ESCROW AGREEMENT
THIS
ESCROW AGREEMENT is
made
and entered into as of May 30, 2007 (this
“Agreement”),
by and
among (i) DGSE
Companies, Inc., a Nevada corporation (together
with its successors and permitted assigns, “DGSE”),
(ii)
Stanford International Bank Ltd., a company organized under the laws of Antigua
and Barbuda, as agent and representative for the Stockholders (as defined below)
of Superior (as defined below) (in such capacity, together with any successors
in such capacity, the “Stockholder
Agent”),
and
(iii) American Stock Transfer & Trust Company, a New York corporation,
as securities intermediary and escrow agent (in such capacity, the “Escrow
Agent”).
Capitalized terms used but not defined herein shall have the respective meanings
ascribed thereto in that certain Amended and Restated Agreement and Plan of
Merger and Reorganization, made and entered into as of January 6, 2007 (the
“Merger
Agreement”),
by
and among DGSE, DGSE Merger Corp., a Delaware corporation (“Merger
Sub”),
Superior Galleries, Inc., a Delaware corporation (f/k/a Tangible Asset
Galleries, Inc., a Nevada corporation) (“Superior”),
and
the Stockholder Agent.
R
E C I T
A L S
WHEREAS,
the Merger Agreement provides for the merger of Superior with and into Merger
Sub, with Superior as the surviving company and a wholly-owned subsidiary of
DGSE (the “Merger”);
WHEREAS,
pursuant to the Merger, all outstanding capital stock of Superior may be
exchanged for shares of common stock, par value $0.01 per share, of DGSE (the
“DGSE
Common Stock”),
subject to the terms and conditions set forth in the Merger
Agreement;
WHEREAS,
Section 3.14 and ARTICLE VIII of the Merger Agreement provide that a separate
escrow account (the “Escrow
Account”)
shall
be established for the purpose of securing the indemnification obligations
of
the stockholders of Superior listed from time to time on Exhibit
A
(collectively, the “Stockholders”)
set
forth in Article VIII of the Merger Agreement;
WHEREAS,
the Stockholders have adopted and approved the Merger Agreement and irrevocably
appointed and constituted the Stockholder Agent as their exclusive agent and
representative for purposes of the Merger Agreement and this
Agreement;
WHEREAS,
simultaneously with the effectiveness of this Agreement, DGSE shall deliver
to
the Escrow Agent, on behalf of the Stockholders, shares of DGSE Common Stock
as
provided in Section 1,
which
shares shall be deposited in the Escrow Account;
WHEREAS,
pursuant to the XxXxxxxx Warrant, (i) XxXxxxxx has agreed that a portion of
the shares to be issued upon the exercise of such warrant shall be subject
to
the escrow provisions of the Merger Agreement and this Agreement, (ii) upon
exercise of the XxXxxxxx Warrant, DGSE is obligated to deposit a portion of
the
shares for which such warrant is exercised into the Escrow Account for the
purpose of securing the indemnification obligations of the Stockholders and
XxXxxxxx set forth in Article VIII of the Merger Agreement (the “Warrant
Shares”),
and
(iii) the holder of such warrant has irrevocably appointed and constituted
the Stockholder Agent as its exclusive agent and representative for purposes
of
the applicable provisions of the Merger Agreement and this
Agreement;
WHEREAS,
the Escrow Agent desires to act as the escrow agent as provided in this
Agreement; and
WHEREAS,
the Parties desire to establish the terms and conditions pursuant to which
the
Escrow Account shall be established and maintained.
A
G R E E
M E N T
NOW,
THEREFORE, in consideration of the premises, the mutual covenants and agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby expressly acknowledged, the parties hereto
(collectively, the “Parties”),
intending to be legally bound, hereby agree as follows:
1. Commencement
of Duties; Escrow Account.
1.1 Commencement
of Duties.
Upon
receipt by the Escrow Agent of the shares of DGSE Common Stock provided in
Section 1.2,
(i) the Escrow Agent shall deliver a notice to DGSE and to the Stockholder
Agent acknowledging such receipt, and (ii) the Escrow Agent shall hold any
Escrow Cash (defined below), the Escrow Shares (defined below) and any proceeds
of the foregoing (other than Escrow Share Dividends (defined below)) in escrow
pursuant to the terms of this Agreement. The Escrow Agent shall hold and
safeguard the Escrow Account during the Escrow Period (defined below), shall
treat such accounts as trust funds in accordance with the terms of this
Agreement and not as the property of the Escrow Agent, DGSE, the Stockholders
or
the Stockholder Agent and shall hold and dispose of the cash and shares in
the
Escrow Account only in accordance with the terms set forth in this
Agreement.
1.2 Initial
Share Deposits.
Simultaneously with the effectiveness of this Agreement, DGSE shall deliver
to
the Escrow Agent, on behalf of the Stockholders and for the benefit of the
Indemnified Parties, including as beneficiaries and secured parties, stock
certificates evidencing the number of shares of DGSE Common Stock as determined
in accordance with Section 3.14(a) of the Merger Agreement, issued in the
name of the Escrow Agent, in its capacity as escrow agent hereunder, or its
nominee, and containing the restrictive legend set forth on Exhibit
C,
for
deposit in the Escrow Account as security for the Indemnified Parties, as
further provided herein. Upon the exercise of the XxXxxxxx Warrant, DGSE shall
deliver to the Escrow Agent, on behalf of XxXxxxxx and for the benefit of the
Indemnified Parties, including as beneficiaries and secured parties, stock
certificates evidencing the number of shares of DGSE Common Stock as determined
in accordance with Section 6 of the XxXxxxxx Warrant, issued in the name of
the Escrow Agent, in its capacity as escrow agent hereunder, or its nominee,
and
containing the restrictive legend set forth on Exhibit
C,
for
deposit in the Escrow Account as security for the Indemnified Parties, as
further provided herein. The shares of DGSE Common Stock held in the Escrow
Account from time to time shall collectively be referred to as the “Escrow
Shares”.
