ASSET PURCHASE AGREEMENT THIS ASSET PURCHASE AGREEMENT (Agreement by xld14276

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									                                 ASSET PURCHASE AGREEMENT

        THIS ASSET PURCHASE AGREEMENT (“Agreement”), dated as of March 25, 2008
(“Effective Date”), is by and among Salander-O’Reilly Galleries LLC, a New York limited liability
company located at 20-22 East 71st Street, New York, New York (“Seller”) and Ursus Rare Books,
Ltd., located at 981 Madison Avenue, New York, New York 10021 (“Buyer”) (Seller and Buyer
may each be referred to herein individually as a “Party” and collectively, as “Parties”).


                                               RECITALS

                A.     WHEREAS, Seller is a debtor and debtor-in-possession pursuant to Title
11 of the United States Code (11 U.S.C. §§ 101-1532, as amended) (the “Bankruptcy Code”), in
Case No. 07-30005 (CGM) (hereinafter referred to as the “Bankruptcy Case”), presently pending
in the United States Bankruptcy Court for the Southern District of New York (hereinafter
referred to as the “Bankruptcy Court”); and

                B.       WHEREAS, Buyer desires to purchase from Seller, and Seller desires to sell
to Buyer, all of the rights, title and interest in, to and under the Purchased Assets (defined in Section
1.1 herein) located at the Seller’s premises located at 20-22 East 71st Street, New York, New York
(the “Gallery Premises”), all in a manner and subject to the terms and conditions set forth herein
and in accordance with 11 U.S.C. § 363; and

                C.     WHEREAS, the transaction contemplated herein shall be consummated
pursuant to the terms and conditions of this Agreement and a Sale Order (as defined herein).


                                             AGREEMENT

        NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, in reliance upon the
mutual covenants and agreements hereinafter set forth and subject to the terms and conditions
herein contained, the Parties agree as follows:


                                              ARTICLE I
                                             DEFINITIONS

       1.1     Certain Definitions. For purposes of this Agreement, the following terms shall
have the following meanings:

              (a) “Purchased Assets” shall mean all of Seller’s right, title and interest in and to its art
                  and music book collection located at the Gallery Premises.

              (b) “Closing Date” shall be on or before April 15, 2008 at 4:00 p.m. EDT.

              (c) “Encumbrance” shall mean any claim, lien, pledge, encumbrance, judgment, lease,
                  sublease, option, charge, easement, license, security interest, conditional sales
                  agreement, title retention arrangement that is intended as security, encumbrance or
                  other right of third parties, whether voluntarily incurred or arising by operation of

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                   law, and shall include, without limitation, any agreement to give any of the
                   foregoing in the future, any contingent sale or other title retention agreement or
                   lease in the nature thereof, and any "claim", "lien", or "security interest" as those
                   terms are defined in the Bankruptcy Code.

              (d) “Sale Order” shall mean an order of the Bankruptcy Court which, among other
                  things, shall (i) authorize the sale and conveyance of the Purchased Assets, pursuant
                  to the terms and conditions of this Agreement and 11 U.S.C. §§ 105, 363(b) and (f),
                  free and clear of all Encumbrances, which Encumbrances shall, under the terms of
                  such order, attach to the proceeds of sale; and (ii) waive the stay requirement of
                  Rule 6004(h) of the Federal Rules of Bankruptcy Procedure, such that entry of the
                  Sale Order shall not be subject to an automatic 10-day stay.


                                        ARTICLE II
                                PURCHASE AND SALE OF ASSETS

        2.1    Sale of Assets. Seller shall sell, convey, transfer, assign, and deliver to Buyer, and
Buyer shall purchase, acquire, and accept from Seller, free and clear of Encumbrances, effective as
of the Closing Date, all of the Purchased Assets pursuant to 11 U.S.C. § 363.

        2.2     As Is-Where Is Sale, Subject to Higher and Better Offers. It is expressly
understood and agreed that the sale of the Purchased Assets is on an AS IS-WHERE IS basis,
without any representation or warranty as to the Purchased Assets and that Buyer’s offer is subject
to such higher and better offers as may be made at an auction to be held at or prior to a hearing to be
held before the Bankruptcy Court to consider the approval of this Agreement.

       2.3      Consideration. On the Closing Date, Buyer shall pay the Seller a total of three
hundred fifty thousand dollars ($350,000.00) plus interest accruing on the Deposit (defined below)
to the Closing Date (“Purchase Price”) in immediately available funds. The Buyer shall also
remove the Purchased Assets, at its own cost, from the Gallery Premises immediately after the
Closing Date but in any event no later than April 30, 2008.

