PURCHASE AGREEMENT
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This Purchase Agreement (the "Agreement") is made and entered into this 4th
day of August, 2006, by and among Xxxxxx Partners, Ltd., a Texas limited
partnership (the "Partnership"), New Xxxxxx, L.L.C., a Texas limited liability
company (the "Company"), Xxxxxx "Xxxx" Xxxxxxx ("Xxxxxxx"), the individuals
listed on Exhibit "A" who are the Limited Partners of the Partnership (the
"Limited Partners") and the Members of the Company (the "Members"), and RCI
Debit Services, Inc., a Texas corporation ("Buyer"). The Limited Partners and
the Members are collectively referred to herein as the "Sellers"
WHEREAS, the Partnership owns an adult entertainment cabaret known as
"Centerfolds" (the "Business"), located at 0000 Xxxxxxxx Xxxxxx, Xxx Xxxxxxx,
Xxxxx 00000 (the "Real Property"); and
WHEREAS, the Company is the General Partner of the Partnership; and
WHEREAS the Members desire to sell to Buyer all of their Membership
Interest in the Company (the "Membership Interest") on the terms and conditions
set forth herein; and
WHEREAS, the Buyer desires to purchase the Membership Interest from the
Members on the terms and conditions set forth herein; and
WHEREAS, the Limited Partners listed on Exhibit "A" desire to sell their
limited partnership interests in the Partnership (the "Partnership Interest) to
the Buyer on the terms and conditions set forth herein ; and
WHEREAS, Xxxxxxx desires to retain 1% of his Partnership Interest; and
WHEREAS, the Buyer desires to purchase the Partnership Interest from the
Limited Partners on the terms and conditions set forth herein; and
WHEREAS, SK&BB Holdings, L.P., a Texas limited partnership ("SK&BB"), an
affiliate of the Company and the Partnership, owns the Real Property on which
the Business is located; and
WHEREAS, simultaneously with the sale of the Membership Interest by the
Members and the Partnership Interest by the Limited Partners to the Buyer,
SK&BB desires to sell the Real Property to RCI Holdings, Inc., a Texas
corporation ("RCI"), an affiliate of Buyer; and
WHEREAS, RCI desires to purchase the Real Property from SK&BB
simultaneously with the sale of the Membership Interest by the Members and the
Partnership Interest by the Limited Partners to the Buyer.
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements and the respective representations and warranties herein contained,
and on the terms and subject to the conditions herein set forth, the parties
hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
PURCHASE AND SALE
Section 1.1 Sale of the Membership Interest. Subject to the terms and
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conditions set forth in this Agreement, at the Closing (as hereinafter defined)
the Members hereby agree to sell, transfer, convey and deliver to Buyer the
Membership Interest as set forth in Exhibit "A", free and clear of all
encumbrances, and shall deliver to Buyer certificates representing the
Membership Interest, duly endorsed to Buyer or accompanied by duly executed
stock powers in form and substance satisfactory to Buyer.
Section 1.2 Sale of the Partnership Interest. Subject to the terms and
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conditions set forth in this Agreement, at the Closing (as hereinafter defined)
the Limited Partners hereby agree to sell, transfer, convey and deliver to Buyer
the Partnership Interest as set forth in Exhibit "A", free and clear of all
encumbrances, and shall deliver to Buyer certificates representing the
Partnership Interest, duly endorsed to Buyer or accompanied by duly executed
stock powers in form and substance satisfactory to Buyer.
Section 1.3 Related Transaction. Simultaneously with the purchase and
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sale of the Membership Interest and the Partnership Interest, on the Closing
Date, RCI shall acquire from SK&BB the Real Property upon which the Business is
located at 0000 Xxxxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxx 00000, including all
improvements thereon. RCI shall pay to SK&BB the total consideration of
$750,000 (the "Real Property Purchase Price"), which shall be payable as
follows:
(a) $150,000 cash paid at the time of Closing; and
(b) Buyer shall assume or refinance the existing $600,000 Promissory Note
owed by the Partnership which is due on or about September 30, 2006
(the "Promissory Note").
(c) To the extent the holder of the Promissory Note requires a pre-payment
as a condition to allowing Buyer to assume the Promissory Note, and
said prepayment is paid, in whole or in part, by the Company,
Partnership, or SK & BB, RCI shall execute a promissory note payable
to SK&BB in the principal amount equal to said pre-payment, at the at
the rate of 12% per annum (the "Bridge Note") payable as follows:
(i) interest only for months one (1) through (5) with the first
payment being due thirty (30) days after the Closing Date; and
(ii) A final lump sum payment for the remaining balance of said Bridge
Note due one hundred eighty (180) days after the Closing Date.
The Bridge Note shall be secured by a lien on the Real Property
inferior only to the existing lien on the Promissory Note, as well as
all of the capital stock of the Buyer, all of the Membership Interest
and Partnership Interest, and a security interest in the assets of the
Business.
Purchase Agreement - Page 2
Section 1.4 Purchase Price for Membership Interest and Partnership
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Interest. As consideration for the purchase of the Membership Interest and the
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Partnership Interest, Buyer shall pay to the Sellers the total aggregate
consideration of $2,150,000 (the "Purchase Price"), which shall be allocated
according to the ownership percentages set forth in Exhibit "A" and payable as
follows:
(a) $450,000 cash paid at the time of Closing;
(b) Buyer shall execute a two (2) year Promissory Note in the principal
amount of $700,000 bearing simple interest at a rate of 7.5% per annum
(the "Short Term Note") payable in arrears in twenty-four (24) equal
monthly payments of principal and interest of $31,499.71, with the
first payment being due thirty (30) days after the Closing Date until
paid in full. All payments shall be credited first to accrued interest
and thereafter to principal. The Short Term Note shall be secured by
the Real Property secured by a lien on the Real Property inferior only
to the existing lien on the Promissory Note and the lien to be granted
to SK & BB under the Bridge Note, as well as all of the capital stock
of Buyer, all of the Membership Interest and Partnership Interest, and
a security interest in the assets of the Business.
(c) Buyer shall execute a five (5) year Promissory Note in the principal
amount of $1,000,000 bearing simple interest at the rate of 7.5% per
annum (the "Long Term Note") payable in arrears as follows:
(i) Fifty-nine (59) equal monthly payments of $9,270.12 consisting of
principal and interest (based upon a fifteen (15) year
amortization), with the first payment being due thirty (30) days
after the Closing Date; and
(ii) A final lump sum payment for the remaining balance of $785,321.04
due thirty (30) days after the final monthly payment date which
will be the 60th month after the Closing Date.
All payments shall be credited first to accrued interest and thereafter to
principal. The Long Term Note shall be secured by the Real Property secured by
a lien on the Real Property inferior only to the existing lien on the Promissory
Note and the lien to be granted to SK&BB under the Bridge Note, as well as all
of the capital stock of the Buyer, all of the Membership Interest and
Partnership Interest, and a security interest in the assets of the Business.
ARTICLE II
CLOSING
Section 2.1 The Closing. The closing of the transactions provided for
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in this Agreement shall take place on or before August 15, 2006 (the "Closing
Date"), or at such other time and place as agreed upon among the parties hereto
(the "Closing"). The closing of the transaction between RCI and SK&BB for the
acquisition of the Real Property shall take place at Chicago Title Company,
Austin, Texas.
