FORM OF] COMMON STOCK PURCHASE AGREEMENT Dated as of November __, 2007 by and among RICK’S CABARET INTERNATIONAL, INC. and THE PURCHASERS LISTED ON EXHIBIT A
Exhibit
10.1
[FORM
OF]
COMMON
STOCK PURCHASE
AGREEMENT
Dated
as of November __, 2007
by
and among
RICK’S
CABARET INTERNATIONAL, INC.
and
THE
PURCHASERS LISTED ON EXHIBIT A
TABLE
OF CONTENTS
Page
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1
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ARTICLE
I
|
Purchase
and Sale of Common Stock
|
1
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Section
1.1
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Purchase
and Sale of Common Stock
|
1
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Section
1.2
|
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Purchase
Price and Closing
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1
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ARTICLE
II
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Representations
and Warranties
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2
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Section
2.1
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Representations
and Warranties of the Company
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2
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Section
2.2
|
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Representations
and Warranties of the Purchasers
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9
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ARTICLE
III
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Covenants
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13
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Section
3.1
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Securities
Compliance
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13
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Section
3.2
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Registration
and Listing
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13
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Section
3.3
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Compliance
with Laws
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13
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Section
3.4
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Keeping
of Records and Books of Account
|
13
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Section
3.5
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Reporting
Requirements
|
13
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Section
3.6
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Other
Agreements
|
14
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Section
3.7
|
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Use
of Proceeds
|
14
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Section
3.8
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Disclosure
of Material Information
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14
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ARTICLE
IV
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Conditions
|
14
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Section
4.1
|
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Conditions
Precedent to the Obligation of the Company to Close and to Sell
the
Securities
|
14
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Section
4.2
|
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Conditions
Precedent to the Obligation of the Purchasers to Close and to Purchase
the
Securities
|
15
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ARTICLE
V
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Certificate
Legend
|
16
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Section
5.1
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Legend
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16
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ARTICLE
VI
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Indemnification
|
16
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Section
6.1
|
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General
Indemnity
|
16
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Section
6.2
|
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Indemnification
Procedure
|
17
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ARTICLE
VII
|
Miscellaneous
|
18
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Section
7.1
|
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Fees
and Expenses
|
18
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Section
7.2
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Specific
Performance; Consent to Jurisdiction; Venue
|
18
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Section
7.3
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Entire
Agreement; Amendment
|
18
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Section
7.4
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Notices
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19
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Section
7.5
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Waivers
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19
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TABLE
OF
CONTENTS
(continued)
Page
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Section
7.6
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Headings
|
20
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Section
7.7
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Successors
and Assigns
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20
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Section
7.8
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No
Third Party Beneficiaries
|
20
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Section
7.9
|
Governing
Law
|
20
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Section
7.10
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Survival
|
20
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Section
7.11
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Execution
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20
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Section
7.12
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Publicity
|
20
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Section
7.13
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Severability
|
20
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Section
7.14
|
Further
Assurances
|
21
|
This
COMMON STOCK PURCHASE AGREEMENT this (“Agreement”), dated as of November
__, 2007 by and between Rick’s Cabaret International, Inc., a Texas corporation
(the "Company"), and the purchasers listed on Exhibit A hereto
(each a "Purchaser" and collectively, the "Purchasers"), for the
purchase and sale of shares of the Company’s Common Stock, par value $0.01 per
share (the “Common Stock”) by the Purchasers.
The
parties hereto agree as follows:
ARTICLE
I
Purchase
and Sale of Common Stock
Section
1.1 Purchase
and Sale of Common Stock. Upon the following terms and
conditions, the Company shall issue and sell to the Purchasers, and the
Purchasers shall purchase from the Company, an aggregate of up to 1,165,000
shares of Common Stock (the “Shares”) at a price per share of $____ (the
“Per Share Purchase Price”) for an aggregate purchase price of up to
$____________ (the “Purchase Price”). The Shares are sometimes referred
to herein as the “Securities.” The Company and the Purchasers
are executing and delivering this Agreement in accordance with and in reliance
upon the exemption from securities registration afforded by Section 4(2)
of the
U.S. Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (the "Securities Act"), including Regulation D
("Regulation D"), and/or upon such other exemption from the registration
requirements of the Securities Act as may be available with respect to
any or
all of the investments to be made hereunder.
Section
1.2 Purchase
Price and Closing. Subject to the terms and conditions hereof,
the Company agrees to issue and sell to the Purchasers and, in consideration
of
and in express reliance upon the representations, warranties, covenants,
terms
and conditions of this Agreement, the Purchasers, severally but not jointly,
agree to purchase the number of Shares set forth opposite their respective
names
on Exhibit A. The closing of the purchase and sale of the
Shares to be acquired by the Purchasers from the Company under this Agreement
shall take place at the offices of Xxxxxxxx Curhan Ford & Co., 000 Xxxxxxx
Xxxxxx, Xxxxx 000, Xxx Xxxx, Xxx Xxxx 00000 (the “Closing”) at 10:00
a.m., New York time (i) on or before November __, 2007, provided, that
all of the conditions set forth in Article IV hereof and applicable to
the
Closing shall have been fulfilled or waived in accordance herewith, or
(ii) at
such other time and place or on such date as the Purchasers and the Company
may
agree upon (the "Closing Date"). Subject to the terms and
conditions of this Agreement, at the Closing the Company shall deliver
or cause
to be delivered to each Purchaser a certificate registered in the name
of such
Purchaser representing the number of Shares that such Purchaser is purchasing
pursuant to the terms hereof as is set forth opposite the name of such
Purchaser
on Exhibit A or shall issue an irrevocable letter of instruction to its
transfer agent to issue the Shares. At the Closing, each Purchaser
shall deliver its Purchase Price by wire transfer to an account designated
by
the Company.
1
ARTICLE
II
Representations
and Warranties
Section
2.1 Representations
and Warranties of the Company. The Company hereby represents and
warrants to the Purchasers as follows, as of the date hereof and the Closing
Date, except as set forth on the Schedule of Exceptions attached hereto
with
each numbered Schedule corresponding to the section number herein:
(a) Organization,
Good Standing and Power. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State
of Texas and has the requisite corporate power to own, lease and operate
its
properties and assets and to conduct its business as it is now being
conducted. The Company does not have any Subsidiaries (except as set
forth in Schedule 2.1(g) and in the Commission Documents), as defined in
Section
2.1(f) of this Agreement. The Company and each such Subsidiary (as
defined in Section 2.1(g)) is qualified to do business as a foreign corporation
and is in good standing in every jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification necessary
except for any jurisdiction(s) (alone or in the aggregate) in which the
failure
to be so qualified will not have a Material Adverse Effect. For the
purposes of this Agreement, "Material Adverse Effect" means any effect on
the business, operations, properties, prospects or financial condition
of the
Company that is material and adverse to the Company and its Subsidiaries,
taken
as a whole, and any condition, circumstance or situation that would prohibit
the
Company from entering into and performing any of its obligations hereunder
and
under the Registration Rights Agreement (as defined below).
