Exhibit 10.1
FIRST AMENDMENT TO
RENEWAL AND MODIFICATION AGREEMENT
This First Amendment to Renewal and Modification Agreement (hereafter
"First Amended Agreement") is made and entered into effective December 15, 2004
by and between SUPERIOR GALLERIES, INC., a Delaware Corporation, and Xxxxxxx
XxXxxxxx (hereafter "SUPERIOR"), and the Xxxx Xxxxxx English Living Trust
(hereafter "Trust") and amends that certain Renewal and Modification Agreement
between the parties dated September 30, 2003 (hereafter "Renewal Agreement") and
the Secured Revolving Line of Credit Agreement between the parties hereto dated
August 8, 2002 (hereafter "Line of Credit Agreement"). All terms of both the
Renewal Agreement and the Line of Credit Agreement shall be referred to herein
as the Existing Agreements. It is acknowledged and agreed that Superior
Galleries, Inc. is the successor in interest to Tangible Asset Galleries, Inc.
(hereafter "TAG") and has assumed all liabilities, obligations, and rights of
TAG under the Existing Agreements and all ancillary agreements related thereto.
It is further acknowledged and agreed that the Trust has assumed all
liabilities, obligations, and rights of Xxxx Xxxxxx English under the Existing
Agreements and all ancillary agreements thereto. Unless otherwise stated herein,
all terms and conditions of the Existing Agreements and all other agreements
between the parties shall remain in full force and be binding as between the
parties hereto. It is also acknowledged and agreed that all obligations of
Xxxxxxx XxXxxxxx under that certain Continuing Guaranty dated August 8, 2002
securing the Existing Agreements (hereafter "Continuing Guaranty") shall remain
in full force and effect and inure to the benefit of the Trust.
RECITALS
As TAG's successor in interest, SUPERIOR is presently obligated to pay
to the Trust all unpaid principal due under the Existing Agreements upon five
(5) days written demand therefore. This provision has created difficulty to
SUPERIOR in raising capital and conducting its affairs as the full amount of the
unpaid principal due (presently $2,500,000.00) must be shown on SUPERIOR'S books
and financial statements as a current debt that can be called due at any time.
To avoid this problem, it is in the best interests of SUPERIOR to extend the due
date for the unpaid principal under the Existing Agreements until January 1,
2006. Likewise, it is in the best interests of the Trust that SUPERIOR'S ability
to raise capital and expand its business be improved in order to make it more
likely that full payment of all obligations to the TRUST under the Existing
Agreements will occur. The 2002 and 2003 Financial Statements of SUPERIOR
appended to its SEC Form 10-KSB's, Note 15, indicates that SUPERIOR's ability to
continue as a going concern remains in doubt, in part due to the "on demand"
nature of the outstanding obligations owed by SUPERIOR to the TRUST under the
Existing Agreements. By entering into this First Amended Agreement, the best
interests of both SUPERIOR and the TRUST are served.
1
NOW THEREFOR, THE PARTIES AGREE AS FOLLOWS:
1.) SUPERIOR shall pay to the TRUST the total sum of Three Hundred
Thousand Dollars ($300,000.00), in three equal installments as follows:
a.) One Hundred Thousand Dollars ($100,000.00) shall be paid
on or before January 31, 2005;
b.) One Hundred Thousand Dollars ($100,000.00) shall be paid
on or before February 28, 2005; and
c.) One Hundred Thousand Dollars ($100,000.00) shall be paid
on or before March 31, 2005.
Upon receipt by the TRUST of all three payments totaling Three Hundred
Thousand Dollars ($300,000.00), the Existing Agreements shall be modified as
follows:
2.) Paragraph 1 of the Renewal Agreement shall be eliminated and
substituted into its place shall be the following:
1. THE ENTIRE UNPAID PRINCIPAL BALANCE OF THE LOANS PLUS
ACCRUED BUT UNPAID INTEREST THEREON (TOGETHER THE "OUTSTANDING
DEBT") SHALL BE DUE AND PAYABLE ON JANUARY 31, 2006.
The remaining provisions of Paragraph 1.3 of the Line of Credit
Agreement shall remain intact and enforceable.
3.) Paragraph 2 of the Renewal Agreement shall be eliminated in its
entirety and substituted into its place shall be the following:
2. SUPERIOR AGREES TO PAY INTEREST ON THE OUTSTANDING
PRINCIPAL BALANCE OF THE LOAN AMOUNT ON THE FIRST DAY OF EACH
MONTH AT A RATE OF SIX PERCENT (6%) PER ANNUM. SAID INTEREST
SHALL BE BASED ON THE OUTSTANDING PRINCIPAL BALANCE DUE AS OF
THE FIRST DAY OF EACH MONTH. THUS, ANY PRINCIPAL PAYMENTS
MADE IN ANY PRECEDING MONTH SHALL REDUCE THE OUTSTANDING
PRINCIPAL BALANCE BY THE TOTAL AMOUNT OF PRINCIPAL PAYMENTS
MADE BEFORE THE FIRST DAY OF EACH SUCCEEDING MONTH. FAILURE
OF SUPERIOR TO MAKE TIMELY PAYMENTS OF EITHER THE PRINCIPAL
PAYMENTS REFERENCED IN PARAGRAPH 1 OF THIS FIRST AMENDED
AGREEMENT OR INTEREST PAYMENTS DUE UNDER THIS PARAGRAPH WILL
CONSTITUTE AN EVENT OF DEFAULT BY SUPERIOR AND THE FULL
AMOUNT OF ALL UNPAID PRINCIPAL AND INTEREST SHALL BECOME
IMMEDIATELY DUE AND PAYABLE UPON FIVE DAYS WRITTEN DEMAND
THEREFORE BY THE TRUST.
2
All other provisions of the Existing Agreements, Continuing Guaranty,
and all other agreements between the parties (including any security agreements
and UCC filings) shall remain in full force and effect. Nothing in this First
Amended Agreement is intended to modify, alter, or change the terms and
conditions of the Renewal Agreement, the Line of Credit Agreement, or any other
agreement between the parties, other than what is expressly stated herein.
EXECUTED effective as of December 15, 2004.
SUPERIOR GALLERIES, INC.
BY /S/ XXXXXXX XXXXXXXX
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Xxxxxxx XxXxxxxx, President & CEO
BY /S/ XXXXXXX XXXXXXXX
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Xxxxxxx XxXxxxxx
XXXX XXXXXX ENGLISH TRUST
BY /S/ XXXXXXX X. XXXXX
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Xxxxxxx X. Xxxxx
Trustee
3
