SHARE PURCHASE AGREEMENT
This share purchase agreement ("Agreement") dated as of February 7, 2002,
by and between TANGIBLE ASSET GALLERIES, INC., a Nevada corporation ("Seller" or
"Company"), and HCR HOLDINGS CORPORATION, a Delaware corporation ("Buyer").
RECITALS
A. The Board of Director of the Seller believes it is in the best interests
of the Company and the stockholders of the Company to sell all of the issued and
outstanding shares of HotelInteractive, Inc., a Delaware corporation and
wholly-owned subsidiary of the Company ("HI"), to the Buyer (the "Sale") and,
in furtherance thereof, have approved the Sale, subject to the satisfaction of
the conditions hereinafter set forth.
B. The Company and the Buyer desire to make certain representations and
warranties and other agreements in connection with the Sale.
NOW, THEREFORE, as consideration for the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
intending to be legally bound hereby, the parties agree as follows:
ARTICLE 1
DEFINITIONS
When used in this agreement, the following terms have the following
meanings:
"Code" means the Internal Revenue Code of 1986, as amended.
"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.
"Financial Statements of HI" means the management prepared financial
statements of HI, consisting of a balance sheet and statements of income, copies
of which are attached hereto as Exhibit A.
"GAAP" means generally accepted accounting principles in the United
States of America as promulgated by the American Institute of Certified Public
Accountants and the Financial Accounting Standards Board or any successor
entities concerning the treatment of any accounting matter.
"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.
"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.
"Law" means any federal, state, local, municipal, foreign, international,
multinational, or other administrative order, constitution, law, ordinance,
principal 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.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, trust, unincorporated organization,
governmental body or authority or any other entity.
"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.
"Seller's Group" means any "affiliated group" (as defined in Section
1504(a) of the Code without regard to the limitations contained in Section
1504(b) of the Code) that includes the Seller or any predecessor of or successor
to Seller (or to any such predecessor or successor).
"Taxes" means all federal, state, local or foreign income, gross receipts,
windfall profits, severances, property, intangible, mortgage, productions,
sales, use, license, excise, franchise, employment, withholding or similar taxes
imposed on the income, properties, assets or operations of HI (or, with respect
to periods ending on or prior to the Closing Date, Seller's Group), together
with any interest additions or penalties with respect thereto and any interest
with respect to such additions and penalties.
"Tax Returns" means all reports and returns required to be filed with
respect to Taxes of HI or, with respect to all periods on or before the Closing
Date, Seller's Group, including, without limitation, consolidated federal income
tax returns of Seller's Group.
ARTICLE 2
PURCHASE AND SALE
2.1 Purchase. Subject to the terms and conditions set forth in this
Agreement, at the Closing (as defined in Section 7.1 herein), the Seller shall
sell, assign and transfer to the Purchaser and the Purchaser shall purchase,
accept and acquire One Thousand (1,000) shares of common stock of HI, which
represents all of the issued and outstanding shares of capital stock of HI (the
"Stock").
2.2 Purchase Price. The aggregate purchase price for the Stock (the
"Purchase Price") is Four Hundred Thousand Dollars ($400,000.00). Buyer shall
pay the Purchase Price as follows:
(1) On the Closing Date (as defined in Section 7.1 hereof), Buyer shall pay
to Seller the cash amount of One Hundred Thousand Dollars ($100,000.00)
("Initial Payment").
(2) On the Closing Date, Buyer shall pay the amount of Three Hundred
Thousand Dollars ($300,000.00) in the form of a promissory note ("Buyer
Promissory Note") attached hereto as Exhibit B, which shall be secured by the
share certificate representing the Stock as defined and specified in the stock
pledge agreement in the form attached hereto as Exhibit C (the "Stock Pledge
Agreement").
2.3 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, cause to be executed and deliver them at
or on the Closing Date:
(1) the Buyer Promissory Note in the form of Exhibit B;
(2) the Stock Pledge Agreement in the form of Exhibit C;
(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 Stock, subject to the Stock Pledge Agreement; and
(4) the HI Secured Promissory Note and the Security Agreement from HI to
Seller referred to in Section 2.4.
