ASSET PURCHASE AGREEMENT
Exhibit
1.0
ASSET
PURCHASE AGREEMENT, dated as of May 9, 2007 between DGSE COMPANIES, INC., a
Nevada Corporation (the “Buyer”),
Euless Gold & Silver Inc., a Texas corporation (“Seller”),
and
for limited purposes, Teton Technology Inc. (“Teton”).
Terms
not immediately defined herein are defined under Article VIII.
W
I T N E
S S E T H:
WHEREAS,
Seller is in the business of the sales and marketing of jewelry (the
“Business”);
and
WHEREAS,
the Buyer wishes to purchase or acquire from Seller, and Seller wishes to sell,
assign and transfer to the Buyer, substantially all of the assets and properties
held in connection with, necessary for, or material to the business and
operations of the Business; all for the purchase price and upon the terms and
subject to the conditions hereinafter set forth; and
WHEREAS,
Teton stands the benefit from the sale of Seller to Buyer; and
NOW,
THEREFORE, in consideration of the mutual covenants, representations and
warranties made herein, and of the mutual benefits to be derived hereby, the
parties hereto agree as follows:
ARTICLE
I
SALE
AND
PURCHASE OF THE ASSETS
1.1
Assets.
Subject
to and upon the terms and conditions set forth in this Agreement, the Seller
will sell, transfer, convey, assign and deliver to the Buyer, and the Buyer
will
purchase or acquire from the Seller, all right, title and interest of the Seller
in and to the assets set forth below, which primarily relate to or are used
or
held for use in connection with the Business as the same may exist on the
Closing Date (collectively, the “Assets”),
and
which conform to the definition of the term “Assets”:
(a)
all
equipment, furniture and fixtures described on Schedule
1.1(a);
(b)
the
inventory of the Business described on Schedule
1.1(b)
(“Inventory”)
(c)
All
right, title and interest of the Seller in, to and under all trademarks, trade
names, copyrights, and other intellectual property necessary or used in the
Business and described on Schedule
1.1(c) (collectively,
the “Intellectual
Property”);
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(d)
All
post
office boxes, all telephone numbers, answering service numbers, and other
communication codes or numbers (including, without limitation, any e-mail
addresses and Internet sites) used primarily in connection with the
Business;
(e) All
of
the Seller’s goodwill with respect to the Business and the operations thereof;
ARTICLE
II
THE
CLOSING
2.1
Place
and Date.
The
closing of the sale and purchase of the Assets (the “Closing”)
shall
take place and be effective as of the date of this Agreement. The date of the
Closing is herein referred to as the “Closing
Date”.
2.2
Purchase
Price.
On the
terms and subject to the conditions set forth in this Agreement, the Buyer
agrees to pay or cause to be paid to Seller an aggregate of U.S. $1,000,000
(the
“Purchase
Price”).
The
following portions of the Purchase Price shall be payable at the Closing, in
separate payments determined in accordance with Section 2.3, as
follows:
(a)
by
the
wire transfer of $600,000 ($500,000 of which shall be payable to Seller and
$100,000 of which shall be payable to Teton) in immediately available funds
to
such bank account or accounts as per written instructions of Seller, given
to
the Buyer at least five days prior to the Closing to which such payment relates;
and
(b)
By
the
execution and delivery to Seller of a Promissory Note (the “Note”)
of the
Buyer in the principal amount of $400,000, as increased or decreased by the
Purchase Price Adjustment Amount (defined in Section 2.3 below), such Note
to be
in the form of Exhibit
A
attached
hereto.
2.3
Adjustments
to Purchase Price.
(a) The
Purchase Price shall be, as applicable, either reduced by the amount, if any,
that the combined value of the Inventory immediately prior to Closing is less
than [$________________],
or
increased by the amount, if any, that the value of the Inventory immediately
prior to Closing is greater than [$________________]
(“Purchase Price Adjustment Amount”). For purposes of this Agreement, the value
of Inventory will be based on book value as of the Closing Date.
2.4
Consent
of Third Parties.
Notwithstanding anything to the contrary in this Agreement, this Agreement
shall
not constitute an agreement to assign or transfer any governmental approval,
instrument, contract, lease, permit or other agreement or arrangement or any
claim, right or benefit arising thereunder or resulting therefrom if an
assignment or transfer or an attempt to make such an assignment or transfer
without the consent of a third party would constitute a breach or violation
thereof or affect adversely the rights of the Buyer or Seller thereunder; and
any transfer or assignment to the Buyer by Seller of any interest under any
such
instrument, contract, lease, permit or other agreement or arrangement that
requires the consent of a third party shall be made subject to such consent
or
approval being obtained.
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ARTICLE
III
REPRESENTATIONS
AND WARRANTIES
As
of the
date hereof Seller represents and warrants to the Buyer as follows:
3.1 Authorization.
Seller
has the corporate power and authority to execute and deliver this Agreement,
the
Xxxx of Sale, and each other agreement, document, and instrument required to
be
executed in accordance herewith (collectively, the “Transaction
Documents”),
to
perform fully its obligations thereunder, and to consummate the transactions
contemplated thereby. The execution and delivery by Seller of this Agreement,
and the consummation of the transactions contemplated hereby, have been duly
authorized by all requisite corporate action of Seller and the resolution of
the
Seller authorizing this transaction is attached as Exhibit
B.