Purchase Agreement - Page 3
Section 2.2 Actions at the Closing. At the Closing:
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(a) the Buyer shall deliver to the Company and the Partnership the various
certificates, instruments and documents (and shall take the required
actions) referred to in Article VIII below;
(b) the Company and the Partnership shall deliver to the Buyer the various
certificates, instruments and documents (and shall take the required
actions) referred to in Article VIII below;
(c) the Sellers shall deliver or cause to be delivered to Buyer
originally issued certificates representing the Membership Interest of
the Company or the Partnership Interest of the Partnership, as
appropriate, duly endorsed over to the Buyer in a form satisfactory to
the Buyer;
(d) RCI shall pay $150,000 cash as set forth in Section 1.3;
(e) the Buyer shall pay $450,000 cash as set forth in Section 1.4;
(f) the Buyer and RCI shall execute the Bridge Note as set forth in
Section 1.3, and the Buyer shall execute the Short Term Note and the
Long Term Note as set forth in Section 1.4;
(g) the Buyer shall assume or refinance the Promissory Note as set forth
in Section 1.3;
(h) the Buyer and, as applicable, RCI, shall execute appropriate security
instruments, including a deed of trust, to secure the Bridge Note,
Long Term Note, and Short Term note by the Real Property, all of the
capital stock of the Buyer, all of the Membership Interest and
Partnership Interest, and the assets of the Business.
(i) the Related Transaction in Section 1.3 shall be consummated.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY, THE PARTNERSHIP AND XXXXXXX
The Company, the Partnership and Xxxxxxx (but not Xxxxxxxx Xxxxxxxxxxx or
any of the Limited Partners), jointly and severally, hereby represent and
warrant to the Buyer as follows:
Section 3.1. Organization, Good Standing and Qualification.
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(a) The Company and the Partnership (i) are entities duly organized,
validly existing and in good standing under the laws of the state of
Texas, (ii) have all requisite power and authority to own, operate and
lease their properties and to carry on their business, and (iii) are
duly qualified to transact business and is in good standing in all
jurisdictions
Purchase Agreement - Page 4
where their ownership, lease or operation of property or the conduct
of their business requires such qualification, except where the
failure to do so would not have a material adverse effect to Company
or the Partnership, respectively.
(b) The authorized capital of the Company consists of ______ units of
membership interest of which _______ units of membership interest are
validly issued and outstanding. There is no other class of capital
authorized or issued by the Company. All of the issued and outstanding
units of Membership Interest of the Company are owned by Members and
are fully paid and non-assessable. None of the units of Membership
Interest issued are in violation of any preemptive rights. The Company
does not have any obligation to repurchase, reacquire, or redeem any
of its outstanding units of membership interests. There are no
outstanding securities convertible into or evidencing the right to
purchase or subscribe for any units of membership interests of the
Company, there are no outstanding or authorized options, warrants,
calls, subscriptions, rights, commitments or any other agreements of
any character obligating the Company to issue any units of membership
interests or any securities convertible into or evidencing the right
to purchase or subscribe for any units of membership interests, and
there are no agreements or understandings with respect to the voting,
sale, transfer or registration of any units of membership interest of
the Company.
(c) The Partnership is comprised of the Limited Partners listed on Exhibit
"A" who own all of the Partnership Interest. The Partnership Interests
are validly issued and outstanding. There is no other class of capital
authorized or issued by the Partnership. All of the issued and
outstanding Partnership Interests of the Partnership are owned by
Limited Partners and are fully paid and non-assessable. None of the
Partnership Interests issued are in violation of any preemptive
rights. The Partnership does not have any obligation to repurchase,
reacquire, or redeem any of its outstanding Partnership Interests.
There are no outstanding securities convertible into or evidencing the
right to purchase or subscribe for any partnership interests of the
Partnership, there are no outstanding or authorized options, warrants,
calls, subscriptions, rights, commitments or any other agreements of
any character obligating the Partnership to issue any partnership
interests or any securities convertible into or evidencing the right
to purchase or subscribe for any partnership interests, and there are
no agreements or understandings with respect to the voting, sale,
transfer or registration of any partnership interests of the
Partnership.
Section 3.2 Authorization. The Company and the Partnership have all
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requisite power and authority to execute and deliver this Agreement and to
perform their obligations hereunder and to consummate the transactions
contemplated hereby. All action on the part of Company and the Partnership
necessary for the authorization, execution, delivery and performance of this
Agreement and all documents related to consummate the transactions contemplated
herein have been taken or will be taken prior to the Closing Date by the Company
and the Partnership. This Agreement, when duly executed and delivered in
accordance with its terms, will constitute legal, valid and binding obligations
of the Company and the Partnership enforceable against them in accordance with
its
Purchase Agreement - Page 5
terms, except as may be limited by bankruptcy, insolvency, reorganization and
other similar laws of general application affecting creditors' rights generally
or by general equitable principles.
Xxxxxxx represents that he is a person of full age of majority, with full
power, capacity, and authority to enter into this Agreement and perform the
obligations contemplated hereby by and for himself and his spouse. All action on
the part of Xxxxxxx necessary for the authorization, execution, delivery and
performance of this Agreement by him has been taken, or will be taken by him
prior to the Closing Date. This Agreement, when duly executed and delivered in
accordance with its terms, will constitute legal, valid and binding obligations
of Xxxxxxx enforceable against him in accordance with its terms, except as may
be limited by bankruptcy, insolvency, reorganization and other similar laws of
general application affecting creditors' rights generally or by general
equitable principles.
Section 3.3 Consents. No consent of, approval by, order or
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authorization of, or registration, declaration or filing by the Company or the
Partnership with any court or any governmental or regulatory agency or authority
having jurisdiction over the Company or the Partnership or any of their property
or assets is required on the part of the Company or the Partnership (a) in
connection with the consummation of the transactions contemplated by this
Agreement or (b) as a condition to the legality, validity or enforceability of
this Agreement as against the Company or the Partnership, excluding any
registration, declaration or filing the failure to effect which would not have a
material adverse effect on the financial condition of the Company or the
Partnership. No further consent or approval of any other third party is
required in connection with the execution, delivery and performance of this
Agreement by the Company or the Partnership.
Section 3.4 Litigation. Except as set forth in Exhibit 3.4, there is
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no claim, suit, arbitration, investigation, judgment, action or other
proceeding, whether judicial, administrative or otherwise, now pending or, to
the best of the Company's, the Partnership's or Xxxxxxx'x knowledge, threatened
before any court, arbitration, administrative or regulatory body or any
governmental agency which may result in any judgment, order, award, decree,
liability or other determination which will or could reasonably be expected to
have a material adverse effect upon the Company, the transfer by the Sellers to
the Buyer of the Membership Interest or the Partnership Interest under this
Agreement, or the operation of the Business after the Closing Date, nor is their
any basis known to the Company, the Partnership or Xxxxxxx for any such action.
Section 3.5 Taxes. The Company and the Partnership have timely and
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accurately filed all federal, state, foreign and local tax returns and reports
required to be filed prior to such dates and have timely paid all taxes shown on
such returns as owed for the periods of such returns, including all sales taxes
and withholding or other payroll related taxes shown on such returns and any
taxes required to have been withheld and paid in connection with amounts paid or
owing to any employee, creditor or independent contractor. The Company and the
Partnership have made adequate provision for the payment of all taxes accruable
for all periods ending on or before the Closing Date to any taxing authority and
are not delinquent in the payment of any tax or governmental charge of any
nature. No assessments or notices of deficiency or other communications have
been received by the Partnership, the Company or Xxxxxxx with respect to any tax
return which has not been paid, discharged or fully reserved against and no
amendments or applications for refund have been filed or are planned with
respect to any such return. None of the Company, the Partnership or Xxxxxxx has
any knowledge of any actions by any taxing authority in connection with
assessing additional taxes
Purchase Agreement - Page 6
against or in respect of any past period. There are no agreements between the
Company and/or the Partnership and any taxing authority waiving or extending any
statute of limitations with respect to any tax return.
Section 3.6 Financial Statements. The Company has delivered to Buyer
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the unaudited balance sheets of the Company and the Partnership, together with
the related unaudited statements of income, (collectively referred to as the
"Financial Statements"). Such Financial Statements, including the related notes,
are in accordance with the books and records of the Company and the Partnership
and fairly represent the financial positions of the Company and the Partnership,
respectively, and the results of operations and changes in financial position of
the Company and the Partnership as of the dates and for the periods indicated,
in each case in conformity with generally accepted accounting principles applied
on a consistent basis. Except as, and to the extent reflected or reserved
against in the Financial Statements, the Company and the Partnership, as of the
dates of the Financial Statements, have no material liability or obligation of
any nature, whether absolute, accrued, contingent or otherwise, not fully
reflected or reserved against in the Financial Statements. As of the Closing
Date, the Company, the Partnership and Xxxxxxx represent there have been no
adverse changes in the financial condition or other operations, business,
properties or assets of the Company, the Partnership or the Business.
