EXHIBIT 10.2 NON-COMPETITION AGREEMENT

 

                                                                    Exhibit 10.2

 

 

                            NON-COMPETITION AGREEMENT

 

      This NON-COMPETITION AGREEMENT (the "Agreement") is made as of February

19, 2004, by and between COLLECTORS UNIVERSE, INC., a Delaware corporation

("Seller"), and SPECTRUM NUMISMATICS INTERNATIONAL, INC., a California

corporation ("Buyer").

 

                                R E C I T A L S:

 

      A. Concurrently herewith, Seller and Buyer are entering into that certain

Asset Purchase Agreement dated of even date herewith (the "Asset Purchase

Agreement"), pursuant to which Buyer is acquiring the Auction Businesses and

purchasing, or acquiring the right to use, a substantial portion of the

operating assets of those Businesses, including all of the goodwill associated

with the conduct of those Businesses (the "Acquired Assets"), all as more fully

described in the Asset Purchase Agreement.

 

      B. Seller has agreed, in the Asset Purchase Agreement, to execute and

deliver this Non-Competition Agreement and the Seller's execution and delivery

thereof is a condition precedent to the effectiveness of the Asset Purchase

Agreement.

 

      NOW, THEREFORE, in satisfaction of the above referenced condition and

other good and valuable consideration the receipt and adequacy of which are

hereby acknowledged by the parties, it is agreed as follows:

 

      1. Definitions and Interpretive Rules.

 

            1.1 Unless otherwise defined in this Agreement, terms with initial

capital letters contained in the above Recitals to, or elsewhere in, this

Agreement (including the term "Auction Businesses") shall have the meanings

ascribed to them in the Asset Purchase Agreement.

 

            1.2 For purposes of this Agreement, the following terms shall have

the respective meanings set forth hereinafter in this Section 1.2:

 

      (a) For purposes of this Agreement, a Person shall be deemed to be an

"Affiliate" of another Person if, at the time the determination of Affiliation

is to be determined, (i) the other Person is a Parent (as defined below) of the

Person, (ii) the Other Person is a Subsidiary of the Person or of any Parent of

the Person

 

      (b) The term "Competitive Business" means the conduct or management of a

business or venture that (1) acquires, by purchase or consignment, Collectible

Coins or Collectible Sports Memorabilia (as such terms are defined in the Asset

Purchase Agreement) for sale at in-person, telephonic and internet auctions, (2)

conducts in-person, telephonic and internet auctions at which such Collectible

Coins or Collectible Sports Memorabilia are sold, or (3) is making preparations

to engage any of the foregoing.

 

      (c) The term "Grading Services" means services that consist of any or all

of the following: (i) grading the quality of, (ii) authenticating the

genuineness or authenticity of, (iii) certifying the grade of quality assigned

to or authenticity of, and (iv) providing any service or device designed to

reduce the incidence of (or to help identify) forgeries of Collectible Coins,

Collectible Sports Memorabilia or any other collectibles, to or for owners,

dealers, sellers, purchasers and consignees of such collectibles, including

Competitive Businesses (collectively, "Grading Customers"). The term "Grading

Business" means a business engaged in providing any Grading Services to any

Grading Customers.

 

      (d) The term "Parent" of a Person shall mean any corporation or other

entity that acquires beneficial ownership of common stock possessing, either

directly or indirectly (through one or more entities), more than fifty percent

(50%) of the total combined voting power of that Person. Accordingly if any

corporation or other entity acquires beneficial ownership of common stock of

Seller possessing, either

 

 

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directly or indirectly (through one or more entities), more than fifty percent

(50%) of the total combined voting power of Seller, such corporation or other

entity shall, for purposes of this Agreement, be the Parent of Seller.

 

      (e) The term "Person" shall mean a natural person, corporation, limited

liability company, limited or general partnership or a joint venture, trust,

unincorporated organization or other entity.

 

      (f) The term "Restrictive Period" shall mean the period commencing on the

date hereof and ending on the fifth (5th) anniversary of the date hereof.

 

      (g) The term "Restricted Territory" shall mean any state, city or other

locality in the United States of America, Europe and Asia.

 

       (h) The term "Seller-Related Parties" shall mean any Parent of Seller and

any Subsidiary of Seller or of Parent.

