LEASE AGREEMENT
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BY AND BETWEEN
WMF INVESTMENTS, INC., AS LANDLORD
AND
RCI ENTERTAINMENT (HOUSTON), INC., AS TENANT
Exhibit 10.2
ASSET PURCHASE AGREEMENT
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This Asset Purchase Agreement ("Agreement") is made this 4th day of August,
2000, by and between WMF Investments, Inc., a Texas corporation ("Seller"),
whose address is 00000 Xxxxx Xxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000, RCI
Entertainment (Houston), Inc., a Texas corporation ("Buyer"), whose address is
000 Xxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000 Rick's Cabaret International,
Inc., a Texas corporation ("Rick's"), whose address is 000 Xxxxx Xxxx, Xxxxx
000, Xxxxxxx, Xxxxx 00000.
R E C I T A L S:
WHEREAS, Seller is the owner of all of the tangible and intangible assets
(the "Personal Property") associated or used in connection with the operation of
an adult entertainment business, restaurant and alcoholic beverage bar known as
"Chesapeake Bay Gentlemen's Club at 00000 Xxxx Xxxxxxx, Xxxxxxx, Xxxxx 00000
("Chesapeake"); and
WHEREAS, the Seller also owns all of the real estate upon which Chesapeake
is located, as more fully described herein, and all improvements thereon (the
"Real Property"); and
WHEREAS, Seller desires to sell and transfer all of the Personal Property
associated or used in connection with the operation of Chesapeake, and
WHEREAS, Seller desires to be the lessor in a lease for the Real Property;
and
WHEREAS, the Buyer desires to acquire all of the Personal Property of the
Seller and be the lessee in a lease for the Real Property, upon and subject to
the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements set forth herein and in reliance upon the representations and
warranties contained herein, the parties hereto covenant and agree as follows:
ARTICLE I
PURCHASE AND SALE OF THE PERSONAL PROPERTY
1.1 Assets of Seller to be Transferred to Buyer. On the Closing Date
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(as defined in Article IX hereof), and subject to the terms and conditions set
forth in this Agreement, Seller shall sell, convey, transfer and assign, or
cause to be sold, conveyed, transferred and assigned to Buyer, and Buyer shall
acquire all of the tangible and intangible assets and personal property of every
kind and description and wherever situated of the business of Chesapeake from
the Seller, including but not limited to, the following personal property of the
Seller (the "Purchased Assets"):
(i) all of the tangible and intangible assets and personal properties of
every kind and description and wherever situated of the business of
Chesapeake, including, without limitation, inventories, furniture,
fixtures, equipment (including office and kitchen equipment),
computers and software, , appliances, sign inserts, sound and lighting
and telephone systems not incorporated into the building, and with
respect to the lighting only as it relates to the interior of the
building, telephone numbers and its Sexually Oriented Business permit
and license, and other personal property of whatever nature owned or
leased by Seller in connection with the operation of Chesapeake,
including but not limited to those items more fully described on
Exhibit 1.1(i) of this Agreement;
(ii) all of Seller's inventory of supplies, accessories and any and all
other items of personal property of whatever nature, sold by the
Seller in the operation of Chesapeake (the "Inventory"), as more fully
described in Exhibit 1.1(ii);
(iii)all supplies (other than Inventory) and other "consumable supplies"
used in connection with the operation of Chesapeake (the "Supplies"),
as more fully described in Exhibit 1.1(iii);
(iv) all of Seller's right, title, and interest, as lessee, of any and all
equipment leased by Seller and located at Chesapeake (the "Leased
Equipment");
(v) all right, title and interest in and to any and all copyrights,
trademarks, tradenames, trade dress, service marks, slogans, logos,
corporate or partnership names (and any existing or possible
combination or derivation of any or all of the same) and general
intangibles, including, without limitation, the goodwill and
intellectual property rights, associated with or used in connection
with the operation or business of Chesapeake, including all rights,
title and interest in and to the following tradename and trademark
"Chesapeake Bay" (the "Intellectual Property");
(vi) all right, title, and interest of Seller to the use of the telephone
numbers presently being used by Seller, including all rotary
extensions thereto, and all advertisements in the "Yellow Pages",
"City Directory" and other similar publications (the "Telephone
Numbers") and after the Closing, Buyer shall assume all expenses for
the Telephone Numbers and advertising;
(vii)copies of Seller's lists of suppliers, and any and all of books,
records, papers, files, memoranda and other documents in Seller's
possession relating to or compiled in connection with the operation of
Chesapeake which are requested by Buyer (the "Records");
(viii) any and all necessary permits and authorizations which are needed to
conduct an adult entertainment business at Chesapeake which the Seller
has the right to transfer and convey, including its sexually oriented
business permit and license; and
(ix) assignment by the Seller of its rights under the existing lawsuit with
the City of Houston.