(b) Authorization;
Enforcement. The Company has the requisite corporate power and
authority to enter into and perform this Agreement and that certain Registration
Rights Agreement by and among the Company and the Purchasers, dated as
of the
date hereof, substantially in the form of Exhibit B attached hereto (the
“Registration Rights Agreement” and, together with this Agreement, the
"Transaction Documents") and to issue and sell the Securities in
accordance with the terms hereof. The execution, delivery and
performance of the Transaction Documents by the Company and the consummation
by
it of the transactions contemplated thereby have been duly and validly
authorized by all necessary corporate action, and, no further consent or
authorization of the Company, its Board of Directors or stockholders is
required. When executed and delivered by the Company, each of the
Transaction Documents shall constitute a valid and binding obligation of
the
Company enforceable against the Company in accordance with its terms, except
as
such enforceability may be limited by applicable bankruptcy, reorganization,
moratorium, liquidation, conservatorship, receivership or similar laws
relating
to, or affecting generally the enforcement of, creditor's rights and remedies
or
by other equitable principles of general application.
(c) Capitalization. The
authorized capital stock and capital structure of the Company is set forth
in
the Company’s (A) Form 10-KSB for the fiscal year ended September 30, 2006 and
(B) Form 10-QSB for the Company’s quarter ended June 30, 2007, except for shares
subsequently issued which do not have a Material Adverse Effect.
2
(d) Issuance
of Securities. The Shares to be issued at the Closing have been
duly authorized by all necessary corporate action and, when paid for and
issued
in accordance with the terms hereof, the Shares will be validly issued,
fully
paid and nonassessable and free and clear of all liens, encumbrances and
rights
of refusal of any kind (other than restrictions on transfer under applicable
securities laws or other such restrictions imposed under the Transaction
Documents) and the holders shall be entitled to all rights accorded to
a holder
of Common Stock.
(e) No
Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company
of the
transactions contemplated hereby and thereby do not and will not (i) violate
any
provision of the Company's Articles of Incorporation or Bylaws, each as
amended
to date, or any Subsidiary's comparable charter documents, (ii) conflict
with,
or constitute a default (or an event which with notice or lapse of time
or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, mortgage, deed
of
trust, indenture, note, bond, license, lease agreement, instrument or obligation
to which the Company or any of its Subsidiaries is a party or by which
the
Company or any of its Subsidiaries' respective properties or assets are
bound,
or (iii) result in a violation of any federal, state, local or foreign
statute,
rule, regulation, order, judgment or decree (including federal and state
securities laws and regulations) applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of
its
Subsidiaries are bound or affected, except, in all cases, other than violations
pursuant to clauses (i) or (iii) above with respect to federal and state
securities laws, for such conflicts, defaults, terminations, amendments,
acceleration, cancellations and violations as would not, individually or
in the
aggregate, have a Material Adverse Effect. The business of the
Company and its Subsidiaries is not being conducted in violation of any
laws,
ordinances or regulations of any governmental entity, except for possible
violations, which singularly or in the aggregate do not and will not have
a
Material Adverse Effect. Neither the Company nor any of its
Subsidiaries is required under federal, state, foreign or local law, rule
or
regulation to obtain any consent, authorization or order of, or make any
filing
or registration with, any court or governmental agency in order for it
to
execute, deliver or perform any of its obligations under the Transaction
Documents or issue and sell the Securities in accordance with the terms
hereof
(other than any filings, consents and approvals which may be required to
be made
by the Company under applicable state and federal securities laws, rules
or
regulations, or the Nasdaq Global Market, prior to or subsequent to the
Closing,
or any registration provisions provided in the Registration Rights
Agreement).
(f) Commission
Documents, Financial Statements. The Common Stock of the Company
is registered pursuant to Section 12(b) or 12(g) of the Securities Exchange
Act
of 1934, as amended (the "Exchange Act"), and during the two year period
preceding the Closing Date, the Company has timely filed all reports, schedules,
forms, statements and other documents required to be filed by it with the
Securities and Exchange Commission (the “Commission”) pursuant to the
reporting requirements of the Exchange Act (all of the foregoing including
filings incorporated by reference therein being referred to herein as the
"Commission Documents"). At the time of their respective
filing, the Form 10-QSB for the fiscal quarter ended June 30, 2007 (the
"Form
10-QSB") and the Form 10-KSB for the fiscal year ended September 30, 2006
(the “Form 10-KSB”) complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the Commission
promulgated thereunder and other federal, state and local laws, rules and
regulations applicable to such documents, and the Form 10-QSB and Form
10-KSB
did not contain any untrue statement of a material fact or omit to state
a
material fact required to be stated therein or necessary in order to make
the
statements therein, in light of the circumstances under which they were
made,
not misleading. As of their respective dates, the financial
statements of the Company included in the Commission Documents complied
as to
form in all material respects with applicable accounting requirements and
the
published rules and regulations of the Commission or other applicable rules
and
regulations with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis during the periods involved
(except (i) as may be otherwise indicated in such financial statements
or the
Notes thereto or (ii) in the case of unaudited interim statements, to the
extent
they may not include footnotes or may be condensed or summary statements),
and
fairly present in all material respects the financial position of the Company
and its Subsidiaries as of the dates thereof and the results of operations
and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments).
3
(g) Subsidiaries. Schedule
2.1(g) hereto sets forth each Subsidiary of the Company, showing the
jurisdiction of its incorporation or organization and showing the percentage
of
the Company’s ownership of the outstanding stock or other interests of such
Subsidiary. For the purposes of this Agreement, "Subsidiary" shall
mean any corporation or other entity of which at least a majority of the
securities or other ownership interest having ordinary voting power (absolutely
or contingently) for the election of directors or other persons performing
similar functions are at the time owned directly or indirectly by the Company
and/or any of its other Subsidiaries. All of the outstanding shares
of capital stock of each Subsidiary have been duly authorized and validly
issued, and are fully paid and nonassessable.
(h) No
Material Adverse Change. Since June 30, 2007, the Company has not
experienced or suffered any Material Adverse Effect.
(i) No
Undisclosed Liabilities. Since June 30, 2007, neither the Company
nor any of its Subsidiaries has incurred any liabilities, obligations,
claims or
losses (whether liquidated or unliquidated, secured or unsecured, absolute,
accrued, contingent or otherwise) other than those incurred in the ordinary
course of the Company's or its Subsidiaries respective businesses and which,
individually or in the aggregate, are not reasonably likely to have a Material
Adverse Effect.
(j) No
Undisclosed Events or Circumstances. Since June 30, 2007, except
as disclosed on Schedule 2.1(j) hereto, no event or circumstance has
occurred or exists with respect to the Company or its Subsidiaries or their
respective businesses, properties, prospects, operations or financial condition,
which, under applicable law, rule or regulation, requires public disclosure
or
announcement by the Company but which has not been so publicly announced
or
disclosed.
