SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE
ACT OF 1934
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| | Preliminary Proxy Statement
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|X| Definitive Proxy Statement
| | Definitive Additional Materials
| | Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
TANGIBLE ASSET GALLERIES, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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_________________________________________________________________________
2. Aggregate number of securities to which transaction applies:
_________________________________________________________________________
3. Per unit price or other underlying value of transaction computed pursuant
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4. Date Filed: _____________________________________________________________
TANGIBLE ASSET GALLERIES, INC.
9478 WEST OLYMPIC BOULEVARD
BEVERLY HILLS, CA 90212
June 5, 2003
To Our Shareholders:
You are cordially invited to attend the 2003 annual meeting of
shareholders of Tangible Asset Galleries, Inc. that will be held at 9:00 a.m.
local time on June 30, 2003 at our Beverly Hills, California offices located at
9478 West Olympic Boulevard, Beverly Hills, California 90212. All holders of our
outstanding common stock, Series B Preferred Stock and Series D Preferred Stock
as of the close of business on June 4, 2003 are entitled to vote at the 2003
annual meeting.
Enclosed is a copy of the notice of annual meeting of shareholders, a
proxy statement and a proxy card. A current report on our business operations
will be presented at the meeting, and shareholders will have an opportunity to
ask questions.
We hope you will be able to attend the 2003 annual meeting. Whether or
not you expect to attend, it is important that you complete, sign, date and
return the proxy card in the enclosed envelope in order to make certain that
your shares will be represented at the 2003 annual meeting.
Sincerely,
/S/ Silvano DiGenova
Silvano DiGenova
Chairman of the Board and Chief Executive Officer
TANGIBLE ASSET GALLERIES, INC.
9478 WEST OLYMPIC BOULEVARD
BEVERLY HILLS, CA 90212
NOTICE OF 2003 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 30, 2003
__________________________
NOTICE IS HEREBY GIVEN that the 2003 annual meeting of shareholders of
Tangible Asset Galleries, Inc., a Nevada corporation, will be held at 9:00 a.m.
local time on June 30, 2003 at our Beverly Hills, California offices located at
9478 West Olympic Boulevard, Beverly Hills, California 90212, for the following
purposes:
1. To elect five directors to the board of directors;
2. To consider and vote upon a proposal to adopt a new stock
option plan (the "2003 Stock Option Plan").
3. To consider and vote upon a proposal to amend our Certificate
of Incorporation to provide for a one-for-twenty reverse stock
split of our common stock.
4. To consider and vote upon a proposal to reincorporate Tangible
Asset Galleries, Inc. in the State of Delaware, and in
connection with such reincorporation to change our corporate
name to "Superior Galleries, Inc."
5. To ratify the selection of Haskell & White LLP as our
independent certified public accountants to audit our
financial statements for the year ending June 30, 2003; and
6. To transact such other business as may properly come before
the 2003 annual meeting or any adjournment or adjournments
thereof.
The board of directors has fixed the close of business on June 4, 2003
as the record date for the determination of shareholders entitled to notice of
and to vote at the 2003 annual meeting and all adjourned meetings thereof.
By Order of the Board of Directors
/S/ Silvano DiGenova
Silvano DiGenova
Chairman of the Board and Chief Executive Officer
Dated: June 5, 2003
PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE RETURN ENVELOPE
FURNISHED FOR THAT PURPOSE AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO
ATTEND THE ANNUAL MEETING. IF YOU LATER DESIRE TO REVOKE YOUR PROXY FOR ANY
REASON, YOU MAY DO SO IN THE MANNER DESCRIBED IN THE ATTACHED PROXY STATEMENT.
TANGIBLE ASSET GALLERIES, INC.
9478 WEST OLYMPIC BOULEVARD
BEVERLY HILLS, CA 90212
PROXY STATEMENT
_____________________
2003 ANNUAL MEETING OF SHAREHOLDERS
JUNE 30, 2003
_____________________
THESE PROXY MATERIALS ARE FIRST BEING MAILED TO
SHAREHOLDERS ON OR ABOUT JUNE 5, 2003
_____________________
VOTING AND PROXY
This proxy statement is being furnished in connection with the
solicitation of proxies by our board of directors for use at the 2003 annual
meeting of shareholders to be held at 9:00 a.m. local time on June 30, 2003 at
our Beverly Hills, California offices located at 9478 West Olympic Boulevard,
Beverly Hills, CA 90212, and at any adjournments of the 2003 annual meeting.
When a proxy is properly executed and returned, the shares it represents will be
voted according to directions noted on the proxy. If no specification is
indicated, the shares will be voted "for" each of the proposals listed on the
proxy. Any shareholder giving a proxy has the power to revoke it at any time
before it is voted by providing written notice to our corporate Secretary, by
issuance of a subsequent proxy, or by voting in person at the 2003 annual
meeting.
At the close of business on June 4, 2003, the record date for
determining shareholders entitled to notice of and to vote at the 2003 annual
meeting, we had issued and outstanding 52,813,699 shares of common stock,
3,400,000 shares of Series B Preferred Stock, and 2,000,000 shares of Series D
Preferred Stock. We also had 125,000 shares of Series A Preferred Stock
outstanding at such date, but such shares are nonvoting. Only shareholders of
record at the close of business on the record date are entitled to notice of and
to vote at the 2003 annual meeting or at any adjournments of the meeting.
Each share of common stock entitles the holder of record to one vote on
any matter coming before the 2003 annual meeting. Each holder of Series B
Preferred stock is entitled to 10 votes for each share held by him or her, and
each holder of Series D Preferred Stock is entitled to 16.67 votes for each
share held by him or her. In voting for directors, because we will be treated as
a "quasi-foreign corporation" under California law, shareholders entitled to
vote will have cumulative voting rights (subject to the requirements set forth
below), which means that the total number of votes that the shareholder may cast
for the election of directors shall equal the number of directors to be elected
(5) multiplied by the number of shares held, and the stockholder may cast all of
such votes for one candidate for director or may distribute the total votes
among all or several candidates, as the shareholder sees fit. A shareholder may
not cumulate votes for a candidate unless the candidate's name has been placed
in nomination prior to the voting and unless the shareholder gives notice at the
annual meeting, prior to voting, of an intention to cumulate votes. If any
shareholder present at the annual meeting gives such notice, all shareholders
may cumulate their votes.
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If cumulative voting is not invoked, the candidates receiving the
highest number of votes of the shares entitled to vote for them, up to the
number of directors to be elected, shall be elected. Whether or not cumulative
voting is invoked, votes against a candidate and votes withheld will have no
legal effect in the election of directors.
The person or persons holding the proxies solicited by our board of
directors will exercise their voting rights, at their discretion, to vote the
shares they hold in such a way as to ensure the election of as many of the
nominees of the board of directors as they deem possible. This discretion and
authority of the proxy holders may be withheld by checking the box on the proxy
card marked "withhold from all nominees." However, such an instruction will also
deny the proxy holders the authority to vote for any or all of the nominees of
the board of directors, even if cumulative voting is not called for at the 2003
annual meeting.
A shareholder may choose to withhold from the proxy holders the
authority to vote for any of the individual candidates nominated by our board of
directors by marking the appropriate box on the proxy card and striking out the
names of the disfavored candidates as they appear on the proxy card. In that
event, the proxy holders will not cast any of the shareholder's votes for
candidates whose names have been crossed out. However, the proxy holders will
retain the authority to vote for the candidates nominated by the board of
directors whose names have not been struck out and for any candidates who may be
properly nominated at the 2003 annual meeting. If a shareholder wishes to
specify the manner in which his or her votes are allocated, he or she must
appear and vote in person at the 2003 annual meeting. Ballots will be available
at the 2003 annual meeting for shareholders who desire to vote in person.
A majority of the shares entitled to vote, represented in person or by
proxy, will constitute a quorum at a meeting of shareholders. Under Nevada law,
the approval of the amendment to our Articles of Incorporation to effect a
reverse stock split and the approval of our reincorporation from the State of
Nevada to the State of Delaware will require the affirmative vote of the holders
of a majority of all of our voting stock. You may cast your votes in favor of,
or against, these proposals, or may abstain from voting on the proposals. Only
votes cast "for" a matter constitute affirmative votes. Thus, a failure to vote
on these proposals or an abstention will not be treated as a vote cast "for" the
proposals and will have the same effect as a vote "against" the proposals.
Under Nevada law, the ratification of the selection of Haskell & White
LLP as our independent auditors requires for approval the number of votes cast
in favor of ratification to exceed the number of votes cast in opposition. You
may cast your votes in favor of, or against, this proposal or abstain from
voting on the proposals. Since an abstention is not treated as a "vote" for or
against the matter, it will not have any impact on the vote.
"Broker non-votes" are not counted either "for" or "against" any
proposals, but will be treated the same as abstentions. Thus, if the number of
"broker non-votes" results in the votes "for" a proposal not equaling at least a
majority of the outstanding voting shares (in the case of votes on the reverse
stock split or reincorporation), the proposal will not be approved. This will be
the case even though the number of votes "for" these proposals exceeds the
number of votes "against" the proposal.
We will pay the expenses of soliciting proxies for the 2003 annual
meeting, including the cost of preparing, assembling and mailing the proxy
solicitation materials. Proxies may be solicited personally, by mail or by
telephone, or by our directors, officers and regular employees who will not be
additionally compensated. We have no present plans to hire special employees or
paid solicitors to assist in obtaining proxies, but we reserve the option to do
so if it appears that a quorum otherwise might not be obtained. The matters to
be considered and acted upon at the 2003 annual meeting are referred to in the
preceding notice and are discussed below more fully. Executed proxies may be
delivered by facsimile transmission (fax) to our transfer agent, Stalt, Inc., at
(775) 831-3337.
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ELECTION OF DIRECTORS
(PROPOSAL 1)
Our bylaws provide that there are five seats on our Board of Directors.
Directors are elected annually and hold office until the next annual meeting of
shareholders, until their respective successors are elected and qualified or
until their earlier death, resignation or removal. It is intended that the
proxies solicited by our board of directors will be voted "for" election of the
following five nominees unless a contrary instruction is made on the proxy:
Silvano DiGenova, Paul Biberkraut, Lee Ittner, David Rector and Mark Cohen.
If for any reason one or more of the nominees is unavailable as a
candidate for director, an event that is not anticipated, the person named in
the proxy will vote for another candidate or candidates nominated by our board
of directors. However, under no circumstances may a proxy be voted in favor of a
greater number of persons than the number of nominees named above.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE DIRECTORS NOMINATED
IN THIS PROPOSAL NO. 1.
The current directors and executive officers of Tangible Asset
Galleries, Inc. and their ages, positions, business experience and education are
as follows:
Name Age Position
---- --- --------
Silvano DiGenova......... 41 Chairman of the Board, Chief Executive
Officer, President and Director
Paul Biberkraut.......... 42 Chief Financial Officer, Executive Vice
President, Secretary and Director
Mark Cohen............... 42 Director
Lee Ittner............... 41 Director
David Rector............. 56 Director
All directors hold office until the next annual meeting of shareholders
and until their respective successors are elected or until their earlier death,
resignation or removal. Each of our officers serves at the discretion of the
board of directors. There are no family relationships between or among any of
our directors, director nominees or executive officers .
DIRECTORS AND DIRECTOR NOMINEES
SILVANO DIGENOVA is our chairman of the board, chief executive officer,
president and a director. Mr. DiGenova has also served as our acting chief
financial officer from September 2002 through December 2002. Mr. DiGenova
founded Tangible Investments of America, what would later become our company, in
1977. Mr. DiGenova is a recognized leader in the numismatic and fine arts field.
In 1986, Mr. DiGenova helped form the Professional Coin Grading Service, the
first widely accepted uniform grading system for rare coins. Mr. DiGenova
attended the Wharton School of Business at the University of Pennsylvania for
four years. However, Mr. DiGenova left Wharton in his fourth year to develop
Tangible Investments of America, and did not obtain a degree from Wharton.
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PAUL BIBERKRAUT is our executive vice president, chief financial
officer, Secretary and a Director. Mr. Biberkraut has served in this role since
December 2002 and previously was our Company's Vice President of Finance and
chief financial officer from October 1999 to December 2000. Mr. Biberkraut has
over fifteen years of experience in management roles with varying levels of
responsibilities for finance, accounting, information technology, operations and
human resources. Prior to returning to our company Mr. Biberkraut was a senior
finance manager for information technology at PacifiCare Health Systems, Inc.
from December 2000 to November 2002 and was the corporate controller of Quality
Systems, Inc. from November 1997 to June 1999. Mr. Biberkraut also served as the
chairman of the audit committee for an Orange County, California based credit
union from 1997 to 1999 and had served as a board member, treasurer and
president of an Orange County, California based not-for-profit social service
agency from 1989 to 1998.
MARK COHEN is one of our Directors. Mr. Cohen has served in this role
since May, 2003. Mr. Cohen is a Certified Public Accountant licensed in the
State of Florida, and since 1998 has been engaged in the practice of public
accounting through his own accounting firm. Mr. Cohen has over ten years of
experience in corporate accounting and finance at a management level for both
public and private companies. He currently provides a wide range of accounting
services, including audits of publicly traded companies.
LEE ITTNER is one of our Directors. He has served in this role since
May, 2003. Mr. Ittner is currently the Vice President for Latin America for
Kyocer Wireless Corp., a position he has held since 2002. Prior to that time,
Mr. Ittner was Senior Vice President of the Americas Region for Cellstar
Corporation. Mr. Ittner has over 14 years of experience in both domestic and
international operational management, sales and marketing, customer relations
and strategic planning in the communications industry.
DAVID RECTOR is one of our Directors. Mr. Rector has served in this
role since May, 2003. Since 1992, Mr. Rector has been a principal management
consultant with The David Stephen Group, where he provides executive management
services for several companies, overseeing operations and strategic planning.
Mr. Rector has over twenty years of experience as a senior executive focusing on
general management with Fortune 100 and developmental companies.
BOARD COMMITTEES AND MEETINGS
Our board of directors does not have an audit committee, compensation
committee or a nominating committee. In the absence of an audit committee,
compensation committee or a nominating committee, the entire board of directors
will satisfy the duties of those committees. Selection of nominees for our board
of directors is made by the entire board of directors.
During our 2002 fiscal year, our board of directors held one meeting
and took action by written consent on 26 occasions. During the 2002 fiscal year,
no incumbent director attended fewer than 75% of the aggregate of the total
number of meetings of the board of directors held during the period for which he
or she has been a director and the total number of meetings held by all
committees of the board on which he or she served during the periods that he or
she served.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires our executive officers and directors, and persons who beneficially own
more than 10% of a registered class of our common stock to file initial reports
of ownership and reports of changes in ownership with the Securities and
Exchange Commission. These officers, directors and stockholders are required by
Securities and Exchange Commission regulations to furnish us with copies of all
such reports that they file.
Based solely upon a review of copies of such reports furnished to us
during the fiscal year ended June 30, 2002 and thereafter, or any written
representations received by us from directors, officers and beneficial owners of
more than 10% of our common stock that no other reports were required, we
believe that, during our 2002 fiscal year, certain Section 16(a) filing
requirements were not complied with, as follows: (a) Mr. DiGenova, our chief
executive officer failed to file on a timely basis Form 4s reporting the
following transactions: (i) the purchase of 400,000 shares of Series B Preferred
Stock, 7,000 shares of Series C Preferred Stock and a warrant to purchase
4,000,000 shares of our common stock in a transaction in April 2002; (ii) the
grant of options to purchase 50,000 shares of our common stock in November 2001;
(iii) the issuance of a warrant to purchase 400,000 shares of our common stock
in November 2001; (iv) the issuance of a warrant to purchase 1,402,000 shares of
our common stock in July 2001; and (iv) the issuance of a warrant to purchase
1,500,000 shares of our common stock in July 2001. In addition, during the prior
fiscal year, Mr. DiGenova failed to file on a timely basis, Form 4s reporting
the following transactions: (i) the grant of options to purchase 500,000 shares
of our common stock in June 2001; and (ii) the issuance of a warrant to purchase
1,500,000 shares of our common stock in June 2001; and (b) Mr. Deeds, the
president of our wholly-owned subsidiary, Superior Galleries, Inc., failed to
file on a timely basis, a Form 3 upon his appointment as an executive officer of
our company in July 2001. These reports have since been filed. In addition, the
following former executive officers and directors of our company failed to file
any Section 16 reports with the Commission: Michael Haynes, Mali Shrinivas,
Richard Viola, Yvonne E. Wong Chester, Arthur Marcus and Robert Escobio.
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ADOPTION OF 2003 STOCK OPTION PLAN
(PROPOSAL 2)
GENERAL
Effective as of May 1, 2003, the board of directors approved our 2003
Stock Option Plan (the "2003 Plan"). The 2003 Plan is designed to enable us to
offer an incentive-based compensation system to the employees, officers and
directors of Tangible Asset Galleries, Inc. and its subsidiaries and to
consultants who do business with us or our subsidiaries. There are currently 20
employees, officers, directors or consultants of Tangible Asset Galleries, Inc.
or its subsidiaries who are eligible to participate in the 2003 Plan.
The 2003 Plan provides for the grant of incentive stock options, or
ISOs, and nonqualified stock options, or NQOs. As of May 1, 2003, no options to
purchase shares of common stock were outstanding under the 2003 Plan, and
16,000,000 shares were available for issuance under the 2003 Plan. In the next
several months, we intend to register on Form S-8 under the Securities Act of
1933 the issuance of our securities under the 2003 Plan. A copy of the 2003 Plan
is attached as Exhibit A to this proxy statement and is described below.
SHARES SUBJECT TO THE 2003 PLAN
A total of 16,000,000 shares of common stock are authorized for
issuance under the 2003 Plan. On May 1, 2003, the closing sale price of a share
of our common stock in the "Pink Sheets" was $0.02. Any shares of common stock
that are subject to an option but are not used because the option is not
exercised, or which are repurchased by the Company, may again be used for awards
under the 2003 Plan.
ADMINISTRATION
The 2003 Plan is administered by the Board of Directors, but also may
be by an administered committee of not less than two nor more than five persons
appointed by the board of directors, each of whom must be a director of Tangible
Asset Galleries, Inc. It is the intent of the 2003 Plan that it be administered
in a manner such that option grants and exercises would be "exempt" under Rule
16b-3 of the Securities Exchange Act of 1934 (the "Exchange Act").
The Board or the committee appointed by it is empowered to select those
eligible persons to whom options shall be granted under the 2003 Plan, to
determine the time or times at which each option shall be granted, whether
options will be ISOs or NQOs, and the number of shares to be subject to each
option, and to fix the time and manner in which each such option may be
exercised, including the exercise price and option period, and other terms and
conditions of such options, all subject to the terms and conditions of the 2003
Plan. The Board or the committee appointed by it has sole discretion to
interpret and administer the 2003 Plan, and its decisions regarding the 2003
Plan are final.
The 2003 Plan may be wholly or partially amended or otherwise modified,
suspended or terminated at any time and from time to time by the Board. The
Board may not make any amendment which adversely affects any outstanding options
without the express consent of the optionee, except as may be necessary, in the
opinion of counsel, to comply with any applicable law. In addition, unless
approved by the shareholders, the Board may not increase the number of shares
subject to the 2003 Plan, amend the Plan so as to change the manner of
determining the option exercise price, change the class of persons eligible to
receive options under the Plan, or extend the maximum duration of the Plan or of
any option granted thereunder. No option may be granted under the 2003 Plan
after April 30, 2013.
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OPTION TERMS
ISOs granted under the 2003 Plan must have an exercise price of not
less than 100% of the fair market value of the common stock on the date the ISO
is granted and must be exercised, if at all, within ten years from the date of
grant. In the case of an ISO granted to an optionee who owns more than 10% of
the total voting securities of Tangible Asset Galleries, Inc. on the date of
grant, such exercise price shall be not less than 110% of fair market value on
the date of grant, and the option period may not exceed five years. NQOs granted
under the 2003 Plan must have an exercise price of not less than 85% of the fair
market value of the common stock on the date the NQO is granted.
Options may be exercised during a period of time fixed by the Board or
the committee, not to exceed ten years from the date of grant, except that no
ISO may be exercised earlier than six months after the date of grant. In the
discretion of the Board or the committee, payment of the purchase price for the
shares of stock acquired through the exercise of an option may be made in cash,
shares of our common stock or a combination of cash and shares of our common
stock.
FEDERAL INCOME TAX CONSEQUENCES
NQOS
Holders of NQOs do not realize income as a result of a grant of the
option, but normally realize compensation income upon exercise of an NQO to the
extent that the fair market value of the shares of common stock on the date of
exercise of the NQO exceeds the exercise price paid. We will be required to
withhold taxes on ordinary income realized by an optionee upon the exercise of a
NQO.
In the case of an optionee subject to the "short-swing" profit
recapture provisions of Section 16(b) of the Exchange Act, the optionee realizes
income only upon the lapse of the six-month period under Section 16(b), unless
the optionee elects to recognize income immediately upon exercise of his or her
option.
ISOS
Holders of ISOs will not be considered to have received taxable income
upon either the grant of the option or its exercise. Upon the sale or other
taxable disposition of the shares, long-term capital gain will normally be
recognized on the full amount of the difference between the amount realized and
the option exercise price paid if no disposition of the shares has taken place
within either two years from the date of grant of the option or one year from
the date of exercise. If the shares are sold or otherwise disposed of before the
end of the one-year or two-year periods, the holder of the ISO must include the
gain realized as ordinary income to the extent of the lesser of the fair market
value of the option stock minus the option price, or the amount realized minus
the option price. Any gain in excess of these amounts, presumably, will be
treated as capital gain. We will be entitled to a tax deduction in regard to an
ISO only to the extent the optionee has ordinary income upon the sale or other
disposition of the option shares.
Upon the exercise of an ISO, the amount by which the fair market value
of the purchased shares at the time of exercise exceeds the option price will be
an "item of tax preference" for purposes of computing the optionee's alternative
minimum tax for the year of exercise. If the shares so acquired are disposed of
prior to the expiration of the one-year and two-year periods described above,
there should be no "item of tax preference" arising from the option exercise.
-9-
POSSIBLE ANTI-TAKEOVER EFFECTS
Although not intended as an anti-takeover measure by the board of
directors, one of the possible effects of the 2003 Plan could be to place
additional shares, and to increase the percentage of the total number of shares
outstanding, in the hands of our directors and officers. Such persons may be
viewed as part of, or friendly to, incumbent management and may, therefore,
under certain circumstances be expected to make investment and voting decisions
in response to a hostile takeover attempt that may serve to discourage or render
more difficult the accomplishment of such attempt.
In addition, all outstanding options shall become immediately
exercisable with respect to the full number of shares subject to such options
upon execution of an agreement to sell all or substantially all of the assets or
capital stock of the Company, whether by sale, merger or otherwise (provided
that such option shall not be accelerated to become exercisable earlier than six
months after the option grant date). In the opinion of the board of directors,
such an acceleration provision merely ensures that optionees under the 2003 Plan
will be able to exercise their options as intended by our board of directors and
stockholders prior to any such extraordinary corporate transaction which might
serve to limit or restrict such right. The board of directors is, however,
presently unaware of any threat of hostile takeover involving our company.
REQUIRED VOTE OF STOCKHOLDERS
The affirmative vote of a majority of the shares of voting stock
represented and voting on this proposal will constitute stockholder approval of
the 2003 Plan. As noted above, the board of directors has approved the 2003
Plan. Stockholders should be aware, however, that the board of directors may be
viewed as having a conflict of interest in approving, and recommending that
stockholders approve, the 2003 Plan.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF
THE 2003 PLAN.
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AMENDMENT TO ARTICLES OF INCORPORATION TO
EFFECT A ONE-FOR-TWENTY REVERSE STOCK SPLIT
OF TANGIBLE ASSET GALLERIES, INC. COMMON STOCK
(PROPOSAL 3)
GENERAL
As of May 1, 2003, 52,813,699 shares of our common stock were
outstanding and the per share closing price of our common stock on that date was
$0.02. In order to reduce the number of shares of common stock outstanding, the
board of directors and the holders of a majority of the outstanding voting
shares have adopted a resolution approving an amendment to our Articles of
Incorporation to effect a one-for-twenty reverse stock split of our common
stock.
Pursuant to this approval, we will file an amendment to our Articles of
Incorporation ("Amendment") with the Secretary of State of the State of Nevada
through which every twenty shares of common stock issued and outstanding will be
converted into one fully paid and nonassessable share of common stock, with any
fractional shares that result from such reverse stock split to be rounded up to
the nearest whole share of common stock. The reverse stock split will not change
the number of authorized shares of common stock or preferred stock or the par
value of our common stock or preferred stock. However, the conversion rate
applicable to our outstanding convertible preferred stock will be adjusted when
the reverse stock split becomes effective, so that the shares of preferred stock
surrendered for conversion after such date shall be entitled to receive the
number of shares of common stock that the holder of such preferred shares would
have been entitled to receive had the preferred shares been converted
immediately prior to such date. In addition, upon the effectiveness of the
reverse stock split, our outstanding warrants and options will automatically be
adjusted so that they cover a proportionately lower number of shares and a
proportionally higher exercise price.
Except for any changes as a result of the treatment of fractional
shares, each stockholder will hold the same percentage of common stock
outstanding after the reverse stock split as such stockholder did immediately
prior to the split.
PURPOSE
In order to reduce the number of shares of our common stock outstanding
and thereby attempt to proportionally raise the per share price of our common
stock, the board of directors has determined that a reverse stock spit is
desirable in order to: (i) encourage greater investor interest in our common
stock by making the stock price more attractive to the many investors,
particularly institutional investors, who refrain from investing in lower priced
stocks; and (ii) reduce trading fees and commissions incurred by stockholders,
since these costs are based to a significant extent on the number of shares
traded.
The board of directors believes that the reverse stock split may help
encourage greater interest in our common stock. The board of directors believes
that the current market price of our common stock may impair its acceptability
to institutional investors, professional investors and other members of the
investing public. Many institutional and other investors look upon stock trading
at low prices as unduly speculative in nature and, as a matter of policy, avoid
investing in such stocks. If effected, the reverse stock split would reduce the
number of outstanding shares of our common stock and, we believe, increase the
trading price of our common stock. The board of directors believes that raising
the trading price of our common stock will increase the attractiveness of our
common stock to the investment community and possibly promote greater liquidity
for our existing stockholders.
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Because broker commissions on low-priced stocks generally represent a
higher percentage of the stock price than commissions on higher priced stocks,
the current share price of our common stock, in the absence of the reverse stock
split, may continue to result in individual stockholders paying transaction
costs (commissions, markups or markdowns) which are a higher percentage of their
total share value than would be the case if the share price was substantially
higher. For this reason, individual and institutional investors may be unwilling
to purchase our common stock at its current market price.
Our common stock currently trades in the "Pink Sheets," although we
plan to file an application soon to have these securities listed on the OTC
Bulletin Board(R).
The board of directors reserves its right to elect not to proceed with
the reverse stock split if it determines, in its sole discretion, that the split
is no longer in the best interests of Tangible Asset Galleries, Inc. and our
stockholders.
RISKS ASSOCIATED WITH THE REVERSE STOCK SPLIT
WE CANNOT ASSURE YOU THAT THE TOTAL MARKET CAPITALIZATION OF OUR COMMON STOCK
AFTER THE PROPOSED REVERSE STOCK SPLIT WILL BE EQUAL TO OR GREATER THAN THE
TOTAL MARKET CAPITALIZATION BEFORE THE PROPOSED REVERSE STOCK SPLIT OR THAT THE
PER SHARE MARKET PRICE OF OUR COMMON STOCK FOLLOWING THE REVERSE STOCK SPLIT
WILL EITHER EXCEED OR REMAIN HIGHER THAN THE CURRENT PER SHARE MARKET PRICE.
There can be no assurance that the market price per new share of our
common stock (the "New Shares") after the reverse stock split will rise or
remain constant in proportion to the reduction in the number of old shares of
our common stock (the "Old Shares") outstanding before the reverse stock split.
For example, based on the closing market price of our common stock on May 1,
2003 of $0.02 per share, if the board of directors decided to implement the
reverse stock split, there can be no assurance that the post-split market price
of our common stock would be $0.40 per share or greater. Accordingly, the total
market capitalization of our common stock after the proposed reverse stock split
may be lower than the total market capitalization before the proposed reverse
stock split and, in the future, the market price of our common stock following
the reverse stock split may not exceed or remain higher than the market price
prior to the proposed reverse stock split. In many cases, the total market
capitalization of a company following a reverse stock split is lower than the
total market capitalization before the reverse stock split.
WE CANNOT ASSURE YOU THAT THE REVERSE STOCK SPLIT WILL RESULT IN A PER SHARE
PRICE THAT WILL ATTRACT INVESTORS AND BROKERS.
While the board of directors believes that a higher stock price may
help generate investor interest, there can be no assurance that the reverse
stock split will result in a per share price that will attract investors and
brokers.
A DECLINE IN THE MARKET PRICE FOR OUR COMMON STOCK AFTER THE REVERSE STOCK SPLIT
MAY RESULT IN A GREATER PERCENTAGE DECLINE THAN WOULD OCCUR IN THE ABSENCE OF A
REVERSE STOCK SPLIT, AND THE LIQUIDITY OF OUR COMMON STOCK COULD BE ADVERSELY
AFFECTED FOLLOWING A REVERSE STOCK SPLIT.
The market price of our common stock will also be based on our
financial performance and other factors, some of which are unrelated to the
number of shares outstanding. If the reverse stock split is effected and the
market price of our common stock declines, the percentage decline as an absolute
number and as a percentage of our overall market capitalization may be greater
than would occur in the absence of a reverse stock split. In many cases, both
the total market capitalization of a company and the market price of a share of
such company's common stock following a reverse stock split are lower than they
were before the reverse stock split. Furthermore, the liquidity of our common
stock could be adversely affected by the reduced number of shares that would be
outstanding after the reverse stock split.
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PRINCIPAL EFFECTS OF THE REVERSE STOCK SPLIT
CORPORATE MATTERS. The reverse stock split will have the following
effects:
1. twenty Old Shares owned by a stockholder would be exchanged
for one New Share;
2. the number of shares of our common stock issued and
outstanding will be proportionately reduced;
3. proportionate adjustments will be made to the per share
exercise or conversion price and the number of shares issuable upon the
conversion of our outstanding Series A Preferred Stock, Series B
Preferred Stock and Series D Preferred Stock, or upon the exercise of
all outstanding options and warrants entitling the holders thereof to
purchase shares of our common stock, which will result in approximately
the same aggregate price being required to be paid for such options or
warrants upon exercise of such options or warrants immediately
preceding the reverse stock split;
4. the number of shares reserved for issuance under our
existing stock option plan will be reduced proportionately.
