ASSET PURCHASE AGREEMENT
BY AND BETWEEN
SELLER
SUPERIOR GALLERIES, INC.
AND
BUYER
TANGIBLE ACQUISITION II CORPORATION
_____________________________________________
DATED: JULY 6, 2001
ASSET PURCHASE AGREEMENT
This asset purchase agreement ("Agreement") dated as of JULY 6, 2001, is
between SUPERIOR GALLERIES, INC., a California corporation ("Seller") and
TANGIBLE ACQUISITION II CORPORATION, a Nevada corporation ("Buyer").
Seller is engaged in the business of operating retail auctions of memorabilia
and collectible items and buying and selling related materials by private
treaty. A substantial portion of Seller's business activities involve
auctioning and other purchasing and selling of numismatic and other collectible
coins ("Coin Assets"). Seller wishes to sell to Buyer, and Buyer wishes to
purchase from Seller the Coin Assets.
The parties therefore agree as follows:
ARTICLE 1
DEFINITIONS
When used in this agreement, the following terms have the following
meanings:
"Affiliate" means, with respect to any given Person, any other Person at the
time directly or indirectly controlling, controlled by or under common control
with that Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise.
"Code" means the Internal Revenue Code of 1986, as amended, or any successor
law, and regulations issued by the IRS pursuant thereto.
"Consent" means any approval, consent, ratification, filing, declaration,
registration, waiver, or other authorization.
"Contract" means any agreement, contract, obligation, promise, arrangement, or
undertaking that is legally binding on the parties thereto.
"Environmental Law" means any Law relating to the environment, natural
resources, or public or employee health and safety, and includes the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Sec. 9601 et seq., the Hazardous Materials Transportation Act, 49 U.S.C. Sec.
1801 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Sec. 6901 et
seq., the Clean Water Act, 33 U.S.C. Sec. 1251 et seq., the Clean Air Act, 33
U.S.C. Sec. 2601 et seq., the Toxic Substances Control Act, 15 U.S.C. Sec. 2601
et seq., the Oil Pollution Act of 1990, 33 U.S.C. Sec. 2701 et seq., and the
Occupational Safety and Health Act, 29 U.S.C. Sec. 651 et seq.
"ERISA" means the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant thereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or any
successor law, and any rules or regulations issued pursuant thereto.
"GAAP" means United States generally accepted accounting principles.
"Governmental Authority" means any (1) nation, state, county, city, town,
village, district, or other jurisdiction of any nature, (2) federal, state,
local, municipal, foreign, or other government, (3) governmental or
quasi-governmental authority of any nature (including any governmental agency,
branch, department, official, or entity and any court or other tribunal,
including an arbitral tribunal), (4) multi-national organization or body, or (5)
body exercising, or entitled to exercise, any administrative, executive,
judicial, legislative, police, regulatory, or taxing power of any nature.
"Hazardous Material" means any substance, material or waste which is regulated
under Environmental Law, including, without limitation, any material, substance
or waste that is defined as a "hazardous waste," "hazardous material," or
"hazardous substance" under any provision of Environmental Law.
"Indemnifiable Losses" means all losses, liabilities, taxes, damages,
deficiencies, obligations, fines, expenses, claims, demands, actions, suits,
proceedings, judgments or settlements, whether or not resulting from third party
claims, incurred or suffered by an indemnitee, including interest and penalties
with respect thereto and out-of-pocket expenses and reasonable attorneys' and
accountants' fees and expenses incurred in the investigation or defense of any
of the same or in asserting, preserving or enforcing any of the indemnity's
rights hereunder.
"IRS" means the United States Internal Revenue Service or any successor agency,
and, to the extent relevant, the United States Department of the Treasury.
"Law" means any federal, state, local, municipal, foreign, international,
multinational, or other administrative order, constitution, law, ordinance,
principle of common law, regulation, statute, or treaty.
"Legal Proceeding" means any judicial, administrative or arbitral action, suit,
claim, investigation or proceeding, whether at law or in equity, civil or
criminal in nature, before a Governmental Authority.
"Lien" means, with respect to the property of any Person, any claim, lien,
pledge, option, charge, easement, security interest, deed of trust, mortgage,
right-of-way, encroachment, building or use restriction, conditional sales
agreement, encumbrance or other right of any other Person, whether voluntarily
incurred or arising by operation of law, and includes, without limitation, any
agreement to give any of the foregoing in the future, and any contingent sale or
other title retention agreement or lease in the nature thereof.
"Order" means any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict of any court, arbitral tribunal, administrative agency, or
other Governmental Authority.
"Permitted Lien" means (1) any Lien for taxes that are not yet due, or (2) any
carrier's, warehouseman's, mechanic's, materialman's, repairman's, landlord's,
lessor's or similar statutory Lien incidental to the ordinary course of
business.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, trust, unincorporated organization,
governmental body or authority or any other entity.
