STOCK PURCHASE AGREEMENT
------------------------
This Stock Purchase Agreement (the "Agreement") is made and entered into
this 7th day of July, 2006, by and among Texas S&I, Inc., a Texas corporation
(the "Company"), Xxxx Xxxxxxx (the "Seller"), and Rick's Cabaret International,
Inc., a Texas corporation ("Purchaser" or "Rick's").
WHEREAS, Seller owns 1,000 shares of common stock, no par value of the
Company, which shares represents 100% of all of the shares of capital stock of
the Company presently outstanding; and
WHEREAS, the shares of common stock owned by Seller are hereinafter
collectively referred to as the "Shares"; and
WHEREAS, the Company owns and operates an adult entertainment facility
known as "Club Exotica" located at 0000 Xxxx Xxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxx
00000; and
WHEREAS, the Seller desires to sell the Shares of the Company to Purchaser
on the terms and conditions set forth herein; and
WHEREAS, Purchaser desires to purchase the Shares of the Company from
Seller on the terms and conditions set forth herein.
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 OF THE SHARES
Section 1.1 Sale of the Shares. Subject to the terms and conditions
--------------------
set forth in this Agreement, at the Closing (as hereinafter defined) the Seller
hereby agrees to sell, transfer, convey and deliver to Purchaser all of the
Shares of common stock of the Company, free and clear of all encumbrances, which
represents all of the outstanding capital stock of the Company, and shall
deliver to Purchaser stock certificates representing the Shares, duly endorsed
to Purchaser or accompanied by duly executed stock powers in form and substance
satisfactory to Purchaser.
Section 1.2 Purchase Price. As consideration for the purchase of the
---------------
Shares, Purchaser shall pay to Seller a total consideration of $125,000 (the
"Purchase Price") payable as follows:
(a) $45,000 shall be paid by check or wire transfer to the Seller at
the Closing of the transaction;
(b) $10,000 shall be paid by check or wire transfer to Xxxxxx Plaza
Shopping Center, the Landlord of the existing lease at 0000 Xxxx
Xxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxx 00000 at the Closing of the
transaction; and
(c) $70,000, as evidenced by a Promissory Note payable to the Seller
bearing interest at four percent (4%) per annum, payable monthly, and
amortized over five (5) years (the "Promissory Note").
ARTICLE II
CLOSING
Section 2.1 The Closing. The closing of the transactions contemplated
-----------
by this Agreement shall take place on or before July 10, 2006 (the "Closing
Date"), at the offices of Xxxxxxx, Xxxxx and Xxxxxxxxx, 0000 Xxxxxxxx Xxxxx,
Xxxxx 000, Xxxxxxx, Xxxxx 00000, or at such other time and place as agreed upon
among the parties hereto (the "Closing").
Section 2.2 Delivery and Execution. At the Closing: (a) the Seller
------------------------
shall deliver to Purchaser certificates evidencing the Shares of the Company,
free and clear of any liens, claims, equities, charges, options, rights of first
refusal or encumbrances, duly endorsed to Purchaser or accompanied by duly
executed stock powers in form and substance satisfactory to Purchaser against
delivery by Purchaser to the Seller of payment in an amount equal to the
Purchase Price of the Shares being purchased by Purchaser in the manner set
forth in Section 1.2; and (b) the Related Transactions (as defined below) shall
be consummated concurrently with the Closing.
Section 2.3 Related Transactions. In addition to the purchase and sale
--------------------
of the Shares, the following actions shall take place contemporaneously at the
Closing (collectively, the "Related Transactions"):
(i) The Seller will enter into a five (5) year covenant not to
compete pursuant to the terms of which the Seller will agree not to
compete, either directly of indirectly, with the Purchaser by
operating an establishment featuring live adult entertainment within
the corporate limits of the city of San Antonio, Texas; and
(ii) The Landlord for the existing lease agreement for the location
where Club Exotica is located shall consent to the transaction
contemplated by this Agreement and shall confirm that the initial
option to renew and extend the lease for an additional five (5) year
period from the end of the present term of the lease has been approved
and effected.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SELLER AND THE COMPANY
The Seller and the Company, jointly and severally, hereby represent and
warrant to Purchaser as follows:
Section 3.1. Organization, Good Standing and Qualification. The Company
---------------------------------------------
(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 the
Seller or the Company.