1.3 Investment
of Escrow Cash.
Upon
receipt of any cash, including upon the sale or liquidation of, or the
declaration of any cash dividend or distribution (other than an Escrow Share
Dividend) in respect of, any Escrow Shares (any such cash, the “Escrow
Cash”),
the
Escrow Agent shall invest and re-invest such cash (i) solely at the risk of
the beneficiaries of the Escrow Account; (ii) in the name of the Escrow
Agent or its nominee; and (iii) in such amounts and in such Permitted
Investments (as defined below) as DGSE may designate in writing from time to
time. Income, if any, resulting from the investment of the Escrow Cash or the
liquidation of Permitted Investments shall be retained by the Escrow Agent
and
will be considered, for all purposes of this Agreement, to be part of the Escrow
Cash deposited in the Escrow Account. “Permitted
Investments”
means
an investment in any of the following accounts, securities and instruments:
(i) demand deposits, certificates of deposit, bankers acceptances, time
deposits and other deposit accounts with commercial banks organized under the
laws of the United States of American, or any State thereof, having an aggregate
capital and surplus in excess of $100,000,000 and, to the extent applicable,
having a maturity of not more than 180 days from the date of investment therein;
(ii) investments in marketable direct obligations of, or obligations
unconditionally and fully guaranteed by, the United States of America (or by
any
agency thereof to the extent such obligations are backed by the full faith
and
credit of the United States of America) and maturing not more than one year
from
the date of investment therein; (iii) open market commercial paper rated at
least “A1” or “P1” or better by a nationally recognized statistical rating
organization and maturing not more than one year from the issuance thereof;
(iv) money market and other mutual funds invested solely in (A) the
types of Permitted Investments described in clauses (i) through (iii),
inclusive, of this definition of Permitted Investments, and (B) investments
pursuant to or arising under currency agreements or interest rate agreements
entered into in the ordinary course of business. Any interest earnings from
any
Permitted Investment shall be credited upon receipt by the Escrow Agent to
the
Escrow Fund.
1.4 Escrow
Share Dividends, Etc.
Any
dividends distributed by DGSE in respect of Escrow Shares, other than
stockholder rights associated with a stockholder rights plan which by their
terms are not separable from the Escrow Shares, (all such dividends,
“Escrow
Share Dividends”)
shall
not become Escrow Cash, Escrow Shares or Escrow Assets and shall not be
deposited in the Escrow Account, but shall be promptly distributed in accordance
with Section 2.7.
1.5 Share
Distributions, Etc.
Any
shares of DGSE Common Stock or other equity securities issued or distributed
(including shares issued in connection with a stock split or other
reclassification or recapitalization) (“New
Shares”)
in
respect of Escrow Shares that have not been released from the Escrow Account,
other than Escrow Share Dividends, shall be deposited in the Escrow Account
and
become a part thereof, and shall be considered Escrow Shares for all purposes
of
this Agreement. New Shares issued in respect of shares of DGSE Common Stock
that
have been paid or released from the Escrow Account shall not be deposited in
the
Escrow Account, but shall be distributed to the respective record holders of
such paid or released shares.
1.6 Voting
of Shares.
The
Stockholders shall be entitled to vote their respective pro
rata
portion
of Escrow Shares, based on their respective percentage interest as set forth
on
Exhibit A
(which
shall include, with respect to XxXxxxxx, the shares deposited in the Escrow
Account pursuant to the XxXxxxxx Warrant). DGSE shall deliver any communications
it distributes to its stockholders qua
stockholders, including notices of meetings, annual reports and proxy
statements, to the Stockholder Agent at the time such communications are
delivered to its other stockholders. The Stockholder Agent shall deliver such
communications to the respective Stockholders and, in accordance with the
instructions received from the Stockholders, direct the Escrow Agent in writing
as to the exercise of voting rights pertaining to the Escrow Shares as to which
such voting instructions have been received, and not to act with respect to
any
Escrow Shares for which no or invalid instructions have been received from
any
Stockholders, and the Escrow Agent shall comply with any such written
instructions from the Stockholder Agent. To the extent of the absence of such
instructions from the Stockholder Agent, the Escrow Agent shall not vote any
Escrow Shares. Beyond the delivery of DGSE proxies or consents to the
Stockholders as aforesaid, the Stockholder Agent shall have no obligation to
solicit consents or proxies from the Stockholders for purposes of any such
vote.
1.7 Issued
and Outstanding.
The
Escrow Shares shall appear as issued and outstanding shares on the books and
records of DGSE.
1.8 Transferability
of Interests by Stockholders.
The
interests of the Stockholders in the Escrow Account, or the Escrow Cash, Escrow
Shares, Permitted Investments and other assets from time to time held in the
Escrow Account (collectively, the “Escrow
Assets”),
may
not be sold, assigned or otherwise Transferred, other than strictly in
accordance with the limited exceptions provided in Section 3.15 of the Merger
Agreement. The applicable Stockholder effecting, or any Party who has actual
notice of, any such permitted sale, assignment or other Transfer shall promptly
provide notice thereof to the Escrow Agent, Stockholder Agent and DGSE thereof,
and no such sale, assignment or other Transfer shall be valid or effective
unless so made and until such notice has been duly provided.
