SECURITY AGREEMENT
THIS
SECURITY AGREEMENT
(this
“Agreement”),
is
made as of March ___, 2005, by and between Goldspring, Inc., a Florida
corporation, with its principal executive offices at 0000 Xxxx Xxxxxxxx Xxxxx,
Xxxxx 000, Xxxxxxxxxx, XX 00000 (the “Company”),
and
the secured parties identified on Schedule
A
hereto
(each, a “Secured
Party”
and
collectively, the “Secured
Parties”).
(The
Company and the Secured Parties may hereinafter be referred to singularly
as a
“party,”
and
collectively as the “parties.”).
W
I T N E S S E T H:
WHEREAS,
concurrently herewith, the Company is entering into a Settlement Agreement
(the
“Settlement
Agreement”)
with
the Secured Parties, pursuant to which, the Company is issuing the Secured
Parties 12% Convertible Debentures of the Company in the aggregate principal
amount of $6,885,184 (the “Convertible
Debenture”);
and
WHEREAS,
in
order to induce the Secured Parties to enter into the Settlement Agreement,
the
Company has agreed to execute and deliver to the Secured Parties this Agreement
for the benefit of the Secured Parties, and to grant to it a security interest
in certain property of the Company to secure the prompt payment, performance
and
discharge in full of all of Company’s obligations under the Settlement Agreement
and Convertible Debenture, and certain other Agreements contemporaneously
entered into by the parties including, a Subscription Agreement, Escrow
Agreement, Put Agreement and Promissory Note (collectively, the “Transaction
Documents”).
NOW,
THEREFORE,
in
consideration of the agreements herein contained and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the
parties hereto hereby agree as follows:
1. Certain
Definitions.
As used
in this Agreement, the following terms shall have the meanings set forth
in this
Section 1. Terms used but not otherwise defined in this Agreement that are
defined in Article 9 of the UCC (such as “general
intangibles”
and
“proceeds”)
shall
have the respective meanings given such terms in Article 9 of the
UCC.
(a) “Collateral”
means
the collateral in which the Secured Parties are granted a first priority
security interest by this Agreement and which shall include the following,
whether presently owned or existing or hereafter acquired or coming into
existence, and all additions and accessions thereto and all substitutions
and
replacements thereof, and all proceeds, products and accounts thereof,
including, without limitation, all proceeds from the sale or transfer of
the
Collateral and of insurance covering the same and of any tort claims in
connection therewith:
(i) all
Goods
of the Company, including, without limitation, all machinery, equipment,
computers, motor vehicles, trucks, tanks, boats, ships, appliances, furniture,
special and general tools, fixtures, test and quality control devices and
other
equipment of every kind and nature and wherever situated, together with all
documents of title and documents representing the same, all additions and
accessions thereto, replacements therefor, all parts therefor, and all
substitutes for any of the foregoing and all other items used and useful
in
connection with the Company’s businesses and all improvements thereto
(collectively, the “Equipment”);
and
(ii) All
Inventory of the Company; and
(iii) All
of
the Company’s contract rights and general intangibles, including, without
limitation, all partnership interests, stock or other securities, licenses,
distribution and other agreements, computer software development rights,
leases,
franchises, customer lists, quality control procedures, grants and rights,
goodwill, trademarks, service marks, trade styles, trade names, patents,
patent
applications, copyrights, deposit accounts, and income tax refunds
(collectively, the “General
Intangibles”);
and
(iv) All
Receivables of the Company including all insurance proceeds, and rights to
refunds or indemnification whatsoever owing, together with all instruments,
all
documents of title representing any of the foregoing, all rights in any
merchandising, goods, equipment, motor vehicles and trucks which any of the
same
may represent, and all right, title, security and guaranties with respect
to
each Receivable, including any right of stoppage in transit; and
(v) All
of
the Company’s documents, instruments and chattel paper, files, records, books of
account, business papers, computer programs and the products and proceeds
of all
of the foregoing Collateral set forth in clauses (i)-(iv) above.