Section 3.7 Labor Matters. Neither the Company nor the Partnership is
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a party or otherwise subject to any collective bargaining agreement with any
labor union or association. Neither the Company nor the Partnership is a party
to any written or oral contract, agreement or understanding for the employment
of any officer, director or employee. Neither the Company nor the Partnership
is a party to any employee benefits plans (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended) or any other fringe
or employee benefits plan, programs or arrangements.
Section 3.8 Compliance with Laws; Permits. The Company and the
--------------------------------
Partnership are, and at all times prior to the date hereof have been in
compliance with all statutes, orders, rules, ordinances and regulations
applicable to it or to the operation of the Business or ownership of their
assets or the operation of their businesses. The Company and the Partnership
own, hold, possess or lawfully use in the operation of their business all
permits and licenses which are in any manner necessary for them to conduct the
Business as now or previously conducted.
Section 3.9 No Conflicts. The execution and delivery of this Agreement
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by the Partnership and the Company does not, and the performance and
consummation of the transactions contemplated hereby by the Partnership and the
Company, will not (i) conflict with the articles of organization or regulations
or partnership agreement of the Company or the Partnership, as appropriate; (ii)
conflict with or result in a breach or violation of, or default under, or give
rise to any right of acceleration or termination of, any of the terms,
conditions or provisions of any note, bond, lease, license, agreement or other
instrument or obligation to which the Partnership or the Company is a party or
by which the Partnership's or Company's assets or properties are bound (other
than the Promissory Note); (iii) result in the creation of any encumbrance on
any of the assets or properties of the Partnership or the Company; including the
Business or (iv) violate any law, rule, regulation or order applicable to the
Partnership or Company or any of the Partnership's or Company's assets or
properties, including the Business.
Purchase Agreement - Page 7
Section 3.10 Title to Properties; Encumbrances. The Company and the
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Partnership have good and marketable title to all of the personal property and
assets that are used in the Business that are material to the condition
(financial or otherwise), business, operations or prospects of the Partnership
and the Company, free and clear of all mortgages, claims, liens, security
interests, charges, leases, encumbrances and other restrictions of any kind and
nature, except (i) as disclosed in the Financial Statements of the Company and
the Partnership, (ii) any and all intellectual property rights of the Company
and the Partnership, including but not limited to any and all copyrights,
trademarks, tradenames, trade secrets, servicemarks, slogans, logos, corporate
or partnership names (and any existing or possible combination or derivation of
any or all of the same) associated with or used in connection with the operation
or business of the Business, which may have been previously used by the
Partnership or the Company, (iii) statutory liens not yet delinquent, and (iv)
such liens consisting of zoning or planning restrictions, imperfections of
title, easements, pledges, charges and encumbrances, if any, as do not
materially detract from the value or materially interfere with the present use
of any of the property or assets subject thereto or affected thereby, including
the Business.
Section 3.11 No Pending Transactions. Except for the transactions
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contemplated by this Agreement and the Related Transaction contemplated in
Section 1.3 herein, neither the Company nor the Partnership is a party to or
bound by or the subject of any agreement, undertaking, commitment or discussions
or negotiations with any person that could result in: (i) the sale, merger,
consolidation or recapitalization of the Company or the Partnership; (ii) the
sale of any of the assets of the Company, the Partnership or the Business,
except in the ordinary course of business; (iii) the sale of any outstanding
capital of the Company or the Partnership Interest of the Partnership; (iv) the
acquisition by the Partnership, the Company or the Business of any operating
business or the capital stock of any other person or entity; (iv) the borrowing
of money or (v) any agreement with any of the respective officers, managers or
affiliates of the Partnership or the Company.
Section 3.12 Contracts and Leases. Except as set forth in Exhibit
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3.12, neither the Partnership nor the Company (i) has any leases of personal
property relating to the assets of the Partnership or the Company, whether as
lessor or lessee; (ii) has any contractual or other obligations relating to the
assets of the Partnership or the Company, whether written or oral; and (iii) has
not given any power of attorney to any person or organization for any purpose
relating to the assets of the Partnership or the Company. Other than as
contemplated by this Agreement, as of the Closing Date, there will not be any
lease agreements for the Real Property where the Business is located. The
Company and the Partnership have provided Buyer access to each and every
contract, lease or other document relating to the assets of the Partnership and
the Company to which they are subject or are a party or a beneficiary. To the
Company's and the Partnership's knowledge, such contracts, leases or other
documents are valid and in full force and effect according to their terms and
constitute legal, valid and binding obligations of the Partnership and/or the
Company, and the other respective parties thereto and are enforceable in
accordance with their terms. Neither the Partnership nor the Company has
knowledge of any default or breach under such contracts, leases or other
documents or of any pending or threatened claims under any such contracts,
leases or other documents.
Section 3.13 No Default. Neither the Company nor the Partnership is
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(a) in violation of any provision of its articles of organization, regulations
or partnership agreement or (b) in default under
Purchase Agreement - Page 8
any term or condition of any instrument evidencing, creating or securing any
indebtedness of the Partnership, the Company or the Business, and there has been
no default in any material obligation to be performed by the Partnership, the
Company or the Business under any other contract, lease, agreement, commitment
or undertaking to which it is a party or by which it or its assets or properties
are bound, nor has the Partnership or the Company waived any material right
under any such contract, lease, agreement, commitment or undertaking.
Section 3.14 Books and Records. The books of account, minute books,
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membership interest record books and other records of the Partnership, the
Company and the Business are accurate and complete and have been maintained in
accordance with sound business practices and will be located at the premises
where the Business is operated upon Closing.
Section 3.15 Insurance Policies. Copies of all insurance policies
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maintained by the Partnership and the Company relating to the operation of the
Business have been delivered or made available to Buyer. The policies of
insurance held by the Partnership and the Company are in such amounts, and
insure against such losses and risks, as the Partnership and the Company
reasonably deem appropriate for their property and business operations. All
such insurance policies are in full force and effect, and all premiums due
thereon have been paid. Valid policies for such insurance will be outstanding
and duly in force at all times prior to the Closing.
Section 3.16 Pending Claims. Except as set forth in Exhibit 3.4, there
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is no claim, suit, arbitration, investigation, action or other proceeding,
whether judicial, administrative or otherwise, now pending or, to the best of
the Companys', the Partnership's or Xxxxxxx'x knowledge, threatened before any
court, arbitration, administrative or regulatory body or any governmental agency
which may result in any judgment, order, award, decree, liability or other
determination which will or could reasonably be expected to have any effect upon
the Company, the Partnership or the Business or the transfer of the Membership
Interest or the Partnership Interest by the Sellers to Buyer under this
Agreement, nor is there any basis known to the Company, the Partnership or
Xxxxxxx for any such action. No litigation is pending, or, to the Companys',
the Partnership's or Xxxxxxx'x knowledge, threatened against the Company, the
Partnership or the Business, or their assets or properties which seeks to
restrain or enjoin the execution and delivery of this Agreement or any of the
documents referred to herein or the consummation of any of the transactions
contemplated thereby or hereby. None of the Company, the Partnership or Xxxxxxx
is subject to any judicial injunction or mandate or any quasi-judicial or
administrative order or restriction directed to or against them or which would
affect the Company or the Business, or the Membership Interest and Partnership
Interest to be transferred under this Agreement.
Section 3.17 No Liabilities. As of the Closing Date, neither the
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Company nor the Partnership shall have any obligation or liability (contingent
or otherwise) to any third party.