"Release" means any release, spill, emission, leaking, pumping, pouring,
dumping, emptying, injection, deposit, disposal, discharge, dispersal, leaching,
or migration on or into the indoor or outdoor environment or into or out of any
property.
"Remedial Action" means all actions, including, without limitation, any capital
expenditures, required by any Governmental Authority to (1) clean up, remove,
treat, or in any other way address any Hazardous Material or other substance,
(2) prevent the Release or threat of Release, or minimize the further Release of
any Hazardous Material or other substance so it does not migrate or endanger or
threaten to endanger public health or welfare or the indoor or outdoor
environment, (3) perform pre-remedial studies and investigations or
post-remedial monitoring, or (4) bring facilities on any property owned,
operated or leased by Buyer and the facilities located and operations conducted
thereon into compliance with all Environmental Laws.
"Representative" means with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of that
Person, including legal counsel, accountants, and financial advisors.
"Securities Act" means the Securities Act of 1933, as amended, or any successor
law, and rules or regulations issued pursuant thereto.
ARTICLE 2
PURCHASE AND SALE
2.1 Acquired Assets
. Seller will sell to Buyer, and Buyer will purchase from Seller at
Closing (as defined in Section 8.2 herein) only those certain assets on Schedule
2.1 related to the Seller's Coin Assets free from all liens and encumbrances,
the "Acquired Assets." The Acquired Assets shall consist of Seller's rights to
the following assets:
(1) the trade names, including all domain names as used on the Internet, as
set forth on Schedule 2.1(1);
(2) all lists and other data of Seller, including but not limited to a list
of existing, potential, and prior Seller customers subject to the exclusion of
use of such list as described in Section 2.2 (10) (the "Customer List");
(3) licenses for the software used by seller in the Coin Assets, including
the license to use the Accountmate software and a copy of the proprietary
modifications made by Seller thereto ("Software Assets") subject to the
restrictions as set forth in Section 3.11. Seller acknowledges that the
Accountmate software and such proprietary modifications are material to the Coin
Assets and any impairment thereto will materially decrease the value of the Coin
Assets. Buyer shall be responsible for obtaining any licensing or other
agreement required by any software licensor required to allow the Buyer to use
such software and Seller shall provide its best efforts to assist the Buyer to
obtain such licensing. If Buyer is unable, through no fault of its own, to
obtain such licensing at a nominal expense or not at all, Seller agrees to
either pay all costs associated with the acquisition of such licensing agreement
or to indemnify the Buyer from any claims by Accountmate or any other entity
having rights to such license with respect to the use of such license by Buyer.
The failure to obtain such a license or other agreement for use by Buyer shall
not result in a breach of this Agreement;
(4) all furniture, fixtures and computers as listed on Schedule 2.1(4);
(5) the Research Coin Library which shall consist of those books which have
been used by Seller to catalogue coins or are otherwise reasonably necessary to
catalogue coins for future auctions ("Research Coin Library");
(6) all of Seller's rights under any Contract to which Seller is party as
listed on Schedule 2.1 (6) (each such contract an "Acquired Contract").
However, Buyer agrees to notify each Consignor in the Consignment Agreements
identified on Schedule 2.1(6) that the Buyer is prepared to auction the
Consignor's property at auction, but that Consignor shall have the right to
withdraw the property consigned from auction and returned to Consignor at
Consignor's option within fifteen days of such notification from Buyer to
Consignor and upon repayment of any loan advances made to Consignor.
Consignor's withdrawal of the property consigned shall not in any manner
constitute a default under this Agreement;
(7) all of Seller's rights and remedies, under warranty or otherwise,
against a manufacturer, vendor, or other Person for any defects in any Acquired
Asset;
2.2 Excluded Assets
. Seller shall retain and not sell to Buyer, and Buyer will not purchase
from Seller, including, but not limited to, the following assets (collectively,
the "Excluded Assets"):
(1) Seller's rights under this Agreement;
(2) Seller's right to the trade name "Superior Stamp," "Superior Space" and
"Superior Stamp and Space," unless set forth on Schedule 2.1(1); Buyer agrees
that it will not conduct any auctions of stamps or space-related collectibles
for a period of two years from the Closing Date (as defined in Article 8
herein).
(3) all causes of action, choses in action, and rights of recovery that
arise in connection with discharge by Seller of any liabilities or rights of
recovery or contribution in respect of any Excluded Assets;
(4) all of Seller's accounts, notes and other receivables (including
accounts receivable) relating to the Coin Assets prior to Closing, whether or
not accrued and whether or not billed (the "Accounts Receivable");
(5) all Seller's inventory;
(6) all Seller cash, bank deposits, and cash equivalents of Seller and any
proceeds thereof;
(7) all books, records, files, and other documents relating to the business
activities of Seller other than those relating to the Coin Assets and identified
in Section 2.1 above (the "Non-Coin Assets Books and Records");
(8) all office furniture and equipment unless listed on Schedule 2.1(4);
(9) all art;
(10) rights to mail to, send electronic mail to, make telephone calls to or
contact in any manner the Customer List for the specific and explicit purpose of
selling or marketing stamps or space collectibles; and
(11) all other assets not identified in Section 2.1.