2. Escrow
Account.
2.1 Escrow
Period.
The
Escrow Agent shall establish the Escrow Account immediately upon the
effectiveness of this Agreement, and will terminate the Escrow Account at 5:00
p.m., Pacific time, on the date (as adjusted pursuant hereto, the “Expiration
Date”)
that
is one calendar year after the Effective Time (such period of time, as adjusted
pursuant hereto, the “Escrow
Period”);
provided,
however,
that in
the event DGSE notifies the Escrow Agent that any Indemnified Party has made
a
claim under Article VIII of the Merger Agreement prior to the Expiration Date
which claim has not yet been fully and finally resolved and settled on the
Expiration Date (an “Unresolved
Claim”),
the
Escrow Period shall be extended, the Expiration Date, the termination of the
Escrow Account, and the release of shares of DGSE Common Stock having an
aggregate value of the maximum aggregate amount of all Unresolved Claims shall
be delayed, until the earlier to occur of (i) ten Business Days after DGSE
notifies the Escrow Agent and the Stockholder Agent that it has determined
that
each Unresolved Claim has been fully and finally resolved, settled and
satisfied, and (ii) the date no Escrow Assets remain in or are due to the
Escrow Account.
2.2 Funding.
The
Escrow Agent shall deposit cash (if any) and shares of DGSE Common Stock in
the
Escrow Account as provided in Section 1.
2.3 Use
of
Account.
(a) Indemnified
Party Claims.
The
Stockholders have agreed to indemnify, defend and hold harmless DGSE and its
Representatives and Affiliates (including the Surviving Corporation)
(collectively, the “Indemnified
Parties”)
in
Section 8.2 of the Merger Agreement from and against any Losses, as set
forth in Article VIII of the Merger Agreement. XxXxxxxx has additionally agreed
to indemnify, defend and hold harmless the Indemnified Parties in Section 6
of
the XxXxxxxx Warrant. The Stockholder Agent, on behalf of the Stockholders,
expressly agrees, and by virtue of the approval of the Merger and the Merger
Agreement each Stockholder has agreed and consented, and by virtue of accepting
the XxXxxxxx Warrant XxXxxxxx has agreed and consented, that the Escrow Assets
(i) shall be available to satisfy, including as security for, such
indemnity obligations, subject to the limitations and in the manner provided
for
in this Agreement, and (ii) are subject to release and payment to DGSE or
other Indemnified Parties upon the terms and subject to the conditions set
forth
herein and in the Merger Agreement.
(b) Distributions.
The
Escrow Agent shall establish and maintain the Escrow Account solely for the
purposes of (i) satisfying the indemnification obligations of the
stockholders of Superior and XxXxxxxx under the Merger Agreement, and
(ii) distributing any assets remaining in the Escrow Account upon the
expiration of the Escrow Period as provided in Section 2.7.
2.4 Claims.
(a) Indemnified
Party.
The
Escrow Agent shall distribute assets from the Escrow Account to satisfy the
claim of an Indemnified Party only upon receipt of: (i) joint instructions
executed by DGSE and the Stockholder Agent; (ii) a final written decision
of an arbitrator submitted by DGSE on behalf of the applicable Indemnified
Party, or (iii) a final non-appealable order of a court of competent
jurisdiction submitted by DGSE on behalf of the applicable Indemnified Party;
in
each case containing instructions to the Escrow Agent concerning the release
of
assets from the Escrow Account (including the name of the payee and the amount
of the payment). Upon payment in full of a claim so received pursuant to
Section 2.5,
the
Escrow Agent shall deem such claim finally resolved, settled and satisfied
for
purposes of this Agreement. In the event there are insufficient assets to pay
the claims of all Indemnified Parties, the claims made by DGSE shall be
satisfied first and all other claims shall be satisfied on a pro
rata
basis
from the remaining assets.
2.5 Payments
from Escrow Account.
In the
event any Indemnified Party is entitled to payment on a claim from the Escrow
Account, the Escrow Agent shall make such payment:
(a) first,
out of
any Escrow Cash then held in the Escrow Account,
(b) second,
if
commercially reasonable or upon the written request of DGSE, out of cash
received upon the liquidation of any Permitted Investments or other assets
(other than Escrow Shares) then held in the Escrow Account; and
(c) finally,
out of
the Escrow Shares by delivering to such Indemnified Party a number of Escrow
Shares from the Escrow Account having a value equal to the remaining amount
of
the payment due, with such shares being valued at the per-share value equal
to
$2.67 (the “Share
Value”);
provided,
however,
that in
the event of any Capitalization Adjustment with respect to the DGSE Common
Stock
occurring after the Effective Time, the Share Value shall be equitably adjusted
to the extent necessary to provide the parties the same economic effect as
contemplated by this Section 2.5(c)
prior to
such Capitalization Adjustment (it being understood that DGSE shall promptly
notify the Escrow Agent of any Capitalization Adjustment).
Any
distribution of Escrow Assets to an Indemnified Party pursuant to this
Section 2
shall be
deemed paid by the Stockholders on a pro
rata
basis.
calculated in accordance with the percentages set forth opposite the respective
Stockholder names on Exhibit
A.
