it as reasonably shall
be necessary in order to assure compliance with federal and applicable state
securities laws.

               11.4. Non-Registration Events. The Company and the Subscribers
agree that the Sellers will suffer damages if the Registration Statement is not
filed by the Filing Date and not declared effective by the Commission by the
Effective Date, and any registration statement required under Section 11.1(i) or
11.1(ii) is not filed within 60 days after written request and declared
effective by the Commission within 120 days after such request, and maintained
in the manner and within the time periods contemplated by Section 11 hereof, and
it would not be feasible to ascertain the extent of such damages with precision.
Accordingly, if (A) the Registration Statement is not filed on or before the
Filing Date, (B) is not declared effective on or before the Effective Date,
(C) the Registration Statement is not declared effective within three
(3) business days after receipt by the Company or its attorneys of a written or
oral communication from the Commission that the Registration Statement will not
be reviewed or that the Commission has no further comments, (D) if the
registration statement described in Sections 11.1(i) or 11.1(ii) is not filed
within 60 days after such written request, or is not declared effective within
120 days after such written request, or (E) any registration statement described
in Sections 11.1(i), 11.1(ii) or 11.1(iv) is filed and declared effective but
shall thereafter cease to be effective (without being succeeded within fifteen
(15) business days by an effective replacement or amended registration
statement) for a period of time which shall exceed 30 days in the aggregate per
year (defined as a period of 365 days commencing on the date the Registration
Statement is declared effective) or more than 20 consecutive days (each such
event referred to in clauses A through E of this Section 11.4 is referred to
herein as a “Non-Registration Event”), then the Company shall deliver to the
holder of Registrable Securities, as Liquidated Damages, an amount equal to two
percent (2%) for each thirty (30) days or part thereof, thereafter of the
Purchase Price of the Notes remaining unconverted and purchase price of Shares
issued upon conversion of the Notes owned of record by such holder which are
subject to such Non-Registration Event. The Company must pay the Liquidated
Damages in cash or an amount equal to two hundred percent of such cash
Liquidated Damages if paid in additional shares of registered unlegended
free-trading shares of Common Stock. Such Common Stock shall be valued at a per
share value 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 the first day of each thirty (30) day
or shorter period for which Liquidated Damages are payable. The Liquidated
Damages must be paid within ten (10) days after the end of each thirty (30) day
period or shorter part thereof for which Liquidated Damages are payable. In the
event a Registration Statement is filed by the Filing Date but is withdrawn
prior to being declared effective by the Commission, then such Registration
Statement will be deemed to have not been filed. All oral or written and
accounting comments received from the Commission relating to the Registration
Statement must be responded to within fifteen (15) business days. Failure to
timely respond to such comments from the Commission is a Non-Registration Event
for which Liquidated Damages shall accrue and be payable by the Company to the
holders of Registrable Securities at the same rate set forth above.
Notwithstanding the foregoing, the Company shall not be liable to the Subscriber
under this Section 11.4 for any events or delays occurring as a consequence of
the acts or omissions of the Subscribers contrary to the obligations undertaken
by Subscribers in this Agreement. Liquidated Damages will not accrue nor be
payable pursuant to this Section 11.4 nor will a Non-Registration Event be
deemed to have occurred for times during which Registrable Securities are
transferable by the holder of Registrable Securities pursuant to Rule 144(k)
under the 1933 Act.

               11.5. Expenses. All expenses incurred by the Company in complying
with Section 11, including, without limitation, all registration and filing
fees, printing expenses, fees and disbursements of counsel and independent
public accountants for the Company, fees and expenses (including reasonable
counsel fees) incurred in connection with complying with state securities or
“blue sky” laws, fees of the National Association of Securities Dealers, Inc.,
transfer taxes, fees of transfer agents and registrars, costs

(Subscription Agreement)

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of insurance and fee of one counsel for all Sellers are called “Registration
Expenses.” All underwriting discounts and selling commissions applicable to the
sale of Registrable Securities, including any fees and disbursements of one
counsel to the Seller, are called “Selling Expenses.” The Company will pay all
Registration Expenses in connection with the registration statement under
Section 11. Selling Expenses in connection with each registration statement
under Section 11 shall be borne by the Seller and may be apportioned among the
Sellers in proportion to the number of shares sold by the Seller relative to the
number of shares sold under such registration statement or as all Sellers
thereunder may agree.

               11.6. Indemnification and Contribution.

                         (a) In the event of a registration of any Registrable
Securities under the 1933 Act pursuant to Section 11, the Company will, to the
extent permitted by law, indemnify and hold harmless the Seller, each officer of
the Seller, each director of the Seller, each underwriter of such Registrable
Securities thereunder and each other person, if any, who controls such Seller or
underwriter within the meaning of the 1933 Act, against any losses, claims,
damages or liabilities, joint or several, to which the Seller, or such
underwriter or controlling person may become subject under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such Registrable Securities was registered under the 1933 Act
pursuant to Section 11, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances when made, and will subject to the provisions of
Section 11.6(c) reimburse the Seller, each such underwriter and each such
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall not be liable to
the Seller to the extent that any such damages arise out of or are based upon an
untrue statement or omission made in any preliminary prospectus if (i) the
Seller failed to send or deliver a copy of the final prospectus delivered by the
Company to the Seller with or prior to the delivery of written confirmation of
the sale by the Seller to the person asserting the claim from which such damages
arise, (ii) the final prospectus would have corrected such untrue statement or
alleged untrue statement or such omission or alleged omission, or (iii) to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission so made in conformity with information furnished by any such Seller, or
any such controlling person in writing specifically for use in such registration
statement or prospectus.

                         (b) In the event of a registration of any of the
Registrable Securities under the 1933 Act pursuant to Section 11, each Seller
severally but not jointly will, to the extent permitted by law, indemnify and
hold harmless the Company, and each person, if any, who controls the Company
within the meaning of the 1933 Act, each officer of the Company who signs the
registration statement, each director of the Company, each underwriter and each
person who controls any underwriter within the meaning of the 1933 Act, against
all losses, claims, damages or liabilities, joint or several, to which the
Company or such officer, director, underwriter or controlling person may become
subject under the 1933 Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in the registration statement under which such Registrable Securities were
registered under the 1933 Act pursuant to Section 11, any preliminary prospectus
or final prospectus contained therein, or any amendment or supplement thereof,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Company and each such
officer, director, underwriter and controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim,

(Subscription Agreement)

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damage, liability or action, provided, however, that the Seller will be liable
hereunder in any such case if and only to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in reliance upon
and in conformity with information pertaining to such Seller, as such, furnished
in writing to the Company by such Seller specifically for use in such
registration statement or prospectus, and provided, further, however, that the
liability of the Seller hereunder shall be limited to the net proceeds actually
received by the Seller from the sale of Registrable Securities covered by such
registration statement.