(b) “Obligations”
means
all of the Company’s obligations under this Agreement, and the other Transaction
Documents, in each case, whether now or hereafter existing, voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not
from
time to time decreased or extinguished and later decreased, created or incurred,
and all or any portion of such obligations or liabilities that are paid,
to the
extent all or any part of such payment is avoided or recovered directly or
indirectly from the Secured Parties as a preference, fraudulent transfer
or
otherwise as such obligations may be amended, supplemented, converted, extended
or modified from time to time.
(c) “UCC”
means
the Uniform Commercial Code, as currently in effect in the State of New
York.
2. Grant
of Security Interest.
As an
inducement for the Secured Parties to purchase the Convertible Debenture
and
Shares, and to secure the complete and timely payment, performance and discharge
in full, as the case may be, of all of the Obligations, except for Permitted
Liens (as hereinafter defined), the Company hereby, unconditionally and
irrevocably, pledges, grants and hypothecates to the Secured Parties, a
continuing first priority security interest in, a continuing lien upon, an
unqualified right to possession and disposition of and a right of set-off
against, in each case to the fullest extent permitted by law, all of the
Company's right, title and interest of whatsoever kind and nature in and
to the
Collateral (the “Security
Interest”).
(a) The
Security Interest granted herein shall be pari
passu
to the
extent of the Obligations due to any Secured Party and the Obligations due
to
all other Secured Parties that are signatories hereto. Each Secured Party
shall
have the benefit of all forms of security granted in connection with this
Agreement, and all proceeds thereof, to the same extent of the Secured Party’s
pari
passu interest
with all other secured parties that are signatories hereto. In
the
event that the Company materially breaches any of the terms and provisions
of
this Security Agreement, or should any Event of Default (as that term is
defined
herein) occur, the respective positions of each Secured Party with respect
to
the Collateral shall be in accordance with its respective participations
therein.
2
3. Representations,
Warranties, Covenants and Agreements of the Company.
The
Company represents and warrants to, and covenants and agrees with, the Secured
Parties as follows:
(a) The
Company has the requisite corporate power and authority to enter into this
Agreement and otherwise to carry out its obligations thereunder. The execution,
delivery and performance by the Company of this Agreement and the filings
contemplated herein have been duly authorized by all necessary action on
the
part of the Company and no further action is required by the Company. This
Agreement constitutes a legal, valid and binding obligation of the Company
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws
affecting the enforcement of creditor’s rights generally.
(b) The
Company represents and warrants that it has no place of business or offices
where its respective books of account and records are kept (other than
temporarily at the offices of its attorneys or accountants), except as set
forth
on Schedule
B
attached
hereto;
(c) Except
as
to those liens existing as of the date hereof that were disclosed to the
Secured
Parties by the Company and are set forth on the attached Schedule
C
(the
“Permitted
Liens”),
the
Company is the sole owner of the Collateral (except for non-exclusive licenses
granted by the Company in the ordinary course of business), free and clear
of
any liens, security interests, encumbrances, rights or claims, and is fully
authorized to grant the Security Interest in and to pledge the Collateral.
Except as to the Permitted Liens, there is not on file in any governmental
or
regulatory authority, agency or recording office an effective financing
statement, security agreement, license or transfer or any notice of any of
the
foregoing (other than those that have been filed in favor of the Secured
Parties
pursuant to this Agreement) covering or affecting any of the Collateral.
Except
as to the Permitted Liens, so long as this Agreement shall be in effect,
the
Company shall not execute and shall not knowingly permit to be on file in
any
such office or agency any such financing statement or other document or
instrument (except to the extent filed or recorded in favor of the Secured
Parties pursuant to the terms of this Agreement).
(d) No
part
of the Collateral has been judged invalid or unenforceable. No written claim
has
been received that any Collateral or the Company’s use of any Collateral
violates the rights of any third party. There has been no adverse decision
to
the Company’s claim of ownership rights in or exclusive rights to use the
Collateral in any jurisdiction or to the Company's right to keep and maintain
such Collateral in full force and effect, and there is no proceeding involving
said rights pending or, to the best knowledge of the Company, threatened
before
any court, judicial body, administrative or regulatory agency, arbitrator
or
other governmental authority.