This
Agreement is a legal, valid and binding obligation of Seller, enforceable
against it in accordance with its respective terms.
3.2
Corporate
Status.
Seller
is a corporation duly organized, validly existing and in good standing under
the
laws of Texas, with full corporate power and authority to carry on its business
and to own or lease and to operate its properties in the places where such
business is conducted and such properties are owned, leased or operated,
including, but not limited to the states of ____Texas____________. Seller has
delivered to the Buyer complete and correct copies of its certificate of
incorporation and by-laws or other organizational documents, in each case,
as
amended and in effect on the date hereof. Seller is not in violation of any
of
the provisions of its certificate of incorporation or by-laws or other
organizational documents.
3.3
No
Conflicts.
Unless
otherwise disclosed by Seller, no action, approval, consent or authorization
of
any governmental authority is necessary for Seller to consummate the
transactions contemplated hereby.
3.4
Liabilities.
With
the exception of the Leases as defined below, Seller is not transferring any
of
its liabilities or obligations to Buyer.
3.5.
Taxes.
To
Seller’s knowledge and belief, except as disclosed on Schedule
3.5,
(a) all
federal, state, and local tax returns, reports, and statements (including all
income tax, unemployment compensation, social security, payroll, sales and
use,
excise, privilege, property, ad valorem, franchise, license, school and any
other tax under laws of the United States or any state or municipal or political
subdivision thereof) required to be filed by Seller in connection with the
Assets and the Business (the “Tax
Returns”)
have
been filed with the appropriate governmental agencies in all jurisdictions
in
which such returns, reports, and statements are required to be filed, and all
such returns, reports, and statements properly reflect the tax liabilities
of
Seller in relation to the Assets for the periods, properties, or events covered
thereby; (b) all federal, state, and local taxes, assessments, interest,
penalties, deficiencies, fees and other governmental charges or impositions,
including those enumerated above in respect to the Tax Returns, which are called
for by the Tax Returns, or claimed to be due by any taxing authority from
Seller, or upon or measured by Seller’s properties, assets, or income (the
“Taxes”)
have
been properly accrued or paid; (c) Seller has not received any notice of
assessment or proposed assessment by the Internal Revenue Service (“IRS”)
or any
other taxing authority in connection with any Tax Returns and there are no
pending tax examinations of or tax claims asserted against Seller or any of
the
Assets or properties; (d) there are no tax liens (other than any lien for
current taxes not yet due and payable) on any of the Assets; and (e) Seller
has
no knowledge of any basis for any additional assessment of any Taxes in relation
to the Assets.
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3.6.
Litigation.
Except
as set forth on Schedule
3.6,
to
Sellers’ knowledge and reasonable belief there is no action, claim, demand,
suit, proceeding, arbitration, grievance, citation, summons, subpoena, inquiry
or investigation of any nature, civil, criminal, regulatory or otherwise, in
law
or in equity, pending or threatened against or relating to Seller in connection
with the Assets or against or relating to the transactions contemplated by
this
Agreement. Except as set forth in such Schedule
3.6,
to
Sellers’ knowledge no citations, fines or penalties have been asserted against
Seller with respect to the Assets under any Environmental Law or any federal,
state or local law relating to occupational health or safety.
3.7
Compliance
with Laws, Governmental Approvals and Consents.
Seller
has complied with and is in compliance with all laws, regulations, licensing
requirements, rules, ordinances, and orders of Governmental Authorities,
including, without limitation, all Environmental Laws, regulative rules,
ordinances, and orders of Governmental Authorities except for any non-compliance
which has not had a Material Adverse Effect on the Assets. Seller has not
received any notices of non-compliance from any governmental
agency.
3.8 Title
to Assets.
Unless
otherwise disclosed by Seller on Schedule 3.8, Seller has good and defensible
title to each and all of the Assets, free and clear of all liens, security
interests, pledges, charges, claims, and encumbrances of any kind and rights
of
other persons or entities. Those Assets that constitute equipment, inventory,
or
other goods are, and will be as of the Closing, in good operating condition
and
repair and fit for the purpose for which they are intended to be used in the
Business.
3.9 Intellectual
Property.
Schedule
1.1(c) hereto
contains a true, correct, and complete list of all trademarks, trade names,
patents, and copyrights owned by Seller, all registrations thereof, and all
pending applications therefor and all agreements for the licensing of any such
trademarks, trade names, patents, or copyright. To the best of the Seller’s
knowledge, Seller does not infringe any existing patent or violate any trade
secrets or secret processes of any third person by virtue of the manufacture,
sale, or use of any products or processes in the conduct of its business. There
are no proceedings pending or, to the best of Seller’s knowledge, threatened
against Seller in respect of any trademark, trade name, patent, copyright or
application therefor. All registered trademarks listed on Schedule
1.1(c)
are
validly registered; all taxes, annuities, or other maintenance fees required
to
be paid with respect to all listed trademarks have been paid in full; and,
all
requirements of use with respect to all listed trademarks have been met. Unless
otherwise disclosed by Seller on Schedule
3.9,
Seller
owns or possesses rights to use all inventions, processes, designs, trade
secrets, know-how, customer lists, and other industrial property rights
necessary for the conduct of its business, free and clear of any payment or
encumbrance.