(k) Indebtedness. The
Commission Documents or Schedule 2.1(k) hereto sets forth as of the date
hereof all outstanding secured and unsecured Indebtedness of the Company
or any
Subsidiary, or for which the Company or any Subsidiary has
commitments. For the purposes of this Agreement,
“Indebtedness” shall mean (a) any liabilities for borrowed money or
amounts owed in excess of $300,000 (other than trade accounts payable incurred
in the ordinary course of business), (b) all guaranties, endorsements and
other
contingent obligations in respect of Indebtedness of others in excess of
$100,000, whether or not the same are or should be reflected in the Company’s
balance sheet (or the notes thereto), except guaranties by endorsement
of
negotiable instruments for deposit or collection or similar transactions
in the
ordinary course of business; and (c) the present value of any lease payments
in
excess of $25,000 due under leases required to be capitalized in accordance
with
GAAP. Neither the Company nor any Subsidiary is in default with
respect to any Indebtedness.
4
(l) Title
to Assets. Each of the Company and the Subsidiaries has good and
marketable title to all of its real and personal property reflected in
the
Commission Documents, free and clear of any mortgages, pledges, charges,
liens,
security interests or other encumbrances, except as reflected in the Commission
Documents or such that, individually or in the aggregate, do not cause
a
Material Adverse Effect. All said leases of the Company and each of
its Subsidiaries are valid and subsisting and in full force and
effect.
(m) Actions
Pending. There is no action, suit, claim, investigation,
arbitration, alternate dispute resolution proceeding or other proceeding
pending
or, to the knowledge of the Company, threatened against the Company or
any
Subsidiary which questions the validity of this Agreement or any of the
other
Transaction Documents or any of the transactions contemplated hereby or
thereby
or any action taken or to be taken pursuant hereto or thereto. Except
as set forth in the Commission Documents, there is no action, suit, claim,
investigation, arbitration, alternate dispute resolution proceeding or
other
proceeding pending or, to the knowledge of the Company, threatened, against
or
involving the Company, any Subsidiary or any of their respective properties
or
assets, which individually or in the aggregate, could reasonably be expected
to
have a Material Adverse Effect. Except as described in the Commission
Documents, there are no outstanding orders, judgments, injunctions, awards
or
decrees of any court, arbitrator or governmental or regulatory body against
the
Company or any Subsidiary or any officers or directors of the Company or
Subsidiary in their capacities as such, which individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
(n) Compliance
with Law. The business of the Company and the Subsidiaries has
been and is presently being conducted in accordance with all applicable
federal,
state and local governmental laws, rules, regulations and ordinances, except
as
set forth in the Commission Documents or such that, individually or
in the aggregate, the noncompliance therewith could not reasonably be expected
to have a Material Adverse Effect. The Company and each of its
Subsidiaries have all franchises, permits, licenses, consents and other
governmental or regulatory authorizations and approvals necessary for the
conduct of its business as now being conducted by it unless the failure
to
possess such franchises, permits, licenses, consents and other governmental
or
regulatory authorizations and approvals, individually or in the aggregate,
could
not reasonably be expected to have a Material Adverse Effect.
(o) Taxes. Except
as set forth on Schedule 2.1(o) hereto, the Company and each of the
Subsidiaries has accurately prepared and filed all federal, state and other
tax
returns required by law to be filed by it, has paid or made provisions
for the
payment of all taxes shown to be due and all additional assessments, and
adequate provisions have been and are reflected in the financial statements
of
the Company and the Subsidiaries for all current taxes and other charges
to
which the Company or any Subsidiary is subject and which are not currently
due
and payable. Except as disclosed on Schedule 2.1(o) hereto,
none of the federal income tax returns of the Company or any Subsidiary
have
been audited by the Internal Revenue Service. The Company has no
knowledge of any additional assessments, adjustments or contingent tax
liability
(whether federal or state) of any nature whatsoever, whether pending or
threatened against the Company or any Subsidiary for any period, nor of
any
basis for any such assessment, adjustment or contingency.
5
(p) Certain
Fees. The Company shall be responsible for the payment of all
broker or finders’ fees incurred or any liability for any brokerage or
investment banking fees, commissions, finders' structuring fees, financial
advisory fees or other similar fees in connection with the Transaction
Documents.
(q) Disclosure. To
the best of the Company's knowledge, neither this Agreement or the Schedules
hereto nor any other documents, certificates or instruments furnished to
the
Purchasers by or on behalf of the Company or any Subsidiary in connection
with
the transactions contemplated by this Agreement contain any untrue statement
of
a material fact or omit to state a material fact necessary in order to
make the
statements made herein or therein, in the light of the circumstances under
which
they were made herein or therein, not misleading.
(r) Operation
of Business. The Company and each of the Subsidiaries owns or
possesses sufficient legal rights to use all trademarks, domain names (whether
or not registered), websites and intellectual property rights relating
thereto,
service marks, trade names, copyrights, licenses and authorizations currently
used in the Company’s operation of its business, without any known infringement
of the rights of others.
(s) Environmental
Compliance. The Company and each of its Subsidiaries have
obtained all material approvals, authorization, certificates, consents,
licenses, orders and permits or other similar authorizations of all governmental
authorities, or from any other person, that are required under
any Environmental Laws. "Environmental Laws" shall mean
all applicable laws relating to the protection of the environment including,
without limitation, all requirements pertaining to reporting, licensing,
permitting, controlling, investigating or remediating emissions, discharges,
releases or threatened releases of hazardous substances, chemical substances,
pollutants, contaminants or toxic substances, materials or wastes, whether
solid, liquid or gaseous in nature, into the air, surface water, groundwater
or
land, or relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of hazardous substances, chemical
substances, pollutants, contaminants or toxic substances, material or wastes,
whether solid, liquid or gaseous in nature. The Company has all
necessary governmental approvals required under all Environmental Laws
and used
in its business or in the business of any of its Subsidiaries, except for
such
instances as would not individually or in the aggregate have a Material
Adverse
Effect. The Company and each of its Subsidiaries are also in
compliance with all other limitations, restrictions, conditions, standards,
requirements, schedules and timetables required or imposed under all
Environmental Laws. Except for such instances as would not
individually or in the aggregate have a Material Adverse Effect, there
are no
past or present events, conditions, circumstances, incidents, actions or
omissions relating to or in any way affecting the Company or its Subsidiaries
that violate or would be reasonably likely to violate any Environmental
Law
after the Closing or that would be reasonably likely to give rise to any
environmental liability, or otherwise form the basis of any claim, action,
demand, suit, proceeding, hearing, study or investigation (i) under any
Environmental Law, or (ii) based on or related to the manufacture, processing,
distribution, use, treatment, storage (including, without limitation,
underground storage tanks), disposal, transport or handling, or the emission,
discharge, release or threatened release of any hazardous
substance. "Environmental Liabilities" means all liabilities of a
person (whether such liabilities are owed by such person to governmental
authorities, third parties or otherwise) whether currently in existence
or
arising hereafter which arise under or relate to any Environmental
Law.
6
(t) Books
and Records; Internal Accounting Controls. The records and
documents of the Company and its Subsidiaries accurately reflect in all
material
respects the information relating to the business of the Company and the
Subsidiaries, the location and collection of their assets, and the nature
of all
transactions giving rise to the obligations or accounts receivable of the
Company or any Subsidiary. The Company and each of its Subsidiaries
maintain a system of internal accounting controls sufficient, in the judgment
of
the Company's board of directors, to provide reasonable assurance that
(i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii) access
to
assets is permitted only in accordance with management's general or specific
authorization and (iv) the recorded accountability for assets is compared
with
the existing assets at reasonable intervals and appropriate actions are
taken
with respect to any differences.