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(e) The
Company shall at all times maintain its books of account and records relating
to
the Collateral at its principal place of business and may not relocate such
books of account and records unless it delivers to the Secured Parties at
least
30 days prior to such relocation (i) written notice of such relocation and
the
new location thereof (which must be within the United States) and
(ii) evidence that appropriate financing statements and other necessary
documents have been filed and recorded and other steps have been taken to
perfect the Security Interest to create in favor of the Secured Parties valid,
perfected and continuing liens in the Collateral.
(f) This
Agreement creates in favor of the Secured Parties a valid first priority
security interest in the Collateral securing the payment and performance
of the
Obligations and, upon making the filings described in the immediately following
sentence, a perfected first priority security interest in such Collateral.
Except for the filing of financing statements on Form-1 under the UCC with
the
jurisdictions indicated on Schedule
B,
attached hereto, no authorization or approval of or filing with or notice
to any
governmental authority or regulatory body is required either (i) for the
grant
by the Company of, or the effectiveness of, the Security Interest granted
hereby
or for the execution, delivery and performance of this Agreement by the Company
or (ii) for the perfection of or exercise by the Secured Parties of its rights
and remedies hereunder.
(g) On
the
date of execution of this Agreement, the Company will deliver to the Purchaser’s
Agent one or more executed UCC financing statements on Form-1 with respect
to
the Security Interest for filing with the jurisdictions indicated on
Schedule
B,
attached hereto and in such other jurisdictions as may be requested by the
Secured Parties.
(h) The
execution, delivery and performance of this Agreement does not conflict with
or
cause a breach or default, or an event that with or without the passage of
time
or notice, shall constitute a breach or default, under any agreement to which
the Company is a party or by the Company is bound. No consent (including,
without limitation, from stockholders or creditors of the Company) is required
for the Company to enter into and perform its obligations
hereunder.
(i) The
Company shall at all times maintain the liens and Security Interest provided
for
hereunder as valid and perfected liens and security interests in the Collateral
in favor of the Secured Parties until this Agreement and the Security Interest
hereunder shall be terminated pursuant to Section 11. The Company hereby
agrees
to defend the same against any and all persons. The Company shall safeguard
and
protect all Collateral for the account of the Secured Parties. At the request
of
the Secured Parties, the Company will sign and deliver to the Secured Parties
at
any time, or from time to time, one or more financing statements pursuant
to the
UCC (or any other applicable statute) in form reasonably satisfactory to
the
Secured Parties and will pay the cost of filing the same in all public offices
wherever filing is, or is deemed by the Secured Parties to be, necessary
or
desirable to effect the rights and obligations provided for herein. Without
limiting the generality of the foregoing, the Company shall pay all fees,
taxes
and other amounts necessary to maintain the Collateral and the Security Interest
hereunder, and the Company shall obtain and furnish to the Secured Parties
from
time to time, upon demand, such releases and/or subordinations of claims
and
liens which may be required to maintain the priority of the Security Interest
hereunder.
4
(j) The
Company will not transfer, pledge, hypothecate, encumber, license (except
for
non-exclusive licenses granted by the Company in the ordinary course of
business), sell (except for sales of inventory in the ordinary course of
business) or otherwise dispose of any of the Collateral without the prior
written consent of the Secured Parties.
(k) The
Company shall keep and preserve its Equipment, Inventory and other tangible
Collateral in good condition, repair and order and shall not operate or locate
any such Collateral (or cause to be operated or located) in any area excluded
from insurance coverage.
(l) The
Company shall, within ten (10) days of obtaining knowledge thereof, advise
the
Secured Parties promptly, in sufficient detail, of any substantial change
in the
Collateral, and of the occurrence of any event which would have a material
adverse effect on the value of the Collateral or on the Secured Parties'
security interest therein.
(m) The
Company shall promptly execute and deliver to the Secured Parties such further
deeds, mortgages, assignments, security agreements, financing statements
or
other instruments, documents, certificates and assurances and take such further
action as the Secured Parties may from time to time request and may in its
sole
discretion deem necessary to perfect, protect or enforce its security interest
in the Collateral.
(n) The
Company shall permit the Secured Parties and their representatives and agents
to
inspect the Collateral at any time, and to make copies of records pertaining
to
the Collateral as may be requested by the Secured Parties from time to
time.