2.4 HI Secured Promissory Note. HI shall, on the Closing Date, issue a
secured promissory note to the Seller in the maximum amount of Seventy Five
Thousand Dollars ($75,000.00) to evidence HI's only debt to Seller (the "HI
Secured Promissory Note") in the form attached hereto as Exhibit D. The HI
Secured Promissory Note shall be secured by all of the computer equipment of HI
pursuant to the terms of a security agreement in the form attached hereto as
Exhibit E (the "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 of Seller. Seller is a corporation
validly existing and in good standing under the laws of the State of Nevada 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 Organization and Good Standing of HI. HI is a corporation validly
existing and in good standing under the laws of the State of Delaware with the
power to own all of its properties and assets and to carry on its business as it
is currently being conducted. HI 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.
3.3 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 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 against it inaccordance 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.
3.4 Capitalization of HI. The authorized capital stock of HI consists
of One Million (1,000,000) shares of Stock. As of the date of this Agreement,
there were One Thousand (1,000) issued and outstanding shares of Stock and no
shares of Stock held as treasury shares. No shares of Stock have been reserved
for issuance to any Person, and there are no other outstanding rights, warrants,
options or agreements for the purchase of Stock from HI or any notes or other
securities convertible into shares of stock. No Person is entitled to any rights
with respect to the issuance or transfer of the Stock. The outstanding shares of
Stock are validly issued, fully paid, non-assessable, and have been issued in
compliance with all state and Federal securities laws or other Law.
3.5 Right to Sell. Seller (1) is the sole and beneficial owner of the
Stock which Stock constitutes all the issued and outstanding shares in the
capital of HI, (2) has the exclusive right to dispose of the Stock as herein
provided and such disposition will not violate, contravene, breach or offend
against or result in any default under any indenture, mortgage, lease,
agreement, instrument, charter or by-law provision or Law to which Seller or by
which Seller is bound or affected, (3) is the holder of record of all the shares
of Stock, free and clear of encumbrances or rights of others (other than the
rights of the Buyer hereunder) and no Person (other than the Buyer hereunder)
has any agreement, option or any rights capable of becoming an agreement or
option for the acquisition of the Stock, and (4) upon transfer to the Buyer at
Closing of certificates representing such shares of Stock, the Buyer shall
receive full title to the Stock free and clear of all encumbrances or other
rights of others.
3.6 No Violations. Seller's execution and delivery of this
Agreement and performance of its obligations under this Agreement do not (1)
violate any provision of Seller's articles of incorporation or by-laws as
currently in effect, (2) 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 either Seller or HI is a party
or by which any of Seller's or HI's properties or assets are bound, or (3)
violate any Law or Order currently in effect to which Seller or HI is subject.
3.7 Absence of Conflicting Agreements. Neither Seller nor HI is a party to,
bound or affected by or subject to any indenture, mortgage, lease, agreement,
instrument, charter or by-law provision, statute, regulation, order, judgment,
decree or law which would be violated, contravened or breached by, or under
which any default would occur, as a result of the execution and delivery of this
Agreement or the consummation of any of the transactions provided for herein.
Except as contemplated by the terms of this Agreement, immediately following the
Closing HI will not be party to or bound by any contract, agreement or other
arrangement between HI and Seller or any affiliate of Seller.
3.8 Financial Statements. The Financial Statements of HI for the
period commencing on July 1, 2001 and ending on December 31, 2001, are true and
correct and have been prepared in accordance with GAAP. The management prepared
report annexed hereto as Exhibit F consisting of the accounts payable of HI and
the amount due to Seller as of and on the Closing Date is true and correct and
has been prepared in accordance with GAAP (the "Compilation Report"). To the
Seller's knowledge, since December 31, 2001, HI has not incurred any liability
outside the ordinary course business or entered into any agreement or
arrangement obligating HI to make aggregate payments in an amount exceeding Five
Thousand Dollars ($5,000), except with respect to the HI Secured Promissory Note
contemplated hereby.
3.9 Consent. Other than the consent of the Board of Directors of the
Seller, no Consent of any Person is required in connection with execution and
delivery of this Agreement or the other Transaction Documents to which the
Seller is party or the performance by the Seller of its obligations hereunder.
3.10 Compliance With Laws. To Seller's knowledge, HI has complied with
all Laws and Orders applicable to HI. Seller has not received any notice
alleging noncompliance with any Laws or Orders applicable to HI, 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.
