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EXHIBIT 10.17
CONTRIBUTION AND ACQUISITION AGREEMENT
This CONTRIBUTION AND ACQUISITION AGREEMENT, dated as of February 3,
1999 (this "Agreement"), among COLLECTORS UNIVERSE, INC., a Delaware corporation
("CUI"), and PROFESSIONAL COIN GRADING SERVICE, INC., a Delaware corporation
(the "Company" or "PCGS"), and the individuals set forth on Exhibit A hereto,
who are all of the stockholders of the Company (each a "Stockholder" and
collectively, the "Stockholders").
RECITALS:
A. CUI has been formed, organized and capitalized under the laws of the
State of Delaware for the purposes of effecting the transactions contemplated in
this Agreement and the other agreements listed on Exhibit B hereto (the "Other
Contribution Agreements") and to conduct such other business and affairs as the
Board of Directors of CUI may from time to time find to be in the best interests
of CUI.
B. Each of the corporations or other business entities whose shares,
ownership interests or assets are being contributed to CUI pursuant to this
Agreement and or the Other Contribution Agreements (hereinafter sometimes
referred to collectively as the "Founding Companies") is engaged in the business
of marketing and selling, or providing services to, businesses that market and
sell, Collectibles (as hereinafter defined) at retail establishments, by mail
order, at trade shows or auctions or over the internet or by other means of
electronic commerce (collectively, the "Businesses" or, individually, the
"Business"). CUI intends to integrate the products and services offered by each
of the Founding Companies in order to increase their sales, achieve efficiencies
and reduce operating costs and to increase their presence and expand their sales
over the Internet.
X. XXX desires to acquire all of the capital stock of the Company, and
Stockholder desires to contribute and convey all of his or her shares of capital
stock of the Company to CUI and obtain, in exchange therefor, the number of
shares of CUI Common Stock set forth opposite his or her name on Exhibit A
hereto, all on the terms and conditions set forth herein, at or about the same
time as and in conjunction with consummation of the similar transactions under
the Other Contribution Agreements.
D. This Agreement is being entered into by the parties, and the Other
Contribution Agreements are being or have been entered into by CUI and the other
parties thereto, as part of a unified plan of contribution and exchange of stock
(the "Plan") that is intended by the parties to qualify for non-recognition
treatment under Section 351 of the Internal Revenue Code of 1986, as amended
(the "Code"). However, none of the parties to this Agreement nor any of the
parties to the Other Contribution Agreements has made or is making any
representations or warranties with respect to whether the transactions being
consummated pursuant to and as part of such Plan will comply with the
requirements of Code Section 351 or as to the consequences, under applicable
federal, state or other tax laws, of such transactions to the parties to this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, CUI, and the Company and Stockholders hereby agree as follows:
ARTICLE I
EXCHANGE OF CONSIDERATION
1.1 Contribution of Company Shares. On the terms and subject to the
conditions that are set forth in this Agreement, on the Closing Date (as
hereinafter defined), each Stockholder shall contribute, convey, assign,
transfer and deliver to CUI all of the shares of Common Stock of the Company
owned of record and beneficially by such Stockholder (his or her "Company
Shares"), free and clear of all liens,
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claims, encumbrances, pledges, options, security interests and any other adverse
interests of any kind or nature whatsoever, in exchange for the Acquisition
Consideration (as defined in Section 1.2 below).
1.2 Acquisition Consideration. On the terms and subject to the
conditions that are set forth in this Agreement, at the Closing CUI shall, as
consideration for the contribution by each Stockholder of his or her Company
Shares to CUI, issue to such Stockholder the number of validly issued, fully
paid and nonassessable shares of CUI Common Stock set forth opposite the name of
such Stockholder on Exhibit A hereto. The CUI Shares that each Stockholder will
receive pursuant to this Section 1.2 shall constitute and will sometimes be
referred to herein as the "Acquisition Consideration" or the "CUI Shares".
1.3 Closing. Subject to the satisfaction or waiver of the conditions
set forth in Article VI, the consummation of the transactions contemplated
hereby (the "Closing") shall take place at the offices of Xxxxxxxxx Xxxxx
Xxxxxxx & Xxxxx, 000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx Xxxxx, Xxxxxxxxxx
00000, on the third (3rd) business day after satisfaction or waiver of such
conditions precedent, provided, however, that, if the Closing occurs on or
before March 12, 1999, the transactions contemplated hereby shall be effective
for accounting purposes as of February 5, 1999 (the "Effective Date"). At the
Closing, Each Stockholder shall (i) surrender to CUI all of the certificates
evidencing his or her Company Shares, together with one or more stock
assignments separate from certificate, each duly endorsed in blank and with
signature guaranteed, and (ii) shall execute and deliver to CUI a Stockholders
Agreement substantially in the form of Exhibit C hereto (the "Stockholders
Agreement"). In exchange therefor, CUI shall deliver to each such Stockholder a
certificate evidencing the CUI Shares constituting such Stockholder's
Acquisition Consideration, issued in the name of such Stockholder The parties
also shall execute and deliver the additional documents and instruments listed
on Exhibit D hereto (the "Closing Documents").