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3.10 Real
Estate Leases.
Listed
on Schedule
3.10
is a
complete and correct list of (i) all leases relating to the Business
(“Leases”)
setting forth the address, landlord and tenant for each lease (“Leased
Properties”).
Seller has delivered to the Buyer correct and complete copies of the Leases
and
each lease is legal, valid, binding, enforceable, and in full force and effect.
Seller is not in default, violation or breach in any respect under any lease
and
no event has occurred and is continuing that constitutes or, with notice or
the
passage of time or both, would constitute a default, violation or breach in
any
respect under any lease. The Seller has good and valid title to the leasehold
estate under each lease, free and clear of all Liens other than Permitted Liens.
3.11 Environmental
Matters.
Seller
has not been a party to any release nor does Seller have any knowledge of any
release of or storage of any substances which affects the Assets, the release
or
storage of which is prohibited, restricted, or regulated by any Environmental
Law, regulation, rule, ordinance, or order of any domestic governmental
authority. The Seller has not received any notice from any governmental
authority as to any environmental condition regardless of whether such condition
is violative of law. Seller has disclosed and made available to the Buyer all
information, including without limitation all studies, analyses and test
results, in the possession, custody or control of Seller relating to (i) the
environmental conditions on, under or about the Leased Properties, and (ii)
Hazardous Substances used, managed, handled, transported, treated, generated,
stored or Released by Seller or any other person at any time on the Leased
Properties, or otherwise in connection with the use or operation of the Leased
Properties used in or held for use in connection with the Assets.
3.12 Brokers,
Finders.
Seller
acknowledges that Seller has not been represented by any Broker in negotiating
and procuring the Buyer as is set forth in this Agreement and not fees are
owed
to any such Broker.
3.13 Disclosure.
No
representation or warranty by Seller contained in this Agreement nor any
statement or certificate furnished or to be furnished by or on behalf of Seller
to the Buyer or its representatives in connection herewith or pursuant hereto
knowingly contains or will contain any untrue statement of a material fact,
or
omits or will omit to state any material fact required to make the statements
contained herein or therein not mislead-ing. There is no fact known to Seller
that has not been disclosed by Seller to the Buyer that might reasonably be
expected to have or result in a Material Adverse Effect.
3.14 Inventory.
All
inventories owned by Seller (‘‘Inventories’’) consist of items of a quality and
quantity usable and saleable in the ordinary course of business by Seller.
All
items included in the Inventories are the property of Seller, except for sales
made in the ordinary course of business, and for each of such sales, either
the
purchaser of the Inventories has made full payment for it or the purchaser’s
liability to make such payment is reflected in the financial books of the
Seller. No items included in the Inventories shall be pledged as of the Closing
Date as collateral or are held by Seller on consignment from
others.
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ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES - BUYER
As
of the
date hereof, the Buyer represents and warrants to Seller as
follows:
4.1. Authorization.
Buyer
has the corporate power and authority to execute and deliver this Agreement
and
each of the Transaction Documents to which it will be a party, to perform fully
its obligations thereunder, and to consummate the transactions contemplated
thereby. The execution and delivery by Buyer of this Agreement, and the
consummation of the transactions contemplated hereby, have been duly authorized
by all requisite corporate action of Buyer and the resolution of Buyer
authorizing this transaction is attached as Exhibit
C.
This
Agreement is a legal, valid and binding obligation of Buyer, enforceable against
it in accordance with its respective terms.
4.2
Corporate
Status.
Buyer
is a corporation duly organized, validly existing and in good standing under
the
laws of Nevada with full corporate power and authority to carry on its business
and to own or lease and to operate its properties in the places where such
business is conducted and such properties are owned, leased or operated. Buyer
is not in violation of any of the provisions of its certificate of organization
or regulations or other organizational documents.
4.3. No
Conflicts.
The
execution, delivery and performance by Buyer of this Agreement and each of
the
Transaction Documents to which it is a party, and the consummation of the
transactions contemplated thereby, do not and will not conflict with or result
in a violation of or under (with or without the giving of notice or the lapse
of
time, or both) (i) any Applicable Law applicable to Buyer or any of its
properties or assets or (ii) any contract, agreement or other instrument
applicable to Buyer or its properties or assets. No Governmental Approval or
other Consent is required to be obtained or made by Buyer in connection with
the
execution and delivery of this Agreement or the Transaction Documents or the
consummation of the transactions contemplated thereby.
4.4. Litigation.
There
is no action, claim, suit or proceeding pending, or to the Buyer’s knowledge
threatened, by or against or affecting Buyer in connection with or relating
to
the transactions contemplated by this Agreement or of any action taken or to
be
taken in connection herewith or the consummation of the transactions
contemplated hereby.
4.5 Brokers,
Finders, etc.