2.6 Release.
During
the ten Business Days prior to the expiration of the Escrow Period, the Escrow
Agent shall use its commercially reasonable efforts to liquidate all Escrow
Assets (other than Escrow Shares and Escrow Cash) held in the Escrow Account
so
that no Escrow Assets other than Escrow Shares and Escrow Cash will remain
in
the Escrow Account upon the expiration of the Escrow Period. Upon the expiration
of the Escrow Period, or as soon as reasonably practicable thereafter, subject
to Section 4.12,
the
Escrow Agent shall distribute all of the Escrow Assets then held in the Escrow
Account to the Stockholders pursuant to Section 2.7.
2.7 Distribution.
Any
distribution of all or a portion of the Escrow Assets then held in the Escrow
Account to the Stockholders pursuant to Section 2.6,
or of
any Escrow Share Dividends pursuant to Section 1.4,
shall
be distributed on a pro
rata basis
to
the stockholders of Superior immediately prior to the Merger, and to XxXxxxxx
with respect to the Warrant Shares, in accordance with the percentages set
forth
opposite such stockholders’ respective names on Exhibit
A;
provided,
however,
that
the Escrow Agent shall withhold the distribution of the portion of the Escrow
Assets or Escrow Share Dividends otherwise distributable to any stockholder
who
is identified on Exhibit A
as
(i) being a Dissenting Stockholder, or (ii) not having prior to such
distribution surrendered its stock certificates formerly representing Company
Common Shares pursuant to the terms of the Merger Agreement (or theretofore
delivered the affidavit and bond, if any, specified in Section 3.4(i) of
the Merger Agreement). Any such withheld Escrow Assets or Escrow Share Dividends
shall be delivered to DGSE promptly after the expiration of the Escrow Period,
and, with respect to such Stockholders other than Dissenting Stockholders,
shall
be delivered by DGSE to the Stockholders to whom such Escrow Assets or Escrow
Share Dividends would have otherwise been distributed upon surrender of their
certificates representing Company Common Shares (or delivery of such affidavit
and bond, if any). The Escrow Agent shall distribute Escrow Assets or Escrow
Share Dividends to the respective Stockholders by mailing a check representing
the funds, or directing the transfer agent for the Escrow Shares to deliver
a
stock certificate representing such Escrow Shares or Escrow Share Dividends,
due
to such Stockholder at its address shown on Exhibit
A.
No
fractional Escrow Shares shall be distributed to the Stockholders pursuant
to
this Agreement and, upon notification of a permitted distribution to the
Stockholders, DGSE shall provide, or cause its transfer agent to provide, stock
certificates evidencing a number of shares that each Stockholder shall receive
rounded up to the nearest whole number of shares.
2.8 Calculations.
Notwithstanding anything herein to the contrary, the Person requesting a
distribution shall make any and all calculations required to be made pursuant
to
this Section 2,
including the value of the Escrow Shares, and certify the same to the Escrow
Agent.
3. Stockholder
Agent.
The
Parties acknowledge and accept the provisions of Section 8.5 of the Merger
Agreement concerning the Stockholder Agent, which are incorporated herein by
reference. Any successor Stockholder Agent under the Merger Agreement shall
become the Stockholder Agent hereunder, as provided in such Section
8.5.
4. Escrow
Agent.
4.1 Appointment
and Acceptance.
DGSE
and the Stockholder Agent hereby appoint the Escrow Agent as escrow agent in
relation to or in connection with this Agreement and the Merger Agreement.
The
approval of the Merger and the approval and adoption of the Merger Agreement
by
the stockholders of Superior constitutes, without any further action on the
part
of any such stockholders, the consent and authorization of each of such
stockholders for the Escrow Agent to act as the escrow agent pursuant to the
terms and provisions hereof. The Escrow Agent hereby accepts such
appointments.
4.2 Duties.
The
Escrow Agent shall be obligated only for the performance of such duties as
are
specifically set forth herein, and as set forth in any additional written escrow
instructions that the Escrow Agent may receive from DGSE and the Stockholder
Agent from time to time as provided herein, upon which instructions the Escrow
Agent may conclusively rely.
4.3 Compliance
with Orders, Etc.
The
Escrow Agent is authorized to comply with and obey orders, awards, judgments
or
decrees of any court of law or arbitration tribunal, notwithstanding any
notices, warnings or other communications from any party hereto or any other
Person to the contrary. In case the Escrow Agent obeys or complies with any
such
order, judgment or decree of any court or arbitration tribunal, the Escrow
Agent
shall not be liable to any of the parties hereto or to any other Person by
reason of such compliance, notwithstanding any such order, judgment or decree
being subsequently reversed, modified, annulled, set aside, vacated or found
to
have been entered without jurisdiction.
4.4 Certain
Notices.
DGSE
shall promptly notify the Escrow Agent of the Closing Date, any Capitalization
Adjustment, and the expiration of the Escrow Period. Upon the expiration of
the
Escrow Period, DGSE shall update Exhibit A
to
indicate each Stockholder’s name, current mailing address (as notified to DGSE
by the applicable Stockholder) and how many Escrow Shares are to be distributed
to each Stockholder.
4.5 Additional
Instructions.
The
Escrow Agent may from time to time request further information, instructions
or
direction from DGSE or the Stockholder Agent, as the case may be, as it
reasonably deems necessary in the performance of its duties hereunder, and
DGSE
or the Stockholder Agent, as applicable, shall use their respective commercially
reasonable efforts promptly to provide such information, instructions or
direction, upon which the Escrow Agent may conclusively rely.
4.6 Limitation
of Liability.