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND STOCKHOLDERS
The Company and the Stockholders hereby jointly and severally represent
and warrant to CUI that, except as set forth in the written disclosure schedule
delivered on or prior to the date hereof by the Company to CUI that is arranged
in paragraphs corresponding to the numbered and lettered paragraphs contained in
this Article II (the "Company Disclosure Schedule"):
2.1 Organization and Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and it has the requisite corporate power and authority and is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, consents, certificates, approvals and orders necessary to own, lease
and operate the properties it purports to own, and to operate or lease and to
carry on its business as it is now being conducted, except where the failure to
be so organized, existing and in good standing or to have such power, authority
and Approvals would not have a Material Adverse Effect (as hereinafter defined).
The Company is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
its properties owned, leased or operated by it or the nature of its activities
make such qualification or licensing necessary, except for any such failure to
be so duly qualified or licensed and in good standing that would not have a
Material Adverse Effect. Except as set forth in Section 2.1 of the Company
Disclosure Schedule, the Company does not directly or indirectly own any
ownership, equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for, any equity or similar interest in, any
corporation, limited liability company, partnership, joint venture or other
business association or entity. The term "Material Adverse Effect," when used in
connection with the Company, means any change, effect or circumstance that is
materially adverse to the business, assets, financial condition, results of
operations or prospects of the Company, other than any
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such changes, circumstances or effects that are set forth or described in the
Company Disclosure Schedule.
2.2 Certificate of Incorporation and By-Laws. Stockholders have
heretofore furnished to CUI a complete and correct copy of its Certificate of
Incorporation and By-Laws, as amended to date. Such Certificate of Incorporation
and By-Laws are in full force and effect. The Company is not in violation of any
of the provisions of its Articles of Incorporation or By-Laws.
2.3 Capitalization.
(a) The authorized capital stock of the Company consists of
(i) _____ shares of Company Common Stock, par value $0.01 per share. Of the
authorized Company Shares, a total of ____ Company Shares are issued and
outstanding , and all of such Company Shares were validly issued and are fully
paid and nonassessable. The Company is not authorized to issue or sell and has
not issued or sold any shares of capital stock other than shares of Common
Stock.
(b) Except as otherwise set forth in Section 2.3 of the
Company Disclosure Schedule there are no shares of Common Stock held in treasury
or reserved for future issuance pursuant to stock options, warrants or other
rights to acquire, by purchase, exchange conversion or otherwise, any shares of
Common Stock of the Company. There are no options, warrants or other rights, and
there are no agreements, arrangements or commitments of any character relating
to the issued or unissued capital stock of the Company or obligating the Company
to issue or sell any shares of capital stock of, or other equity interests in,
the Company.
(c) There are no obligations, contingent or otherwise, of the
Company to repurchase, redeem or otherwise acquire any shares of Company Common
Stock or to provide funds to or make any investment (in the form of a loan,
capital contribution or otherwise) in any business entity.
2.4 Authority Relative to this Agreement.
(a) The Company has all necessary corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate and stockholder action, and no other
corporate or stockholder proceedings or actions are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. The Board of
Directors of the Company has determined that it is advisable and in the best
interest of the Company's stockholders for the Company to enter into this
Agreement and to consummate the transactions contemplated hereby.
(b) This Agreement has been duly and validly executed and
delivered by the Company and, assuming due authorization, execution and delivery
by CUI, as applicable, constitutes a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
the enforceability thereof may be subject to or limited by (i) bankruptcy,
insolvency, reorganization, arrangement, moratorium, or other similar laws
relating to or affecting rights of creditors, and (ii) general equitable
principles, regardless of whether the issue of enforceability is considered in a
proceeding in equity or at law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
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Each Stockholders, severally and not jointly, hereby represent and
warrant to CUI that:
3.1 Authority and Capacity. Such Stockholder has the full legal right
and capacity to execute and deliver, and to perform his or her obligations
under, and has duly executed and delivered, this Agreement with the intent to be
legally bound hereby. This Agreement constitutes, and when executed and
delivered by such Stockholder, the Stockholders Agreement and any
Non-Competition Agreement (as hereinafter defined) which, pursuant to Section
5.6 hereof, such Stockholder has agreed to execute and deliver, will constitute,
valid and legally binding obligations of such Stockholder that are enforceable
against such Stockholder in accordance with their respective terms, except as
such enforceability may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting creditors' rights and by general principles of
equity relating to the availability of equitable remedies (regardless of whether
any such agreements are sought to be enforced in a proceeding at law or in
equity). Such Stockholder is not obligated to obtain any consent or approval of
any other person (other than of his or her spouse, if any) in connection with
the execution and delivery of this Agreement or the other Agreements that the
Stockholder is entering into pursuant hereto (the "Additional Agreements") or
the consummation of the transactions contemplated hereby or thereby. The
execution and delivery of this Agreement and the Additional Agreements and the
consummation by such Stockholder of the transactions contemplated hereby or
thereby will not violate, or constitute a breach or default under or cause the
acceleration of any obligation or liability under any contract, promissory note,
mortgage, lease, license, permit, writ, decree or other instrument or agreement
to which such Stockholder is a party or is subject.