2.3 Assumption of Liabilities
. Seller hereby assumes, and shall discharge when due in accordance with
their terms, all liabilities or obligations of Seller resulting from Seller's
activities in operating the Coin Assets prior to the Closing Date (as defined in
Section 8.2). However, the Buyer shall discharge all liabilities resulting from
Buyer's activities regarding the Coin Assets after the Closing Date.
2.4 Purchase Price
. The aggregate purchase price for the Acquired Assets (the "Purchase
Price") is Nine Hundred One Thousand Dollars ($901,000.00). Buyer shall pay the
Purchase price as follows:
(1) On the Closing Date, Buyer shall pay to Seller the amount of Two Hundred
Thousand Dollars ($200,000.00) ("Initial Payment").
(2) On the Closing Date, Buyer shall pay the amount of Seven Hundred One
Thousand Dollars ($701,000.00) in the form of a promissory note ("Promissory
Note") attached hereto as Exhibit 2.4.B which shall be secured by certain
collateral as defined and specified in the Security Agreement in the form
attached hereto as Exhibit 2.4.A.
2.5 Purchase Price Allocation
. The parties shall do the following:
(1) allocate the Purchase Price among the Acquired Assets in accordance with
Section 1060 of the Code and the regulations thereunder as set forth on Schedule
2.5.A; and
(2) reflect the allocation of the Purchase Price as set forth on Schedule
2.5.B on a completed Internal Revenue Service Form 8594.
2.6 Transaction Documents.
It is a condition to consummation of the transactions contemplated by
this Agreement that the parties to or signatories of the following agreements
and other documents (together with this Agreement, the "Transaction Documents")
execute and deliver them at or on the Closing Date:
(1) the Promissory Note in the form of Exhibit 2.4.B;
(2) the Security Agreement in the form of Exhibit 2.4.A and any Uniform
Commercial code ("U.C.C.") financing statements required thereunder;
(3) any deeds, assignments, certificates of title and other instruments of
transfer and conveyance as are necessary to convey to Buyer good and marketable
title to the Acquired Assets;
(4) an Assignment of the Lease (as defined below) in the form of Exhibit
3.7.A, and Sublease (as defined below) in the form of 3.7.B;
(5) document(s) to transfer the rights to any and all domain names on the
Internet on the forms prescribed by Xxxxxxxxxxxxxxxx.xxx;
(6) the Consignment Advance Loan and Security Agreement from Seller to Buyer
referred to in Section 2.7; and
(7) A Guaranty by Tangible Asset Galleries, Inc., in the form of Exhibit 9.1
and a Guaranty by Xxxxxxx XxXxxxxx in the form of Exhibit 9.2.
2.7 Consignment Advances
. Seller shall provide Buyer with loans for the purpose of making loan
advances to consignors for property consigned for auction pursuant to the terms
and conditions set forth in the Consignment Advance Loan and Security Agreement
in the form attached hereto as Exhibit 2.7. Furthermore, Seller shall advance
loans to Buyer subject to terms and conditions of the Consignment Advance Loan
and Security Agreement for the consignment loans made by Seller prior to the
Closing Date for auctions currently scheduled after the Closing Date, which
loans are listed on Schedule 2.7, the repayment of which shall be made to Seller
in accordance with the terms and conditions of the Consignment Advance Loan and
Security Agreement.
ARTICLE 3
SELLER REPRESENTATIONS
Seller represents to Buyer as of the date of this Agreement as follows:
3.1 Organization and Good Standing
. Seller is a corporation validly existing and in good standing under the
laws of its state of incorporation with the power to own all of its properties
and assets and to carry on its business as it is currently being conducted.
Seller is duly qualified to do business and is in good standing in every
jurisdiction in which the failure to be so qualified or in good standing would
have a material adverse effect.
3.2 Authorization
. Seller has the power to execute and deliver this Agreement and the other
Transaction Documents to which it is party and to consummate the transactions
contemplated hereby and thereby. Seller has obtained resolutions of its
shareholders and its board of directors which has duly authorized Seller to
execute and deliver this Agreement and perform its obligations under this
Agreement and the other Transaction Documents to which it is party, and no other
corporate proceedings of Seller are necessary with respect thereto. Assuming
that Buyer has been duly authorized as warranted in Article 4 to execute and
deliver this Agreement and the other Transaction Documents to which it is party,
this Agreement constitutes, and each of the other Transaction Documents to which
Seller is a party will constitute when executed and delivered by Seller, the
valid and binding obligation of Seller, enforceable in accordance with its
terms, except as enforceability is limited by (1) any applicable bankruptcy,
insolvency, reorganization, moratorium or similar law affecting creditors'
rights generally or (2) general principles of equity, whether considered in a
proceeding in equity or at law.