All of the items set forth in Section 1.1 are collectively referred to as
the "Purchased Assets."
Specifically excluded from the term "Purchased Assets" as used herein are
cash equivalents, investment securities, federal income tax refunds, corporate
seals, books, accounting records and records relating solely to corporate
governance, and any motor vehicle used for personal or family activities by any
shareholder of Seller (hereinafter collectively referred to as the "Excluded
Assets"). Further specifically excluded from the Term "Purchased Assets" is
real property of the Seller.
1.2 Intent of the Parties. Although the Exhibits to this Agreement are
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intended to be complete, in the event such Exhibits fail to contain the
description of any asset belonging to Seller which is used solely for the
business of Chesapeake or are otherwise necessary for the ownership of
Chesapeake, such assets shall nonetheless be deemed transferred to Buyer at the
Closing.
ARTICLE II
NO ASSUMPTION OF LIABILITIES
The Buyer shall have no obligation and shall not assume or agree to pay,
perform or discharge, nor shall the Buyer be directly or indirectly responsible
or obligated for, any debts, obligations, contracts or liabilities of the
Seller, wherever or however incurred. All personal property taxes on the
Purchased Assets will be paid in full by the Seller for all years prior to the
Closing Date and for the year of Closing such personal property taxes will be
pro rated to the Closing Date.
ARTICLE III
PURCHASE PRICE
3.1 Purchase Price. As consideration for the Purchased Assets, Rick's,
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of which the Buyer is a wholly owned subsidiary, shall deliver at Closing to
Seller, 160,000 restricted shares of Rick's common stock, par value $.01 (the
"Common Stock").
3.2 Contingent Future Consideration. In the event that on August 6,
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2001, the average closing price of Rick's common stock for the sixty (60) days
prior to August 6, 2001 is less than $5.00 per share then RCI shall be obligated
to pay to Seller a contingent amount ("Contingent Amount") equal to the lesser
of (i) $250,000.00 or (ii) $800,000.00 less the Average Price multiplied by
160,000. The Contingent Amount, if any, shall be evidenced by the execution of
a Promissory Note dated one year from the Closing Date and shall be payable as
follows:
Term: Nine Years
Simple Interest Rate: Ten Percent Per Annum
Principal is amortized: Over Nine Years
Principal and Interest are due: Monthly In Arrears
A form of the contingent Promissory Note is attached hereto as Exhibit 3.2.
3.3 Condition to Obligation of the Contingent Amount. If Seller has
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sold any of the shares of Common Stock or "sold short" or "sold short against
the box" any shares of Common Stock of Rick's prior to August 6, 2001, then the
Buyer shall not be obligated to pay any Contingent Amount set forth in Section
3.2 hereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE SELLER
The Seller represents and warrants to Buyer as follows;
4.1 Organization and Capitalization of Seller. Seller is a corporation
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duly organized, validly existing and in good standing under the laws of the
State of Texas, with full power and authority and all necessary governmental and
regulatory licenses, permits and authorizations to carry on the businesses in
which it is engaged, to own the properties that it owns currently and to perform
its obligations under this Agreement, and is duly qualified or licensed to do
business in the manner in which it is presently conducting its business. All of
such issued and outstanding shares of common stock of Seller is fully paid and
non-assessable.
