SECURITY AGREEMENT
THIS
SECURITY AGREEMENT
(this
“Agreement”),
is
made as of July 15, 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 “Obligor”
or
“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 loan agreement (the
“Loan
Agreement”)
with
the Secured Parties, pursuant to which the Secured Parties are lending to
the
Company an aggregate of One Million Two Hundred Thousand ($1,200,000) Dollars
(the “Loan”),
and
the Company is issuing promissory notes to the Secured Parties in the aggregate
original principal amount up to $1,200,000 (the “Note”),
at an
original issue discount of thirty-three and one-third (33.3%) percent (i.e.,
the
amount paid is 33.3% less than the principal amount of the Note issued);
and
WHEREAS,
in order to induce the Secured Parties to make the Loan, 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 them a first priority security interest
(subject only to an existing security interest the Company granted to Xxxxxxxxx
Trust (the “Xxxxxxxxx
Interest”)
and
the security interest previously granted to a group of investors on March
31,
2005, of which the Secured Parties hereunder were a part (the “Winfield
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 Loan Agreement and
the Note.
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. Each
capitalized term used herein, and not otherwise defined, shall have the meaning
ascribed thereto in the Loan Agreement.
(a) “Collateral”
means
the collateral in which the Secured Parties is granted a first priority security
interest by this Agreement (subject only to the Xxxxxxxxx Interest and Winfield
Interest) 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 Obligor, including, without limitations, 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 Obligor’s businesses and all improvements thereto
(collectively, the “Equipment”);
and
(ii) All
Inventory of the Obligor; and
(iii) All
of
the Obligor’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 Obligor 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 Obligor’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 Obligor’s obligations under this Agreement, the Loan Agreement and
the Note, 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 make the Loan 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
Obligor hereby, unconditionally and irrevocably, pledges, grants and
hypothecates to the Secured Parties, a continuing first priority security
interest (subject only to the Xxxxxxxxx Interest and Winfield 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 Obligor's right, title and interest of whatsoever kind and nature
in
and to the Collateral (the “Security
Interest”).
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3. Representations,
Warranties, Covenants and Agreements of the Obligor.
The
Obligor represents and warrants to, and covenants and agrees with, the Secured
Parties as follows:
(a) The
Obligor has the requisite corporate power and authority to enter into this
Agreement and otherwise to carry out its obligations hereunder. The execution,
delivery and performance by the Obligor of this Agreement and the filings
contemplated herein have been duly authorized by all necessary action on
the
part of the Obligor and no further action is required by the Obligor. This
Agreement constitutes a legal, valid and binding obligation of the Obligor
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
Obligor 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
A
attached
hereto;
(c) Except
as
to those liens existing as of the date hereof that were disclosed to the
Secured
Parties by the Obligor and are set forth on the attached Schedule
B
(the
“Permitted
Liens”),
the
Obligor is the sole owner of the Collateral (except for non-exclusive licenses
granted by the Obligor 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
Obligor 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 Obligor’s use of any Collateral
violates the rights of any third party. There has been no adverse decision
to
the Obligor’s claim of ownership rights in or exclusive rights to use the
Collateral in any jurisdiction or to the Obligor'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 Obligor, threatened
before
any court, judicial body, administrative or regulatory agency, arbitrator
or
other governmental authority.
(e) The
Obligor 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.
3
(f) This
Agreement creates in favor of the Secured Parties a valid first priority
security interest (subject only to the Xxxxxxxxx Interest and the Winfield
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 security interest in such Collateral (subject only
to the
Xxxxxxxxx Interest and the Winfield Interest). Except for the filing of
financing statements on Form-1 under the UCC with the jurisdictions indicated
on
Schedule
C,
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 Obligor of, or the effectiveness of, the Security Interest granted
hereby
or for the execution, delivery and performance of this Agreement by the Obligor
or (ii) for the perfection of or exercise by the Secured Parties of its rights
and remedies hereunder.
(g) The
Obligor hereby irrevocably authorizes the Secured Parties at any time and
from
time to time to file in any Uniform Commercial Code jurisdiction any initial
financing statements and amendments thereto that (a) indicate the Collateral
regardless of whether any particular asset comprised in the Collateral falls
within the scope of Article 9 of the Uniform Commercial Code of the State
of New
York as amended from time to time (“NYUCC”),
or
any other Uniform Commercial Code jurisdiction; and (b) contain any other
information required by part 5 of Article 9 of the NYUCC for the sufficiency
or
filing office acceptance of any financing statement or amendment, including
whether the Obligor is an organization, the type of organization and any
organization identification number issued to the Obligor. The Obligor agrees
to
furnish any such information to the Secured Parties promptly upon request.