3.11 Litigation. There is no suit, action, litigation, arbitration
proceeding or governmental proceeding, including appeals and applications for
review, in progress, pending or, to the best of the knowledge, information and
belief (after due enquiry) of the senior officers of the Seller, threatened
against or involving the Seller or any judgment, decree, injunction, rule or
order of any court, governmental department, commission, agency, instrumentality
or arbitrator which, in any such case, might adversely affect the ability of the
Seller to enter into this Agreement or to consummate the transactions
contemplated hereby. The Seller is not aware of any existing ground on which
any such action, suit or proceeding may be commenced with any reasonable
likelihood of success.
3.12 Tax Representations.
(a) As of the Closing Date, and except as set forth in Schedule
3.12, (i) all Tax Returns that are required to be filed prior to the Closing
Date by or with respect to HI, have been duly and timely filed and are true,
correct and complete, (ii) all Taxes due on the Tax Returns referred to in
clause (i) have been paid in full, (iii) HI has withheld or collected and then
paid over all Taxes required to have been withheld or collected, (iv) no
deficiencies exist or are being asserted or all deficiencies asserted or
assessments made as a result of examinations of any Tax Returns referred to in
clause (i) have been paid in full, (v) no issues that have been raised by the
relevant taxing authority in connection with the examination of any Tax Return
referred to in clause (i) are currently pending and (vi) no waivers of statutes
of limitation have been given by or requested with respect to any Taxes of HI
(b) Except as set forth in Schedule 3.12, HI has not made any elections
for federal income tax purposes.
3.13 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.
3.14 Resignation of Officers and Directors. Seller shall cause all officers
and all members of the Board of Directors of HI to resign as of the Closing
Date, and at the Closing will provide to Buyer proof of such resignations.
3.15 Inspection of Books and Records. Seller shall permit Buyer or its
Representatives and agents, at Buyer's expense and at reasonable times during
business hours, to inspect all the files, books, records and accounts of HI that
Seller has in its possession at the time of that request, as well as provide
Buyer with access to, and the cooperation of, any employee of Seller or HI
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 HI is a party or (2)
performance of accounting reviews or audits of the business of HI relating to
periods prior to the date of this Agreement.
3.16 Full Disclosure. The Financial Statements of HI and the
representations and warranties of the Seller contained in Article 3 of this
Agreement, do not contain any untrue statement of a material fact, or omit to
state a material fact required to be stated herein or therein, or necessary to
make the statements herein or therein, in the light of the circumstances under
which they were made, not misleading.
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 the State of Delaware 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 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.
4.3 No Violations. Execution and delivery of this Agreement by the Buyer
and the performance by the Buyer of its obligations under this Agreement do not
(1) violate any provision of its organizational documents as currently in
effect, (2) 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 (3) violate any Law or Order currently in effect to which it is
subject.
4.4 Absence of Conflicting Agreements. The Buyer is not a party
to, bound or affected by or subject to any indenture, mortgage, lease,
agreement, instrument, charter or by-law provision, statute, regulation, order,
judgment, decree or law which would be violated, contravened or breached by, or
under which any default would occur, as a result of the execution and delivery
of this Agreement or the consummation of any of the transactions provided for
herein.
4.5 Litigation. There is no suit, action, litigation, arbitration
proceeding or governmental proceeding, including appeals and applications for
review, in progress, pending or, to the best of the knowledge, information and
belief (after due enquiry) of the senior officers of the Buyer, threatened
against or involving the Buyer or any judgment, decree, injunction, rule or
order of any court, governmental department, commission, agency, instrumentality
or arbitrator which, in any such case, might adversely affect the ability of the
Buyer to enter into this Agreement or to consummate the transactions
contemplated hereby. The Buyer is not aware of any existing ground on which any
such action, suit or proceeding may be commenced with any reasonable likelihood
of success.
4.6 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.
4.7 Brokers. No broker, finder, investment advisor or other Person is
entitled to any fee or other commission, or other remuneration, in connection
with any action, agreement, arrangement or understanding taken or made by or on
behalf of Buyer, except for the fee, if any, to be paid by Buyer to Xxxxx Xxxxx
in connection with the transactions contemplated hereby.
4.8 Full Disclosure. The representations and warranties of the
Buyer contained in Article 4 of this Agreement, does not contain any untrue
statement of a material fact, or omit to state a material fact required to be
stated herein or necessary to make the statements herein, in the light of the
circumstances under which they were made, not misleading.
ARTICLE 5
INDEMNIFICATION
5.1 Survival of Representations. The representations and warranties of the
parties contained in this Agreement will survive until the first anniversary of
the date of this Agreement.