Buyer
represents and warrants that Buyer has not been represented by any broker and
that the Seller shall have no liability for any broker or finder claiming
through the Buyer.
4.6 Disclosure.
No
representation or warranty by Buyer contained in this Agreement in connection
herewith or pursuant hereto knowingly contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material fact
required to make the statements contained herein or therein not mislead-ing.
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ARTICLE
V
COVENANTS
- SELLER
5.1. Further
Assurances.
Following the Closing, the Seller shall, from time to time, execute and deliver
such additional instruments, documents, conveyances or assurances and take
such
other actions as shall be necessary, or otherwise reasonably requested by the
Buyer, to confirm and assure the rights and obligations provided for in this
Agreement and in the Transaction Documents and render effective the consummation
of the transactions contemplated thereby.
5.2.
Liability
for Transfer Taxes.
The
Seller shall be responsible for the timely payment of, and shall indemnify
and
hold harmless the Buyer against, all sales (including, without limitation,
bulk
sales), use, value added, documentary, stamp, gross receipts, registration,
transfer, conveyance, excise, recording, firearm, ammunition, license and other
similar Taxes and fees (“Transfer
Taxes”),
arising out of or attributable to the transactions effected pursuant to this
Agreement. The Seller shall prepare and timely file all Tax Returns required
to
be filed in respect of Transfer Taxes (including, without limitation, all
notices required to be given with respect to bulk sales taxes), provided
that the
Buyer shall be permitted to prepare any such Tax Returns that are the primary
responsibility of the Buyer under applicable law. The Buyer’s preparation of any
such Tax Returns shall be subject to Seller’s approval, which approval shall not
be withheld unreasonably.
ARTICLE
VI
COVENANTS
- BUYER
6.1. Public
Announcements.
Prior
to the Closing, except as required by Applicable Law, the Buyer shall not make
any public announcement in respect of this Agreement or the transactions
contemplated hereby without the prior written consent of Seller.
6.2. Further
Assurances.
Following the Closing, the Buyer shall, from time to time, execute and deliver
such additional instruments, documents, conveyances or assurances and take
such
other actions as shall be necessary, or otherwise reasonably requested by the
Seller, to confirm and assure the rights and obligations provided for in this
Agreement and render effective the consummation of the transactions contemplated
thereby.
ARTICLE
VII
INDEMNIFICATION
7.1 Indemnification.
Seller
covenants and agrees to indemnify, defend, and hold harmless Buyer from and
against any and all claims, suits, losses, judgments, damages, liabilities,
including but not limited to any investigation, legal, and other expenses
incurred in connection with, and any amount paid in, settlement of any claim,
action, suit, proceeding (collectively called “Losses”),
to
which Buyer may become subject, if such Losses arise out of or are based upon
any facts and circumstances (or alleged facts and circumstances) with respect
to
(a) a material inaccuracy, misrepresentation, breach of warranty, breach of
covenant by Seller to Buyer in this Agreement, (b) a claim of a creditor of
Seller, (c) a material breach of any of the provisions of this Agreement;
provided, however, that Seller shall not be obligated to indemnify Buyer with
respect to any claim until such time as such claim(s) in the aggregate
[exceed
$5,000, in which event Buyer shall be entitled to receive indemnity payments
in
the amount of all Losses in excess of $5,000].
This
right to indemnification is in addition to any other right available to Buyer,
including the right to xxx Seller for misrepresentation, breach of warranty,
or
breach of covenant under this Agreement.
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7.2 Notification
and Defense of Claims or Actions.
When
Buyer proposes to assert the right to be indemnified under this section with
respect to third-party claims, actions, suits, or proceedings, Buyer shall,
within 30 days after the receipt of notice of the commencement of the claim,
action, suit, or proceeding, notify Seller in writing, enclosing a copy of
all
papers served or received. On receipt of the notice, Seller shall have the
right
to direct the defense of the matter, but Buyer shall be entitled to participate
in the defense and, to the extent that Buyer desires, to jointly direct the
defense with Seller with counsel mutually satisfactory to Buyer and Seller
at
the expense of Seller. Buyer shall also have the right to employ its own
separate counsel in any such action. The fees and expenses of Buyer’s counsel
shall be paid by Buyer unless: (a) the employment of the counsel has been
authorized by Seller (b) counsel of Seller in such litigation has reasonably
concluded that there may be a conflict of interest between action; or (c) Seller
has not, in fact, employed counsel satisfactory to Buyer to assume the defense
of the action. In each of these cases, the fees and expenses of Buyer’s counsel
shall be paid by Seller. Neither Seller nor Buyer shall be liable for any
settlement of any action or claim described in this section that is effected
without their consent; provided, if Seller has failed to honor its obligations
under this paragraph, Buyer may settle any claim at the expense of
Seller.
7.3 Income
Taxes.
Seller
shall indemnify, defend, and hold harmless Buyer from and against any Losses
to
which Seller may become subject insofar as such Losses arise out of or are
based
on any tax on or measured by the net income or sales of Seller in any period
on
or before the Closing Date. The indemnifications provided in this paragraph
are
cumulative.