The
Obligor also ratifies its authorization for the Secured Parties to have filed
in
any Uniform Commercial Code jurisdiction any like initial financing statements
or amendments thereto if filed prior to the date hereof with respect to the
Collateral.
(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 Obligor is a party or by the Obligor is bound. No consent (including,
without limitation, from stockholders or creditors of the Obligor) is required
for the Obligor to enter into and perform its obligations
hereunder.
(i) The
Obligor 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 Obligor hereby
agrees
to defend the same against any and all persons. The Obligor shall safeguard
and
protect all Collateral for the account of the Secured Parties. At the request
of
the Secured Parties, the Obligor will pay the cost of filing one or more
financing statements pursuant to the UCC (or any other applicable statute)
in
form reasonably satisfactory to the Secured Parties 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 Obligor shall pay all fees,
taxes
and other amounts necessary to maintain the Collateral and the Security Interest
hereunder, and the Obligor 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
Obligor will not transfer, pledge, hypothecate, encumber, license (except
for
non-exclusive licenses granted by the Obligor 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
Obligor 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
Obligor 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's
security interest therein.
(m) The
Obligor 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
Obligor shall permit the Secured Parties and its 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
Obligor 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
Obligor 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
Obligor 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 Obligor with respect to the Collateral is accurate and
complete in all material respects as of the date furnished.
4. Defaults.
The
following events shall be “Events
of Default”:
5
(a) A
breach
by the Obligor of its material obligations under the Loan Agreement and failure
to cure such breach for ten (10) days after receipt by the Obligor of notice
of
such breach from the Secured Parties;
(b) Any
representation or warranty of the Obligor in this Agreement shall prove to
have
been incorrect in any material respect when made; and
(c) The
material failure by the Obligor to observe or perform any of its material
obligations hereunder for ten (10) days after receipt by the Obligor 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 Obligor
shall, upon receipt by it of any revenue, income or other sums subject to
the
Security Interest, whether payable pursuant to the Loan Agreement, the Note
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 Loan Agreement, 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 Obligor shall assemble the Collateral and make it available
to the
Secured Parties at places which the Secured Parties shall reasonably select,
whether at the Obligor's premises or elsewhere, and make available to the
Secured Parties, without rent, all of the Obligor’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 Obligor
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 Obligor or right of
redemption of the Obligor, 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 Obligor, 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 Obligor 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 is legally entitled, the Obligor 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 Obligor 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.
(a) All
ordinary costs and expenses incurred by any Secured Parties in collection
of the
Obligations shall be borne exclusively by the Obligor including, without
limitation, any costs, expenses, fees or disbursements incurred by outside
agencies or attorneys retained by the Secured Parties to effect collections
of
the Obligations or any Collateral securing the Obligations. 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 Parties to the Company that do not arise under the Loan Agreement
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
Obligor 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 Obligor 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 Obligor 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 Loan Agreement. Until
so
paid, any fees payable hereunder shall be added to the principal amount of
the
Note and shall bear interest at the Default Rate.
7
9. Responsibility
for Collateral.
The
Obligor assumes all liabilities and responsibility in connection with all
Collateral, and the obligations of the Obligor hereunder or under the Loan
Agreement 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 Obligor hereunder,
shall be absolute and unconditional, irrespective of: (a) any lack of validity
or enforceability of this Agreement, the Loan Agreement, or any agreement
entered into in connection with the foregoing, 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 Loan Agreement, or any
other
agreement entered into in connection with the foregoing; (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 Obligor, 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
Obligor
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 Obligor'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 Obligor 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 Obligor 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 repayment of all
amounts due the Secured Parties under the Loan Agreement. Upon such termination,
the Secured Parties, at the request and at the expense of the Obligor, will
join
in executing any termination statement with respect to any financing statement
executed and filed pursuant to this Agreement.
12. Power
of Attorney; Further Assurances.
(a) The
Obligor authorizes the Secured Parties, and does hereby make, constitute
and
appoint the Secured Parties, and the Secured Parties’ respective officers,
agents, successors or assigns with full power of substitution, as the Obligor's
true and lawful attorney-in-fact, with power, in its own name or in the name
of
the Obligor, 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 Obligor'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 and the Loan Agreement,
all as fully and effectually as the Obligor might or could do; and the Obligor
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.
8
(b) On
a
continuing basis, the Obligor 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
C,
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
Obligor hereby irrevocably appoints the Secured Parties as the Obligor's
attorney-in-fact, with full authority in the place and stead of the Obligor
and
in the name of the Obligor, 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 its sole discretion, of one or more
financing or continuation statements and amendments thereto, relative to
any of
the Collateral without the signature of the Obligor where permitted by
law.