4.2 Authorization of Agreement. Seller has all requisite corporate
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power and authority to execute and deliver this Agreement and to perform its
obligations here-under. The execution and delivery by Seller of this Agreement
and the performance by Seller of its obligations hereunder (a) have been duly
and validly authorized by all requisite corporate action and (b) will not
violate its charter or bylaws or any order, writ, injunction, decree, statute,
rule or regulations applicable to it or any of its properties or assets, or be
in conflict with, result in a breach of or constitute a default under any note,
bond, indenture, mortgage, lease, license, franchise agreement or other
agreement, instrument or obligation, or result in the creation or imposition of
any lien, charge or encumbrance of any kind or nature whatsoever upon any of the
properties or assets of Seller. This Agreement and each and every agreement,
document, exhibit and instrument to be executed, delivered and performed by the
Seller in connection herewith constitute or will, when executed and delivered,
constitute the valid and legally binding obligations of the Seller, enforceable
against it in accordance with their respective terms, except as enforceability
may be limited by applicable equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws from time to time in effect
affecting the enforcement of creditors' rights generally.
4.3 [Intentionally Left Blank]
4.4 Consents. No consent of, approval by, order or authorization
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of, or registration, declaration or filing by Seller with, any court
or any governmental or regulatory agency or authority having
jurisdiction over Seller or any of their property or assets or any
other person is required on the part of Seller in connection with the
consummation of the transactions contemplated by this Agreement,
excluding any registration, declaration or filing the failure to
effect which would not have a material adverse effect on the financial
condition of Seller or the operation of its business after the
Closing.
4.5 Title to Purchased Assets, Personal Property and the Real
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Property. The Seller will have at Closing good and marketable title to
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all of the Purchased Assets and the Real Property, which are being
sold or leased to Buyer under this Agreement, free and clear of all
liens, claims, charges, encumbrances, restrictions or security
interests, except as set forth in Exhibit 4.5, which obligations will
be paid in full at Closing unless otherwise provided for in Exhibit
4.5. All of the Purchased Assets which are to be acquired by Buyer and
the Real Property to be leased to the Buyer are in the possession of
Seller and are generally in good operating condition and repair
(ordinary wear and tear excepted). The Seller is not a party to any
contract or obligation whereby there has been granted to anyone an
absolute or contingent right to purchase, obtain or acquire any rights
in the Purchased Assets or used in connection with the business of
Seller.
4.6 Contracts and Leases. Except as disclosed in Exhibit 4.6,
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Seller (i) has no leases of personal property relating to the
Purchased Assets, whether as lessor or lessee; (ii) has no contractual
or other obligations relating to the Purchased Assets, whether written
or oral; and (iii) has not given any power of attorney to any person
or organization for any purpose relating to the Purchased Assets. The
Seller has no real estate lease on the Real Property in which the
Seller is the landlord or lessor. Exhibit 4.6 sets forth a complete
list, including any amendment of each lease or contract which are part
of the Purchased Assets or the Lease to be acquired by the Buyer.
Seller has furnished Buyer a copy of each contract, lease or other
document relating to the Purchased Assets to which they are subject or
are a party or a beneficiary, which is to be assumed or acquired by
Buyer. To Seller'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 Seller
and the other respective parties thereto and is enforceable in
accordance with their terms, and Seller has no knowledge of any
default or breach under such contract, lease or other document or of
any pending or threatened claims under any such contract, lease or
other document. Neither the signing or 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 contract, lease or other document.
4.7 Litigation. Except as disclosed in Exhibit 4.7, there is no
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suit, claim, arbitration, investigation, action or proceeding entered
against, now pending or, to the Seller's knowledge, threatened against
the Purchased Assets or the Real Property, before any court,
arbitration, administrative or regulatory body or any governmental
agency which may result in any judgment, order, award, decree,
liability or other determination which will or could reasonably be
expected to have any effect upon the Purchased Assets or the Real
Property , nor is there any basis known to Seller for any such action.
The Seller is not subject to any judicial injunction or mandate or any
quasi-judicial or administrative order or restriction directed to or
against it or him or which would affect the Purchased Assets or the
Real Property.