5.2 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 Seller prior to the
Closing Date.
5.3 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.
5.4 Procedures for a Third Party Claim. In order to be entitled to
indemnification under this Article 5 in connection with a claim made by any
Person against any Person entitled to indemnification pursuant to this Article 5
(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; 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, except that any failure to give any
such notification, or to furnish any such copy, will only affect the
Indemnifying Party's obligation to indemnify the Indemnified Party if the
Indemnifying Party has been materially prejudiced as a result of that failure.
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.
5.5 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 shall
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 6
CONDITIONS TO CLOSING
6.1 Conditions to Obligation of Buyer. The obligation of Buyer to
consummate the transactions contemplated hereby is subject to the satisfaction
or waiver, 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.
(b) All of the representations and warranties of Seller made in or
pursuant to this Agreement, including, without limitation, the representations
and warranties made and set forth in Article 3 hereof, shall be true and correct
as at the Closing and with the same effect as if made at and as of the Closing
(except as such representations and warranties may be affected by the occurrence
of events or transactions expressly contemplated and permitted hereby or by
transactions in the ordinary and normal course of business).
(c) Seller shall have delivered to the Buyer, in the care of Xxxxxxx,
Savage, Kaplowitz, Wolf and Marcus, LLP as escrow agent (the "Escrow Agent"),
share certificates representing all of the shares of Stock, which share
certificates shall have been duly endorsed in blank for transfer or accompanied
by duly executed stock powers.
(d) All documentation relating to the due authorization and completion
of the sale and purchase hereunder of the Stock and all actions and proceedings
taken on or prior to the Closing in connection with the performance of Seller's
obligations under this Agreement shall be satisfactory to the Buyer, acting
reasonably, and the Buyer shall have received copies of all such documentation
or other evidence as it may reasonably request in order to establish the
consummation of the transactions contemplated hereby and the taking of all
corporate proceedings in connection therewith in compliance with these
conditions, in form (as to certification and otherwise) and substance
satisfactory to the Buyer.
6.2 Conditions to Obligation of Seller. The obligation of Seller to
consummate the transactions contemplated hereby is subject to the satisfaction
or waiver, 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.
(b) All of the representations and warranties of Buyer made in or
pursuant to this Agreement, including, without limitation, the representations
and warranties made and set forth in Article 4 hereof, shall be true and correct
as at the Closing and with the same effect as if made at and as of the Closing
(except as such representations and warranties may be affected by the occurrence
of events or transactions expressly contemplated and permitted hereby or by
transactions in the ordinary and normal course of business).
(c) All documentation relating to the due authorization and
completion of the sale and purchase hereunder of the Stock and all actions and
proceedings taken on or prior to the Closing in connection with the performance
of Buyer's obligations under this Agreement shall be satisfactory to the Seller,
acting reasonably, and the Seller shall have received copies of all such
documentation or other evidence as it may reasonably request in order to
establish the consummation of the transactions contemplated hereby and the
taking of all corporate proceedings in connection therewith in compliance with
these conditions, in form (as to certification and otherwise) and substance
satisfactory to the Seller.
ARTICLE 7
CLOSING
7.1 Place, Date and Time. The closing of the sale and purchase contemplated
hereunder (the "Closing") shall take place at 10:00 a.m., Eastern Standard time,
on February 7, 2002, at the offices of Xxxxxxx, Savage, Kaplowitz, Wolf and
Marcus, LLP, or at such other time and place as may be agreed to by the Buyer
and Seller (the "Closing Date").
7.2 Actions by Seller and Buyer at the Closing. At the Closing, the
Seller and the Buyer shall take the following action:
(1) The Seller shall transfer and deliver to the Buyer, in the care of the
Escrow Agent, at the Closing share certificates representing the Stock duly
endorsed in blank for transfer or accompanied by an irrevocable security
transfer power of attorney duly executed in blank, in either case by the holder
of record thereof. The Seller shall take such steps as shall be necessary to
cause HI to, and HI shall, enter the Buyer or its nominee upon the books of HI
as the holder of the shares of Stock and to issue one or more share certificates
to the Buyer or its nominee representing the Stock.
(2) The Buyer shall pay to Seller the Initial Payment, shall issue the
Promissory Note and shall cause HI to execute and deliver the Secured Promissory
Note and Secured Loan and Security Agreement, all as outlined in Section 2
hereof.