Section 3.18 Brokerage Commission. No broker or finder has acted for
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the Company or the Partnership in connection with this Agreement or the
transactions contemplated hereby, and no person is entitled to any brokerage or
finder's fee or compensation in respect thereof based in any way on agreements,
arrangements or understandings made by or on behalf of the Company or the
Partnership.
Purchase Agreement - Page 9
Section 3.19 Environmental. Neither the Company nor the Partnership
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has received any citation, directive, letter or other communication, written or
oral, or any notice of any proceeding, claim or lawsuit relating to any
environmental issue arising out of the ownership or occupation of the Business,
nor is their any basis known to the Company, the Partnership or Xxxxxxx for any
such action.
Section 3.20 Banks and Brokerage Accounts. Exhibit 3.21 sets forth (a)
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a true and complete list of the names and locations of all banks, trust
companies, securities brokers and other financial institutions at which the
Partnership or the Company has an account or safe deposit box or maintains a
banking, custodial, trading or other similar relationship, and (b) a true and
complete list and description of each such account, box and relationship,
indicating in each case the account number and the names of the respective
officers, employees, agents or other similar representatives of the Partnership
or the Company having signatory power with respect thereto.
Section 3.21 Disclosure. No representation or warranty of the
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Company, the Partnership or Xxxxxxx contained in this Agreement (including the
exhibits hereto) contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained herein
or therein, in light of the circumstances under which they were made, not
misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE MEMBERS
Each of the Members, severally and not jointly, hereby makes the following
representations and warranties to the Buyer, which representations and
warranties shall be true and correct on the date hereof and on and as of the
Closing Date:
Section 4.1 Ownership of the Membership Interest. Each of the Members
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owns, beneficially and of record, the Membership Interest as listed on Exhibit
"A" free and clear of any liens, claims, equities, charges, options, rights of
first refusal, or encumbrances. Each of the Members has the unrestricted right
and power to transfer, convey and deliver full ownership of the Membership
Interest without the consent or agreement of any other person and without any
designation, declaration or filing with any governmental authority. Upon the
transfer of the Membership Interest to Buyer as contemplated herein, Buyer will
receive good and valid title thereto, free and clear of any liens, claims,
equities, charges, options, rights of first refusal, encumbrances or other
restrictions (except those imposed by applicable securities laws).
Section 4.2 Authorization. Each Member represents that he is a person
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of full age of majority, with full power, capacity, and authority to enter into
this Agreement and perform the obligations contemplated hereby by and for
himself and his spouse. All action on the part of the Member necessary for the
authorization, execution, delivery and performance of this Agreement by him has
been taken, or will be taken by him prior to the Closing Date. This Agreement,
when duly executed and delivered in accordance with its terms, will constitute
legal, valid and binding obligations of the Member enforceable against him in
accordance with its terms, except as may be
Purchase Agreement - Page 10
limited by bankruptcy, insolvency, reorganization and other similar laws of
general application affecting creditors' rights generally or by general
equitable principles.
Section 4.3 Consents. No consent, approval or authorization of, or
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designation, declaration or filing with, any other person or entity (other than
governmental entities) is required on the part of the Member in connection with
the execution and delivery by the Member of this Agreement or the consummation
and performance of the transactions contemplated hereby
Section 4.4 No Solicitation or Pending Transactions. Except for the
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transactions contemplated by this Agreement, the Member is not a party to or
bound by or the subject of any agreement, undertaking, commitment or discussions
or negotiations with any person that could result in the sale of any of the
Membership Interests. Each Member agrees that from the date of his execution of
this Agreement until the Closing Date, he will not offer to sell or solicit any
offer to purchase or engage in any discussions or activities of any nature
whatsoever, directly or indirectly, involving in any manner the actual or
potential sale, transfer, encumbrance, pledge, collateralization or
hypothecation of the Membership Interest, or any assets of the Company, the
Partnership or the Business. Each Member hereby agrees to advise Buyer of any
contact from any third party regarding the acquisition of the Membership
Interest or other investment in the Company, the Partnership or the Business, or
of any contact which would relate to the transactions contemplated by this
Agreement.
Section 4.5 Disclosure. No representation or warranty of the Member
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contained in this Article IV contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
contained herein in light of the circumstances under which they were made, not
misleading.
Section 4.6 Consent to Sell Interest. Each Member by their execution
-------------------------
of this Agreement hereby give their written consent to all other Members and
Limited Partners to sell, transfer and convey their ownership interest in the
Company or Partnership, respectively, to the Buyer.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE LIMITED PARTNERS
Each of the Limited Partners, severally and not jointly, hereby makes the
following representations and warranties to the Buyer, which representations and
warranties shall be true and correct on the date hereof and on and as of the
Closing Date:
Section 5.1 Ownership of the Partnership Interest. Each of the Limited
-------------------------------------
Partners owns, beneficially and of record, the Partnership Interest as listed on
Exhibit "A" free and clear of any liens, claims, equities, charges, options,
rights of first refusal, or encumbrances. Each of the Limited Partners has the
unrestricted right and power to transfer, convey and deliver full ownership of
the Partnership Interest without the consent or agreement of any other person
and without any designation, declaration or filing with any governmental
authority. Upon the transfer of the Partnership Interest to Buyer as
contemplated herein, Buyer will receive good and valid title thereto,
Purchase Agreement - Page 11
free and clear of any liens, claims, equities, charges, options, rights of first
refusal, encumbrances or other restrictions (except those imposed by applicable
securities laws).
Section 5.2 Authorization. Each Limited Partner represents that he is
-------------
a person of full age of majority, with full power, capacity, and authority to
enter into this Agreement and perform the obligations contemplated hereby by and
for himself and his spouse. All action on the part of the Limited Partners
necessary for the authorization, execution, delivery and performance of this
Agreement by him has been taken, or will be taken by him prior to the Closing
Date. This Agreement, when duly executed and delivered in accordance with its
terms, will constitute legal, valid and binding obligations of the Limited
Partner enforceable against him in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization and other similar laws of
general application affecting creditors' rights generally or by general
equitable principles.
Section 5.3 Consents. No consent, approval or authorization of, or
--------
designation, declaration or filing with, any other person or entity (other than
governmental entities) is required on the part of the Limited Partner in
connection with the execution and delivery by the Limited Partner of this
Agreement or the consummation and performance of the transactions contemplated
hereby.
Section 5.4 No Solicitation or Pending Transactions. Except for the
-----------------------------------------
transactions contemplated by this Agreement, the Limited Partner is not a party
to or bound by or the subject of any agreement, undertaking, commitment or
discussions or negotiations with any person that could result in the sale of any
of the Partnership Interest. Each Limited Partner agrees that, from the date of
his execution of this Agreement until the Closing Date, he will not offer to
sell or solicit any offer to purchase or engage in any discussions or activities
of any nature whatsoever, directly or indirectly, involving in any manner the
actual or potential sale, transfer, encumbrance, pledge, collateralization or
hypothecation of the Partnership Interest, or any assets of the Company, the
Partnership or the Business. Each Limited Partner hereby agrees to advise Buyer
of any contact from any third party regarding the acquisition of the Partnership
Interest or other investment in the Company, the Partnership or the Business, or
of any contact which would relate to the transactions contemplated by this
Agreement.
Section 5.5 Disclosure. No representation or warranty of the Limited
----------
Partner contained in this Article V contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained herein in light of the circumstances under which they were made, not
misleading.
Section 5.6 Consent to Sell Interest. Each Limited Partner by their
------------------------
execution of this Agreement hereby give their written consent to all other
Members and Limited Partners to sell, transfer and convey their ownership
interest in the Company or Partnership, respectively, to the Buyer.