3.3 No Violations
. Seller's execution and delivery of this Agreement and performance of its
obligations under this Agreement do not (A) violate any provision of Seller's
articles of incorporation or by-laws as currently in effect, (B) conflict with,
result in a breach of, constitute a default under (or an event which, with
notice or lapse of time or both, would constitute a default under), accelerate
the performance required by, result in the creation of any Lien upon any of
Seller's properties or assets under, or create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under, any
Contract to which Seller is a party or by which any of Seller's properties or
assets are bound, or (C) violate any Law or Order currently in effect to which
Seller is subject (other than any applicable "bulk sales" laws).
3.4 Consents
. Seller shall obtain the Consent of any Person, as listed on Schedule
3.4, including the Consent of any party to any Contract to which Seller is a
party, in connection with execution and delivery of this Agreement or the other
Transaction Documents to which it is party and performance of its obligations,
except as otherwise expressly set forth in this Agreement.
3.5 Title; Absence of Liens
. Seller has good and marketable title to all of the Acquired Assets, free
and clear of any Liens, and upon consummation of the transactions contemplated
by this Agreement, Buyer will have good and marketable title to the Acquired
Assets free and clear of any Liens.
3.6 Compliance With Laws
. To Seller's knowledge, in operating the Business in the past three years
Seller has complied with all Laws and Orders applicable to the Business or the
Acquired Assets. Within the past three years Seller has not received any notice
alleging noncompliance with any Laws or Orders applicable to the Acquired
Assets, including, without limitation, those related to antitrust and trade
matters, civil rights, zoning and building codes, public health and safety,
worker health and safety and labor and nondiscrimination, and, to seller's
knowledge, no such notice has been recorded or published.
3.7 Leases
.
(a) The lease entered into on April 6, 1999, between 9478 Corporation
("Landlord") and Seller (the "Lease") for the premises located at 0000 Xxxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx (the "Leased Real Property") constitutes
the only real property leased by Seller that is used in the operation of the
Coin Assets.
(b) Seller and Buyer shall execute an Assignment of Lease of the Leased Real
Property in the form attached hereto as Exhibit 3.7.A.
(c) Seller and Buyer shall execute a sublease in the form attached hereto as
Exhibit 3.7.B (the "Sublease").
(d) Buyer shall assume all Equipment Leases for the equipment listed on
Schedule 3.7.C. Seller shall use its best efforts to obtain any consent
necessary to assume the Assignment of Lease, Sublease and all Equipment Leases.
3.8 Taxes
. Seller has filed all material tax returns required to be filed relating
to the Coin Assets and has paid all taxes relating to the Coin Assets that have
become due pursuant to those tax returns or any assessment that has become
payable, other than those amounts being diligently contested in good faith by
appropriate Legal Proceedings and against which adequate reserves are being
maintained. There is no Legal Proceeding pending, or to Seller's knowledge,
threatened with respect to taxes of Seller relating to the Coin Assets other
than normal or recurring-type audits.
3.9 Environmental Matters
. The operations of Seller are and have always been in compliance with all
applicable Environmental Laws.
(a) Neither Seller nor any of its operations are subject to any Order
or Contract respecting (1) Environmental Laws, (2) Remedial Action, (3) any
Environmental Claim, or (4) the Release or threatened Release of any Hazardous
Material.
(b) None of the operations of Seller involves the generation,
transportation, treatment, storage or disposal of Hazardous Material.
3.10 Brokers
. No broker, finder or investment advisor acted directly or indirectly as
such for Seller in connection with this Agreement or the other Transaction
Documents relating to the transactions contemplated hereby, and no broker,
finder, investment advisor or other Person is entitled to any fee or other
commission, or other remuneration, in respect thereof based in any way on any
action, agreement, arrangement or understanding taken or made by or on behalf of
Seller.
3.11 Software
. The parties hereby agree that Seller has developed proprietary
modifications related to the Accountmate software. Buyer shall not sell,
transfer, assign, convey or encumber Seller's proprietary modifications related
to the Accountmate software independent of a sale of all or a substantial
majority of the assets of Buyer, except that Buyer may license an affiliate of
the Buyer to utilize such proprietary modifications, provided that such license
restricts further licensing and prohibits any transfer, assignment or sale.
Such violation shall result in a termination of Buyer's rights in the
proprietary modifications related to the Accountmate software and such sale,
transfer, assignment, conveyance, or encumbrance shall be null and void. Seller
shall also be entitled to damages caused by any such sale, transfer or
assignment. Buyer, or any affiliate of Buyer may enhance or modify the
proprietary software at its own expense ("Enhancement"), and all such
Enhancements shall be the separate property of Buyer. Buyer shall immediately
notify Seller of any Enhancements and provide such Enhancements, without charge
or expense, to Seller. Seller shall immediately notify Buyer of any Enhancements
and provide such Enhancements, without charge or expense, to Buyer.