         2.4     Deposit. Buyer shall tender to Seller’s counsel, as escrow agent (“Escrow Agent”),
a deposit of Thirty Five Thousand Dollars ($35,000.00) (“Deposit”) to be held in an interest bearing
escrow account and applied toward the Purchase Price on the Closing Date in the event Buyer is the
successful bidder at the auction for the Purchased Assets. In the event the Buyer materially defaults
on the terms of this Agreement, there is no default by the Seller, and the Closing does not occur, the
Deposit and interest accrued thereon shall be transferred to the Seller by the Escrow Agent without
the need for the Escrow Agent to receive any additional instructions from the Buyer. In the event
the Buyer is not the successful bidder at the auction for the Purchased Assets or this Agreement
fails to close for any reason other than a material default by Buyer, the deposit plus interest accrued
thereon shall be returned to Buyer within three (3) business days after the earlier of (a) the date of
the entry of an order by the Bankruptcy Court approving the sale of the Purchased Assets other than
to the Buyer, or (b) termination of this Agreement.

       2.5      Expenses. Each Party shall pay its own fees, costs and expenses in connection with
this Agreement and the Closing including, without limitation, legal fees, accountant fees, and
brokerage fees.

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        2.6    Closing. The closing of the transaction contemplated herein (the “Closing”) shall be
held at the offices of the counsel for the Seller, Halperin Battaglia Raicht, LLP, 555 Madison
Avenue, 9th Floor, New York, New York 10022, no later than April 15, 2008 unless the Parties
hereto otherwise agree.


                                        ARTICLE III
                          REPRESENTATIONS AND WARRANTIES OF BUYER

         Buyer hereby represents and warrants to Seller as follows:

        3.1   Buyer is duly organized, validly existing and in good standing under the laws of the
State of New York, has adequate financial resources to pay for the Purchased Assets by the Closing
Date and has all requisite corporate authority to enter into and consummate the transaction
contemplated herein.

        3.2    Buyer’s ability to consummate the transaction is not subject to any financing or
other contingency.

       3.3     This Agreement has been duly executed and delivered by Buyer and is a legal, valid
and binding obligation of Buyer, enforceable against Buyer in accordance with its terms.

       3.4    Following the Closing Date, but in no event later than April 30, 2008, the Buyer
covenants and warranties that Buyer shall remove the Purchased Assets from the Gallery Premises
at Buyer’s own cost and expense.


                                         ARTICLE IV
                             CONDITIONS TO SELLER’S OBLIGATIONS

        4.1       The obligation of Seller to consummate the transactions provided for herein is
subject to the entry of the Sale Order by the Bankruptcy Court on or prior to the Closing Date.


                                         ARTICLE V
                             CONDITIONS TO BUYER’S OBLIGATIONS

        The obligation of Buyer to consummate the transactions provided for herein is subject to the
satisfaction, on or prior to the Closing Date, of each of the following conditions, any of which may
be waived in writing by Buyer, in whole or in part, in its sole discretion:

        5.1     Representations, Warranties and Covenants. All representations and warranties of
Seller contained in this Agreement shall be true and correct in all material respects at and as of the
date hereof and the Closing Date, except as and to the extent that the facts and conditions upon
which such representations and warranties are based are expressly required or permitted to be
changed by the terms hereof, and Seller shall have performed all agreements and covenants
required by the terms hereof to be performed by it prior to or on the Closing Date.




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        5.2     Bankruptcy Court Approval. The Sale Order, in form and substance consistent
with this Agreement and acceptable to Buyer, shall have been entered by the Bankruptcy Court
on or prior to the Closing Date.


                                          ARTICLE VI
                                      REMEDIES FOR BREACH

        6.1    Buyer’s Breach. In the event the Buyer materially breaches any of the agreements,
covenants or warranties contained herein, the Seller shall be entitled to terminate the agreement and
retain the Deposit and interest accrued thereon as liquidated damages, except that, in the event the
Buyer breaches its agreement to remove the Purchased Assets from the Gallery Premises by no later
than April 30, 2008, Buyer shall pay the Seller the costs of the physical removal of the Purchased
Assets from the Gallery Premises in addition to Seller’s retention of the Deposit. In order for the
Buyer to be able to remove the Purchased Assets from the Gallery Premises, the Buyer or the
Buyer’s representatives/agents shall be granted access to the Gallery Premises as is reasonable and
necessary to effectuate the removal of the Purchased Assets, provided, however, that all times the
Buyer’s representatives are in the Gallery Premises, they shall be accompanied by a representative
of the CRO. In the event the Buyer is denied substantial access to the Gallery Premises, through no
fault of the Buyer, and therefore is physically unable to remove the Purchased Assets by April 30,
2008 despite the Buyer’s good faith efforts to do so, the Buyer shall not be liable for the payment of
the removal costs of the Purchased Assets.

