Exhibit 10.1
INVENTORY REDUCTION AND DEBT REPAYMENT AGREEMENT
THIS INVENTORY REDUCTION AND DEBT REPAYMENT AGREEMENT ("Agreement") is
made as of November 21, 2006 (the "Effective Date"), by and among SUPERIOR
GALLERIES, INC. ("Borrower"), and STANFORD INTERNATIONAL BANK, LTD.
("Lender"). Borrower and Lender are jointly referred to as the "Parties."
R E C I T A L S
A. On October 1, 2003, Borrower entered into that certain Commercial
Loan and Security Agreement (the "Loan Agreement") with Stanford Financial Group
Company, which assigned its rights to Lender. The Loan Agreement was
subsequently amended such that the maximum amount that can currently be borrowed
by Borrower under the Loan Agreement is $10,850,000. The principal balance
currently outstanding under the Loan Agreement is $10,850,000 (the "Principal
Balance").
B. Borrower desires to transfer, and Lender desires to accept, certain
items of Borrower's rare coin inventory, consisting of the coins set forth on
Schedule A attached hereto (the "Transferred Coins") in consideration of the
Lender's agreement to reduce the balance due by Borrower under the Loan
Agreement by $2,408,481.81 (the "Reduction Amount") on the Effective Date.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing recitals and the
agreements to the parties contained herein, the parties do hereby agree as
follows:
1. TRANSFER; REDUCTION OF PRINCIPAL BALANCE.
a. TRANSFER OF COINS. Subject to Section 1(c) below, Borrower does hereby
transfer, assign and deliver to Lender, and Lender does hereby accept
from Borrower, all of Borrower's right, title and interest in and to
the Transferred Coins. Except for Transferred Coins that are sold to
third parties pursuant to Section 1(c), Borrower shall deliver
possession of the Transferred Coins to, or as directed by, Lender no
later than November 27, 2006.
b. REDUCTION OF PRINCIPAL BALANCE.. The consideration for the transfer,
assignment and delivery of the Transferred Coins shall be a reduction
in the Principal Balance by Lender in the amount of the Reduction
Amount. The parties agree that the Reduction Amount represents the
fair market value, in the aggregate, of the Transferred Coins. Subject
to any adjustment required under Section 1(c) below, Lender hereby
agrees, effective immediately, that the Principal Balance of the loan
made under the Loan Agreement is reduced by the amount of the
Reduction Amount.
c. ADJUSTMENT FOR PRESOLD COINS. The parties acknowledge that prior to
the execution of this Agreement, some of the Transferred Coins were
being actively marketed to third parties, including in connection with
the Santa Clara, California trade show scheduled to close on November
18, 2006, and that as a result offers have been made to sell some of
the Transferred Coins to such third parties. No later than November
21, 2006, Borrower shall advise Lender of any Transferred Coins that
are sold to third parties pursuant to such offers, and coins that are
sold to third parties in this manner shall be excluded from the
Transferred Coins. In that case, the Reduction Amount shall be reduced
by the Borrower's booked cost of the coins that are excluded in this
manner.
2. MISCELLANEOUS.
a. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
b. COUNTERPARTS. This Agreement may be executed in two counterparts,
which taken together shall be deemed a single instrument. Executed
copies of this Agreement may be delivered by facsimile transmission,
and delivery by such means shall have the same effect as delivery of
the executed original agreement.
c. ENTIRE AGREEMENT. This Agreement includes the entire agreement of the
parties concerning the subject matter hereof, and supersedes all prior
discussions or agreements concerning such subject matter.
d. AUTHORIZATION. Each of the parties hereby represents that such party
has been fully authorized by all necessary corporate or trust action,
as appropriate, in connection with the execution, delivery and
performance of this Agreement, and that this Agreement therefore
constitutes such party's valid, binding and enforceable agreement.
IN WITNESS WHERE, the undersigned have executed this Agreement as of the
date first set forth above.
BORROWER:
SUPERIOR GALLERIES, INC
By: /s/ Xxxxxxx XxXxxxxx
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Xxxxxxx XxXxxxxx, Chief Executive Officer
LENDER:
STANFORD INTERNATIONAL BANK, LTD.
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Its: CFO and Director