3.12 Confidentiality
. Seller shall not without the prior written consent of Buyer reveal or
make accessible to any Person any confidential information relating to the Coin
Assets or the Acquired Assets. For purposes of this Section 3.12, the term
"confidential information" does not include information that is already
available to the public or becomes available to the public other than by means
of a breach of this Section 3.12.
3.13 Name Change
. Seller shall file an amendment to the certificate of incorporation of
Seller with the California Department of Corporations within seven (7) days of
the Closing to change its corporate name to A-Xxxx Auction Galleries, Inc., and
provide to Buyer proof of the effective filing of such amendment immediately
upon receipt of confirmation from the State of California.
3.14 Employment Waiver
. Seller warrants that no contributions, interest or penalties are due to
the Employment Development Department from Seller. Seller shall provide a
certificate of release from the California Employment Development Department
within thirty (30) days from the date of this Agreement or indemnify Buyer from
any losses suffered as a result of Seller's failure to obtain such a
certificate;
3.15 California Franchise and Interest Tax
. Seller warrants that there are no taxes that need to be withheld under
California franchise and income tax law. Seller shall provide corporation tax
clearance certificates as of the date of this Agreement within sixty (60) days
from the date of this Agreement or indemnify Buyer from any losses suffered as a
result of Seller's failure to obtain such a certificate; and
3.16 Sales and Use Tax
. Seller warrants that it does not owe any sales and use taxes that need
to be withheld pursuant to California law. Seller shall provide a certificate
from the Board of Equalization indicating that no amount is due or a receipt
showing that all payments have been made within sixty (60) days from the date of
this Agreement or indemnify Buyer from any losses suffered as a result of
Seller's failure to obtain such a certificate or receipt.
ARTICLE 4
BUYER REPRESENTATIONS
Buyer hereby represent to Seller as follows:
4.1 Organization and Good Standing
. Buyer is a corporation validly existing and in good standing under the
laws of its jurisdiction of organization with the power to own all of its
properties and assets and to carry on its business as it is currently being
conducted.
4.2 Financial Statements.
Upon execution of this Agreement, Buyer and Guarantor, Xxxxxxx XxXxxxxx
shall have delivered or made available to Seller all financial statements of the
Buyer and Guarantor; including but not limited to income statements and balance
sheets as reasonably requested by Seller ("Financial Statements"). Buyer and
Guarantor warrant that the Financial Statements fairly present, in all material
respects, the financial position of Buyer and Guarantor, Xxxxxxx XxXxxxxx, and
the Guarantor Tangible Asset Galleries, Inc., as of the date thereof.
4.3 Authorization
. Buyer has the power to execute and deliver this Agreement and the other
Transaction Documents to which it is party and to consummate the transactions
contemplated hereby and thereby. Buyer's board of directors has duly authorized
Buyer to execute and deliver this Agreement and perform its obligations under
this Agreement and the other Transaction Documents to which it is party, and no
other corporate proceedings of Buyer are necessary with respect thereto.
Assuming that Seller has duly authorized execution and delivery of this
Agreement and the other Transaction Documents to which it is party as warranted
in Article 3, this Agreement constitutes, and each of the other Transaction
Documents to which Buyer is party will constitute when executed and delivered by
Buyer, the valid and binding obligation of Buyer, enforceable in accordance with
its terms, except as enforceability is limited by (1) any applicable bankruptcy,
insolvency, reorganization, moratorium or similar law affecting creditors'
rights generally or (2) general principles of equity, whether considered in a
proceeding in equity or at law.
4.4 No Violations
. Execution and delivery of this Agreement by each of Buyer and Buyer and
performance of its obligations under this agreement do not (A) violate any
provision of its organizational documents as currently in effect, (B) conflict
with, result in a breach of, constitute a default under (or an event which, with
notice or lapse of time or both, would constitute a default under), accelerate
the performance required by, result in the creation of any Lien upon any of its
properties or assets under, or create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under, any Contract to which
it is a party or by which any of its properties or assets are bound, or (C)
violate any Law or Order currently in effect to which it is subject (other than
any applicable "bulk sales" laws).
4.5 Consents
. If required, Buyer shall obtain the Consent of any Person, including the
Consent of any party to any Contract to which it is a party, in connection with
execution and delivery of this Agreement or the other Transaction Documents to
which it is party and performance of its obligations hereunder or thereunder.
4.6 Confidentiality
. Buyer shall not without the prior written consent of Seller reveal or
make accessible to any Person any confidential information relating to the
Business or the Acquired Assets. For purposes of this Section 4.6 the term
"confidential information" does not include information that is already
available to the public or becomes available to the public other than by means
of a breach of this Section 4.6.
4.7 Brokers
. No broker, finder or investment advisor acted directly or indirectly as
such for Buyer in connection with this Agreement or any other Transaction
Documents contemplated hereby, and no broker, finder, investment advisor or
other Person is entitled to any fee or other commission, or other remuneration,
in respect thereof based in any way on any action, agreement, arrangement or
understanding taken or made by or on behalf of Buyer.