        6.2     Seller’s Breach. In the event the Seller materially breaches any of the agreements,
covenants or warranties contained herein, the Buyer’s remedies shall be limited to the immediate
return of its Deposit.


                                             ARTICLE VII
                                           MISCELLANEOUS

        7.1     Termination. If any condition precedent contained herein is not satisfied and such
condition is not waived by Seller or Buyer, as the case may be, at or prior to the Closing, Seller or
Buyer, as the case may be, may terminate this Agreement at its option by notice to the other Party.
This Agreement may also be terminated by either Party by notice to the other Party as a result of the
breach of any representation or warranty set forth herein, and shall be automatically terminated in
the event Seller closes a sale of the Purchased Assets with any purchaser other than Buyer.

       7.2      Notices. Unless otherwise provided herein, any notice, request, instruction or other
document to be given hereunder by either Party to the other shall be in writing and delivered
personally, faxed or mailed, as follows:

                          If to Seller, addressed to:

                          Triax Capital Advisors
                          75 Rockefeller Plaza, 16th Floor
                          New York, New York 10019
                          Attn: Joseph E. Sarachek
                          Fax: (212) 265-6373

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                          With copy to:

                          Halperin Battaglia Raicht, LLP
                          555 Madison Avenue, 9th Floor
                          New York, New York 10022
                          Attn: Robert D. Raicht, Esq.
                          Fax: (212) 765-9100

                          If to Buyer, addressed to:

                          Ursus Rare Books Ltd.
                          981 Madison Avenue
                          New York, NY 10021
                          Attn: T. Peter Kraus
                          Fax: (212) 737-9306

                          With copy to:
                          Warren Starr, Esq.
                          Fax: (516) 883-9537

        7.3    Choice of Law; Venue. This Agreement shall be construed, interpreted and the
rights of the Parties determined in accordance with the laws of the State of New York, without
regard to conflict of law principles. Venue shall be solely in the Bankruptcy Court for the
Southern District of New York, Poughkeepsie Division.

        7.4     Entire Agreement; Amendments and Waivers. This Agreement constitutes the
entire Agreement between the Parties pertaining to the subject matter hereof and supersedes all
prior agreements, understandings, negotiations and discussions, whether oral or written, of the
Parties. This Agreement may be supplemented and modified, and terms herein may be waived, but
such supplements, modifications and waivers shall not be binding unless executed in writing by the
Party to be bound thereby. No waiver of any of the provisions of this Agreement shall be deemed
to or shall constitute a waiver of any other provision hereof (whether or not similar), nor shall such
waiver constitute a continuing waiver unless otherwise expressly provided.

        7.5    Multiple Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Facsimile signatures shall have the same force and effect as an
original.

        7.6      Severability. In the event that any one or more of the provisions contained in this
Agreement or in any other instrument referred to herein shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, then to the maximum extent permitted by law, such
invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or
any other such instrument.

        7.7    Titles. The titles, captions or headings of the articles and sections herein are
inserted for convenience of reference only and are not intended to be a part of or to affect the
meaning or interpretation of this Agreement.


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        7.8     No Broker’s Commission Payable by Seller. No fee or commission shall be payable
by Seller from the Purchase Price or otherwise in connection under this Agreement.

         7.9       Burden and Benefit.

              (a)     This Agreement shall be binding upon and, to the extent expressly permitted
in this Agreement, shall inure to the benefit of, the Parties hereto and their respective successors
and assigns.

               (b)     It is the intent of the Parties hereto that no third-party beneficiary rights be
created or deemed to exist in favor of any person not a party to this Agreement, unless otherwise
expressly agreed to in writing by the Parties.

        7.10 Time. Time is of the essence, and the parties agree that all deadlines and dates set
forth herein are material provisions of this Agreement.



                                         [signature page follows]




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        IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly
executed on their respective behalf, by their respective officers thereunto duly authorized, all as of
the Effective Date.



BUYER                                                 SELLER

Ursus Rare Books, Ltd.                                Salander-O’Reilly Galleries LLC


By:      /s/ T. Peter Kraus                           By:     /s/ Joseph E. Sarachek
         T. Peter Kraus                                       Joseph E. Sarachek
         President                                            Chief Restructuring Officer




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