7.4 Set-off.
The
Buyer shall have the right to set-off and apply against all amounts due and
owing under any agreement between Buyer and Seller, including, but not limited
to, the Note, if applicable, all sums in respect of which the Seller may be
liable as a result of a breach of any representation or warranty contained
in
this Agreement, or pursuant to the indemnification agreement contained in this
Agreement or with respect to any other provision of this Agreement, such right
of set-off to be in addition to and not in lieu of or an election against any
and all other remedies available to the Buyer at law or in equity; provided,
however, when exercising its right of set-off under this Section, Buyer agrees
that Buyer will act in good faith and will not exercise the right of set-off
with respect to frivolous or specious claims.
7.5 Survival.
Notwithstanding any provision to the contrary in this Agreement, all
claims for indemnification under this Article VII for breaches of
representations and warranties made herein must be asserted prior to the
expiration of two (2) years following the Closing Date, except that claims
for
indemnification relating to fraud, Section
3.1
(Seller’s Authorization), Section
3.2
(Seller’s Corporate Status), Section
3.5
(Taxes), Section
3.8
(Title to Assets), Section
4.1
(Buyer’s Authority), and Section
4.2
(Buyer’s Corporate Status) may be made at any time after the Closing Date
without any time limitation.
7.7 Indemnity
Limit.
No
indemnification shall be required to be made pursuant to this Article VII with
respect to any claims to the extent that the aggregate amount of Damages
incurred with
respect to such claims (whether asserted, resulting, imposed, or incurred
before, on, or after the Closing Date) exceeds [Two
Million, Five Hundred Thousand Dollars ($2,500,000)]
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ARTICLE
VIII
DEFINITIONS
The
terms
defined in this Article VIII, whenever used in this Agreement (including in
the
Schedules), shall have the respective meanings indicated below for all purposes
of this Agreement. All references herein to a Section, Article or Schedule
are
to a Section, Article or Schedule of or to this Agreement, unless otherwise
indicated.
Agreement:
this
Asset Purchase Agreement, including the Schedules and Exhibits
hereto.
Applicable
Law:
all
applicable provisions of all (i) constitutions, treaties, statutes, laws
(including the common law), rules, regulations, ordinances, codes or orders
of
any Governmental Authority, (ii) Governmental Approvals and (iii) orders,
decisions, injunctions, judgments, awards and decrees of or agreements with
any
Governmental Authority.
Assets:
as
defined in Section 1.1.
Business
Day: shall
mean a day other than a Saturday, Sunday or other day on which commercial banks
in the state of Texas are authorized or required to close.
Buyer:
as
defined in the first paragraph of this Agreement.
CERCLA:
the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended, 42 U.S.C. § 9601 et
seq.
Closing
Date:
as
defined in Section 2.1.
Code:
the
Internal Revenue Code of 1986, as amended.
Consent:
any
consent, approval, authorization, waiver, permit, grant, franchise, concession,
agreement, license, exemption or order of, registration, certificate,
declaration or filing with, or report or notice to, any Person, including but
not limited to any Governmental Authority.
Environmental
Laws:
all
Applicable Laws relating to the protection of the environment, to human health
and safety, or to any emission, discharge, generation, processing, storage,
holding, abatement, existence, Release, threatened Release or transportation
of
any Hazardous Substances, including, without limitation, (i) CERCLA, the
Resource Conservation and Recovery Act, and the Occupational Safety and Health
Act, (ii) all other requirements pertaining to reporting, licensing, permitting,
investigation or remediation of emissions, discharges, releases or threatened
releases of Hazardous Materials into the air, surface water, groundwater or
land, or relating to the manufacture, processing, distribution, use, sale,
treatment, receipt, storage, disposal, transport or handling of Hazardous
Substances, and (iii) all other requirements pertaining to the protection of
the
health and safety of employees or the public.
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Environmental
Liabilities and Costs:
all
Losses, whether direct or indirect, known or unknown, current or potential,
past, present or future, imposed by, under or pursuant to Environmental Laws,
including, without limitation, all Losses related to Remedial Actions, and
all
fees, disbursements and expenses of counsel, experts, personnel and consultants
based on, arising out of or otherwise in respect of: (i) the ownership of the
Assets, Real Property or other leases or any other real properties, assets,
equipment or facilities, by any Seller, or any of their predecessors or
affiliates; (ii) the environmental conditions existing on the Closing Date
on,
under, above, or about any Real Property or property subject to Other Leases
or
any other real properties, assets, equipment or facilities currently or
previously owned, leased or operated by any Seller, or any of their predecessors
or affiliates; and (iii) expenditures necessary to cause any Real Property
or
any aspect of the Assets to be in compliance with any and all requirements
of
Environmental Laws as of the Clos-ing Date.
Governmental
Approval:
any
Consent of, with or to any Governmental Authority.
Governmental
Authority:
any
nation or government, any state or other political subdivision thereof, any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including, without limitation, any
government authority, agency, department, board, commission or instrumentality
of the United States, any State of the United States or any political
subdivision thereof, and any tribunal or arbitrators) of competent jurisdiction,
and any self-regulatory organization.