Stock Purchase Agreement - Page 2
At Closing, the authorized capital stock of the Company consists of 100,000
shares of common stock, no par value, of which 1,000 shares are validly issued
and outstanding. There are no shares of preferred stock authorized or issued and
there is no other class of capital stock authorized or issued by the Company.
All of the issued and outstanding shares of common stock of the Company are
owned by the Seller and are fully paid and non-assessable. None of the shares
issued are in violation of any preemptive rights. The Company has no obligation
to repurchase, reacquire, or redeem any of its outstanding capital stock. There
are no outstanding securities convertible into or evidencing the right to
purchase or subscribe for any shares of capital stock 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 shares of its capital stock or any securities convertible into or
evidencing the right to purchase or subscribe for any shares of such stock, and
there are no agreements or understandings with respect to the voting, sale,
transfer or registration of any shares of capital stock of the Company.
Section 3.2 Subsidiaries. The Company has no subsidiaries
------------
Section 3.3 Ownership of the Shares. The Seller owns, beneficially and
-----------------------
of record, all of the Shares of the Company free and clear of any liens, claims,
equities, charges, options, rights of first refusal, or encumbrances. The
Seller has the unrestricted right and power to transfer, convey and deliver full
ownership of the Shares 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 Shares to Purchaser as contemplated herein, Purchaser
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 3.4 Authorization. Seller 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 for himself.
All action on the part of Seller necessary for the authorization, execution,
delivery and performance of this Agreement by him has been taken and will be
taken prior to Closing. This Agreement, when duly executed and delivered in
accordance with its terms, will constitute legal, valid and binding obligations
of Seller 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.
All corporate action on the part of the Company necessary for the
authorization, execution, delivery and performance of this Agreement by the
Company has been taken or will be taken prior to the Closing. The Company has
the requisite corporate power and authority to execute, deliver and perform this
Agreement. This Agreement, when duly executed and delivered in accordance with
its terms, will constitute a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization, and other similar laws of
general application relating to or affecting creditors' rights and to general
equitable principles.
Section 3.5 No Breaches or Defaults. The execution, delivery, and
------------------------
performance of this Agreement by the Seller and the Company does not: (i)
conflict with, violate, or constitute a breach of or a default under, (ii)
result in the creation or imposition of any lien, claim, or encumbrance of any
kind upon the Shares, or (iii) require any authorization, consent, approval,
exemption, or other
Stock Purchase Agreement - Page 3
action by or filing with any third party or Governmental Authority under any
provision of: (a) any applicable Legal Requirement, or (b) any credit or loan
agreement, promissory note, or any other agreement or instrument to which the
Seller or the Company is a party or by which the Shares may be bound or
affected. For purposes of this Agreement, "Governmental Authority" means any
foreign governmental authority, the United States of America, any state of the
United States, and any political subdivision of any of the foregoing, and any
agency, department, commission, board, bureau, court, or similar entity, having
jurisdiction over the parties hereto or their respective assets or properties.
For purposes of this Agreement, "Legal Requirement" means any law, statute,
injunction, decree, order or judgment (or interpretation of any of the
foregoing) of, and the terms of any license or permit issued by, any
Governmental Authority.
Section 3.6 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 the Seller or the Company
in connection with the execution and delivery by the Seller or the Company of
this Agreement or the consummation and performance of the transactions
contemplated hereby.
Section 3.7 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 Seller's or the Company's
knowledge, threatened against Seller or the Company or their respective
properties, assets, operations or businesses before any court, arbitration,
administrative or regulatory body or any governmental agency which may result
either singly or in the aggregate in any judgment, order, award, decree,
liability or other determination which will or could reasonably be expected to
have any effect upon Seller or the Company or its prospects, results of
operation, properties, liabilities, assets, financial condition or business or
the transfer by Seller to Purchaser of the Shares under this Agreement, nor is
there any basis known to Seller for any such action. No litigation is pending,
or, to Seller's or the Company's knowledge, threatened against Seller or the
Company, 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. Neither Seller nor the Company 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 Shares to be
transferred under this Agreement.
