ESCROW AGREEMENT
THIS
ESCROW AGREEMENT
(the
“Agreement”)
is
entered into and effective as of March ____, 2005, by and among Goldspring,
Inc., a Florida corporation, with its principal executive offices at 0000
Xxxx
Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxx, XX 00000 (the “Company”),
the
parties identified on the signature page hereto (each, a “Recipient”
and
collectively, the “Recipients”),
and
Xxxxx & Xxxxxxx LLP (the “Escrow
Agent”).
Terms
not defined herein shall have the meaning prescribed thereto in the Settlement
Agreement executed simultaneously herewith (the “Settlement
Agreement”).
W
I T N E S S E T H:
WHEREAS,
simultaneously herewith, the Company and the Recipients have entered into
the
Settlement Agreement, pursuant to which, among other things, the Company
has
agreed: (i) to issue the Recipients 12% Secured Convertible Debentures of
the
Company, in the aggregate principal amount of $6,885,184 (the “Convertible
Debenture”), and (ii) to, contemporaneously with the execution of the Settlement
Agreement, and issuance of the Convertible Debenture, issue 17,761,067 shares
of
common stock of the Company (each, a “Share,”
and
collectively, the “Shares”)
in
exchange for $266,416 (the “Conversion Amount”) representing certain other
payments due to Recipients by Company, which Shares may be put back to the
Company for 125% of the Conversion Amount if the Company does not satisfy
all or
any portion of its registration requirements pursuant to Section 9 of the
Subscription Agreement; and
WHEREAS,
as
further specified in the Put Agreement, if, at the time the Purchasers exercise
their right to put the Shares to the Company, the Company does not have an
amount of cash, as defined by GAAP, equal to or greater than the 125% of
the
Conversion Amount, than the Company shall cause the Escrow Agent to deliver
to
the Purchasers a promissory note in the full amount of 125% of the Conversion
Amount (the “Note”);
and
WHEREAS,
the
Recipients agreed to enter into the Settlement Agreement, and related documents
(the “Transaction
Documents”)
on the
condition that the Company deposit with the Escrow Agent: (i) certificates
representing 150% of the amount of shares of common stock of the Company
(assuming the conversion of the Convertible Debenture by the Recipients as
of
the Closing Date, (the “Conversion
Shares”),
in
order to facilitate the conversion of the Convertible Debenture, and (ii)
the
Note, in order to facilitate the transactions set forth in the Put Agreement;
and
WHEREAS,
the
Company is ready, willing and able to so deposit the Conversion Shares and
Note
with the Escrow Agent pursuant to this Agreement.
NOW,
THEREFORE,
in
consideration of the covenants and mutual promises contained herein and other
good and valuable consideration, the receipt and legal sufficiency of which
are
hereby acknowledged and intending to be legally bound hereby, the parties
agree
as follows:
1. Deposit
of Shares.
(a) In
satisfaction of certain of its obligations under the Convertible Debenture,
the
Company shall deposit with the Escrow Agent one or more certificates
representing not less than __________ shares of common stock of the Company,
which shall be held in the name of the Company, endorsed or assigned in blank
or
in favor of the Escrow Agent.
(b) If
upon
conversion of the Convertible Debenture the number of shares of common stock
of
the Company that the Recipients are entitled to receive is more than __________,
no later than three (3) Business Days after receiving written request therefore
from the Escrow Agent, the Company shall deposit with the Escrow Agent
certificates representing a number of the shares of its common stock
representing the difference between the number of shares of common stock
of the
Company the Recipients were entitled to receive upon conversion and __________
shares.
2. Release
of Shares.
(a) Upon
surrender not later than the maturity date of the Convertible Debenture by
the
Recipients to the Escrow Agent of a duly executed and completed notice (the
“Conversion
Notice”)
in the
form attached to the Convertible Debenture, together with the original
Convertible Debenture representing the principal amount and accrued interest
to
be converted, the Escrow Agent shall (i) release from escrow and use its
best
efforts to cause to be transferred to the Recipients such number of shares
of
the Company’s common stock then held by the Escrow Agent pursuant to this
Agreement to the person entitled thereto in accordance with the terms of
the
Convertible Debenture and the Conversion Notice, and (ii) deliver to the
Company
the original Convertible Debenture.