Hazardous
Substances:
any
substance that: (i) is or contains asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum or petroleum-derived substances or wastes,
radon gas or related materials (ii) requires investigation, removal or
remediation under any Environmental Law, or is defined, listed or identified
as
a “hazardous waste” or “hazardous substance” thereunder, or (iii) is toxic,
explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic, or otherwise hazardous and is regulated by any Governmental Authority
or Environmental Law.
IRS:
the
Internal Revenue Service.
Lien:
any
mortgage, pledge, hypothecation, right of others, claim, security interest,
encumbrance, lease, sublease, license, occupancy agreement, adverse claim or
interest, easement, covenant, encroachment, burden, title defect, title
retention agreement, voting trust agreement, interest, equity, option, lien,
right of first refusal, charge or other restrictions or limitations of any
nature whatsoever, including but not limited to such as may arise under any
contracts.
Material
Adverse Effect:
any
event, occurrence, fact, condition, change or effect that is materially adverse
to the Assets.
Permitted
Liens:
(i)
Liens for Taxes not yet due and payable or which are being contested in good
faith and by appropriate proceedings if adequate re-serves with respect thereto
are maintained on the books of any Seller in accordance with generally accepted
accounting principles, or (ii) Liens that, individually and in the aggregate,
do
not and would not materially detract from the value of any of the Assets or
materially interfere with the use thereof as currently used or contemplated
to
be used or otherwise.
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10
Person:
any
natural person, firm, partnership, association, corporation, company, trust,
business trust, Governmental Authority or other entity.
Purchase
Price:
as
defined in Section 2.2.
Release:
any
releasing, disposing, discharging, injecting, spilling, leaking, leaching,
pumping, dumping, emitting, escaping, emptying, seeping, dispersal, migration,
transporting, placing and the like, including without limitation, the moving
of
any materials through, into or upon, any land, soil, surface water, ground
water
or air, or otherwise entering into the environment.
Remedial
Action:
all
actions required to (i) clean up, remove, treat or in any other way remediate
any Hazardous Substances; (ii) prevent the release of Hazardous Substances
so
that they do not migrate or endanger or threaten to endanger public health
or
welfare or the environment; or (iii) perform studies, investigations and care
related to any such Hazardous Substances.
Seller:
as
defined in the first paragraph of this Agreement.
Subsidiaries:
each
corporation or other Person in which a Person owns or controls, directly or
indirectly, capital stock or other equity interests representing at least 50%
of
the outstanding voting stock or other equity interests.
Tax:
any
federal, state, provincial, local, foreign or other income, alternative,
minimum, accumulated earnings, personal holding company, franchise, capital
stock, net worth, capital, profits, windfall profits, gross receipts, value
added, sales, use, goods and services, excise, customs duties, transfer,
conveyance, mortgage, registration, stamp, documentary, recording, premium,
severance, environmental (including taxes under Section 59A of the Code), real
property, personal property, ad valorem, intangibles, rent, occupancy, license,
occupational, employment, unemployment insurance, social security, disability,
workers’ compensation, payroll, health care, withholding, estimated or other
similar tax, duty or other governmental charge or assessment or deficiencies
thereof (including all interest and penalties thereon and additions thereto
whether disputed or not).
Tax
Return:
any
return, report, declaration, form, claim for refund or information return or
statement relating to Taxes, including any schedule or attachment thereto,
and
including any amendment thereof.
Transfer
Taxes:
as
defined in Section 5.3.
Treasury
Regulations:
the
regulations prescribed pursuant to the Code.
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11
ARTICLE
IX
CONFIDENTIALITY,
NON-COMPETITION, NON-SOLICITATION
In
exchange for the payment of the Purchase Price to Seller; to protect the
Confidential Information (as defined below) possessed by Seller; to protect
the
business goodwill that Seller is selling, transferring and conveying to Buyer
pursuant to this Agreement; and as an additional inducement for Buyer to enter
into this Agreement and all of the other Transaction Documents, Seller hereby
covenants and agrees as follows:
(a) From
and
after the Closing, all trade secrets, confidential information and data obtained
or possessed by each of them concerning the Assets (the “Confidential
Information”) will be the property of Buyer and not Seller. Seller hereby agrees
that from and after the Closing, Seller will not disclose to any person or
use
for its or his/her own account any of the Confidential Information. Seller
hereby agrees to immediately deliver to Buyer all memoranda, notes, plans,
records, reports and other documents (and copies thereof) relating to the Assets
which any of them may then possess or have under their respective
control.
(b) From
and
after the Closing, Seller will not, until 11:59 p.m. on the [fifth
anniversary of the Closing Date]:
(i) directly
or indirectly own, engage in, manage, operate, join, control or participate
in
the ownership, management, operation or control of, or be connected as a
stockholder, director, officer, employee, agent, representative, partner, joint
venturer, member, beneficiary or otherwise with, any corporation, limited
liability company, partnership, sole proprietorship, association, business,
trust or other organization, entity or individual involved in business
activities that are the same as, similar to, or in competition with the Business
within the United States; provided, however, nothing contained in this Section
10 shall prevent Seller from holding for investment no more than five percent
(5%) of any class of equity securities of a company whose securities are traded
on a national securities exchange; and
(ii) directly
or indirectly (a) make known to any person, firm or corporation the names and
addresses of any of the customers or clients of Seller or any other information
pertaining to the customers or clients, and (b) call on, solicit, or take away,
or attempt to call on, solicit, contact, or take away, any of the customers
or
clients of Seller.
