Option Contract
This
Option Agreement (“Agreement”) is
entered into this 25th day of May, 2010, by and between Xx. X.X. Xxxxx, an
individual (“Xxxxx” or “Grantor”) and NTR Metals, LLC, a Texas limited
liability company (“NTR” or “Grantee”).
WHEREAS, Grantor and Grantee
are each parties to that certain Closing Agreement (the “Closing Agreement”),
dated as of May 25, 2010, by and between Grantor, Grantee, and DGSE Companies,
Inc., a Nevada corporation (“DGSE”);
and
WHEREAS, the parties wish to
provide a mechanism whereby the Grantee may acquire certain equity interests
owned by the Grantor.
NOW, THEREFORE, the parties,
for good and
valuable consideration the receipt and adequacy of which is hereby acknowledged,
do hereby agree as follows:
1. Grant of
Option. Grantor does hereby grant to Grantee the option (the
“Option”) to
purchase from the Grantor 1,000,000 shares of the common stock of DGSE (the
“Stock Option
Shares”).
2. Right to
Exercise. Grantee shall have the right to exercise this option
commencing as of the date of Closing (as that term is defined in the Closing
Agreement).
3. Exercise Periods and
Prices.
(a) Years 1 and
2. In the event that the Grantee exercises the Option during
the first two years following the date of Closing (as that term is defined in
the Closing Agreement), the exercise price (the “Exercise Price”)
payable to the Grantor by the Grantee shall be (i) six dollars ($6.00) per
share; AND (ii) the
release of the Grantor as guarantor for DGSE’s $1,500,000 line of credit with
Texas Capital Bank, N.A.
(b) Years 3 and
4. In the event that the Grantee exercises the Option during
the third or fourth years following the date of Closing, the Exercise Price
payable to the Grantor by the Grantee shall be (i) ten dollars ($10.00) per
share; AND (ii) the
release of the Grantor as guarantor for DGSE $1,500,000 line of credit with
Texas Capital Bank, N.A.
4. Manner and Method of
Exercise.
(a) Notice of
Exercise. Grantee shall only exercise the Option in whole, and
not in part. Grantee must notify the Grantor of its execution of the
Option by delivering this Agreement with the duly executed Notice of Exercise
attached hereto.
(b) Option
Closing. Subject to the terms and conditions set forth in this
Agreement, the parties will make arrangements to transfer the Stock Option
Shares on a mutually agreed upon date which will be within sixty (60) days of
delivery of the Notice of Exercise (“Closing Date”).
5. Representations and Warranties of
Grantor. Grantor represents and warrants to Grantee as
follows:
(a)
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This
Agreement constitutes a valid and binding obligation of Grantor,
enforceable against Grantor in accordance with its terms. No
consent or approval by any person, entity, officer, director or
governmental authority is required in connection with the execution and
delivery by Grantor of this Agreement or the consummation of the
transactions contemplated hereby, which has not yet been obtained or will
be obtained as provided herein.
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(b)
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Except
as otherwise set forth in the Closing Agreement or the Closing Documents
(as defined in the Closing Agreement), to the knowledge of Grantor there
are no restrictions on the transfer or sale of the Stock Option Shares
under any governing documents of DGSE, including the Articles of
Incorporation dated September 17, 1965 as amended (“Articles”) and the
By-Laws of DGSE dated March 2, 1992 (“By-Laws”) or under any other
agreement.
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(c)
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Grantor
represents and warrants that no liability to any broker or agent has been
incurred with respect to the payment of any commission relating to this
Agreement or the consummation of the transactions contemplated herein and
therein.
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(d)
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Upon
the satisfaction of the conditions set forth in Section 6 below and the
transfer to Grantee of the Stock Option Shares, Grantee shall receive
good, marketable title to the Stock Option Shares, free and clear of any
and all liens, claims, encumbrances, pledges, charges and security
interests.
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(e)
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The
above representations and warranties of Grantor are true and accurate upon
the date of execution of this Agreement and will be true and accurate on
the Closing Date.
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6. Conditions to
Closing. On the Closing Date, the parties shall execute and/or
deliver the following:
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(a)
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Grantee
shall make payment in full of the Exercise Price by check or wire transfer
of immediately available funds in U.S.
Dollars.
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(b)
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Grantor
shall have made arrangements to transfer the Stock Option Shares to
Grantee.
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(c)
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Grantor
will reaffirm the representations and warranties set forth in Section 5 of
this Agreement.
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(d)
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Grantee
will reaffirm the representations and warranties set forth in Section 7 of
the Closing Agreement.