(o) The
Company will take all steps reasonably necessary to diligently pursue and
seek
to preserve, enforce and collect any rights, claims, causes of action and
accounts receivable in respect of the Collateral.
(p) The
Company shall promptly notify the Secured Parties in sufficient detail upon
becoming aware of any attachment, garnishment, execution or other legal process
levied against any Collateral and of any other information received by the
Company that may materially affect the value of the Collateral, the Security
Interest or the rights and remedies of the Secured Parties
hereunder.
(q) All
information heretofore, herein or hereafter supplied to the Secured Parties
by
or on behalf of the Company with respect to the Collateral is accurate and
complete in all material respects as of the date furnished.
2. Defaults.
The
following events shall be “Events
of Default”:
(a) A
breach
by the Company of its material obligations under the Transaction Documents
(as
defined herein) and failure to cure such breach for ten (10) days after receipt
by the Company of notice of such breach from the Secured Parties;
5
(b) Any
material misrepresentation or warranty of the Company in this Agreement shall
prove to have been incorrect in any material respect when made; and
(c) The
failure by the Company to observe or perform any of its material obligations
hereunder for ten (10) days after receipt by the Company of notice of such
failure from the Secured Parties.
5. Duty
To Hold In Trust.
Upon
the occurrence of any Event of Default and at any time thereafter, the Company
shall, upon receipt by it of any revenue, income or other sums subject to
the
Security Interest, whether payable pursuant to the Transaction Documents
or
otherwise, or of any check, draft, debenture, trade acceptance or other
instrument evidencing an obligation to pay any such sum, hold the same in
trust
for the Secured Parties and shall forthwith endorse and transfer any such
sums
or instruments, or both, to the Secured Parties for application to the
satisfaction of the Obligations.
6. Rights
and Remedies Upon Default.
Upon
occurrence of any Event of Default and at any time thereafter, the Secured
Parties shall have the right to exercise all of the remedies conferred hereunder
and under the Settlement Agreement and other Transaction Documents, and the
Secured Parties shall have all the rights and remedies of a secured party
under
the UCC and/or any other applicable law (including the Uniform Commercial
Code
of any jurisdiction in which any Collateral is then located). Without
limitation, the Secured Parties shall have the following rights and
powers:
(a) The
Secured Parties shall have the right to take possession of the Collateral
and,
for that purpose, enter, with the aid and assistance of any person, any premises
where the Collateral, or any part thereof, is or may be placed and remove
the
same, and the Company shall assemble the Collateral and make it available
to the
Secured Parties at places which the Secured Parties shall reasonably select,
whether at the Company's premises or elsewhere, and make available to the
Secured Parties, without rent, all of the Company’s respective premises and
facilities for the purpose of the Secured Parties taking possession of, removing
or putting the Collateral in saleable or disposable form.
(b) The
Secured Parties shall have the right to operate the business of the Company
using the Collateral and shall have the right to assign, sell, lease or
otherwise dispose of and deliver all or any part of the Collateral, at public
or
private sale or otherwise, either with or without special conditions or
stipulations, for cash or on credit or for future delivery, in such parcel
or
parcels and at such time or times and at such place or places, and upon such
terms and conditions as the Secured Parties may deem commercially reasonable,
all without (except as shall be required by applicable statute and cannot
be
waived) advertisement or demand upon or notice to the Company or right of
redemption of the Company, which are hereby expressly waived. Upon each such
sale, lease, assignment or other transfer of Collateral, the Secured Parties
may, unless prohibited by applicable law which cannot be waived, purchase
all or
any part of the Collateral being sold, free from and discharged of all trusts,
claims, right of redemption and equities of the Company, which are hereby
waived
and released.
6
7. Applications
of Proceeds.