(3) The Seller, the Buyer and the Escrow Agent shall execute and deliver an
Escrow Agreement in the form of Exhibit B to the Stock Pledge Agreement.
ARTICLE 8
OTHER TAX MATTERS
8.1 Liability for Taxes and Related Matters.
(a) Liability for Taxes. Seller shall be liable for and indemnify
Buyer for all Taxes (including without limitation, any obligation to contribute
to the payment of a Tax determined on a consolidated, combined or unitary basis
with respect to a group of corporations that includes or included HI and Taxes
resulting from HI ceasing to be a member of the Seller's Group) (i) imposed on
Seller's Group (other than HI) for any taxable year, (ii) imposed on HI or for
which HI may otherwise be liable for any taxable year or period that ends on or
before the Closing Date and, with respect to any taxable year or period
beginning before and ending after the Closing Date, the portion of such taxable
year ending on and including the Closing Date. Seller shall be entitled to any
refund of Taxes HI received for such periods.
(b) Buyer shall be liable for and indemnify Seller for Taxes of HI for
any taxable year or period that begins after the Closing Date and, with respect
to any taxable year or period beginning before and ending after the Closing
Date, the portion of such taxable year beginning after the Closing Date. The
Buyer shall be entitled to any refund of Taxes of HI received for such periods.
(c) Taxes for Short Taxable Year. For purposes of Section 8.01(a) and (b),
whenever it is necessary to determine the liability for Taxes of HI for a
portion of a taxable year or period that begins before and ends after the
Closing Date, the determination of the Taxes of HI for the portion of the year
or period ending on, and the portion of the year or period beginning after, the
Closing Date shall be determined by assuming that HI had a taxable year or
period which ended at the Closing Date, except that exemptions, allowances or
deductions that are calculated on an annual basis, such as the deduction for
depreciation, shall be apportioned on a time basis.
(d) Adjustment to Purchase Price. Any payment by Buyer or Seller under
this Article 8 will be an adjustment to the Purchase Price.
(e) Refunds from Carrybacks. Buyer agrees to waive the carryback of
losses, credits, or similar items from a taxable year or period that begins
after the Closing Date and attributable to HI.
(f) Tax Returns and Payment of Taxes. Seller shall file or cause to be
filed when due all Tax Returns with respect to Taxes that are required to be
filed by or with respect to HI for taxable years or periods ending on or before
the Closing Date (including, but not limited to, any Tax Returns HI may be
required to file for a taxable year ending on the Closing Date as a result of HI
being merged or liquidated out of existence on the Closing Date after the
Closing), and shall pay any Taxes due in respect of such Tax Returns, and Buyer
shall file or cause to be filed when due all Tax Returns with respect to Taxes
that are required to be filed by or with respect to HI for taxable years or
periods ending after the Closing Date and shall remit any Taxes due in respect
of such Tax Returns. Seller shall pay Buyer the Taxes for which Seller is
liable pursuant to Section 8.01(a) but which are payable with Tax Returns to be
filed by Buyer pursuant to the previous sentence within 10 days prior to the due
date for the filing of such Tax Returns.
(g) Contest Provisions. Buyer shall promptly notify Seller in
writing upon receipt by Buyer, any of its affiliates or HI of notice of any
pending or threatened federal, state, local or foreign income or franchise tax
audits or assessments which may materially affect the tax liabilities of HI for
which Seller would be requires to indemnify Buyer pursuant to Section 8.01(a),
provided that failure to comply with this provision shall not affect Buyer's
right to indemnification hereunder. Seller shall have the sole right to
represent HI's interest in any tax audit or administrative or court proceeding
relating to taxable periods beginning before the Closing Date, and employ
counsel of its choice at its expense. Notwithstanding the foregoing, Seller
shall not be entitled to settle, either administratively or after the
commencement of litigation, any claim for Taxes which would adversely affect the
liability for Taxes of the Buyer or HI for any period after the Closing Date to
any extent (including, but not limited to, the imposition of income tax
deficiencies, the reduction of asset basis or cost adjustments, the lengthening
of any amortization or depreciation periods, the denial of amortization or
depreciation deductions, or the reduction of loss or credit carryfowards)
without the prior written consent of Buyer. Such consent shall not be
unreasonably withheld, and shall not be necessary to the extent that Seller has
indemnified the Buyer against the effects of any such settlement.