Section 3.8 Taxes. The Company 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. The Company 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 Company
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. There are no agreements between
the Company and any taxing authority, including, without limitation, the
Internal Revenue Service, waiving or extending any statute of limitations with
respect to any tax return.
Stock Purchase Agreement - Page 4
Section 3.9 Compliance with Laws. The Company 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 ownership of their assets or the operation of their businesses, except
for failures to be in compliance that would not have a material adverse effect
on the business, properties, condition (financial or otherwise) or prospects of
the Company. Seller and the Company have no basis to expect, nor have they
received, any order or notice of any such violation or claim of violation of any
such statute, order, rule, ordinance or regulation by the Company. Exhibit 3.9
sets forth all licenses and permits held by the Company used in the operation of
its businesses, all of which are in good standing and in effect as of the
Closing Date. These licenses and permits represent all of the licenses and
permits required by the Company for the operation of their business.
Section 3.10 Title to Properties; Encumbrances. The Company has good
----------------------------------
and marketable title to all of its properties and assets, real and personal,
tangible and intangible, that are material to the condition (financial or
otherwise), business, operations or prospects of 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) statutory liens not
yet delinquent and (ii) such liens consisting of zoning or planning
restrictions, imperfections of title, easements and encumbrances, if any, as do
not materially detract from the value or materially interfere with the present
use of the property or assets subject thereto or affected thereby. At the time
of Closing, the assets of the Company shall include, but shall not be limited
to, the Corporate Real Property identified on Exhibit 3.10, including
improvements, furniture, fixtures, appliances and all other personalty owned by
the Company and located thereon, which it owns free and clear of any mortgages,
liens, claims, security interests, charges, rights of first refusal or
encumbrances and the assets set forth in the Company's 2005 corporate income tax
return, along with all equipment and fixtures located on the premises at 0000 X.
Xxxxxxxx as of the Closing Date.
Section 3.11 Financial Statements. Seller and the Company have
---------------------
delivered to Rick's the unaudited balance sheets of the Company as of May 31,
2006, together with the related unaudited statements of income, for the periods
then ended (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 fairly represent the financial position of
the Company and the results of operations and changes in financial position of
the Company 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, as of the date of the Financial Statements,
has no material liability or obligation of any nature, whether absolute,
accrued, continued or otherwise, not fully reflected or reserved against in the
Financial Statements. As of the Closing Date, Seller and the Company represent
there have been no adverse changes in the financial condition or other
operations, business, properties or assets of the Company.
Section 3.12 No Liabilities. As of the Closing Date the Company does
--------------
not and shall not have any obligation or liability (contingent or otherwise) to
any third party, except as disclosed on Exhibit 3.12.
Section 3.13 Contracts and Leases. Except as disclosed in Exhibit
----------------------
3.13, the Company (i) has no leases of personal property relating to the assets
of the Company, whether as lessor or lessee;
Stock Purchase Agreement - Page 5
(ii) has no contractual or other obligations relating to the assets of 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
Company. The Company has an existing real estate lease agreement covering the
real property where the Company operates its business located at 0000 Xxxx
Xxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxx 00000. The Company has furnished Purchaser a
copy of each and every contract, lease or other document relating to the assets
of the Company to which they are subject or are a party or a beneficiary. To
Seller's and the Company's knowledge, such contracts, leases or other documents
are valid and in full force and effect according to their terms and constitutes
a legal, valid and binding obligation of the Company and the other respective
parties thereto and are enforceable in accordance with their terms. Neither
Seller nor the Company have any 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. Neither the execution of
this Agreement, nor the consummation of all or any of the transactions
contemplated under this Agreement, will constitute a breach or default under any
such contracts, leases or other documents which would have a material adverse
effect on the financial condition of the Company for the operation of its
business after the Closing.
Section 3.14 Material Agreements; Action. There are no material
-----------------------------
contracts, agreements, commitments, understandings or proposed transactions,
whether written or oral, to which Seller or the Company is a party or by which
they are bound.
Section 3.15 No Default. Neither Seller nor the Company is in default
----------
under any term or condition of any instrument evidencing, creating or securing
any indebtedness of Seller or the Company, and there has been no default in any
material obligation to be performed by Seller or the Company 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 have Seller or the
Company waived any material right under any such contract, lease, agreement,
commitment or undertaking.