(iii) make
known to any person, firm or corporation the names and addresses of any of
the
customers or clients of Buyer or any other information pertaining to the
customers or clients, nor call on, solicit, or take away, or attempt to call
on,
solicit, contact, or take away, any of the customers or clients of
Buyer.
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12
(c) From
and
after the Closing, Seller will not directly or indirectly request or advise
any
service provider or financial resource of Buyer to withdraw, curtail or cancel
the furnishing of such service or resource to Buyer.
(d) From
and
after the Closing, Seller will not, until 11:59 p.m. on the [first
anniversary of the Closing Date],
without
the prior written consent of the Buyer, solicit any person who is an employee
of
the Buyer or any of its Subsidiaries, to terminate his or her employment with
the Buyer or any of its Subsidiaries; provided, however, if any employee of
the
Buyer responds to a solicitation by general advertisement, such solicitation
shall not be deemed a breach of this provision; provided further, however,
that
if an employee of the Buyer responds to a general solicitation within such
one
year period, then Seller shall not employ such employee.
ARTICLE
X
MISCELLANEOUS
10.1.
Survival
of Representations and Warranties.
The
representations and warranties contained in this Agreement shall survive the
execution and delivery of this Agreement, any examination by or on behalf of
the
parties hereto and the completion of the transactions contemplated herein for
two (2) years with the exception of representations and warranties made under
Section
3.1
(Seller’s Authorization), Section
3.2
(Seller’s Corporate Status), Section
3.5
(Taxes), Section
3.8
(Title to Assets), Section
4.1
(Buyer’s Authority), and Section
4.2
(Buyer’s Corporate Status) shall survive Closing Date without any time
limitation.
10.2.
Expenses.
Except
as provided in Section 5.2, Seller, on the one hand, and the Buyer, on the
other
hand, shall bear their respective expenses, costs and fees (including
attorneys’, auditors’ and financing commitment fees) in connection with the
transactions contemplated hereby, including the preparation, execution and
delivery of this Agreement and compliance herewith (the “Transaction
Expenses”),
whether or not the transactions contemplated hereby shall be
consummated.
10.3.
Severability.
If any
provision of this Agreement, including any phrase, sentence, clause, Section
or
subsection is inoperative or unenforceable for any reason, such circumstances
shall not have the effect of rendering the provision in question inoperative
or
unenforceable in any other case or circumstance, or of rendering any other
provision or provisions herein contained invalid, inoperative, or unenforceable
to any extent whatsoever.
10.4.
Notices.
All
notices and other communications hereunder shall be in writing and shall be
deemed duly given: (a) on the date of delivery if delivered personally; (b)
on
the date of transmission if sent by facsimile, e-mail, or other wire
transmission (receipt confirmed); (c) on the first Business Day following the
date of dispatch if delivered utilizing a next-day service by a recognized
next-day courier; or (d) on the earlier of confirmed receipt or the third
Business Day following the date of mailing if delivered by registered or
certified mail, return receipt requested, postage prepaid. All notices hereunder
shall be delivered to the addresses set forth below, or pursuant to such other
instructions as may be designated in writing by the party to receive such
notice:
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13
(i)
if
to the
Buyer: _________________________
_________________________
_________________________
_________________________
(ii)
if
to
Seller: _________________________
_________________________
_________________________
_________________________
10.5. Headings.
The
headings contained in this Agreement are for purposes of convenience only and
shall not affect the meaning or interpretation of this Agreement.
10.6. Entire
Agreement.
This
Agreement (including the Exhibits and Schedules hereto) and the Transaction
Documents (when executed and delivered) constitute the entire agreement and
supersede all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof.
10.7. Counterparts.
This
Agreement may be executed in several counterparts, each of which shall be deemed
an original and all of which shall together constitute one and the same
instrument. The parties hereby agree that a facsimile copy of this Agreement
will be deemed an original for all purposes, and each party hereby waives the
necessity of providing the original copy of this Agreement to bind the
other.`
10.8. Governing
Law.
This
Agreement shall be governed in all respects, including as to validity,
interpretation and effect, by the internal laws of the State of Texas without
giving effect to the conflict of laws rules thereof to the extent that the
application of the law of another jurisdiction would be required thereby. The
parties agree that any claims, actions, or controversy regarding this Agreement,
the transaction subject of this Agreement or any act, omission, occurrence,
event or circumstance relating to or resulting from this Agreement, shall be
resolved in Dallas County, Texas. The parties agree to forbear from bringing
suit in any state or county other than Dallas County, Texas.
10.9. Binding
Effect.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, successors and permitted assigns.