(h) Termination of Tax Allocation Agreements. Any tax allocation or
sharing agreement or arrangement, whether or not written, that may have been
entered into by Seller or any member of Seller's Group and HI shall be
terminated as to HI as of the Closing Date, and no payments which are owed by or
to HI pursuant thereto shall be made thereunder.
8.2 Transfer Taxes. Seller shall be liable for all transfer taxes arising
from the sale of the Stock.
8.3 Assistance and Cooperation. After the Closing Date, each of Seller and
Buyer shall:
(i) assist (and cause their respective affiliates to assist) the other
party in preparing any Tax Returns or reports which such other party is
responsible for preparing and filing in accordance with this Article 8;
(ii) cooperate fully in preparing for any audits of or disputes with taxing
authorities regarding, any Tax Returns of HI;
(iii) make available to the other and to any taxing authority as reasonably
requested, all information, records and documents relating to Taxes of HI;
(iv) provide timely notice to the other in writing of any pending or
threatened tax audits or assessments of HI for taxable period for which the
other may have a liability under this Article 8; and
(v) furnish the other with copies of all correspondence received from any
taxing authority in connection with any tax audit or information request with
respect to any such taxable period.
ARTICLE 9
MISCELLANEOUS
9.1 Governing Law. This Agreement shall be governed by the laws of the
State of New York without giving effect to principles of conflict of laws.
9.2 Expenses. Seller and Buyer shall share equally and shall timely pay all
sales, use, value added, documentary, stamp, gross receipts, registration,
transfer, conveyance, excise, recording, license and other similar taxes and
fees.
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 Stock to Buyer and
to effectuate the intent 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 Arbitration. In the event of any dispute among the parties in
connection with this Agreement, including without limitation, disputes over a
claim pursuant to this Section or any disputes under the state or federal
securities laws in connection with this Agreement, Buyer and Seller shall
attempt in good faith to agree upon the rights of the respective parties with
respect to each of such claims. If the Buyer and Seller should so agree, a
memorandum setting forth such agreement shall be prepared and signed by both
parties.
If no such agreement can be reached after good faith negotiation (or in any
event after sixty (60) days from the date of the notice), either Buyer or Seller
may demand arbitration of the matter unless the amount of the damage or loss is
at issue in pending litigation with a third party, in which event arbitration
shall not be commenced until such amount is ascertained or both parties agree to
arbitration; and in either such event the matter shall be settled by arbitration
in the city of New York conducted by one (1) arbitrator, that is mutually
acceptable to both the Buyer and the Seller. The arbitrator shall set a limited
time period and establish procedures designed to reduce the cost and time for
discovery while allowing the parties an opportunity, adequate in the sole
judgment of the arbitrators, to discover relevant information from the opposing
parties about the subject matter of the dispute. The arbitrator shall rule upon
motions to compel or limit discovery and shall have the authority to impose
sanctions, including attorneys' fees and costs, to the same extent as a court of
law or equity, should the arbitrators determine that discovery was sought
without substantial justification or that discovery was refused or objected to
without substantial justification. The decision of the arbitrator as to the
validity and amount of any claim in such notice shall be binding and conclusive
upon the parties to this Agreement. Such decision shall be written and shall be
supported by written findings of fact and conclusions which shall set forth the
award, judgment, decree or order awarded by the arbitrator. The arbitrator
shall not be empowered to award punitive damages.
9.7 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:
(ii) personal delivery, in which case delivery will be deemed to occur the
day of delivery;
(iii) 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
(iv) 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 Seller: Tangible Asset Galleries, Inc.
0000 Xxx Xxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx
Facsimile: 000-000-0000
Attn: Xxxxxxx XxXxxxxx
with copy to: Xxxxxxx, Savage, Kaplowitz, Wolf & Marcus LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: 212-980-5192
Attn: Xxxxxx Xxxxxx
If to Buyer: HCR Holdings Corporation
X.X. Xxx 000
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
with copy to: Xxxxx Xxxxxxx Xxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxx
9.8 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.
9.9 Amendment. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.
9.10 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.
9.11 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.
9.12 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.
SELLER
TANGIBLE ASSET GALLERIES, INC.,
By: /s/ Xxxxxxx XxXxxxxx
Name: Xxxxxxx XxXxxxxx
Title: Chief Executive Officer
BUYER
HCR HOLDINGS CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title:CEO