3. Deposit
and Release of Note.
(a) In
satisfaction of its obligations under the Put Agreement, the Company shall
deposit with the Escrow Agent the Note, in the principal amount of not less
than
$333,020, representing 125% of the Conversion Amount, which shall be held
in the
name of the Recipients, pending the Recipients exercise of their put option
pursuant to the Put Agreement.
(b) If
the
Escrow Agent receives written notice from the Recipients to the effect that:
(i)
the Company has failed to satisfy all or any portion of its registration
requirements pursuant to Section 9 of the Subscription Agreement, (ii) the
Recipients have exercised their right to put the Shares to the Company for
125%
of the Conversion Amount, and (iii) the Company has notified the recipients
that
it does not have cash, as defined by GAAP, in the amount of 125% of the
Conversion Amount, and therefore can not redeem the Shares, then the Escrow
Agent shall release the Note from escrow and deliver it to the
Recipients.
4. Limitations
of Escrow Agent’s Capacity.
(a) This
Agreement expressly and exclusively sets forth the duties of the Escrow Agent
with respect to any and all matters pertinent hereto and no implied duties
or
obligations shall be read into this Agreement against the Escrow
Agent.
2
(b) The
Escrow Agent shall act hereunder as a depository only, and is not responsible
or
liable in any manner whatsoever for the sufficiency, correctness, genuineness
or
validity of the subject matter of this Agreement or any part thereof, whether
in
form or substance, or for the form of execution thereof, or for any endorsement
or lack of endorsement thereon or for any description therein. It shall be
sufficient if a writing purporting to be such instrument, document, certificate,
statement or notice is delivered to the Escrow Agent and purports on its
face to
be correct in form and signed or otherwise executed by the party or parties
required to sign or execute the same under this Agreement. The Escrow Agent
shall not be required in any way to determine the identity or authority of
any
person executing the same or the genuineness of such signature.
(c) This
Agreement as it presently exists or may hereafter be amended constitutes
the
entire agreement between the Escrow Agent and any other parties hereto in
connection with the subject matter hereof, and no other agreement entered
into
between the parties or any of them, shall be considered as adopted or binding,
in whole or in part, upon the Escrow Agent notwithstanding that any other
agreement may be deposited with the Escrow Agent or the Escrow Agent may
have
knowledge thereof.
(d) The
Escrow Agent shall have no liability or obligation to notify any party hereto
or
any other party interested in this Agreement of any payment required or maturity
occurring under this Agreement or under the terms of any instrument deposited
herewith unless such notice is explicitly provided for in this
Agreement.
(e) The
Escrow Agent shall not be charged with notice of knowledge of any fact or
information not herein set forth.
5. Authority
of Escrow Agent.
(a) The
Escrow Agent is hereby authorized and directed by the undersigned to deliver
the
subject matter of this Agreement only in accordance with the provisions of
Sections 2 and 3 above.
(b) The
Escrow Agent shall be protected in acting upon any written notice, request,
waiver, consent, certificate, receipt, authorization, power of attorney or
other
paper or document which the Escrow Agent in good faith believes to be genuine
and what it purports to be, including but not limited to items directing
investment or non-investment of funds, items requesting or authorizing release,
disbursement or retainage of the subject matter of this Agreement and the
items
amending the terms of this Agreement.
(c) The
Escrow Agent may consult with legal counsel in the event of any dispute or
question as to the construction of any of the provisions hereof or its duties
hereunder, and shall incur no liability and shall be fully protected in act
and
in accordance with the advise of such counsel. The
Escrow Agent has acted as legal counsel for the Recipients, and may continue
to
act as legal counsel for the Recipients, from time to time, notwithstanding
its
duties as the Escrow Agent hereunder. The Company consents to the Escrow
Agent
in such capacity as legal counsel for the Recipients and waives any claim
that
such representation represents a conflict of interest on the part of the
Escrow
Agent. The Company understands that the Recipients and the Escrow Agent are
relying explicitly on the foregoing provision in entering into this
Agreement.