3.2 The Company Shares. Such Stockholder is the record and beneficial
owner of, and has and on the Closing Date will transfer and convey to CUI, good
and marketable title to, the shares of Company Common Stock set forth opposite
his or her name on Exhibit A hereto, free and clear of any and all liens,
claims, encumbrances, pledges, security interests, options, rights of first
refusal, community property interests, restrictions and any other adverse
interests of any kind or nature whatsoever, other than restrictions on the
transferability under the federal securities laws which, however, are not an
impediment to consummation of the transactions contemplated hereby. Such
Stockholder has not sold, transferred, conveyed, assigned, hypothecated, or
granted any security interest in or pledged, or granted any option or right
entitling anyone to acquire, any of the Company Shares owned by him or her, and
has not entered into nor is he or she a party to or bound by any agreement,
commitment or understanding (written or oral) to do any of the foregoing. The
Company Shares owned by such Stockholder are not subject to any liabilities and
no liabilities will arise as a result of or in connection with the consummation
by such Stockholder of the transactions contemplated hereby.
3.3 Securities Law Compliance. Each Stockholder represents and warrants
that:
(a) He or she has been advised and understands and agrees that
the CUI Shares will not be registered under the Securities Act of 1933, as
amended (the "1933 Act"), nor qualified under any state securities laws, on the
ground (among others) that no distribution or public offering of the CUI Shares
is to be effected in connection with the transactions contemplated herein and in
issuing the CUI Shares to such Stockholder, CUI is relying on the accuracy and
completeness of the representations and warranties of such Stockholder set forth
in this Section 3.3.
(b) He or she is acquiring the CUI Shares for his or her own
account, and not as a nominee or agent for any other persons or entities, and
for investment and not with a view to distribution or resale thereof.
(c) He or she acknowledges that he or she has been informed
and understands that no public market for the CUI Shares exists and that there
can be no assurance that any such market may develop or exist in the future and,
even if a public market does develop, that the CUI Shares may not be sold or
transferred except in compliance with the 1933 Act or any exemption thereunder
and there is no
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assurance that any exemption from registration, including Rule 144 under the
1933 Act will become available to permit resales of the CUI Shares.
(d) He or she has or has been furnished with such information
regarding CUI and the CUI Shares as he or she has requested of CUI and has had
an opportunity to ask questions of the officers of CUI regarding, and to become
informed about, CUI and its business and its consolidated financial condition
and results of operations.
(e) Such Stockholder is an "Accredited Investor" as such term
is defined in Regulation D under the 1933 Act.
(f) Such Stockholder acknowledges and agrees that (i) until
his or her CUI Shares become eligible for resale under Rule 144(k) under the
1933 Act, any proposed sale or other transfer or disposition of any of the CUI
Shares, other than pursuant to an effective registration statement under the
1933 Act, may not be made unless and until such Stockholder has furnished to CUI
an opinion of counsel, reasonably acceptable to CUI and its counsel, to the
effect that the proposed sale or other transfer or disposition is exempt from
registration under the 1933 Act, and (ii) the CUI Shares will be subject to the
Stockholders Agreement referred to in Section 1.4 hereof and, until such
Stockholders Agreement has been terminated (A) no sale or other disposition of
the CUI Shares may be made except in compliance therewith and (B) the CUI Shares
may be required to be sold in one or more transactions involving sales of shares
of CUI initiated by certain other of the CUI Stockholders, all as more fully
provided in the Stockholders Agreement. The Stockholder has read and understands
the Stockholders Agreement.
(g) Such Stockholder acknowledges and agrees that the
certificate representing the CUI Shares shall contain restrictive legends in the
forms set forth in the form of Stockholders Agreement attached hereto as Exhibit
C or restrictive legends that are substantially similar thereto.
3.4 Acknowledgements and Agreements Regarding CUI Representations. Each
Stockholder acknowledges and agrees that (a) CUI has not made, and is not
making, any representations or warranties to such Stockholder with respect to
(i) the federal, state or local income or other tax consequences to such
Stockholder of his or her consummation of the transactions contemplated hereby,
or (ii) the future performance of CUI; and (b) in entering into this Agreement,
and the Additional Agreements, each such Stockholder is not relying on any
statements or representations or warranties of CUI, or any representations or
warranties made or purported to have been made by any officer, director,
stockholder, employee or agent of CUI, other than the express representations
and warranties of CUI contained in this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF XXX
XXX hereby represents and warrants to each of the Stockholders that,
except as set forth in the written disclosure schedule delivered on or prior to
the date hereof by CUI to the Company that is arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this Article
IV (the "CUI Disclosure Schedule"):
4.1 Organization and Qualification; Subsidiaries. CUI is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite corporate power and
authority to own, lease and operate the properties it purports to own, and to
operate or lease and to carry on its business as it is now being conducted,
except where the failure to be so organized, existing and in good standing or to
have such power, authority and Approvals would not have a Material Adverse
Effect (as hereinafter defined) on CUI. CUI is duly qualified or licensed as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned, leased or operated by
it or the nature of its activities makes such qualification or
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licensing necessary, except for such failures to be so duly qualified or
licensed and in good standing that would not have a Material Adverse Effect. The
term "Material Adverse Effect," when used in connection with the CUI or any of
its subsidiaries, means any change, effect or circumstance that is materially
adverse to the business, assets, financial condition, results of operations or
prospects of the CUI and its subsidiaries, taken as a whole, other than any such
changes, circumstances or effects that are set forth or described in the CUI
Disclosure Schedule.