                         (c) Promptly after receipt by an indemnified party
hereunder of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party hereunder, notify the indemnifying party in writing thereof, but the
omission so to notify the indemnifying party shall not relieve it from any
liability which it may have to such indemnified party other than under this
Section 11.6(c) and shall only relieve it from any liability which it may have
to such indemnified party under this Section 11.6(c), except and only if and to
the extent the indemnifying party is prejudiced by such omission. In case any
such action shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate in and, to the extent it shall wish, to assume and
undertake the defense thereof with counsel satisfactory to such indemnified
party, and, after notice from the indemnifying party to such indemnified party
of its election so to assume and undertake the defense thereof, the indemnifying
party shall not be liable to such indemnified party under this Section 11.6(c)
for any legal expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of investigation
and of liaison with counsel so selected, provided, however, that, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be reasonable defenses available to it which are different from
or additional to those available to the indemnifying party or if the interests
of the indemnified party reasonably may be deemed to conflict with the interests
of the indemnifying party, the indemnified parties, as a group, shall have the
right to select one separate counsel and to assume such legal defenses and
otherwise to participate in the defense of such action, with the reasonable
expenses and fees of such separate counsel and other expenses related to such
participation to be reimbursed by the indemnifying party as incurred.

                         (d) In order to provide for just and equitable
contribution in the event of joint liability under the 1933 Act in any case in
which either (i) a Seller, or any controlling person of a Seller, makes a claim
for indemnification pursuant to this Section 11.6 but it is judicially
determined (by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 11.6 provides for indemnification in
such case, or (ii) contribution under the 1933 Act may be required on the part
of the Seller or controlling person of the Seller in circumstances for which
indemnification is not provided under this Section 11.6; then, and in each such
case, the Company and the Seller will contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (after contribution
from others) in such proportion so that the Seller is responsible only for the
portion represented by the percentage that the public offering price of its
securities offered by the registration statement bears to the public offering
price of all securities offered by such registration statement, provided,
however, that, in any such case, (y) the Seller will not be required to
contribute any amount in excess of the public offering price of all such
securities sold by it pursuant to such registration statement; and (z) no person
or entity guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) will be entitled to contribution from any person or
entity who was not guilty of such fraudulent misrepresentation.

               11.7. Delivery of Unlegended Shares.

(Subscription Agreement)

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                         (a) Within three (3) business days (such third (3rd)
business day being the “Unlegended Shares Delivery Date”) after the business day
on which the Company has received (i) a notice that Registrable Securities have
been sold either pursuant to the Registration Statement or Rule 144 under the
1933 Act, (ii) a representation that the prospectus delivery requirements, or
the requirements of Rule 144, as applicable and if required, have been
satisfied, and (iii) the original share certificates representing the shares of
Common Stock that have been sold, and (iv) in the case of sales under Rule 144,
customary representation letters of the Subscriber and/or Subscriber’s broker
regarding compliance with the requirements of Rule 144, the Company at its
expense, (y) shall deliver, and shall cause legal counsel selected by the
Company to deliver to its transfer agent (with copies to Subscriber) an
appropriate instruction and opinion of such counsel, directing the delivery of
shares of Common Stock without any legends including the legend set forth in
Section 4(e) above, reissuable pursuant to any effective and current
Registration Statement described in Section 11 of this Agreement or pursuant to
Rule 144 under the 1933 Act (the “Unlegended Shares”); and (z) cause the
transmission of the certificates representing the Unlegended Shares together
with a legended certificate representing the balance of the submitted Shares
certificate, if any, to the Subscriber at the address specified in the notice of
sale, via express courier, by electronic transfer or otherwise on or before the
Unlegended Shares Delivery Date. Transfer fees shall be the responsibility of
the Seller.

                         (b) In lieu of delivering physical certificates
representing the Unlegended Shares, if the Company’s transfer agent is
participating in the Depository Trust Company (“DTC”) Fast Automated Securities
Transfer program, upon request of a Subscriber, so long as the certificates
therefor do not bear a legend and the Subscriber is not obligated to return such
certificate for the placement of a legend thereon, the Company shall cause its
transfer agent to electronically transmit the Unlegended Shares by crediting the
account of Subscriber’s prime Broker with DTC through its Deposit Withdrawal
Agent Commission system. Such delivery must be made on or before the Unlegended
Shares Delivery Date.

                         (c) The Company understands that a delay in the
delivery of the Unlegended Shares pursuant to Section 11 hereof later than two
business days after the Unlegended Shares Delivery Date could result in economic
loss to a Subscriber. As compensation to a Subscriber for such loss, the Company
agrees to pay late payment fees (as liquidated damages and not as a penalty) to
the Subscriber for late delivery of Unlegended Shares in the amount of $100 per
business day after the Delivery Date for each $10,000 of purchase price of the
Unlegended Shares subject to the delivery default. If during any 360 day period,
the Company fails to deliver Unlegended Shares as required by this Section 11.7
for an aggregate of thirty (30) days, then each Subscriber or assignee holding
Securities subject to such default may, at its option, require the Company to
redeem all or any portion of the Shares and Warrant Shares subject to such
default at a price per share equal to 120% of the Purchase Price of such Common
Stock and Warrant Shares (“Unlegended Redemption Amount”). The amount of the
aforedescribed liquidated damages that have accrued or paid for the twenty day
period prior to the receipt by the Subscriber of the Unlegended Redemption
Amount shall be credited against the Unlegended Redemption Amount. The Company
shall pay any payments incurred under this Section in immediately available
funds upon demand.

                         (d) In addition to any other rights available to a
Subscriber, if the Company fails to deliver to a Subscriber Unlegended Shares as
required pursuant to this Agreement, within seven (7) business days after the
Unlegended Shares Delivery Date and the Subscriber purchases (in an open market
transaction or otherwise) shares of common stock to deliver in satisfaction of a
sale by such Subscriber of the shares of Common Stock which the Subscriber was
entitled to receive from the Company (a “Buy-In”), then the Company shall pay in
cash to the Subscriber (in addition to any remedies available to or elected by
the Subscriber) the amount by which (A) the Subscriber’s total purchase price
(including brokerage commissions, if any) for the shares of common stock so
purchased exceeds (B) the aggregate purchase price of the shares of Common Stock
delivered to the Company for reissuance as Unlegended Shares,

(Subscription Agreement)

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together with interest thereon at a rate of 15% per annum, accruing until such
amount and any accrued interest thereon is paid in full (which amount shall be
paid as liquidated damages and not as a penalty). For example, if a Subscriber
purchases shares of Common Stock having a total purchase price of $11,000 to
cover a Buy-In with respect to $10,000 of purchase price of shares of Common
Stock delivered to the Company for reissuance as Unlegended Shares, the Company
shall be required to pay the Subscriber $1,000, plus interest. The Subscriber
shall provide the Company written notice indicating the amounts payable to the
Subscriber in respect of the Buy-In.