(u) Transactions
with Affiliates. Except as set forth in the Commission Documents
(or the definitive proxy statement described below), to the Company’s knowledge,
there are no loans, leases, agreements, contracts, royalty agreements,
management contracts or arrangements or other continuing transactions between
(a) the Company, any Subsidiary or any of their respective customers or
suppliers on the one hand, and (b) on the other hand, any officer, employee,
consultant or director of the Company, or any of its Subsidiaries, or any
person
owning any capital stock of the Company or any Subsidiary or any member
of the
immediate family of such officer, employee, consultant, director or stockholder
or any corporation or other entity controlled by such officer, employee,
consultant, director or stockholder, or a member of the immediate family
of such
officer, employee, consultant, director or stockholder which, in each case,
is
required to be disclosed in the Commission Documents or in the Company’s most
recently filed definitive proxy statement on Schedule 14A, that is not
so
disclosed in the Commission Documents or in such proxy statement.
(v) Securities
Act of 1933. Based in material part upon the representations
herein of the Purchasers, the Company has complied and will comply with
all
applicable federal and state securities laws in connection with the offer,
issuance and sale of the Securities hereunder. Neither the Company
nor anyone acting on its behalf, directly or indirectly, has or will sell,
offer
to sell or solicit offers to buy any of the Securities or similar securities
to,
or solicit offers with respect thereto from, or enter into any negotiations
relating thereto with, any person, or has taken or will take any action
so as to
bring the issuance and sale of any of the Securities under the registration
provisions of the Securities Act and applicable state securities laws,
and
neither the Company nor any of its affiliates, nor any person acting on
its or
their behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D under the Securities Act)
in
connection with the offer or sale of any of the Securities.
7
(w) Governmental
Approvals. Except for the filing of any notice prior or
subsequent to the Closing that may be required under applicable state and/or
federal securities laws or the Nasdaq Global Market, no authorization,
consent,
approval, license, exemption of, filing or registration with any court
or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, is or will be necessary for, or in connection with,
the
execution or delivery of the Securities, or for the performance by the
Company
of its obligations under the Transaction Documents.
(x) Employees. Neither
the Company nor any Subsidiary has any collective bargaining arrangements
covering any of its employees.
(y) Absence
of Certain Developments. Since the filing of its Form 10-QSB for
the quarter ended June 30, 2007, the Company has not experienced or suffered
any
Material Adverse Effect.
(z) Public
Utility Holding Company Act and Investment Company Act
Status. The Company is not a “holding company” or a “public
utility company” as such terms are defined in the Public Utility Holding Company
Act of 1935, as amended. The Company is not, and as a result of and
immediately upon the Closing will not be, an “investment company” or a company
“controlled” by an “investment company,” within the meaning of the Investment
Company Act of 1940, as amended.
(aa) ERISA. No
liability to the Pension Benefit Guaranty Corporation has been incurred
with
respect to any Plan by the Company or any of its Subsidiaries which is
or would
be materially adverse to the Company and its Subsidiaries. The
execution and delivery of this Agreement and the issuance and sale of the
Shares
and the Warrants will not involve any transaction which is subject to the
prohibitions of Section 406 of ERISA or in connection with which a tax
could be
imposed pursuant to Section 4975 of the Internal Revenue Code of 1986,
as
amended, provided that, if any of the Purchasers, or any person or entity
that
owns a beneficial interest in any of the Purchasers, is an “employee pension
benefit plan” (within the meaning of Section 3(2) of ERISA) with respect to
which the Company is a “party in interest” (within the meaning of Section 3(14)
of ERISA), the requirements of Sections 407(d)(5) and 408(e) of ERISA,
if
applicable, are met. As used in this Section 2.1(bb), the term “Plan”
shall mean an “employee pension benefit plan” (as defined in Section 3 of ERISA)
which is or has been established or maintained, or to which contributions
are or
have been made, by the Company or any Subsidiary or by any trade or business,
whether or not incorporated, which, together with the Company or any Subsidiary,
is under common control, as described in Section 414(b) or (c) of the
Code.
(bb) Delisting
Notification. The Company has not received notice (written or
oral) from the Nasdaq Global Market to the effect that the Company is not
in
compliance with the listing or maintenance requirements of such
market.
8
(cc) Independent
Nature of Purchasers. The Company acknowledges that the
obligations of each Purchaser under the Transaction Documents are several
and
not joint with the obligations of any other Purchaser, and no Purchaser
shall be
responsible in any way for the performance of the obligations of any other
Purchaser under the Transaction Documents. The Company acknowledges
that all Purchasers have been provided with the same terms and Transaction
Documents.
(dd) No
Integrated Offering. To the knowledge of the Company, neither the
Company, nor any of its affiliates, nor any person acting on its or their
behalf, has directly or indirectly made any offers or sales of any security
or
solicited any offers to buy any security under circumstances that would
cause
the offering of the Securities pursuant to this Agreement to be integrated
with
prior offerings by the Company for purposes of the Securities Act which
would
prevent the Company from selling the Securities pursuant to Regulation
D and
Rule 506 thereof under the Securities Act, or any applicable exchange-related
stockholder approval provisions, nor will the Company or any of its affiliates
or subsidiaries take any action or steps that would cause the offering
of the
Securities to be integrated with other offerings. The Company does
not have any registration statement pending before the Commission or currently
under the Commission’s review.
(ee) Xxxxxxxx-Xxxxx
Act. The Company is in substantial compliance with the applicable
provisions of the Xxxxxxxx-Xxxxx Act of 2002 (the “Xxxxxxxx-Xxxxx Act”), and the
rules and regulations promulgated thereunder, that are effective and for
which
compliance by the Company is required as of the date hereof.
Section
2.2 Representations
and Warranties of the Purchasers. Each of the Purchasers hereby
represents and warrants to the Company with respect solely to itself and
not
with respect to any other Purchaser as follows as of the date hereof and
as of
the Closing Date:
(a) Organization
and Standing of the Purchasers. If the Purchaser is an entity,
such Purchaser is a corporation, limited liability company or partnership
duly
incorporated or organized, validly existing and in good standing under
the laws
of the jurisdiction of its incorporation or organization.
(b) Authorization
and Power. Each Purchaser has the requisite power and authority
to enter into and perform the Transaction Documents and to purchase the
Securities being sold to it hereunder. The execution, delivery and
performance of the Transaction Documents by each Purchaser and the consummation
by it of the transactions contemplated hereby have been duly authorized
by all
necessary corporate or partnership action, and no further consent or
authorization of such Purchaser or its Board of Directors, stockholders,
or
partners, as the case may be, is required. When executed and
delivered by the Purchasers, the other Transaction Documents shall constitute
valid and binding obligations of each Purchaser enforceable against such
Purchaser in accordance with their terms, except as such enforceability
may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation, conservatorship, receivership or similar laws relating to,
or
affecting generally the enforcement of, creditor's rights and remedies
or by
other equitable principles of general application.