FRACTIONAL SHARES. No scrip or fractional certificates will be issued
in connection with the reverse stock split. Instead, any fractional share that
results from the reverse stock split will be rounded up to the next whole share
of our common stock.
If approved and effected, the reverse stock split will result in some
stockholders owning "odd lots" of less than 100 shares of our common stock.
Brokerage commissions and other costs of transactions in odd lots are generally
somewhat higher than the costs of transactions in "round lots" of even multiples
of 100 shares.
AUTHORIZED SHARES. Upon the effectiveness of the reverse stock split,
the number of authorized shares of common stock that are not issued or
outstanding would increase due to the reduction in the number of shares of our
common stock issued and outstanding. As of May 1, 2003, we had 250,000,000
shares of common stock and 15,000,000 shares of preferred stock authorized, of
which 1,400,000 shares were designated Series A Preferred Stock, 3,400,000
shares were designated Series B Preferred Stock, and 2,000,000 shares were
designated as Series D Preferred Stock. As of May 1, 2003, there were issued and
outstanding, 52,813,699 shares of common stock, 125,000 shares of Series A
Preferred Stock, 3,400,000 shares of Series B Preferred Stock and 2,000,000
shares of Series D Preferred Stock. Authorized but unissued shares will be
available for issuance, and we may issue such shares in financings or otherwise.
If we issue additional shares, the ownership interest of holders of our common
stock may also be diluted. Also, the issued shares may have rights, preferences
or privileges senior to those of our common stock.
ACCOUNTING MATTERS. The reverse stock split will not affect the par
value of our common stock. As a result, as of the effective time of the reverse
stock split, the stated capital on our balance sheet attributable to our common
stock will be reduced proportionately, and the additional paid-in capital
account will be credited with the amount by which the stated capital is reduced.
The per share net income or loss and net book value of our common stock will be
increased because there will be fewer shares of our common stock outstanding.
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POTENTIAL ANTI-TAKEOVER EFFECT. Although the increased proportion of
unissued authorized shares to issued shares could, under certain circumstances,
have an anti-takeover effect (for example, by permitting issuances that would
dilute the stock ownership of a person seeking to effect a change in the
composition of our board of directors or contemplating a tender offer or other
transaction for the combination of Tangible Asset Galleries with another
company), the reverse stock split proposal is not being proposed in response to
any effort of which we are aware to accumulate our shares of common stock or
obtain control of Tangible Asset Galleries, nor is it part of a plan by
management to recommend a series of similar amendments to our board of directors
and stockholders. Other than the reverse stock split proposal, our board of
directors does not currently contemplate recommending the adoption of any other
amendments to our Articles of incorporation that could be construed to affect
the ability of third parties to take over or change the control of Tangible
Asset Galleries, Inc.
PROCEDURE FOR EFFECTING REVERSE STOCK SPLIT AND EXCHANGE OF STOCK CERTIFICATES
In order to implement the reverse stock split, we will file the
Amendment with the Secretary of State of the State of Nevada to amend our
existing articles of incorporation. The reverse stock split will become
effective at the time specified in the Amendment, which is referred to below as
the "effective time." Beginning at the effective time, each certificate
representing Old Shares will be deemed for all corporate purposes to evidence
ownership of New Shares. The text of the Amendment to effect the reverse stock
split, if implemented by the board of directors, would be in substantially the
form attached hereto as Exhibit B. The text of the form of Amendment attached to
this proxy statement is subject to modification to include such changes as may
be required by the Office of the Secretary of State of the State of Nevada and
as the board of directors deems necessary and advisable to effect the reverse
stock split, including the insertion of the effective time determined by the
board of directors.
As soon as practicable after the effective time, stockholders will be
notified that the reverse stock split has been effected. We expect that our
transfer agent, Stalt, Inc., will act as exchange agent for purposes of
implementing the exchange of stock certificates. Holders of Old Shares will not
be asked to surrender to the exchange agent certificates representing Old Shares
in exchange for certificates representing New Shares, although they may do so if
they wish. However, no new certificates will be issued to a stockholder until
such stockholder has surrendered such stockholder's outstanding certificate(s),
together with the properly completed and executed letter of transmittal, to the
exchange agent. Any Old Shares submitted for transfer, whether pursuant to a
sale, other disposition or otherwise, will automatically be exchanged for New
Shares. STOCKHOLDERS SHOULD NOT DESTROY ANY STOCK CERTIFICATE(S).
NO DISSENTERS' RIGHTS
Under the Nevada Revised Statutes, our stockholders are not entitled to
dissenters' rights with respect to the reverse stock split, and the Company will
not independently provide stockholders with any such right.
FEDERAL INCOME TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT
The following is a summary of certain material federal income tax
consequences of the reverse stock split, does not purport to be a complete
discussion of all of the possible federal income tax consequences of the reverse
stock split and is included for general information only. Further, it does not
address any state, local or foreign income or other tax consequences. Also, it
does not address the tax consequences to holders that are subject to special tax
rules, such as banks, insurance companies, regulated investment companies,
personal holding companies, foreign entities, nonresident alien individuals,
broker-dealers and tax-exempt entities. The discussion is based on the
provisions of the United States federal income tax law as of the date hereof,
which is subject to change retroactively as well as prospectively. This summary
also assumes that the Old Shares were, and the New Shares will be, held as a
"capital asset," as defined in the Internal Revenue Code of 1986, as amended
(i.e., generally, property held for investment). The tax treatment of a
stockholder may vary depending upon the particular facts and circumstances of
such stockholder. Each stockholder is urged to consult with such stockholder's
own tax advisor with respect to the tax consequences of the reverse stock split.
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No gain or loss should be recognized by a stockholder upon such
stockholder's exchange of Old Shares for New Shares pursuant to the reverse
stock split. The aggregate tax basis of the New Shares received in the reverse
stock split (including any fraction of a New Share deemed to have been received)
will be the same as the stockholder's aggregate tax basis in the Old Shares
exchanged therefor. The stockholder's holding period for the New Shares will
include the period during which the stockholder held the Old Shares surrendered
in the reverse stock split.
Our view regarding the tax consequences of the reverse stock split is
not binding on the Internal Revenue Service or the courts. ACCORDINGLY, EACH
STOCKHOLDER SHOULD CONSULT WITH HIS OR HER OWN TAX ADVISOR WITH RESPECT TO ALL
OF THE POTENTIAL TAX CONSEQUENCES TO HIM OR HER OF THE REVERSE STOCK SPLIT.
REQUIRED VOTE OF STOCKHOLDERS
The affirmative vote of a majority of the shares of voting stock
outstanding on the Record Date will be required to approve this proposal.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL
TO GRANT AUTHORITY TO OUR BOARD OF DIRECTORS TO AMEND OUR ARTICLES OF
INCORPORATION TO EFFECT A ONE-FOR-TWENTY REVERSE STOCK SPLIT OF OUR COMMON STOCK
AT ANY TIME PRIOR TO DECEMBER 31, 2003.
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REINCORPORATION OF TANGIBLE ASSET GALLERIES, INC. IN THE
STATE OF DELAWARE; CORPORATE NAME CHANGE
(PROPOSAL 4)
Our board of directors has unanimously approved a proposal to
reincorporate our company in the State of Delaware. This reincorporation will,
if approved by the shareholders, be effected by merging Tangible Asset
Galleries, Inc. with and into Superior Galleries, Inc., its wholly-owned
subsidiary incorporated in the State of Delaware, pursuant to an agreement and
plan of merger to be entered into by and between these two companies. The form
of Agreement and Plan of Merger is included as Exhibit C to this proxy
statement. Our board recommends that the shareholders approve and adopt the
reincorporation of Tangible Asset Galleries, Inc. in the State of Delaware.
We presently have another wholly owned subsidiary named Superior
Galleries, Inc., which is incorporated in California and through which our
auction operations are conducted. This California corporation will continue to
exist, following the reincorporation merger, for some period of time, as a
separate subsidiary, but will change its corporate name, just prior to the
reincorporation, to "Superior Galleries Beverly Hills, Inc." Except as
expressly stated in the following discussion, all references to "Superior
Galleries, Inc." mean the newly organized Delaware corporation formed in
connection with the reincorporation merger, and not the presently existing
California subsidiary corporation, which is referred to in this discussion as
Superior Galleries Beverly Hills.
Prior to the reincorporation merger, Superior Galleries, Inc. shall
have no material amount of assets or liabilities. In the reincorporation,
Tangible Asset Galleries, Inc. will merge with and into Superior Galleries,
Inc., and Superior Galleries, Inc. will be the corporation surviving the merger.
As a result of the merger, the surviving corporation will retain the corporate
name "Superior Galleries, Inc." The address of the principal executive offices
of the surviving corporation will remain 9478 West Olympic Boulevard, Beverly
Hills, California 90212.
REASONS FOR THE REINCORPORATION
Our board of directors believes that the reincorporation in Delaware
will provide added flexibility for both the management and business of Tangible
Asset Galleries, Inc. Delaware is recognized both domestically and
internationally as a favorable legal and regulatory environment within which to
operate a corporation business. This environment should enhance our operations
and our ability to effect future acquisitions and other transactions. For many
years, Delaware has followed a policy of encouraging incorporation in that state
and, in furtherance of that policy, has adopted comprehensive, modern and
flexible corporate laws which are periodically updated and revised to meet
changing business needs. In addition, the Delaware courts have developed
considerable expertise in dealing with corporate issues, and a substantial body
of case law has developed in the interpretation of Delaware law, resulting in
greater predictability with respect to corporate legal affairs. Thus, for
example, in relation to other states Delaware provides greater guidance to
directors in the context of dealing with major transactions, including potential
changes in corporate control, as well as other more general corporate matters.
As a result, various major companies have either incorporated or have
subsequently reincorporated in Delaware.
THE REINCORPORATION MERGER
AGREEMENT AND PLAN OF MERGER. The reincorporation will be effected
through the reincorporation merger. As a result of the reincorporation merger,
Tangible Asset Galleries, Inc. will be merged into Superior Galleries, Inc.
which will succeed to all of the rights, properties, assets and liabilities of
Tangible Asset Galleries, Inc. The terms and conditions of the reincorporation
merger are set forth in the Agreement and Plan of Merger, and the summary of the
terms and conditions of the reincorporation merger set forth below is qualified
by reference to the full text of the Agreement and Plan of Merger included as
Exhibit C to this information statement.
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MANAGEMENT AND CHARTER DOCUMENTS. Following the reincorporation, the
composition of our board of directors will remain the same, and the rights of
stockholders and our corporate affairs will be governed by the Delaware General
Corporation Law (the "DGCL") and the restated certificate of incorporation and
bylaws of Superior Galleries, Inc. rather than by the Nevada Business
Corporation Law (the "NBCL") and the articles of incorporation, as amended, and
bylaws of Tangible Asset Galleries, Inc. Set forth below, under the heading
"Delaware and Nevada Corporate Laws," is a comparison of the material rights of
shareholders and matters of corporate governance before and after the
reincorporation in Delaware.
CERTIFICATE OF INCORPORATION AND BYLAWS OF SUPERIOR GALLERIES, INC. The
certificate of incorporation and bylaws of Superior Galleries, Inc. are included
as Exhibit D and Exhibit E to this proxy statement, respectively. The
description of the certificate of incorporation and bylaws of Superior
Galleries, Inc. set forth herein is qualified by reference to the full text of
the certificate of incorporation and bylaws attached to this proxy statement.
The articles of incorporation, as amended, and bylaws of Tangible Asset
Galleries, Inc. are available for inspection by our shareholders at the
principal offices of Tangible Asset Galleries, Inc. located at 9478 West Olympic
Boulevard, Beverly Hills, California 90212.
CAPITALIZATION. Tangible Asset Galleries, Inc.'s current articles of
incorporation, as amended, authorize 265,000,000 shares of capital stock,
consisting of 250,000,000 shares of common stock, par value $0.001 per share,
and 15,000,000 shares of preferred stock, par value $0.001 per share. As of May
1, 2003, there were 52,813,699 shares of common stock, 125,000 shares of Series
A Preferred Stock, 3,400,000 shares of Series B Preferred Stock and 2,000,000
shares of Series D Preferred Stock issued and outstanding. There were no shares
of Series C Preferred Stock outstanding at that date.
Superior Galleries, Inc.'s certificate of incorporation authorizes
22,500,000 shares of capital stock consisting of 12,500,000 shares of common
stock, par value $0.001 per share and 10,000,000 shares of preferred stock, par
value $0.001 per share. The certificate of incorporation authorizes Series A
Preferred Stock, Series B Preferred Stock and Series D Preferred Stock having
the same rights, preferences and privileges (except as provided below) as the
outstanding securities of the same designation for Tangible Asset Galleries,
Inc. The authorized number of shares of each of these series of preferred stock
is equal to the total number of outstanding shares of such class. As of the date
of the Annual Meeting, all 100 issued and outstanding shares of common stock of
Superior Galleries, Inc. will be held by Tangible Asset Galleries, Inc. Upon
consummation of the reincorporation merger, the 100 issued shares will be
cancelled.
CONVERSION OF SHARES. Upon the effectiveness of the reincorporation
merger, and without any action on the part of Tangible Asset Galleries, Inc. or
the holder of any securities of Tangible Asset Galleries, Inc., except for
shares held by a dissenting shareholder, every outstanding share of common stock
of Tangible Asset Galleries, Inc. will be automatically converted into one share
of, except as provided below, common stock of Superior Galleries, Inc. Each
share of our outstanding preferred stock will be converted in the
reincorporation merger into one share of preferred stock of Superior Galleries,
Inc., and will have the same rights, preferences and privileges as it had prior
to the reincorporation merger. Each outstanding certificate representing shares
of stock of Tangible Asset Galleries, Inc. of any class will represent the same
number of shares of stock of Superior Galleries, Inc. of the same class, and
such certificates will be deemed for all corporate purposes to evidence
ownership of shares of stock of Superior Galleries, Inc.
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The current Certificate of Designation for our Series B Preferred Stock
provides that in case of the liquidation of Tangible Asset Galleries, Inc., the
Series B Preferred Stock will have a liquidation preference that is senior to
that of our outstanding Series D Preferred Stock. However, the holders of those
securities have separately agreed that in the case of a liquidation, they will
have the same liquidation preferences. The Certificates of Designation for the
Superior Galleries, Inc. Series B Preferred Stock and Series D Preferred Stock
incorporate that agreement, and therefore differ in this respect from the
Certificates of Designation of Tangible Asset Galleries, Inc. that are presently
of record. Although the Certificates of Designation of the two companies have
this difference, the rights of the holders of these securities are not affected
by the reincorporation merger since they had already agreed among themselves
that they would have equivalent liquidation preferences. There are currently two
holders of Series B Preferred Stock and one holder of Series D Preferred Stock.
Furthermore, approval of the Reincorporation Merger will be deemed to
be approval of an amendment to the Certificate of Designation for our Series A
Preferred Stock, in order to clarify an ambiguity in that Certificate. As
presently drafted, that Certificate of Designation provides that the Series A
Preferred Stock will automatically convert into common stock of Tangible Asset
Galleries upon any merger in which Tangible Asset Galleries is not the survivor.
Literally read, this provision would result in automatic conversion of the
Series A Preferred Stock upon the closing of the reincorporation merger.
However, we believe that it was not the intent of our company or of the
purchasers of the Series A Preferred Stock that there be automatic conversion
into common stock as a result of a reincorporation merger where the ownership of
Tangible Asset Galleries, Inc. (or its successor) was not changed. Accordingly,
your approval of the reincorporation merger will be deemed to be approval of an
amendment to the Certificate of Designation for the Series A Preferred Stock to
provide that the term requiring automatic conversion of the Series A Preferred
Stock into common stock as a result of merger in which Tangible Asset Galleries,
Inc. is not the survivor does not apply in the case of a merger effected for the
purpose of changing our place of corporate domicile.
IT WILL NOT BE NECESSARY FOR OUR SHAREHOLDERS TO EXCHANGE THEIR
EXISTING STOCK CERTIFICATES FOR STOCK CERTIFICATES UPON CONSUMMATION OF THE
REINCORPORATION. HOWEVER, SHAREHOLDERS MAY EXCHANGE THEIR CERTIFICATES IF THEY
SO CHOOSE.
TRADING OF OUR COMMON STOCK. The common stock of Tangible Asset
Galleries, Inc. currently trades in the "Pink Sheets," under the symbol TAGZ,
although we plan to apply for listing of these securities on the OTC Bulletin
Board. Upon consummation of the reincorporation merger, the common stock of
Superior Galleries, Inc. will continue to be traded without interruption, and
delivery of existing stock certificates of Tangible Asset Galleries, Inc. will
constitute "good delivery" of stock certificates representing shares of stock of
any class in stock transactions effected after the reincorporation merger. Prior
to the completion of the reincorporation, we will be notified of a new trading
symbol for Superior Galleries, Inc., which will be effective after the merger is
completed.
EFFECT ON STOCK OPTION PLANS. As a result of the reincorporation
merger, Superior Galleries, Inc. will assume all of the outstanding options and
stock option plans of Tangible Asset Galleries, Inc. Approval of the
reincorporation merger, therefore, by the shareholders will be deemed to be
approval by the shareholders, for all relevant purposes, of the stock option
plans and stock options assumed by Superior Galleries, Inc. in the merger.
GOVERNMENTAL FILINGS. Except for the filing of the articles of merger
and a certificate of merger in Nevada and Delaware, respectively, there are no
state or federal regulatory requirements or approvals necessary to consummate
the reincorporation merger that have not been obtained.
APPROVAL, EFFECTIVENESS. The reincorporation merger must be approved by
the holders of a majority of our outstanding voting securities. The
reincorporation merger is expected to become effective as soon as practicable
after all other conditions to the reincorporation merger have been satisfied,
including the receipt of all consents, orders and approvals necessary for
consummation of the reincorporation merger. Prior to its effectiveness, however,
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the reincorporation merger may be abandoned by our board of directors if, for
any reason, the board of directors determines that consummation of the
reincorporation merger is no longer in the best interest of Tangible Asset
Galleries, Inc. and its shareholders or if we receive demands for exercise of
dissenters' rights from holders of voting stock of Tangible Asset Galleries,
Inc. representing more than one percent of our issued and outstanding shares of
any class.
DISSENTERS' RIGHTS
The following discussion is not a complete statement of the law
pertaining to dissenters' rights under the NBCL and is qualified in its entirety
by the full text of Sections 92A.300 to 92A.500 of the NRS, which is reprinted
in its entirety as Exhibit F.
Holders of Tangible Asset Galleries, Inc. common and preferred stock
who do not approve the reincorporation merger may, under certain circumstances
and by following the procedure prescribed by the NRS, exercise dissenters'
rights and obtain payment of the "fair value" of their shares of Tangible Asset
Galleries, Inc. common stock. For purposes of dissenters' rights under the NRS,
"fair value" means the value of the shares immediately before the effectuation
of the reincorporation merger, excluding any appreciation or depreciation in
anticipation of the reincorporation merger unless exclusion would be
inequitable.
Under NRS Section 92A.420, a stockholder who does not approve the
reincorporation merger and who wishes to assert dissenter's rights must deliver
to Tangible Asset Galleries, Inc., before the vote on the reincorporation merger
is taken, written notice of such shareholder's intent to demand payment for his
shares if the proposed reincorporation merger is effectuated and must not vote
his shares in favor of the proposed reincorporation merger. A shareholder who
does not adequately satisfy the foregoing requirements is not entitled to
payment for his shares.
Any holder of Tangible Asset Galleries, Inc. common stock who wishes to
exercise his dissenter's rights, or who wishes to preserve his right to do so,
should review the following discussion and Exhibit F carefully. Failure to
comply timely and properly with the procedures specified in Sections 92A.300 to
92A.500 of the NRS will result in the loss of dissenter's rights.
If the proposed reincorporation merger is authorized and approved at
the special meeting, Tangible Asset Galleries, Inc. must deliver a written
dissenters' notice to all shareholders who satisfied the requirements of Section
92A.420 of the NRS no later than ten days after such approval. A shareholder who
is sent such a dissenters' notice must then timely demand payment, certify
whether he acquired beneficial ownership of the shares before the date set forth
in the dissenters' notice and deposit his shareholder's certificates in
accordance with the terms of the dissenters' notice. The dissenters' notice we
send must specify a date by which we must receive the dissenters' demands for
payment, which date shall be not less than 30 and not more than 60 days after
the date the notice is delivered.
A shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his shares. Payment will be made to a dissenting
shareholder for his shares as soon as the proposed reincorporation merger is
consummated, unless the NRS permits Tangible Asset Galleries, Inc. to, and
Tangible Asset Galleries, Inc. elects to, withhold payment. Tangible Asset
Galleries, Inc. may elect to withhold payment from a dissenter unless the
dissenter was the beneficial owner of the shares before the date set forth in
the dissenters' notice as the date of the first announcement to news media or
shareholders of the terms of the proposed reincorporation merger. To the extent
Tangible Asset Galleries, Inc. elects to withhold such payment, after
consummating the proposed reincorporation merger, it shall estimate the fair
value of the shares and shall pay this amount to each dissenter who agrees to
accept it in full satisfaction of the dissenter's demand.
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A dissenter may notify the corporation in writing of his own estimate
of the fair value of the shares held by him and demand payment of his estimate,
or reject the corporation's offer and demand payment of the fair value of the
shares held by him, if the dissenter believes that the amount paid is less than
the fair value of his shares.
If a demand for payment remains unsettled, we must commence a
proceeding within 60 days after receiving the payment demand and petition the
circuit or superior court of Clark County, Nevada, the location of our
registered office in the State of Nevada, to determine the fair value of the
shares. If we do not timely commence the proceeding, we must pay each dissenter
whose demand remains unsettled the amount demanded.
All dissenters (whether or not residents of the State of Nevada) whose
demands remain unsettled must be made parties to the proceeding as in an action
against their shares and all parties must be served with a copy of the petition.
Nonresidents of the State of Nevada may be served by registered or certified
mail or by publication as provided by law.
The court in which a proceeding is commenced may assess the fees, costs
and expenses of such proceedings, including the reasonable compensation and
expenses of appraisers appointed by the court, and counsel and experts fees for
the respective parties, in amounts the court finds equitable, either (a) against
Tangible Asset Galleries, Inc. and in favor of any or all dissenters if the
court finds we did not substantially comply with the requirements of Sections
91A.300 to 92A.500 of the NRS, (b) against either Tangible Asset Galleries, Inc.
or a dissenter, in favor of any other party, if the court finds that the party
against whom the fees and expenses are assessed acted arbitrarily, vexatiously,
or not in good faith with respect to the rights provided by Sections 92A.300 to
92A.500 of the NRS. Additionally, if the court finds that the services of
counsel for any dissenter were of substantial benefit to other dissenters
similarly situated and that the fees for those services should not be assessed
against Tangible Asset Galleries, Inc., the court may award to these counsel
reasonable fees to be paid out of the amounts awarded the dissenters who were
benefited.
ALL WRITTEN NOTICES TO TANGIBLE ASSET GALLERIES, INC. SHOULD BE SENT OR
DELIVERED TO:
Paul Biberkraut
Chief Financial Officer
Tangible Asset Galleries, Inc. Inc.
9478 West Olympic Boulevard
Beverly Hills, California 90212
Any dissenting shareholder who has duly demanded payment for his shares
under Sections 92A.300 to 92A.500 of the NRS will not after the effective time
of the reincorporation merger, be entitled to vote the shares subject to such
demand for any purposes or be entitled to the payment of dividends or other
distributions on such shares (except dividends or other distributions payable to
shareholders of record as of the date prior to the effective time of the
reincorporation).
If any holder of Tangible Asset Galleries, Inc. common or preferred
stock who demands payment for his shares fails to perfect, or effectively
withdraws or loses his or her right to such payment for his shares, the shares
of such holder will be converted to shares of Superior Galleries, Inc. as
contemplated by the reincorporation merger. A dissenting shareholder will not be
entitled to payment for his shares if: (a) the reincorporation merger is
abandoned; (b) the shares are transferred prior to their deposit as required in
the dissenters' notice; (c) the dissenting shareholder fails to make a timely
written demand for payment along with a certification regarding whether he
acquired beneficial ownership of the shares before the date set forth in the
dissenters' notice; or (d) with our consent, the shareholder delivers to us a
written withdrawal of such shareholder's demand for payment for his shares.
-20-
FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTIONS 92A.300 TO 92A.500 OF
THE NRS FOR PERFECTING DISSENTERS' RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS
(IN WHICH EVENT A SHAREHOLDER WILL BE ENTITLED TO RECEIVE THE NUMBER OF SUPERIOR
GALLERIES, INC. SHARES AS CONTEMPLATED BY THE REINCORPORATION MERGER). IN VIEW
OF THE COMPLEXITY OF THE PROVISIONS OF THESE RULES, SHAREHOLDERS WHO ARE
CONSIDERING DISSENTING TO THE REINCORPORATION MERGER SHOULD CONSULT THEIR OWN
LEGAL ADVISORS.
ACCOUNTING TREATMENT OF THE REINCORPORATION
The reincorporation will have no accounting implications on the
historical financial statements of Tangible Asset Galleries, Inc.
FEDERAL INCOME TAX CONSEQUENCES OF THE REINCORPORATION
Subject to the limitations, qualifications and exceptions described
herein, and assuming the reincorporation merger qualifies as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended, the following tax consequences generally should result:
1. A holder of Tangible Asset Galleries, Inc. common or preferred stock
or should not recognize gain or loss upon receipt of Superior Galleries, Inc.
common or preferred stock pursuant to the reincorporation.
2. The aggregate tax basis of the Superior Galleries, Inc. common or
preferred stock received pursuant to the reincorporation should be equal to the
aggregate tax basis of the Tangible Asset Galleries, Inc. common or preferred
stock surrendered in exchange therefor.
3. The holding period of the Superior Galleries, Inc. common or
preferred stock should include the period during which such shareholder held the
corresponding share of Tangible Asset Galleries, Inc. common or preferred stock
prior to the reincorporation, provided such shareholder held the corresponding
share as a capital asset at the time of the reincorporation.
In addition, Tangible Asset Galleries, Inc. should not, prior to or
after the reincorporation, recognize gain or loss as a result of the
reincorporation, and the tax attributes of Superior Galleries, Inc. will remain
the same as those of Tangible Asset Galleries, Inc. after the reincorporation.
The foregoing summary of material federal income tax consequences is
included for general information only and does not address all income tax
consequences to all of our shareholders. This summary does not purport to be
complete and does not address the tax consequences to holders that are subject
to special tax rules, such as banks, insurance companies, regulated investment
companies, personal holding companies, foreign entities, nonresident alien
individuals, broker-dealers and tax-exempt entities. This summary is based on
the Internal Revenue Code of 1986, as amended, Treasury regulations and proposed
regulations, court decisions and current administrative rulings and
pronouncements of the Internal Revenue Service, all of which are subject to
change, possibly with retroactive effect. Holders of common or preferred stock
are advised to consult their own tax advisers regarding the federal income tax
consequences of the proposed reincorporation in light of their personal
circumstances and the consequences under state, local and foreign tax laws.
NO CHANGE IN REPORTING STATUS
The proposed reincorporation of Tangible Asset Galleries, Inc. as a
Delaware corporation will have no effect upon Tangible Asset Galleries, Inc.'s
status as a reporting company for federal securities law purposes.
-21-
BOARD OF DIRECTORS RESERVATION OF RIGHTS
The board of directors reserves the right, notwithstanding shareholder
approval and without further action by the shareholders, to elect not to proceed
with the reincorporation merger, if at any time prior to consummating such
reincorporation, the board of directors, in its sole discretion, determines that
it is no longer in the best interests of the corporation or its shareholders.
The board of directors may also elect not the proceed with the reincorporation
if Tangible Asset Galleries, Inc. receives demands for the exercise of
dissenters' rights from holders of shares of common or preferred stock
representing more than one percent of our issued and outstanding shares of
common or preferred stock. In addition, the board of directors reserves the
right to consummate the reincorporation merger for up to twelve months following
shareholder approval thereof at the meeting. However, at the present time, the
board of directors intends to proceed with the reincorporation of Tangible Asset
Galleries, Inc. with and into Superior Galleries, Inc., as presented herein
without delay.
CHANGE OF CORPORATE NAME
As a result of the reincorporation merger, the surviving corporation
will retain the corporate name "Superior Galleries, Inc."
DELAWARE AND NEVADA CORPORATE LAWS
The following discussion includes a summary of the material differences
between the rights of Tangible Asset Galleries, Inc.'s shareholders before and
after the reincorporation. In most cases, the rights of shareholders before and
after the reincorporation are substantially similar, with changes having been
made to the corporate charter documents to maintain this substantial similarity.
In other cases, there are differences that might be considered material, and
these differences may be understood from the following comparison.
BOARD OF DIRECTORS
------------------
TANGIBLE ASSET GALLERIES, INC. Our bylaws state that our board of
directors will consist of five members and may be increased or decreased from
time to time by amendment to the bylaws. Each director is entitled to serve
until his successor is elected and qualified. Directors may be removed for or
without cause by an affirmative vote of a majority of the shares entitled to
vote at a special or annual meeting of the shareholders.
SUPERIOR GALLERIES, INC. The certificate of incorporation of Superior
Galleries, Inc. provides that the number of directors which shall constitute the
board of directors of Superior Galleries, Inc. will be fixed from time to time
by, or in the manner provided in, the bylaws of Superior Galleries, Inc. or in
an amendment thereof duly adopted by the board of directors or the stockholders
of Superior Galleries, Inc. Superior Galleries, Inc.'s bylaws provides that the
board of directors shall be not less than three nor more than seven. The board
of directors has fixed the number of directors at five. This number may be
changed by a duly adopted amendment to the certificate of incorporation or by an
amendment to the bylaws duly adopted by the vote or written consent of the
holders of a majority of the stock issued and outstanding and entitled to vote
or by resolution of a majority of the board of directors, except as may be
otherwise specifically provided by statute or by the certificate of
incorporation. No reduction of the authorized number of directors shall have the
effect of removing any director before that director's term of office expires.
Each director is entitled to serve until his successor is elected and qualified
or until his earlier death, resignation or removal. Directors may be removed for
or without cause by a majority of the stockholders entitled to vote at a special
or annual meeting of the stockholders.