                         (e) In the event a Subscriber shall request delivery of
Unlegended Shares as described in Section 11.7 and the Company is required to
deliver such Unlegended Shares pursuant to Section 11.7, the Company may not
refuse to deliver Unlegended Shares based on any claim that such Subscriber or
any one associated or affiliated with such Subscriber has been engaged in any
violation of law, or for any other reason, unless, an injunction or temporary
restraining order from a court, on notice, restraining and or enjoining delivery
of such Unlegended Shares or exercise of all or part of said Warrant shall have
been sought and obtained and the Company has posted a surety bond for the
benefit of such Subscriber in the amount of 120% of the amount of the aggregate
purchase price of the Common Stock and Warrant Shares which are subject to the
injunction or temporary restraining order, which bond shall remain in effect
until the completion of arbitration/litigation of the dispute and the proceeds
of which shall be payable to such Subscriber to the extent Subscriber obtains
judgment in Subscriber’s favor.

               12. (a) Right of First Refusal. Until one year after the Actual
Effective Date, the Subscribers shall be given not less than ten (10) business
days prior written notice of any proposed sale by the Company of its common
stock or other securities or debt obligations, except (i) securities issued or
issuable to officers, directors, or full-time employees of the Company pursuant
to stock grants, stock purchases, and/or stock option plans or any other stock
incentive program, agreement, or arrangement approved by all of the
disinterested members of the Company’s board of directors, (ii) securities
issued as full or partial consideration in connection with a strategic merger,
consolidation, or purchase of substantially all of the securities or assets of
another corporation or entity, (iii) securities issued in connection with bank
financing or equipment leasing transactions, (iv) shares of Common Stock issued
upon conversions of the Notes or exercise of the Warrants or pursuant to the
provisions of this Section 12, and (v) as has been described in the Reports or
Other Written Information filed with the Commission or delivered to the
Subscribers prior to the Closing Date (collectively the foregoing are “Excepted
Issuances”). The Subscribers who exercise their rights pursuant to this Section
12(a) shall have the right during the ten (10) business days following receipt
of the notice to purchase such amount of offered common stock, debt or other
securities in accordance with the terms and conditions set forth in the notice
of sale in the same proportion to each other as their purchase of Notes in the
Offering. In the event such terms and conditions are modified during the notice
period, the Subscribers shall be given prompt notice of such modification and
shall have the right during the ten (10) business days following the notice of
modification, whichever is longer, to exercise such right.

                         (b) Offering Restrictions. Until the sooner of (i) the
end of the Exclusion Period, or (ii) until all the Shares and Warrant Shares
have been resold or transferred by all the Subscribers pursuant to the
Registration Statement or pursuant to Rule 144, without regard to volume
limitations, except for the Excepted Issuances, without the consent of holders
of not less than eighty percent (80%) of outstanding Note principal, the Company
will not issue any equity, convertible debt or other securities convertible into
common stock or equity of the Company without the prior written consent of the
Subscriber, which consent may be withheld for any reason.

                         (c) Favored Nations Provision. Other than the Excepted
Issuances, if at any time Notes are outstanding the Company shall offer, issue
or agree to issue any common stock or securities

(Subscription Agreement)

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convertible into or exercisable for shares of common stock (or modify any of the
foregoing which may be outstanding) to any person or entity at a price per share
or conversion or exercise price per share which shall be less than the
Conversion Price in respect of the Shares, or if less than the Warrant exercise
price in respect of the Warrant Shares, without the consent of each Subscriber
holding Notes and/or Shares, then the Company shall issue, for each such
occasion, additional shares of Common Stock to each Subscriber so that the
average per share purchase price of the shares of Common Stock issued to the
Subscriber (of only the Common Stock or Warrant Shares still owned by the
Subscriber) is equal to such other lower price per share and the Conversion
Price and Warrant Exercise Price shall automatically be reduced to such other
lower price per share. The average Purchase Price of the Shares and average
exercise price in relation to the Warrant Shares shall be calculated separately
for the Shares and Warrant Shares. The foregoing calculation and issuance shall
be made separately for Shares received upon conversion and separately for
Warrant Shares. The delivery to the Subscriber of the additional shares of
Common Stock shall be not later than the closing date of the transaction giving
rise to the requirement to issue additional shares of Common Stock. The
Subscriber is granted the registration rights described in Section 11 hereof in
relation to such additional shares of Common Stock except that the Filing Date
and Effective Date vis-à-vis such additional common shares shall be,
respectively, the sixtieth (60th) and one hundred and twentieth (120th) date
after the closing date giving rise to the requirement to issue the additional
shares of Common Stock. For purposes of the issuance and adjustment described in
this paragraph, the issuance of any security of the Company carrying the right
to convert such security into shares of Common Stock or of any warrant, right or
option to purchase Common Stock shall result in the issuance of the additional
shares of Common Stock upon the issuance of such convertible security, warrant,
right or option and again at any time upon any subsequent issuances of shares of
Common Stock upon exercise of such conversion or purchase rights if such
issuance is at a price lower than the Conversion Price in effect upon such
issuance. The rights of the Subscriber set forth in this Section 12 are in
addition to any other rights the Subscriber has pursuant to this Agreement, the
Note, any Transaction Document, and any other agreement referred to or entered
into in connection herewith. The provision of this Section 12(c) shall not apply
to any offering which shall result in the Optional Redemption (as defined in
Section 2.3 of the Note) of the whole (but not part) of the amount which may be
redeemed by the Company pursuant to Section 2.3 of the Note.

                         (d) Maximum Exercise of Rights. In the event the
exercise of the rights described in Sections 12(a) and 12(c) would result in the
issuance of an amount of common stock of the Company that would exceed the
maximum amount that may be issued to a Subscriber calculated in the manner
described in Section 7.3 of this Agreement, then the issuance of such additional
shares of common stock of the Company to such Subscriber will be deferred in
whole or in part until such time as such Subscriber is able to beneficially own
such common stock without exceeding the maximum amount set forth calculated in
the manner described in Section 7.3 of this Agreement. The determination of when
such common stock may be issued shall be made by each Subscriber as to only such
Subscriber.

               13. Mutual General Release.

                         (a) Subject to the terms and conditions of this
Agreement, each Subscriber agrees to and does hereby release and forever
discharge Company and its agents, officers, directors, shareholders, employees,
affiliates, insurers, assigns, and other successors in interest of and from any
and all claims, demands, rights, liabilities, and causes of action, whether
presently known or unknown, suspected or unsuspected, which such Subscriber may
now have, has ever had, or may hereafter have against Company arising from or
related to (i) the transactions described in the First Subscription Agreement,
(ii) the issuance of the First Common Stock and First Warrants, (iii) the
litigation (and its underlying allegations and circumstances) pending in
Manicopa County Superior Court titled, Goldspring, Inc. v. Parent, et al.
No. CV2004-021755, and (iv) any omissions, acts, or facts which have occurred up
until the Closing, including, but not limited to, any claims in connection with
such Subscriber’s original

(Subscription Agreement)

24

--------------------------------------------------------------------------------

 

purchase of the First Common Stock and First Warrants, or any rights to
indemnification or reimbursement from Company, whether pursuant to its
organizational documents, contracts, or otherwise and whether or not relating to
the foregoing, pending on, or asserted after the Closing Date.