9
(c) No
Conflict. The execution, delivery and performance of the
Transaction Documents by the Purchaser and the consummation by the Purchaser
of
the transactions contemplated thereby and hereby do not and will not (i)
violate
any provision of the Purchaser’s charter or organizational documents, (ii)
conflict with, or constitute a default (or an event which with notice or
lapse
of time or both would become a default) under, or give to others any rights
of
termination, amendment, acceleration or cancellation of, any agreement,
mortgage, deed of trust, indenture, note, bond, license, lease agreement,
instrument or obligation to which the Purchaser is a party or by which
the
Purchaser’s respective properties or assets are bound, or (iii) result in a
violation of any federal, state, local or foreign statute, rule, regulation,
order, judgment or decree (including federal and state securities laws
and
regulations) applicable to the Purchaser or by which any property or asset
of
the Purchaser are bound or affected, except, in all cases, other than violations
pursuant to clauses (i) or (iii) above with respect to federal and state
securities laws, for such conflicts, defaults, terminations, amendments,
acceleration, cancellations and violations as would not, individually or
in the
aggregate, materially and adversely affect the Purchaser’s ability to perform
its obligations under the Transaction Documents.
(d) Acquisition
for Investment. Each Purchaser is purchasing the Shares solely
for its own account for the purpose of investment and not with a view to
or for
sale in connection with distribution. Each Purchaser does not have a
present intention to sell any of the Shares, nor a present arrangement
(whether
or not legally binding) or intention to effect any distribution of any
of the
Shares to or through any person or entity; provided, however, that
by making the representations herein, such Purchaser does not agree to
hold the
Shares for any minimum or other specific term and reserves the right to
dispose
of the Shares at any time in accordance with Federal and state securities
laws
applicable to such disposition. Each Purchaser acknowledges that it
(i) has such knowledge and experience in financial and business matters
such
that Purchaser is capable of evaluating the merits and risks of Purchaser's
investment in the Company, (ii) is able to bear the financial risks associated
with an investment in the Securities and (iii) has been given full access
to
such records of the Company and the Subsidiaries and to the officers of
the
Company and the Subsidiaries as it has deemed necessary or appropriate
to
conduct its due diligence investigation.
(e) Rule
144. Each Purchaser understands that the Securities must be held
indefinitely unless such Shares are registered under the Securities Act
or an
exemption from registration is available. Each Purchaser acknowledges
that such person is familiar with Rule 144 of the rules and regulations
of the
Commission, as amended, promulgated pursuant to the Securities Act ("Rule
144"), and that such Purchaser has been advised that Rule 144 permits
resales only under certain circumstances. Each Purchaser understands
that to the extent that Rule 144 is not available, such Purchaser will
be unable
to sell any Securities without either registration under the Securities
Act or
the existence of another exemption from such registration
requirement.
(f) General. Each
Purchaser understands that the Securities are being offered and sold in
reliance
on a transactional exemption from the registration requirements of federal
and
state securities laws and the Company is relying upon the truth and accuracy
of
the representations, warranties, agreements, acknowledgments and understandings
of such Purchaser set forth herein in order to determine the applicability
of
such exemptions and the suitability of such Purchaser to acquire the
Securities. Each Purchaser understands that no United States federal
or state agency or any government or governmental agency has passed upon
or made
any recommendation or endorsement of the Securities.
10
(g) No
General Solicitation. Each Purchaser acknowledges that the
Securities were not offered to such Purchaser by means of any form of general
or
public solicitation or general advertising, or publicly disseminated
advertisements or sales literature, including (i) any advertisement, article,
notice or other communication published in any newspaper, magazine, or
similar
media, or broadcast over television or radio, or (ii) any seminar or meeting
to
which such Purchaser was invited by any of the foregoing means of
communications. Each Purchaser, in making the decision to purchase
the Securities, has relied upon independent investigation made by it and
the
representations, warranties and agreements set forth in the Transaction
Documents and has not relied on any information or representations made
by third
parties.
(h) Accredited
Investor. Each Purchaser is an “accredited investor” (as defined
in Rule 501 of Regulation D), and such Purchaser has such experience in
business
and financial matters that it is capable of evaluating the merits and risks
of
an investment in the Securities. Such Purchaser is not required to be
registered as a broker-dealer under Section 15 of the Exchange Act and
such
Purchaser is not a broker-dealer. Each Purchaser acknowledges that an
investment in the Securities is speculative and involves a high degree
of
risk. Each Purchaser has completed or caused to be completed the
Investor Questionnaire Certification attached hereto as Exhibit C
certifying as to its status as an “accredited investor” and understands that the
Company is relying upon the truth and accuracy of the Purchaser set forth
therein to determine the suitability of such Purchaser to acquire the
Securities.
(i) Certain
Fees. The Purchasers have not employed any broker or finder or
incurred any liability for any brokerage or investment banking fees,
commissions, finders' structuring fees, financial advisory fees or other
similar
fees in connection with the Transaction Documents.
(j) Independent
Investment. No Purchaser has agreed to act with any other
Purchaser for the purpose of acquiring, holding, voting or disposing of
the
Securities purchased hereunder for purposes of Section 13(d) under the
Exchange
Act, and each Purchaser is acting independently with respect to its investment
in the Securities. The decision of each Purchaser to purchase
Securities pursuant to this Agreement has been made by such Purchaser
independently of any other purchase and independently of any information,
materials, statements or opinions as to the business, affairs, operations,
assets, properties, liabilities, results of operations, condition (financial
or
otherwise) or prospects of the Company or of its Subsidiaries which may
have
been made or given by any other Purchaser or by any agent or employee of
any
other Purchaser, and no Purchaser or any of its agents or employees shall
have
any liability to any Purchaser (or any other person) relating to or arising
from
any such information, materials, statements or opinions. Each
Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation, the rights arising out of this Agreement
or the
Transaction Documents, and it shall not be necessary for any other Purchaser
to
be joined as an additional party in any proceeding for such
purpose. Nothing contained herein, or in any Transaction Document,
and no action taken by any Purchaser pursuant hereto or thereto, shall
be deemed
to constitute the Purchasers as a partnership, an association, a joint
venture
or any other kind of entity, or create a presumption that the Purchasers
are in
any way acting in concert or as a group with respect to such obligations
or the
transactions contemplated by the Transaction Documents.