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(e)
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Grantor
shall obtain from DGSE and deliver to Grantee a Certificate (in form and
content reasonably satisfactory to Grantee) which Certificate shall
confirm that DGSE has complied with its obligations and covenants under
Section 10 of the Closing
Agreement.
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(f)
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Acknowledgment
by Grantor of the termination of the NTR Irrevocable
Proxy.
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(g)
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Consummation
of the Agreement to Execute Xxxxx
Proxy.
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(h)
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Each
party shall deliver such legal opinions and other documents as appropriate
for compliance with securities
laws.
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7.
Expiration. The
Option granted herein shall expire, if unexercised, on the four (4) year
anniversary date of Closing.
8.
Adjustments. The
number of Stock Option Shares covered by this Agreement shall be appropriately
adjusted should DGSE make a dividend or distribution, undergo a forward split or
a reverse split or otherwise reclassify its shares of common stock.
9.
Invalid
Provision. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if such invalid
or unenforceable provisions were omitted.
10. Modification. No
change or modification of this Agreement shall be valid unless the same is in
writing and signed by all the parties to this Agreement.
11. Successors and
Assigns. This agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective heirs, legal
representatives, successors, and assigns.
12. Notice. Any
notice, demand, offer, or other written instrument required or permitted to be
given, made, or sent hereunder, shall be in writing, signed by the party giving
or making the same, and shall be sent by registered mail to all parties hereto,
simultaneously, at their respective addresses as reflected in the Company’s
records. The date by mailing of any offer, demand, notice or
instrument shall be deemed to be the date of such offer, demand, notice or
instrument, and shall be effective from such date.
13. Duty to
Cooperate. Each party to this Agreement agrees to perform any
further acts, and to execute and deliver any documents which may be reasonably
necessary to carry out the provisions of this Agreement. Each party
hereby directs and authorizes the personal representative of his estate to
fulfill and comply with the provisions of, and to sell and transfer his equity
interests in compliance with the terms of this Agreement.
14. Agreement Governed by Texas
Law. The parties hereto agree that it is their intention, and
covenant that this Agreement shall be governed by and construed in accordance
with the laws of the State of Texas. The parties shall have the right, but not
the obligation, to apply to a court of competent jurisdiction within Dallas
County, Texas to enjoin any breach of this Agreement or to seek specific
performance of this Agreement. Excepting the right of a party to seek such
injunctive relief, all claims, disputes and matters in question arising out of
or related to this Agreement, whether sounding in contract, tort or otherwise,
shall be resolved by binding arbitration, administered by the American
Arbitration Association (“AAA”) pursuant to its then current AAA Commercial
Arbitration Rules (“Rules”). The dispute shall be heard and determined by one
(1) arbitrator. Within thirty (30) days of the notification of a party’s intent
to proceed with arbitration, the parties shall mutually agree upon and designate
an arbitrator. If the parties fail to designate an arbitrator within the time
specified, then the arbitrator shall be appointed by the AAA. The arbitrator
shall decide whether a particular dispute is or is not arbitrable. The costs of
the arbitrator shall be divided equally between the parties. Only damages
alleged pursuant to this Agreement may be awarded, and the arbitrator shall have
no authority to award punitive or exemplary damages, the parties hereby waiving
their right, if any, to recover punitive or exemplary damages, either in
arbitration or in litigation. The arbitration shall take place in Dallas,
Texas. Judgment on the award may be entered in any court having
jurisdiction.
15. Attorneys'
Fees. In any action at law or in equity to enforce any of the
provisions or rights under this Agreement, the unsuccessful party of such
litigation, as determined by the Court in a final non-appealable judgment or
decree, shall pay the substantially prevailing party or parties all costs,
expenses, and reasonable attorneys' fees incurred therein by such party or
parties (including, without limitation, such costs, expenses, and fees on any
appeals), and if such successful party shall recover judgment in any such action
or proceeding, such costs, expenses, and attorneys' fees shall be included as
part of such judgment.
Dated May
25, 2010
NTR
METALS, LLC,
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a
Texas limited liability company
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By:
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its
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XX.
X.X. XXXXX,
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an
individual
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Xx.
X.X. Xxxxx
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Notice
Of Exercise
The
undersigned hereby irrevocably elects to exercise the Option dated _____________
to the extent of purchasing 1,000,000 shares of the common stock of DGSE
Companies, Inc. The undersigned hereby further agrees to make payment
of $_________ in payment of the aggregate Exercise Price of such equity
interests pursuant thereto payable at the time of Closing of the transfer of the
Stock Option Shares.
NTR
METALS, LLC,
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a
Texas limited liability company
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By:
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its
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Dated: _____________