                         (b) Subject to the terms and conditions of this
Agreement, Company agrees to and does hereby release and forever discharge each
Subscriber, and such Subscriber’s personal representatives, estates, spouses,
agents, assigns, heirs, administrators, officers, directors, shareholders,
employees, affiliates, insurers and other successors in interest (collectively
“Subscriber Releasees”) of and from any and all claims, demands, rights,
liabilities, and causes of action relating to any matters of any kind, whether
presently known or unknown, suspected or unsuspected, which Company may now
have, has ever had, or may hereafter have against such Subscriber Releasees
arising from the transactions described in the First Subscription Agreement, the
issuance of the First Common Stock and First Warrants or arising out of any
omissions, acts, or facts which have occurred up until the Closing, including,
but not limited to, any claims in connection with such Subscriber’s original
purchase of the First Common Stock and First Warrants, or any rights to
indemnification or reimbursement from Subscriber Releasees, whether pursuant to
its organizational documents, contracts, or otherwise and whether or not
relating to claims pending on the Closing Date.

                         (c) Each party irrevocably covenants to refrain from,
directly or indirectly asserting any claim or demand, or commencing,
instituting, or causing to be commenced, any proceeding of any kind against any
party hereto, based upon any matter purported to be released pursuant to this
Section 13.

                         (d) The foregoing notwithstanding, the Company and
Subscriber shall indemnify and hold harmless the other from and against all
loss, liability, claim, damage (including incidental and consequential damages),
or expense (including costs of investigation and defense and reasonably
attorney’s fees) involving third party claims, arising directly or indirectly
from or in connection with the assertion by or on behalf of any third party of
any claim or other matter purported to be released pursuant to this Section 13.

                         (e) Each Subscriber and Company understand that future
claims, demands, rights, liabilities, and causes of action released under
Sections 13(a) and (b) above, which presently are unknown, unforeseen, or not
yet in existence may occur and consciously intend to release all such claims.

                         (f) Each Subscriber and Company represent and warrant
that they have made no assignment, transfer, conveyance, pledge, or other
disposition of any of the claims, demands, causes of action, obligations,
damages, or liabilities released under Sections 13(a) and (b) above, and that
they are fully entitled to give their full and complete release of all such
claims and demands.

                         (g) Each Subscriber and Company agree and understand
that once this Agreement becomes effective it may not be revoked, and no party
may proceed against any other party hereto on account of any of the claims
released herein. Each Subscriber and Company further agree and understand that
any party defending an action or claim commenced, maintained, or prosecuted in
violation of this Agreement will be entitled to recover from the party or
parties bringing the action or claim any damages or costs, including reasonable
attorney fees and costs, incurred in defending the action or claim.

               14. Miscellaneous.

                         (a) Notices. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and, unless otherwise specified herein,

(Subscription Agreement)

25

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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., 8585 E. Hartford Drive, Suite 400,
Scottsdale, AZ 85255, Attn: Robert T. Faber, President & CEO, telecopier:
(480) 505-4044, with a copy by telecopier only to: Greenberg Traurig LLP, 2375
E. Camelback Road, Suite 700, Phoenix, AZ 85016, Attn: Robert S. Kant, Esq.,
telecopier: (602) 445-8100, 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 & Mittman, P.C., 551 Fifth
Avenue, Suite 1601, New York, New York 10176, telecopier number: (212) 697-3575.

                         (b) Closing. The consummation of the transactions
contemplated herein shall take place at the offices of Grushko & Mittman, P.C.,
551 Fifth Avenue, Suite 1601, New York, New York 10176, upon the satisfaction of
all conditions to Closing set forth in this Agreement (“Closing Date”). Provided
the Escrow Agent has received all Company Documents and Subscriber Documents (as
defined in the Escrow Agreement) on or before December 6, 2004, then the Closing
Date for all purposes will be deemed to be November 30, 2004.

                         (c) Entire Agreement; Assignment. This Agreement and
other documents delivered in connection herewith represent the entire agreement
between the parties hereto with respect to the subject matter hereof and may be
amended only by a writing executed by both parties. Neither the Company nor the
Subscribers have relied on any representations not contained or referred to in
this Agreement and the documents delivered herewith. No right or obligation of
the Company shall be assigned without prior notice to and the written consent of
the Subscribers.

                         (d) Counterparts/Execution. This Agreement may be
executed in any number of counterparts and by the different signatories hereto
on separate counterparts, each of which, when so executed, shall be deemed an
original, but all such counterparts shall constitute but one and the same
instrument. This Agreement may be executed by facsimile signature and delivered
by facsimile transmission.

                         (e) Law Governing this Agreement. This Agreement 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. The parties and the individuals
executing this Agreement and other agreements referred to herein or delivered in
connection herewith on behalf of the Company agree to submit to the jurisdiction
of such courts and waive trial by jury. 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 Agreement or any other agreement delivered in
connection herewith 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

(Subscription Agreement)

26

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rule of law. Any such provision which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision
of any agreement.

                         (f) Specific Enforcement, Consent to Jurisdiction. The
Company and Subscriber acknowledge and agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to one or more preliminary
and final injunctions to prevent or cure breaches of the provisions of this
Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which any of them may be entitled by
law or equity. Subject to Section 14(e) hereof, each of the Company, Subscriber
and any signator hereto in his personal capacity hereby waives, and agrees not
to assert in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction in New York of such court, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper. Nothing in this Section shall affect
or limit any right to serve process in any other manner permitted by law.

                         (g) Independent Nature of Subscribers. The Company
acknowledges that the obligations of each Subscriber under the Transaction
Documents are several and not joint with the obligations of any other
Subscriber, and no Subscriber shall be responsible in any way for the
performance of the obligations of any other Subscriber under the Transaction
Documents. The Company acknowledges that the decision of each Subscriber to
purchase Securities has been made by such Subscriber independently of any other
Subscriber and independently of any information, materials, statements or
opinions as to the business, affairs, operations, assets, properties,
liabilities, results of operations, condition (financial or otherwise) or
prospects of the Company which may have been made or given by any other
Subscriber or by any agent or employee of any other Subscriber, and no
Subscriber or any of its agents or employees shall have any liability to any
Subscriber (or any other person) relating to or arising from any such
information, materials, statements or opinions. The Company acknowledges that
nothing contained in any Transaction Document, and no action taken by any
Subscriber pursuant hereto or thereto (including, but not limited to, the
(i) inclusion of a Subscriber in the Registration Statement and (ii) review by,
and consent to, such Registration Statement by a Subscriber) shall be deemed to
constitute the Subscribers as a partnership, an association, a joint venture or
any other kind of entity, or create a presumption that the Subscribers are in
any way acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Documents. The Company acknowledges
that each Subscriber shall be entitled to independently protect and enforce its
rights, including without limitation, the rights arising out of the Transaction
Documents, and it shall not be necessary for any other Subscriber to be joined
as an additional party in any proceeding for such purpose. The Company
acknowledges that it has elected to provide all Subscribers with the same terms
and Transaction Documents for the convenience of the Company and not because
Company was required or requested to do so by the Subscribers. The Company
acknowledges that such procedure with respect to the Transaction Documents in no
way creates a presumption that the Subscribers are in any way acting in concert
or as a group with respect to the Transaction Documents or the transactions
contemplated thereby.