Section 3.16 Books and Records. The books of account, minute books,
-------------------
stock record books and other records of the Company, all of which have been made
available to Purchaser, are accurate and complete and have been maintained in
accordance with sound business practices. Upon Closing, all books and records
will be in the possession of Seller or the Company.
Section 3.17 Disclosure. No representation or warranty of the Seller
----------
or the Company contained in this Agreement (including the exhibits hereto)
contains any untrue statement 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.
Section 3.18 Brokerage Commission. No broker or finder has acted on
---------------------
behalf of Seller or the Company 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 Seller or the Company.
Stock Purchase Agreement - Page 6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PURCHASER
Rick's hereby represents and warrants to the Sellers and the Company as
follows:
Section 4.1 Authorization. Rick's 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 Rick's necessary for the authorization, execution, delivery and
performance of this Agreement by it has been taken and will be taken prior to
Closing. This Agreement, when duly executed and delivered in accordance with
its terms, will constitute legal, valid, and binding obligations of Rick's
enforceable against Rick's 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 4.2 No Breaches or Defaults. The execution, delivery, and
--------------------------
performance of this Agreement by Rick's does not: (i) conflict with, violate,
or constitute a breach of or a default under or (ii) require any authorization,
consent, approval, exemption, or other action by or filing with any third party
or Governmental Authority under any provision of: (a) any applicable Legal
Requirement, or (b) any credit or loan agreement, promissory note, or any other
agreement or instrument to which Rick's is a party.
Section 4.3 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 Rick's in connection with
the execution and delivery by Rick's of this Agreement or the consummation and
performance of the transactions contemplated hereby other than as required under
the federal securities laws.
Section 4.4 Disclosure. No representation or warranty of Rick's
----------
contained in this Agreement (including the exhibits hereto) contains any untrue
statement 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.
Section 4.5 Brokerage Commission. No broker or finder has acted on
---------------------
behalf of Rick's 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 Rick's.
ARTICLE V
COVENANT OF THE SELLER,
COMPANY AND PURCHASER
Section 5.1 Conduct of Business. From the date of the execution hereof
-------------------
until the Closing Date, Seller and the Company shall operate the business of the
Company in the ordinary course consistent with past practices, and:
Stock Purchase Agreement - Page 7
(a) the Company will not authorize, declare, pay or effect any
dividend or liquidation or other distribution in respect of the stock
of the Company or other equity interest or any direct or indirect
redemption, purchase or other acquisition of any equity interest of
the Company;
(b) the Company will not make any changes in its condition (financial
or otherwise), liabilities, assets, or business or in any of its
business relationships, including relationships with suppliers or
customers, that, when considered individually or in the aggre-gate,
might reasonably be expected to have a material adverse effect on the
Company;
(c) the Company will not increase the salary or other compensation
payable or to become payable by the Company to any employee, or the
declaration, payment, or commitment or obligation of any kind for the
pay-ment by the Company of a bonus or other additional salary or
compensation to any such person;
(d) the Company will not 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) the Company will not accelerate, terminate, modify or cancel any
agreement, contract, lease or license (or series of related
agreements, contracts, leases and licenses) involving more than $5,000
to which the Company is a party;
(f) the Company will not make any loans to any person or entity, or
guarantee any loan;
(g) the Company will not waive or release any right or claim held by
the Company;
(h) the Company will operate its business in the ordinary course and
consistent with past practices so as to preserve its business
organization intact, to retain the ser-vices of its employees and to
preserve its goodwill and relationships with suppliers, creditors,
cus-tomers, and others having business relationships with it;
(i) the Company will not 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) the Company will not delay or postpone the payment of accounts
payable and other liabilities outside the ordinary course of business;
(k) the Company will not make any loan to, or enter into any other
transaction with, any of its directors, officers, employees or
shareholders;
(l) the Company will not issue, sell or otherwise dispose of any of
its equity securities, 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 its
equity securities;
Stock Purchase Agreement - Page 8
(m) the Company will not be a party to any merger, consolidation or
other business combination; and
(n) the Company will not agree to take any action described in this
Section 5.1.