4.8 Inspection of Books and Records
. Buyer shall permit Seller or its representatives and agents, at Seller's
expense and at reasonable times during business hours, to inspect all the files,
books, records and accounts of the Business transferred to Buyer hereunder that
Buyer has in its possession at the time of that request, as well as provide
Seller with access to, and the cooperation of, any employee having knowledge of
the information therein contained, if that inspection, access and cooperation
would serve a reasonable purpose, including without limitation (1) preparation
for Legal Proceedings to which Seller is a party relating to the Business prior
to the date of this Agreement or (2) performance of accounting reviews or audits
of the Business relating to periods prior to the date of this Agreement.
ARTICLE 5
EMPLOYEES
5.1 Employees
. On the date of this Agreement, or at another time mutually agreed by the
parties, Buyer may offer employment, to any employee of Seller. Notwithstanding
the foregoing, Buyer has no obligation to hire or offer employment to any
employee of Seller.
5.2 Terms of Subsequent Employment
. Nothing in this Agreement will be construed to limit or restrict Buyer
from changing the terms of employment of, or terminating, any person hired by
Buyer.
ARTICLE 6
INDEMNIFICATION
6.1 Survival of Representations
. The representations and warranties of the parties contained in this
Agreement will survive until six (6) years from the date of this Agreement.
6.2 Indemnification of Buyer
. Seller hereby agrees to indemnify, defend and save the Buyer harmless
against Indemnifiable Losses arising out of breach by Seller of any of its
obligations under this Agreement or any inaccuracy in any representation by
Seller in this Agreement, and any Indemnifiable Losses of Buyer arising out of
the activities and operations of Buyer prior to the Closing Date. Seller shall
be obligated to indemnify Buyer pursuant to this section until the sixth
anniversary of the Closing.
6.3 Indemnification of Seller
. Buyer shall indemnify, defend and save the Seller harmless against
Indemnifiable Losses arising out of breach by Buyer of any of its obligations
under this Agreement, any inaccuracy in any representation by Buyer in this
Agreement, and any Indemnifiable Losses of Seller arising out of the activities
and operations of Buyer subsequent to the Closing Date. Buyer shall be obligated
to indemnify Seller pursuant to this section until the sixth anniversary of the
Closing.
6.4 Procedures for Third Party Claim
. In order to be entitled to indemnification under this Article 6 in
connection with a claim made by any Person against any Person entitled to
indemnification pursuant to this Article 6 (an "Indemnified Party" any such
claim, a "Third Party Claim"), that Indemnified Party must do the following:
(1) notify the Person or Persons obligated to indemnify it (the
"Indemnifying Party") in writing, and in reasonable detail, of that Third Party
Claim promptly but in any event within twenty (20) business days after receipt
of notice of that Third Party Claim, except that any failure to give any such
notification will only affect the Indemnifying Party's obligation to indemnify
the Indemnified Party if the Indemnifying Party has been prejudiced as a result
of that failure; and
(2) deliver to the Indemnifying Party promptly but in any event within ten
(10) business days after the Indemnified Party receives them a copy of all
notices and documents (including court papers) delivered to that Indemnified
Party relating to that Third Party Claim.
In the event of a Third Party Claim against one or more Indemnified
Parties, the Indemnifying Party will be entitled to participate in the defense
of that Third Party Claim and, if it so chooses, to assume at its expense the
defense of that Third Party Claim with counsel selected by the Indemnifying
Party and reasonably satisfactory to the Indemnified Party. If the Indemnifying
Party elects to assume the defense of a Third Party Claim, the Indemnifying
Party will not be liable to the Indemnified Party for any legal expenses
subsequently incurred by the Indemnified Party in connection with the defense of
that Third Party Claim, except that if, under applicable standards of
professional conduct, there exists a conflict on any significant issue between
the Indemnified Party and the Indemnifying Party in connection with that Third
Party Claim, the Indemnifying Party shall pay the reasonable fees and expenses
of one additional counsel to act with respect to that issue to the extent
necessary to resolve that conflict. If the Indemnifying Party assumes defense
of any Third Party Claim, the Indemnified Party will be entitled to participate
in the defense of that Third Party Claim and to employ counsel, at its own
expense, separate from counsel employed by the Indemnifying Party, it being
understood that the Indemnifying Party will be entitled to control that defense.