[THIS SPACE INTENTIONALLY LEFT BLANK]

(Subscription Agreement)

27

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SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT

     Please acknowledge your acceptance of the foregoing Subscription Agreement
by signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.

              GOLDSPRING, INC.
a Florida corporation     By:   /s/ Robert T. Faber

--------------------------------------------------------------------------------

Name: Robert T. Faber
Title: President & CEO     Dated: November 30, 2004

                                                              FIRST WARRANTS

--------------------------------------------------------------------------------

        FIRST   FIRST   CLASS A   GREEN SHOE   PRINCIPAL SUBSCRIBER

--------------------------------------------------------------------------------

  PURCHASE PRICE

--------------------------------------------------------------------------------

  COMMON STOCK

--------------------------------------------------------------------------------

  WARRANTS

--------------------------------------------------------------------------------

  WARRANTS

--------------------------------------------------------------------------------

  AMOUNT OF NOTE

--------------------------------------------------------------------------------

GAMMA OPPORTUNITY CAPITAL PARTNERS, LP
  $ 750,000       1,630,435       815,218       815,218     $ 832,550  
605 Crescent Executive Court, Suite 416
                                       
Lake Mary, Florida 32746
                                       
Fax:
                                       
/s/ Jonathan P. Knight
                                       

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By: Jonathan P. Knight
                                         
LONGVIEW FUND LP
  $ 750,000       1,630,435       815,218       815,218     $ 832,550  
600 Montgomery Street, 44th Floor
                                       
San Francisco, CA 94111
                                       
Fax: (415) 981-5302
                                       
/s/ Michael Rudolph
                                       

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By: S. Michael Rudolph, CFO
                                         
LONGVIEW EQUITY FUND, LP
  $ 1,125,000       2,445,652       1,222,826       1,222,826     $ 1,248,825  
600 Montgomery Street, 44th Floor
                                       
San Francisco, CA 94111
                                       
Fax: (415) 981-5302
                                       
/s/ Wayne H. Coleson
                                       

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By: Wayne H. Coleson, CEO
                                       

 

--------------------------------------------------------------------------------

 

SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT

     Please acknowledge your acceptance of the foregoing Subscription Agreement
by signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.

              GOLDSPRING, INC.
a Florida corporation     By:   /s/ Robert T. Faber

--------------------------------------------------------------------------------

Name: Robert T. Faber
Title: President & CEO     Dated: November 30, 2004

                                                              FIRST WARRANTS

--------------------------------------------------------------------------------

        FIRST   FIRST   CLASS A   GREEN SHOE   PRINCIPAL SUBSCRIBER

--------------------------------------------------------------------------------

  PURCHASE PRICE

--------------------------------------------------------------------------------

  COMMON STOCK

--------------------------------------------------------------------------------

  WARRANTS

--------------------------------------------------------------------------------

  WARRANTS

--------------------------------------------------------------------------------

  AMOUNT OF NOTE

--------------------------------------------------------------------------------

LONGVIEW INTERNATIONAL EQUITY FUND, LP
  $ 375,000       815,217       407,609       407,609     $ 416,275  
600 Montgomery Street, 44th Floor
                                       
San Francisco, CA 94111
                                       
Fax: (415) 981-5302
                                       
/s/ Wayne H. Coleson
                                       

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By: Wayne H. Coleson, CEO
                                         
ALPHA CAPITAL AKTIENGESELLSCHAFT
  $ 500,000       1,086,957       543,479       543,479     $ 555,033  
Pradafant 7
                                       
9490 Furstentums
                                       
Vaduz, Lichtenstein
                                       
Fax: 011-42-32323196
                                       
/s/ Konrad Ackerman
                                       

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By: Konrad Ackerman
                                       

43

--------------------------------------------------------------------------------

 

SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT

     Please acknowledge your acceptance of the foregoing Subscription Agreement
by signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.

              GOLDSPRING, INC.
a Florida corporation     By:   /s/ Robert T. Faber 

--------------------------------------------------------------------------------

Name: Robert T. Faber
Title: President & CEO     Dated: November  30, 2004

                                                              FIRST WARRANTS

--------------------------------------------------------------------------------

        FIRST   FIRST   CLASS A   GREEN SHOE   PRINCIPAL SUBSCRIBER

--------------------------------------------------------------------------------

  PURCHASE PRICE

--------------------------------------------------------------------------------

  COMMON STOCK

--------------------------------------------------------------------------------

  WARRANTS

--------------------------------------------------------------------------------

  WARRANTS

--------------------------------------------------------------------------------

  AMOUNT OF NOTE

--------------------------------------------------------------------------------

CAPITAL VENTURES INTERNATIONAL
  $ 1,000,000       2,173,913       1,086,957       1,086,957     $ 1,110,066  
401 City Lane Avenue, Suite 220
                                       
Bala Cynwyd, PA 19004
                                       
Fax:
                                       
 
                                       
/s/ Martin Kobinger

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By:
                                         
PORTSIDE GROWTH AND OPPORTUNITY FUND
  $ 250,000       543,478       271,739       271,739     $ 277,516  
C/o Ramius Capital Group, LLC
                                       
666 Third Avenue, 26th Floor
                                       
New York, NY 10017
                                       
Fax: (212) 845-7999
                                       
 
                                       
/s/ Jeffrey Smith

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By:   Jeffrey Smith, Authorized Signatory
                                         
ENABLE GROWTH PARTNERS L.P.
  $ 200,000       434,783       217,392       217,392     $ 222,013  
One Ferry Building, Suite 255
                                       
San Francisco, CA 94111
                                       
Fax: (415) 677-1580
                                       
 
                                       
/s/ Mitch Levine

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By:   Mitch Levine
                                       

44

--------------------------------------------------------------------------------

 

SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT

Please acknowledge your acceptance of the foregoing Subscription Agreement by
signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.