4.2 Certificate of Incorporation and By-Laws. CUI has heretofore
furnished to the Stockholders a complete and correct copy of its Certificate of
Incorporation and By-Laws, as amended to date. Such Certificate of Incorporation
and By-Laws are in full force and effect. CUI is not in violation of any of the
provisions of Certificate of Incorporation or By-Laws.
4.3 Capitalization. As of the date hereof, the authorized capital stock
of CUI consists of 30,000,000 shares of Common Stock, par value $.001 per share.
On consummation of the transactions contemplated by this Agreement and the Other
Contributions Agreements, there will be (i) a total of 19,000,000 fully paid and
nonassessable shares of Common Stock that will be issued and outstanding, which
will include the CUI Shares being issued under this Agreement; and (ii)
3,250,000 shares of Common Stock reserved for issuance on the exercise of stock
options (either granted or to be granted in the future). Except as set forth in
Section 4.3 of the CUI Disclosure Schedule, as of the date of hereof there are
no options, warrants or other rights, agreements, arrangements or commitments of
any character relating to the issued or unissued capital stock of CUI or
obligating CUI to issue or sell any shares of capital stock of, or other equity
interests in, CUI. There are no obligations, contingent or otherwise, of CUI to
repurchase, redeem or otherwise acquire any of the capital stock of CUI.
4.4 Power and Authority. CUI has all necessary corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by CUI and the consummation by CUI of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of CUI, and no other corporate
proceedings on the part of CUI are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by CUI and, assuming due authorization,
execution and delivery by the Company and Stockholders, constitutes a legal,
valid and binding obligation of CUI enforceable against it in accordance with
its terms, except as the enforceability thereof may be subject to or limited by
(i) bankruptcy, insolvency, reorganization, arrangement, moratorium, or other
similar laws relating to or affecting rights of creditors, and (ii) general
equitable principles, regardless of whether the issue of enforceability is
considered in a proceeding in equity or at law.
ARTICLE V
ACTIONS TO BE TAKEN PENDING AND AFTER THE CLOSING
5.1 Prohibited Actions. Between the date hereof and the earlier of the
consumation of the Closing or termination of this Agreement, the Company and
each of the Stockholders agree not to take any action which they know, or
reasonably should have known (i) would make any of their respective
representations or warranties contained in this Agreement untrue or incorrect,
or (ii) would prevent or interfere with the performance by the Company or such
Stockholder of any of their respective covenants contained in this Agreement.
Each Stockholder also covenants and agrees that he or she will not grant any
options or rights to acquire, or pledge or permit the imposition of any liens or
encumbrances on or hypothecate, any of such Stockholder's Company Shares and he
or she will not enter into any agreement or understanding, written or oral, that
provides therefor.
5.2 Access to Information. During the period from the date hereof and
continuing until the earlier of the completion of the Closing or termination of
this Agreement, each of the Company and CUI, upon reasonable notice, and subject
to the provisions of Section 5.8 hereof, shall each (i) afford to the
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officers, employees, accountants, counsel and other representatives of the
other, reasonable access, during the period between the date hereof and
continuing until the earlier of the Closing or termination of this Agreement, to
all its properties, books, contract, commitments and records (ii) furnish
promptly to the other all information concerning its business, properties and
personnel as such other party may reasonably request, and (iii) make available
to the other the appropriate individuals (including attorneys, accountants and
other professionals) for discussion of the other's business, properties and
personnel as either CUI or the Company may reasonably request.
5.3 Consents; Approvals. The Company, the Stockholders and CUI shall
each use their best reasonable efforts to obtain all consents, waivers,
approvals, authorizations or orders (including, without limitation, all
governmental and regulatory rulings and approvals), and the Company, the
Stockholders and CUI shall make all filings (including, without limitation, all
filings with governmental or regulatory agencies) required in connection with
the authorization, execution and delivery of this Agreement by the Company, the
Stockholders and CUI and the consummation by them of the transactions
contemplated hereby. The Company, the Stockholders and CUI shall furnish all
information required to be included in any applications or other filings to be
made pursuant to the rules and regulations of any governmental body in
connection with the transactions contemplated by this Agreement.
5.4 Notification of Certain Matters. The Company or the Stockholders
shall give prompt notice to CUI, and CUI shall give prompt notice to the Company
of (i) the occurrence or nonoccurrence of any event which would be likely to
cause any representation or warranty made by such party in this Agreement to be
materially untrue or inaccurate, or (ii) any failure of the Company, the
Stockholders or CUI, as the case may be, materially to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section shall not limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
5.5 Non-Competition and Employment Agreements. Each of the Stockholders
named on Exhibit E hereto shall execute, and deliver to CUI at the Closing,
Non-Competition Agreements substantially in the form of Exhibit F hereto (the
"Non-Competition Agreements"). At the Closing, CUI shall assume any employment
agreement that may exist between the Company and any officer thereof.