In
performing any duties hereunder, the Escrow Agent shall not be liable to any
party hereto for damages, losses or expenses, except for gross negligence or
willful misconduct on the part of the Escrow Agent. The Escrow Agent shall
not
incur any such liability for any action taken or omitted in reliance upon any
instrument, including any written statement or affidavit provided for in this
Agreement, that the Escrow Agent in good faith believes to be genuine, nor
will
the Escrow Agent be liable or responsible if acting in good faith for forgeries,
fraud, impersonations or determining the scope of any representative authority.
In addition, the Escrow Agent may consult with legal counsel (whether such
counsel will be regularly retained or specifically employed) in connection
with
the Escrow Agent’s duties under this Agreement and shall be fully protected in
any act taken, suffered, or permitted by it in good faith in accordance with
the
advice of counsel. The Escrow Agent is not responsible for determining and
verifying the authority of any Person acting or purporting to act on behalf
of
any party hereto or beneficiary hereof. The Escrow Agent shall not be liable
for
the expiration of any rights under any statute of limitations with respect
to
this Agreement or any documents deposited with the Escrow Agent. IN NO EVENT
SHALL THE ESCROW AGENT BE LIABLE, DIRECTLY OR INDIRECTLY, FOR ANY
(i) DAMAGES OR EXPENSES ARISING OUT OF THE SERVICES PROVIDED HEREUNDER,
OTHER THAN DAMAGES WHICH RESULT FROM THE ESCROW AGENT’S FAILURE TO ACT IN
ACCORDANCE WITH THE STANDARDS SET FORTH IN THIS AGREEMENT, OR (ii) SPECIAL
OR CONSEQUENTIAL DAMAGES, EVEN IF THE ESCROW AGENT HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
4.7 Disputes.
If any
controversy arises between the parties to this Agreement, or with any other
Person, concerning the subject matter of this Agreement, the Escrow Agent shall
not be required to determine the controversy or to take any action regarding
it.
Furthermore, the Escrow Agent may file an action of interpleader requiring
the
parties hereto to answer and litigate any claims and rights amongst themselves.
The Escrow Agent is authorized to deposit with the clerk of the court all
documents and Escrow Assets; provided,
however,
that
all costs, expenses, charges and reasonable attorney fees incurred by the Escrow
Agent due to the interpleader action shall be reimbursed equally by the
Stockholders (subject to Section 4.13),
on the
one hand, and DGSE, on the other hand, it being agreed and understood that
the
Escrow Agent shall have a prior lien upon the Escrow Assets with respect to
its
costs, expenses, charges and reasonable attorney fees incurred by the Escrow
Agent due to the interpleader action, superior to the interests of any other
Person. Upon initiating such action, the Escrow Agent shall be fully released
and discharged of and from all obligations and liability imposed by the terms
of
this Agreement, except for any liability for obligations or acts or omissions
that have already occurred, and only to the extent set forth
herein.
4.8 Indemnification.
DGSE
and the Stockholders (subject to Section 4.13),
and
their respective successors and assigns, shall jointly and severally indemnify
and hold the Escrow Agent harmless against any and all losses, claims, damages,
liabilities and expenses, including reasonable costs of investigation, attorneys
fees and disbursements, that may be imposed on the Escrow Agent or incurred
by
the Escrow Agent in connection with the performance of its duties under this
Agreement. Such indemnification shall survive the resignation or removal of
the
Escrow Agent, or the termination of this Agreement.
4.9 Resignation
and Removal.
The
Escrow Agent may resign at any time upon sixty days written notice to DGSE
and the Stockholder Agent, and the duties of the Escrow Agent shall terminate
at
the time specified in such notice (but not less than sixty days after delivery
to DGSE). The Escrow Agent may be removed at any time by notice from DGSE,
and
the duties of the Escrow Agent shall terminate at the time specified in such
notice. Upon the termination of its duties hereunder, the Escrow Agent shall
promptly deliver the balance of the Escrow Assets, and any documentation or
notices or other communications relating to the Escrow Account, the Escrow
Assets or this Agreement, then in its possession to a successor escrow agent,
as
identified by a written notice delivered by DGSE to the Escrow
Agent.
4.10 Successors.
DGSE
may appoint the successor escrow agent (i) without the consent of the
Stockholder Agent if such successor is a commercial bank organized under the
laws of the United States of America, or any State thereof, having an aggregate
capital and surplus in excess of $50,000,000 and being a “securities
intermediary” for purposes of the applicable Uniform Commercial Code, or
(ii) with the consent of the Stockholder Agent (which the Stockholder Agent
may not unreasonably withhold, delay or condition). If DGSE shall have failed
to
appoint a successor escrow agent prior to the termination of the Escrow Agent’s
duties as provided in this Section 4.10,
the
Escrow Agent may petition any court of competent jurisdiction for the
appointment of a successor escrow agent or for other appropriate relief, with
due regard to the qualifications for a successor escrow agent specified in
clause (i) next preceding, and any such resulting appointment shall be
binding upon all of the parties hereto and beneficiaries hereof. The successor
escrow agent shall execute and deliver an instrument accepting such appointment,
and it shall, without further acts, be vested with all the estates, properties,
rights, powers and duties (but not accrued liabilities) of the predecessor
escrow agent as if originally named as escrow agent. Upon resignation in
accordance with this Section 4.10,
the
Escrow Agent shall be discharged from any further duties and liability under
this Agreement, except for any liability for obligations or acts or omissions
that have already occurred, and only to the extent set forth
herein.