ARTICLE VI
CONDITIONS TO CLOSING OF SELLER
AND THE COMPANY
Each obligation of Seller and the Company to be performed on the Closing
Date shall be subject to the satisfaction of each of the conditions stated in
this Article VI, except to the extent that such satisfaction is waived by Seller
and the Company in writing.
Section 6.1 Representations and Warranties Correct. The
-----------------------------------------
representations and warranties made by Purchaser contained in this Agreement
shall be true and correct as of the Closing Date.
Section 6.2 Covenants. All covenants, agreements and conditions
---------
contained in this Agreement to be performed by Purchaser on or prior to the
Closing Date shall have been performed or complied with in all respects.
Section 6.3 Delivery of Certificate. Purchaser shall provide to Seller
-----------------------
and the Company Certificates, dated the Closing Date and signed by the President
of Purchaser to the effect set forth in Section 6.1 and 6.2 for the purpose of
verifying the accuracy of such representations and warranties and the
performance and satisfaction of such covenants and conditions.
Section 6.4 Payment of Purchase Price. Purchaser shall have tendered
--------------------------
the Purchase Price for the Shares as referenced in Section 1.2 to the Seller
concurrently with the Closing.
Section 6.5 Related Transactions. The Related Transaction set forth in
---------------------
Section 2.3 shall be consummated concurrently with the Closing.
Section 6.6 Corporate Resolutions. Purchaser shall provide resolutions
---------------------
of the Board of Directors of the Purchaser which approve the transactions
contemplated herein and authorize the execution, delivery and performance of
this Agreement and the documents referred to herein to which it is or is to be a
party dated as of the Closing Date.
Section 6.7 Absence of Proceedings. No action, suit or proceeding by
-----------------------
or before any court or any governmental or regulatory authority shall have been
commenced and no investigation by any governmental or regulatory authority shall
have been commenced seeking to restrain, prevent or challenge the transactions
contemplated hereby or seeking judgments against Purchaser.
Stock Purchase Agreement - Page 9
ARTICLE VII
CONDITIONS TO CLOSING OF
PURCHASER
Each obligation of Purchaser to be performed on the Closing Date shall be
subject to the satisfaction of each of the conditions stated in this Article
VII, except to the extent that such satisfaction is waived by Purchaser in
writing.
Section 7.1 Representations and Warranties Correct. The
-----------------------------------------
representations and warranties made by the Seller and the Company hereof shall
be true and correct as of the Closing Date.
Section 7.2 Covenants. All covenants, agreements and conditions
---------
contained in this Agreement to be performed by the Seller and the Company on or
prior to the Closing Date shall have been performed or complied with in all
respects.
Section 7.3 Delivery of Certificate. Seller and the Company shall
-------------------------
provide to Purchaser certificates, dated the Closing Date and signed by the
Seller and by the President of the Company, respectively, to the effect set
forth in Section 7.1 and 7.2 for the purpose of verifying the accuracy of such
representations and warranties and the performance and satisfaction of such
covenants and conditions.
Section 7.4 Delivery of Shares. Seller shall have delivered
--------------------
certificates evidencing the Shares of the Company, duly endorsed to Purchaser or
accompanied by duly executed stock powers in form and substance satisfactory to
Purchaser.
Section 7.5 Related Transactions. The Related Transaction set forth in
--------------------
Section 2.3 shall be consummated concurrently with the Closing.
Section 7.6 Corporate Resolutions. The Company shall provide to
----------------------
Purchaser a corporate resolution of the Board of Directors of the Company, which
approves the transactions contemplated herein and authorizes the execution,
delivery and performance of this Agreement and the documents referred to herein
to which it is or is to be a party dated as of the Closing Date.
Section 7.7 Consents; Transfer of Licenses. All necessary transfers of
------------------------------
licenses and leases required for the continued operation of the business of the
Company shall have been obtained. All business licenses of the Company shall be
in full force and effect.
Section 7.8 Resignation. The Officers and Directors of the Company
-----------
shall have provided to Purchaser their written resignations.