5.6 Option Plan. Upon consummation of the Closing, CUI shall assume the
Company's Employee Stock Option Plan (the "Plan") and each stock option that is
outstanding under the Plan as of the Closing Date, and entitles the option
holder to acquire Company Shares now or in the future ("Company Options"). Upon
such assumption, each Company Option shall automatically be converted into an
option (a "CUI Option") entitling the holder of such Company Option (the
"Optionee") to purchase, on the terms set forth in the Option Agreement
evidencing such Company Option (a "Company Option Agreement") a number of shares
of Common Stock of CUI ("CUI Option Shares") that is equal to the number of
shares of Common Stock of CUI that the option holder would have received
pursuant to this Agreement had he exercised such Company Options in their
entirety to purchase Company Shares immediately prior to the date hereof and had
been a party to this Agreement. Promptly following the Closing, CUI shall
execute and deliver to each such Optionee an Option Agreement, substantially
identical to the Company Option Agreement, entitling him or her to purchase such
CUI Option Shares at an option exercise price per share that is equal to the
number that, when multiplied by the total number of CUI Option Shares the
Optionee has become entitled to purchase by reason of the provisions hereof and
of the provisions of the Company Plan, would be equal to the aggregate option
exercise price that such Optionee would have been required to pay if he had
exercised all of the Company Options immediately prior to the consummation of
the transactions contemplated hereby.
5.7 Further Action. On the terms and subject to the conditions hereof,
each of the parties hereto shall use all reasonable efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, all other things
necessary, proper or advisable to consummate and make effective as promptly as
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practicable the transactions contemplated by this Agreement, to obtain in a
timely manner all necessary waivers, consents and approvals and to effect all
necessary registrations and filings, and otherwise to satisfy or cause to be
satisfied all conditions precedent to its obligations under this Agreement. From
and after the Closing, each party shall take such actions and execute such
documents and instruments as any other party may reasonably request to better
evidence or effectuate the transactions contemplated by this Agreement or the
Exhibits hereto.
5.8 Confidential Information. Each party acknowledges that it or any of
its officers, directors, managers, employees, agents or advisors
("Representatives") may be given, by one of the other parties hereto (a
"disclosing party") or any of such disclosing party's Representatives, access to
various items of proprietary and confidential information of the disclosing
party in the course of investigations and negotiations prior to Closing. Each
party hereto who is furnished or given access to the confidential information of
a disclosing party (a "receiving party") agrees that such confidential
information shall be kept strictly confidential by the receiving party and by
its Representatives and shall not be used for any purpose other than to
facilitate the consummation of the transactions contemplated herein.
Confidential information shall include any proprietary business or other
information which is delivered (orally or in writing) or to which access is
given by a disclosing party or any of its Representatives to the receiving party
or any of its Representatives, and any such information that is included in or
incorporated into any notes, analyses, memoranda, projections or other documents
that are prepared by the receiving party or any of its Representatives, unless
such information (a) is already of public knowledge, or (b) becomes of public
knowledge through no fault, action or inaction of the receiving party or its
Representatives, or (c) is demonstrated convincingly by the receiving party to
have been known by the receiving party, or any of its Representatives, prior to
the disclosure of such information by the disclosing party to the receiving
party, unless such knowledge was acquired from a person who the receiving party
or its Representatives knew or reasonably should have known was subject, at the
time of such disclosure, to a fiduciary or other duty of non-disclosure to the
disclosing party. Except as permitted by Section 5.8, no party hereto, nor its
respective Representatives, shall intentionally disclose any confidential
information of any of the other parties to any third person; provided, however,
that such information may be disclosed (i) with the written consent of the other
parties hereto, (ii) in applications or requests required to be made to obtain
licenses, permits, approvals or consents needed to consummate the transactions
contemplated herein, (iii) to the professional advisors of each party hereto who
need to know such information in connection with the consummation of the
transactions contemplated hereby, or (iv) pursuant to court order or subpoena,
provided, however, that if any receiving party or any of its Representatives is
served with a court order or subpoena that would require the disclosure of any
of the confidential information of a disclosing party, the receiving party or
such Representative so served (as the case may be) shall promptly, but in any
event within three (3) days thereafter, notify the disclosing party thereof and
shall provide reasonable cooperation, at the disclosing party's expense, with
any efforts that the disclosing party may undertake to quash such court order or
subpoena or obtain a protective order with respect to the disclosure and use of
such confidential information. The restrictions and obligations contained in
this Section 5.8 shall survive any termination of this Agreement; provided,
however, that, if the transactions contemplated hereby are consummated, the
obligations of CUI and any subsidiaries thereof under this Section 5.8 shall
terminate, but all of the obligations of the Company and Stockholders under this
Section 5.8 shall survive and shall continue in full force and effect at all
times after the Closing.
5.9 Certain Consents and Agreements of Stockholders. By executing this
Agreement, each Stockholder:
(a) Consents hereby to the approval and adoption of the
amendment, set forth in Exhibit G to this Agreement, to the Certificate of
Incorporation of PCGS, which provides that Article V of the Certificate of
Incorporation, which limits the number of record stockholders that the Company
may have to 30 and requires the Company to maintain its status as an "S"
corporation for federal income tax purposes, be deleted in its entirety from the
Certificate of Incorporation.
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(b) Consents to the termination of the Company status as an
"S" corporation for federal income tax purposes that will result from
consummation of the transactions contemplated by this Agreement.