The
proceeds of any such sale, lease or other disposition of the Collateral
hereunder shall be applied first, to the expenses of retaking, holding, storing,
processing and preparing for sale, selling, and the like (including, without
limitation, any taxes, fees and other costs incurred in connection therewith)
of
the Collateral, to the reasonable attorneys' fees and expenses incurred by
the
Secured Parties in enforcing its rights hereunder and in connection with
collecting, storing and disposing of the Collateral, and then to satisfaction
of
the Obligations, and to the payment of any other amounts required by applicable
law, after which the Secured Parties shall pay to the Company any surplus
proceeds. If, upon the sale, license or other disposition of the Collateral,
the
proceeds thereof are insufficient to pay all amounts to which the Secured
Parties are legally entitled, the Company will be liable for the deficiency,
together with interest thereon, at the rate of 18% per annum (the “Default
Rate”),
and
the reasonable fees of any attorneys employed by the Secured Parties to collect
such deficiency. To the extent permitted by applicable law, the Company waives
all claims, damages and demands against the Secured Parties arising out of
the
repossession, removal, retention or sale of the Collateral, unless due to
the
gross negligence or willful misconduct of the Secured Parties.
All
ordinary costs and expenses incurred by any Secured Party in collection of
the
Obligations shall be borne exclusively by the Company including, without
limitation, any costs, expenses, fees or disbursements incurred by outside
agencies or attorneys retained by the Secured Party to effect collections
of the
Obligations or any collateral securing the Obligations. In such event, any
money
paid, any expenses, costs and attorneys fees paid or incurred in connection
therewith or in enforcing, maintaining or preserving the rights of all Secured
Parties under this Agreement shall be shared by all Secured Parties pro rata
in
accordance with their respective percentage of the Convertible Debenture.
The
provisions of this paragraph shall not apply to any suits, actions, proceedings
or claims of the nature referred to herein or otherwise which are based upon
or
related to the repayment of, or the taking of security for, any loans and/or
advances made by any Secured Party to the Company that do not arise under
the
Purchase Agreements or that are not participated in by all Secured Parties,
and
the party making such loans and/or advances shall be exclusively responsible
for
such suits, actions, proceedings or claims and the payment of all such expenses
in connection therewith.
8. Costs
and Expenses.
The
Company agrees to pay all reasonable out-of-pocket fees, costs and expenses
incurred in connection with any filing required hereunder, including without
limitation, any financing statements, continuation statements, partial releases
and/or termination statements related thereto or any expenses of any searches
reasonably required by the Secured Parties. The Company shall also pay all
other
claims and charges which in the reasonable opinion of the Secured Parties
might
prejudice, imperil or otherwise affect the Collateral or the Security Interest
therein. The Company will also, upon demand, pay to the Secured Parties the
amount of any and all reasonable expenses, including the reasonable fees
and
expenses of its counsel and of any experts and agents, which the Secured
Parties
may incur in connection with (i) the enforcement of this Agreement, (ii)
the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, or (iii) the exercise or enforcement
of
any of the rights of the Secured Parties under the Settlement Agreement and
other Transaction Documents. Until so paid, any fees payable hereunder shall
be
added to the principal amount of the Convertible Debenture and shall bear
interest at the Default Rate.
7
9. Responsibility
for Collateral.
The
Company assumes all liabilities and responsibility in connection with all
Collateral, and the obligations of the Company hereunder or under the Settlement
Agreement or other Transaction Documents shall in no way be affected or
diminished by reason of the loss, destruction, damage or theft of any of
the
Collateral or its unavailability for any reason.
10. Security
Interest Absolute.
All
rights of the Secured Parties and all Obligations of the Company hereunder,
shall be absolute and unconditional, irrespective of: (a) any lack of validity
or enforceability of this Agreement, the Settlement Agreement, or any of
the
Transaction Documents, or any portion hereof or thereof; (b) any change in
the
time, manner or place of payment or performance of, or in any other term
of, all
or any of the Obligations, or any other amendment or waiver of or any consent
to
any departure from the Settlement Agreement, or other Transaction Documents;
(c)
any exchange, release or nonperfection of any of the Collateral, or any release
or amendment or waiver of or consent to departure from any other collateral
for,
or any guaranty, or any other security, for all or any of the Obligations;
(d)
any action by the Secured Parties to obtain, adjust, settle and cancel in
its
sole discretion any insurance claims or matters made or arising in connection
with the Collateral; or (e) any other circumstance which might otherwise
constitute any legal or equitable defense available to the Company, or a
discharge of all or any part of the Security Interest granted hereby. Until
the
Obligations shall have been paid and performed in full, the rights of the
Secured Parties shall continue even if the Obligations are barred for any
reason, including, without limitation, the running of the statute of limitations
or bankruptcy. The Company expressly waives presentment, protest, notice
of
protest, demand, notice of nonpayment and demand for performance. In the
event
that at any time any transfer of any Collateral or any payment received by
the
Secured Parties hereunder shall be deemed by final order of a court of competent
jurisdiction to have been a voidable preference or fraudulent conveyance
under
the bankruptcy or insolvency laws of the United States, or shall be deemed
to be
otherwise due to any party other than the Secured Parties, then, in any such
event, the Company's obligations hereunder shall survive cancellation of
this
Agreement, and shall not be discharged or satisfied by any prior payment
thereof
and/or cancellation of this Agreement, but shall remain a valid and binding
obligation enforceable in accordance with the terms and provisions hereof.