Purchase Agreement - Page 12
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
OF THE BUYER
Buyer hereby represents and warrants to the Company and the Partnership as
follows:
Section 6.1 Organization, Good Standing and Qualification. Buyer (i)
-----------------------------------------------
is an entity duly organized, validly existing and in good standing under the
laws of the state of Texas, (ii) has all requisite power and authority to carry
on its business, and (iii) is duly qualified to transact business and is in good
standing in all jurisdictions where its ownership, lease or operation of
property or the conduct of its business requires such qualification, except
where the failure to do so would not have a material adverse effect to Buyer.
Section 6.2 Authorization. Buyer is a corporation duly organized in
-------------
the state of Texas and has full power, capacity, and authority to enter into
this Agreement and perform the obligations contemplated hereby. All action on
the part of Buyer necessary for the authorization, execution, delivery and
performance of this Agreement by it has been taken or will be taken prior to the
Closing Date. This Agreement, when duly executed and delivered in accordance
with its terms, will constitute legal, valid, and binding obligations of Buyer
enforceable against Buyer in accordance with its terms, except as may be limited
by bankruptcy, insolvency, and other similar laws affecting creditors' rights
generally or by general equitable principles.
Section 6.3 Consents. No permit, consent, approval or authorization
--------
of, or designation, declaration or filing with, any governmental authority or
any other person or entity is required on the part of Buyer in connection with
the execution and delivery by Buyer of this Agreement or the consummation and
performance of the transactions contemplated hereby other than as may be
required under the federal securities laws.
Section 6.4 Litigation. There is no claim, suit, arbitration,
----------
investigation, judgment, action or other proceeding, whether judicial,
administrative or otherwise, now pending or, to the best of Buyer's knowledge,
threatened before any court, arbitration, administrative or regulatory body or
any governmental agency which may result in any judgment, order, award, decree,
liability or other determination which will or could reasonably be expected to
have a material adverse effect upon the Buyer.
Section 6.5 Taxes. The Buyer has timely and accurately filed all
-----
federal, state, foreign and local tax returns and reports required to be filed
prior to such dates and have timely paid all taxes shown on such returns as owed
for the periods of such returns, including all sales taxes and withholding or
other payroll related taxes shown on such returns and any taxes required to have
been withheld and paid in connection with amounts paid or owing to any employee,
creditor or independent contractor. The Buyer has made adequate provision for
the payment of all taxes accruable for all periods ending on or before the
Closing Date to any taxing authority and is not delinquent in the payment of any
tax or governmental charge of any nature. No assessments or notices of
deficiency or other communications have been received by the Buyer with respect
to any tax return which has not been paid, discharged or fully reserved against
and no amendments or applications for refund have been filed or are planned with
respect to any such return. The Buyer
Purchase Agreement - Page 13
does not have any knowledge of any actions by any taxing authority in connection
with assessing additional taxes against or in respect of any past period. There
are no agreements between the Buyer and any taxing authority waiving or
extending any statute of limitations with respect to any tax return.
Section 6.6 Compliance with Laws; Permits. The Buyer is, and at all
-------------------------------
times prior to the date hereof have been, to the best of its knowledge, in
compliance with all statutes, orders, rules, ordinances and regulations
applicable to it or to the operation of its business or ownership of its assets
or the operation of its businesses, except for failures to be in compliance that
would not have a material adverse effect on the business, properties or
condition (financial or otherwise) of the Buyer.
Section 6.7 No Conflicts. The execution and delivery of this Agreement
------------
by the Buyer does not, and the performance and consummation of the transactions
contemplated hereby by the Buyer, will not (i) conflict with the articles of
incorporation or bylaws of the Buyer; (ii) conflict with or result in a breach
or violation of, or default under, or give rise to any right of acceleration or
termination of, any of the terms, conditions or provisions of any note, bond,
lease, license, agreement or other instrument or obligation to which the Buyer
is a party or by which the Buyer's assets or properties are bound; (iii) result
in the creation of any encumbrance on any of the assets or properties of the
Buyer; or (iv) violate any law, rule, regulation or order applicable to the
Buyer or any of the Buyer's assets or properties.
Section 6.8 No Default. The Buyer is not (a) in violation of any
-----------
provision of its articles of incorporation or bylaws or (b) in default under any
term or condition of any instrument evidencing, creating or securing any
indebtedness of the Buyer, and there has been no default in any material
obligation to be performed by the Buyer under any other contract, lease,
agreement, commitment or undertaking to which it is a party or by which it or
its assets or properties are bound, nor has the Buyer waived any material right
under any such contract, lease, agreement, commitment or undertaking.
Section 6.9 Pending Claims. There is no claim, suit, arbitration,
---------------
investigation, action or other proceeding, whether judicial, administrative or
otherwise, now pending or, to the best of the Buyer's knowledge, threatened
before any court, arbitration, administrative or regulatory body or any
governmental agency which may result in any judgment, order, award, decree,
liability or other determination which will or could reasonably be expected to
have a material adverse effect upon the Buyer, nor is there any basis known to
the Buyer for any such action. No litigation is pending, or, to the Buyer's
knowledge, threatened against the Buyer or its assets or properties which seeks
to restrain or enjoin the execution and delivery of this Agreement or any of the
documents referred to herein or the consummation of any of the transactions
contemplated thereby or hereby. The Buyer is not subject to any judicial
injunction or mandate or any quasi-judicial or administrative order or
restriction directed to or against it or which would have a material adverse
affect on the Buyer.
Section 6.10 Brokerage Commission. No broker or finder has acted for
---------------------
the Buyer in connection with this Agreement or the transactions contemplated
hereby, and no person is entitled to any brokerage or finder's fee or
compensation in respect thereof based in any way on agreements, arrangements or
understandings made by or on behalf of Buyer.
Purchase Agreement - Page 14
Section 6.11 Disclosure. No representation or warranty of the Buyer
----------
contained in this Agreement (including the exhibits hereto) contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading.
ARTICLE VII
COVENANTS OF THE COMPANY
AND THE PARTNERSHIP
Section 7.1 Stand Still. To induce Buyer to proceed with this
------------
Agreement, the Company and the Partnership agree that until the Closing Date or
the termination of this Agreement, neither any representative of the Company nor
any representative of the Partnership will offer to sell or solicit any offer to
purchase or engage in any discussions or activities of any nature whatsoever,
directly or indirectly, involving in any manner the actual or potential sale,
transfer, encumbrance, pledge, collateralization or hypothecation of any assets
of the Company, the Partnership or the Business. The Company and the Partnership
hereby agree to advise the Buyer of any contact from any third party regarding
the acquisition or other investment in the Company, the Partnership or the
Business, or of any contact which would relate to the transactions contemplated
by this Agreement.
Section 7.2 Access; Due Diligence. Between the date of this Agreement
---------------------
and the Closing Date, the Company and the Partnership shall (a) provide Buyer
and their authorized representatives reasonable access to all plants, offices,
warehouse and other facilities and properties of the Company, the Partnership
and the Business, and to the books and records of the Company, the Partnership
and the Business; (b) permit the Buyer to make inspections thereof; and (c)
cause the officers and advisors of the Company, the Partnership and the Business
to furnish the Buyer with such financial and operating data and other
information with respect to the business and properties of the Company and the
Partnership and to discuss with the Buyer and their authorized representatives
the affairs of the Company and the Partnership as the Buyer may from time to
time reasonably request.