(c) Acknowledges and agrees that, (i) except as such
Stockholder sets forth otherwise on a Disclosure Schedule addressed and
delivered to CUI, and signed and dated by such Stockholder, on the date of this
Agreement (the "Stockholder's Disclosure Schedule"), the number of shares of
Common Stock of PCGS set forth opposite the name of such Stockholder on Exhibit
A hereto is the total number of shares of PCGS Common Stock owned, of record or
beneficially, by such Stockholder and the Stockholder does not have any options
or rights to purchase or otherwise acquire any additional shares of PCGS Common
Stock either from PCGS or from any other Stockholder of PCGS; and (ii) except
for compensation that is payable to him or her for services rendered as an
employee of PCGS or rights under the Option Agreements set forth in Section 2.3
of the Company Disclosure Schedule, such Stockholder does not have any claims or
causes of action, whether asserted or unasserted, against PCGS, or any of its
officers or directors, arising out of any transactions that may have occurred
between such Stockholder and PCGS or such Stockholder and any officer or
director of PCGS, either in his or her capacity as such or in his or her
individual capacity, relating in any way to PCGS or its business or to shares of
stock of PCGS or arising out of the management or conduct of PCGS' businesses.
5.10 Releases.
(a) Each Stockholder hereby irrevocably and unconditionally
releases, acquits and forever discharges PCGS and each of its directors and
executive officers, in the capacity as directors or officers and also in their
individual capacities, from any and all claims, actions, charges, complaints,
causes of action, rights, damages (including attorneys' fees and costs),
demands, debts, or accountings of any nature whatsoever, known or unknown,
suspected or unsuspected, whether statutory or common law, which such they may
have against each other based any transactions that have taken place prior to
the date hereof between such Stockholder and PCGS or such Stockholder and any
officer or director of PCGS involving the sale, transfer or other disposition of
any shares of Common Stock of PCGS by such Stockholder to PCGS or any officer or
director thereof (collectively, the "Released Claims").
(b) WAIVER OF CIVIL CODE SECTION 1542: Each Stockholder
expressly waives and relinquishes any and all rights which he or she may have
under the provisions of Section 1542 of the California Civil Code, pertaining or
relating solely to the Released Claims. Section 1542 of the California Civil
Code reads as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Obligations of Each Party to Consummate Transactions.
The performance by each party of its respective obligations under this Agreement
shall be subject to the satisfaction, at or prior to the Closing Date, of each
of the following conditions unless waived in writing by such party:
(a) Absence of Injunctions or Restraints; Illegality. No
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the transactions contemplated hereby
shall
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be in effect, nor shall any proceeding brought by any administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign, seeking any of the foregoing be pending; and there shall not be any
action taken, or any statute, rule, regulation or order enacted, entered,
enforced or deemed applicable to the transactions contemplated hereby which
makes their consummation illegal.
(b) Governmental Actions. There shall not have been
instituted, pending or threatened, in writing, any action or proceeding (or any
investigation or other inquiry that might result in such an action or
proceeding) by any governmental authority or administrative agency before any
governmental authority, administrative agency or court of competent
jurisdiction, nor shall there be in effect any judgment, decree or order of any
governmental authority, administrative agency or court of competent
jurisdiction, in either case, seeking to prohibit or limit CUI, following the
Closing, from exercising any of the material rights and privileges pertaining to
its ownership of the Company or the ownership or conduct of its business.
(c) Consents Obtained. All material consents, waivers,
approvals, authorizations or orders required to be obtained by CUI or the
Company or any of the Stockholders for the authorization, execution and delivery
of this Agreement and the consummation by each such party of the transactions
contemplated hereby shall have been obtained by CUI, the Company or the
Stockholders (as the case may be), except where the failure to receive such
consents, waivers, approvals, authorizations or orders could not reasonably be
expected to have a Material Adverse Effect on the Business or CUI;
6.2 Additional Conditions to Obligations of CUI. The obligations of CUI
to consummate its acquisition of the Business and the Contributed Assets and to
perform its other obligations under this Agreement also are subject to the
following conditions:
(a) Accuracy of Representations and Warranties. The
representations and warranties of the Company and each Stockholder contained in
this Agreement shall be true and correct in all material respects on and as of
the Closing Date, with the same force and effect as if made on and as of the
Closing Date, except for (i) changes contemplated by this Agreement or by the
Company Disclosure Schedule, and (ii) those representations and warranties which
address matters only as of a particular date (which shall have been true and
correct as of such date, and CUI shall have received a certificate to such
effect signed by the President of the Company and by each Stockholder.
(b) Performance of Covenants. The Company and each Stockholder
shall have performed or complied in all material respects with all agreements
and covenants required by this Agreement to be performed or complied with by it
or him or her (as the case may be) on or prior to the Closing Date, including
the execution and delivery by each Stockholder of the Stockholders Agreement and
the execution and delivery of a Non-Competition Agreement by each of the
Stockholders named on Exhibit E hereto, and CUI shall have received a
certificate to such effect signed by the President of the Company and the
Stockholder.
(c) Consummation of Other Transactions. The transactions
contemplated by the Other Contribution Agreements shall have been consummated at
or about the same time as the Closing hereunder.
(d) Additional Instruments. CUI shall have received the
Closing Documents listed on Exhibit D hereto and such other instruments and
documents as CUI or its counsel reasonably deems to be necessary.