The
Company waives all right to require the Secured Parties to proceed against
any
other person or to apply any Collateral which the Secured Parties may hold
at
any time, or to marshal assets, or to pursue any other remedy. The Company
waives any defense arising by reason of the application of the statute of
limitations to any obligation secured hereby.
11. Term
of Agreement.
This
Agreement and the Security Interest shall terminate on the date on which
all
payments under the Convertible Debenture have been made in full by the Company
and/or the date that the Secured Parties convert in full the Convertible
Debenture into shares of the Company’s Common Stock. Upon such termination, the
Secured Parties, at the request and at the expense of the Company, will join
in
executing any termination statement with respect to any financing statement
executed and filed pursuant to this Agreement.
8
12. Power
of Attorney; Further Assurances.
(a) The
Company authorizes the Secured Parties upon five (5) business days prior
notice,
and does hereby make, constitute and appoint them, and their respective
officers, agents, successors or assigns with full power of substitution,
as the
Company's true and lawful attorney-in-fact, with power, in its own name or
in
the name of the Company, to, after the occurrence and during the continuance
of
an Event of Default, (i) endorse any debentures, checks, drafts, money orders,
or other instruments of payment (including payments payable under or in respect
of any policy of insurance) in respect of the Collateral that may come into
possession of the Secured Parties; (ii) to sign and endorse any UCC financing
statement or any invoice, freight or express xxxx, xxxx of lading, storage
or
warehouse receipts, drafts against debtors, assignments, verifications and
notices in connection with accounts, and other documents relating to the
Collateral; (iii) to pay or discharge taxes, liens, security interests or
other
encumbrances at any time levied or placed on or threatened against the
Collateral; (iv) to demand, collect, receipt for, compromise, settle and
xxx for
monies due in respect of the Collateral; and (v) generally, to do, at the
option
of the Secured Parties, and at the Company's expense, at any time, or from
time
to time, all acts and things which the Secured Parties deem necessary to
protect, preserve and realize upon the Collateral and the Security Interest
granted therein in order to effect the intent of this Agreement, the Settlement
Agreement, and any of the other Transaction Documents, all as fully and
effectually as the Company might or could do; and the Company hereby ratifies
all that said attorney shall lawfully do or cause to be done by virtue hereof.
This power of attorney is coupled with an interest and shall be irrevocable
for
the term of this Agreement and thereafter as long as any of the Obligations
shall be outstanding.
(b) On
a
continuing basis, the Company will make, execute, acknowledge, deliver, file
and
record, as the case may be, in the proper filing and recording places in
any
jurisdiction, including, without limitation, the jurisdictions indicated
on
Schedule
B,
attached hereto, all such instruments, and take all such action as may
reasonably be deemed necessary or advisable, or as reasonably requested by
the
Secured Parties, to perfect the Security Interest granted hereunder and
otherwise to carry out the intent and purposes of this Agreement, or for
assuring and confirming to the Secured Parties the grant or perfection of
a
security interest in all the Collateral.
(c) The
Company hereby irrevocably appoints the Secured Parties as the Company's
attorneys-in-fact, with full authority in the place and stead of the Company
and
in the name of the Company, from time to time at the discretion of the Secured
Parties, to take any action and to execute any instrument which the Secured
Parties may deem necessary or advisable to accomplish the purposes of this
Agreement, including the filing, in their sole discretion, of one or more
financing or continuation statements and amendments thereto, relative to
any of
the Collateral without the signature of the Company where permitted by
law.