4.11 Fees.
All
fees of the Escrow Agent for performance of its duties under this Agreement
shall be paid one-half by DGSE and (subject to Section 4.13)
one-half by the Stockholders. Exhibit B
sets
forth the usual fees and charges agreed upon for services of the Escrow Agent
as
contemplated by this Agreement. In the event the Escrow Agent renders any
service not provided for in Exhibit B,
or if
the parties request a substantial modification of its terms, or if the Escrow
Agent is made a party to, or intervenes in, any litigation pertaining to the
Escrow Account, the Escrow Agent’s reasonable costs and expenses shall be paid
(i) in the case the Escrow Agent is made a party to any litigation by DGSE
or the Stockholder Agent, by DGSE or the Stockholders, as the case may be,
or
(ii) otherwise, one-half by DGSE and (subject to Section 4.13)
one-half by the Stockholders.
4.12 Set-Off.
In the
event that the Escrow Agent is authorized to make disbursements to any party
to
or beneficiary of this Agreement pursuant to and in accordance with the terms
of
this Agreement, and fees and expenses are due and payable to the Escrow Agent
pursuant to the terms of this Agreement by the party or beneficiary receiving
such disbursement, the Escrow Agent is hereby authorized to offset such amounts
due and payable to it against such disbursement to such party or
beneficiary.
4.13 Limitations
on Stockholder Payments.
The
obligations of the Stockholders to make payments to the Escrow Agent hereunder,
other than pursuant to Section 5
(as to
which the limitations of this Section 4.13
shall
not apply), shall be strictly and exclusively limited to the Escrow Assets
and
Escrow Share Dividends. If the Escrow Assets and Escrow Share Dividends shall
be
insufficient to pay the fees of or other amounts due to the Escrow Agent
hereunder, DGSE shall make such payments on behalf of the
Stockholders
(subject
to reimbursement in the event any Escrow Assets or Escrow Share Dividends
thereafter become available).
5. Tax
Matters.
The
Escrow Agent shall be responsible for reporting any interest earned, as of
each
calendar year-end, on the Escrow Cash or Permitted Investments, or any cash
dividends or other distributions made in respect of the Escrow Shares, to the
IRS, whether or not such income was distributed by the Escrow Agent during
any
particular year. The Stockholder Agent shall provide a completed IRS Form W-8
(an original W-8 is required) or Form W-9 to the Escrow Agent upon the signing
of this Agreement. The Escrow Agent may delay accepting any Escrow Cash until
the IRS forms shall have been provided. Notwithstanding
Section 4.13,
each
Stockholder, severally but not jointly, covenants and agrees to indemnify and
hold the Escrow Agent harmless against all liability for tax withholding or
reporting for any payments made by the Escrow Agent to such Stockholder pursuant
to this Agreement. The Escrow Agent shall have no responsibility for the
preparation and/or filing of any tax or information return, other than 1099-INT
reporting, with respect to any transaction, whether or not related to the
Agreement or any Related Agreements, that occurs outside of the Escrow
Account.
6. Miscellaneous.
6.1 Construction.
For all
purposes of this Agreement, except as otherwise expressly provided or unless
the
context otherwise requires:
(a) all
references in this Agreement to designated “Articles,” “Sections” and other
subdivisions, or to designated “Exhibits,” “Schedules” or “Appendices,” are to
the designated Articles, Sections and other subdivisions of, or the designated
Exhibits, Schedules or Appendices to, this Agreement;
(b) references
to any Person includes such Person’s successors and assigns but, if applicable,
only if such successors and assigns are not prohibited by this Agreement, and
reference to a Person in a particular capacity excludes such Person in any
other
capacity or individually;
(c) references
to any agreement, document or instrument means such agreement, document or
instrument as Amended and in effect from time to time in accordance with the
terms thereof, and shall be deemed to refer as well to all addenda, annexes,
appendices, exhibits, schedules and other attachments thereto;
(d) references
to “dollars” or “cash”, and the “$” symbol, are references to the lawful money
of the United States of America;
(e) with
respect to the determination of any period of time, “from” means “from and
including” and “to” means “to but excluding”;
(f) the
words
“include,” “includes,” and “including” shall be deemed to be followed by
“without limitation”;
(g) the
term
“or” shall not be exclusive;
(h) pronouns
in masculine, feminine, and neuter genders shall be construed to include any
other gender;
(i) whenever
the singular number is used, if required by the context, the same shall include
the plural, and vice versa; and
(j) the
words
“this Agreement,” “herein,” “hereof,” “hereby,” “hereunder,” and words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.
6.2 Titles
and Headings.
The
section and paragraph titles and headings contained herein are inserted purely
as a matter of convenience and for ease of reference and shall be disregarded
for all other purposes, including the construction, interpretation or
enforcement of this Agreement or any of its terms or provisions.
6.3 Voluntary
Execution of Agreement.
This
Agreement is executed voluntarily and without any duress or undue influence
on
the part or behalf of the parties hereto. Each of the parties hereto
acknowledges, represents and warrants that (i) it has read and fully
understood this Agreement and the implications and consequences thereof;
(ii) it has been represented in the preparation, negotiation, and execution
of this Agreement by legal counsel of its own choice, or it has made a voluntary
and informed decision to decline to seek such counsel; and (iii) it is
fully aware of the legal and binding effect of this Agreement.