Section 7.3 Conduct of Business. From the date of the execution hereof
-------------------
until the Closing Date, the Company and the Partnership shall operate the
Business in the ordinary course consistent with past practices, and:
(a) Neither the Company nor the Partnership will authorize, declare, pay
or effect any dividend except as is consistent with past practices of
the Company or Partnership, or liquidation or other distribution in
respect of the units of membership interest of the Company,
partnership interest of the Partnership, or other equity interest or
any direct or indirect redemption, purchase or other acquisition of
any equity interest of the Company or the Partnership;
(b) Neither the Company nor the Partnership will make any changes in their
condition (financial or otherwise), liabilities, assets, or business
or in any of their business relationships, including relationships
with suppliers or customers, that, when considered individually or in
the aggregate, might reasonably be expected to have a material adverse
effect on the Company, the Partnership or the Business;
Purchase Agreement - Page 15
(c) Neither the Company nor the Partnership will increase the salary or
other compensation payable or to become payable by the Company or the
Partnership to any employee, or the declaration, payment, or
commitment or obligation of any kind for the payment by the Company or
Partnership of a bonus or other additional salary or compensation to
any such person except in the normal course of business, consistent
with past practices of the Company or the Partnership;
(d) Neither the Company nor the Partnership will sell, lease, transfer or
assign any of their assets, tangible or intangible, other than for a
fair consideration in the ordinary course of business;
(e) Neither the Company nor the Partnership will accelerate, terminate,
modify or cancel any agreement, contract, lease or license (or series
of related agreements, contracts, leases and licenses) involving more
than $1,000 to which the Company or the Partnership is a party;
(f) Neither the Company nor the Partnership will make any loans to any
person or entity, or guarantee any loan, absent the consent of the
Buyer;
(g) Neither the Company nor the Partnership will waive or release any
right or claim held by the Company or the Partnership, absent the
consent of the Buyer;
(h) Both the Company and the Partnership will operate their business in
the ordinary course and consistent with past practices so as to
preserve their business organization intact, to retain the services of
their employees and to preserve their goodwill and relationships with
suppliers, creditors, customers, and others having business
relationships with them;
(i) Neither the Company nor the Partnership will issue any note, bond or
other debt security or create, incur or assume, or guarantee any
indebtedness for borrowed money or capitalized lease obligations;
(j) Neither the Company nor the Partnership will delay or postpone the
payment of accounts payable and other liabilities outside the ordinary
course of business;
(k) Neither the Company nor the Partnership will make any loan to, or
enter into any other transaction with, any of their directors,
officers, and employees, outside the ordinary course of business;
(l) Neither the Company nor the Partnership will make any change in any
method, practice, or principle of accounting involving the Company's
business, the Partnership's business, the Business. or the assets of
the Partnership, the Company or the Business;
(m) Neither the Company nor the Partnership will issue, sell or otherwise
dispose of any
Purchase Agreement - Page 16
of its membership interests or partnership interests, or create, sell
or dispose of any options, rights, conversion rights or other
agreements or commitments of any kind relating to the issuance, sale
or disposition of any of their membership interests or partnership
interests;
(n) Neither the Company nor the Partnership will reclassify, split up or
otherwise change any of their membership interests or partnership
interests;
(o) Neither the Company nor the Partnership will be a party to any merger,
consolidation or other business combination; and
(p) Neither the Company nor the Partnership will agree to take any action
described in this Section 7.3.
ARTICLE VIII
CONDITIONS TO CLOSING
The obligations of the parties to effect the transactions contemplated
hereby are subject to the satisfaction at or prior to the Closing of the
following conditions:
Section 8.1 Conditions to Closing of Buyer.
------------------------------
(a) Representations and Warranties. The representations and warranties of
-------------------------------
the Partnership, the Company, and Xxxxxxx shall be true and correct on
the date hereof and on and as of the Closing Date.
(b) The representations and warranties of the Members and Limited
Partners, as set forth in Article IV and V above, shall be true and
correct on the date hereof and on and as of the Closing Date
(c) Covenants. All covenants, agreements and conditions contained in this
---------
Agreement to be performed by the Company, the Partnership and Xxxxxxx
on or prior to the Closing Date shall have been performed or complied
with in all respects.
(d) Delivery of Certificates. The Company and the Partnership shall
--------------------------
provide to Buyer certificates, dated as of the Closing Date and signed
by a representative of the Company and by a representative of the
Partnership, respectively, to the effect set forth in Section 8.1(a)
and 8.1(c) for the purpose of verifying the accuracy of such
representations and warranties and the performance and satisfaction of
such covenants and conditions.
(e) Resolutions. The Company and the Partnership shall deliver appropriate
-----------
resolutions which authorize the execution, delivery and performance of
this Agreement and the documents referred to herein to which they are
to be a party.
Purchase Agreement - Page 17
(f) Covenant Not to Compete. At the time of Closing, Limited Partners who
-----------------------
own more than 5% of the Partnership and Members who own more than 5%
of the Company shall enter into a five (5) year covenant not to
compete pursuant to the terms of which the Limited Partners and the
Members will agree not to compete, either directly or indirectly, with
Buyer, Rick's Cabaret International, Inc. ("Rick's") or any affiliates
of Buyer or Rick's, by operating an establishment featuring live adult
entertainment within (i) Bexar County, Texas, or (ii) a ten (10) mile
radius of the Real Property.
(g) Delivery of Membership Interest. The Members shall deliver or cause to
-------------------------------
be delivered to Buyer either originally issued certificates
representing the Membership Interest of the Company duly endorsed over
to the Buyer in a form satisfactory to the Buyer, or an affidavit of
lost certificate.
(h) Delivery of Partnership Interest. To the extent they exist and are
-----------------------------------
available, the Limited Partners shall deliver or cause to be delivered
to Buyer originally issued certificates representing the Partnership
Interest of the Partnership duly endorsed over to the Buyer in a form
satisfactory to the Buyer; alternatively, the Limited Partners shall
execute an affidavit confirming that said certificates were either
never issued, or lost.
(i) Related Transactions. The Related Transaction set forth in Section 1.3
--------------------
shall be consummated concurrently with the Closing.
(j) Third-Party Consents. Any and all consents or waivers required from
---------------------
third parties relating to this Agreement or any of the other
transactions contemplated hereby shall have been obtained.
(k) Assumption of Promissory Note. The Promissory Note referenced in
--------------------------------
Section 1.3 shall have been assumed or refinanced.
(l) Satisfactory Diligence. Buyer shall have concluded its due diligence
-----------------------
investigation of the Partnership, the Company, the Business and their
assets and properties and all other matters related to the foregoing,
and shall be satisfied, in its absolute and sole discretion, with the
results thereof.
(m) No Actions or Proceedings. No claim, action, suit, investigation or
----------------------------
proceeding shall be pending or threatened before any court or
governmental agency which presents a substantial risk of the restraint
or prohibition of the transactions contemplated by this Agreement.
(n) Government Approvals. All authorizations, permits, consents, orders,
---------------------
licenses or approvals of, or declarations or filings with, or
expiration of waiting periods imposed by, any governmental or
regulatory entity necessary for the consummation of the transactions
contemplated by this Agreement or the continuation of the Business as
presently being conducted shall have been filed, occurred or been
obtained.
Purchase Agreement - Page 18
(o) Resignations. All existing Managers and officers of the Company shall
------------
have resigned.
(p) Termination of Existing Leases. Except as may be contemplated by this
-------------------------------
Agreement, any and all existing leases for the Real Property where the
Business is located shall be terminated.
Section 8.2 Conditions to Closing of the Partnership, the Company,
----------------------------------------------------------
Xxxxxxx and the Sellers.
---------------------------
(a) Representations, Warranties and Agreements. The representations and
---------------------------------------------
warranties of Buyer shall be true and correct on the date hereof and
on and as of the Closing Date, as though made on and as of the Closing
Date.
(b) Covenants. All covenants, agreements and conditions contained in this
---------
Agreement to be performed by the Buyer on or prior to the Closing Date
shall have been performed or complied with in all respects.
(c) Delivery of Certificates. Buyer shall provide to the Company, the
--------------------------
Partnership, Xxxxxxx and the Sellers, certificates, dated as of the
Closing Date and signed by a representative of the Buyer to the effect
set forth in Section 8.2(a) and 8.2(b) for the purpose of verifying
the accuracy of such representations and warranties and the
performance and satisfaction of such covenants and conditions.
(d) Resolutions. Buyer shall deliver resolutions of its Board of Directors
-----------
which authorize the execution, delivery and performance of this
Agreement and the documents referred to herein to which it is to be a
party.