13. Notices.
Any
notice or other communications required or permitted hereunder shall be deemed
to be sufficient if contained in a written instrument delivered in person
or
duly sent by first class certified mail, postage prepaid, by reputable overnight
courier or such other address as may hereafter be designated in writing by
the
addressee to the other parties:
9
If
to a
Secured Party, to:
the
address set forth beneath his or its name on Schedule
A
hereto
with
a
copy to:
Xxxxx
& Xxxxxxx LLP
00
Xxxx
00xx
Xx.,
00xx
Xxxxx
Xxx
Xxxx,
XX 00000
Attn:
Xxxxxxx X. Xxxxx, Esq.
Fax:
(000) 000-0000
If
to the
Company, to:
GoldSpring,
Inc.
0000
Xxxx
Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx,
XX 00000
Attn.:
Xxxxxx X. Xxxxx
Fax:_______________________
with
a
copy to:
__________________________
__________________________
__________________________
Attn.:_______________________
Fax:_________________________
or,
in
any case, at such other address or addresses as shall have been furnished
in
writing by such party to the other parties hereto. All such notices, requests,
consents and other communications shall be deemed to have been received (a)
in
the case of personal delivery, on the date of such delivery, (b) in the case
of
mailing, on the fifth business day following the date of such mailing and
(c) in
the case of overnight courier, on the second next business day.
14. Other
Security.
To the
extent that the Obligations are now or hereafter secured by property other
than
the Collateral or by the guarantee, endorsement or property of any other
person,
firm, corporation or other entity, then the Secured Parties shall have the
right, in their sole discretion, to pursue, relinquish, subordinate, modify
or
take any other action with respect thereto, without in any way modifying
or
affecting any of the Secured Party’s rights and remedies hereunder.
10
15. Miscellaneous.
(a) No
course
of dealing between the Company and the Secured Parties, nor any failure to
exercise, nor any delay in exercising, on the part of the Secured Parties,
any
right, power or privilege hereunder or under Settlement Agreement, or other
Transaction Documents shall operate as a waiver thereof; nor shall any single
or
partial exercise of any right, power or privilege hereunder or thereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.
(b) All
of
the rights and remedies of the Secured Parties with respect to the Collateral,
whether established hereby or by the Settlement Agreements or other Transaction
Documents, or by any other agreements, instruments or documents or by law
shall
be cumulative and may be exercised singly or concurrently.
(c) This
Agreement constitutes the entire agreement of the parties with respect to
the
subject matter hereof and is intended to supersede all prior negotiations,
understandings and agreements with respect thereto. Except as specifically
set
forth in this Agreement, no provision of this Agreement may be modified or
amended except by a written agreement specifically referring to this Agreement
and signed by the parties hereto.
(d) In
the
event that any provision of this Agreement is held to be invalid, prohibited
or
unenforceable in any jurisdiction for any reason, unless such provision is
narrowed by judicial construction, this Agreement shall, as to such
jurisdiction, be construed as if such invalid, prohibited or unenforceable
provision had been more narrowly drawn so as not to be invalid, prohibited
or
unenforceable. If, notwithstanding the foregoing, any provision of this
Agreement is held to be invalid, prohibited or unenforceable in any
jurisdiction, such provision, as to such jurisdiction, shall be ineffective
to
the extent of such invalidity, prohibition or unenforceability without
invalidating the remaining portion of such provision or the other provisions
of
this Agreement and without affecting the validity or enforceability of such
provision or the other provisions of this Agreement in any other
jurisdiction.
(e) No
waiver
of any breach or default or any right under this Agreement shall be considered
valid unless in writing and signed by the party giving such waiver, and no
such
waiver shall be deemed a waiver of any subsequent breach or default or right,
whether of the same or similar nature or otherwise.
(f) This
Agreement shall be binding upon and inure to the benefit of each party hereto
and its successors and assigns.
(g) Each
party shall take such further action and execute and deliver such further
documents as may be necessary or appropriate in order to carry out the
provisions and purposes of this Agreement.