-22-
If the shareholders approve and adopt the reincorporation proposal, all
members of the board of directors immediately prior to the reincorporation
merger shall continue as members of the board of directors of Superior
Galleries, Inc. The term of such directors will expire upon the election and
qualification of each such director's successor at the 2004 annual meeting of
stockholders of Superior Galleries, Inc.
LIMITATION OF DIRECTOR OR OFFICER LIABILITY
-------------------------------------------
TANGIBLE ASSET GALLERIES, INC. Our articles of incorporation, as
amended, provide that our directors or officers shall not be liable to Tangible
Asset Galleries, Inc. or its shareholders for damages for a breach of fiduciary
duty as a director or officer, except that such provision does not eliminate or
limit the liability of a director for acts or omissions which involve
intentional misconduct, fraud or a knowing violation of law, or for the payment
of dividends in violation of the statutory requirements of the Nevada Revised
Statutes.
SUPERIOR GALLERIES, INC. Superior Galleries, Inc.'s certificate of
incorporation provides that directors of Superior Galleries, Inc. will not be
liable personally to Superior Galleries, Inc. or its stockholders for monetary
damages for breach of fiduciary duty as a director except for liability: (a) for
any breach of the director's duty of loyalty to the corporation or its
stockholders, (b) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (c) under Section 174 of
the DGCL for unlawful payment of a dividend or approval of an unlawful stock
redemption or repurchase, or (d) for any transaction from which the director
derived any improper personal benefit. Additionally, if the DGCL is subsequently
amended, then the liability of a director of Superior Galleries, Inc. shall be
eliminated or limited to the fullest extent permitted by the DGCL, as so
amended. This provision protects Superior Galleries, Inc. directors against
personal liability for monetary damages from breaches of their duty of care.
Under Delaware law, absent adoption of this provision in the Superior Galleries,
Inc. certificate of incorporation, directors can be held liable for gross
negligence in connection with decisions made on behalf of the corporation in the
performance of their duty of care, but may not be liable for simple negligence.
We believe that the provisions of Superior Galleries, Inc.'s
certificate of incorporation relating to limitations on the liability of
directors, though similar to those included in the Tangible Asset Galleries,
Inc. articles of incorporation, are likely to be easier to apply to a specific
situation, as a result of the much more developed case law that considers the
Delaware provisions.
INDEMNIFICATION
TANGIBLE ASSET GALLERIES, INC. Under Sections 78.7502 and 751 of the
NRS, Tangible Asset Galleries, Inc. has the right to indemnify and to pay and
advance expenses to directors, officers and other persons who are eligible for,
or entitled to, such indemnification, payments or advances, by being made or
threatened to be made a party to an action or a proceedings, whether criminal,
civil, administrative or investigative by reason of the fact that he is or was a
director, officer or employee of Tangible Asset Galleries, Inc., or served any
other enterprise as director or officer or employee at the request of Tangible
Asset Galleries, Inc.
SUPERIOR GALLERIES, INC. Under Section 145 of the DGCL, directors,
officers, employees and other individuals may be indemnified against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement in
connection with specified actions, suits or proceedings, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation, including derivative action, a "Corporation Action")
if they acted in good faith and in a manner they reasonably believed to be in,
or not opposed to, the best interests of the corporation, and, regarding any
-23-
criminal action or proceeding, had no reasonable cause to believe their conduct
was unlawful. A similar standard is applicable in the case of Corporation
Actions, except that indemnification only extends to expenses (including
attorneys' fees) incurred in connection with the defense or settlement of such
actions. The DGCL further requires court approval before there can be any
indemnification where the person seeking indemnification has been found liable
to the corporation. To the extent that a director or officer is otherwise
eligible to be indemnified is successful on the merits of any claim or defense
described above, indemnification for expenses (including attorneys' fees)
actually and reasonably incurred is mandated by the DGCL.
Neither the articles of incorporation nor the bylaws of Tangible Asset
Galleries, Inc. contain any provisions addressing a director's, officer's or
agent's indemnification rights. Superior Galleries, Inc.'s certificate of
incorporation and bylaws provide, however, that Superior Galleries, Inc. may
indemnify, in addition to a person who is or was a director, officer, employee
or agent of Superior Galleries, Inc., or is or was serving at the request of
Superior Galleries, Inc. as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, a person who
is or was a director, officer, employee or agent of any resulting corporation or
any constituent corporation (including any constituent of a constituent)
absorbed in a consolidation or merger with Superior Galleries, Inc. which, if
its separate existence had continued, would have had power and authority to
indemnify its directors, officers, employees or agents, so that any person who
is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position with
respect to the resulting or surviving corporation as he would have with respect
to such constituent corporation if its separate existence had continued. The
right to indemnification is not exclusive of any other right which any person
may have or acquire under any statute, any provision of the Superior Galleries,
Inc. restated certificate of incorporation or the bylaws, or otherwise.
ANTI-TAKEOVER STATUTES/PROVISIONS
---------------------------------
TANGIBLE ASSET GALLERIES, INC. Sections 78.411 et. seq. of the NRS
prohibit, in general, any business combination, such as a merger or
consolidation, between a Nevada corporation with 200 or more shareholders with
shares of its stock registered under the federal securities laws or which makes
an election under the NRS, and an "interested shareholder" (which is defined
generally as any owner of ten percent or more of the corporation's outstanding
voting stock) for three years after the date on which such shareholder became an
interested shareholder unless the business combination or the stock acquisition
which caused the person to become an interested shareholder was approved in
advance by the corporation's board of directors. This provision of the NBCL is
effective even if all parties should subsequently decide that they wish to
engage in the business combination. Following the three-year moratorium period,
the Nevada corporation may engage in certain business combinations with an
interested shareholder only if, among other things, (a) the business combination
is approved by the board of directors before the interested shareholder's
acquisition of the shares, or by the affirmative vote of the holders of a
majority of the outstanding voting shares not beneficially owned by the
interested shareholder proposing the business combination, or (b) the business
combination meets certain criteria designed to ensure that the remaining
shareholders receive fair consideration for their shares.
Sections 78.378 et seq. of the NRS contain a "control share
acquisition" provision which effectively denies voting rights to shares of an
"issuing public corporation" acquired in control share acquisitions unless the
grant of such voting rights is approved by a majority vote of disinterested
shareholders.
Neither our articles of incorporation, as amended, nor bylaws
specifically address the foregoing. We have has not opted out of any of the
foregoing anti-takeover provisions.
-24-
SUPERIOR GALLERIES, INC. Section 203 of the DGCL is similar, but not
identical, to Sections 78.411 et seq. of the NRS. Section 203 of the DGCL, which
applies to Superior Galleries, Inc., regulates transactions with major
stockholders after they become major stockholders. Section 203 of the DGCL
prohibits a Delaware corporation from engaging in mergers, dispositions of ten
percent or more of its assets, certain issuances of stock and other transactions
("business combinations") with a person or group that owns 15% or more of the
voting stock of the corporation (an "interested stockholder") for a period of
three years after the interested stockholder crosses the 15% threshold. These
restrictions on transactions involving an interested stockholder do not apply if
(a) before the interested stockholder owned 15% or more of the voting stock, the
board of directors approved the business combination or the transaction that
resulted in the person or group becoming an interested stockholder, (b) in the
transaction that resulted in the person or group becoming an interested
stockholder, the person or group acquired at least 85% of the voting stock other
than stock owned by directors who are also officers and certain employee stock
plans, or (c) after the person or group became an interested stockholder, the
board of directors and at least two-thirds of the voting stock other than stock
owned by the interested stockholder approves the business combination at a
meeting. The restrictions contained in Section 203 of the DGCL do not apply to
Superior Galleries, Inc. in connection with the reincorporation merger because,
under Section 203(b)(4) of the DGCL, such restrictions generally do not apply
where a corporation does not have a class of voting stock that is (i) listed on
a national securities exchange, (ii) authorized for quotation on The Nasdaq
Stock Market, or (iii) held of record by more than 2,000 stockholders.
The DGCL does not have a statute that is similar to the Nevada control
share acquisitions statute.
Superior Galleries, Inc.'s certificate of incorporation expressly
elects not to be governed by Section 203 of the DGCL.
PREFERRED STOCK
---------------
TANGIBLE ASSET GALLERIES, INC. Tangible Asset Galleries, Inc.'s
articles of incorporation, as amended, authorize the board of directors to issue
preferred stock. As permitted by the NRS, the Board of Directors is authorized
to prescribe the number of shares in each unissued class, a distinguishing
designation for each such class and the preferences, limitations, and relative
rights of each such class.
SUPERIOR GALLERIES, INC. Superior Galleries, Inc.'s certificate of
incorporation authorizes the board of directors of Superior Galleries, Inc. to
issue up to 10,000,000 shares of preferred stock, of which 125,000 shares have
been designated as Series A Preferred Stock, 3,400,000 shares have been
designated as Series B Preferred Stock and 2,000,000 shares have been designated
as Series D Preferred Stock. Except as set forth under "Conversion of Shares"
above, the rights, preferences and privileges of these securities are the same
as the correspondingly designated security of Tangible Asset Galleries, Inc. The
certificate of incorporation also authorizes the board of directors to determine
the preferences, limitations and relative rights of any other class or series of
Superior Galleries, Inc. preferred stock prior to issuance.
CUMULATIVE VOTING
-----------------
Neither Tangible Asset Galleries, Inc.'s articles of incorporation, as
amended, nor Superior Galleries, Inc.'s restated certificate of incorporation
provide for cumulative voting rights in the election of directors. However,
under certain circumstances which are dependent in part upon the residency of
our shareholders, either Tangible Asset Galleries, Inc. or Superior Galleries,
Inc. may be deemed to be a "quasi-foreign corporation" under California law, and
in such event the California Corporations Code requires cumulative voting in the
election of directors. A non-California corporation is treated as a
"quasi-foreign" corporation under California law if it meets certain tests
relating to the location of its operations, and more than one-half of its
-25-
outstanding voting securities are held of record by persons having addresses in
California. For these purposes, securities held to the knowledge of the
corporation in the names of broker-dealers, nominees for broker-dealers
(including clearing corporations) and certain other entities shall not be
considered outstanding. Tangible Asset Galleries, Inc. is presently treated as a
"quasi-foreign" corporation under California law. Whether it continues to be so
treated in the future will depend on whether it continues to meet the
requirements for such treatment, including the residency of its shareholders.
ACTION WITHOUT A MEETING
------------------------
TANGIBLE ASSET GALLERIES, INC. Under Section 78.320 of the NRS, unless
otherwise provided in a Nevada corporation's articles of incorporation or
bylaws, any action required or permitted to be taken at a shareholders' meeting
may be taken without a meeting by the written consent of a majority of the
shareholders entitled to vote on such action. The articles of incorporation and
bylaws of Tangible Asset Galleries, Inc. do not limit our ability to take
shareholder action by written consent.
SUPERIOR GALLERIES, INC. Section 228 of the DGCL permits any action
required or permitted to be taken at a stockholders' meeting to be taken by
written consent signed by the holders of the number of shares that would have
been required to effect the action at an actual meeting of the stockholders at
which all shares were present and voted. Section 228 of the DGCL will govern
stockholders rights in Superior Galleries, Inc.
SPECIAL MEETINGS
----------------
TANGIBLE ASSET GALLERIES, INC. Tangible Asset Galleries, Inc.'s bylaws
provide that a special meeting of the shareholders may be called by the board of
directors, the chairman of the board, the president or by the holders of not
less than 10% of the shares entitled to vote at the meeting.
SUPERIOR GALLERIES, INC. Section 211(d) of the DGCL authorizes the
board of directors or those persons authorized by the corporation's certificate
of incorporation or bylaws to call a special meeting of the corporation's
stockholders. Superior Galleries, Inc.'s bylaws provide that a special meeting
may be called by the board of directors, the chairman of the board, the
president, the secretary, any two officers of Superior Galleries, Inc., and by
the secretary of Superior Galleries, Inc. at the request of not less than ten
percent of the total voting power of all outstanding securities of Superior
Galleries, Inc. then entitled to vote or as otherwise may be required by law.
VOTING, APPRAISAL RIGHTS AND CORPORATE REORGANIZATIONS
------------------------------------------------------
TANGIBLE ASSET GALLERIES, INC. The NRS generally requires a majority
vote of shareholders to approve a plan of merger or share exchange unless the
articles of incorporation or board requires a greater vote. However, there are
no dissenters' rights for a merger or plan of share exchange by a corporation
the shares of which are (a) registered on a United States securities exchange
registered under the Securities and Exchange Act of 1934, as amended, or (b)
traded on The Nasdaq National Market or (c) held by at least 2,000 stockholders
of record.
SUPERIOR GALLERIES, INC. The DGCL generally requires a majority vote of
stockholders to approve a merger, sale of assets or similar reorganization
transaction. Section 262 of the DGCL does not provide for dissenters' rights of
appraisal for (a) the sale, lease or exchange of all or substantially all of the
assets of a corporation, (b) a merger by a corporation, the shares of which are
either listed on a national securities exchange or held by more than 2,000
stockholders if such stockholders receive shares of the surviving corporation or
of a listed or widely held corporation, or (c) certain mergers not requiring
stockholder approval.
-26-
AMENDMENT TO CERTIFICATE/ARTICLES OF INCORPORATION
--------------------------------------------------
TANGIBLE ASSET GALLERIES, INC. An amendment to the articles of
incorporation must be approved by (a) a majority of the votes cast when a quorum
is present, and (b) if the amendment would alter or change any preference or
other right given to any class or series of outstanding shares, then by the vote
of a majority of the voting power of each affected class, regardless of any
restrictions on such voting power.
SUPERIOR GALLERIES, INC. The DGCL provides that an amendment to the
certificate of incorporation becomes effective upon the approval of a majority
of the outstanding stock entitled to vote.
AMENDMENT TO BYLAWS
-------------------
TANGIBLE ASSET GALLERIES, INC. Tangible Asset Galleries, Inc.'s bylaws
may be amended either by the vote of the holders of a majority of the
outstanding shares entitled to vote or by the vote of a majority of the
directors; provided that that authorized number of directors may only be changed
by an amendment to the Company's articles of incorporation.
SUPERIOR GALLERIES, INC. Section 109 of the DGCL places the power to
adopt, amend or repeal bylaws in the corporation's stockholders, but permits the
corporation, in its certificate of incorporation, also to vest such power in the
board of directors. Although the board of directors is vested with such
authority pursuant to Superior Galleries, Inc.'s certificate of incorporation,
the stockholders' power to make, repeal, alter, amend and rescind bylaws will
remain unrestricted.
PREEMPTIVE RIGHTS
-----------------
TANGIBLE ASSET GALLERIES, INC. Section 78.267 of the NRS provides that
the shareholders of a corporation do not have a preemptive right to acquire a
corporation's unissued shares except to the extent the articles of incorporation
so provide. Tangible Asset Galleries, Inc.'s articles of incorporation, as
amended, do not provide Tangible Asset Galleries, Inc.'s shareholders with
preemptive rights.
SUPERIOR GALLERIES, INC. Under Section 102 of the DGCL, no statutory
preemptive rights will exist, unless a corporation's certificate of
incorporation specifies otherwise. Superior Galleries, Inc.'s restated
certificate of incorporation does not provide for any such preemptive rights.
DIVIDEND RIGHTS
---------------
TANGIBLE ASSET GALLERIES, INC. The NRS does not permit dividend
distributions if, after giving effect to the proposed dividend, (a) the
corporation would be unable to pay its debts as they become due in the usual
course of business, or (b) the corporation's total assets would be less than the
sum of its total liabilities plus (unless the articles of incorporation permit
otherwise) the amount that would be needed, if the corporation were to be
dissolved at the time of distribution, to satisfy the preferential rights (if
any) of shareholders whose preferential rights are superior to those of
shareholders receiving the distribution.
SUPERIOR GALLERIES, INC. Delaware corporations may pay dividends out of
the excess of the net assets of the corporation (the "Surplus") less the
consideration received by the corporation for any shares of its capital stock
(the "Capital") or, if there is no Surplus, out of net profits for the fiscal
year in which declared and/or the preceding fiscal year. Section 170 of the DGCL
also provides that dividends may not be paid out of net profits if, after the
payment of the dividend, Capital is less than the Capital represented by the
outstanding stock of all classes having a preference upon the distribution of
assets.
-27-
APPROVAL OF INDEPENDENT AUDITORS
(PROPOSAL 4)
Our board of directors has selected the independent certified public
accounting firm of Haskell & White LLP to audit and comment on our financial
statements for the year ending June 30, 2003, and to conduct whatever audit
functions are deemed necessary. Haskell & White LLP audited our financial
statements as of June 30, 2002 and 2001 and for the twelve months ended June 30,
2002, the six months ended June 30, 2001 and the twelve months ended December
31, 2000, which were included in our most recent annual report on Form 10-KSB.
The appointment of Haskell & White LLP is being submitted to
shareholders for ratification. In the event the appointment is not ratified by a
majority of votes cast, in person or by proxy, it is anticipated that no change
in auditors would be made for the current year because of the difficulty and
expense of making any change so long after the beginning of the current year,
but that vote would be considered in connection with the auditors' appointment
for 2004. A representative of Haskell & White LLP is expected to attend the
annual meeting respond to appropriate questions and if the representative
desires, which is not now anticipated, make a statement.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THIS PROPOSAL.
PROXIES, UNLESS INDICATED TO THE CONTRARY, WILL BE VOTED "FOR" THIS PROPOSAL.
AUDIT FEES
The aggregate fees billed by Haskell & White LLP for professional
services rendered for the audit of the Company's financial statements for the
fiscal year ended June 30, 2002 and the interim reviews of the financial
statements included in the Company's Form 10-KSB for its fiscal year 2002 were
$104,815.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES.
Haskell & White LLP did not bill us for any Financial Information
System Design and Implementation fees for fiscal year 2002.
ALL OTHER FEES
In addition to the audit services described above, Haskell & White LLP
billed us an aggregate of $49,320 for other services rendered during fiscal year
2002, which principally consisted of tax services and general corporate
accounting matters. The Board of Directors has taken such services into
consideration in connection with its determinations concerning the principal
accountant's independence.
-28-
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of May 1, 2003 certain information
with respect to the beneficial ownership of our stock by (i) each of our
executive officers named in the summary compensation table below, (ii) each of
our directors, (iii) each person known to us to be the beneficial owner of more
than 5% of each class of our outstanding voting securities, and (iv) all of our
directors and executive officers as a group. Although Paul Biberkraut is named
as a Director herein and Mali Shrinivas and Steve Deeds are named as executive
officers in the Executive Compensation table contained herein, none of these
individuals is the beneficial owner of any of our outstanding voting securities.
The following table does not include security ownership information concerning
our new Directors, Messrs. Cohen, Ittner and Rector, who were appointed to the
Board after May 1, 2003. None of such new Directors currently own any of our
stock.
Amount and Nature of Percentage of
Name and Address Beneficial Ownership of Class
of Beneficial Owner(1) Title of Class Common Stock (2) Outstanding(2)
- -------------------------------- ------------------------- ------------------- --------------
Silvano DiGenova Common(3) 40,548,667 61.1%
Series B Preferred Stock 400,000 11.8%
Stanford Venture Capital Holdings, Inc. Common (4) 60,000,000 53.2%
6075 Poplar Avenue Series B Preferred Stock 3,000,000 88.2%
Memphis, TN 38119 Series D Preferred Stock 2,000,000 100.0%
Steven Bayern Common(5) 3,288,438 5.9%
Five Cedarwood Court
Laurel Hollow, NY 11791
Patrick Kolenick Common(6) 3,288,438 5.9%
35 Elizabeth Drive
Laurel Hollow, NY 11743
Andrew M. Denis Common(7) 2,325,593 4.4%
11 Fairwind Court
Northport, NY 11768
Tonni Giovanetti Common(8) 2,340,312 4.4%
11 Fairwind Court
Northport, NY 11768
All Executive Officers and Common(3) 40,548,667 61.1%
Directors as a Group (2 persons) Series B Preferred Stock 400,000 11.8%
___________________
(1) Except as set forth above, the address of each individual is 9478 West
Olympic Boulevard, Beverly Hills, California 90212.
(2) Based upon information furnished to us by the directors and executive
officers or obtained from our stock transfer books showing 52,813,699
shares of common stock outstanding as of May 1, 2003. We are informed that
these persons hold the sole voting and dispositive power with respect to
the common stock except as noted herein. For purposes of computing
"beneficial ownership" and the percentage of outstanding common stock held
by each person or group of persons named above as of May 1, 2003, any
security which such person or group of persons has the right to acquire
within 60 days after such date is deemed to be outstanding for the purpose
of computing beneficial ownership and the percentage ownership of such
person or persons, but is not deemed to be outstanding for the purpose of
computing the percentage ownership of any other person.
-29-
(3) Includes 9,171,445 shares of common stock issuable upon the exercise of
options and warrants, 4,000,000 shares of common stock issuable upon the
conversion of Series B Preferred Stock, all of which were exercisable,
convertible or exercisable or convertible within 60 days of the date of
this table, and 44,000 shares held by our Profit Sharing Plan Trust, over
which Mr. DiGenova exercises voting control.
(4) Includes 15,000,000 shares of common stock issuable upon the exercise of
warrants and 30,000,000 shares of common stock issuable upon the conversion
of Series B Preferred Stock both of which are currently exercisable or
convertible within the next 60 days. Includes warrants to purchase
15,000,000 shares of common stock assigned to four of Stanford's employees,
Daniel Bogar, William Fusselmann, Osvaldo Pi and Ronald Stein, in equal
amounts such that each of these employees has a warrant to purchase
3,750,000 shares of our common stock.
(5) Includes: (a) 2,909,435 shares of common stock owned by Cyndel & Co., Inc.,
a corporation in which Mr. Bayern is a stockholder and officer; (b) 36,693
shares of common stock owned by Win Capital Corp., a corporation in which
Mr. Bayern is a principal; (c) 8,462 shares of common stock issuable upon
the exercise of warrants owned by Mr. Bayern, which are currently
exercisable or exercisable within 60 days of the date of this table; (d)
218,340 shares of common stock issuable upon the exercise of warrants owned
by Cyndel, which are currently exercisable or exercisable within 60 days of
the date of this table; and (e) 2,754 shares of common stock issuable upon
the exercise of warrants owned by Win Capital Corp., which are currently
exercisable or exercisable within 60 days of the date of this table.
(6) Includes: (a) 2,909,435 shares of common stock owned by Cyndel, a
corporation in which Mr. Kolenick is a stockholder and officer; (b) 36,693
shares of common stock owned by Win Capital Corp., a corporation in which
Mr. Kolenick is a principal; (c) 8,462 shares of common stock issuable upon
the exercise of warrants owned by Mr. Kolenick, which are currently
exercisable or exercisable within 60 days of the date of this table; (d)
218,340 shares of common stock issuable upon the exercise of warrants owned
by Cyndel, which are currently exercisable or exercisable within 60 days of
the date of this table; and (e) 2,754 shares of common stock issuable upon
the exercise of warrants owned by Win Capital Corp., which are currently
exercisable or exercisable within 60 days of the date of this table.
(7) Includes 162,343 shares of common stock issuable upon the exercise of
warrants currently exercisable or exercisable within 60 days of the date of
this table.
(8) Includes 163,370 shares of common stock issuable upon the exercise of
warrants currently exercisable or exercisable within 60 days of the date of
this table.
-30-
EXECUTIVE COMPENSATION
The summary compensation table below shows certain compensation
information for services rendered in all capacities to us by our chief executive
officer and by each other executive officer whose total annual salary and bonus
exceeded $100,000 during the fiscal year ended June 30, 2002. Compensation
information for such individuals is provided for the fiscal year ended June 30,
2002, the six months ended June 30, 2001 and the fiscal year ended December 31,
2000, to the extent applicable. Other than as set forth below, no executive
officer's total annual salary and bonus exceeded $100,000 during our last fiscal
year.
SUMMARY COMPENSATION TABLE
Annual Compensation Awards Payouts
------------------------------------ ----------- ------------------------
Securities
Other Restricted Underlying
Annual Stock Options/ LTIP All Other
Name and Salary Bonus Compensation Awards SARs Payouts Compensation
Principal Position Year ($) ($) ($) ($) (#) ($) ($)
------------------ ---- ---------- --------- -------------- --------- ----------- --------- -------------
Silvano DiGenova, 2002 $308,333 -0- -0- -0- -0- -0- -0-
Chairman of the 2001* 141,666 -0- -0- -0- -0- -0- -0-
Board, and Chief 2000 281,410 -0- -0- -0- -0- -0- -0-
Executive Officer
Mali Shrinivas, Chief 2002(1) $ 53,958 -0- -0- -0- -0- -0- -0-
Financial Officer(1)
Steve Deeds, 2002(2) $210,938 0 $63,999(3) 0 -0- 0 0
President of
Superior Galleries,
Inc., our
wholly-owned
subsidiary
Michael Haynes, Chief 2002 $191,084 -0- -0- -0- -0- -0- -0-
Operating Officer 2001* 85,852 -0- -0- -0- -0- -0- -0-
2000 54,015 -0- -0- -0- 300,000 -0- -0-
____________________
* Six months ended June 30, 2001.
(1) Mr. Shrinivas joined our company as our chief financial officer in June
2002 and left the company in September 2002.
(2) Mr. Deeds joined our company when we acquired the assets of Superior in
July 2001.
(3) Consists of sales commissions.
-31-
STOCK OPTIONS GRANTED TO EXECUTIVE OFFICERS DURING FISCAL 2002
The following table summarizes options to purchase shares of our common
stock that we granted during the fiscal year ended June 30, 2002 to each of the
executive officers identified in the summary compensation table above. We have
never granted any stock appreciation rights.
Number of Percent of
Securities Total Options
Underlying Granted to Exercise
Options Employees in Price Expiration
Name Granted (#) Fiscal Year (%) ($/Share) Date
- ---- ----------- --------------- --------- ----
Silvano DiGenova 50,000 16.67%(1) $0.05 11/26/04
Mali Shrinivas 0 N/A N/A N/A
Steve Deeds 0 N/A N/A N/A
Michael Haynes 0 N/A(1) N/A N/A
_______________________
(1) Based on an aggregate of 300,000 options granted to our employees during
the fiscal year ended June 30, 2002. Of these, options to purchase 50,000
shares of our common stock have terminated and are no longer exercisable.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The following table summarizes exercises of stock options during the
fiscal year ended June 30, 2002 by each of the executive officers named in the
summary compensation table above and the year-end value of unexercised options
for these executive officers.
Number of
Unexercised Securities Value of Unexercised
Shares Value Underlying Options In-the-Money Options
Acquired Realized at Fiscal Year End at Fiscal Year End
Name on Exercise ($) Exercisable/Unexercisable Exercisable/Unexercisable
---- ----------- ------- ------------------------- -------------------------
Silvano DiGenova 0 N/A 550,000/0 0/0
Mali Shrinivas 0 N/A N/A N/A
Steve Deeds 0 N/A N/A N/A
Michael Haynes 0 N/A N/A N/A
LONG-TERM INCENTIVE PLAN AWARDS
In fiscal 2002, no awards were given to the executive officers named in
the summary compensation table under long-term incentive plans.
DIRECTORS' COMPENSATION
Our directors do not currently receive any cash compensation for
service on our board of directors, but directors may be reimbursed for certain
expenses in connection with attendance at board meetings. At the discretion of
our board of directors, directors may be granted stock option. During the fiscal
year ended June 30, 2002, our six directors were each granted options to
purchase 50,000 shares of our common stock at an exercise price of $0.05 per
share. These options were immediately exercisable upon issuance for a period of
three years or for three months following the termination or resignation of the
director from the board. Except for the options granted to Mr. DiGenova, all
options granted to the directors expired as they all resigned and were not
exercised.
-32-
REPRICING OF OPTIONS
No adjustments to, or repricing of, stock options previously awarded to
the executive officers named in the summary compensation table above occurred in
fiscal 2002.
EMPLOYMENT AGREEMENTS
On June 15, 2001, we entered into an employment agreement with Silvano
DiGenova under which we agreed to pay an annual salary of $375,000 and bonus
arrangements based on a sliding scale of 5% to 50% of base salary based on a
corresponding fiscal year consolidated pre-tax income (as defined) of our
company from $250,000 to $4,000,000, a bonus of 25% of base salary payable in
our common stock if market capitalization of our common stock exceeds
$50,000,000 for a specified period and a bonus of 5% of the base salary payable
in our common stock if average market capitalization increases by 20% over the
average market capitalization of the prior fiscal year subject to certain
limitations. This agreement terminates December 31, 2004.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On April 10, 2002, pursuant to a Stock Purchase Agreement, we sold
400,000 shares of our Series B Preferred Stock, issued a warrant to purchase
4,000,000 shares of our common stock and sold 7,000 shares of our newly created
Series C Preferred Stock to Mr. DiGenova, our chief executive officer. Each
share of the Series B Preferred Stock is convertible into shares of our common
stock at the option of the holder at the conversion price of $0.10 per common
share, subject to certain anti-dilution adjustments, and each share of the
Series B Preferred Stock is entitled to 10 votes on all matters requiring a vote
of our shareholders. Upon issuance, the Series B Preferred Stock was immediately
convertible into shares of our common stock and the warrants were immediately
exercisable for five years at the option of the holder. One-third of the shares
underlying the warrant are exercisable for $0.10 per share, one-third are
exercisable for $0.15 per share and one-third are exercisable for $0.20 per
share. Each share of the Series C Preferred Stock carries a 9% dividend payable
quarterly and is convertible into shares of our common stock at the option of
the holder at the conversion price of $0.22 per common share, subject to certain
anti-dilution adjustments, and each share of the Series C Preferred Stock is
entitled to 454 votes on all matters requiring a vote of our shareholders. The
Series C Preferred Stock is redeemable on December 31, 2004 for cash. The
agreement further provided for the sale of a secured and subordinated note to
Mr. DiGenova in the principal amount of $1,000,000 bearing interest at the
annual rate of 9% with interest and a principal reduction payable quarterly of
$150,000 until the principal is paid in full. In payment for the aggregate
amount of $2,100,000 in new securities issued, Mr. DiGenova tendered two notes
issued by us to Mr. DiGenova in the amounts of $1,400,000 and $700,000.
In connection with our acquisition of the assets of Superior on July 6,
2001, Silvano DiGenova, our chief executive officer, personally guaranteed our
obligations under a note for $701,000 to the seller. In consideration of his
personal guaranty of this note, we issued to Mr. DiGenova a warrant to purchase
1,402,000 shares of our common stock at an exercise price of $0.21 per share
with an exercise period expiring on July 5, 2006. Also as part of this
acquisition, Mr. DiGenova personally guaranteed our obligations under a
revolving promissory note to the seller in the aggregate amount of $3,000,000.