4.8 Taxes. Seller has timely and accurately filed all federal,
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state, foreign, local tax returns and reports and personal and real
property returns and reports required to be filed by it prior to such
dates and has timely paid all taxes shown on such returns as owed for
the periods of such returns, including all withholding or other
payroll related taxes shown on such returns. Seller has timely paid
all real property taxes and personal property taxes. Seller 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 material tax or
governmental charge of any nature. No assessments or notices of
deficiency or other communications have been received by Seller 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 Seller and any taxing authority, including,
without limitation, the Internal Revenue Service, waiving or extending
any statute of limitations with respect to any tax return.
4.9 Financial Information.
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(a) Buyer has received true and complete copies of the unaudited
balance sheet as of March 31, 2000, and the related unaudited statements of
income for the three month period then ending (the "Financial Statement")
for WMF Investments, Inc. The Financial Statements are in accordance with
the books and records of WMF Investments, Inc. and fairly present the
financial position of the corporation and the result of operations and
changes in financial position of the corporation as of the dates and for
the periods indicated.
(b) Seller has no liability or obligation (whether accrued, absolute,
contingent or otherwise) which is of a nature required to be reflected in
financial statements prepared in conformity with the Seller's Financial
Statement, except for (i) the liabilities and obligations which are
disclosed, or reserved against in the Financial Statements, to the extent
and in the amounts so disclosed or reserved against, and (ii) liabilities
incurred or accrued in the ordinary course of business since March 31, 2000
and which do not, either individually or in the aggregate, have an adverse
effect on the business, assets or operations of the Seller.
(c) Seller is not in default with respect to any liabilities or
obligations, and all such liabilities or obligations shown or reflected in
the Financial Statements and such liabilities incurred or accrued
subsequent to March 31, 2000 have been, or are being, paid and discharged
as they become due, and all such liabilities and obligations were incurred
in the ordinary course of business.
4.10 Compliance with Laws. Seller is and at all times prior to the
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date hereof has been, in compliance with all statutes, orders, rules, and
regulations applicable to it or to the ownership of its assets or the operation
of its business, 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 Seller, and Seller has no basis to expect to receive,
and have not received, any order or notice of any such violation or claim of
violation of any such statute, order, rule, ordinance or regulation.
4.11 Entertainment Licenses. Seller will use its best efforts to the
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effect that a sexually oriented business license and a liquor license (full
service alcoholic beverage license) for Seller issued by Texas and/or the City
of Houston, are in full force and effect and will remain in full force and
effect until the Closing.
4.12 Intellectual Property. The Seller is the owner of all right,
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title and interest in and to all of the Intellectual Property used in connection
with the operation of Chesapeake. Such Intellectual Property is free and clear
of any material liens, mortgages, judgments, or other encumbrances of any kind,
and no rights or licenses of any kind respecting the Intellectual property have
been granted to any third party. There are no outstanding, or, to the best
knowledge of the Seller, threatened claims of infringement against Seller
respecting the use of any of the Intellectual Property in connection with the
operations or business of the Seller and it has no knowledge of any trademark,
service xxxx, trade name, assumed name, copyright, patent, trade secret,
contractual or other rights of any third party which may be violated or
infringed by the use of any of the Intellectual Property in connection with
Seller's operations or business.
4.13 Insurance Policies. Copies of all insurance policies maintained
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by the Seller relating to the operation of Chesapeake carried by the Seller have
been delivered or will be made available to Buyer. The policies of insurance
held by Seller are in such amounts, and insure against such losses and risks, as
Seller reasonably deems appropriate for its property and business operations.
All such insurance policies are in full force and effect, and all premiums due
thereon have been paid. Valid policies for such insurance will be outstanding
and duly in force at all times prior to the Closing.