11
(k) Patriot
Act. If the Purchaser is an individual, the Purchaser certifies
that he or she is not nor to his or her knowledge has been designated,
a
“suspected terrorist” as defined in Executive Order 13224. If the
Purchaser is a corporation, trust, partnership, limited liability company
or
other organization, the Purchaser certifies that, to the best of Purchaser’s
knowledge, the Purchaser has not been designated, and is not owned or
controlled, by a “suspected terrorist” as defined in Executive Order
13224. The Purchaser hereby acknowledges that the Company seeks to
comply with all applicable laws concerning money laundering and related
activities. In furtherance of those efforts, the Purchaser hereby
represents, warrants and agrees that to its knowledge: (i) none of the
cash or
property that the Purchaser will pay or will contribute to the Company
has been
or shall be derived from, or related to, any activity that is deemed criminal
under United States law; and (ii) no contribution or payment by the Purchaser
to
the Company, to the extent that they are within the Purchaser’s control shall
cause the Company to be in violation of the United States Bank Secrecy
Act, the
United States International Money Laundering Control Act of 1986 or the
United
States International Money Laundering Abatement and Anti-Terrorist Financing
Act
of 2001. The Purchaser shall promptly notify the Company if any of
these representations ceases to be true and accurate regarding the
Purchaser. The Purchaser agrees to provide the Company any additional
information regarding the Purchaser that the Company deems necessary or
convenient to ensure compliance with all applicable laws concerning money
laundering and similar activities. The Purchaser understands and
agrees that if at any time it is discovered that any of the foregoing
representations are incorrect, or if otherwise required by applicable law
or
regulation related to money laundering similar activities, the Company
may
undertake appropriate actions to ensure compliance with applicable law
or
regulation, including but not limited to segregation and/or redemption
of the
Purchaser’s investment in the Company. In the event that the Company
is requested or required (by deposition, interrogatory, request for documents,
subpoena, civil investigative demand or similar legal, judiciary or regulatory
process or as otherwise required by applicable law or regulation) to disclose
any confidential information about a Purchaser, the Company shall (A) provide
the Purchaser with prompt prior written notice of such request or requirement
and (B) cooperate with the Purchaser so that the Purchaser may seek a protective
order or other appropriate remedy. In the event that such protective
order or other remedy is not obtained, the Company and their respective
representatives shall disclose only that portion of the confidential information
that such person is advised by legal counsel in writing is legally required
to
be disclosed, and provided that the Company uses reasonable efforts to
obtain reliable assurance that confidential treatment will be accorded
any
confidential information so disclosed.
(l) Trading
Activities. Each Purchaser’s trading activities with respect to
the Shares shall be in compliance with all applicable federal and state
securities laws. No Purchaser or any of its affiliates has an open
short position in the Common Stock, each Purchaser agrees that it shall
not, and
that it will cause its affiliates not to, engage in any short sales with
respect
to the Common Stock.
(m) Legend. Each
Purchaser acknowledges and understands that the Shares are “restricted
securities” (as such term is defined in the Securities Act), and, as such, the
certificates evidencing the Shares will bear the legend as reflected in
Section
5.1 herein.
12
ARTICLE
III
Covenants
The
Company covenants with each Purchaser as follows, which covenants are for
the
benefit of each Purchaser and their respective permitted assignees.
Section
3.1 Securities
Compliance. The Company shall file a Form 8-K with the Commission
in accordance with its rules and regulations regarding the transactions
contemplated by the Transaction Documents.
Section
3.2 Registration
and Listing. The Company shall use its reasonable best efforts to
cause its Common Stock to continue to be registered under Sections 12(b)
or
12(g) of the Exchange Act, to comply in all respects with its reporting
and
filing obligations under the Exchange Act, to comply with all requirements
related to any registration statement filed pursuant to the Registration
Rights
Agreement, and to not take any action or file any document (whether or
not
permitted by the Securities Act or the rules promulgated thereunder) to
terminate or suspend such registration or to terminate or suspend its reporting
and filing obligations under the Exchange Act or Securities Act, except
as
permitted herein or as contemplated under the Registration Rights
Agreement. The Company shall use its reasonable best efforts to
continue the listing or trading of its Common Stock on the Nasdaq Global
Market
or any successor market. If required, the Company will promptly file
the "Listing Application" for, or in connection with, the issuance and
delivery
of the Shares.
Section
3.3 Compliance
with Laws. The Company shall use its best efforts to comply, and
cause each Subsidiary to comply, with all applicable laws, rules, regulations
and orders, noncompliance with which would be reasonably likely to have
a
Material Adverse Effect.
Section
3.4 Keeping
of Records and Books of Account. The Company shall keep adequate
records and books of account, in which complete entries will be made in
accordance with GAAP consistently applied, reflecting all financial transactions
of the Company and its Subsidiaries on a consolidated basis, and in which,
for
each fiscal year, all proper reserves for depreciation, depletion, obsolescence,
amortization, taxes, bad debts and other purposes in connection with its
business shall be made.
Section
3.5 Reporting
Requirements. If the Commission shall cease making the Company’s
periodic reports available via the Internet without charge, then the Company
shall furnish the following to each Purchaser so long as such Purchaser
shall be
obligated hereunder to purchase the Securities or shall beneficially own
Shares:
(a) Quarterly
Reports filed with the Commission on Form 10-QSB as soon as available,
and in
any event within forty-five (45) days after the end of each of the first
three
fiscal quarters of the Company;
(b) Annual
Reports filed with the Commission on Form 10-KSB as soon as available,
and in
any event within ninety (90) days after the end of each fiscal year of
the
Company; and
13
(c) Copies
of all notices, information and proxy statements in connection with any
meetings, that are, in each case, provided to holders of shares of Common
Stock,
contemporaneously with the delivery of such notices or information to such
holders of Common Stock.
Section
3.6 Other
Agreements. The Company shall not enter into any agreement in
which the terms of such agreement would restrict or impair the right or
ability
of the Company to perform its obligations under any Transaction
Document.
Section
3.7 Use of
Proceeds. The proceeds from the sale of the Shares will be used
by the Company for (i) acquisitions and (ii) working capital and general
corporate purposes.
Section
3.8 Disclosure
of Material Information. The Company covenants and agrees that
neither it nor any other person acting on its behalf has provided or will
provide any Purchaser or its agents or counsel with any information that
the
Company believes constitutes material non-public information, unless prior
thereto such Purchaser shall have executed a written agreement regarding
the
confidentiality and use of such information. The Company understands and
confirms that each Purchaser shall be relying on the foregoing representations
in effecting transactions in securities of the Company.
ARTICLE
IV
Conditions
Section
4.1 Conditions
Precedent to the Obligation of the Company to Close and to Sell the
Securities. The obligation hereunder of the Company to close and
issue and sell the Securities to the Purchasers on the Closing Date is
subject
to the satisfaction or waiver, at or before the Closing of the conditions
set
forth below. These conditions are for the Company's sole benefit and
may be waived by the Company at any time in its sole discretion.
(a) Accuracy
of the Purchasers’ Representations and Warranties. The
representations and warranties of each Purchaser shall be true and correct
in
all material respects as of the date when made and as of the Closing Date
as
though made at that time, except for representations and warranties that
are
expressly made as of a particular date, which shall be true and correct
in all
material respects as of such date.
(b) Performance
by the Purchasers. Each Purchaser shall have performed, satisfied
and complied in all material respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Purchasers at or prior to the Closing Date.
(c) No
Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated
or
endorsed by any court or governmental authority of competent jurisdiction
which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
14
(d) Delivery
of Purchase Price. The Purchase Price for the Shares shall have
been delivered to the Company on the Closing Date.
(e) Delivery
of Transaction Documents. The Transaction Documents shall have
been duly executed and delivered by the Purchasers to the Company.