In consideration of his personal guaranty of this note, we issued to Mr.
DiGenova a warrant to purchase 1,500,000 shares of our common stock at an
exercise price of $0.35 per share with an exercise period expiring on July 5,
2005.
-33-
On November 27, 2001, in connection with the extension of the maturity
date of a financing agreement between NRLP and TCI, we agreed to issue to NRLP,
480,000 shares of our common stock and a warrant to purchase 1,000,000 shares of
our common stock. The exercise price of the warrant is $0.05 per share and it
expires on November 26, 2006. NRLP is an entity that is controlled by one of our
former directors, Carl Fusco.
On November 27, 2001, in connection with the agreement to issue his
personal guaranty for certain obligations of the company, we agreed to issue to
Silvano DiGenova, our chief executive officer, a warrant to purchase 400,000
shares of our common stock. The exercise price of the warrant is $0.05 per share
and it expires on November 26, 2006.
On June 26, 2001, in connection with our acquisition of HI, we issued
to NRLP, an entity controlled by one of our former directors, a warrant to
purchase 250,000 shares of our common stock at an exercise price of $0.32 per
share with an expiration date of June 26, 2006.
On June 25, 2001, we entered into an advisory agreement with Robert
Escobio, who at that time was a director of our company. Under the terms of that
agreement, Mr. Escobio was to provide us with advice regarding financial
planning and corporate capital structure. In consideration for rendering such
services, we agreed to pay Mr. Escobio an annual fee of $100,000 and granted him
a warrant to purchase 100,000 shares of our common stock at an exercise price of
$0.34 per share. The warrant expired on June 25, 2002. On November 27, 2001, we
issued 1,333,320 shares of our common stock to Mr. Escobio in full satisfaction
of our future obligations under this agreement and the agreement was terminated.
On June 15, 2001, we issued a warrant to purchase 1,500,000 shares of
common stock to Silvano DiGenova, our chief executive officer. This warrant is
exercisable for $0.39 per share and expires on December 31, 2004. We issued the
warrant in consideration for the extension of the maturity date of a note and
for maintaining the current interest rate throughout the extension period.
On June 15, 2001, we entered into an advisory agreement with Steven
Bayern, the former chairman of the board of directors of HI and a holder of 5%
or more of our common stock. Under this agreement, Mr. Bayern agreed to provide
us with advice regarding corporate governance matters and corporate strategies.
In consideration for rendering these services, we agreed to pay Mr. Bayern an
annual fee of $50,000. This agreement has been terminated in connection with a
settlement agreement between our company and Mr. Bayern.
On June 15, 2001, we entered into a three-year consulting agreement
with Cyndel & Co., Inc. to provide us with financial advice and other financial
consulting services. Under this agreement, we agreed to pay Cyndel & Co., Inc.
$120,000 per year. The agreement also provides for fees to be paid to Cyndel in
the event that Cyndel provides advice or other consulting services directly
relating to the sale of our equity securities or the placement of any debt
securities. This agreement was to expire on June 2004. Mr. Bayern and Cyndel
filed a suit against us for payment under this agreement in November 2001 after
we ceased making payments for what we believed to be reasonable cause. On April
3, 2002, we entered into a settlement and release agreement with Steve Bayern
and Cyndel to settle all claims of all parties to this suit. Under this
agreement, we paid $75,000 and $180,000 to Mr. Bayern and Cyndel, respectively.
Cyndel is owned by Steven Bayern and Patrick Kolenick, holders of more than 5%
of our common stock.
On June 1, 2001, we entered into an employment agreement with Silvano
DiGenova, our chief executive officer under which we agreed to pay him an annual
salary of $375,000 and bonus arrangements based on a sliding scale of 5% to 50%
of base salary based on a corresponding fiscal year consolidated pre-tax income
(as defined) of our company from $250,000 to $4,000,000, a bonus of 25% of base
salary payable in our common stock if market capitalization of our common stock
exceeds $50,000,000 for a specified period and a bonus of 5% of the base salary
payable in our common stock if average market capitalization increases by 20%
over the average market capitalization of the prior fiscal year subject to
certain limitations.
-34-
On November 13, 2000, we entered a Loan and Security Agreement and
issued into a $1,000,000 demand convertible promissory note payable to NRLP, a
lender controlled by Carl Fusco, a former director of our company. Mr. Fusco
served on our board from November 27, 2000 to June 25, 2001. The note bears
interest at 13.5%, with interest payable monthly and provides the holder with a
profit sharing interest in our TCI subsidiary. The note is secured by the
inventory of that subsidiary and is convertible into shares of our common stock
at $0.75 a share for the first $500,000 and at $1.00 a share for the remaining
$500,000. In connection with this transaction, we also issued to NRLP, a warrant
to purchase 250,000 shares of our common stock at an exercise price of $0.32 per
share. This warrant is exercisable until June 26, 2006. On October 1, 2001, we
amended the Loan and Security Agreement to apply to an additional note payable
to NRLP in the principal amount of $375,000.
AVAILABLE INFORMATION
We are subject to the informational requirements of the Exchange Act
and, in accordance therewith, files reports and other information with the
Commission relating to its business, financial statements and other matters.
Reports and information statements filed pursuant to the informational
requirements of the Exchange Act and other information filed with the Commission
can be inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's Midwest Regional Offices at 500 West Madison
Street, Chicago, Illinois 60606 and Northeast Regional Office at 7 World Trade
Center, New York, New York 10048. Copies of such material can also be obtained
at prescribed rates from the Public Reference Section of the Commission at its
principal office at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549. Such material may also be obtained electronically by visiting the
Commission's web site on the Internet at http://www.sec.gov. Quotations for our
Common Stock are available in the "Pink Sheets" under the symbol "TAGZ."
-35-
SUBMISSION OF SHAREHOLDER PROPOSALS
Under Rule 14a-8 of the Securities and Exchange Commission, proposals
by shareholders that are intended for inclusion in our proxy statement and proxy
and to be presented at our next annual meeting must be received by us by January
2, 2004 in order to be considered for inclusion in our proxy materials. These
proposals must be addressed to our Secretary and may be included in next year's
proxy materials if they comply with certain rules and regulations of the
Securities and Exchange Commission governing shareholder proposals. For all
other proposals by shareholders to be timely, a shareholder's notice must be
delivered to, or mailed and received at, the principal executive offices of
Tangible Asset Galleries, Inc. not later than March 16, 2004. If a shareholder
fails to so notify us of any such proposal prior to such date, management of
Tangible Asset Galleries, Inc. will be allowed to use their discretionary voting
authority with respect to proxies held by management when the proposal is raised
at the annual meeting, without any discussion of the matter in our proxy
statement.
-36-
EXHIBIT A
TANGIBLE ASSET GALLERIES, INC.
A NEVADA CORPORATION
OMNIBUS STOCK OPTION PLAN
1. NAME, EFFECTIVE DATE AND PURPOSE.
1.1 PLAN A AND PLAN B. This Plan document is intended to implement and
govern two separate stock option plans of TANGIBLE ASSET GALLERIES, INC. (the
"COMPANY"): The Incentive Stock option plan ("PLAN A") and the Nonstatutory
Stock Option Plan ("PLAN B"). Plan A provides for the granting of options that
are intended to qualify as incentive stock options ("INCENTIVE STOCK OPTIONS")
within the meaning of Section 422(b) of the Internal Revenue Code (the "CODE"),
as amended. Plan B provides for the granting of options that are not intended to
so qualify. Unless specified otherwise, all the provisions of this Plan relate
equally to both Plan A and Plan B and are condensed for convenience into one
Plan document.
1.2 PURPOSE. Plan A and Plan B are each established effective as of
______________, 2003. The purpose of Plan A and Plan B (sometimes together
referred to as the "Plan" or this "Plan") is to promote the growth and general
prosperity of the Company and its Affiliated Companies. This Plan will permit
the Company to grant options ("Options") to purchase shares of its common stock
("Common Stock"). The granting of Options will help the Company attract and
retain the best available persons for positions of substantial responsibility,
and will provide certain key employees with an additional incentive to
contribute to the success of the Company and its Affiliated Companies. For
purposes of this Plan, the term "Affiliated Companies" shall mean any parent or
subsidiary of the Company, as set forth in Sections 424(e) and 424(f) of the
Code.
2. ADMINISTRATION.
2.1 ADMINISTRATION. The Plan shall be administered solely by the Board
of Directors (the "BOARD"). All decisions, determinations and interpretations of
the Board shall be final and binding on all Optionees. The Board may, in its
discretion, appoint a committee of not less than two (2) nor more that five (5)
persons, each of whom must be a director of the Company, to administer the Plan.
In the event that such a committee is appointed, all references herein to the
administration of the Plan by the Board shall mean, instead, by such committee.
2.2 AUTHORITY. The Board shall have sole authority, in its absolute
discretion, to determine which of the eligible persons of the Company and its
Affiliated Companies shall receive Options ("OPTIONEES"), and, subject to the
express provisions and restrictions of this Plan, shall have sole authority, in
its absolute discretion: (a) to determine the time when Options shall be
granted; (b) to determine the form, terms and conditions of any Option other
than those terms and conditions fixed under this Plan; (c) to determine the
number of shares which may be issued upon exercise of an Option and the means of
payment for such shares; (d) to construe and interpret the terms of the Plan and
Options granted pursuant to the Plan; and (e) to do everything necessary or
appropriate to administer the Plan. All decisions, determinations and
interpretations of the Board with respect to the Plan and the Options shall be
final and binding on all Optionees.
2.3 LIMITATIONS. Aggregate limitations with respect to all participants
in the Plan:
2.3.1 The Board shall not grant Options covering more than the
number of Available Shares of Common Stock to any employee in any Plan Year.
2.3.2 The Board shall not grant Options under Plan A if the
total number of shares of Common Stock subject to Plan A (and all other employee
stock options outstanding), equals or exceeds 10% of the outstanding Common
Stock of the Company.
2.4 PLAN APPROVAL. Any Option exercised before shareholder approval of
the Plan is obtained must be rescinded if shareholder approval is not obtained
within 12 months before or after this Plan is adopted. The securities underlying
such Options shall not be counted in determining whether approval of the Plan is
obtained.
2.5 DEFINITIONS.
2.5.1 AVAILABLE SHARES. Those shares specified in SECTION 4.1
as available for issuance pursuant to this Plan in any Plan Year.
2.5.2 OFFICER. The chief executive officer, president, chief
financial officer, chief accounting officer, any vice president in charge of a
principal business function (such as sales, administration, finance, or legal)
and any other person who performs similar policy-making functions for the
Company.
2.5.3 PARENT CORPORATION. A corporation as defined in Section
425(e) of the Code.
2.5.4 PLAN YEAR. Any twelve (12) month period (or shorter
period during the final year of this Plan) commencing October 1 during the term
of this Plan.
2.5.5 RESTRICTED SHAREHOLDER. An individual who, at the time
an Option is granted under either Plan A or Plan B, owns stock possessing more
than 10% of the total combined voting power of all classes of stock of the
employer corporation or of its Parent Corporation or Subsidiary Corporation,
with stock ownership to be determined in light of the attribution rules set
forth in Section 425(d) of the Code.
2.5.6 SUBSIDIARY CORPORATION. A corporation as defined in
Section 425(f) of the Code.
3. ELIGIBILITY.
3.1 PLAN A. The Board may, in its discretion, grant one or more Options
under Plan A to any key employee of the Company or its Affiliated Companies,
including any employee who is a director of the Company or of any of its
Affiliated Companies presently existing or hereinafter organized or acquired.
Such Options may be granted to one or more such employees without being granted
to other eligible employees, as the Board may deem appropriate.
3.2 PLAN B. The Board may, in its discretion, grant one or more options
under Plan B to any key management employee, any employee or non-employee
director of the Company or its Affiliated Companies, including any employee who
is a director of the Company or of any of its Affiliated Companies presently
existing or hereinafter organized or acquired, or any person who performs
consulting or other services for the Company or its Affiliated Companies and who
is designated by the Board as eligible to participate in Plan B. Such Options
may be granted to one or more such persons without being granted to other
eligible persons, as the Board may deem appropriate.
-38-
4. STOCK TO BE OPTIONED.
4.1 MAXIMUM NUMBER OF SHARES. The maximum aggregate number of shares
which maybe optioned and sold under Plan A and Plan B shall not exceed sixteen
million (16,000,000) shares. The foregoing is subject to the limitation in
SECTION 2.3.2 hereof, and constitutes an absolute cumulative limitation on the
total number of share that may be optioned under both Plan A and Plan B. All
shares to be optioned and sold under either Plan A or Plan B may be either
authorized but unissued shares or shares held in the treasury.
4.2 ADDITIONAL AVAILABLE SHARES. Shares of Common Stock that: are not
purchased by the Optionee prior to the expiration or termination of the
applicable Option, shall again become available to be covered by Options to be
issued hereunder and shall not, as of the effective date of such
expiration, be counted as covered by an outstanding Option for purposes of the
above-described maximum number of shares which may be optioned hereunder.
5. OPTION PRICE. The Option Price for shares of Common Stock to be issued under
Plan A shall be 100% of the fair market value of such shares on the date on
which the Option covering such shares is granted by the Board, except that if on
the date on which such Option is granted the Optionee is a Restricted
Shareholder, then such Option Price for Options granted under Plan A shall be
110% of the fair market value of the shares of Common Stock subject to the
Option on the date such Option is granted by the Board. The Option Price for
shares of common stock to be issued under Plan B shall be eighty-five percent
(85%) of the fair market value of such shares on the date on which the Option
covering such shares is granted by the Board. The fair market value of the
shares of Common Stock for all purposes of this Plan is to be determined by the
Board in its sole discretion, exercised in good faith.
6. TERM OF PLAN. Plan A and Plan B shall become effective on _________, 2003.
Both Plan A and Plan B shall continue in effect until __________, 2013 unless
terminated earlier by action of the Board. No Option may be granted hereunder
after _________, 2013.
7. EXERCISE OF OPTION. Subject to the actions, conditions and/or limitations set
forth in this Plan document and/or any applicable Stock Option Agreement entered
into hereunder, Options granted under this Plan shall be exercisable in
accordance with the following rules:
7.1 PLAN A OPTIONS. No Option granted under Plan A may be exercised in
whole or in part until six (6) months after the date on which the Option is
granted by the Board (hereinafter the "OPTION GRANT DATE").
7.2 INSTALLMENTS. Subject to the specific provisions of this Section 7,
Options shall become exercisable at such times and in such installments (which
may be cumulative) as the Board shall provide in the terms of each individual
Option; provided, however, that by a resolution adopted after an Option is
granted the Board may, on such terms and conditions as it may determine to be
appropriate and subject to the specific provisions of this Section 7, accelerate
the time at which such Option or installment thereof maybe exercised. For
purposes of this Plan, any installment of an Option granted hereunder which has
become exercisable shall be referred to as an "Accrued Installment."
Notwithstanding the foregoing, so long as the person to whom the Option was
granted continues to be employed by the Company, his or her Option shall become
exercisable at the rate of at least 20% per year over the five (5) years
following the date the Option is granted.
7.3 MAXIMUM TERM. Subject to the specific restrictions contained in
this SECTION 7, an Option may be exercised when Accrued Installments accrue, as
provided in the terms under which such Option was granted, for a period of up to
ten (10) years from the Option Grant Date; provided, however, that the maximum
term for any Option granted under Plan A to a person who is a Restricted
Shareholder shall be five (5) years from the date of grant. In no event shall
any Option be exercised on or after the expiration of said maximum applicable
period, regardless of the circumstances then existing (including but not limited
to the death or termination of employment of the Optionee).
-39-
7.4 FIXING OF EXPIRATION DATE. The Board shall fix the expiration date
of the Option (the "OPTION EXPIRATION DATE") at the time the Option grant is
authorized.
8. RULES APPLICABLE TO CERTAIN DISPOSITIONS.
8.1 ACCELERATION. Notwithstanding the foregoing provisions of SECTION
7, except as set forth below, in the event the Company or the shareholders of
the Company enter into an agreement to dispose of all or substantially all of
the assets or capital stock of the Company by means of a sale, merger,
consolidation, reorganization, liquidation, or otherwise, an Option shall become
immediately exercisable with respect to the full number of shares subject to
that Option during the period commencing as of the later of (i) date of
execution of such agreement or (ii) six (6) months after the Option Grant Date,
and ending as of the earlier of:
8.1.1 the Option Expiration Date; or
8.1.2 the date on which the disposition of assets or capital
stock contemplated by the agreement is consummated.
The exercise of any Option made exercisable solely by reason of this SECTION 8.1
shall be conditioned upon the consummation of the disposition of assets or stock
under the above referenced agreement. Upon the consummation of any such
disposition of assets or stock, the Plan and any unexercised Options issued
hereunder (or any unexercised portion thereof) shall terminate and cease to be
effective. The foregoing provisions shall not apply to any merger which is
effected for the purpose of changing the Company's state of domicile; provided
however that in the event such a merger is consummated, this Plan shall remain
in effect and shall become the Plan of the surviving corporation.
8.2 TERMINATION OF TRANSACTION. Notwithstanding the foregoing, in the
event that any such agreement shall be terminated without consummating the
disposition of said stock or assets, any unexercised nonvested installments that
had become exercisable solely by reason of the provisions of SECTION 8.1 shall
again become non-vested and unexercisable as of said termination of such
agreement.
8.3 REPLACEMENT OPTIONS. Notwithstanding the provisions set forth in
Section 8.1, the Board may, at its election and subject to the approval of the
corporation purchasing or acquiring the stock or assets of the Company or with
which the Company is merging (the "Surviving Corporation"), arrange for the
Optionee to receive upon surrender of Optionee's Option a new option covering
shares of the Surviving Corporation in the same proportion, at an equivalent
option price and subject to the same terms and conditions as the old Option. For
purposes of the preceding sentence, the excess of the aggregate fair market
value of the shares subject to such new option immediately after consummation of
such disposition of stock or assets over the aggregate option price of such
shares of the Surviving Corporation shall not be more than the excess of the
aggregate fair market value of all shares subject to the old Option immediately
before consummation of such disposition of stock or assets over the aggregate
Option Price of such shares of the Company, and the new option shall not give
the Optionee additional benefits which such Optionee did not have under the old
Option or deprive the Optionee of benefits which the Optionee had under the old
Option. If such substitution of options is effectuated, the Optionee's rights
under the old Option shall thereupon terminate.
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9. MERGERS AND ACQUISITIONS.
9.1 ISSUANCES FOLLOWING MERGER. If the Company at any time should
succeed to the business of another corporation through a merger or
consolidation, or through the acquisition of stock or assets of such
corporation, Options may be granted under the Plan to option holders of such
corporation or its subsidiaries, in substitution for options or rights to
purchase stock of such corporation held by them at the time of succession. The
Board shall have sole and absolute discretion to determine the extent to which
such substitute Options shall be granted (if at all), the person or persons
within the eligible group to receive such substitute Options (who need not be
all option holders of such corporation), the number of Options to be received by
each person, the Option Price of such Option, and the terms and conditions of
such substitute Options; provided however, that the terms and conditions of the
substitute Options shall comply with the provisions of Section 425 of the Code,
such that the excess of the aggregate fair market value of the shares subject to
such substitute Option immediately after the substitution or assumption over the
aggregate option price of such shares is not more than the excess of the
aggregate fair market value of all shares subject to the substitution Option
immediately before such substitution or assumption over the aggregate option
price of such shares, and the substitution Option or the assumption of the old
option does not give the holder thereof additional benefits which he or she did
not have under such old option. Notwithstanding anything to the contrary herein,
no Option shall be granted, nor any action taken, permitted or omitted, which
could cause the Plan, or any Options granted hereunder as to which Rule 16b-3
under the Securities Exchange Act of 1934 may apply, not to comply with such
Rule. Additionally, all issuances of Options granted hereunder shall be in
conformance with California statutes and regulations.
10. TERMINATION OF EMPLOYMENT.
10.1 TERMINATION WITHOUT CAUSE. In the event that the Optionee's
employment, directorship or consulting or other arrangement with the Company (or
Affiliated Company) is terminated without cause, as defined in applicable law,
and is not due to death or disability, any unexercised Accrued Installments of
the Option granted hereunder to such terminated Optionee shall expire and become
unexercisable as of the earlier of:
10.1.1 the applicable Option Expiration Date; or
10.1.2 a date 30 days after such termination occurs, provided,
however, that the Board may, in the exercise of its discretion, by specific
Board action extend said date up to and including a date three months following
such termination with respect to Options granted under Plan A, or up to and
including a date two years following such termination with respect to Options
granted under Plan B.
10.2 TERMINATION FOR CAUSE. If an Optionee's employment, directorship,
or other relationship with the Company that is the basis for the grant of an
Option is terminated for Cause, as defined herein, then all Options granted to
such Optionee hereunder shall immediately expire on the date of such
termination. As used in this Section, "Cause" shall mean: (i) a failure by the
Optionee to comply with any material obligation imposed under any applicable
contract of employment or employment manual; (ii) willful malfeasance by the
Optionee in connection with the performance of his employment duties; (iii) the
Optionee's conviction of, or pleading guilty or nolo contendere to, or being
indicted for a felony or other crime involving theft, fraud or moral turpitude;
(iv) the illegal use by the Optionee of drugs or alcohol; (v) fraud or
embezzlement against the Company; (vi) the failure of the Optionee to obey any
proper written direction of the Board that is not inconsistent with this
Agreement; or (x) the violation by the Optionee of the non-competition and
confidentiality provisions of any other agreement with the Company.
10.3 DEATH OR DISABILITY. In the event that Optionee's employment,
directorship or consulting or other arrangement with the Company is terminated
due to the death or disability of the Optionee, any unexercised Accrued
Installments of the Option granted hereunder to such Optionee shall expire and
become unexercisable as of the earlier of:
10.3.1 the applicable Option Expiration Date; or
10.3.2 the first anniversary of the date of death of such
Optionee (if applicable); or
10.3.3 the first anniversary of the date of the termination of
employment, directorship or consulting or other arrangement by reason of
disability (if applicable). Any such Accrued Installments of a deceased Optionee
may be exercised prior to their expiration by (and only by) the person or
persons to whom the Optionee's Option right shall pass by will or by the laws of
descent and distribution, if applicable, subject, however, to all the terms and
conditions of this Plan and the applicable Stock Option Agreement governing the
exercise of Options granted hereunder.
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10.4 LEAVES OF ABSENCE. For purposes of this SECTION 10, an Optionee
shall be deemed employed by the Company (or Affiliated Company) during any
period of leave of absence of up to ninety (90) days from active employment as
authorized by the Company (or Affiliated Company).
11. EXERCISE OF OPTIONS.
11.1 NOTICE OF EXERCISE. An Option shall be deemed exercised when
written notice of such exercise has been given to the Company at its principal
business office by the person entitled to exercise the Option and full payment
in cash or cash equivalents (or with shares of Common Stock pursuant to SECTION
14) for the shares with respect to which the Option is exercised has been
received by the Company. The Board may cause the Company to give or arrange for
financial assistance (including without limitation direct loans, with or without
interest, secured or unsecured, or guarantees of third party loans) to an
Optionee for the purpose of providing funds for the purchase of shares pursuant
to the exercise of Options, when in the judgment of the Board such assistance is
in the best interests of the Company, is consistent with the Certificate of
Incorporation and Bylaws of the Company and applicable laws, and will permit the
shares to be fully paid and nonassessable when issued.
11.2 EXERCISE OF PORTION. An Option maybe exercised in accordance with
this SECTION 11 as to all or any portion of the shares covered by an Accrued
Installment of the Option from time to time during the applicable Option period,
but shall not be exercisable with respect to fractions of a share.
11.3 CERTIFICATES. As soon as practicable after any proper exercise of
an Option in accordance with the provisions of this Plan, the Company shall
deliver to the Optionee at the main office of the Company, or such other place
as shall be mutually acceptable, a certificate or certificates representing the
shares of Common Stock as to which the Option has been exercised. The time of
issuance and delivery of the Common Stock may be postponed by the Company for
such period as may be required for it with reasonable diligence to comply with
any applicable listing requirements of any national or regional securities
exchange and any law or regulation applicable to the issuance and delivery of
such shares.
12. AUTHORIZATION TO ISSUE OPTIONS AND SHAREHOLDER APPROVAL. Unless in the
judgment of counsel to the Company such permit is not necessary with respect to
particular grants, Options granted under the Plan shall be conditioned upon the
Company obtaining any required permit from the California Department of
Corporations and/or other appropriate governmental agencies, free of any
conditions not acceptable to the Board, authorizing the Company to grant such
Options, provided, however, such condition shall lapse as of the effective date
of issuance of such permit(s) in a form to which the Company does not object
within sixty (60) days. The grant of Options under the Plan also is conditioned
on approval of the Plan by the vote or consent of the holders of a majority of
the outstanding shares of the Company's Common Stock and no Option granted
hereunder shall be effective or exercisable unless and until the Plan has been
so approved.
13. LIMIT ON VALUE OF OPTIONED SHARES. The aggregate fair market value
(determined as of the Option Grant Date) of the shares of Common Stock to which
Options granted under Plan A are exercisable for the first time by any employee
of the Company during any calendar year under all incentive stock option plans
of the Company and its Affiliated Companies shall not exceed $100,000. The
limitation imposed by this SECTION 13 shall not apply to Options granted under
Plan B. To the extent that the aggregate fair market value of the shares with
respect to which incentive stock options are exercisable for the first time by
the Optionee during any calendar year (under all plans of the Company and any
parent or subsidiary corporation) exceeds $100,000, such option shall be treated
as Nonstatutory Stock Options. For purposes of this SECTION 13, Incentive Stock
Options shall be taken into account in the order in which they were granted. The
fair market value of the shares shall be determined as of the time the Option
with respect to such shares is granted.
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14. PAYMENT OF EXERCISE PRICE.
14.1 WITH COMPANY STOCK. The Board may provide that, upon exercise of
the Option, the Optionee may elect to pay for all or some of the shares of
Common Stock underlying the Option with shares of Common Stock of the Company
previously acquired and owned at the time of exercise by the Optionee, subject
to all restrictions and limitations of applicable laws, rules and regulations,
including Section 425(c)(3) of the Code, and provided that the Optionee will
make representations and warranties satisfactory to the Company regarding his or
her title to the shares used to effect the purchase, including without
limitation representations and warranties that the Optionee has good and
marketable title to such shares free and clear of any and all liens,
encumbrances, charges, equities, claims, security interests, options or
restrictions, and has full power to deliver such shares without obtaining the
consent or approval of any person or governmental authority other than those
which have already given consent or approval in a form satisfactory to the
Company. The equivalent dollar value of the shares used to effect the purchase
shall be the fair market value of the shares on the date of the purchase as
determined by the Board in its sole discretion, exercised in good faith.
14.2 CASHLESS EXERCISE PROVISION. The Board may provide that Options
granted hereunder may contain a term that upon exercise of the Option, the
Optionee may elect to pay for all or some of the shares of Common Stock
underlying the Option by presentation and surrender of such Option to the
Company at its principal executive offices with a Cashless Exercise Form annexed
thereto duly executed (the "Cashless Exercise"). In the event of a Cashless
Exercise, the Optionee shall exchange his or her Option for such number of
shares of Common Stock determined by multiplying the number of shares of Common
Stock underlying the Option by a fraction, the numerator of which shall be the
difference between the current fair market value per share of Common Stock and
the Option Price, and the denominator of which shall be the then-current fair
market value per share of Common Stock.
14.3 OTHER CONSIDERATION. In addition to the above, upon the exercise
of the Option, the Optionee may elect to pay for all or some of the shares of
Common Stock underlying the Option with such other lawful consideration as may
be approved by the Board.
15. STOCK OPTION AGREEMENTS. The terms and conditions of Options granted under
the Plan shall be evidenced by a Stock Option Agreement (hereinafter referred to
as the "AGREEMENT") executed by the Company and the person to whom the Option is
granted. Each agreement shall contain the following provisions:
15.1 NUMBER. A provision fixing the number of shares which may be
issued upon exercise of the Option;
15.2 PRICE. A provision establishing the Option exercise price per
share;
15.3 INSTALLMENTS. A provision establishing the times and the
installments in which Options may be exercised, provided, however, that such
provision complies with Section 7.2 above;
15.4 INCORPORATION OF PLAN. A provision incorporating therein this Plan
by reference;
15.5 TYPE OF OPTION. A provision clarifying which Options are intended
to be Incentive Stock Options under Plan A and which are intended to be
nonstatutory stock options under Plan B;
15.6 TERM. A provision fixing the maximum duration of the Option as not
more than ten (10) years from the Option Grant Date;
15.7 REPRESENTATIONS. Such representations and warranties by the
Optionee as maybe required by SECTION 25 of this Plan or as may be required by
the Board in its discretion;
15.8 OTHER RESTRICTIONS. Any other restriction (in addition to those
established under this Plan) as may be established by the Board with respect to
the exercise of the Option, the transfer of the Option, and/or the transfer of
the shares purchased by exercise of the Option, provided that such restrictions
are not in conflict with this Plan; and
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15.9 OTHER PROVISIONS. Such other terms and conditions consistent with
this Plan as may be established by the Board.
16. TAXES, FEES AND EXPENSES. The Company shall pay all original issue and
transfer taxes (but not income taxes, if any) with respect to the grant of
Options and/or the issue and transfer of shares pursuant to the exercise of such
Options, and all other fees and expenses necessarily incurred by the Company in
connection therewith, and will from time to time use its best efforts to comply
with all laws and regulations which, in the opinion of counsel for the Company,
shall be applicable thereto.
17. WITHHOLDING OF TAXES. The grant of Options hereunder and the issuance of
Common Stock pursuant to the exercise of such Options is conditioned upon the
Company's reservation of the right to withhold, in accordance with any
applicable law, from any compensation payable to the Optionee any taxes required
to be withheld by federal, state and local law as a result of the grant or
exercise of any such Option.
18. AMENDMENT OR TERMINATION OF THE PLAN.
18.1 AMENDMENT. The Board may amend this Plan from time to time in such
respects as the Board may deem advisable, including, without limitation, to
reduce the maximum number of shares of Common Stock issuable under the Plan,
provided, however, that no such amendment shall operate to (i) affect adversely
an Optionee's rights under this Plan with respect to any Option granted
hereunder prior to the adoption of such amendment, except as may be necessary,
in the judgment of counsel to the Company, to comply with any applicable law,
(ii) increase the maximum aggregate number of shares which maybe optioned and
sold under the Plan (unless shareholders approve such increase), (iii) change
the manner of determining the option exercise price, (iv) change the classes of
persons eligible to receive Options under the Plan, or (v) extend the maximum
duration of the Option or the Plan.