 

      (i) The term "Subsidiary" of a Person shall mean any corporation or other

entity more than fifty percent (50%) of the voting stock or other equity

ownership interests of which are held, directly or indirectly (through one or

more entities), by such Person or, by an Affiliate of such Person.

 

            1.3 This Agreement is the result of arms'-length negotiations

between the parties hereto and no provision hereof, because of any ambiguity

found to be contained therein or otherwise, shall be construed against a party

by reason of the fact that such party or its legal counsel was the draftsman of

that provision. The section, subsection and any paragraph headings contained

herein are for the purpose of convenience only and are not intended to define or

limit or affect, and shall not be considered in connection with, the

interpretation of any of the terms or provisions of this Agreement. Unless

otherwise indicated expressly or by the context in which such terms are found

elsewhere in this Agreement, (1) the term "or" shall not be exclusive, (2) the

term "including" shall mean "including, but not limited to" and (3) the terms

"herein," "hereof," "hereto," "hereunder" and other terms similar to such terms

shall refer to this Agreement as a whole and not merely to the specific section,

subsection, paragraph or clause where such terms may appear. The Recitals to

this Agreement are fully incorporated into and are an integral part of this

Agreement.

 

      2. Non-Competition Covenants and Certain Acknowledgements.

 

            2.1 Non-Competition Covenants. Except as otherwise permitted by

Section 2.2 hereof, during the Restrictive Period, neither Seller nor any

Seller-Related Parties shall directly or indirectly:

 

                  B.     (a)    conduct or engage in any Competitive Business in

        the Restricted Territory; or

 

                  C.     (b)    acquire, invest in, operate, control, manage, own

        or have any ownership interest in, or participate or become or be a

        partner, member, joint venturer, shareholder or owner, or consultant,

        advisor or agent of, any Competitive Business, or with any Person that

        engages in, or to the best knowledge of Seller is preparing to engage

        in, any Competitive Business, anywhere in the Restricted Territory; or

 

                  (c) provide marketing, promotional, management, consulting,

advisory or financial assistance to any Person that engages in. or to the best

knowledge of Seller is preparing to engage in, any Competitive Business anywhere

in the Restricted Territory.

 

 

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            2.2 Limited Exceptions. Notwithstanding the foregoing, or any other

provision contained herein to the contrary:

 

                  (a) Seller and any of the Seller-Related Parties may own

shares of voting stock of any corporation whose shares are listed for trading on

any stock exchange or on the Nasdaq National Market or Nasdaq SmallCap Market,

without thereby breaching its covenants contained in this Agreement, provided

that the aggregate number of voting shares of any such corporation that may be

owned, in the aggregate, by the Seller and the Seller-Related Parties shall not

exceed five percent (5%) of such corporation's voting stock so long as Seller

does not in fact have the power to control, or direct the management of that

corporation.

 

                  (b) Seller and the Seller-Related Parties shall be entitled,

and it shall not be a breach of this Agreement (including Section 2.1(c) above),

for Seller or any of the Seller Related Parties, to acquire, invest in, operate,

control, manage, own, participate or have any ownership interest in, or to sell

or otherwise transfer, or become or be a partner, member, joint venturer,

shareholder or owner, consultant, advisor or agent of: (1) any Grading Business

that provides, in the ordinary course, any Grading Services to or for any

Competitive Business, or with any Person that engages in any Competitive

Business, anywhere in the Restricted Territory; (2) subject to Paragraph 2.3

below, any business that, in the ordinary course, provides services (other than

or in addition to those currently being provided by Seller's Grading Services)

that facilitate or enhance commerce, trading or dealing in Collectible Coins or

Collectible Sports Memorabilia (such as, by way of illustration but not

limitation, Seller's sportscard set registry program) (hereinafter "Value Added

Services") for any Competing Businesses anywhere in the Restricted Territory;

provided, however, that in no event shall Value Added Services include

conducting, managing, or controlling the conduct of any auctions anywhere in the

Restricted Territory for Seller's account or for the account of any other

Person; (3) sell or consign Seller's Collectible Inventory (as defined in the

Asset Purchase Agreement) to any Competitive Business if Buyer does not exercise

its option to purchase such Collectibles Inventory pursuant to the Asset

Purchase Agreement; (4) consign or sell t