Section 7.9 Absence of Proceedings. No action, suit or proceeding by
-----------------------
or before any court or any governmental or regulatory authority shall have been
commenced and no investigation by any governmental or regulatory authority shall
have been commenced seeking to restrain, prevent or challenge the transactions
contemplated hereby or seeking judgments against the Company or any of its
assets.
Stock Purchase Agreement - Page 10
ARTICLE VIII
INDEMNIFICATION
Section 8.1 Indemnification from Seller and the Company. Seller and
---------------------------------------------
the Company, jointly and severally, hereby agree to and shall indemnify, defend
(with legal counsel reasonably acceptable to Purchaser), and hold Purchaser, its
officers, directors, employees, shareholders, affiliates, assigns, agents and
legal counsel (collectively, the "Purchaser 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) suffered or incurred by any of the Purchaser Group arising
from: (a) any misrepresentation by, or breach of any covenant or warranty of the
Seller or the Company contained in this Agreement, or any exhibit, certificate,
or other instrument furnished or to be furnished by Seller or the Company
hereunder; (b) any nonfulfillment of any agreement on the part of Seller or the
Company under this Agreement; (c) from any liability or obligation due to any
third party by the Company incurred at or prior to the Closing Date; or (d) any
suit, action, proceeding, claim or investigation against Purchaser which arises
from or which is based upon or pertaining to Seller's or the Company's conduct
or the operation or liabilities of the business of the Company prior to the
Closing Date.
Section 8.2 Indemnification from Purchaser. Purchaser agrees to and
--------------------------------
shall indemnify, defend (with legal counsel reasonably acceptable to the Seller)
and hold the Seller, the Company, its officers, directors, employees,
shareholders, agents, affiliates, legal counsel, successors and assigns
(collectively, the "Seller'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 attorney's fees and costs of any suit related thereto)
suffered or incurred by any of the Seller's Group, arising from (a) any
misrepresentation by, or breach of any covenant or warranty of Purchaser
contained in this Agreement or any exhibit, certificate, or other agreement or
instrument furnished or to be furnished by Purchaser hereunder; (b) any
nonfulfillment of any agreement on the part of Purchaser under this Agreement;
or (c) any suit, action, proceeding, claim or investigation against Seller which
arises from or which is based upon or pertaining to Purchaser conduct or the
operation of the business of the Company subsequent to the Closing Date.
Section 8.3 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
Stock Purchase Agreement - Page 11
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 8.4 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, 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
individuals 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.
ARTICLE IX
MISCELLANEOUS
Section 9.1 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 9.2 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 Seller: Xxxx Xxxxxxx
0000 Xxxxxxxxxx, Xxx. 000
Xxxxxxx, Xxxxx 00000
(b) if to Purchaser: Rick's Cabaret International, Inc.
Attn: President
00000 Xxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Stock Purchase Agreement - Page 12
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 9.3 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 9.4 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 9.5 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 9.6 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 9.7 Choice of Law. 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 Xxxxxx County, Texas.
Section 9.8 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.
Stock Purchase Agreement - Page 13
Section 9.9 Costs and Expenses. Each party shall pay their own
--------------------
respective fees, costs and disbursements incurred in connection with this
Agreement.
Section 9.10 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 9.11 No Third-Party Beneficiaries. Nothing in this Agreement
-----------------------------
will confer any third party beneficiary or other rights upon any person
(specifically including any employees of The Company) or any entity that is not
a party to this Agreement.
Section 9.12 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.
Section 9.13 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 9.14 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.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE.]
Stock Purchase Agreement - Page 14
IN WITNESS WHEREOF, the undersigned have executed this Stock Purchase
Agreement to become effective as of the date first set forth above.
TEXAS S&I, INC.
/s/ Xxxx Xxxxxxx
-----------------------------------
By: Xxxx Xxxxxxx, President
Date:
------------------------
XXXX XXXXXXX
/s/ Xxxx Xxxxxxx
-----------------------------------
Xxxx Xxxxxxx, Individually
Date:
------------------------
RICK'S CABARET INTERNATIONAL, INC.
/s/ Xxxx Xxxxxx
-----------------------------------
By: Xxxx Xxxxxx, CEO/President
Date:
------------------------
Stock Purchase Agreement - Page 15
EXHIBITS