6.3 Additional Conditions to Obligations of the Company and
Stockholder. The obligation of the Company and Stockholder to consummate their
respective obligations under this Agreement is also subject to the following
conditions:
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(a) Accuracy of Representations and Warranties. The
representations and warranties of CUI contained in this Agreement shall be true
and correct in all material respects on and as of the Closing Date, with the
same force and effect as if made on and as of the Closing Date, except for (i)
changes contemplated by this Agreement or by the CUI Disclosure Schedule, and
(ii) those representations and warranties which address matters only as of a
particular date (which shall have been true and correct as of such date, and the
Stockholder shall have received a certificate to such effect signed by the
President of CUI.
(b) Agreements and Covenants. CUI shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the Closing
Date, and the Stockholder shall have received a certificate to such effect
signed by the President of CUI.
(c) Additional Instruments. Each Stockholder shall have
received the additional Closing Documents listed on Exhibit D hereto and such
other instruments and documents as such Stockholder or its counsel reasonably
deems to be necessary.
ARTICLE VII
TERMINATION
7.1 Termination. This Agreement may be terminated and the transactions
herein contemplated may be abandoned at any time prior to the Closing:
(a) By mutual written consent of CUI and the Company; or
(b) By CUI, if any of the conditions to its obligations set
forth in Section 6 of this Agreement shall not have been satisfied, or waived by
CUI in writing, prior to March 12, 1999;
(c) By the Company if any of the conditions set forth in
Section 6 of this Agreement to the obligations of the Company or the
Stockholders shall not have been satisfied, or waived in writing by the
Stockholders, prior to March 12, 1999;
Provided, that in each of the foregoing cases the party so terminating
is not in breach of any of its material obligations or representations or
warranties under this Agreement.
Notwithstanding anything to the contrary contained elsewhere in this Agreement,
if a party hereto has breached this Agreement (a "Breaching Party") and such
breach is of a nature that it is susceptible of cure, and the other party
determines to terminate this Agreement by reason thereof, such other party shall
give prompt written notice of such termination to the Breaching Party and such
intended termination shall not become effective provided that the Breaching
Party effectuates a cure of such breach by the earlier of (i) the 30th day
following such notice of termination or (ii) March 12, 1999.
7.2 Procedure Upon Termination. Any termination and abandonment by CUI
or the Stockholders, or both, pursuant to Section 7.1 hereof, shall be effective
on written notice thereof from the terminating party to the other parties and
upon any such termination:
(a) Each party will redeliver all documents, workpapers and
other material of any other party relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof, to the party
furnishing the same;
(b) The obligations of confidentiality set forth in Section
5.8 hereof shall continue despite such termination; and
(c) The parties shall be relieved of any obligation to
consummate the transactions contemplated hereby, but none of the parties shall
be relieved of any liability for its breach or default under this Agreement.
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ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Regardless of any due diligence or other investigation, either prior to
or after the Closing, or any verification or approval by any party hereto or by
anyone or on behalf of any party hereto, all of the representations and
warranties set forth in this Agreement or in any certificates delivered pursuant
hereto shall remain in full force and effect and shall survive the Closing until
the expiration of three (3) years from the Closing Date, except that (i) the
representations and warranties of the Company and each of the Stockholders
contained in Sections 2.3 and 2.4, the representations and warranties of the
Stockholders contained in Sections 3.1 and 3.2 and the representations and
warranties of CUI contained in Sections 4.3 and 4.4, shall survive for a period
of seven (7) years following the Closing. All covenants which by their terms
require performance or compliance following the Closing shall remain in full
force and effect and shall survive the Closing until they have been fully
performed and discharged.
ARTICLE IX
MISCELLANEOUS
9.1 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made if and when delivered personally or by overnight courier to the parties
at the addresses set forth on Exhibit H hereto or sent by electronic
transmission, with confirmation received, to the telecopy numbers specified on
that Exhibit (or at such other address or telecopy number for a party as shall
be specified by like notice).
9.2 Interpretation and Certain Definitions. This Agreement is the
result of arms'-length negotiations between the parties hereto and no provision
hereof, because of any ambiguity found to be contained therein or otherwise,
shall be construed against a party by reason of the fact that such party or its
legal counsel was the draftsman of that provision. Unless otherwise indicated
elsewhere in this Agreement, (a) the term "or" shall not be exclusive, (b) the
term "including" shall mean "including, but not limited to," and (c) the terms
"herein," "hereof," "hereto," "hereunder" and other terms similar to such terms
shall refer to this Agreement as a whole and not merely to the specific section,
subsection, paragraph or clause where such terms may appear. In addition, for
purposes of this Agreement, the term:
(a) "business day" means any day other than a day on which
banks in California are required or authorized to be closed.
(b) "Collectibles" means rare or valuable coins, stamps,
sports cards, sports memorabilia, comic books, movie posters, items autographed
by recording artists, or sports, movie, television or other celebrities,
game-used and other products or items the value of which is greater than the
customary retail price of similar items or products because they are associated
with a recording artist, or sports, movie, television or other celebrities or a
well-known event and other products or items (such as antiques) which derive
their value largely from their uniqueness or the limited quantity or
availability thereof.
(c) "control" (including the terms "controlled by" and "under
common control with") means possession, directly or indirectly or as trustee or
executor, or the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise.
(d) "person" means an individual, corporation, limited
liability company, partnership, association, trust, unincorporated organization,
other entity or group (as defined in Section 13(d)(3) of the Securities Exchange
Act of 1934).