6.4 Assignment.
DGSE
may assign any or all of its rights under this Agreement, in whole or in part,
to any other Person without obtaining the consent or approval of any other
party
hereto or of any other Person. Without limiting the generality of
Section 1.8,
none of
the Stockholders may assign any of its rights or interests or delegate any
of
its duties or obligations under this Agreement without the prior written consent
of DGSE, which consent may be withheld in DGSE’s sole and absolute discretion.
The Stockholder Agent may assign and delegate its rights, powers, obligations
and duties under this Agreement only as provided in Section 8.5 of the Merger
Agreement. The Escrow Agent may assign and delegate its rights, powers,
obligations and duties under this Agreement only as provided in
Section 4.10.
Any
purported assignment not in full compliance with this Section 6.4
shall be
null and void and of no force or effect ab
initio.
Subject
to the sentence next preceding, this Agreement shall be binding upon, inure
to
the benefit of, and be enforceable by, the parties hereto and express
beneficiaries hereof and their respective successors and permitted
assigns
6.5 Amendments
and Modification.
This
Agreement may not be modified, amended, altered or supplemented except upon
the
execution and delivery of a written agreement executed by DGSE, the Stockholder
Agent and, if adversely affected thereby, the Escrow Agent; provided,
however,
that
DGSE shall have the right to amend Exhibit A
by
written notice to the Escrow Agent and Stockholder Agent to the extent
(i) Exhibit
A
does not
accurately or completely list the Stockholders of Superior or their stock
ownership immediately prior to the Merger, (ii) any Stockholder changes its
current mailing address (it being agreed that the Stockholder Agent may certify
to DGSE from time to time a new address of any Stockholder), (iii) any
Stockholder delivers the required stock certificate or affidavit in lieu
thereof, or (iv) a Stockholder sells, assigns or otherwise Transfers its
interests in the Escrow Account, or any Escrow Cash, Escrow Stocks, Permitted
Investments or other assets from time to time held therein, as permitted by
Section 1.8.
Any
modification, amendment, alteration or supplement to the Merger Agreement which
has or may have an adverse effect upon the Escrow Agent shall not be effective
for purposes of this Agreement absent the written consent of the Escrow Agent,
such consent not to be unreasonably withheld.
6.6 Severability.
The
provisions of this Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof; provided that if any provision
of
this Agreement, as applied to any party or to any circumstance, is adjudged
by a
court, tribunal or other governmental body, arbitrator or mediator not to be
enforceable in accordance with its terms, the parties agree that such
governmental body, arbitrator or mediator making such determination shall have
the power to modify the provision in a manner consistent with its objectives
such that it is enforceable, and to delete specific words or phrases, and in
its
reduced form, such provision shall then be enforceable and shall be
enforced.
6.7 No
Waiver.
The
failure of any party hereto to exercise any right, power or remedy provided
under this Agreement or otherwise available in respect hereof at law or in
equity, or to insist upon compliance by any other party hereto with its
obligations hereunder, or any custom or practice of the parties at variance
with
the terms hereof shall not constitute a waiver by such party of its right to
exercise any such or other right, power or remedy or to demand such compliance.
No waiver by any party of any default, misrepresentation or breach hereunder,
whether intentional or not, shall be effective unless in writing and signed
by
the party against whom such waiver is sought to be enforced, and no such waiver
shall be deemed to extend to any prior or subsequent default, misrepresentation
or breach hereunder or affect in any way any rights arising because of any
prior
or subsequent such occurrence.
6.8 Notices.
All
notices, requests, instructions or other documents to be given under this
Agreement shall be in writing and shall be deemed given, (i) upon receipt
if sent via registered or certified mail, return receipt requested, in the
U.S.
mails, postage prepaid, (ii) when sent if sent by facsimile or email;
provided,
however,
that
the facsimile or email is promptly confirmed by telephone confirmation thereof,
(iii) when delivered, if delivered personally to the intended recipient,
and (iv) one business day following delivery to a reputable national
courier service for overnight delivery; and in each case, addressed to a party
at the following address:
(a) If
to
DGSE, addressed to it at:
DGSE
Companies, Inc.
0000
Xxxxxx Xxxx
Xxxxxx,
Xxxxx 00000
Attn:
Xx.
X.X. Xxxxx
Facsimile:
Email:
with
a
copy (which shall not constitute notice and which shall not be required for
effective delivery) to:
Sheppard,
Mullin, Xxxxxxx & Hampton LLP
00000
Xx
Xxxxxx Xxxx, Xxxxx 000
Xxx
Xxxxx, Xxxxxxxxxx 00000-0000
Attn:
Xxxx X. Xxxxxxxx, Esq.
Facsimile:
Email:
(b) If
to the
Stockholder Agent, addressed to it at:
Stanford
International Bank Ltd.
c/o
Stanford Financial Group
0000
Xxxxxx Xxxxxx
Xxxxxxx,
Xxxxxxxxx 00000
Attn:
Xxxxx X. Xxxxx, Chief Financial Officer
Facsimile:
Email:
with
a
copy (which shall not constitute notice and which shall not be required for
effective delivery) to:
Xxxxxxx
Xxxxxx, P.A.
4000
Bank
of America Tower at International Place
000
X.X.
Xxxxxx Xxxxxx
Xxxxx,
Xxxxxxx 00000
Attn:
Xxxx X. Xxxxxx, Esq.
Facsimile:
Email:
(c) If
to the
Escrow Agent, addressed to it at:
American
Stock Transfer & Trust Company
00
Xxxxxx
Xxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxxxx X. Xxxxxx
Facsimile:
Email:
Or
in
each case to such other address, email address or fax number as the party to
whom the notice, request, instruction or other document is given may have
previously furnished to the other parties in writing in the manner set forth
in
this Section 6.8.