18.2 TERMINATION. The Board may at anytime terminate this Plan. Any
such termination of the Plan shall not, without the written consent of the
Optionee, alter the terms of Options already granted, and such Options shall
remain in full force and effect as if this Plan had not been terminated.
19. OPTIONS NOT TRANSFERABLE. Options granted under this Plan may not be sold,
pledged, hypothecated, assigned, encumbered, gifted or otherwise transferred or
alienated in any manner, either voluntarily or involuntarily by operation of
law, other than by will or the laws of descent of distribution, and may be
exercised during the lifetime of an Optionee only by such Optionee.
20. NO RESTRICTIONS ON TRANSFER OF STOCK. Common Stock issued pursuant to the
exercise of an Option granted under this Plan (hereinafter "OPTIONED STOCK"), or
any interest in such Optioned Stock, may be sold, assigned, gifted, pledged,
hypothecated, encumbered or otherwise transferred or alienated in any manner by
the holder(s) thereof, subject, however, to any representations or warranties
requested under SECTION 25 of this Plan and also subject to compliance with any
applicable federal, state or other local law, regulation or rule governing the
sale or transfer of stock or securities.
21. RESERVATION OF SHARES OF COMMON STOCK. The Company, during the term of this
Plan, shall at all times reserve and keep available such number of shares of its
Common Stock sufficient to satisfy the requirements of the Plan.
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22. RESTRICTIONS ON ISSUANCE OF SHARES. The Company, during the term of this
Plan, shall use its best efforts to obtain from the appropriate regulatory
agencies any requisite authorization to grant Options or issue and sell such
number of shares of its Common Stock as necessary to satisfy the requirements of
the Plan. The inability of the Company to obtain from any such regulatory agency
having jurisdiction thereof the authorization deemed by the Company's counsel to
be necessary to the lawful grant of Options or the issuance and sale of any
shares of its stock hereunder or the inability of the Company to confirm to its
satisfaction that any grant of Options or issuance and sale of any shares of
such stock will meet applicable legal requirements shall relieve the Company of
any liability in respect of the non-issuance or sale of such stock as to which
such authorization or confirmation have not been obtained.
23. VOTING RIGHTS. The common stock issuable upon exercise of Options granted
hereunder shall have the same voting rights as all other outstanding common
stock of the Company.
24. NOTICES. Any notice to be given to the Company pursuant to the provisions of
this Plan shall be addressed to the Company in care of its Secretary at its
principal office, and any notice to be given to a person to whom an Option is
granted hereunder shall be addressed to him or her at the address given beneath
his or her signature on his or her Stock Option Agreement, or at such other
address as such person or his or her transferee (upon the transfer of Optioned
Stock) may hereafter designate in writing to the Company. Any such notice shall
be deemed duly given when enclosed in a properly sealed envelope or wrapper
addressed as aforesaid, registered or certified, and deposited, postage and
registry or certification fee prepaid, in a post office or branch post office
regularly maintained by the United States Postal Service. It shall be the
obligation of each Optionee and each transferee holding optioned stock to
provide the Secretary of the Company, by letter mailed as provided hereinabove,
with written notice of his or her correct mailing address.
25. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. If the outstanding shares of
Common Stock of the Company are increased, decreased, changed into or exchanged
for a different number or kind of shares of the Company through reorganization,
recapitalization, reclassification, stock dividend, stock split or reverse stock
split, then an appropriate and proportionate adjustment shall be made in the
maximum number of shares of Common Stock issuable under the Plan and in the
number or kind of shares which may be issued upon exercise of Options granted
under the Plan; provided, however, that no such adjustment need be made if, upon
the advice of counsel, the Board determines that such adjustment may result in
the receipt of federally taxable income to holders of Options granted hereunder
or the holders of Common Stock or other classes of the Company's securities.
26. REPRESENTATIONS AND WARRANTIES. As a condition to the grant of any Option
hereunder or the exercise of any portion of an Option, the Company may require
the person to be granted or exercising such Option to make any representations
and/or warranty to the Company as may, in the judgment of counsel to the
Company, be required under any applicable law or regulation, including, but not
limited to, a representation and warranty that the Option and/or shares issuable
or issued upon exercise of such Option are being acquired only for investment,
for such person's own account and without any present intention to sell or
distribute such Option or shares, as the case may be, if, in the opinion of
counsel for the Company, such representation is required under the Securities
Act of 1933, the California Corporate Securities Law of 1968 or any other
applicable law, regulation or rule of any governmental agency.
27. NO ENLARGEMENT OF EMPLOYEE RIGHTS. This Plan is purely voluntary on the part
of the Company, and the continuance of the Plan shall not be deemed to
constitute a contract between the Company and any employee, or to be
consideration for or a condition of the employment of any employee. Nothing
contained in the Plan shall be deemed to give any employee the right to be
retained in the employ of the Company or its Affiliated Companies, or to
interfere with the right of the Company or an Affiliated Company to discharge
any employee thereof at any time. No employee shall have any right to or
interest in Options authorized hereunder prior to the grant of such an Option to
such employee, and upon such grant he or she shall have only such rights and
interests as are expressly provided herein, subject, however, to all applicable
provisions of the Company's Certificate of Incorporation, as the same may be
amended from time to time.
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28. INFORMATION TO OPTION HOLDERS. During the period any options granted to
employees of the Company remain outstanding, such employee-option holders shall
be entitled to receive, on an annual or other periodic basis, financial and
other information regarding the Company. The Board shall exercise its discretion
with regard to the nature and extent of the financial information so provided,
giving due regard to the size and circumstances of the Company and, if the
Company provides annual reports to its shareholders, the Company's practice in
connection with such annual reports. Notwithstanding the above, if the issuance
of options under either Plan A or Plan B is limited to key employees whose
duties in connection with the company assure their access to equivalent
information, this SECTION 27 shall not apply to such employees and plan. A copy
of this Plan shall be delivered to the Secretary of the Company and shall be
shown by him or her to each eligi
29. LEGENDS ON STOCK CERTIFICATES. Each certificate representing Common Stock
issued under this Plan shall bear whatever legends are required by federal or
state law or by any governmental agency. In particular, unless an appropriate
registration statement is filed pursuant to the Federal Securities Act of 1933,
as amended, with respect to the shares of Common Stock issuable under this Plan,
each certificate representing such Common Stock shall be endorsed on its face
with the following legend or its equivalent:
Neither the Option pursuant to which the shares represented by
this certificate are issued nor said shares have been
registered under the Securities Act of 1933, as amended (the
"ACT"). Transfer or sale of such securities or any interest
therein is unlawful except after registration, or pursuant to
an exemption from the registration requirements, as provided
in the Act and the regulations thereunder.
30. INVALID PROVISION. In the event that any provision of this Plan is found to
be invalid or otherwise unenforceable under any applicable law, such invalidity
or enforceability shall not be construed as rendering any other provisions
contained herein invalid or unenforceable, and all such other provisions shall
be given full force and effect to the same extent as though the invalid or
unenforceable provision was not contained herein.
31. APPLICABLE LAW. This Plan shall be governed by and construed in accordance
with the laws of the State of California.
32. SUCCESSORS AND ASSIGNS. This Plan shall be binding on and inure to the
benefit of the Company and the employees to whom an Option is granted hereunder,
and such employees heirs, executors, administrators, legatees, personal
representatives, assignees and transferees.
IN WITNESS WHEREOF, pursuant to the due authorization and adoption of
this Plan by the Board on __________, 2003, the Company has caused this Plan to
be duly executed by its duly authorized officer.
TANGIBLE ASSET GALLERIES, INC.
-------------------------------
By: Silvano A. DiGenova
Its: President
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EXHIBIT B
CERTIFICATE OF AMENDMENT
OF ARTICLES OF INCORPORATION
OF
TANGIBLE ASSET GALLERIES, INC.,
TANGIBLE ASSET GALLERIES, INC., a corporation organized under the laws
of the State of Nevada (the "Corporation"), by its President and Secretary, does
hereby certify:
1. That the Board of Directors of the Corporation, by unanimous written
consent on June ___, 2003, adopted a resolution declaring that the following
change and amendment in the Articles of Incorporation is advisable.
RESOLVED, that Article 4 of the Articles of Incorporation of the
Corporation, originally filed on August 30, 1995, is hereby amended to read as
follows:
"4. A. The Corporation is authorized to issue two classes of
shares of $0.001 par value capital stock, which classes shall
be designated "Common Stock" and "Preferred Stock,"
respectively. The Corporation shall have the authority to
issue a total of 250,000,000 shares of Common Stock and
15,000,000 shares of Preferred Stock.
B. The Preferred Stock may be issued from time to
time in one or more series. The Board of Directors of this
Corporation is expressly authorized to provide for the issue
of all or any of the shares of Preferred Stock in one or more
series, and to fix the designation and number of shares and to
determine or alter for each such series such voting powers,
full or limited, or no voting powers, and such designations,
preferences and relative, participating, optional or other
rights and such qualifications, limitations or restrictions
thereof as shall be stated and expressed in the resolution or
resolutions adopted by the Board of Directors providing for
the issue of such shares and as may be permitted by the Nevada
Revised Statutes. The Board of Directors is also expressly
authorized to increase or decrease (but not below the number
of shares of such series then outstanding) the number of
shares of any series subsequent to the issue of shares of that
series. If the number of shares of any such series shall be so
decreased, the shares constituting such decrease shall resume
the status they had prior to the adoption of the resolutions
originally fixing the number of shares of such series.
C. Upon amendment of this article to read as herein
set forth, each twenty (20) outstanding shares of this
Corporation's Common Stock shall be combined into one (1)
share of this Corporation's Common Stock, with any fractional
shares resulting from such reverse stock split being rounded
up to the nearest whole share of Common Stock."
2. That the number of shares of the Corporation outstanding and
entitled to vote on an amendment to the Articles of Incorporation is 52,813,699
shares of Common Stock, 3,400,000 shares of Series B $1.00 Convertible Preferred
Stock and 2,000,000 shares of Series D $1.00 Convertible Preferred Stock; that
the said changes and amendment have been consented to and approved by a majority
of all of the stockholders of each class of stock outstanding and entitled to
vote thereon.
IN WITNESS WHEREOF, the undersigned declare under penalty of perjury
that the matters set out in the foregoing certificate are true of their own
knowledge.
Dated: June __, 2003
-----------------------------------
Silvano DiGenova, President
-----------------------------------
Paul Biberkraut, Secretary
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EXHIBIT C
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("MERGER AGREEMENT") is made and
entered into as of June ___, 2003, by and among SUPERIOR GALLERIES, INC., a
Delaware corporation ("SUBSIDIARY"), and TANGIBLE ASSET GALLERIES, INC., a
Nevada corporation ("PARENT"). The Subsidiary and the Parent are sometimes
referred to as the "CONSTITUENT ENTITIES."
WITNESSETH:
WHEREAS, Parent has authority to issue 250,000,000 shares of common
stock, $0.001 par value (the "PARENT COMMON STOCK") and 15,000,000 shares of
preferred stock, $0.001 par value (the "PARENT PREFERRED STOCK") of which there
is presently outstanding 52,813,699 shares of Parent Common Stock and 5,525,000
shares of Parent Preferred Stock (the Parent Common Stock and Parent Preferred
Stock being referred to herein collectively as the "PARENT STOCK"); and
WHEREAS, Subsidiary has authority to issue 12,500,000 shares of common
stock, $0.001 par value (the "SUBSIDIARY COMMON STOCK"), and 10,000,000 shares
of preferred stock (the "SUBSIDIARY PREFERRED STOCK") of which there is
presently outstanding one share of Subsidiary Common Stock (the Subsidiary
Common Stock and Subsidiary Preferred Stock being referred to herein
collectively as the "SUBSIDIARY STOCK"); and
WHEREAS, the Board of Directors of each of the Constituent Corporations
deems it advisable and in the best interests of each of the Constituent
Corporations and their respective shareholders that Parent be merged into and
with Subsidiary as permitted by the General Corporation Law of the State of
Nevada and the General Corporation Law of the State of Delaware under and
pursuant to the terms and conditions hereinafter set forth; and
WHEREAS, the Board of Directors of each of the Constituent Corporations
has approved this Agreement and directed that this Agreement be submitted to its
shareholders;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and in accordance with the applicable provisions of the General
Corporation Law of the State of Nevada and the General Corporation Law of the
State of Delaware, the parties agree as follows:
ARTICLE 1
THE MERGER
----------
1.1 MERGER OF PARENT WITH AND INTO SUBSIDIARY.
1.1.1 MERGER. Subject to the terms of this Merger Agreement,
the Parent shall be acquired by the Subsidiary through a merger
("MERGER") of the Parent with and into the Subsidiary. Subsidiary shall
survive the merger.
1.1.2 EFFECTIVE TIME. The Merger shall become effective (the
"EFFECTIVE TIME") upon the latest to occur of:
(a) the filing with the Secretary of State of the
State of Delaware of a Certificate of Merger (the "CERTIFICATE
OF MERGER") executed and acknowledged by the Constituent
Entities in accordance with the relevant provisions of the
Delaware General Corporation Law; and
(b) the filing with the Secretary of State of the
State of Nevada of Articles of Merger (the "ARTICLES OF
MERGER") executed and acknowledged by the Constituent Entities
in accordance with the relevant provisions of the Nevada
Revised Statutes.
The parties intend that the Effective Time occur after the
effectiveness of a one-for-twenty reverse stock split by Parent, as
contemplated by Parent's Proxy Statement for its 2003 Annual Meeting of
Shareholders.
1.1.3 SURVIVING CORPORATION. At the Effective Time, the Parent
shall be merged with and into the Subsidiary (herein the "SURVIVING
CORPORATION") and the separate corporate existence of the Parent shall
thereupon cease. The Surviving Corporation shall succeed, without other
transfer, to all the rights and property of the Parent and shall be
subject to all the debts and liabilities of the Parent in the same
manner as if the Surviving Corporation had itself incurred them.
ARTICLE 2
NAME, CERTIFICATE OF INCORPORATION, BYLAWS,
DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION
---------------------------------------------------
2.1 CERTIFICATE OF INCORPORATION OF THE SURVIVING CORPORATION. The
Certificate of Incorporation of the Surviving Corporation shall be the present
Certificate of Incorporation of Subsidiary.
2.2 BYLAWS OF THE SURVIVING CORPORATION. The Bylaws of Parent as in
effect immediately prior to the Effective Time shall be the Bylaws of the
Surviving Corporation, unless and until amended or repealed as provided by
applicable law, the Certificate of Incorporation of Subsidiary and the Bylaws of
Parent.
2.3 DIRECTORS AND OFFICERS. The directors and officers of Parent as of
the Effective Time will be the directors and officers, respectively, of the
Surviving Corporation, until expiration of their current terms and until their
successors are elected and qualify, or their prior resignation, removal or
death, subject to the Certificate of Incorporation of Subsidiary, the Bylaws of
Parent and applicable law.
ARTICLE 3
TREATMENT OF SHARES OF EACH
OF THE CONSTITUENT CORPORATIONS
-------------------------------
3.1 CONVERSION OF SHARES. At the Effective Time:
3.1.1 By virtue of the Merger and without any action on the
part of the holder thereof:
3.1.2 Each share of Parent Common Stock outstanding
immediately prior to the Merger shall be converted into and become one
share of Subsidiary Common Stock;
3.1.3 Each share of Parent Series A $5.00 Redeemable 8%
Convertible Preferred Stock outstanding immediately prior to the Merger
shall be converted into and become one share of Subsidiary Series A
$5.00 Redeemable 8% Convertible Preferred Stock;
3.1.4 Each share of Parent Series B $1.00 Convertible
Preferred Stock outstanding immediately prior to the Merger shall be
converted into and become one share of Subsidiary Series B $1.00
Convertible Preferred Stock; and
-50-
3.1.5 Each share of Parent Series D $1.00 Convertible
Preferred Stock outstanding immediately prior to the Merger shall be
converted into and become one share of Subsidiary Series D $1.00
Convertible Preferred Stock.
3.1.6 Each share of Subsidiary Common Stock outstanding
immediately prior to the Merger shall cease to exist and be cancelled;
3.1.7 Each other option, warrant, or right (including rights
of conversion under other outstanding securities of Parent) for the
purchase of the capital stock of Parent immediately prior to the Merger
shall, by virtue of the Merger and without any action on the part of
the holder thereof, be converted into and become an option, warrant or
right (respectively) to purchase the same number of shares of the same
class and series of Subsidiary capital stock at the same price and
otherwise upon the same terms and conditions. Each stock option plan of
Parent shall be assumed and continued as a stock option plan of
Subsidiary.
3.2 CERTIFICATES. No certificates for shares of Subsidiary Stock will
be required to be issued to holders of any of the shares of Parent Stock upon
the Merger; provided, however, that all shareholders of Parent who tender their
certificates for Parent Stock for exchange shall be issued certificates
representing the number of shares of Subsidiary Stock, of the same class and
series, into which their Parent Stock has been converted by virtue of the
Merger. Certificates representing shares of Parent Stock shall upon the Merger
be deemed for all purposes to represent an equal number of shares of the same
class and series of Subsidiary Stock. After the Effective Time, whenever
certificates which formerly represented shares of Parent Stock are presented for
exchange or registration of transfer, the Surviving Corporation will cause to be
issued in respect thereof certificates representing an equal number of shares of
Subsidiary Stock of the same class and series.
ARTICLE 4
TRANSFER OF ASSETS AND LIABILITIES
----------------------------------
4.1 TRANSFER OF ASSETS AND LIABILITIES. At the Effective Time, the
rights, privileges, powers and franchises, both of a public as well as of a
private nature, of each of the Constituent Corporations shall be vested in and
possessed by the Surviving Corporation, subject to all the disabilities, duties
and restrictions of or upon each of the Constituent Corporations; and any and
all rights, privileges, powers and franchises of each of the Constituent
Corporations, and all property, real, personal and mixed, of each of the
Constituent Corporations, and all debts due to each of the Constituent
Corporations on whatever account, and all things in action or belonging to each
of the Constituent Corporations shall be transferred to and vested in the
Surviving Corporation; and all property, rights, privileges, powers and
franchises, and all and every other interest, shall be thereafter as effectually
the property of the Surviving Corporation as they were of the Constituent
Corporations, and the title to any real estate vested by deed or otherwise in
either of the Constituent Corporations shall not revert or be in any way
impaired by reason of the Merger; provided, however, that the liabilities of the
Constituent Corporations and of their shareholders, directors and officers shall
not be affected and all rights of creditors and all liens upon any property of
either of the Constituent Corporations shall be preserved unimpaired, and any
claim existing or action or proceeding pending by or against either of the
-51-
Constituent Corporations may be prosecuted to judgment as if such Merger had not
taken place except as they may be modified with the consent of such creditors
and all debts, liabilities and duties of or upon each of the Constituent
Corporations shall attach to the Surviving Corporation, and may be enforced
against it to the same extent as if such debts, liabilities and duties had been
incurred or contracted by it. The parties hereto agree that from time to time
and as and when requested by the Surviving Corporation, or by its successors or
assigns, to the extent permitted by law, the officers and directors of Parent
and of the Surviving Corporation are fully authorized in the name of Parent or
otherwise to execute and deliver all such deeds, assignments, confirmations,
assurances and other instruments and to take or cause to be taken all such
further action as the Surviving Corporation may deem, necessary or desirable in
order to vest, perfect, confirm in or assure the Surviving Corporation title to
and possession of all of said property, rights, privileges, powers and
franchises and otherwise to carry out the intent and purposes of this Agreement.
ARTICLE 5
CONDITIONS, DEFERRAL, AND TERMINATION
-------------------------------------
5.1 CONDITIONS. The obligation of Parent and Subsidiary to effect the
transactions contemplated hereby is subject to satisfaction of the following
conditions (any or all of which may be waived by Parent and Subsidiary in their
sole discretion to the extent permitted by law):
5.1.1 Parent as sole shareholder of Subsidiary shall have
approved the Merger in accordance with the General Corporation Law of
the States of Nevada and Delaware.
5.1.2 The shareholders of Parent shall have approved the
Merger in accordance with the General Corporation Law of the State of
Nevada.
5.2 DEFERRAL. Consummation of the Merger may be deferred by the Board
of Directors of Parent for a reasonable period of time if such Board determines
that deferral would be in the best interests of Parent and its shareholders.
5.3 TERMINATION. This Agreement may be terminated by the Board of
Directors of Parent or Subsidiary, for any reason, at any time before or after
adoption and approval thereof by the shareholders of Parent or Subsidiary or
both, but not later than the Effective Time. In determining whether to terminate
this Agreement, the Directors of Parent and Subsidiary shall consider, in
addition to any other matters deemed relevant, whether the Surviving Corporation
will be subject to the requirements of Section 2115(b) of the California
Corporations Code following the Effective Time.
5.4 EFFECTS OF TERMINATION. In the event of the termination of this
Merger Agreement, this Merger Agreement shall forthwith become void and there
shall be no liability on the part of either of the Constituent Entities or their
respective officers or directors.
5.5 PAYMENT OF EXPENSES. If the Merger becomes effective, the Surviving
Corporation shall assume and pay all expenses in connection therewith not
theretofore paid by the respective parties. If for any reason the Merger shall
not become effective, Parent shall pay all expenses incurred in connection with
all the proceedings taken in respect of this Agreement or relating thereto.
ARTICLE 6
GENERAL PROVISIONS
------------------
6.1 AMENDMENT. This Merger Agreement may be amended by the parties
hereto at anytime before or after approval hereof by the shareholders of the
Constituent Entities by execution of an instrument in writing signed on behalf
of each of the parties hereto, provided, however, that no amendment shall be
made which by law requires the further approval of the shareholders of the
Constituent Entities without obtaining such approval.
6.2 COUNTERPARTS. This Merger Agreement may be executed in one or more
counterparts, each of which shall be deemed to be the original, but all of which
together shall constitute one agreement.
-52-
IN WITNESS WHEREOF, the parties have duly executed this Merger
Agreement as of the date first above written.
TANGIBLE ASSET GALLERIES, INC.,
a Nevada corporation
By:
---------------------------------------
Silvano DiGenova, President
By:
---------------------------------------
Paul Biberkraut, Secretary
SUPERIOR GALLERIES, INC.,
a Delaware corporation
By:
---------------------------------------
Silvano DiGenova, President
By:
---------------------------------------
Paul Biberkraut, Secretary
-53-
EXHIBIT D
CERTIFICATE OF INCORPORATION
OF
SUPERIOR GALLERIES, INC.,
A DELAWARE CORPORATION
ARTICLE I.
The name of this Corporation is Superior Galleries, Inc., a Delaware
corporation.
ARTICLE II.
The address of the registered office of the Corporation in the State of
Delaware and the County of Kent is 9 East Loockerman Street, Suite 1B, in the
city of Dover, and the name of the registered agent at that address is National
Registered Agents, Inc.
ARTICLE III.
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
ARTICLE IV.
The name of the Corporation's incorporator is Thomas G. Brockington and
the incorporator's mailing address is Rutan & Tucker, LLP, 611 Anton Boulevard,
Suite 1400, Costa Mesa, California 92626-1931.
ARTICLE V.
The powers of the incorporator are to terminate upon the filing of this
Certificate of Incorporation. The name and mailing address of the person who is
to serve as director until the first annual meeting of stockholders or until a
successor is elected and qualified is as follows:
Name Mailing Address
---- ---------------
Paul Biberkraut Superior Galleries
9478 West Olympic Boulevard
Beverly Hills, CA 90212
ARTICLE VI.
A. This Corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock:" The total number
of shares which the Corporation is authorized to issue is Twenty-Two Million
Five Hundred Thousand (22,500,000) shares. Twelve Million Five Hundred Thousand
(12,500,000) shares shall be Common Stock, $0.001 par value, and Ten Million
(10,000,000) shares shall be Preferred Stock, $0.001 par value.
B. The Board of Directors of the Corporation may issue Preferred Stock
from time to time in one or more series. The Board of Directors of the
Corporation is hereby authorized to adopt a resolution or resolutions from time
to time, within the limitations and restrictions stated in this Certificate of
Incorporation, to fix or alter the voting powers, designations, preferences,
rights, qualifications, limitations and restrictions of any wholly unissued
class of Preferred Stock, or any wholly unissued series of any such class, and
the number of shares constituting any such series and the designation thereof,
or any of them, and to increase or decrease the number of shares of any series
subsequent to the issuance of shares of that series, but not below the number of
shares of such series then outstanding. In case the number of shares of any
series shall be so decreased, the shares constituting such decrease shall resume
the status which they had prior to the adoption of the resolution originally
fixing the number of shares of such series.
ARTICLE VII.
A director of the Corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the General Corporation Law of the
State of Delaware, or (iv) for any transaction from which the director derived
any improper personal benefit. If the General Corporation Law of the State of
Delaware is amended after approval by the stockholders of this Article to
authorize corporate action further eliminating or limiting the personal
liability of directors then the liability of a director of the corporation shall
be eliminated or limited to the fullest extent permitted by the General
Corporation Law of the State of Delaware as so amended.
Any repeal or modification of the foregoing provisions of this Article
VII by the stockholders of the Corporation shall not adversely affect any right
or protection of a director of the Corporation existing at the time of such
repeal or modification.
ARTICLE VIII.
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred on stockholders
herein are granted subject to this reservation.
ARTICLE IX.
Election of directors need not be by written ballot unless the Bylaws
of the Corporation shall so provide.
ARTICLE X.
The number of directors which shall constitute the whole Board of
Directors of the Corporation shall be fixed from time to time by, or in the
manner provided in, the Bylaws of the Corporation or in an amendment thereof
duly adopted by the Board of Directors of the Corporation or by the stockholders
of the Corporation.
ARTICLE XI.
Meetings of stockholders of the Corporation may be held within or
without the State of Delaware, as the Bylaws of the Corporation may provide. The
books of the corporation may be kept (subject to any provision contained in the
statutes) outside the State of Delaware at such place or places as may be
designated from time to time by the Board of Directors of the Corporation or in
the Bylaws of the Corporation.
-55-
ARTICLE XII.
Except as otherwise provided in this Certificate of Incorporation, in
furtherance and not in limitation of the powers conferred by statute, the Board
of Directors of the Corporation is expressly authorized to make, repeal, alter,
amend and rescind any or all of the Bylaws of the Corporation.
ARTICLE XIII.
The Corporation expressly elects not to be governed by Section 203 of
the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the undersigned has signed this Certificate of
Incorporation this 6th day of May, 2003.
THOMAS G. BROCKINGTON
-----------------------------------
Thomas G. Brockington, Incorporator
-56-
CERTIFICATE OF DESIGNATION
OF
SERIES A $5.00 REDEEMABLE 8% CONVERTIBLE PREFERRED STOCK
OF
SUPERIOR GALLERIES, INC.
Pursuant to Section 141 of the Delaware General Corporation Law, the
undersigned, being an officer of Superior Galleries, Inc., a Delaware
corporation (the "COMPANY"), does hereby certify that the following resolutions
were duly adopted by the unanimous consent of the board of directors (the
"BOARD") of the Company:
RESOLVED, that pursuant to authority expressly granted to and vested in
the Board by the Certificate of Incorporation of the Company, the Board hereby
creates one hundred twenty-five thousand (125,000) shares of Series A $5.00
Redeemable 8 % Convertible Preferred Stock of the Company and authorizes the
issuance thereof, and hereby fixes the designation thereof, and the voting
powers, preferences and relative, participating, optional and other special
rights, and the qualifications, limitations or restrictions thereon (in addition
to the designation, preferences and relative, participating and other special
rights, and the qualifications, limitations or restrictions thereof, set forth
in the Certificate of Incorporation of the Company, which are applicable to the
preferred stock, if any) as follows:
1. DEFINITIONS.
For purposes of this Certificate of Designation, the following
definitions shall apply:
1.1 "BOARD" shall mean the Board of Directors of the Company.
1.2 "COMPANY" shall mean Superior Galleries, Inc., a Delaware
corporation.
1.3 "COMMON STOCK" shall meant the Common Stock, $.001 par value per
share, of the Company.
1.4 "COMMON STOCK DIVIDEND" shall mean a stock dividend declared and
paid on the Common Stock that is payable in shares of Common Stock.
1.5 "DISTRIBUTION" shall mean the transfer of cash or property by the
Company to one or more of its stockholders without consideration, whether by
dividend or otherwise (except a dividend in shares of Company's stock).
1.6 "ORIGINAL ISSUE DATE" shall mean the date on which the first share
of Series A $5.00 Redeemable 8% Convertible Preferred Stock is issued by the
Company.
1.7 "ORIGINAL ISSUE PRICE" shall mean $5.00 per share for the Series A
$5.00 Redeemable 8% Convertible Preferred Stock.
1.8 "SERIES A PREFERRED STOCK" shall mean the Series A $5.00 Redeemable
8% Convertible Preferred Stock, $.001 par value per share, of the Company.
1.9 "SUBSIDIARY" shall mean any corporation or limited liability
company of which at least fifty percent (50%) of the outstanding voting stock or
membership interests, as the case may be, is at the time owned directly or
indirectly by the Company or by one or more of such subsidiary corporations.
2. DIVIDEND RIGHTS.
2.1 DIVIDEND PROVISIONS. The holders of shares of Series A Preferred
Stock (the "SHAREHOLDERS" or "HOLDER") shall be entitled to receive cumulative
dividends at the rate of 8% per year, payable quarterly, in cash or shares of
the Company's Common Stock at the Company's election. In the event the Company
elects to pay such dividends in shares of the Company's Common Stock, the number
of shares to be issued shall be based on the average of the closing prices of
the Company's Common Stock, as reported on the Nasdaq Over the Counter Bulletin
Board (or such other market on which the Company's Common Stock is then traded)
for the 10 consecutive trading days preceding the record date for each such
dividend, with such record date being the 14th day preceding the end of each
quarter.
2.2 COMMON STOCK DIVIDEND PARTICIPATION. No dividends (other than a
Common Stock Dividend) shall be paid, and no Distribution shall be made, with
respect to the Common Stock unless dividends in such amount shall have been paid
or declared and set apart for payment to the holders of the Series A Preferred
Stock simultaneously. Dividends on the Series A Preferred Stock shall not be
mandatory or cumulative, and no rights or interest shall accrue to the holders
of the Series A Preferred Stock by reason of the fact that the Company shall
fail to declare or pay dividends on the Series A Preferred Stock, except for
such rights or interest that may arise as a result of the Company paying a
dividend or making a Distribution on the Common Stock in violation of the terms
of this SECTION 2.