The Indemnifying Party will be liable for the fees and expenses of counsel
employed by the Indemnified Party for any period during which the Indemnifying
Party did not assume the defense of any Third Party Claim (other than during any
period in which the Indemnified Party failed to give notice of the Third Party
Claim as provided above and a reasonable period after such notice). If the
Indemnifying Party chooses to defend or prosecute a Third Party Claim, all the
parties shall cooperate in the defense or prosecution of that Third Party Claim,
including by retaining and providing to the Indemnifying Party records and
information reasonably relevant to that Third Party Claim, and making employees
available on a reasonably convenient basis. If the Indemnifying Party chooses
to defend or prosecute any Third Party Claim, the Indemnified Party will agree
to any settlement, compromise or discharge of that Third Party Claim that the
Indemnifying Party recommends and that by its terms obligates the Indemnifying
Party to pay the full amount of liability in connection with that Third Party
Claim, except that the Indemnifying Party may not without the Indemnified
Party's prior written consent agree to entry of any judgment or enter into any
settlement that provides for injunctive or other nonmonetary relief affecting
the Indemnified Party or that does not include as an unconditional term that
each claimant or plaintiff give to the Indemnified Party a release from all
liability with respect to that Third Party Claim. Whether or not the
Indemnifying Party has assumed the defense of a Third Party Claim, the
Indemnified Party shall not admit any liability with respect to, or settle,
compromise or discharge, that Third Party Claim without the Indemnifying Party's
prior written consent.
6.5 Procedures for Other Claims
. In order for an Indemnified Party to be entitled to any indemnification
under this agreement in respect of a claim that does not involve a Third Party
Claim (a "Claim"), that Indemnified Party must within twenty (20) business days
of its being notified of that Claim notify the Indemnifying Party of that Claim,
and describe in reasonable detail the basis for that Claim, except that any
failure to give any such notification will only affect the Indemnifying Party's
obligation to indemnify the Indemnified Party if the Indemnifying Party has been
prejudiced as a result of that failure. If the Indemnifying Party does not
dispute that the Indemnified Party is entitled to indemnification with respect
to that Claim by notice to the Indemnified Party prior to the expiration of a
20-calendar-day period following receipt by the Indemnifying Party of notice
from the Indemnified Party of that Claim, that Claim will be conclusively deemed
a liability of the Indemnifying Party and the Indemnifying Party shall pay the
amount of that liability to the Indemnified Party on demand or, in the case of
any notice in which the amount of the Claim (or any portion thereof) is
estimated, on such later date as the amount of the Claim (or any portion
thereof) becomes finally determined. If the Indemnifying Party has timely
disputed its liability with respect to the Claim, the Indemnifying Party and the
Indemnified Party shall proceed in good faith to negotiate a resolution of the
Claim and, if the Claim is not resolved through negotiations, the Indemnified
Party may pursue such remedies as may be available to enforce its rights to
indemnification under this Agreement.
ARTICLE 7
CONDITIONS TO CLOSING
7.1 Conditions to Obligation of Buyer
. The obligation of Buyer to consummate the transactions contemplated
hereby is subject to the satisfaction, at or prior to Closing, of the following
conditions:
(a) The Seller shall have duly performed and complied in all material
respects with all terms, agreements and conditions required by this Agreement to
be performed or complied with by it prior to or at the Closing.
7.2 Conditions to Obligation of Seller
. The obligation of Seller to consummate the transactions contemplated
hereby is subject to the satisfaction, at or prior to Closing, of the following
conditions:
(a) The Buyer shall have duly performed and complied in all material
respects with all terms, agreements and conditions required by this Agreement to
be performed or complied with by it prior to or at the Closing.
ARTICLE 8
CLOSING
8.1 Place and Date
. The closing of the sale and purchase contemplated hereunder (the
"Closing") shall take place on or before July 6, 2001, or at such other time as
may be agreed to by the Buyer and Seller (the "Closing Date").
8.2 Transfer of Assets
.
(a) At Closing, Seller shall deliver to Buyer:
(i) all Transaction Documents.
(b) At Closing, Buyer shall deliver to Seller:
(i) All Transaction Documents; and
(ii) the Initial Payment.
ARTICLE 9
MISCELLANEOUS
9.1 Governing Law
. This Agreement is governed by the laws of the State of California
without giving effect to principles of conflict of laws.
9.2 Expenses
. Seller and Buyer shall share equally and shall timely pay all sales
(including, without limitation, bulk sales), use, value added, documentary,
stamp, gross receipts, registration, transfer, conveyance, excise, recording,
license and other similar taxes and fees and all outside and independent
accounting costs arising out of or attributable to the transactions contemplated
by this Agreement.
9.3 Entirety of Agreement
. This Agreement and the other Transaction Documents constitute the entire
agreement of the parties concerning the subject matter hereof and thereof and
supersede all prior agreements, if any.
9.4 Seller's Further Assurances
. Seller shall execute and deliver such additional documents and
instruments and perform such additional acts as Buyer may reasonably request to
effectuate or carry out and perform all the terms of this Agreement and the
other Transaction Documents and the transactions contemplated thereby, to
effectively assign and deliver the Acquired Assets to Buyer and to effectuate
the intent of this Agreement. Buyer's Further Assurances. Buyer shall execute
and deliver such additional documents and instruments, and perform such
additional acts as Seller may reasonably request to effectuate or carry out and
perform all the terms of this Agreement and the other Transaction Documents and
the transactions contemplated by this Agreement, and to effectuate the intent
and purposes of this Agreement
9.5 Buyer's Further Assurances
. Buyer shall execute and deliver such additional documents and
instruments and perform such additional acts as Seller may reasonably request to
effectuate or carry out and perform all the terms of this Agreement and the
other Transaction Documents and the transactions contemplated by this Agreement,
and to effectuate the intent and purposes of this Agreement.