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9.3 Amendment. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto, provided, however, the
signature of the Company shall not be required if such instrument has been
signed by Stockholders.
9.4 Waiver. At any time prior to the Closing, the Stockholders, on
behalf of the Stockholders and the Company, may with respect to CUI and CUI may
with respect to the Stockholders and the Company (i) extend the time for the
performance of any of the obligations or other acts of the other, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto by the other, or (c) waive compliance with
any of the agreements or conditions contained herein. Any such extension or
waiver shall be valid if set forth in an instrument in writing signed by the
party or parties to be bound thereby.
9.5 Headings. The section, subsection and any paragraph headings
contained herein are for the purpose of convenience only and are not intended to
define, limit or affect, and shall not be considered in connection with, the
interpretation of any of the terms or provisions of this Agreement.
9.6 Severability. If any term or other provision of this Agreement is
determined by a court of competent jurisdiction to be invalid, illegal or
incapable of being enforced by reason of any rule of law or public policy, all
other conditions and provisions of this Agreement shall nevertheless remain in
full force and effect, unless such invalidity, illegality or unenforceability
would prevent consummation of the material transactions contemplated hereby or
would have a Material Adverse Effect on the Business or CUI.
9.7 Entire Agreement. This Agreement (inclusive of the Company
Disclosure Schedule and CUI Disclosure Schedule) constitutes the entire
agreement and supersedes all prior agreements and undertakings, both oral and
written, among the parties, or any of them, with respect to the subject matter
hereof.
9.8 Assignment. This Agreement shall not be assigned voluntarily by any
of the parties nor by operation of law or otherwise.
9.9 Parties In Interest. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement, including, without limitation, by way of subrogation.
9.10 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure
or delay on the part of any party hereto in the exercise of any right hereunder
shall impair such right or be construed to be a waiver of, or acquiescence in,
any breach of any representation, warranty or agreement herein, nor shall any
single or partial exercise of any such right preclude other or further exercise
thereof or of any other right. All rights and remedies existing under this
Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
9.11 Governing Law; Jurisdiction over Legal Actions. This Agreement
shall be governed by, and construed in accordance with, the internal laws of the
State of California applicable to contracts executed and fully performed within
the State of California. In the event any party hereto is required to initiate
any legal action or proceeding to enforce its rights hereunder, such action or
proceeding shall be brought and maintained exclusively in the Superior Court for
the County of Orange, in California and each party agrees to accept, and not to
challenge, the jurisdiction of such court over the parties and the subject
matter of such action or proceeding or the convenience of the forum and to
accept and not to challenge the adequacy of service by certified or registered
mail. The prevailing party in any such action or
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proceeding shall be entitled to recover its reasonable attorneys fees and
disbursements, expert witness fees and disbursements and other costs of suit
from the non-prevailing party. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, EACH PARTY HEREBY EXPRESSLY WAIVES ITS RIGHT TO A JURY TRIAL IN ANY SUCH
ACTION OR PROCEEDING, IRRESPECTIVE OF WHICHEVER PARTY MAY BRING ANY SUCH ACTION
OR PROCEEDING.
9.12 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, each of CUI and the Company has caused this
Contribution and Acquisition Agreement to be executed, by its respective
officers thereunto duly authorized, and the Stockholders have executed this
Agreement, as of the date first written above.
COLLECTORS UNIVERSE, INC. PROFESSIONAL COIN GRADING SERVICE, INC
By: /s/ Xxxxx Xxxx By: /s/ Xxxxx Xxxx
--------------------------- --------------------------------
Name: Xxxxx Xxxx Name: Xxxxx Xxxx
--------------------------- --------------------------------
Title: President Title: President
--------------------------- --------------------------------
(Signatures of Stockholders follow on next page)
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STOCKHOLDERS:
/s/ Xxxxx Xxxx /s/ Xxx Xxxxxxx
------------------------------------ -------------------------------------
Xxxxx Xxxx Xxx Xxxxxxx
/s/ Xxxxxx Xxxxxx and Xxxxx Xxxxxx /s/ Xxxx Xxxxxxxxxxx
------------------------------------ -------------------------------------
Xxxxxx Xxxxxx and Xxxxx Xxxxxx Xxxx Xxxxxxxxxxx
/s/ Xxxxx Cyrkin /s/ Xxxxx Cyrkin
------------------------------------ -------------------------------------
Xxxxx Cyrkin Xxxxx Cyrkin
/s/ Q. Xxxxx Xxxxxx /s/ Xxxxxxx Xxxxx
------------------------------------ -------------------------------------
Q. Xxxxx Xxxxxx Xxxxxxx Xxxxx
/s/ Xxxx Xxxxxxxxxx /s/ Xxxxx Xxxxxx
------------------------------------ -------------------------------------
Xxxx Xxxxxxxxxx Xxxxx Xxxxxx
/s/ Xxxxxxx X. Xxxxxxxx /s/ Xxxxx X. Xxxxx
------------------------------------ -------------------------------------
Xxxxxxx X. Xxxxxxxx Xxxxx X. Xxxxx
/s/ Xxxx Xxxxx /s/ Xxxxx Xxxxxxxxx
------------------------------------ -------------------------------------
Xxxx Xxxxx Xxxxx Xxxxxxxxx
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