            GOLDSPRING, INC.
a Florida corporation
      By:   /s/ Robert T. Faber       Name:   Robert T. Faber        Title:  
President & CEO   

         
 
  Dated: November 30, 2004    

                                                              FIRST WARRANTS

--------------------------------------------------------------------------------

        FIRST                   GREEN   PRINCIPAL     PURCHASE   FIRST COMMON  
CLASS A   SHOE   AMOUNT SUBSCRIBER

--------------------------------------------------------------------------------

  PRICE

--------------------------------------------------------------------------------

  STOCK

--------------------------------------------------------------------------------

  WARRANTS

--------------------------------------------------------------------------------

  WARRANTS

--------------------------------------------------------------------------------

  OF NOTE

--------------------------------------------------------------------------------

WHALEHAVEN FUNDS LIMITED
  $ 150,000       326,087       163,044       163,044     $ 166,510  
3rd Floor, 14 Par-Laville Road
Hamilton, Bermuda HM08
Fax: (441) 292-1373
 
By: /s/ Evan Schemenauer
                                       

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By: Evan Schemenauer - Director
                                       
 
                                       
STONESTREET LIMITED PARTNERSHIP
  $ 350,000       760,870       380,435       380,435     $ 388,523  
C/o Canaccord Capital Corporation
320 Bay Street, Suite 1300
Toronto, Ontario M5H 4A6, Canada
Fax: (416) 956-8989
 
/s/ Michael Finkelstein
                                       

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By: Michael Finkelstein - President
                                       

43

--------------------------------------------------------------------------------

 

SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT

Please acknowledge your acceptance of the foregoing Subscription Agreement by
signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.

            GOLDSPRING, INC.
a Florida corporation
      By:   /s/ Robert T. Faber       Name:   Robert T. Faber        Title:  
President & CEO   

         
 
  Dated: November 30, 2004    

                                                              FIRST WARRANTS

--------------------------------------------------------------------------------

        FIRST                   GREEN   PRINCIPAL     PURCHASE   FIRST COMMON  
CLASS A   SHOE   AMOUNT SUBSCRIBER

--------------------------------------------------------------------------------

  PRICE

--------------------------------------------------------------------------------

  STOCK

--------------------------------------------------------------------------------

  WARRANTS

--------------------------------------------------------------------------------

  WARRANTS

--------------------------------------------------------------------------------

  OF NOTE

--------------------------------------------------------------------------------

SMITHFIELD FIDUCIARY LLC
  $ 250,000       543,478       271,739       271,739     $ 277,516  
C/o Highbridge Capital
9 West 57th Street, 27th Floor
New York, NY 10019
By:  Adam Chill
Fax:
 
/s/  Adam J. Chill
                                       
 
                                       

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By: Adam J. Chill
                                       
 
                                       
TCMP3 PARTNERS LLP
  $ 100,000       217,391       108,696       108,696     $ 111,006  
C/o Titan Capital Management
7 Century Drive, Suite 201
Parsippany, NJ 07054
Fax: (973) 540-0702
 
/s/  Steven E. Slawson
                                       
 
                                       

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By:  Steven E. Slawson
                                       

43

--------------------------------------------------------------------------------

 

SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT

Please acknowledge your acceptance of the foregoing Subscription Agreement by
signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.

            GOLDSPRING, INC.
a Florida corporation
      By:   /s/ Robert T. Faber        Name:   Robert T. Faber        Title:  
President & CEO   

         
 
  Dated: November 30, 2004    

                                                              FIRST WARRANTS

--------------------------------------------------------------------------------

        FIRST                   GREEN   PRINCIPAL     PURCHASE   FIRST COMMON  
CLASS A   SHOE   AMOUNT SUBSCRIBER

--------------------------------------------------------------------------------

  PRICE

--------------------------------------------------------------------------------

  STOCK

--------------------------------------------------------------------------------

  WARRANTS

--------------------------------------------------------------------------------

  WARRANTS

--------------------------------------------------------------------------------

  OF NOTE

--------------------------------------------------------------------------------

BRISTOL INVESTMENT FUND, LTD.
  $ 300,000       652,174       326,087       326,087     $ 333,020  
Caledonia House, Jennett Street
George Town, Grand Cayman
Cayman Islands
Fax: (323) 468-8307
                                       
/s/ Paul Kessler
                                       

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By: Paul Kessler, Director
                                       
 
                                       
VERTICAL VENTURES, LLC
  $ 250,000       543,478       271,739       271,739     $ 277,516  
641 Lexington Avenue, 26th Floor
New York, NY 10022
Fax: (212) 207-3452
                                       
/s/ Joshua Silverman
                                       

--------------------------------------------------------------------------------

(Signature)
                                       
By: Joshua Silverman
                                         
MERRIMAN CURHAN FORD CORPORATION
601 Montgomery Street, Suite 1800
San Francisco, CA 94111
Fax: (415) 248-5692
  $ 125,500       272,826       136,413       136,413     $ 139,313  
/s/ D. Jonathan Merriman
                                       

--------------------------------------------------------------------------------

(Signature)
                                       
By: D. Jonathan Merriman
                                       

43

--------------------------------------------------------------------------------

 

SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT

Please acknowledge your acceptance of the foregoing Subscription Agreement by
signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.

            GOLDSPRING, INC.
a Florida corporation
      By:   /s/ Robert T. Faber         Name:   Robert T. Faber        Title:  
President & CEO   

         
 
  Dated: November 30, 2004    

                                                              FIRST WARRANTS

--------------------------------------------------------------------------------

        FIRST                   GREEN   PRINCIPAL     PURCHASE   FIRST COMMON  
CLASS A   SHOE   AMOUNT SUBSCRIBER

--------------------------------------------------------------------------------

  PRICE

--------------------------------------------------------------------------------

  STOCK

--------------------------------------------------------------------------------

  WARRANTS

--------------------------------------------------------------------------------

  WARRANTS

--------------------------------------------------------------------------------

  OF NOTE

--------------------------------------------------------------------------------

A. TOD HINDIN
  $ 50,000       108,696       54,348       54,348     $ 55,503  
601 Montgomery Street, Suite 1800
San Francisco, CA 94111
Fax: (415) 248-5692
                                       
 
                                       
/s/ A. Tod Hindin

--------------------------------------------------------------------------------

(Signature)
                                       
By:  
                                       
 
                                       
KENNETH R. WERNER REV TST DTD 7/20/96
  $ 50,000       108,696       54,348       54,348     $ 55,503  
601 Montgomery Street, Suite 1800
San Francisco, CA 94111
Fax: (415) 248-5692
                                       
 
                                       
/s/ Kenneth R. Werner

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By:   
                                       
 
                                       
THOMAS P. O’SHEA, JR.
  $ 30,000       65,217       32,609       32,609     $ 33,302  
601 Montgomery Street, Suite 1800
San Francisco, CA 94111
Fax: (415) 248-5692
                                       
 
                                       
/s/ Tom O’Shea

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By: Tom O’Shea
                                       

43

--------------------------------------------------------------------------------

 

SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT

Please acknowledge your acceptance of the foregoing Subscription Agreement by
signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.