4.14 Environmental Matters. Neither the Seller nor any other party to
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this Agreement is now, nor has in the past, used or is using the Personal
Property or the Real Property for the handling, treatment, storage or disposal
of any Hazardous Substance (as hereinafter defined). No release, discharge,
spillage or disposal of any Hazardous Substance and no soil or water
contamination by any Hazardous Substance has occurred or is occurring in or on
the Personal Property or the Real Property. The Seller has complied with all
reporting requirements under any applicable federal, state or local
environmental laws and permits, and there are no existing violations by the
Seller of any such environmental laws or permits. There are no claims, actions,
suits, proceedings or investigations related to the presence, release,
discharge, spillage or disposal of any Hazardous Substance or contamination of
soil or water by any Hazardous Substance pending or threatened with respect to
the Personal Property or the Real Property or otherwise against the Seller in
any court or before any state, federal or other governmental agency or private
arbitration tribunal and to the best of the knowledge of Seller and any other
party to this Agreement, there is no basis for any such claim, action, suit,
proceeding or investigation. To the best of their knowledge, there are no
underground storage tanks on the Real Property. The Seller is not aware of any
building or other improvement included in the Real Property which contains any
asbestos or any asbestos-containing materials. For the purposes of this
Agreement, "Hazardous Substance" shall mean any hazardous or toxic substance or
waste as those terms are defined by any applicable federal or state law or
regulation including, without limitation, the Comprehensive Environmental
Recovery Compensation and Liability Act, 42 U.S.C. 9601 and the Resource
Conservation and Recovery Act, 42 U.S.C. 6901 and petroleum, petroleum products
and oil.
4.15 No Default. Seller is not in default under any term or condition
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of any instrument evidencing, creating or securing any indebtedness of Seller,
and there has been no default in any material obligation to be performed by
Seller under any other contract, lease, agreement, commitment or undertaking to
which it is a party or by which it or its assets or properties are bound, nor
has Seller waived any material right under any such contract, lease, agreement,
commitment or undertaking.
4.16 Disclosure. No representation or warranty of Seller contained in
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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.
4.17 Pending Claims. There is no claim, suit, action or proceeding,
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whether judicial, administrative or otherwise, pending or, to the best of
Seller's knowledge, threatened that would preclude or restrict the performance
of this Agreement by Seller.
4.18 No Brokerage Commission. No broker or finder has acted for the
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Seller in connection with this Agreement or the transactions contemplated
hereby, and no person is entitled to any brokerage or finder's fee or
compensation in respect thereof based in any way on agreements, arrangements or
understandings made by or on behalf of the Seller.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
5.1 Organization of Buyer. Buyer is a corporation duly organized,
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validly existing and in good standing in the laws of the state of Texas, with
full power and authority to carry on the businesses in which it is engaged, to
own the properties that it owns currently and will own at the Closing, and to
perform its obligations under this Agreement and is duly qualified or licensed
to do business in the manner in which it is presently conducting its business.
5.2 Authorization of Agreement. Buyer has all requisite corporate
----------------------------
power and authority to execute and deliver this Agreement and to perform its
obligations here-under. The execution and delivery by Buyer of this Agreement
and the performance by Buyer of its obligations hereunder (a) have been duly and
validly authorized by all requisite corporate action and (b) will not violate
its charter or bylaws or any order, writ, injunction, decree, statute, rule or
regulations applicable to it or any of its properties or assets, or be in
conflict with, result in a breach of or constitute a default under any note,
bond, indenture, mortgage, lease, license, franchise agreement or other
agreement, instrument or obligation, or result in the creation or imposition of
any lien, charge or encumbrance of any kind or nature whatsoever upon any of the
properties or assets of Buyer. This Agreement and each and every agreement,
document, exhibit and instrument to be executed, delivered and performed by the
Buyer in connection herewith constitute or will, when executed and delivered,
constitute the valid and legally binding obligations of the Buyer enforceable
against it in accordance with their respective terms, except as enforceability
may be limited by applicable equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws from time to time in effect
affecting the enforcement of creditors' rights generally.
5.3 Disclosure. No representation or warranty of Buyer contained in
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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.
5.4 Consents. No consent of, approval by, order or authorization of,
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or registration, declaration or filing by Buyer with, any court or any
governmental or regulatory agency or authority having jurisdiction over Buyer or
any of their property or assets or any other person is required on the part of
Buyer in connection with the consummation of the transactions contemplated by
this Agreement, excluding any registration, declaration or filing the failure to
effect which would not have a material adverse effect on the financial condition
of Buyer or the operation of its business after the Closing.
5.5 Litigation. No litigation is pending, or, to Buyer's knowledge,
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threatened against Buyer, or its assets or properties which seeks to restrain or
enjoin the execution and delivery of this Agreement or any of the documents
referred to herein or the consummation of any of the transactions contemplated
hereby or thereby.