6.9 Governing
Law.
This
Agreement and the performance of the transactions and obligations of the parties
hereunder shall be governed by and construed in accordance with the laws of
the
State of Texas applicable to contracts negotiated, executed and to be performed
entirely within such State.
6.10 Entire
Agreement.
This
Agreement, and to the extent of the definitions defined in the Merger Agreement
and used herein, the Merger Agreement, constitute the entire agreement and
understanding of the parties hereto in respect of the subject matter hereof
and
supersedes all prior understandings, agreements or representations by or among
the parties hereto, written or oral, to the extent they relate in any way to
the
subject matter hereof or the transactions contemplated by this Agreement. In
case of any conflict between the Merger Agreement and this Agreement, the terms
and provisions of this Agreement shall prevail.
6.11 Third-Party
Beneficiaries.
This
Agreement is made solely for the benefit of the parties to this Agreement,
the
Indemnified Parties and the Stockholders, and their respective permitted
successors and assigns, and no other Person shall have or acquire any right
or
remedy by virtue hereof except as otherwise expressly provided
herein.
6.12 Jurisdiction;
No Jury Trial; Service of Process.
The
terms and provisions of Section 10.7 (d) (Waiver of Trial by Jury) of the Merger
Agreement are hereby incorporated by reference herein and shall apply to this
Agreement mutatis
mutandis,
as if
expressly set forth herein.
6.13 Submission
to Jurisdiction; No Jury Trial.
Any
suit, action or proceeding with respect to this Agreement shall be brought
exclusively in any court of competent jurisdiction in the County of Dallas,
Texas. ALL PARTIES HERETO AND EXPRESS BENEFICIARIES HEREOF HEREBY IRREVOCABLY
WAIVE ANY OBJECTIONS WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE PERSONAL
JURISDICTION OR VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT BROUGHT IN ANY SUCH COURT AND HEREBY FURTHER
IRREVOCABLY WAIVE ANY CLAIM THAT SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN
ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE MAXIMUM EXTENT
PERMITTED BY LAW, THE PARTIES HERETO AND EXPRESS BENEFICIARIES HEREOF HEREBY
FURTHER IRREVOCABLY WAIVE ANY RIGHT TO A JURY TRIAL IN ANY ACTION ARISING OUT
OF
OR IN CONNECTION WITH THIS AGREEMENT.
6.14 Counterparts.
This
Agreement may be executed in two or more original or facsimile counterparts,
each of which shall be deemed an original but all of which together shall
constitute but one and the same instrument.
6.15 Facsimile
Execution.
A
facsimile, telecopy or other reproduction of this Agreement may be executed
by
one or more parties hereto, and an executed copy of this Agreement may be
delivered by one or more parties hereto by facsimile or similar electronic
transmission device pursuant to which the signature of or on behalf of such
party can be seen, and such execution and delivery shall be considered valid,
binding and effective for all purposes. At the request of any party hereto,
all
parties hereto agree to execute an original of this Agreement as well as any
facsimile, telecopy or other reproduction hereof.
[
THE
REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK ]
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed on the day and year first above written.
|
DGSE
COMPANIES, INC.
By:
________________________________________________
Xx.
X.X. Xxxxx
Chief
Executive Officer
|
|
|
STANFORD
INTERNATIONAL BANK LTD.,
as Stockholder Agent
By:
________________________________________________
Xxxxx
X. Xxxxx
Chief
Financial Officer
|
|
|
AMERICAN
STOCK TRANSFER & TRUST COMPANY, as Escrow Agent
By:
________________________________________________
Xxxxxxx
X. Xxxxxx
Vice
President
|
EXHIBIT
A
SUPERIOR
STOCKHOLDERS
|
Stockholder
|
Address
|
Superior
Share Ownership
|
TIN
|
Delivered
Stock
Certificates
or Affidavit in Lieu Thereof
|
Dissenting
Stockholder
|
| o | o | ||||
| o | o |
EXHIBIT
B
ESCROW
AGENT FEES
Fee:
$7,500, plus out-of-pocket expenses.
EXHIBIT
C
RESTRICTIVE
LEGEND
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO FORFEITURE AND OTHER
ESCROW PROVISIONS SET FORTH IN: (1) AN AMENDED AND RESTATED AGREEMENT AND PLAN
OF MERGER AND REORGANIZATION, MADE AND ENTERED INTO AS OF JANUARY 6, 2007,
BY
AND AMONG DGSE COMPANIES, INC., DGSE MERGER CORP., SUPERIOR GALLERIES, INC.,
AND
STANFORD
INTERNATIONAL BANK LTD.,
AS
STOCKHOLDER AGENT (TOGETHER WITH ITS SUCCESSOR IN SUCH CAPACITY, THE
“STOCKHOLDER AGENT”); AND (2) AN ESCROW AGREEMENT, BY AND AMONG DGSE COMPANIES,
INC., AMERICAN STOCK TRANSFER & TRUST COMPANY, AS ESCROW AGENT, AND THE
STOCKHOLDER AGENT, MADE AND ENTERED INTO AS OF MAY 30, 2007. COPIES OF THE
AFORESAID AGREEMENTS ARE ON FILE AT THE PRINCIPAL OFFICE OF DGSE COMPANIES,
INC.
AND SHALL BE PROVIDED TO THE HOLDER OF THIS CERTIFICATE WITHOUT CHARGE UPON
WRITTEN REQUEST.