            GOLDSPRING, INC.
a Florida corporation
      By:   /s/ Robert T. Faber         Name:   Robert T. Faber        Title:  
President & CEO   

         
 
  Dated: November 30, 2004    

                                                              FIRST WARRANTS

--------------------------------------------------------------------------------

        FIRST                   GREEN   PRINCIPAL     PURCHASE   FIRST COMMON  
CLASS A   SHOE   AMOUNT SUBSCRIBER

--------------------------------------------------------------------------------

  PRICE

--------------------------------------------------------------------------------

  STOCK

--------------------------------------------------------------------------------

  WARRANTS

--------------------------------------------------------------------------------

  WARRANTS

--------------------------------------------------------------------------------

  OF NOTE

--------------------------------------------------------------------------------

D. JONATHAN MERRIMAN
601 Montgomery Street, Suite 1800
San Francisco, CA 94111 Fax: (415) 248-5692
  $ 30,000       65,217       32,609       32,609     $ 33,302  
 
                                       
/s/ D. Jonathan Merriman

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By:   
                                       
 
                                       
BROCK GANELES
601 Montgomery Street, Suite 1800
San Francisco, CA 94111
Fax: (415) 248-5692
  $ 25,000       54,348       27,174       27,174     $ 27,751  
 
                                       
/s/ Brock Ganeles

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By:   
                                       
 
                                       
ELISE STERN
601 Montgomery Street, Suite 1800
San Francisco, CA 94111
Fax: (415) 248-5692
  $ 25,000       54,348       27,174       27,174     $ 27,751  
 
                                       
/s/ Elise Stern

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By:   
                                       

43

--------------------------------------------------------------------------------

 

SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT

Please acknowledge your acceptance of the foregoing Subscription Agreement by
signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.

            GOLDSPRING, INC.
a Florida corporation
      By:   /s/ Robert T. Faber         Name:   Robert T. Faber        Title:  
President & CEO   

         
 
  Dated: November 30, 2004    

                                                              FIRST WARRANTS

--------------------------------------------------------------------------------

        FIRST                   GREEN   PRINCIPAL     PURCHASE   FIRST COMMON  
CLASS A   SHOE   AMOUNT SUBSCRIBER

--------------------------------------------------------------------------------

  PRICE

--------------------------------------------------------------------------------

  STOCK

--------------------------------------------------------------------------------

  WARRANTS

--------------------------------------------------------------------------------

  WARRANTS

--------------------------------------------------------------------------------

  OF NOTE

--------------------------------------------------------------------------------

CRAIG E. SULTAN
601 Montgomery Street, Suite 1800
San Francisco, CA 94111
Fax: (415) 248-5692
  $ 25,000       54,348       27,174       27,174     $ 27,751  
 
                                       
/s/ Craig E. Sultan

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By: Craig E. Sultan
                                       
 
                                       
CARL FRANKSON
601 Montgomery Street, Suite 1800
San Francisco, CA 94111
Fax: (415) 248-5692
  $ 25,000       54,348       27,174       27,174     $ 27,751  
 
                                       
/s/ Carl Frankson

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By:
                                       
 
                                       
JON M. PLEXICO
601 Montgomery Street, Suite 1800
San Francisco, CA 94111
Fax: (415) 248-5692
  $ 20,000       43,478       21,739       21,739     $ 22,201  
 
                                       
/s/ Jon M. Plexico

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By:
                                       

43

--------------------------------------------------------------------------------

 

SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT

Please acknowledge your acceptance of the foregoing Subscription Agreement by
signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.

            GOLDSPRING, INC.
a Florida corporation
      By:   /s/ Robtert T Faber       Name:   Robert T. Faber        Title:  
President & CEO   

         
 
  Dated: November 30, 2004    

                                                              FIRST WARRANTS

--------------------------------------------------------------------------------

        FIRST                   GREEN   PRINCIPAL     PURCHASE   FIRST COMMON  
CLASS A   SHOE   AMOUNT SUBSCRIBER

--------------------------------------------------------------------------------

  PRICE

--------------------------------------------------------------------------------

  STOCK

--------------------------------------------------------------------------------

  WARRANTS

--------------------------------------------------------------------------------

  WARRANTS

--------------------------------------------------------------------------------

  OF NOTE

--------------------------------------------------------------------------------

PETE MARCIL
601 Montgomery Street, Suite 1800
San Francisco, CA 94111
Fax: (415) 248-5692
  $ 20,000       43,478       21,739       21,739     $ 22,201  
 
                                       
/s/ Peter C. Marcil

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By:
                                       
 
                                       
DAVID BAIN
601 Montgomery Street, Suite 1800
San Francisco, CA 94111
Fax: (415) 248-5692
  $ 20,000       43,478       21,739       21,739     $ 22,201  
 
                                       
/s/ David Bain

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By: David Bain
                                     
 
                                       
STEVEN R. SARRACINO
601 Montgomery Street, Suite 1800
San Francisco, CA 94111
Fax: (415) 248-5692
  $ 19,500       42,391       21,196       21,196     $ 21,646  
 
                                       
/s/ Steven R. Sarracino

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By:
                                       

43

--------------------------------------------------------------------------------

 

SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT

Please acknowledge your acceptance of the foregoing Subscription Agreement by
signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.

            GOLDSPRING, INC.
a Florida corporation
      By:   /s/ Robert T. Faber       Name:   Robert T. Faber        Title:  
President & CEO   

         
 
  Dated: November 30, 2004    

                                                              FIRST WARRANTS

--------------------------------------------------------------------------------

        FIRST                   GREEN   PRINCIPAL     PURCHASE   FIRST COMMON  
CLASS A   SHOE   AMOUNT SUBSCRIBER

--------------------------------------------------------------------------------

  PRICE

--------------------------------------------------------------------------------

  STOCK

--------------------------------------------------------------------------------

  WARRANTS

--------------------------------------------------------------------------------

  WARRANTS

--------------------------------------------------------------------------------

  OF NOTE

--------------------------------------------------------------------------------

GREGORY S. CURHAN
601 Montgomery Street, Suite 1800
San Francisco, CA 94111
Fax: (415) 248-5692
  $ 10,000       21,739       10,870       10,870     $ 11,100  
 
                                       
/s/ Gregory S. Curhan

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By:
                                       
 
                                       
JOHN HIESTAND
601 Montgomery Street, Suite 1800
San Francisco, CA 94111
Fax: (415) 248-5692
  $ 10,000       21,739       10,870       10,870     $ 11,100  
 
                                       
/s/ John Hiestand

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By:
                                         
ROBERT E. FORD
601 Montgomery Street, Suite 1800
San Francisco, CA 94111
Fax: (415) 248-5692
  $ 10,000       21,739       10,870       10,870     $ 11,100  
 
                                       
/s/ Robert E. Ford

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By: Robert E. Ford
                                       

43

--------------------------------------------------------------------------------

 

SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT

Please acknowledge your acceptance of the foregoing Subscription Agreement by
signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.