3
(d) In
the
event of any disagreement between any of the parties to this Agreement, or
between any of them and any other person, resulting in adverse claims or
demands
being made in connection with the matters covered by this Agreement, or in
the
event that the Escrow Agent, in good faith, shall be in doubt as to what
action
it should take, the Escrow Agent may, at its option, refuse to comply with
any
claims or demands on it, or refuse to take any other action hereunder, so
long
as such disagreement continues or such doubt exists and in any such event
the
Escrow Agent shall not be or become liable in any way or to any person for
its
failure or refusal to act, and the Escrow Agent shall be entitled to continue
to
refrain from acting until (i) the rights of all interested parties shall
have
been fully and finally adjudicated by a court of competent jurisdiction,
or (ii)
all differences shall have been adjudged and all doubt resolved by agreement
among all the interested persons, and the Escrow Agent shall have been notified
thereof in writing signed by all such persons. Notwithstanding the preceding,
the Escrow Agent may in its discretion obey the order or judgment, decree
or
levy of any court, whether with or without jurisdiction, and the Escrow Agent
is
hereby authorized in its sole discretion, to comply with and obey (and shall
have no liability to any person or party so doing) any such orders, judgments,
decrees or levies which the Escrow Agent is advised by legal counsel of its
own
choosing is binding upon it. The rights of the Escrow Agent under this
subsection are cumulative with all other rights which it may have by law
or
otherwise.
(e) The
Escrow Agent shall have no liability for any loss arising from any cause
beyond
its control, including but not limited to the following (i) the act, failure
or
negligence of any agent or correspondent selected by the Escrow Agent for
the
remittance of funds (ii) any delay, error omission or default of any mail,
telegraph, cable or wireless agency or operator (iii) the acts or edicts
of any
government or governmental agency or other group or entity exercising
governmental powers.
(f) Without
in any way limiting any other provision of this Agreement as expressly
understood and agreed that the Escrow Agent shall be under no duty or obligation
to give any notice or to do or to omit the doing of any action or anything
with
respect to the subject matter hereof except to receive, hold and deliver
the
same in accordance with the terms hereof. The Escrow agent shall not be liable
for any error in judgment, or act or omission, or any mistake of law or fact
or
for doing anything it may do or refrain from doing in connection herewith,
except for its own willful misconduct or gross negligence.
(g) The
Escrow Agent shall be indemnified and held harmless from anything which it
may
do or refrain from doing in connection herewith or for any claims, demands
or
losses or for any damages made or suffered by any party to this Agreement
except
such as may rise through or be caused by the Escrow Agent’s willful misconduct
or gross negligence.
4
(h) In
the
event that any controversy should arise among the parties with respect to
this
Agreement, or should the Escrow Agent resign and the parties fail to select
another Escrow Agent to act in its stead, the Escrow Agent shall have the
right
to institute a xxxx of interpleader in any court of competent jurisdiction
to
determine the rights of the parties, all at the cost of the
Company.
6. Resignation.
The
Escrow Agent’s responsibilities as Escrow Agent hereunder shall terminate if the
Escrow Agent shall resign by written notice to the Comapny and the Recipients.
In the event of any such resignation, the Recipients and the Company shall
appoint a successor Escrow Agent.
7. Termination.
(a) Unless
any party has sent notice to all other parties that a dispute exists regarding
any part of the subject matter hereof, this Agreement shall be terminated
on the
earlier of: (a) the complete disbursement of the subject matter of this
Agreement, or (b) the Termination Date. For the purposes of this Agreement,
the
Termination Date shall be defined as date on which all payments under the
Convertible Debenture have been made in full by the Company and the Registration
Statement has been declared effective by the Commission prior to the Effective
Date (as that term is defined in Section 9(a)(iv) of the Subscription Agreement)
(the “Termination
Date”).