2.3 PARTICIPATION RIGHTS. Dividends shall be declared pro rata on the
Common Stock and the Series A Preferred Stock on a pari passu basis according to
the number of shares of Common Stock held by such holders, where each holder of
shares of Series A Preferred Stock is to be treated for this purpose as holding
eleven (11) shares of Common Stock.
2.4 NON-CASH DIVIDENDS. Whenever a dividend or Distribution provided
for in this SECTION 2 shall be payable in property other than cash (other than a
Common Stock Dividend), the value of such dividend or Distribution shall be
deemed to be the fair market value of such property as determined in good faith
by the Board.
3. LIQUIDATION RIGHTS.
In the event of the liquidation, dissolution or winding up of the
Company, the holders of Series A Preferred Stock shall have a liquidation
preference over holders of common stock and other shares junior to the Series A
Preferred Stock equal to $5.10 per share. Additionally, the Company shall not
allow any liens on its inventory, unless subordinated to the interests of the
Series A Preferred Stock, with such preference on the inventory equal to the
inventory value, as determined in accordance with GAAP, of 150% of the stated
par value of the aggregate of the outstanding shares of Series A Preferred
Stock, except for inventory of the Company that is on consignment to be sold by
third parties or was otherwise purchased pursuant to a security interest.
4. CONVERSION RIGHTS.
The outstanding shares of Series A Preferred Stock shall be convertible
into Common Stock as follows:
-58-
4.1 OPTIONAL CONVERSION. Each share of Series A Preferred Stock shall
be convertible into eleven (11) shares of the Company's Common Stock at any time
prior to redemption at the option of the holder, subject to adjustment by
SECTIONS 4.3 AND 4.4. Each holder of Series A Preferred Stock who elects to
convert the same into shares of Common Stock shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the Company or any
transfer agent for the Series A Preferred Stock or Common Stock, and shall give
written notice to the Company at such office that such holder elects to convert
the same and shall state therein the number of shares of Series A Preferred
Stock being converted. Thereupon, the Company shall promptly issue and deliver
at such office to such holder a certificate or certificates for the number of
shares of Common Stock to which such holder is entitled upon such conversion.
Such conversion shall be deemed to have been made immediately on the close of
business on the date of such surrender of the certificate or certificates
representing the shares of Series A Preferred Stock to be converted, and the
person entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder of such shares
of Common Stock on such date.
4.2 AUTOMATIC CONVERSION. The Series A Preferred Stock shall
automatically convert into shares of the Company's Common Stock upon any of the
following events: (i) the sale by the Company of all or substantially all of its
assets; (ii) the consummation of a merger or a consolidation in which the
Company is not the survivor (but not including a merger with the Company's
initial corporate parent, Tangible Asset Galleries, Inc.); or (iii) the sale or
exchange of all or substantially all of the outstanding shares of the Company's
common stock (including by way of merger, consolidation, or other similar
action).
4.3 ADJUSTMENTS FOR OTHER DIVIDENDS AND DISTRIBUTIONS. If at any time
or from time to time after the Original Issue Date the Company pays a dividend
or makes another distribution to the holders of the Common Stock payable in
securities of the Company, then in each such event, provision shall be made so
that the holders of the Series A Preferred Stock shall receive upon conversion
thereof, in addition to the number of shares of Common Stock receivable upon
conversion thereof, the amount of securities of the Company which they would
have received had their Series A Preferred Stock been converted into Common
Stock on the date of such event (or such record date, as applicable) and had
they thereafter, during the period from the date of such event (or such record
date, as applicable) to and including the conversion date, retained such
securities receivable by them as aforesaid during such period, subject to all
other adjustments called for during such period under this section with respect
to the rights of the holders of the Series A Preferred Stock or with respect to
such other securities by their terms.
4.4 ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE AND SUBSTITUTION. If at
any time or from time to time after the Original Issue Date the Common Stock
issuable upon the conversion of the Series A Preferred Stock is changed into the
same or a different number of shares of any class or classes of stock, whether
by recapitalization, reclassification or otherwise (other than by a Common Stock
Event or a stock dividend, reorganization, merger, consolidation or sale of
assets provided for elsewhere herein), then in any such event each holder of
Series A Preferred Stock shall have the right thereafter to convert such stock
into the kind and amount of stock and other securities and property receivable
upon such recapitalization, reclassification or other change by holders of the
number of shares of Common Stock into which such shares of Series A Preferred
Stock could have been converted immediately prior to such recapitalization,
reclassification or change, all subject to further adjustment as provided herein
or with respect to such other securities or property by the terms thereof.
4.5 RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Company shall at
all times reserve and keep available out of its authorized but unissued shares
of Common Stock, solely for the purpose of effecting the conversion of the
shares of the Series A Preferred Stock, such number of its shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Series A Preferred Stock and if at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of all then outstanding shares of the Preferred Stock, the
Company will take such corporate action as may, in the opinion of its counsel,
be necessary to increase its authorized but unissued shares of Common Stock to
such number of shares as shall be sufficient for such purpose.
-59-
5. REDEMPTION AT OPTION OF THE COMPANY OR THE HOLDER.
The Series A Preferred Stock shall be redeemable as follows:
5.1 REDEMPTION BY THE COMPANY. The Series A Preferred Stock may be
redeemed at the option of the Company, in whole or in part, for cash in the
amount of $5.10 per share of Series A Preferred Stock or for shares of the
Company's Common Stock in accordance with the Conversion Rate, in the event the
closing sale price of the Company's Common Stock, as reported on the Nasdaq Over
the Counter Bulletin Board (or such other market on which the Company's Common
Stock is then traded), is greater than or equal to $0.90 for any consecutive 5
trading days (the "5 DAY CONSECUTIVE TRADING PERIOD"). Any partial redemption
shall be made pro rata among all of the holders of the Series A Preferred Stock.
The Company shall exercise its redemption right within thirty (30) days of the
end of the 5 Day Consecutive Trading Period. In the event of a cash redemption,
the Company shall immediately notify, in writing, the holder fifteen (15) days
prior to the effective date of such redemption. Absent an election by the holder
to convert the Series A Preferred Stock within fifteen (15) days of such notice,
the Company shall promptly forward to the holder such funds or certificate or
certificates for the number of shares of Common Stock to which such holder is
entitled upon such redemption. In the event that the holder receives shares of
Common Stock as a result of the redemption, such redemption shall be deemed to
have been made on the close of business on the fifteenth day following notice of
redemption and the person entitled to receive the shares of Common Stock
issuable upon such redemption shall be treated for all purposes as the record
holder of such shares of Common Stock on such date. In the event that the
Company elects to redeem only a part of the outstanding Series A Preferred
Stock, the Company shall cancel the redeemed Series A Preferred Stock
certificates and issue new certificates representing the non-redeemed shares of
Series A Preferred Stock to the holders along with such funds or common stock
certificates due holder as a result of the redemption.
5.2 REDEMPTION BY THE HOLDER. In addition, the Series A Preferred Stock
shall be redeemable, at the option of the holder, at any time after March 21,
2004, for cash in the amount of $5.50 per share of Series A Preferred Stock or
for shares of the Company's Common Stock in accordance with the Conversion Rate.
In the event the holder elects to redeem such holder's shares of Series A
Preferred Stock for cash, such shares of Series A Preferred Stock shall be
redeemable at the rate of 1/10 of such shares purchased per quarterly period for
any 10 consecutive quarters commencing after March 31, 2004. Upon election to
redeem the Series A Preferred Stock, the holder shall surrender the certificate
or certificates therefor, duly endorsed, at the office of the Company or any
transfer agent for the Series A Preferred Stock or Common Stock, and shall give
written notice to the Company of such redemption. Thereafter, following fifteen
days of such notice, the Company shall promptly issue and deliver to holder such
funds or a certificate or certificates for the number of shares of Common Stock
to which such holder is entitled upon such redemption. In the event that the
holder receives shares of Common Stock as a result of the redemption, such
redemption shall be deemed to have been made on the close of business on the
fifteenth day following notice of redemption and the person entitled to receive
the shares of Common Stock issuable upon such redemption shall be treated for
all purposes as the record holder of such shares of Common Stock on such date.
6. NOTICES.
Any notices required by the provisions of this Certificate of
Designation to be given to the holders of shares of Series A Preferred Stock
shall be deemed given if deposited in the United States mail, postage prepaid,
and addressed to each holder of record at its address appearing on the books of
the Company. The effective date of such notice shall be deemed to be three (3)
calendar days following mailing of such notice. In the alternative, notices may
be given via overnight delivery whereupon notice shall be deemed to be given as
of the date of the actual receipt of such notice.
-60-
7. VOTING PROVISIONS.
The shares of Series A Preferred Stock shall not have any voting
rights.
IN WITNESS WHEREOF, the Company has caused this Certificate to be
signed in its name and on its behalf by its Chief Executive Officer and attested
by its Secretary to as of the 6th day of May, 2003.
SUPERIOR GALLERIES, INC.
By: SILVANO DIGENOVA
------------------------------------
Name: Silvano DiGenova
Title: Chief Executive Officer
By: PAUL BIBERKRAUT
------------------------------------
Name: PAUL BIBERKRAUT
Title: SECRETARY
-61-
CERTIFICATE OF DESIGNATION
OF
SERIES B $1.00 CONVERTIBLE PREFERRED STOCK
OF
SUPERIOR GALLERIES, INC.
Pursuant to Section 141 of the Delaware General Corporation Law, the
undersigned, being an officer of Superior Galleries, Inc., a Delaware
corporation (the "CORPORATION"), does hereby certify that the following
resolutions were duly adopted by the unanimous consent of the board of directors
(the "BOARD") of the Corporation:
RESOLVED, that pursuant to authority expressly granted to and vested in
the Board by the Certificate of Incorporation of the Corporation, the Board
hereby creates 3,400,000 shares of Series B $1.00 Convertible Preferred Stock of
the Corporation and authorizes the issuance thereof, and hereby fixes the
designation thereof, and the voting powers, preferences and relative,
participating, optional and other special rights, and the qualifications,
limitations or restrictions thereon (in addition to the designation, preferences
and relative, participating and other special rights, and the qualifications,
limitations or restrictions thereof, set forth in the Certificate of
Incorporation of the Corporation, which are applicable to the preferred stock,
if any) as follows:
1. DESIGNATION.
The series of preferred stock shall be designated and known as "Series
B $1.00 Convertible Preferred Stock" (the "SERIES B PREFERRED STOCK"). The
number of shares constituting the Series D Preferred Stock shall be 3,400,000.
Each share of the Series B Preferred Stock shall have a stated value equal to
one dollar ($1.00) (the "STATED VALUE").
2. CONVERSION RIGHTS.
The Series B Preferred Stock shall be convertible into the $0.001 par
value common stock of the Corporation (the "COMMON STOCK") as follows:
a. OPTIONAL CONVERSION. Subject to and upon compliance with the
provisions of this Section 2, a holder of any shares of the Series B Preferred
Stock (a "HOLDER") shall have the right at such Holder's option at any time, to
convert any of such shares of the Series B Preferred Stock held by the Holder
into fully paid and non-assessable shares of the Common Stock at the then
Conversion Rate (as defined herein).
b. CONVERSION RATE. Each share of the Series B Preferred Stock is
convertible into the number of shares of the Common Stock shall be calculated by
dividing the Stated Value by $0.10 (the "CONVERSION PRICE"; the conversion rate
so calculated, the "CONVERSION RATE"), subject to adjustments as set forth in
Section 2(d) hereof.
c. MECHANICS OF CONVERSION. The Holder may exercise the conversion
right specified in Section 2(a) by giving thirty (30) days written notice to the
Corporation, that the Holder elects to convert a stated number of shares of the
Series B Preferred Stock into a stated number of shares of Common Stock, and by
surrendering the certificate or certificates representing the Series B Preferred
Stock to be converted, duly endorsed to the Corporation or in blank, to the
Corporation at its principal office (or at such other office as the Corporation
may designate by written notice, postage prepaid, to all Holders) at any time
during its usual business hours, together with a statement of the name or names
(with addresses) of the person or persons in whose name the certificate or
certificates for Common Stock shall be issued.
d. Conversion Rate Adjustments. The Conversion Price shall be subject
to adjustment from time to time as follows:
(1) CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE. In case
of any consolidation with or merger of the Corporation with or into
another corporation (other than a merger with the Corporation's initial
corporate parent, Tangible Asset Galleries, Inc.), or in case of any
sale, lease or conveyance to another corporation of the assets of the
Corporation as an entirety or substantially as an entirety, each share
of the Series B Preferred Stock shall after the date of such
consolidation, merger, sale, lease or conveyance be convertible into
the number of shares of stock or other securities or property
(including cash) to which the Common Stock issuable (at the time of
such consolidation, merger, sale, lease or conveyance) upon conversion
of such share of the Series B Preferred Stock would have been entitled
upon such consolidation, merger, sale, lease or conveyance; and in any
such case, if necessary, the provisions set forth herein with respect
to the rights and interests thereafter of the Holder of the shares of
the Series B Preferred Stock shall be appropriately adjusted so as to
be applicable, as nearly as may reasonably be, to any shares of stock
of other securities or property thereafter deliverable on the
conversion of the shares of the Series B Preferred Stock.
(2) STOCK DIVIDENDS, SUBDIVISIONS, RECLASSIFICATION, OR
COMBINATIONS. If the Corporation shall (i) declare a dividend or make a
distribution on its Common Stock in shares of its Common Stock, (ii)
subdivide or reclassify the outstanding shares of Common Stock into a
greater number of shares, or (iii) combine or reclassify the
outstanding Common Stock into a smaller number of shares; the
Conversion Price in effect at the time of the record date for such
dividend or distribution or the effective date of such subdivision,
combination, or reclassification shall be proportionately adjusted so
that the Holder of any shares of the Series B Preferred Stock
surrendered for conversion after such date shall be entitled to receive
the number of shares of Common Stock that it would have owned or been
entitled to receive had such Series B Preferred Stock been converted
immediately prior to such date. Successive adjustments in the
Conversion Price shall be made whenever any event specified above shall
occur.
(3) ISSUANCES OF SECURITIES. If the Corporation shall (i) sell
or otherwise issue shares of the Common Stock at a purchase price per
share less than the Conversion Price, or (ii) sell or otherwise issue
the Corporation's securities which are convertible into or exercisable
for shares of the Corporation's Common Stock at a conversion or
exercise price per share less than the Conversion Price, then
immediately upon such issuance or sale, the Conversion Price shall be
adjusted to a price determined by multiplying the Conversion Price
immediately prior to such issuance by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding
immediately prior to such issuance or sale (excluding shares held in
the treasury), plus the number of shares of the Common Stock that the
aggregate consideration received by the Corporation for such issuance
would purchase at such Conversion Price; and the denominator of which
shall be the number of shares of Common Stock outstanding immediately
prior to such issuance plus the number of the additional shares to be
issued at such issuance or sale.
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(4) EXCLUDED TRANSACTIONS. No adjustment to the Conversion
Price shall be required under this Section 2(d) in the event of the
issuance of shares of Common Stock by the Corporation upon the
conversion or exercise of or pursuant to any outstanding stock options
or stock option plan now existing or hereafter approved by the Holders
which stock options have an exercise or conversion price per share of
less than the Conversion Price.
e. APPROVALS. If any shares of the Common Stock reserved for the
purpose of conversion of shares of the Series B Preferred Stock require
registration with or approval of any governmental authority under any Federal or
state law before such shares may be validly issued or delivered upon conversion,
then the Corporation will in good faith and as expeditiously as possible
endeavor to secure such registration or approval, as the case may be. If, and so
long as, any Common Stock into which the shares of the Series B Preferred Stock
are then convertible is listed on any national securities exchange, the
Corporation will, if permitted by the rules of such exchange, list and keep
listed on such exchange, upon official notice of issuance, all shares of such
Common Stock issuable upon conversion.
f. VALID ISSUANCE. All shares of Common Stock that may be issued upon
conversion of shares of the Series B Preferred Stock will upon issuance be duly
and validly issued, fully paid and non-assessable and free from all taxes, liens
and charges with respect to the issuance thereof, and the Corporation shall take
no action that will cause a contrary result.
3. LIQUIDATION.
a. LIQUIDATION PREFERENCE. In the event of liquidation, dissolution or
winding up of the Corporation (each a "LIQUIDATION EVENT"), the Series B
Preferred Stock and the Corporation's Series D $1.00 Convertible Preferred Stock
(the "SERIES D PREFERRED STOCK") shall have the same liquidation preference,
pari passu, and the Holders of the Series B Preferred Stock (the "SERIES B
HOLDERS") shall be entitled to receive, before any distribution of assets shall
be made to the holders of any Common Stock, but after the liquidation preference
of the Series A $5.00 convertible preferred stock (the "SERIES A PREFERRED
STOCK"), an amount equal to the Stated Value per share of Series B Preferred
Stock held by such Holder (the "LIQUIDATION PAY OUT"). After payment of the
Liquidation Pay Out to each Series B Holder and the payment of the respective
liquidation preferences of the other classes of preferred stock of the
Corporation pursuant to the Corporation's Certificate of Incorporation, each
Series B Holder shall be entitled to share with the holders of the Series D
Preferred Stock (the "SERIES D HOLDERS") and the holders of the Common Stock,
PARI PASSU, the remaining assets of the Corporation available for distribution
to the Corporation's stockholders, with the ratable shares to be distributed
with respect to the Series B Preferred Stock and Series D Preferred Stock
calculated on an as-converted basis.
b. RATABLE DISTRIBUTION. If upon any liquidation, dissolution or
winding up of the Corporation, the net assets of the Corporation to be
distributed among the Series B Holders and the Series D Holders shall be
insufficient to permit payment in full to such holders of their respective
Liquidation Payouts, then all remaining net assets of the Corporation after the
provision for the payment of the Corporation's debts and distribution to any
senior stockholders shall be distributed ratably among such holders of the
Series B Preferred Stock and Series D Preferred Stock in proportion to the full
amounts to which they would otherwise be entitled to receive.
4. VOTING RIGHTS.
Except as prohibited under law of the State of Delaware, the Holders of
the Series B Preferred Stock shall be entitled to vote at any meeting of
stockholders of the Corporation (or any written actions of stockholders in lieu
of meetings) with respect to any matters presented to the stockholders of the
Corporation for their action or consideration. For the purposes of such
shareholder votes, each share of Series B Preferred Stock shall be entitled to
such number of votes as represented by the number of shares of Common Stock such
share of Series B Preferred Stock would be convertible into at the time of such
voting. Notwithstanding the foregoing, so long as any shares of Series B
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Preferred Stock remain outstanding, the Corporation shall not, without first
obtaining the approval of the holders of at least a majority of the then
outstanding shares of Series B Preferred Stock (i) alter or change the rights,
preferences or privileges of the Series B Preferred Stock as outlined herein, or
(ii) create any new class or series of capital stock having a preference over
the Series B Preferred Stock as to the payment of dividends or the distribution
of assets upon the occurrence of a Liquidation Event ("SENIOR SECURITIES"), or
(iii) alter or change the rights, preferences or privileges of any Senior
Securities so as to adversely affect the Series B Preferred Stock.
5. DIVIDENDS.
The Holders of the Series B Preferred Stock shall not be entitled to
receive dividends.
6. NO PREEMPTIVE RIGHTS.
No Holders of the Series B Preferred Stock, whether now or hereafter
authorized, shall, as such Holder, have any preemptive right whatsoever to
purchase, subscribe for or otherwise acquire, stock of any class of the
Corporation nor of any security convertible into, nor of any warrant, option or
right to purchase, subscribe for or otherwise acquire, stock of any class of the
Corporation, whether now or hereafter authorized.
7. EXCLUSION OF OTHER RIGHTS.
Except as may otherwise be required by law, the shares of the Series B
Preferred Stock shall not have any preferences or relative, participating,
optional or other special rights, other than those specifically set forth in
this resolution (as such resolution may be amended from time to time) and in the
Corporation's Certificate of Incorporation, as amended. The shares of the Series
B Preferred Stock shall have no preemptive or subscription rights.
8. HEADINGS OF SUBDIVISIONS.
The headings of the various subdivisions hereof are for convenience of
reference only and shall not affect the interpretation of any of the provisions
hereof.
9. SEVERABILITY OF PROVISIONS.
If any right, preference or limitation of the Series B Preferred Stock
set forth in this Certificate (as such Certificate may be amended from time to
time) is invalid, unlawful or incapable of being enforced by reason of any rule
of law or public policy, all other rights, preferences and limitations set forth
in this Certificate (as so amended) which can be given effect without the
invalid, unlawful or unenforceable right, preference or limitation shall,
nevertheless, remain in full force and effect, and no right, preference or
limitation herein set forth shall be deemed dependent upon any other such right,
preference or limitation unless so expressed herein.
10. STATUS OF REACQUIRED SHARES.
No shares of the Series B Preferred Stock which have been issued and
reacquired in any manner may be reissued, and all such shares shall be returned
to the status of undesignated shares of preferred stock of the Corporation.
11. RESTRICTIONS AND LIMITATIONS.
So long as any shares of the Series B Preferred Stock remain
outstanding, the Corporation may not, without the vote or written consent by the
holders of a majority of the outstanding shares of the Series B Preferred Stock,
voting as a separate class:
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a. Effect any sale, license, conveyance, exchange or transfer of all or
substantially all of the assets of the Corporation or take any other action
which will result in the holders of the Corporation's capital stock prior to the
transaction owning less than 50% of the voting power of the Corporation's
capital stock after the transaction; or
b. Amend or otherwise change the Corporation's Certificate of
Incorporation, bylaws or certificate of designation of any stock; or
c. Change the nature of the business of the Corporation or any of its
subsidiaries; or
d. Make any distributions on, or redemption of, any capital stock other
than distributions or redemptions made pursuant to the certificates of
designations of the Series A Preferred Stock, the Series B Preferred Stock; or
e. Authorize, issue, obligate itself to issue, or agree to the
authorization or issuance by any of the subsidiaries of the Corporation of, any
capital stock or securities convertible into or exercisable for any capital
stock, other than issuance of the Common Stock upon the conversion of shares of
the Corporation's preferred stock or upon the exercise of any options or
warrants which have been disclosed to the Holder in the certain Securities
Purchase Agreement between the Corporation and the Holder relating to the
issuance of Series B $1.00 Convertible Preferred Stock of the Corporation's
corporate predecessor, Tangible Asset Galleries, Inc.; or
f. Make acquisitions of fixed assets or capital stock or capital
expenditures, except for the purchase of inventory or other assets in the
ordinary course of business, in any 12-month period during which the aggregate
amount of all such transactions exceeding $100,000; or
g. Enter into any credit facility or issue any debt, except for
increases in debt under existing credit facilities as of the date hereof and the
increase of trade credit or accounts payable in the ordinary course of business,
involving any amount exceeding $100,000 in a single transaction or a series of
transactions; or
h. Increase the number of directors on the Board above five; or
i. Enter into any transaction with any affiliate (as such term is used
in Rule 144 promulgated pursuant to the Securities Act of 1933, as amended) of
the Corporation or modify any existing agreement or understanding with such
affiliate (except for any transaction with any of its wholly owned, operating
subsidiaries in the ordinary course of business); or
j. File a voluntary or involuntary petition that commences a case under
Title 11 of the United States Code (or any successor statutes) with respect to
the Corporation, or consent to the institution of bankruptcy or insolvency
proceedings against it, or file a petition seeking, or consent to, relief under
any applicable federal or state law relating to bankruptcy or insolvency.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed in its name and on its behalf by its Chief Executive Officer and attested
to as of the 5th day of May, 2003.
SUPERIOR GALLERIES, INC.
By: SILVANO DIGENOVA
------------------------------------
Name: Silvano DiGenova
Title: Chief Executive Office
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CERTIFICATE OF DESIGNATION
OF
SERIES D $1.00 CONVERTIBLE PREFERRED STOCK
OF
SUPERIOR GALLERIES, INC.
Pursuant to Section 141 of the Delaware General Corporation Law, the
undersigned, being an officer of Superior Galleries, Inc., a Delaware
corporation (the "Corporation"), does hereby certify that the following
resolutions were duly adopted by the unanimous consent of the board of directors
(the "Board") of the Corporation:
RESOLVED, that pursuant to authority expressly granted to and vested in
the Board by the Certificate of Incorporation of the Corporation, the Board
hereby creates two million (2,000,000) shares of Series D $1.00 Convertible
Preferred Stock, of the Corporation and authorizes the issuance thereof, and
hereby fixes the designation thereof, and the voting powers, preferences and
relative, participating, optional and other special rights, and the
qualifications, limitations or restrictions thereon (in addition to the
designation, preferences and relative, participating and other special rights,
and the qualifications, limitations or restrictions thereof, set forth in the
Certificate of Incorporation of the Corporation, which are applicable to the
preferred stock, if any) as follows:
1. DESIGNATION.
The series of preferred stock shall be designated and known as "Series
D $1.00 Convertible Preferred Stock" (the "SERIES D PREFERRED STOCK"). The
number of shares constituting the Series D Preferred Stock shall be two million
(2,000,000). Each share of the Series D Preferred Stock shall have a stated
value equal to one dollar ($1.00) (the "STATED VALUE").
2. CONVERSION RIGHTS.
The Series D Preferred Stock shall be convertible into the $0.001 par
value common stock of the Corporation (the "COMMON STOCK") as follows:
a. OPTIONAL CONVERSION. Subject to and upon compliance with
the provisions of this Section 2, a holder of any shares of the Series
D Preferred Stock (a "HOLDER") shall have the right at such Holder's
option at any time, to convert any of such shares of the Series D
Preferred Stock held by the Holder into fully paid and non-assessable
shares of the Common Stock at the then Conversion Rate (as defined
herein).
b. CONVERSION RATE. Each share of the Series D Preferred Stock
is convertible into the number of shares of the Common Stock shall be
calculated by dividing the Stated Value by $0.06 (the "CONVERSION
PRICE"; the conversion rate so calculated, the "CONVERSION RATE"),
subject to adjustments as set forth in Section 2(d) hereof.
c. MECHANICS OF CONVERSION. The Holder may exercise the
conversion right specified in Section 2(a) by giving thirty (30) days
written notice to the Corporation, that the Holder elects to convert a
stated number of shares of the Series D Preferred Stock into a stated
number of shares of Common Stock, and by surrendering the certificate
or certificates representing the Series D Preferred Stock to be
converted, duly endorsed to the Corporation or in blank, to the
Corporation at its principal office (or at such other office as the
Corporation may designate by written notice, postage prepaid, to all
Holders) at any time during its usual business hours, together with a
statement of the name or names (with addresses) of the person or
persons in whose name the certificate or certificates for Common Stock
shall be issued.
d. CONVERSION RATE ADJUSTMENTS. The Conversion Price shall be
subject to adjustment from time to time as follows:
(1) CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE. In case
of any consolidation or merger of the Corporation with or into another
corporation (other than a merger with the Corporation's initial
corporation parent, Tangible Asset Galleries, Inc.), or in case of any
sale, lease or conveyance to another corporation of all or
substantially all of the assets of the Corporation, each share of the
Series D Preferred Stock shall after the date of such consolidation,
merger, sale, lease or conveyance be convertible into the number of
shares of stock or other securities or property (including cash) to
which the Common Stock issuable (at the time of such consolidation,
merger, sale, lease or conveyance) upon conversion of such share of the
Series D Preferred Stock would have been entitled upon such
consolidation, merger, sale, lease or conveyance; and in any such case,
if necessary, the provisions set forth herein with respect to the
rights and interests thereafter of the Holder of the shares of the
Series D Preferred Stock shall be appropriately adjusted so as to be
applicable, as nearly as may reasonably be, to any shares of stock of
other securities or property thereafter deliverable on the conversion
of the shares of the Series D Preferred Stock.
(2) STOCK DIVIDENDS, SUBDIVISIONS, RECLASSIFICATION, OR
COMBINATIONS. If the Corporation shall (i) declare a dividend or make a
distribution on its Common Stock in shares of its Common Stock, (ii)
subdivide or reclassify the outstanding shares of Common Stock into a
greater number of shares, or (iii) combine or reclassify the
outstanding Common Stock into a smaller number of shares; the
Conversion Price in effect at the time of the record date for such
dividend or distribution or the effective date of such subdivision,
combination, or reclassification shall be proportionately adjusted so
that the Holder of any shares of the Series D Preferred Stock
surrendered for conversion after such date shall be entitled to receive
the number of shares of Common Stock that it would have owned or been
entitled to receive had such Series D Preferred Stock been converted
immediately prior to such date. Successive adjustments in the
Conversion Price shall be made whenever any event specified above shall
occur.
(3) ISSUANCES OF SECURITIES. If the Corporation shall (i) sell
or otherwise issue shares of the Common Stock at a purchase price per
share less than the Conversion Price, or (ii) sell or otherwise issue
the Corporation's securities which are convertible into or exercisable
for shares of the Corporation's Common Stock at a conversion or
exercise price per share less than the Conversion Price, then
immediately upon such issuance or sale, the Conversion Price shall be
adjusted to a price determined by multiplying the Conversion Price
immediately prior to such issuance by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding
immediately prior to such issuance or sale (excluding shares held in
the treasury), plus the number of shares of the Common Stock that the
aggregate consideration received by the Corporation for such issuance
would purchase at such Conversion Price; and the denominator of which
shall be the number of shares of Common Stock outstanding immediately
prior to such issuance plus the number of the additional shares to be
issued at such issuance or sale.
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(4) EXCLUDED TRANSACTIONS. No adjustment to the Conversion
Price shall be required under this Section 2(d) in the event of the
issuance of shares of Common Stock by the Corporation upon the
conversion or exercise of or pursuant to any outstanding stock options
or stock option plan now existing or hereafter approved by the Holders
which stock options have an exercise or conversion price per share of
less than the Conversion Price.
e. APPROVALS. If any shares of the Common Stock reserved for the
purpose of conversion of shares of the Series D Preferred Stock require
registration with or approval of any governmental authority under any Federal or
state law before such shares may be validly issued or delivered upon conversion,
then the Corporation will in good faith and as expeditiously as possible
endeavor to secure such registration or approval, as the case may be. If, and so
long as, any Common Stock into which the shares of the Series D Preferred Stock
are then convertible is listed on any national securities exchange, the
Corporation will, if permitted by the rules of such exchange, list and keep
listed on such exchange, upon official notice of issuance, all shares of such
Common Stock issuable upon conversion.
f. VALID ISSUANCE. All shares of Common Stock that may be issued upon
conversion of shares of the Series D Preferred Stock will upon issuance be duly
and validly issued, fully paid and non-assessable and free from all taxes, liens
and charges with respect to the issuance thereof, and the Corporation shall take
no action that will cause a contrary result.