9.6 Bulk Transfer Laws
. Buyer hereby waives compliance by Seller with any applicable bulk sale
or bulk transfer laws of any jurisdiction in connection with the sale of the
Acquired Assets to Buyer pursuant to this Agreement; provided, however, that
nothing in this Section 10.5 will be construed (1) as indicating that either
Buyer or Seller has determined that any bulk sale or bulk transfer law is
applicable to the sale of the Acquired Assets, or (2) as diminishing Seller's
obligation to pay its debts, obligations and liabilities not expressly assumed
by Buyer pursuant to this Agreement.
9.7 Jurisdiction; Service of Process
. Any action or proceeding seeking to enforce any provision of, or based
on any right arising out of this Agreement must be brought against any of the
parties in the courts of the State of California, or, if it has or can acquire
jurisdiction, in the United States District Court for the Central District of
California, and each of the parties consents to the jurisdiction of those courts
(and of the appropriate appellate courts) in any such action or proceeding and
waives any objection to venue laid therein. Process in any such action or
proceeding may be served by sending or delivering a copy of the process to the
party to be served at the address and in the manner provided for the giving of
notices in Section 10.7. Nothing in this Section 10.6, however, affects the
right of any party to serve legal process in any other manner permitted by law.
9.8 Notices
.
(a) Every notice or other communication required or contemplated by
this Agreement must be in writing and sent by one of the following methods:
(i) personal delivery, in which case delivery will be deemed to occur the
day of delivery;
(ii) certified or registered mail, postage prepaid, return receipt
requested, in which case delivery will be deemed to occur the day it is
officially recorded by the U.S. Postal Service as delivered to the intended
recipient; or
(iii) next-day delivery to a U.S. address by recognized overnight delivery
service such as Federal Express, in which case delivery will be deemed to occur
upon receipt.
(b) In each case, a notice or other communication sent to a party must
be directed to the address for that party set forth below, or to another address
designated by that party by written notice:
If to Buyer: Tangible Acquisition II Corporation
0000 Xxx Xxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx
Facsimile: 000-000-0000
Attn: Xxxxxxx Xxxxxx
with copy to: Xxxxxxx Savage & Xxxxxxxxx, LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: 212-980-5192
Attn: Xxxxxx Xxxxxx
If to Seller: The A-Xxxx Corporation
000 Xxxxxxxx Xxxxxxxxx
Xxxxx Xxxxx
Xxxxx Xxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
with copy to: Xxxxxx Xxxxxxx Xxxxx & Xxxxxx LLP
X.X. Xxx 0000
Xxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxx, Xx.
9.9 Severability
. If any provision of this Agreement is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
9.10 Amendment
. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties.
9.11 Counterparts
. This Agreement may be executed in several counterparts, each of which is
an original and all of which together constitute one and the same instrument.
9.12 No Third-Party Rights
. Nothing expressed or referred to in this Agreement gives any Person
other than the parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this agreement or any provision of this
agreement, and this Agreement and all of its provisions are for the sole and
exclusive benefit of the parties to this Agreement and their successors and
assigns.
9.13 Successors and Assigns
. This Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors, legal representatives and assigns, but
this Agreement may not be assigned by any party without the written consent of
the other.
9.14 Default
. Failure of Buyer to perform any Obligation under this Agreement shall
constitute a material default under this Agreement and any Transaction Document.
The undersigned are executing this Agreement on the date stated in the
introductory clause.
SELLER
SUPERIOR GALLERIES, INC.,
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Chair
BUYER
TANGIBLE ACQUISITION II CORPORATION,
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: President
SCHEDULES AND EXHIBITS
Schedule 2.1(1) Trade Names
Schedule 2.1(4) Furniture, Fixtures and Computers
Schedule 2.1(6) Seller's Contract Rights
Exhibit 2.4.A Security Agreement
Exhibit 2.4.B Promissory Note
Schedule 2.6.A Allocate Purchase Price among Acquired Assets in accordance
with Section 1060 of the Code
Schedule 2.6.B Internal Review Service Form 8594
Exhibit 2.7 Consignment Advance Loan and Security Agreement
Schedule 2.7 Consignment Loans Made By Seller for Auctions After
Closing Date
Exhibit 3.7.A Assignment of Lease
Exhibit 3.7.B Sublease
Schedule 3.7.C Equipment Leases
Exhibit 9.1 Guaranty-Tangible Asset Galleries, Inc.
Exhibit 9.2 Guaranty-Xxxxxxx XxXxxxxx