(e) Payment of Purchase Price. Buyer shall have tendered the Purchase
----------------------------
Price as referenced in Section 1.4.
(f) Related Transactions. The Related Transaction set forth in Section 1.3
--------------------
shall be consummated concurrently with the Closing.
(g) Third-Party Consents. Any and all consents or waivers required from
---------------------
third parties relating to this Agreement or any of the other
transactions contemplated hereby shall have been obtained.
(h) No Actions or Proceedings. No claim, action, suit, investigation or
----------------------------
proceeding shall be pending or threatened before any court or
governmental agency which presents a substantial risk of the restraint
or prohibition of the transactions contemplated by this Agreement.
(i) Delivery of Notes and Security Instruments. Buyer (and as applicable,
-------------------------------------------
RCI) shall execute and deliver to Sellers the Bridge Note, Long Term
Note, and Short Term Note, together with appropriate security
instruments, including a deed of trust, to
Purchase Agreement - Page 19
secure the Bridge Note, Long Term Note, and Short Term note by the Real
Property, all of the capital stock of the Buyer, all of the Membership Interest
and Partnership Interest, and the assets of the Business.
(j) Government Approvals. All authorizations, permits, consents, orders or
--------------------
approvals of, or declarations or filings with, or expiration of
waiting periods imposed by, any governmental entity necessary for the
consummation of the transactions contemplated by this Agreement shall
have been filed, occurred or been obtained.
ARTICLE IX
INDEMNIFICATION
Section 9.1 Indemnification from the Company, the Partnership and
----------------------------------------------------------
Xxxxxxx. The Company, the Partnership and Xxxxxxx (but not Xxxxxxxx Xxxxxxxxxxx
-------
or the Limited Partners) hereby agree to and shall indemnify, defend (with legal
counsel reasonably acceptable to Buyer), and hold Buyer, its officers,
directors, shareholders, employees, affiliates, parent, agents, legal counsel,
successors and assigns (collectively, the "Buyer Group") harmless at all times
after the date of this Agreement, from and against any and all actions, suits,
claims, demands, debts, liabilities, obligations, losses, damages, costs,
expenses, penalties or injury (including reasonable attorneys fees and costs of
any suit related thereto) (collectively, "Indemnifiable Loss" or "Indemnifiable
Losses") suffered or incurred by any or all of the Buyer Group arising from: (a)
any material misrepresentation by, or material breach of any covenant or
warranty of Company, the Partnership or Xxxxxxx contained in this Agreement, or
any exhibit, certificate, or other instrument furnished or to be furnished by
Company, the Partnership or Xxxxxxx hereunder; (b) any nonfulfillment of any
material agreement on the part of Company, the Partnership or Xxxxxxx under this
Agreement; (c) any suit, action, proceeding, claim or investigation against any
member of the Buyer's Group which arises from or which is based upon or
pertaining to either the Company's conduct, the Partnership's conduct, Xxxxxxx'x
conduct, or the operation or liabilities of the Business prior to entering into
this Agreement, or (d) any liabilities of the Company, the Partnership or the
Business incurred prior to the Closing Date.
Section 9.2 Indemnification from the Members. The Members hereby agree
--------------------------------
to and shall indemnify, defend (with legal counsel reasonably acceptable to
Buyer), and hold Buyer, its officers, directors, shareholders, employees,
affiliates, parent, agents, legal counsel, successors and assigns (collectively,
the "Buyer Group") harmless at all times after the date of this Agreement, from
and against any and all actions, suits, claims, demands, debts, liabilities,
obligations, losses, damages, costs, expenses, penalties or injury (including
reasonable attorneys fees and costs of any suit related thereto) (collectively,
"Indemnifiable Loss" or "Indemnifiable Losses") suffered or incurred by any or
all of the Buyer Group arising from any material misrepresentation by, or
material breach of any warranty of the Member contained in Article IV of this
Agreement.
Section 9.3 Indemnification from the Limited Partners. The Limited
--------------------------------------------
Partners hereby agree to and shall indemnify, defend (with legal counsel
reasonably acceptable to Buyer), and hold Buyer, its officers, directors,
shareholders, employees, affiliates, parent, agents, legal counsel, successors
and assigns (collectively, the "Buyer Group") harmless at all times after the
date of this Agreement,
Purchase Agreement - Page 20
from and against any and all actions, suits, claims, demands, debts,
liabilities, obligations, losses, damages, costs, expenses, penalties or injury
(including reasonable attorneys fees and costs of any suit related thereto)
(collectively, "Indemnifiable Loss" or "Indemnifiable Losses") suffered or
incurred by any or all of the Buyer Group arising from any material
misrepresentation by, or material breach of any warranty of the Limited Partner
contained in Article V of this Agreement.
Section 9.4 Indemnification from Buyer. Buyer agrees to and shall
----------------------------
indemnify, defend (with legal counsel reasonably acceptable to Company) and hold
the Company, the Partnership, Xxxxxxx, the Members, and Limited Partners, and
their agents, officers, directors, shareholders, employees, affiliates, parent,
agents, legal counsel, successors and assigns, (collectively, the "Company's
Group") harmless at all times after the date of the Agreement from and against
any and all actions, suits, claims, demands, debts, liabilities, obligations,
losses, damages, costs, expenses, penalties or injury (including reasonably
attorneys fees and costs of any suit related thereto) suffered or incurred by
any or all of the Company's Group, arising from (a) any material
misrepresentation by, or material breach of any covenant or warranty of Buyer
contained in this Agreement or any exhibit, certificate, or other agreement or
instrument furnished or to be furnished by Buyer hereunder; (b) any
nonfulfillment of any material agreement on the part of Buyer under this
Agreement; (c) arising from or pertaining to any litigation against any Member
of the Company's Group resulting from any activities of a representative of the
Buyer subsequent to the execution of this Agreement until the Closing Date or
(d) any suit, action, proceeding, claim or investigation against any member of
the Company's Group which arises from or which is based upon or pertaining to
the operation or liabilities of the Business subsequent to the Closing Date.
Section 9.5 Defense of Claims. If any lawsuit or enforcement action is
-----------------
filed against any party entitled to the benefit of indemnity hereunder, written
notice thereof shall be given to the indemnifying party as promptly as
practicable (and in any event not less than fifteen (15) days prior to any
hearing date or other date by which action must be taken); provided that the
failure of any indemnified party to give timely notice shall not affect rights
to indemnification hereunder except to the extent that the indemnifying party
demonstrates actual damage caused by such failure. After such notice, the
indemnifying party shall be entitled, if it so elects, to take control of the
defense and investigation of such lawsuit or action and to employ and engage
attorneys of its own choice to handle and defend the same, at the indemnifying
party's cost, risk and expense; and such indemnified party shall cooperate in
all reasonable respects, at its cost, risk and expense, with the indemnifying
party and such attorneys in the investigation, trial and defense of such lawsuit
or action and any appeal arising therefrom; provided, however, that the
indemnified party may, at its own cost, participate in such investigation, trial
and defense of such lawsuit or action and any appeal arising therefrom. The
indemnifying party shall not, without the prior written consent of the
indemnified party, effect any settlement of any proceeding in respect of which
any indemnified party is a party and indemnity has been sought hereunder unless
such settlement of a claim, investigation, suit, or other proceeding only
involves a remedy for the payment of money by the indemnifying party and
includes an unconditional release of such indemnified party from all liability
on claims that are the subject matter of such proceeding.
Section 9.6 Default of Indemnification Obligation. If an entity or
----------------------------------------
individual having an indemnification, defense and hold harmless obligation, as
above provided, shall fail to assume such obligation, then the party or entities
or both, as the case may be, to whom such indemnification,
Purchase Agreement - Page 21
defense and hold harmless obligation is due shall have the right, but not the
obligation, to assume and maintain such defense (including reasonable counsel
fees and costs of any suit related thereto) and to make any settlement or pay
any judgment or verdict as the individual or entities deem necessary or
appropriate in such individual's or entities' absolute sole discretion and to
charge the cost of any such settlement, payment, expense and costs, including
reasonable attorneys fees, to the entity or individual that had the obligation
to provide such indemnification, defense and hold harmless obligation and same
shall constitute an additional obligation of the entity or of the individual or
both, as the case may be.