3. LIQUIDATION.
a. LIQUIDATION PREFERENCE. In the event of liquidation, dissolution or
winding up of the Corporation (each a "LIQUIDATION EVENT"), the Holders of the
Series D Preferred Stock shall have the same liquidation preference, pari passu,
as the holders (the "SERIES B HOLDERS") of the Series B $1.00 Convertible
Preferred Stock (the "SERIES B PREFERRED STOCK"), and shall be entitled to
receive, before any distribution of assets shall be made to the holders of any
Common Stock, but after the liquidation preference of the Series A $5.00
convertible preferred stock (the "SERIES A PREFERRED STOCK"), an amount equal to
the Stated Value per share of Series D Preferred Stock held by such Holder (the
"LIQUIDATION PAY OUT"). After payment of the Liquidation Pay Out to each Holder
and the payment of the respective liquidation preferences of the other classes
of preferred stock of the Corporation pursuant to the Corporation's Certificate
of Incorporation, each Holder shall be entitled to share with the Series B
Holders and the holders of the Common Stock, PARI PASSU, the remaining assets of
the Corporation available for distribution to the Corporation's stockholders,
with the ratable shares to be distributed with respect to the Series B Preferred
Stock and Series D Preferred Stock calculated on an as-converted basis.
b. RATABLE DISTRIBUTION. If upon any liquidation, dissolution or
winding up of the Corporation, the net assets of the Corporation to be
distributed among the Holders and the Series B Holders shall be insufficient to
permit payment in full to such holders of their respective Liquidation Payouts,
then all remaining net assets of the Corporation after the provision for the
payment of the Corporation's debts and distribution to any senior stockholders
shall be distributed ratably among such holders of the Series B Preferred Stock
and Series D Preferred Stock in proportion to the full amounts to which they
would otherwise be entitled to receive.
4. VOTING RIGHTS.
Except as prohibited under Delaware law, the Holders of the Series D
Preferred Stock shall be entitled to vote at any meeting of stockholders of the
Corporation (or any written actions of stockholders in lieu of meetings) with
respect to any matters presented to the stockholders of the Corporation for
their action or consideration. For the purposes of such shareholder votes, each
share of Series D Preferred Stock shall be entitled to such number of votes as
represented by the number of shares of Common Stock such share of Series D
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Preferred Stock would be convertible into at the time of such voting.
Notwithstanding the foregoing, so long as any shares of Series D Preferred Stock
remain outstanding, the Corporation shall not, without first obtaining the
approval of the holders of at least a majority of the then outstanding shares of
Series D Preferred Stock, voting as a separate class (i) alter or change the
rights, preferences or privileges of the Series D Preferred Stock as outlined
herein, or (ii) create any new class or series of capital stock having a
preference same as or over the Series D Preferred Stock as to the payment of
dividends or the distribution of assets upon the occurrence of a Liquidation
Event ("SENIOR SECURITIES"), or (iii) alter or change the rights, preferences or
privileges of any Senior Securities so as to adversely affect the Series D
Preferred Stock.
5. DIVIDENDS.
The Holders of the Series D Preferred Stock shall not be entitled to
receive dividends.
6. NO PREEMPTIVE RIGHTS.
No Holders of the Series D Preferred Stock, whether now or hereafter
authorized, shall, as such Holder, have any preemptive right whatsoever to
purchase, subscribe for or otherwise acquire, stock of any class of the
Corporation nor of any security convertible into, nor of any warrant, option or
right to purchase, subscribe for or otherwise acquire, stock of any class of the
Corporation, whether now or hereafter authorized.
7. EXCLUSION OF OTHER RIGHTS.
Except as may otherwise be required by law, the shares of the Series D
Preferred Stock shall not have any preferences or relative, participating,
optional or other special rights, other than those specifically set forth in
this resolution (as such resolution may be amended from time to time) and in the
Corporation's Certificate of Incorporation. The shares of the Series D Preferred
Stock shall have no preemptive or subscription rights.
8. HEADINGS OF SUBDIVISIONS.
The headings of the various subdivisions hereof are for convenience of
reference only and shall not affect the interpretation of any of the provisions
hereof.
9. SEVERABILITY OF PROVISIONS.
If any right, preference or limitation of the Series D Preferred Stock
set forth in this certificate of designation (this "CERTIFICATE") (as such
Certificate may be amended from time to time) is invalid, unlawful or incapable
of being enforced by reason of any rule of law or public policy, all other
rights, preferences and limitations set forth in this Certificate (as so
amended) which can be given effect without the invalid, unlawful or
unenforceable right, preference or limitation shall, nevertheless, remain in
full force and effect, and no right, preference or limitation herein set forth
shall be deemed dependent upon any other such right, preference or limitation
unless so expressed herein.
10. STATUS OF REACQUIRED SHARES.
No shares of the Series D Preferred Stock which have been issued and
reacquired in any manner may be reissued, and all such shares shall be returned
to the status of undesignated shares of preferred stock of the Corporation.
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11. RESTRICTIONS AND LIMITATIONS.
So long as any shares of the Series D Preferred Stock remain
outstanding, the Corporation may not, without the vote or written consent by the
holders of a majority of the outstanding shares of the Series D Preferred Stock,
voting as a separate class:
a. Effect any sale, license, conveyance, exchange or transfer of all or
substantially all of the assets of the Corporation or take any other action
which will result in the holders of the Corporation's capital stock prior to the
transaction owning less than 50% of the voting power of the Corporation's
capital stock after the transaction; or
b. Amend or otherwise change the Corporation's Certificate of
Incorporation, bylaws or certificate of designation of any stock; or
c. Change the nature of the business of the Corporation or any of its
subsidiaries; or
d. Make any distributions on, or redemption of, any capital stock
(other than: (i) distributions or redemptions made pursuant to the certificates
of designations of the Series A Preferred Stock, the Series B Preferred Stock;
or (ii) redemptions or repurchases in amounts not exceeding $10,000 in the
aggregate per fiscal year); or
e. Authorize, issue, obligate itself to issue, or agree to the
authorization or issuance by any of the subsidiaries of the Corporation of, any
capital stock or securities convertible into or exercisable for any capital
stock, other than issuance of the Series D Preferred Stock pursuant to that
certain Series D Preferred Stock Purchase and Warrant Exercise Agreement between
the Corporation's corporate predecessor, Tangible Asset Galleries, Inc., and
Stanford Venture Capital Holdings, Inc. dated as of January 31, 2003 (the
"SERIES D PURCHASE AGREEMENT") or the issuance of the Common Stock upon the
conversion of shares of the Corporation's preferred stock or upon the exercise
of any options or warrants which have been contemplated or disclosed in the
Series D Purchase Agreement in; or
f. Make acquisitions of fixed assets or capital stock or capital
expenditures (except for the purchase of inventory or other assets in the
ordinary course of business) in any 12-month period during which the aggregate
amount of all such transactions exceeds $100,000; or
g. Enter into any credit facility or issue any debt (except for (i)
increases in debt under existing credit facilities as of the date hereof and as
in effect on the date hereof and (ii) the increase of trade credit or accounts
payable in the ordinary course of business) that exceeds $100,000 in a single
transaction or a series of transactions; or
h. Increase the number of directors on the Board above five; or
i. Enter into any transaction with any affiliate (as such term is used
in Rule 144 promulgated pursuant to the Securities Act of 1933, as amended) of
the Corporation or modify any existing agreement or understanding with such
affiliate (except for any transaction with any of its wholly owned, operating
subsidiaries in the ordinary course of business); or
j. File a voluntary or involuntary petition that commences a case under
Title 11 of the United States Code (or any successor statutes) with respect to
the Corporation, or consent to the institution of bankruptcy or insolvency
proceedings against it, or file a petition seeking, or consent to, relief under
any applicable federal or state law relating to bankruptcy or insolvency.
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12. AMENDMENT.
This Certificate may be amended with the written approval of (i) the
Corporation and (ii) the vote or written consent of holders of a majority of the
outstanding shares of the Series D Preferred Stock, without the consent or
approval of any other party. Any amendment so effected shall be binding upon the
Corporation and any holder of the Series D Preferred Stock.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed in its name and on its behalf by its Chief Executive Officer and attested
to as of the 6th day of May, 2003.
SUPERIOR GALLERIES, INC.
By: SILVANO DIGENOVA
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Name: Silvano DiGenova
Title: Chief Executive Officer
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EXHIBIT E
BYLAWS
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BYLAWS OF SUPERIOR GALLERIES, INC.
A DELAWARE CORPORATION
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ARTICLE I - CORPORATE OFFICES
1.1 REGISTERED OFFICE.
The registered office of Superior Galleries, Inc. (the "CORPORATION")
shall be fixed in the Corporation's Certificate of Incorporation, as the same
may be amended from time to time.
1.2 PRINCIPAL OFFICE AND OTHER OFFICES.
The principal executive office for the transaction of business of the
Corporation is hereby fixed and located at 9478 West Olympic Boulevard, Beverly
Hills, CA 90212. The location may be changed by the Corporation's Board of
Directors (the "BOARD") in their discretion, and additional offices may be
established and maintained at any place or places, either inside or outside of
Delaware, as the Board may from time to time designate. Branch or subordinate
offices may at any time be established by the Board at any place or places where
the Corporation is qualified to do business.
ARTICLE II - MEETINGS OF SHAREHOLDERS
2.1 PLACE OF MEETINGS.
Meetings of shareholders shall be held at any place, within or outside
the State of Delaware, as designated by the Board. The Board may, in its sole
discretion, determine that a meeting of shareholders shall not be held at any
place, but may instead be held solely by means of remote communication as
authorized by Section 211(a)(2) of the Delaware General Corporation Law (the
"DGCL"). In the absence of any such designation or determination, shareholders'
meetings shall be held at the Corporation's principal executive office.
2.2 ANNUAL MEETING.
(i) The annual meeting of shareholders shall be held each year
as follows :
Time of meeting: 10:00 AM
Date of Meeting: Third Thursday on the fifth month following
the end of the Corporation's fiscal year.
(ii) If this day shall be a legal holiday, then the meeting
shall be held at the same time on the next succeeding business day. At the
annual meeting, the shareholders shall elect the Board of Directors, consider
reports of the affairs of the Corporation, and transact such other business as
may be properly brought before the meeting.
(iii) If the above date is inconvenient, the annual meeting of
shareholders shall be held each year on a date and at a time designated by the
Board within ninety days of the above date upon proper notice to all
shareholders.
2.3 SPECIAL MEETINGS.
(i) Special meetings of the shareholders for any purpose or
purposes whatsoever, may be called at any time by the Board, Chairperson of the
Board, President or by one or more shareholders holding shares in the aggregate
entitled to cast not less than 10% of the votes at any such meeting. Except as
provided in subsection (ii) of this Section 2.3 below, notice shall be given as
for the annual meeting.
(ii) If a special meeting is called by any person or persons
other than the Board, the request shall be in writing, specifying the time of
such meeting and the general nature of the business proposed to be transacted,
and shall be delivered personally or sent by registered mail or by facsimile
transmission to the Chairperson of the Board, the President, any Vice President,
or the Secretary of the Corporation. The officer(s) receiving such request shall
cause notice to be given to the shareholders entitled to vote at such meeting,
in accordance with the provisions of Sections 2.4 and 2.5 of these Bylaws,
indicating that a meeting will be held at the time requested by the person or
persons calling the meeting, not less than 35 nor more than 60 days after
receipt of the request. If the notice is not given within 20 days after receipt
if the request, the person or persons requesting the meeting may give the notice
in the manner provided in these Bylaws. Nothing contained in this Section
2.3(ii) shall be construed as limiting, fixing, or affecting the time when a
meeting of shareholders called by action of the Board may be held.
2.4 NOTICE OF SHAREHOLDERS' MEETINGS.
(i) Notice of any shareholders meetings, annual or special,
shall be given in writing not less than 10 nor more than 60 days before the date
of the meeting to each shareholder entitled to vote at such meeting by the
Secretary or the Assistant Secretary, or if there be no such officer, or in the
case of said Secretary or Assistant Secretary's neglect or refusal, by any
Director or shareholder. The notice shall specify the place, if any, the day and
the hour of the meeting, the means of remote communication, if any, by which
shareholders and proxy holders may be deemed to be present in person and vote at
such meeting, and (a) in the case of a special meeting, the general nature of
the business to be transacted and that no other business may be transacted, or
(b) in the case of an annual meeting, those matters which the Board, at the date
of mailing of notice, intends to present for action by the shareholders. At any
meetings where Directors are elected, notice shall include the names of the
nominees, if any, intended at the date of notice to be presented for election.
(ii) If action is proposed to be taken at any meeting for
approval of (a) contracts or transactions in which a Director has a direct or
indirect financial interest, (b) an amendment to the Certificate of
Incorporation, (c) a reorganization of the Corporation, (d) dissolution of the
Corporation, or (e) a distribution to preferred shareholders, the notice shall
also state the general nature of such proposal.
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE.
Notice of any meeting of shareholders shall be given personally or by
mail or other means of communication as provided in the DGCL and shall be sent
to the shareholder's address appearing on the books of the Corporation, or
supplied by the shareholder to the Corporation for the purpose of notice. Notice
shall be deemed given at the time it is delivered personally or, if mailed,
deposited in the United States mail, postage prepaid, directed to the
shareholder at his or her address as it appears on the Corporation's records; or
if electronically transmitted, as provided in Section 8.1 of these Bylaws.
An affidavit of the Secretary or an Assistant Secretary of the
Corporation or of the transfer agent or any other agent of the Corporation that
the notice has been given by mail or by a form of electronic transmission, as
applicable, shall, in the absence of fraud, be prima facie evidence of the facts
stated therein.
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2.6 QUORUM.
The holders of a majority of the stock issued and outstanding and
entitled to vote, present in person or represented by proxy, shall constitute a
quorum for the transaction of business at all meetings of the shareholders,
except as otherwise provided in the DGCL or these Bylaws. The shareholders
present at a duly called meeting at which a quorum is present may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum, if any action taken (other than
adjournment) is approved by a majority of the shares required to constitute a
quorum.
2.7 ADJOURNED MEETING; NOTICE.
Any shareholders' meeting, annual or special, whether or not a quorum
is present, may be adjourned from time to time by the vote of the majority of
the shares represented at such meeting, either in person or by proxy, but in the
absence of a quorum, no other business may be transacted at such meeting. When a
meeting is adjourned to another time or place, unless these Bylaws otherwise
require, notice need not be given of the adjourned meeting if the time, place if
any thereof, and the means of remote communications if any by which shareholders
and proxy holders may be deemed to be present in person and vote at such
adjourned meeting are announced at the meeting at which the adjournment is
taken. At the adjourned meeting, the Corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than 45 days, or if after the adjournment a new record date is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be given to each
shareholder of record entitled to vote at the meeting.
2.8 WAIVER OR CONSENT BY ABSENT SHAREHOLDERS.
(i) The transactions of any meeting of shareholders, either
annual or special, however called and noticed, shall be valid as though had at a
meeting duly held after regular call and notice, if a quorum be present either
in person or by proxy, and if, either before or after the meeting, each of the
shareholders entitled to vote, not present in person or by proxy, sign a written
waiver of notice, or a consent to the holdings of such meeting or an approval of
the minutes thereof.
(ii) The waiver of notice or consent need not specify either
the business to be transacted or the purpose of any regular or special meeting
of shareholders, except that if action is taken or proposed to be taken for
approval of any of those matters specified in Section 2.4(ii) of this Article,
the waiver of notice or consent shall state the general nature of such proposal.
All such waivers, consents or approvals shall be filed with the corporate
records or made a part of the minutes of the meeting.
(iii) Attendance of a person at a meeting shall also
constitute a waiver of notice of such meeting, except when the person objects at
the beginning of the meeting to the transaction of any business because the
meeting is not lawfully called or convened, and except that attendance at a
meeting is not a waiver of any right to object to the consideration of matters
not included in the notice. A shareholder or shareholders of the Corporation
holding at least 5% in the aggregate of the outstanding voting shares of the
Corporation may (i) inspect and copy the records of shareholders' names and
addresses and shareholdings during usual business hours upon five days prior
written demand upon the Corporation, and/or (ii) obtain from the transfer agent
by paying such transfer agent's usual charges for such a list, a list of the
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shareholders' names and addresses who are entitled to vote for the election of
Directors, and their shareholdings, as of the most recent record date for which
such list has been compiled or as of a date specified by the shareholders
subsequent to the day of demand. Such list shall be made available by the
transfer agent on or before the later of five days after the demand is received
or the date specified therein as the date as of which the list is to be
compiled. The record of shareholders shall also be open to inspection upon the
written demand of any shareholder or holder of a voting trust certificate, at
any time during usual business hours, for a purpose reasonably related to such
holder's interest as a shareholder or as a holder of a voting trust certificate.
Any inspection and copying under this Section may be made in person or by an
agent or attorney of such shareholder or holder of a voting trust certificate
making such demand.
ARTICLE III - DIRECTORS
3.1 POWERS; STANDARD OF CARE.
(i) Subject to the provisions of the DGCL and any limitations
in the Certificate of Incorporation or these Bylaws relating to action required
to be approved by the shareholders or by the outstanding shares, the business
and affairs of the Corporation shall be managed and all corporate powers shall
be exercised by or under the direction of the Board. The Board may delegate the
management of the day-to-day operation of the business of the Corporation to a
management company or other persons, provided that the business and affairs of
the Corporation shall be managed, and all corporate powers shall be exercised,
under the ultimate direction of the Board.
(ii) Each Director shall exercise such powers and otherwise
perform such duties in good faith, in the matter such Director believes to be in
the best interests of the Corporation, and with such care, including reasonable
inquiry, using ordinary prudence, as a person in a like position would use under
similar circumstances.
(iii) In performing the duties of a Director, a Director shall
be entitled to rely on information, opinions, reports, or statements, including
financial statements and other financial data, which are prepared or presented
by: (a) one or more officers or employees of the Corporation whom the Director
believes to be reliable and competent in the matter presented; (b) counsel,
independent accountants or other persons as to matters which the Director
believes to be within such person's professional or expert competence; or (c) a
committee of the Board upon which the Director does not serve, as to matters
within its designated authority, which committee the Director believes to merit
confidence, so long as in any such case the Director acts in good faith, after
reasonable inquiry when the need therefor is indicated by the circumstances and
without knowledge that would cause such reliance to be unwarranted.
3.2 EXCEPTION FOR CLOSE CORPORATION
Notwithstanding the provisions of Section 3.1 of this Article, in the
event that the Corporation shall elect to become a close corporation, its
shareholders may enter into a Shareholders' Agreement. Said Agreement may
provide for the exercise of corporate powers and the management of the business
and affairs of the Corporation by the shareholders; provided, however, such
Agreement shall, to the extent and so long as the discretion or powers of the
Board in its management of corporate affairs is controlled by such Agreement,
impose upon each shareholder who is a party hereof, liability for managerial
acts performed or omitted by such person pursuant thereto otherwise imposed upon
Directors; and the Directors shall be relieved to that extent from such
liability.
3.3 NUMBER OF DIRECTORS.
(i) The authorized number of Directors shall be five (5) until
changed by a duly adopted amendment to the Certificate of Incorporation or by an
amendment to this Section 3.3 of these Bylaws, adopted by the vote or written
consent of shareholders entitled to exercise majority voting power as provided
in the DGCL.
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(ii) In the event only one Director is required by these
Bylaws or the Certificate of Incorporation, then any reference herein to
notices, waivers, consents, meetings or other actions by a majority or quorum of
the Board shall be deemed or referred as such notice, waiver, etc., by the sole
Director, who shall have all rights and duties and shall be entitled to exercise
all of the powers and shall assume all the responsibilities otherwise herein
described, as given to the Board.
3.4 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS.
Except as provided in Section 3.5 of these Bylaws, Directors shall be
elected at each annual meeting of shareholders to hold office until the next
annual meeting. Directors need not be shareholders unless so required by the
Certificate of Incorporation or these Bylaws. Each director, including a
director elected to fill a vacancy, shall hold office until the expiration of
the term for which elected and until a successor has been elected and qualified
or until such director's earlier death, resignation or removal.
3.5 RESIGNATION AND VACANCIES.
(i) Unless otherwise provided in the Certificate of
Incorporation or these Bylaws, vacancies may be filled by a majority of the
remaining Directors, although less than a quorum, or by a sole remaining
director, except that a vacancy created by the removal of a Director by the vote
or written consent of the shareholders, or by a court order, may be filled only
by vote of a majority of the shares entitled to vote, represented at a duly held
meeting at which a quorum is present, or by the written consent of holders of
the majority of the outstanding shares entitled to vote.
(ii) A vacancy or vacancies on the Board shall be deemed to
exist in the event of the death, resignation or removal of any Director, or if
the Board by resolution declares vacant the office of a Director who has been
declared of unsound mind by an order of court or convicted of a felony.
(iii) The shareholders may elect a Director or Directors at
any time to fill any vacancy or vacancies not filled by the Directors, but any
such election by written consent shall require the consent of a majority of the
outstanding shares entitled to vote.
(iv) Any director may resign at any time, effective on giving
notice to the Chairperson of the Board, the President, the Secretary, or the
Board, unless the notice specifies a later time for that resignation to become
effective. If the resignation is effective at a future time, the Board may,
prior to the effective date of a Director's resignation, elect a successor to
take office when the resignation becomes effective.
3.6 PLACE OF MEETINGS; MEETINGS BY TELEPHONE.
Regular meetings of the Board shall be held at any place within or
outside the state that has been designated from time to time by resolution of
the Board. In the absence of such resolution, regular meetings shall be held at
the principal executive office of the Corporation. Special meetings of the Board
shall be held at any place within or outside the state that has been designated
in the notice of the meeting, or, if not stated in the notice or there is no
notice, at the principal executive office of the Corporation. Any meeting,
regular or special, may be held by conference telephone or similar communication
equipment, so long as all Directors participating in such meeting can hear one
another, and all such Directors shall be deemed to have been present in person
at such meeting.
3.7 ANNUAL MEETINGS.
Immediately following each annual meeting of shareholders, the Board
shall hold a regular meeting for the purpose of organization, the election of
officers and the transaction of other business. Notice of this meeting shall not
be required. Minutes of any meeting of the Board, or any committee thereof,
shall be maintained as required by the DGCL by the Secretary or other officer
designated for that purpose.
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3.8 REGULAR MEETINGS.
Regular meetings of the Board shall be held without notice at such time
and at such place as shall from time to time be determined by the Board. Notice
of the change in the determination of the time and place shall be given to each
Director in the same manner as notice for such special meetings of the Board. If
such day falls upon a holiday, such meetings shall be held on the next
succeeding day thereafter.
3.9 SPECIAL MEETINGS; NOTICE.
(i) Special meetings of the Board for any purpose or purposes
may be called at any time by the Chairperson of the Board, the President, any
Vice President, the Secretary, or any two Directors.
(ii) Notice of the time and place of special meetings shall be
(a) delivered personally by hand, by courier or by telephone; (b) sent by United
States first-class mail, postage prepaid; (c) sent by facsimile; or (d) sent by
electronic mail,
directed to each Director at that Director's address, telephone number,
facsimile number or electronic mail address, as the case may be, as shown on the
Corporation's records.
If the notice is (i) delivered personally by hand, by courier or by
telephone, (ii) sent by facsimile or (iii) sent by electronic mail, it shall be
delivered or sent at least 48 hours before the time of the holding of the
meeting. If the notice is sent by United States mail, it shall be deposited in
the United States mail at least four days before the time of the holding of the
meeting. Any oral notice may be communicated to either the Director or to a
person at the office of the Director who the person giving the notice has reason
to believe will promptly communicate same to Director. The notice need not
specify the place of the meeting (if the meeting is to be held at the
Corporation's principal executive office) nor the purpose of the meeting.
3.10 WAIVER WITHOUT NOTICE.
(i) The transactions of any meeting of the Board, however
called, noticed, or wherever held, shall be as valid as though had at a meeting
duly held after the regular call and notice if a quorum is present and if,
either before or after the meeting, each of the Directors not present signs a
written waiver of notice, a consent to holding the meeting, or an approval of
the minutes thereof. Waivers of notice or consent need not specify the purposes
of the meeting. All such waivers, consents and approvals shall be filed with the
corporate records or made part of the minutes of the meeting.
(ii) Notice of a meeting shall also be deemed given to any
Director who attends the meeting without protesting, prior thereto or at its
commencement, the lack of notice to such Director.
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3.11 QUORUM.
(i) At all meetings of the Board, a majority of the authorized
number of Directors shall constitute a quorum for the transaction of business,
except to adjourn as provided in subsection (ii) of this Section 3.11. The vote
of a majority of the Directors present at any meeting at which a quorum is
present shall be the act of the Board, except as may be otherwise specifically
provided by the DGCL, the Certificate of Incorporation or these Bylaws. A
meeting at which a quorum is initially present may continue to transact business
notwithstanding the withdrawal of Directors, if any action taken is approved by
at least a majority of the required quorum for that meeting.
(ii) A majority of the Directors present, whether or not
constituting a quorum, may adjourn any meeting to another time and place.
(iii) Notice of the time and place of the holding of an
adjourned meeting need not be given, unless the meeting is adjourned for more
than 24 hours, in which case notice of such time and place shall be given prior
to the time of the adjourned meeting to the Directors who were not present at
the time of the adjournment.
3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING.
Unless otherwise restricted by the Certificate of Incorporation or
these Bylaws, any action required or permitted to be taken by the Board, or of
any committee thereof, may be taken without a meeting if all members of the
Board or committee, as the case may be, consent thereto in writing or by
electronic transmission and the writing or writings or electronic transmission
or transmissions are filed with the minutes of proceedings of the Board or
committee. Such filing shall be in paper form if the minutes are maintained in
paper form and shall be in electronic form if the minutes are maintained in
electronic form.
3.13 FEES AND COMPENSATION OF DIRECTORS.
By resolution of the Board, the Directors may be paid their expenses,
if any, of attendance at each meeting of the Board or a stated salary as
Director. No such payment shall preclude any Director from serving the
Corporation in any other capacity and receiving compensation therefor.
3.14 REMOVAL OF DIRECTORS.
(i) Unless otherwise restricted by statute, the Certificate of
Incorporation or these Bylaws, any director or the entire Board may be removed,
with or without cause, by the holders of a majority of the shares then entitled
to vote at an election of Directors. In such case, the remaining members , if
any, of the Board may elect a successor Director to fill such vacancy for the
remaining unexpired term of the Director so removed.
(ii) No Director may be removed (unless the entire Board is
removed) when the votes cast against removal or not consenting in writing to
such removal would be sufficient to elect such Director if voted cumulatively at
an election at which the same total number of votes were cast (or, if such
action is taken by written consent, all shares entitled to vote, were voted) and
the entire number of Directors authorized at the time of the Directors' most
recent election were then being elected; and when by the provisions of the
Certificate of Incorporation the holders of the shares of any class or series
voting as a class or series are entitled to elect one or more Directors, any
Director so elected may be removed only by the applicable vote of the holders of
the shares of that class or series.
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(iii) No reduction of the authorized number of Directors shall
have the effect of removing any director prior to the expiration of such
director's term of office.
3.15 ADVISORY DIRECTORS.
The Board from time to time may elect one or more persons to be
Advisory Directors, who shall not by such appointment be members of the Board.
Advisory Directors shall be available from time to time to perform special
assignments specified by the President, to attend meetings of the Board upon
invitation and to furnish consultation to the Board. The period during which the
title shall be held may be prescribed by the Board. If no period is prescribed,
the title shall be held at the pleasure of the Board.
ARTICLE IV - COMMITTEES
4.1 COMMITTEES OF DIRECTORS.
Committees of the Board may be appointed by resolution passed by a
majority of the whole Board. Committees shall be composed of two or more members
of the Board. The Board may designate one or more Directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. Any such committee shall have such powers as those
held by the Board as may be expressly delegated to it by resolution of the
Board, except those powers expressly made non-delegable by the DGCL.
4.2 MEETINGS AND ACTION OF COMMITTEES.
Meetings and actions of committees shall be governed by, and held and
taken in accordance with, the provisions of Section 0 (place of meetings;
meetings by telephone), Section 3.8 (regular meetings), Section 0 (special
meetings; notice), Section 3.11 (quorum), Section 0 (action without a meeting),
and Section 3.16 (waiver without notice) with such changes in the context of
those Bylaws as are necessary to substitute the committee and its members for
the Board and its members. HOWEVER:
(i) the time of regular meetings of committees may be
determined either by resolution of the Board or by resolution of the committee;
(ii) special meetings of committees may also be called by
resolution of the Board; and
(iii) notice of special meetings of committees shall also be
given to all alternate members, who shall have the right to attend all meetings
of the committee. The Board may adopt rules for the government of any committee
not inconsistent with the provisions of these Bylaws.
ARTICLE V - OFFICERS
5.1 OFFICERS.
The principal officers of the Corporation shall be a President, a Vice
President, a Secretary, and Chief Financial Officer who may also be called
Treasurer. The Corporation may also have, at the discretion of the Board, a
Chairperson of the Board, one or more Vice Presidents, one or more Assistant
Secretaries, one or more Assistant Treasurers, and such other officers as may be
appointed in accordance with the provisions of these Bylaws. Any number of
offices may be held by the same person.
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5.2 APPOINTMENT OF OFFICERS.
The Board shall appoint the officers of the Corporation, except such
officers as may be appointed in accordance with the provisions of Sections 5.3
and 5.5 of these Bylaws, and each shall serve at the pleasure of the Board,
subject to the rights, if any, of an officer under any contract of employment.
5.3 SUBORDINATE OFFICERS.
The Board may appoint such other officers as the business of the
Corporation may require. Each of such officers and agents shall hold office for
such period, have such authority, and perform such duties as are provided in
these Bylaws or as the Board may from time to time determine.
5.4 REMOVAL AND RESIGNATION OF OFFICERS.
(i) Subject to the rights, if any, of an officer under any
contract of employment, any officer may be removed, either with or without
cause, by an affirmative vote of the majority of the Directors at that time in
office at any regular or special meeting of the Board or, except in the case of
an officer chosen by the Board, by any officer upon whom such power of removal
may be conferred by the Board.