5.6 Brokerage Commission. No broker or finder has acted for the Buyer
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in connection with this Agreement or the transactions contemplated hereby, and
no person is entitled to any brokerage or finder's fee or compensation in
respect thereof based in any way on agreements, arrangements or understandings
made by or on behalf of the Buyer.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF RICK'S
Rick's hereby represents and warrants to Seller as follows:
6.1 Organization of Rick's. Rick's is a corporation duly organized,
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validly existing and in good standing in the laws of the state of Texas, with
full power and authority to carry on the businesses in which it is engaged, to
own the properties that it owns currently and will own at the Closing, and to
perform its obligations under this Agreement and is duly qualified or licensed
to do business in the manner in which it is presently conducting its business.
6.2 Authorization of Agreement. Rick's has all requisite corporate
----------------------------
power and authority to execute and deliver this Agreement and to perform its
obligations here-under. The execution and delivery by Rick's of this Agreement
and the performance by Rick's of its obligations hereunder (a) have been duly
and validly authorized by all requisite corporate action and (b) will not
violate its charter or bylaws or any order, writ, injunction, decree, statute,
rule or regulations applicable to it or any of its properties or assets, or be
in conflict with, result in a breach of or constitute a default under any note,
bond, indenture, mortgage, lease, license, franchise agreement or other
agreement, instrument or obligation, or result in the creation or imposition of
any lien, charge or encumbrance of any kind or nature whatsoever upon any of the
properties or assets of Rick's. This Agreement and each and every agreement,
document, exhibit and instrument to be executed, delivered and performed by
Rick's in connection herewith constitute or will, when executed and delivered,
constitute the valid and legally binding obligations of Rick's enforceable
against it in accordance with their respective terms, except as enforceability
may be limited by applicable equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws from time to time in effect
affecting the enforcement of creditors' rights generally.
6.3 Disclosure. No representation or warranty of Rick's contained in
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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.
6.4 Consents. No consent of, approval by, order or authorization of,
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or registration, declaration or filing by Rick's with, any court or any
governmental or regulatory agency or authority having jurisdiction over Rick's
or any of their property or assets or any other person is required on the part
of Rick's in connection with the consummation of the transactions contemplated
by this Agreement, excluding any registration, declaration or filing the failure
to effect which would not have a material adverse effect on the financial
condition of Rick's or the operation of its business after the Closing and
except for any filing under the federal or state securities laws.
6.5 Litigation. No litigation is pending, or, to Rick's knowledge,
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threatened against Rick's, or its assets or properties which seeks to restrain
or enjoin the execution and delivery of this Agreement or any of the documents
referred to herein or the consummation of any of the transactions contemplated
hereby or thereby.
6.6 Brokerage Commission. No broker or finder has acted for Rick's in
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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 VII
COVENANTS
7.1 Consents and Further Actions. As soon as practicable, Seller and
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Buyer will jointly commence to take all reasonable action required to obtain all
consents, approvals and agreements of any third parties. Specifically, without
limiting the foregoing, Seller and Buyer will commence to take all reasonable
action required to obtain the issuance of any and all permits necessary to
operate Chesapeake as an adult entertainment sexually oriented business
facility, including the issuance of a liquor license duly issued and approved by
Texas and Houston which will allow for the sale of liquor and the operation of
an adult entertainment sexually oriented facility by Buyer at Chesapeake.
Seller and Buyer each will keep the other informed of the status of any
inquiries made of such party by any governmental agency or authority or members
of their respective staffs with respect to this Agreement or the transactions
contemplated hereby. In addition, subject to the terms and conditions herein
provided, Seller and Buyer each covenants and agrees to use reasonable efforts
to take, or cause to be taken, all action, or do, or cause to be done, all
things, necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
7.2 Access to Information. Between the date of this Agreement and the
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Closing Date, Seller shall give Buyer and its authorized representatives full
access, at all reasonable times, to its businesses, properties and assets, and
all of its financial books and records, agreements and records relating to the
ownership and operation of Seller as shall be reasonably requested. Seller will
permit Buyer and its representatives to make such inspections as they may
require and will cause the officers of Seller to cooperate with Buyer in
connection with such inspection.