13. Notices.
All
notices, requests, demands and other communications hereunder shall be in
writing, with copies to all the other parties hereto, and shall be deemed
to
have been duly given when (i) if delivered by hand, upon receipt, (ii) if
sent
by facsimile, upon receipt of proof of sending thereof, (iii) if sent by
nationally recognized overnight delivery service (receipt requested), the
next
business day or (iv) if mailed by first-class registered or certified mail,
return receipt requested, postage prepaid, four days after posting in the
U.S.
mails, in each case if delivered to the following addresses:
|
If
to the Obligor:
|
Goldspring,
Inc.
0000
Xxxx Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx,
XX 00000
Attention:
Chief Executive Officer
Telephone
No: (000) 000-0000
Facsimile
No: (000)
000-0000
|
9
| With copies to: |
Xxxxxxxxx
Xxxxx LLP
Attn:
Xxxxxxx X. Xxxxx, Esq.
000
Xxxx Xxxx Xxxx
Xxxx
Xxxx, XX 00000
Fax:
(000) 000-0000
|
If
to the
Secured Parties: to the address set forth immediately below such Secured
Party’s
name on the signature pages to the Loan Agreement.
| With copies to: |
Xxxxxxx
Xxxx LLP
00
X.00xx
Xxxxxx
Xxx
Xxxx, XX 00000
Attention:
Xxxxxxx X. Xxxxx, Esq.
Telephone
No: (000) 000-0000
Facsimile
No: (000) 000-0000
|
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 its 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 Parties’ rights and remedies
hereunder.
15. Miscellaneous.
(a) No
course
of dealing between the Obligor 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 the Loan Agreement 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 Loan Agreement 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.
10
(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.
(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.
11
(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 WAIVED 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.
12
IN
WITNESS WHEREOF, the parties hereto have caused this Security Agreement to
be
duly executed on the day and year first above written.
GOLDSPRING,
INC.
By:___________________________
Name:_________________________
Title:__________________________
Secured
Parties
INTERGROUP
INCORPORATED
By:___________________________
Name:
Address:_______________________
_______________________
PORTSMOUTH
SQUARE, INC.
By:___________________________
Name:
Address:_______________________
_______________________
SANTA
FE FINANCIAL CORP.
By:___________________________
Name:
Address:_______________________
_______________________
13
SCHEDULE
A
Secured
Parties
|
Name
and
Address
|
Amount
of Notes
|
|
Santa
Fe Financial Corp.
000
Xxxxxx Xxxxx
Xxx
Xxxxxxx, XX 00000
Attn.:
Xxxx X. Xxxxxxxx
|
$190,000
|
|
Portsmouth
Square, Inc.
000
Xxxxxx Xxxxx
Xxx
Xxxxxxx, XX 00000
Attn.:
Xxxx X. Xxxxxxxx
|
$340,000
|
|
The
InterGroup Corporation
000
Xxxxxx Xxxxx
Xxx
Xxxxxxx, XX 00000
Attn.:
Xxxx X. Xxxxxxxx
|
$670,000
|
|
TOTAL:
|
$1,200,000
|
14
SCHEDULE
B
Permitted
Liens
|
Name
and
Address
|
Amount
of Principal Indebtedness Remaining
|
|
Xxxxxxxxx
Trust
|
$450,000
|
|
Xxxx
X. Xxxxxxxx
000
Xxxxxx Xxxxx
Xxx
Xxxxxxx, XX 00000
|
$1,721,297
|
|
Xxxx
X. Xxxxxxxx XXX-1
000
Xxxxxx Xxxxx
Xxx
Xxxxxxx, XX 00000
Attn.:
Xxxx X. Xxxxxxxx
|
$1,147,530
|
|
Xxxx
X. Xxxxxxxx XXX-2
000
Xxxxxx Xxxxx
Xxx
Xxxxxxx, XX 00000
Attn.:
Xxxx X. Xxxxxxxx
|
$573,765
|
|
Santa
Fe Financial Corp.
000
Xxxxxx Xxxxx
Xxx
Xxxxxxx, XX 00000
Attn.:
Xxxx X. Xxxxxxxx
|
$573,765
|
|
Portsmouth
Square, Inc.
000
Xxxxxx Xxxxx
Xxx
Xxxxxxx, XX 00000
Attn.:
Xxxx X. Xxxxxxxx
|
$573,765
|
|
The
InterGroup Corporation
000
Xxxxxx Xxxxx
Xxx
Xxxxxxx, XX 00000
Attn.:
Xxxx X. Xxxxxxxx
|
$2,295,061
|
|
TOTAL:
|
$7,335,184
|
15
SCHEDULE
C
Jurisdictions
0000
Xxxx
Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx,
XX 00000
16