            GOLDSPRING, INC.
a Florida corporation
      By:   /s/ Robert T. Faber       Name:   Robert T. Faber        Title:  
President & CEO   

         
 
  Dated: November 30, 2004    

                                                              FIRST WARRANTS

--------------------------------------------------------------------------------

        FIRST                   GREEN   PRINCIPAL     PURCHASE   FIRST COMMON  
CLASS A   SHOE   AMOUNT SUBSCRIBER

--------------------------------------------------------------------------------

  PRICE

--------------------------------------------------------------------------------

  STOCK

--------------------------------------------------------------------------------

  WARRANTS

--------------------------------------------------------------------------------

  WARRANTS

--------------------------------------------------------------------------------

  OF NOTE

--------------------------------------------------------------------------------

ERIC WOLD
601 Montgomery Street, Suite 1800
San Francisco, CA 94111
Fax: (415) 248-5692
  $ 10,000       21,739       10,870       10,870     $ 11,100  
 
                                       
/s/ Eric Wold

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By:
                                       
 
                                       
CHRISTOPHER AGUILAR
601 Montgomery Street, Suite 1800
San Francisco, CA 94111
Fax: (415) 248-5692
  $ 10,000       21,739       10,870       10,870     $ 11,100  
 
                                       
/s/ Christopher Aguilar

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By: Christopher Aguilar
                                         
PETER A. BLACKWOOD
601 Montgomery Street, Suite 1800
San Francisco, CA 94111
Fax: (415) 248-5692
  $ 10,000       21,739       10,870       10,870     $ 11,100  
 
                                       
/s/ Peter A. Blackwood

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By:
                                       

43

--------------------------------------------------------------------------------

 

SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT

Please acknowledge your acceptance of the foregoing Subscription Agreement by
signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.

            GOLDSPRING, INC.
a Florida corporation
      By:  /s/ Robert T. Faber         Name:   Robert T. Faber        Title:  
President & CEO   

         
 
  Dated: November 30, 2004    

                                                              FIRST WARRANTS

--------------------------------------------------------------------------------

        FIRST                   GREEN   PRINCIPAL     PURCHASE   FIRST COMMON  
CLASS A   SHOE   AMOUNT SUBSCRIBER

--------------------------------------------------------------------------------

  PRICE

--------------------------------------------------------------------------------

  STOCK

--------------------------------------------------------------------------------

  WARRANTS

--------------------------------------------------------------------------------

  WARRANTS

--------------------------------------------------------------------------------

  OF NOTE

--------------------------------------------------------------------------------

GENESIS MICROCAP INC.
483 Green Lanes
London N13 4BS, England
By: Lawrence S. Gibbons
Fax: 011-087-0127-5687
  $ 100,000       217,391       108,696       108,696     $ 111,006  
/s/ Larry Gibbons
                                       

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By: Lawrence S. Gibbons
                                     
JOHN V. WINFIELD
820 Moraga Drive
Los Angeles, CA 90049
Fax: (310) 889-2525
  $ 750,000       1,630,435       815,218       815,218     $ 832,550  
/s/ John V. Winfield
                                       

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By:
                                         
JOHN V. WINFIELD IRA-1
820 Moraga Drive
Los Angeles, CA 90049
Fax: (310) 889-2525
  $ 500,000       1,086,957       543,479       543,479     $ 555,033  
/s/ John V. Winfield
                                       

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By:
                                       

43

--------------------------------------------------------------------------------

 

SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT

Please acknowledge your acceptance of the foregoing Subscription Agreement by
signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.

            GOLDSPRING, INC.
a Florida corporation
      By:   /s/ Robert T. Faber         Name:   Robert T. Faber        Title:  
President & CEO   

         
 
  Dated: November 30, 2004    

                                                              FIRST WARRANTS

--------------------------------------------------------------------------------

        FIRST                   GREEN   PRINCIPAL     PURCHASE   FIRST COMMON  
CLASS A   SHOE   AMOUNT SUBSCRIBER

--------------------------------------------------------------------------------

  PRICE

--------------------------------------------------------------------------------

  STOCK

--------------------------------------------------------------------------------

  WARRANTS

--------------------------------------------------------------------------------

  WARRANTS

--------------------------------------------------------------------------------

  OF NOTE

--------------------------------------------------------------------------------

JOHN V. WINFIELD IRA-2
820 Moraga Drive
Los Angeles, CA 90049
Fax: (310) 889-2525
  $ 250,000       543,478       271,739       271,739     $ 277,516  
/s/ John V. Winfield
                                       

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By:
                                       
 
                                       
SANTA FE FINANCIAL CORP.
820 Moraga Drive
Los Angeles, CA 90049
Fax: (310) 889-2525
  $ 250,000       543,478       271,739       271,739     $ 277,516  
/s/ John V. Winfield
                                       

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By:
                                         
PORTSMOUTH SQUARE, INC.
820 Moraga Drive
Los Angeles, CA 90049
Fax: (310) 889-2525
  $ 250,000       543,478       271,739       271,739     $ 277,516  
/s/ John V. Winfield
                                       

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By:
                                       

43

--------------------------------------------------------------------------------

 

SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT

Please acknowledge your acceptance of the foregoing Subscription Agreement by
signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.

            GOLDSPRING, INC.
a Florida corporation
      By:   /s/ Robert T. Faber         Name:   Robert T. Faber        Title:  
President & CEO   

         
 
  Dated: November 30, 2004    

                                                              FIRST WARRANTS

--------------------------------------------------------------------------------

        FIRST                   GREEN   PRINCIPAL     PURCHASE   FIRST COMMON  
CLASS A   SHOE   AMOUNT SUBSCRIBER

--------------------------------------------------------------------------------

  PRICE

--------------------------------------------------------------------------------

  STOCK

--------------------------------------------------------------------------------

  WARRANTS

--------------------------------------------------------------------------------

  WARRANTS

--------------------------------------------------------------------------------

  OF NOTE

--------------------------------------------------------------------------------

INTERGROUP CORP.
820 Moraga Drive
Los Angeles, CA 90049
Fax: (310) 889-2525
  $ 1,000,000       2,173,913       1,086,957       1,086,957     $ 1,110,066  
/s/ John V. Winfield
                                       

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By:
                                       
 
                                       
ERIK FRANKLIN
534 Openaki Road
Denville, NJ 07834
Fax:
  $ 25,000       54,348       27,174       27,174     $ 27,751  
/s/ Erik Franklin
                                       

--------------------------------------------------------------------------------

                                       
(Signature)
                                       
By: Erik Franklin
                                       

43

--------------------------------------------------------------------------------

 

LIST OF EXHIBITS AND SCHEDULES

         

  Attachment 1   Disclosure Schedule
 
       

  Exhibit A   Form of Note
 
       

  Exhibit B   Form of Warrant
 
       

  Exhibit C   Escrow Agreement
 
       

  Exhibit D   Form of Legal Opinion
 
       

  Exhibit E   Form of Public Announcement or Form 8-K
 
       

  Schedule 5(a)   Subsidiaries and Subsidiary Guarantors
 
       

  Schedule 5(d)   Additional Issuances
 
       

  Schedule 5(q)   Undisclosed Liabilities
 
       

  Schedule 5(s)   Capitalization

43