11
(h) This
Agreement shall be construed in accordance with the laws of the State of
New
York, except to the extent the validity, perfection or enforcement of a security
interest hereunder in respect of any particular Collateral which are governed
by
a jurisdiction other than the State of New York in which case such law shall
govern. Each of the parties hereto irrevocably submit to the exclusive
jurisdiction of any New York State or United States Federal court sitting
in New
York county over any action or proceeding arising out of or relating to this
Agreement, and the parties hereto hereby irrevocably agree that all claims
in
respect of such action or proceeding may be heard and determined in such
New
York State or Federal court. The parties hereto agree that a final judgment
in
any such action or proceeding shall be conclusive and may be enforced in
other
jurisdictions by suit on the judgment or in any other manner provided by
law.
The parties hereto further waive any objection to venue in the State of New
York
and any objection to an action or proceeding in the State of New York on
the
basis of forum non conveniens.
(i) EACH
PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRAIL
OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. THE
SCOPE
OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY DISPUTES THAT MAY
BE
FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATER OF THIS AGREEMENT,
INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS
AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES
THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO A
BUSINESS RELATIONSHIP, THAT EACH PARTY HAS ALREADY RELIED ON THIS WAIVER
IN
ENTERING INTO THIS AGREEMENT AND THAT EACH PARTY WILL CONTINUE TO RELY ON
THIS
WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY FURTHER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT
SUCH PARTY HAS KNOWINGLY AND VOLUNTARILY WAIVES ITS RIGHTS TO A JURY TRIAL
FOLLOWING SUCH CONSULTATION. THIS WAIVER IS IRREVOCABLE, MEANING THAT,
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS AND SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT
OF A
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY
THE
COURT.
(j) This
Agreement may be executed in any number of counterparts, each of which when
so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same Agreement. In the event that any signature
is
delivered by facsimile transmission, such signature shall create a valid
binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
were the original thereof.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
12
COUNTERPART
SIGNATURE PAGE TO SECURITY AGREEMENT, DATED MARCH ___,
2005
IN
WITNESS WHEREOF,
the
parties have executed and delivered this Agreement as of the date first above
written.
GOLDSPRING,
INC.
By:____________________________
Name:
Its:
XXXX
X.
XXXXXXXX
XXXX
X. XXXXXXXX XXX-1
By:____________________________
Name:
Its:
XXXX
X. XXXXXXXX XXX-2
By:____________________________
Name:
Its:
SANTA
FE FINANCIAL CORP.
By:____________________________
Name:
Its:
PORTSMOUTH
SQUARE, INC.
By:____________________________
Name:
Its:
THE
INTERGROUP CORPORATION
By:____________________________
Name:
Its:
13
SCHEDULE
A
Secured
Parties
|
Names
and Addresses
|
||
|
Xxxx
X. Xxxxxxxx
000
Xxxxxx Xxxxx
Xxx
Xxxxxxx, XX 00000
|
||
|
Xxxx
X. Xxxxxxxx XXX-1
000
Xxxxxx Xxxxx
Xxx
Xxxxxxx, XX 00000
Attn.:
Xxxx X. Xxxxxxxx
|
||
|
Xxxx
X. Xxxxxxxx XXX-2
000
Xxxxxx Xxxxx
Xxx
Xxxxxxx, XX 00000
Attn.:
Xxxx X. Xxxxxxxx
|
||
|
Santa
Fe Financial Corp.
000
Xxxxxx Xxxxx
Xxx
Xxxxxxx, XX 00000
Attn.:
Xxxx X. Xxxxxxxx
|
||
|
Portsmouth
Square, Inc.
000
Xxxxxx Xxxxx
Xxx
Xxxxxxx, XX 00000
Attn.:
Xxxx X. Xxxxxxxx
|
||
|
The
InterGroup Corporation
000
Xxxxxx Xxxxx
Xxx
Xxxxxxx, XX 00000
Attn.:
Xxxx X. Xxxxxxxx
|
SCHEDULE
B
Places
of Business and Jurisdictions

60;
0000
Xxxx Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
SCHEDULE
C
Permitted
Liens
None