Section
4.2 Conditions
Precedent to the Obligation of the Purchasers to Close and to Purchase
the
Securities. The obligation hereunder of the Purchasers to
purchase the Securities and consummate the transactions contemplated by
this
Agreement is subject to the satisfaction or waiver, at or before the Closing
Date, of each of the conditions set forth below. These conditions are
for the Purchasers’ sole benefit and may be waived by the Purchasers at any time
in their sole discretion.
(a) Accuracy
of the Company's Representations and Warranties. Each of the
representations and warranties of the Company in this Agreement and the
Registration Rights Agreement shall be true and correct in all material
respects
as of the Closing Date, except for representations and warranties that
speak as
of a particular date, which shall be true and correct in all material respects
as of such date.
(b) Performance
by the Company. The Company shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with
by the
Company at or prior to the Closing Date.
(c) No
Suspension, Etc. Trading in the Common Stock shall not have been
suspended by the Commission or the Nasdaq Global Market (except for any
suspension of trading of limited duration agreed to by the Company, which
suspension shall be terminated prior to the Closing).
(d) No
Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated
or
endorsed by any court or governmental authority of competent jurisdiction
which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
(e) Shares. At
or prior to the Closing, the Company shall have delivered to the Purchasers
certificates representing the Shares (in such denominations as each Purchaser
may request) being acquired by the Purchasers at the Closing or shall issue
an
irrevocable letter of instruction to its transfer agent to issue the
Shares.
(f) Officer's
Certificate. On the Closing Date, the Company shall have
delivered to the Purchasers a certificate signed by an executive officer
on
behalf of the Company, dated as of the Closing Date, confirming the accuracy
of
the Company's representations, warranties and covenants as of the Closing
Date.
(g) Registration
Rights Agreement. As of the Closing Date, the Company shall have
duly executed and delivered the Registration Rights Agreement in the form
of
Exhibit B attached hereto.
15
(h) Material
Adverse Effect. No Material Adverse Effect shall have occurred at
or before the Closing Date.
(i) Minimum
Purchase. The Purchasers shall have purchased in the aggregate
1,165,000 Shares.
ARTICLE
V
Certificate
Legend
Section
5.1 Legend. Each
certificate representing the Securities shall be stamped or otherwise imprinted
with a legend substantially in the following form (in addition to any legend
required by applicable state securities or "blue sky" laws):
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE (THE "SECURITIES") HAVE NOT
BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT")
OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS OR RICK’S CABARET INTERNATIONAL, INC. SHALL HAVE RECEIVED
AN OPINION OF ITS COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE
SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES
LAWS IS
NOT REQUIRED.
The
Company agrees to enter into
customary agreements and take such other actions as requested by the Purchasers
in order to expedite or facilitate the disposition or resale of the Shares,
including providing its transfer agent with a legal opinion within three
(3)
business days subsequent to the effectiveness of the Registration Statement
to
be filed pursuant to the Registration Rights Agreement (of which the Purchasers
will be selling shareholders) which shall provide that at any time while
the
Registration Statement remains effective, the Shares, upon their resale
by the
Purchasers, may be issued without restrictive legend.
ARTICLE
VI
Indemnification
Section
6.1 General
Indemnity. The Company agrees to indemnify and hold harmless each
Purchaser (and its respective directors, officers, affiliates, agents,
successors and assigns) from and against any and all losses, liabilities,
deficiencies, costs, damages and expenses (including, without limitation,
reasonable attorneys' fees, charges and disbursements) (“Losses”)
incurred by each Purchaser as a result of any inaccuracy in or breach of
the
representations, warranties or covenants made by the Company
herein. The Purchasers severally but not jointly agree to indemnify
and hold harmless the Company and its directors, officers, affiliates,
agents,
successors and assigns from and against any and all Losses incurred by
the
Company as result of any inaccuracy in or breach of the representations,
warranties or covenants made by the Purchasers herein. The maximum
liability of each Purchaser pursuant to its indemnification obligations
under
this Article VI shall not exceed the portion of the Purchase Price paid
by such
Purchaser hereunder.
16
Section
6.2 Indemnification
Procedure. Any party entitled to indemnification under this
Article VI (an "indemnified party") will give written notice to the indemnifying
party of any matters giving rise to a claim for indemnification; provided,
that
the failure of any party entitled to indemnification hereunder to give
notice as
provided herein shall not relieve the indemnifying party of its obligations
under this Article VI except to the extent that the indemnifying party
is
actually prejudiced by such failure to give notice. In case any such
action, proceeding or claim is brought against an indemnified party in
respect
of which indemnification is sought hereunder, the indemnifying party shall
be
entitled to participate in and, unless in the reasonable judgment of the
indemnifying party a conflict of interest between it and the indemnified
party
exists with respect to such action, proceeding or claim (in which case
the
indemnifying party shall be responsible for the reasonable fees and expenses
of
one separate counsel for the indemnified parties), to assume the defense
thereof
with counsel reasonably satisfactory to the indemnified party. In the
event that the indemnifying party advises an indemnified party that it
will not
contest such a claim for indemnification hereunder, or fails, within thirty
(30)
days of receipt of any indemnification notice to notify, in writing, such
person
of its election to defend, settle or compromise, at its sole cost and expense,
any action, proceeding or claim (or discontinues its defense at any time
after
it commences such defense), then the indemnified party may, at its option,
defend, settle or otherwise compromise or pay such action or
claim. In any event, unless and until the indemnifying party elects
in writing to assume and does so assume the defense of any such claim,
proceeding or action, the indemnified party's costs and expenses arising
out of
the defense, settlement or compromise of any such action, claim or proceeding
shall be losses subject to indemnification hereunder. The indemnified
party shall cooperate fully with the indemnifying party in connection with
any
negotiation or defense of any such action or claim by the indemnifying
party and
shall furnish to the indemnifying party all information reasonably available
to
the indemnified party which relates to such action or claim. The
indemnifying party shall keep the indemnified party fully apprised at all
times
as to the status of the defense or any settlement negotiations with respect
thereto. If the indemnifying party elects to defend any such action
or claim, then the indemnified party shall be entitled to participate in
such
defense with counsel of its choice at its sole cost and expense. The
indemnifying party shall not be liable for any settlement of any action,
claim
or proceeding effected without its prior written
consent. Notwithstanding anything in this Article VI to the contrary,
the indemnifying party shall not, without the indemnified party's prior
written
consent, settle or compromise any claim or consent to entry of any judgment
in
respect thereof which imposes any future obligation on the indemnified
party or
which does not include, as an unconditional term thereof, the giving by
the
claimant or the plaintiff to the indemnified party of a release from all
liability in respect of such claim. The indemnification required by
this Article VI shall be made by periodic payments of the amount thereof
during
the course of investigation or defense, as and when bills are received
or
expense, loss, damage or liability is incurred, so long as the indemnified
party
irrevocably agrees to refund such moneys if it is ultimately determined
by a
court of competent jurisdiction that such party was not entitled to
indemnification. The indemnity agreements contained herein shall be
in addition to (a) any cause of action or similar rights of the
indemnified party against the indemnifying party or others, and (b) any
liabilities the indemnifying party may be subject to pursuant to the
law.