Section 9.7 Right to Offset. In the event that the Buyer's Group is
-----------------
entitled to indemnification in accordance with Section 9.1 hereof, including the
payment by the Buyer of any debts or liabilities of the Company, the Partnership
or the Business which were incurred prior to the Closing Date, then Buyer shall
have the right to offset any such amount from any obligations that are then due
and payable to the Company or the Partnership under the Long Term Note or the
Short Term Note but not the Bridge Note, provided that any offset shall first be
offset against the Long Term Note and thereafter shall be offset against the
Short Term Note.
ARTICLE X
MISCELLANEOUS
Section 10.1 Amendment; Waiver. Neither this Agreement nor any
------------------
provision hereof may be amended, modified or supplemented unless in writing,
executed by all the parties hereto. Except as otherwise expressly provided
herein, no waiver with respect to this Agreement shall be enforceable unless in
writing and signed by the party against whom enforcement is sought. Except as
otherwise expressly provided herein, no failure to exercise, delay in
exercising, or single or partial exercise of any right, power or remedy by any
party, and no course of dealing between or among any of the parties, shall
constitute a waiver of, or shall preclude any other or further exercise of, any
right, power or remedy.
Section 10.2 Notices. Any notices or other communications required or
-------
permitted hereunder shall be sufficiently given if in writing and delivered in
person, transmitted by facsimile transmission (fax) or sent by registered or
certified mail (return receipt requested) or recognized overnight delivery
service, postage pre-paid, addressed as follows, or to such other address has
such party may notify to the other parties in writing:
(a) if to the Company, the
Partnership or Xxxxxxx:
--------------------
--------------------
--------------------
with a copy to: Xxxxxx X. Xxxxxxxx, Xx.
0000 Xxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Purchase Agreement - Page 22
(b) if to the Sellers: to the Address listed on Exhibit "A"
with a copy to: Xxxxxx X. Xxxxxxxx, Xx.
0000 Xxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
(c) if to Buyer RCI Debit Services, Inc.
Attn: Xxxx Xxxxxx, President
00000 Xxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
with a copy to: Xxxxxx X. Xxxxxxx
Xxxxxxx Xxxxx & Xxxxxxxxx
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
A notice or communication will be effective (i) if delivered in person or by
overnight courier, on the business day it is delivered, (ii) if transmitted by
telecopier, on the business day of actual confirmed receipt by the addressee
thereof, and (iii) if sent by registered or certified mail, three (3) business
days after dispatch.
Section 10.3 Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
Section 10.4 Assignment; Successors and Assigns. Except as otherwise
-----------------------------------
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors and permitted assigns of the parties hereto. No
party hereto may assign its rights or delegate its obligations under this
Agreement without the prior written consent of the other parties hereto, which
consent will not be unreasonably withheld.
Section 10.5 Entire Agreement. This Agreement and the other documents
----------------
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subject matter hereof and
thereof and supersede and cancel all prior representations, alleged warranties,
statements, negotiations, undertakings, letters, acceptances, understandings,
contracts and communications, whether verbal or written among the parties hereto
and thereto or their respective agents with respect to or in connection with the
subject matter hereof.
Section 10.6 Jurisdiction. This Agreement shall be governed by, and
------------
construed in accordance with, the laws of the State of Texas, without regard to
principles of conflict of laws. In any action between or among any of the
parties, whether arising out of this Agreement or otherwise, each of the parties
irrevocably consents to the exclusive jurisdiction and venue of the federal and
state courts located in either Xxxxxx County, Bexar County, or Xxxxxx
County,Texas.
Purchase Agreement - Page 23
Section 10.7 Counterparts and Facsimiles. This Agreement may be
-----------------------------
executed in multiple counterparts and in any number of counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute and be deemed to be one and the same instrument and each of which
shall be considered and deemed an original for all purposes. This Agreement
shall be effective with the facsimile signature of any of the parties set forth
below and the facsimile signature shall be deemed as an original signature for
all purposes and the Agreement shall be deemed as an original for all purposes.
Section 10.8 Costs and Expenses. Each party shall pay their own
--------------------
respective fees, costs and disbursements incurred in connection with this
Agreement.
Section 10.9 Section Headings. The section and subsection headings in
----------------
this Agreement are used solely for convenience of reference, do not constitute
a part of this Agreement, and shall not affect its interpretation.
Section 10.10 No Third-Party Beneficiaries. Nothing in this Agreement
----------------------------
will confer any third party beneficiary or other rights upon any person or any
entity that is not a party to this Agreement.
Section 10.11 Attorneys' Review. In connection with the negotiation
------------------
and drafting of this Agreement, the parties represent and warrant to each other
they have had the opportunity to be advised by attorneys of their own choice.
Section 10.12 Further Assurances. Each party covenants that at any
-------------------
time, and from time to time, after the Closing Date, it will execute such
additional instruments and take such actions as may be reasonably be requested
by the other parties to confirm or perfect or otherwise to carry out the intent
and purposes of this Agreement.
Section 10.13 Exhibits Not Attached. Any exhibits not attached hereto
---------------------
on the date of execution of this Agreement shall be deemed to be and shall
become a part of this Agreement as if executed on the date hereof upon each of
the parties initialing and dating each such exhibit, upon their respective
acceptance of its terms, conditions and/or form.
Section 10.14 Survival of Representations, Warranties and Covenants.
-------------------------------------------------------
All representations and warranties made in, pursuant to or in connection with
this Agreement shall survive the execution and delivery of this Agreement for
the maximum period allowed by law.
Section 10.15 Public Announcements. The parties hereto agree that
---------------------
prior to making any public announcement or statement with respect to the
transactions contemplated by this Agreement, the party desiring to make such
public announcement or statement shall consult with the other parties hereto and
exercise their best efforts to (i) agree upon the text of a joint public
announcement or statement to be made by all of such parties or (ii) obtain
approval of the other parties hereto to the text of a public announcement or
statement to be made solely by the party desiring to make such public
announcement; provided, however, that if any party hereto is required by law to
make such public announcement or statement, then such announcement or statement
may be made without the approval of the other parties.
Purchase Agreement - Page 24
Section 10.16 Validity. The invalidity or unenforceability of any
--------
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE.]
Purchase Agreement - Page 25
IN WITNESS WHEREOF, the undersigned have executed this Purchase Agreement
to become effective as of the date first set forth above.
RCI DEBIT SERVICES, INC.
/S/
-------------------------------------------
By: Xxxx Xxxxxx, President
Date:
--------------------------------------
XXXXXX PARTNERS, LTD.
/S/
-------------------------------------------
By: ,
---------------- ----------------
Date:
--------------------------------------
NEW XXXXXX, LLC
/S/
-------------------------------------------
By: ,
---------------- ----------------
Date:
--------------------------------------
/S/
-------------------------------------------
XXXXXXXX XXXXXXXXXXX, Individually
Date:
--------------------------------------
/S/
-------------------------------------------
XXXXXX XXXXXXX, Individually
Date:
--------------------------------------
/S/
-------------------------------------------
XXXXXXXX XXXXXXX, Individually
Date:
--------------------------------------
/S/
-------------------------------------------
XXXXXXXX X. XXXXXXXXXXX, Individually
Date:
--------------------------------------
/S/
-------------------------------------------
XXXXXXX XXXXXXXX, Individually
Date:
--------------------------------------
/S/
-------------------------------------------
XXXXX X. XXXXXXXX, Individually
Date:
--------------------------------------
/S/
-------------------------------------------
XXXXXXXXXXX XXXXXXXXXXX, Individually
Date:
--------------------------------------
Purchase Agreement - Page 26