(ii) Any officer may resign at any time by giving written
notice to the Corporation. Any resignation shall take effect at the date of the
receipt of that notice or at any later time specified in that notice. Unless
otherwise specified in the notice of resignation, the acceptance of the
resignation shall not be necessary to make it effective. Any resignation is
without prejudice to the rights, if any, of the Corporation under any contract
to which the officer is a party.
5.5 VACANCIES IN OFFICES.
A vacancy in any office because of death, resignation, removal,
disqualification, or any other cause shall be filled in the manner prescribed in
these Bylaws for regular appointments to that office.
5.6 CHAIRPERSON OF THE BOARD.
The Chairperson of the Board, if such an officer be elected, shall, if
present, preside at meetings of the Board and exercise and perform such other
powers and duties as may from time to time be assigned to him by the Board or as
may be prescribed by these Bylaws. If there is no president, then the
Chairperson of the Board shall also be the Chief Executive Officer of the
Corporation and shall have the powers and duties prescribed in Section 5.7 of
these Bylaws.
5.7 CHIEF EXECUTIVE OFFICER.
Subject to such supervisory powers, if any, as the Board may give to
the Chairperson of the Board, the Chief Executive Officer, if any, shall,
subject to the control of the Board, have general supervision, discretion, and
control of the business and affairs of the Corporation. The Chief Executive
Officer shall preside at all meetings of the shareholders and, in the absence of
the Chairperson of the Board, or if there be none, at all meetings of the Board.
The Chief Executive Officer shall have the general powers and duties of
management usually vested in the office of Chief Executive Officer of a
corporation, and shall have such other powers and duties as may be prescribed by
the Board or these Bylaws.
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5.8 PRESIDENT.
In the absence or disability of the Chief Executive Officer, the
President shall perform all the duties of the Chief Executive Officer. When
acting as the Chief Executive Officer, the President shall have all the powers
of, and be subject to all the restrictions upon, the Chief Executive Officer.
The President shall have such other powers and perform such other duties as from
time to time may be prescribed for him by the Board, these Bylaws, the Chief
Executive Officer or the Chairperson of the Board.
5.9 VICE PRESIDENTS.
In the absence or disability of the President, the Vice Presidents, if
any, in order of their rank as fixed by the Board or, if not ranked, a Vice
President designated by the Board, shall perform all the duties of the
President, and when so acting, shall have all the powers of, and be subject to
all the restrictions upon, the President. The Vice Presidents shall have such
other powers and perform such other duties as from time to time may be
prescribed for them respectively by the Board, these Bylaws, the Chairperson of
the Board, the Chief Executive Officer or, in the absence of a Chief Executive
Officer, the President.
5.10 SECRETARY.
(i) The secretary shall keep or cause to be kept, at the
principal executive office of the Corporation or such other place as the Board
may direct, a book of minutes of all meetings and actions of the Board,
committees of Directors, and shareholders. The minutes shall include the time
and place of each meeting; whether regular or special (and, if special, how
authorized and the notice given), and the names of those present at Directors'
meetings or committee meetings, the number of shares present or represented at
shareholders' meetings, and the proceedings thereof.
(ii) The secretary shall keep, or cause to be kept, at the
principal executive office of the Corporation or at the office of the
Corporation's transfer agent, a share register, or a duplicate share register
showing the names of all shareholders and their addresses, the number and
classes of shares held by each, the number and date of certificates evidencing
such shares, and the number and date of cancellation of every certificate
surrendered for cancellation.
(iii) The secretary shall give, or cause to be given, notice
of all meetings of the shareholders and of the Board required to be given by law
or by these Bylaws. The secretary shall keep the seal of the Corporation, if one
be adopted, in safe custody and shall have such other powers and perform such
other duties as may be prescribed by the Board or by these Bylaws.
5.11 CHIEF FINANCIAL OFFICER.
(i) The Chief Financial Officer shall keep and maintain, or
cause to be kept and maintained, in accordance with generally accepted
accounting principles, adequate and correct accounts of the properties and
business transactions of the Corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital, earnings (or
surplus), and shares issued. The books of account shall, at all reasonable
times, be open to inspection by any Director.
(ii) The Chief Financial Officer shall deposit all monies and
other valuables in the name and to the credit of the Corporation with such
depositories as the Board may designate. The Chief Financial Officer shall
disburse the funds of the Corporation as may be ordered by the Board, shall
render to the President and Directors, whenever they request it, an account of
all the transactions of the Chief Financial Officer and of the financial
condition of the Corporation, and shall have other powers and perform such other
duties as may be prescribed by the Board or these Bylaws.
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ARTICLE VI - RECORDS AND REPORTS
6.1 MAINTENANCE AND INSPECTION OF BYLAWS.
The Corporation shall keep at its principal executive office, or if not
in this state, at its principal business office in this state, the original or a
copy of these Bylaws amended to date, which shall be open to inspection by the
shareholders at all reasonable times during office hours. If the principal
office of the Corporation is outside this state and the Corporation has no
principal business office in this state, the Secretary shall, upon written
request of any shareholder, furnish to such shareholder a copy of these Bylaws
as amended to date.
6.2 FINANCIAL STATEMENTS.
(i) A copy of any annual financial statement and any income
statement of the Corporation for each quarterly period of each fiscal year, and
any accompanying balance sheet of the Corporation as of the end of each such
period, that has been prepared by the Corporation shall be kept on file at the
principal executive office of the Corporation for 12 months from the date of its
execution, and each such statement shall be exhibited at all reasonable times to
any shareholder demanding an examination of such statement or a copy shall be
made for any such shareholder.
(ii) If a shareholder or shareholders holding at least 5% of
the outstanding shares of any class of stock of the Corporation makes a written
request to the Corporation for an income statement of the Corporation for the
three-month, six-month or nine-month period of the then current fiscal year
ended more than 30 days prior to the date of the request, and a balance sheet of
the Corporation at the end of such period, the Chief Financial Officer shall
cause such statement to be prepared, if not already prepared, and shall deliver
personally or mail such statement or statements to the person making the request
within 30 days after the receipt of such request.
(iii) The Corporation also shall, upon the written request of
any shareholder, mail to the shareholder a copy of the last annual, semi-annual
or quarterly income statement which it has prepared and a balance sheet as of
the end of such period. This quarterly income statement and balance sheet
referred to in this Section shall be accompanied by the report thereon, if any,
of any independent accountants engaged by the Corporation or the certificate of
authorized officer of the Corporation such that financial statements were
prepared without audit form the books and records of the Corporation.
ARTICLE VII - GENERAL MATTERS
7.1 SHAREHOLDERS' AGREEMENTS.
Notwithstanding anything contained in this Article VII to the contrary,
in the event the Corporation elects to become a close corporation, an agreement
between two or more shareholders thereof, if in writing and signed by the
parties thereto, may provide that in exercising any voting rights, the shares
held by them shall be voted as provided therein or in the DGCL, and may
otherwise modify the provisions contained in Article II herein as to
shareholders' meetings and actions.
7.2 EFFECT OF SHAREHOLDERS' AGREEMENTS.
Any shareholders' agreements authorized by the DGCL shall only be
effective to modify the terms of these Bylaws if the Corporation elects to
become a close corporation with the appropriate filing of an amendment to its
Certificate of Incorporation as required by the DGCL and shall terminate when
the Corporation ceases to be a close corporation. Any other provisions of the
DGCL or these Bylaws may be altered or waiver thereby, but to the extent they
are not so altered or waived, these Bylaws shall be applicable.
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7.3 SUBSIDIARY CORPORATIONS.
Shares of the Corporation owned by a subsidiary shall not be entitled
to vote on any matter.
7.4 FORM.
The corporate seal shall be circular in form, and shall have inscribed
thereon the name of the Corporation, the date of incorporation, and the word
"Delaware" to indicate the Corporation was incorporated pursuant to the laws of
the State of Delaware.
7.5 CONSTRUCTION; DEFINITIONS.
Unless the context requires otherwise, the general provisions, rules of
construction, and definitions in the DGCL shall govern the construction of these
Bylaws. Without limiting the generality of this provision, the singular number
includes the plural, the plural number includes the singular, and the term
"person" includes both a Corporation and a natural person.
7.6 FISCAL YEAR.
The fiscal year of the Corporation shall be fixed by resolution of the
Board and may be changed by the Board.
ARTICLE VIII - NOTICE BY ELECTRONIC TRANSMISSION
8.1 NOTICE BY ELECTRONIC TRANSMISSION.
Without limiting the manner by which notice otherwise may be given
effectively to shareholders pursuant to the DGCL, the Certificate of
Incorporation or these Bylaws, any notice to shareholders given by the
Corporation under any provision of the DGCL, the Certificate of Incorporation or
these Bylaws shall be effective if given by a form of electronic transmission
consented to by the shareholder to whom the notice is given. Any such consent
shall be revocable by the shareholder by written notice to the Corporation. Any
such consent shall be deemed revoked if:
(i) the Corporation is unable to deliver by electronic
transmission two consecutive notices given by the Corporation in accordance with
such consent; and
(ii) such inability becomes known to the secretary or an
assistant secretary of the Corporation or to the transfer agent, or other person
responsible for the giving of notice.
However, the inadvertent failure to treat such inability as a revocation shall
not invalidate any meeting or other action.
Any notice given pursuant to the preceding paragraph shall be deemed
given:
(i) if by facsimile telecommunication, when directed to a
number at which the shareholder has consented to receive notice;
(ii) if by electronic mail, when directed to an electronic
mail address at which the shareholder has consented to receive notice;
(iii) if by a posting on an electronic network together with
separate notice to the shareholder of such specific posting, upon the later of
(A) such posting and (B) the giving of such separate notice; and
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(iv) if by any other form of electronic transmission, when
directed to the shareholder.
An affidavit of the secretary or an assistant secretary or of the
transfer agent or other agent of the Corporation that the notice has been given
by a form of electronic transmission shall, in the absence of fraud, be prima
facie evidence of the facts stated therein.
8.2 DEFINITION OF ELECTRONIC TRANSMISSION.
An "electronic transmission" means any form of communication, not
directly involving the physical transmission of paper, that creates a record
that may be retained, retrieved, and reviewed by a recipient thereof, and that
may be directly reproduced in paper form by such a recipient through an
automated process.
8.3 INAPPLICABILITY.
Notice by a form of electronic transmission shall not apply to Sections
164, 296, 311, 312 or 324 of the DGCL.
ARTICLE IX - AMENDMENTS
9.1 AMENDMENT BY SHAREHOLDERS
New Bylaws may be adopted or these Bylaws may be amended or repealed by
the vote or written consent of holders of a majority of the outstanding shares
entitled to vote; provided, however, that if the Certificate of Incorporation of
the Corporation set forth the number of authorized Directors of the Corporation,
the authorized number of Directors may be changed only by amendment to the
Certificate of Incorporation.
9.2 AMENDMENT BY DIRECTORS
Subject to the rights of the shareholders to adopt, amend, or repeal
the Bylaws, as provided in Section 10.1 of this Article, and the limitations of
the DGCL, the Board may adopt, amend, or repeal any of these Bylaws other than
an amendment to the Bylaws changing the authorized number of Directors.
9.3 RECORD OF AMENDMENTS
Whenever an amendment or new Bylaws is adopted, it shall be copied in
the corporate book of Bylaws with the original Bylaws, in the appropriate place.
If any bylaw is repealed, the fact of repeal with the date of the meeting at
which the repeal was enacted or written assent was filed shall be stated in the
corporate book of Bylaws.
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SUPERIOR GALLERIES, INC.
CERTIFICATE OF ADOPTION OF BYLAWS
===========================
The undersigned hereby certifies that he is the duly elected,
qualified, and acting Secretary or Assistant Secretary of Superior Galleries,
Inc., a Delaware corporation and that the foregoing Bylaws, comprising 15 pages,
were adopted as the Corporation's Bylaws on May __, 2003 by the Corporation's
Board of Directors.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this __
day of May, 2003.
PAUL BIBERKRAUT
------------------------------------
Paul Biberkraut, Secretary
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EXHIBIT F
DISSENTER'S RIGHTS
------------------
RIGHTS OF DISSENTING OWNERS
92A.300 Definitions. As used in NRS 92A.300 to 92A.500, inclusive,
unless the context otherwise requires, the words and terms defined in NRS
92A.305 to 92A.335, inclusive, have the meanings ascribed to them in those
sections.
92A.305 "Beneficial stockholder" defined. "Beneficial stockholder"
means a person who is a beneficial owner of shares held in a voting trust or by
a nominee as the stockholder of record.
92A.310 "Corporate action" defined. "Corporate action" means the action
of a domestic corporation.
92A.315 "Dissenter" defined. "Dissenter" means a stockholder who is
entitled to dissent from a domestic corporation's action under NRS 92A.380 and
who exercises that right when and in the manner required by NRS 92A.400 to
92A.480, inclusive.
92A.320 "Fair value" defined. "Fair value," with respect to a
dissenter's shares, means the value of the shares immediately before the
effectuation of the corporate action to which he objects, excluding any
appreciation or depreciation in anticipation of the corporate action unless
exclusion would be inequitable.
92A.325 "Stockholder" defined. "Stockholder" means a stockholder of
record or a beneficial stockholder of a domestic corporation.
92A.330 "Stockholder of record" defined. "Stockholder of record" means
the person in whose name shares are registered in the records of a domestic
corporation or the beneficial owner of shares to the extent of the rights
granted by a nominee's certificate on file with the domestic corporation.
92A.335 "Subject corporation" defined. "Subject corporation" means the
domestic corporation which is the issuer of the shares held by a dissenter
before the corporate action creating the dissenter's rights becomes effective or
the surviving or acquiring entity of that issuer after the corporate action
becomes effective.
92A.340 Computation of interest. Interest payable pursuant to NRS
92A.300 to 92A.500, inclusive, must be computed from the effective date of the
action until the date of payment, at the average rate currently paid by the
entity on its principal bank loans or, if it has no bank loans, at a rate that
is fair and equitable under all of the circumstances.
92A.350 Rights of dissenting partner of domestic limited partnership. A
partnership agreement of a domestic limited partnership or, unless otherwise
provided in the partnership agreement, an agreement of merger or exchange, may
provide that contractual rights with respect to the partnership interest of a
dissenting general or limited partner of a domestic limited partnership are
available for any class or group of partnership interests in connection with any
merger or exchange in which the domestic limited partnership is a constituent
entity.
92A.360 Rights of dissenting member of domestic limited-liability
company. The articles of organization or operating agreement of a domestic
limited-liability company or, unless otherwise provided in the articles of
organization or operating agreement, an agreement of merger or exchange, may
provide that contractual rights with respect to the interest of a dissenting
member are available in connection with any merger or exchange in which the
domestic limited-liability company is a constituent entity.
92A.370 Rights of dissenting member of domestic nonprofit corporation.
1. Except as otherwise provided in subsection 2, and unless
otherwise provided in the articles or bylaws, any member of any
constituent domestic nonprofit corporation who voted against the merger
may, without prior notice, but within 30 days after the effective date
of the merger, resign from membership and is thereby excused from all
contractual obligations to the constituent or surviving corporations
which did not occur before his resignation and is thereby entitled to
those rights, if any, which would have existed if there had been no
merger and the membership had been terminated or the member had been
expelled.
2. Unless otherwise provided in its articles of incorporation
or bylaws, no member of a domestic nonprofit corporation, including,
but not limited to, a cooperative corporation, which supplies services
described in chapter 704 of NRS to its members only, and no person who
is a member of a domestic nonprofit corporation as a condition of or by
reason of the ownership of an interest in real property, may resign and
dissent pursuant to subsection 1.
92A.380 Right of stockholder to dissent from certain corporate actions
and to obtain payment for shares.
1. Except as otherwise provided in NRS 92A.370 and 92A.390, a
stockholder is entitled to dissent from, and obtain payment of the fair
value of his shares in the event of any of the following corporate
actions:
(a) Consummation of a plan of merger to which the
domestic corporation is a constituent entity:
(1) If approval by the stockholders is
required for the merger by NRS 92A.120 to 92A.160,
inclusive, or the articles of incorporation
regardless of whether the stockholder is entitled to
vote on the plan of merger; or
(2) If the domestic corporation is a
subsidiary and is merged with its parent pursuant to
NRS 92A.180.
(b) Consummation of a plan of exchange to which the
domestic corporation is a constituent entity as the
corporation whose subject owner's interests will be acquired,
if his shares are to be acquired in the plan of exchange.
(c) Any corporate action taken pursuant to a vote of
the stockholders to the event that the articles of
incorporation, bylaws or a resolution of the board of
directors provides that voting or nonvoting stockholders are
entitled to dissent and obtain payment for their shares.
2. A stockholder who is entitled to dissent and obtain payment
pursuant to NRS 92A.300 to 92A.500, inclusive, may not challenge the
corporate action creating his entitlement unless the action is unlawful
or fraudulent with respect to him or the domestic corporation.
92A.390 Limitations on right of dissent: Stockholders of certain
classes or series; action of stockholders not required for plan of merger.
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1. There is no right of dissent with respect to a plan of
merger or exchange in favor of stockholders of any class or series
which, at the record date fixed to determine the stockholders entitled
to receive notice of and to vote at the meeting at which the plan of
merger or exchange is to be acted on, were either listed on a national
securities exchange, included in the national market system by the
National Association of Securities Dealers, Inc., or held by at least
2,000 stockholders of record, unless:
(a) The articles of incorporation of the corporation
issuing the shares provide otherwise; or
(b) The holders of the class or series are required
under the plan of merger or exchange to accept for the shares
anything except:
(1) Cash, owner's interests or owner's
interests and cash in lieu of fractional owner's
interests of:
(I) The surviving or acquiring
entity; or
(II) Any other entity which, at the
effective date of the plan of merger or
exchange, were either listed on a national
securities exchange, included in the
national market system by the National
Association of Securities Dealers, Inc., or
held of record by a least 2,000 holders of
owner's interests of record; or
(2) A combination of cash and owner's
interests of the kind described in sub-subparagraphs
(I) and (II) of subparagraph (1) of paragraph (b).
2. There is no right of dissent for any holders of stock of
the surviving domestic corporation if the plan of merger does not
require action of the stockholders of the surviving domestic
corporation under NRS 92A.130.
92A.400 Limitations on right of dissent: Assertion as to portions only
to shares registered to stockholder; assertion by beneficial stockholder.
1. A stockholder of record may assert dissenter's rights as to
fewer than all of the shares registered in his name only if he dissents
with respect to all shares beneficially owned by any one person and
notifies the subject corporation in writing of the name and address of
each person on whose behalf he asserts dissenter's rights. The rights
of a partial dissenter under this subsection are determined as if the
shares as to which he dissents and his other shares were registered in
the names of different stockholders.
2. A beneficial stockholder may assert dissenter's rights as
to shares held on his behalf only if:
(a) He submits to the subject corporation the written
consent of the stockholder of record to the dissent not later
than the time the beneficial stockholder asserts dissenter's
rights; and
(b) He does so with respect to all shares of which he
is the beneficial stockholder or over which he has power to
direct the vote.
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92A.410 Notification of stockholders regarding right of dissent.
1. If a proposed corporate action creating dissenters' rights
is submitted to a vote at a stockholders' meeting, the notice of the
meeting must state that stockholders are or may be entitled to assert
dissenters' rights under NRS 92A.300 to 92A.500, inclusive, and be
accompanied by a copy of those sections.
2. If the corporate action creating dissenters' rights is
taken by written consent of the stockholders or without a vote of the
stockholders, the domestic corporation shall notify in writing all
stockholders entitled to assert dissenters' rights that the action was
taken and send them the dissenter's notice described in NRS 92A.430.
92A.420 Prerequisites to demand for payment for shares.
1. If a proposed corporate action creating dissenters' rights
is submitted to a vote at a stockholders' meeting, a stockholder who
wishes to assert dissenter's rights:
(a) Must deliver to the subject corporation, before
the vote is taken, written notice of his intent to demand
payment for his shares if the proposed action is effectuated;
and
(b) Must not vote his shares in favor of the proposed
action.
2. A stockholder who does not satisfy the requirements of
subsection 1 and NRS 92A.400 is not entitled to payment for his shares
under this chapter.
92A.430 Dissenter's notice: Delivery to stockholders entitled to assert
rights; contents.
1. If a proposed corporate action creating dissenters' rights
is authorized at a stockholders' meeting, the subject corporation shall
deliver a written dissenter's notice to all stockholders who satisfied
the requirements to assert those rights.
2. The dissenter's notice must be sent no later than 10 days
after the effectuation of the corporate action, and must:
(a) State where the demand for payment must be sent
and where and when certificates, if any, for shares must be
deposited;
(b) Inform the holders of shares not represented by
certificates to what extent the transfer of the shares will be
restricted after the demand for payment is received;
(c) Supply a form for demanding payment that includes
the date of the first announcement to the news media or to the
stockholders of the terms of the proposed action and requires
that the person asserting dissenter's rights certify whether
or not he acquired beneficial ownership of the shares before
that date;
(d) Set a date by which the subject corporation must
receive the demand for payment, which may not be less than 30
nor more than 60 days after the date the notice is delivered;
and
(e) Be accompanied by a copy of NRS 92A.300 to
92A.500, inclusive.
92A.440 Demand for payment and deposit of certificates; retention of
rights of stockholder.
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1. A stockholder to whom a dissenter's notice is sent must:
(a) Demand payment;
(b) Certify whether he acquired beneficial ownership
of the shares before the date required to be set forth in the
dissenter's notice for this certification; and
(c) Deposit his certificates, if any, in accordance
with the terms of the notice.
2. The stockholder who demands payment and deposits his
certificates, if any, before the proposed corporate action is taken
retains all other rights of a stockholder until those rights are
canceled or modified by the taking of the proposed corporate action.
3. The stockholder who does not demand payment or deposit his
certificates where required, each by the date set forth in the
dissenter's notice, is not entitled to payment for his shares under
this chapter.
92A.450 Uncertificated shares: Authority to restrict transfer after
demand for payment; retention of rights of stockholder.
1. The subject corporation may restrict the transfer of shares
not represented by a certificate from the date the demand for their
payment is received.
2. The person for whom dissenter's rights are asserted as to
shares not represented by a certificate retains all other rights of a
stockholder until those rights are canceled or modified by the taking
of the proposed corporate action.
92A.460 Payment for shares: General requirements.
1. Except as otherwise provided in NRS 92A.470, within 30 days
after receipt of a demand for payment, the subject corporation shall
pay each dissenter who complied with NRS 92A.440 the amount the subject
corporation estimates to be the fair value of his shares, plus accrued
interest. The obligation of the subject corporation under this
subsection may be enforced by the district court:
(a) Of the county where the corporation's registered
office is located; or
(b) At the election of any dissenter residing or
having its registered office in this state, of the county
where the dissenter resides or has its registered office. The
court shall dispose of the complaint promptly.
2. The payment must be accompanied by:
(a) The subject corporation's balance sheet as of the
end of a fiscal year ending not more than 16 months before the
date of payment, a statement of income for that year, a
statement of changes in the stockholders' equity for that year
and the latest available interim financial statements, if any;
(b) A statement of the subject corporation's estimate
of the fair value of the shares;
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(c) An explanation of how the interest was
calculated;
(d) A statement of the dissenter's rights to demand
payment under NRS 92A.480; and
(e) A copy of NRS 92A.300 to 92A.500, inclusive.
92A.470 Payment for shares: Shares acquired on or after date of
dissenter's notice.
1. A subject corporation may elect to withhold payment from a
dissenter unless he was the beneficial owner of the shares before the
date set forth in the dissenter's notice as the date of the first
announcement to the news media or to the stockholders of the terms of
the proposed action.
2. To the extent the subject corporation elects to withhold
payment, after taking the proposed action, it shall estimate the fair
value of the shares, plus accrued interest, and shall offer to pay this
amount to each dissenter who agrees to accept it in full satisfaction
of his demand. The subject corporation shall send with its offer a
statement of its estimate of the fair value of the shares, an
explanation of how the interest was calculated, and a statement of the
dissenters' right to demand payment pursuant to NRS 92A.480.
92A.480 Dissenter's estimate of fair value: Notification of subject
corporation; demand for payment of estimate.
1. A dissenter may notify the subject corporation in writing
of his own estimate of the fair value of his shares and the amount of
interest due, and demand payment of his estimate, less any payment
pursuant to NRS 92A.460, or reject the offer pursuant to NRS 92A.470
and demand payment of the fair value of his shares and interest due, if
he believes that the amount paid pursuant to NRS 92A.460 or offered
pursuant to NRS 92A.470 is less than the fair value of his shares or
that the interest due is incorrectly calculated.
2. A dissenter waives his right to demand payment pursuant to
this section unless he notifies the subject corporation of his demand
in writing within 30 days after the subject corporation made or offered
payment for his shares.
92A.490 Legal proceeding to determine fair value: Duties of subject
corporation; powers of court; rights of dissenter.
1. If a demand for payment remains unsettled, the subject
corporation shall commence a proceeding within 60 days after receiving
the demand and petition the court to determine the fair value of the
shares and accrued interest. If the subject corporation does not
commence the proceeding within the 60-day period, it shall pay each
dissenter whose demand remains unsettled the amount demanded.
2. A subject corporation shall commence the proceeding in the
district court of the county where its registered office is located. If
the subject corporation is a foreign entity without a resident agent in
the state, it shall commence the proceeding in the county where the
registered office of the domestic corporation merged with or whose
shares were acquired by the foreign entity was located.
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3. The subject corporation shall make all dissenters, whether
or not residents of Nevada, whose demands remain unsettled, parties to
the proceeding as in an action against their shares. All parties must
be served with a copy of the petition. Nonresidents may be served by
registered or certified mail or by publication as provided by law.
4. The jurisdiction of the court in which the proceeding is
commenced under subsection 2 is plenary and exclusive. The court may
appoint one or more persons as appraisers to receive evidence and
recommend a decision on the question of fair value. The appraisers have
the powers described in the order appointing them, or any amendment
thereto. The dissenters are entitled to the same discovery rights as
parties in other civil proceedings.
5. Each dissenter who is made a party to the proceeding is
entitled to a judgment:
(a) For the amount, if any, by which the court finds
the fair value of his shares, plus interest, exceeds the
amount paid by the subject corporation; or
(b) For the fair value, plus accrued interest, of his
after-acquired shares for which the subject corporation
elected to withhold payment pursuant to NRS 92A.470.
92A.500 Legal proceeding to determine fair value: Assessment of costs
and fees.
1. The court in a proceeding to determine fair value shall
determine all of the costs of the proceeding, including the reasonable
compensation and expenses of any appraisers appointed by the court. The
court shall assess the costs against the subject corporation, except
that the court may assess costs against all or some of the dissenters,
in amounts the court finds equitable, to the extent the court finds the
dissenters acted arbitrarily, vexatiously or not in good faith in
demanding payment.
2. The court may also assess the fees and expenses of the
counsel and experts for the respective parties, in amounts the court
finds equitable:
(a) Against the subject corporation and in favor of
all dissenters if the court finds the subject corporation did
not substantially comply with the requirements of NRS 92A.300
to 92A.500, inclusive; or
(b) Against either the subject corporation or a
dissenter in favor of any other party, if the court finds that
the party against whom the fees and expenses are assessed
acted arbitrarily, vexatiously or not in good faith with
respect to the rights provided by NRS 92A.300 to 92A.500,
inclusive.
3. If the court finds that the services of counsel for any
dissenter were of substantial benefit to other dissenters similarly
situated, and that the fees for those services should not be assessed
against the subject corporation, the court may award to those counsel
reasonable fees to be paid out of the amounts awarded to the dissenters
who were benefited.
4. In a proceeding commenced pursuant to NRS 92A.460, the
court may assess the costs against the subject corporation, except that
the court may assess costs against all or some of the dissenters who
are parties to the proceeding, in amounts the court finds equitable, to
the extent the court finds that such parties did not act in good faith
in instituting the proceeding.
5. This section does not preclude any party in a proceeding
commenced pursuant to NRS 92A.460 or 92A.490 from applying the
provisions of N.R.C.P. 68 or NRS 17.115.
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TANGIBLE ASSET GALLERIES, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 30, 2003
The undersigned hereby appoints Silvano DiGenova, individually, as the
attorney, agent and proxy of the undersigned, with the power to appoint his
substitute, to represent and vote, as designated below, all shares of voting
stock of any class of Tangible Asset Galleries, Inc. held of record by the
undersigned on June 4, 2003, at the Annual Meeting of Stockholders to be held at
9478 West Olympic Boulevard, Beverly Hills, California 90212 on June 30, 2003,
at 9:00 a.m. local time, and at any and all adjournments thereof.
|X| Please mark your votes
as in this example.
FOR all nominees WITHHOLD
listed at right AUTHORITY to vote
(except as marked to for all nominees
the contrary below) listed at right NOMINEES:
1. ELECTION OF Silvano DiGenova
DIRECTORS: [ ] [ ] Paul Biberkraut
To withhold authority to vote for any individual Lee Ittner
nominee, write the nominee's name on the lines David Rector
immediately below) Mark Cohen
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
2. APPROVAL AND ADOPTION OF STOCK OPTION PLAN: To approve and adopt the 2003
Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. AMENDMENT OF ARTICLES OF INCORPORATION: To approve the amendment of the
Articles of Incorporation to provide for a one-for-twenty reverse stock
split of our common stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. APPROVAL OF REINCORPORATION IN DELAWARE: To approve the reincorporation
of Tangible Asset Galleries, Inc. in the state of Delaware, to be
effected through the reincorporation merger, the terms and conditions
of which are set forth in the Agreement and Plan of Merger, and in
connection with such reincorporation to change our corporate name to
"Superior Galleries, Inc."
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS: Ratification of
the appointment of Haskell & White LLP as our independent certified
public accountants to audit the financial statements for the year
ending June 30, 2002.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment
thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
This Proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this Proxy will
be voted FOR Proposals 1 through 6.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE
ENCLOSED ENVELOPE OR FAX BOTH PAGES TO STALT, INC. AT (775) 831-3337.
Dated:______________________________, 2003
Name:_____________________________________
Common Shares:____________________________
Series B Preferred Shares:________________
Series D Preferred Shares:________________
__________________________________________
Signature
__________________________________________
Signature (if jointly held)
Please sign exactly as name appears
hereon. When shares are held by joint
tenants, both should sign. When signing as
attorney, as executor, administrator,
trustee or guardian, please give full
title as such. If a corporation, please
sign in full corporate name by President
or other authorized officer. If a
partnership, please sign in partnership
name by authorized person.
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