17
ARTICLE
VII
Miscellaneous
Section
7.1 Fees and
Expenses. Each party shall pay the fees and expenses of its
advisors, counsel, accountants and other experts, if any, and all other
expenses, incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement.
Section
7.2 Specific
Performance; Consent to Jurisdiction; Venue.
(a) The
Company and the Purchasers acknowledge and agree that irreparable damage
would
occur in the event that any of the provisions of this Agreement or the
other
Transaction Documents were not performed in accordance with their specific
terms
or were otherwise breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent or cure breaches
of
the provisions of this Agreement or the Transaction Documents and to enforce
specifically the terms and provisions hereof or thereof, this being in
addition
to any other remedy to which any of them may be entitled by law or
equity.
(b) The
parties agree that venue for any dispute arising under this Agreement will
lie
exclusively in the state or federal courts located in Xxxxxx County, Texas,
and
the parties irrevocably waive any right to raise forum non conveniens
or any other argument that Texas is not the proper venue. The parties
irrevocably consent to personal jurisdiction in the state and federal courts
of
the state of Texas. The Company and each Purchaser consent to process
being served in any such suit, action or proceeding by mailing a copy thereof
to
such party at the address in effect for notices to it under this Agreement
and
agrees that such service shall constitute good and sufficient service of
process
and notice thereof. Nothing in this Section 7.2 shall affect or limit
any right to serve process in any other manner permitted by law. The
Company and the Purchasers hereby agree that the prevailing party in any
suit,
action or proceeding arising out of or relating to the Securities, this
Agreement or the Registration Rights Agreement, shall be entitled to
reimbursement for reasonable legal fees from the non-prevailing
party.
Section
7.3 Entire Agreement;
Amendment. This Agreement and the Registration Rights Agreement
contain the entire understanding and agreement of the parties with respect
to
the matters covered hereby and, except as specifically set forth herein
or in
the Registration Rights Agreement, neither the Company nor any Purchaser
make
any representation, warranty, covenant or undertaking with respect to such
matters, and they supersede all prior understandings and agreements with
respect
to said subject matter, all of which are merged herein. No provision
of this Agreement may be waived or amended other than by a written instrument
signed by the Company and the Purchasers holding at least a majority of
all
Shares then held by the Purchasers. Any amendment or waiver effected
in accordance with this Section 7.3 shall be binding upon each Purchaser
(and
their permitted assigns) and the Company.
18
Section
7.4 Notices. Any
notice, demand, request, waiver or other communication required or permitted
to
be given hereunder shall be in writing and shall be effective (a) upon
hand
delivery by telecopy or facsimile at the address or number designated below
(if
delivered on a business day during normal business hours where such notice
is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice
is
to be received) or (b) on the second business day following the date of
mailing
by express courier service, fully prepaid, addressed to such address, or
upon
actual receipt of such mailing, whichever shall first occur. The
addresses for such communications shall be:
If
to the Company:
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Rick’s
Cabaret International, Inc.
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00000
Xxxxxx Xxxx
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Xxxxxxx,
Xxxxx 00000
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Attention:
Xxxx Xxxxxx
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Tel.
No.: (000) 000-0000
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Fax
No.: (000) 000-0000
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with
copies (which copies shall
not constitute notice to
the Company) to:
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Xxxxxxx,
Xxxxx & Xxxxxxxxx
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0000
Xxxxxxxx Xxxxx, Xxxxx 000
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Xxxxxxx,
Xxxxx 00000
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Attention: Xxxxxx
X. Xxxxxxx
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Fax
No.: (000) 000-0000
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If
to any Purchaser:
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At
the address of such Purchaser set forth on Exhibit A to this
Agreement.
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with
copies to:
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Attention:
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Tel
No.: ( )
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Fax
No.: ( )
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Any
party
hereto may from time to time change its address for notices by giving written
notice of such changed address to the other party hereto.
Section
7.5 Waivers. No
waiver by either party of any default with respect to any provision, condition
or requirement of this Agreement shall be deemed to be a continuing waiver
in
the future or a waiver of any other provision, condition or requirement
hereof,
nor shall any delay or omission of any party to exercise any right hereunder
in
any manner impair the exercise of any such right accruing to it
thereafter.
19
Section
7.6 Headings. The
article, section and subsection headings in this Agreement are for convenience
only and shall not constitute a part of this Agreement for any other purpose
and
shall not be deemed to limit or affect any of the provisions
hereof.
Section
7.7 Successors and
Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and assigns. After the
Closing, the assignment by a party to this Agreement of any rights hereunder
shall not affect the obligations of such party under this
Agreement. Subject to Section 5.1 hereof, the Purchasers may assign
the Securities and its rights under this Agreement and the other Transaction
Documents and any other rights hereto and thereto without the consent of
the
Company.
Section
7.8 No Third
Party Beneficiaries. This Agreement is intended for the benefit
of the parties hereto and their respective permitted successors and assigns
and
is not for the benefit of, nor may any provision hereof be enforced by,
any
other person.
Section
7.9 Governing
Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Texas, without giving
effect
to the choice of law provisions. This Agreement shall not interpreted
or construed with any presumption against the party causing this Agreement
to be
drafted.
Section
7.10 Survival. The
representations and warranties of the Company and the Purchasers shall
survive
the execution and delivery hereof and the Closing until the second anniversary
of the Closing Date, except the agreements and covenants set forth in Articles
I, III, V, VI and VII of this Agreement shall survive the execution and
delivery
hereof and the Closing hereunder.
Section
7.11 Execution. This
Agreement may be executed in two or more counterparts, all of which when
taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered
to the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing
(or
on whose behalf such signature is executed) with the same force and effect
as if
such facsimile or “.pdf” signature page were an original thereof.
Section
7.12 Publicity. The
Company agrees that it will not disclose, and will not include in any public
announcement, the names of the Purchasers without the consent of the Purchasers,
which consent shall not be unreasonably withheld or delayed, or unless
and until
such disclosure is required by law, rule or applicable regulation, and
then only
to the extent of such requirement.
Section
7.13 Severability. The
provisions of this Agreement are severable and, in the event that any court
of
competent jurisdiction shall determine that any one or more of the provisions
or
part of the provisions contained in this Agreement shall, for any reason,
be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision or
part of a
provision of this Agreement and this Agreement shall be reformed and construed
as if such invalid or illegal or unenforceable provision, or part of such
provision, had never been contained herein, so that such provisions would
be
valid, legal and enforceable to the maximum extent possible.
20
Section
7.14 Further
Assurances. From and after the date of this Agreement, upon the
request of the Purchasers or the Company, the Company and each Purchaser
shall
execute and deliver such instruments, documents and other writings as may
be
reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement, the Warrants and the
Registration Rights Agreement.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
21
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the date first above
written.
RICK’S
CABARET INTERNATIONAL, INC.
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By:
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Name:
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Title:
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PURCHASER:
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By:
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Name:
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Title:
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PURCHASER:
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By:
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Name:
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Title:
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PURCHASER:
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By:
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Name:
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Title:
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