(b) If
all or
any portion of the shares of the Conversion Shares and/or the Note has not
been
released to the Recipients on or before the Termination Date, then, upon
such
Termination Date, the Escrow Agent is hereby directed to deliver any remaining
Conversion Shares and/or portion of the Note then held by the Escrow Agent
to
the Company, and this Agreement shall terminate.
8. General
Provisions.
(a) At
the
Termination Date set out in subsection 7(a) above, the Escrow Agent shall
be
discharged from any further obligation.
(b) Where
directions or instructions from more than one of the undersigned are required,
such directions or instructions may be given by separate instruments of similar
tenor. Any of the undersigned may act hereunder through an agent or
attorney-in-fact, provided satisfactory written evidence of authority is
first
furnished to any party relying on such authority.
(c) The
Company shall reimburse the Escrow Agent for its reasonable costs and expenses
incurred in connection with the performance by it of services under this
Agreement (including reasonable fees and expenses of Escrow Agent’s
counsel).
(d) Any
payment, notice, request for consent, report, or any other communication
required or permitted in this Agreement shall be in writing and shall be
deemed
to have been given when personally delivered to the party hereunder specified
against receipt therefor or when placed in the United States Postal Service,
registered or certified, with return receipt requested, postage prepaid and
addressed as follows:
5
If
to a
Secured Party, to:
the
address set forth beneath his or its name on Schedule
A
hereto
with
a
copy to:
Xxxxx
& Schloss 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:_________________________
If
to the
Escrow Agent, to:
Xxxxx
& Xxxxxxx LLP
00
Xxxx
00xx
Xx.,
00xx
Xxxxx
Xxx
Xxxx,
XX 00000
Attn:
Xxxxxxx X. Xxxxx, Esq.
Fax:
(000) 000-0000
Any
party
may unilaterally designate a different address by giving notice of each such
change in the manner specified above to the other party.
(e) This
Agreement is being made in and is intended to be construed according to the
laws
of the State of New York without giving effect to conflict of law provisions.
Any action to enforce, arising out of, or relating in any way to, any provision
of this Agreement shall only be brought in a state or Federal court located
in
the County of New York, State of New York. It shall inure to and be binding
upon
the parties hereto and their respective successors, receivers, personal
representatives, trustees and assigns.
6
(f) Words
used in the singular number may include the plural and the plural may include
the singular. The section headings appearing in this instrument have been
inserted for convenience only and shall be given no substantive meaning or
significance whatsoever in construing the terms and conditions of this
Agreement.
(g) The
terms
of this Agreement may be altered, amended, modified or revoked only by an
instrument in writing signed by all the parties hereto.
(h) If
one or
more of the provisions hereof shall for any reason be held to be invalid,
illegal or unenforceable in any respect under applicable law, such invalidity,
illegality or unenforceability shall not affect any other provisions hereof
and
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.
(i) This
Agreement may be executed in one or more counterparts, each of which so executed
shall be deemed to be an original; but such counterparts shall together
constitute one and the same instrument.
[THE
REMAINDER OF THIS PAGE IS LEFT BLANK INTENTIONALLY]
7
COUNTERPART
SIGNATURE PAGE TO ESCROW AGREEMENT, DATED MARCH ___, 2005
IN
WITNESS WHEREOF,
the
parties have executed and delivered this Agreement as of the date first above
written.
RECIPIENTS:
_____________________________________
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:
8
COUNTERPART
SIGNATURE PAGE TO ESCROW AGREEMENT, DATED MARCH ___, 2005
IN
WITNESS WHEREOF,
the
parties have executed and delivered this Agreement as of the date first above
written.
COMPANY:
GOLDSPRING,
INC.
By:
_____________________________________
Name:
Its:
ESCROW
AGENT:
XXXXX
& SCHLOSS LLP
By:
_____________________________________
Name:
Its:
9
SCHEDULE
A
List
of Recipients
|
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
|