10.10 Assignment.
This
Agreement shall not be assignable or otherwise transferable by any party hereto
without the prior written consent of the other party hereto, provided
that the
Buyer may assign this Agreement to any Subsidiary of the Buyer or to any lender
to the Buyer or any Subsidiary thereof as security for obligations to such
lender in respect of the financing arrangements entered into in connection
with
the transactions contemplated hereby and any refinancings, extensions,
refundings or renewals thereof, provided,
further,
that no
assignment to any such lender shall in any way affect the Buyer’s obligations or
liabilities under this Agreement.
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10.11 No
Third Party Beneficiaries.
Except
as provided in Article VII with respect to indemnification of parties hereunder,
nothing in this Agreement shall confer any rights upon any person or entity
other than the parties hereto and their respective heirs, successors and
permitted assigns.
10.12 Amendment,
Waivers, Remedies Not Exclusive.
No
amendment, modification or discharge of this Agreement, and no waiver hereunder,
shall be valid or binding unless set forth in writing and duly executed by
the
party against whom enforcement of the amendment, modification, discharge or
waiver is sought. Any such waiver shall constitute a waiver only with respect
to
the specific matter described in such writing and shall in no way impair the
rights of the party granting such waiver in any other respect or at any other
time. Neither the waiver by any of the parties hereto of a breach of or a
default under any of the provisions of this Agreement, nor the failure by any
of
the parties, on one or more occasions, to enforce any of the provisions of
this
Agreement or to exercise any right or privilege hereunder, shall be construed
as
a waiver of any other breach or default of a similar nature, or as a waiver
of
any of such provisions, rights or privileges hereunder. The rights and remedies
herein provided are cumulative and are not exclusive of any rights or remedies
that any party may otherwise have at law or in equity. The rights and remedies
of any party based upon, arising out of or otherwise in respect of any
inaccuracy or breach of any representation, warranty, covenant or agreement
or
failure to fulfill any condition shall in no way be limited by the fact that
the
act, omission, occurrence or other state of facts upon which any claim of any
such inaccuracy or breach is based may also be the subject matter of any other
representation, warranty, covenant or agreement as to which there is no
inaccuracy or breach. The representations and warranties of Seller shall not
be
af-fected or deemed waived by reason of any investigation made by or on behalf
of the Buyer (including but not limited to by any of its advisors, consultants
or representatives) or by reason of the fact that the Buyer or any of such
advisors, consultants or representatives knew or should have known that any
such
representation or warranty is or might be inaccurate.
10.13 Taxes.
The
parties understand that by law, the Seller has liability for the personal
property taxes associated with the Assets for the year in which the Closing
occurs. However, the Buyer will most likely receive the tax statement for the
personal property taxes associated with the Assets, as typically, the tax
statement is mailed directly to the address of the Business. Therefore, because
the Buyer will most likely receive the tax statement for the personal property
taxes associated with the Assets, the parties have agreed to estimate those
taxes based on the previous year’s tax xxxx and prorate the personal property
taxes associated with the Assets for the year in which the Closing occurs.
The
parties understand that the Seller will be charged for the Seller’s prorated
share of those estimated taxes and the Buyer will receive credit for the
Seller’s prorated share of those taxes. Buyer hereby accepts the responsibility
for the payment of those personal property taxes, and will indemnify and hold
the Seller harmless for same. Upon statements, if any, being received by Buyer,
Seller or the Individuals will then pay Seller’s prorated share of such taxes or
assessments, if the amount of the actual prorated taxes turns out to be more
than the estimated prorated Seller’s share of the taxes. In the event Seller
does not pay Seller’s actual prorated share of these taxes, Buyer may then
offset these amounts from the amounts owed to Seller by Buyer. Buyer understands
that the Buyer shall be responsible for any sales tax on vehicle transfer(s),
if
any, pursuant to this Agreement.
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15
10.14 Prorations.
The
parties hereto agree that all costs and expenses relating to the Assets shall
be
prorated to the Closing Date with Seller being responsible for any and all
costs, expenses or other liability items related to the Assets up to the Closing
Date and Buyer being responsible for all costs, expenses and other items related
to the Assets from and after the Closing Date, except as otherwise specifically
provided for in this Agreement to the contrary.
[REMAINDER
OF PAGE INTENTIONALLY BLANK]
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IN
WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first above written.
BUYER: DGSE
COMPANIES, INC.
By: ___________________________________
Name: ___________________________________
Title: ___________________________________
SELLER: EULESS
GOLD AND SILVER, INC.
By: ___________________________________
Name: ___________________________________
Title: ___________________________________
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LIST
OF EXHIBITS
|
Exhibit A
|
Note | |
| Exhibit B | Written Consent of Seller | |
| Exhibit C | Written Consent of Buyer |
List
of Schedules
|
Schedule 1.1(a)
|
Equipment, Furniture, Fixtures and Production Equipment | |
| Schedule 1.1(b) | Inventory | |
| Schedule 1.1(c) | Intellectual Property | |
| Schedule 3.5 | Taxes | |
| Schedule 3.6 | Litigation | |
| Schedule 3.8 | Title to Assets | |
| Schedule 3.9 | Intellectual Property | |
| Schedule 3.10 | Leases |
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