7.3 Prohibited Negotiations. Subsequent to the execution of the
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Agreement, and prior to the Closing Date of the Agreement, the Seller shall not
solicit or encourage inquiries or proposals with respect to or furnish any
information relating to or participate in any negotiations or discussions
concerning, any sale, lease or conveyance of the Purchased Assets or the Real
Property or any acquisition or purchase of all or a substantial portion of the
assets of Seller or of a equity interest in Seller, or any business combination
with Seller. Seller hereby agrees to advise Buyer of any contact from any third
party regarding the acquisition of the Purchased Assets or the Real Property or
the acquisition or other investment in Seller or of any contact which would
relate to the transactions contemplated by this Agreement.
ARTICLE VIII
CONDITIONS TO CLOSING
8.1 Conditions to the Obligations of Seller. The obligations of Seller
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to consummate the transactions contemplated hereby shall be subject to the
satisfaction, on or before the Closing Date, of each and every one of the
following conditions, unless waived, in whole or in part, by Seller for purposes
of consummating such transaction.
(a) The representations and warranties of Buyer and Rick's set forth
in this Agreement shall be true and correct in all material respects on the
Closing Date with the same force and effect as if they had been made on the
Closing Date;
(b) Buyer and Rick's shall have performed and complied with all
agreements, obligations, covenants and conditions required by this
Agreement to be performed or complied with on or prior to the Closing;
(c) The Seller shall have received a certificate, dated the Closing
Date and signed by the president of the Buyer to the effect set forth in
Section 8.1(a) and 8.1(b) for the purpose of verifying the accuracy of such
representations and warranties and the performance and satisfaction of such
covenants and conditions;
(d) The Seller shall have received a certificate, dated the Closing
Date and signed by the president of Rick's to the effect set forth in
Section 8.1(a) and 8.1(b) for the purpose of verifying the accuracy of such
representations and warranties and the performance and satisfaction of such
covenants and conditions;
(e) The Related Transactions as set forth in Section 9.2 shall be
consummated concurrently with the Closing;
(f) The Seller shall have received certificates evidencing 160,000
shares of Rick's common stock, duly executed for issuance by Rick's to the
Seller or a letter of instructions from a duly authorized officer of Rick's
to American Stock Transfer & Trust Company (Rick's transfer agent),
instructing the transfer agent to duly issue stock certificates evidencing
the 160,000 shares of common stock of Rick's to Seller, all as contemplated
by this Agreement;
(g) The Seller shall have received corporate resolutions of the Board
of Directors of RCI and Rick's, certified by an authorized officer, which
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; and
(h) 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 against Buyer or Rick's.
8.2 Conditions to the Obligations of Buyer and Rick's. The obligations
-------------------------------------------------
of the Buyer and Rick's to effect the transactions contemplated hereby shall be
subject to the satisfaction, on or before the Closing Date, of each and every
one of the following conditions, unless waived, in whole or in part, by Buyer or
Rick's for purposes of consummating such transaction.
(a) The representations and warranties of Seller set forth herein
shall be true and correct in all material respects on the Closing Date with
the same force and effect as if they had been made on the Closing Date;
(b) The Seller shall have performed and complied with all agreements,
obligations, covenants and conditions required by this Agreement to be
performed or complied with by Seller on or prior to the Closing;
(c) The Buyer and Rick's shall have received a certificate, dated the
Closing Date and signed by the president of the Seller to the effect set
forth in Section 8.2(a) and 8.2(b) for the purpose of verifying the
accuracy of such representations and warranties and the performance and
satisfaction of such covenants and conditions;
(d) The Buyer shall have obtained a liquor license duly issued and
approved by the Texas Alcoholic Beverage Commission which will allow for
the sale of liquor by the Buyer at the premises where Chesapeake is
located;
(e) The Buyer shall have obtained or been transferred from Seller all
necessary permits or other authorizations which may be needed to conduct an
adult entertainment sexually oriented business on the Real Property;
(f) The Related Transactions as set forth in Section 9.2 shall be
consummated concurrently with the Closing;
(g) The Buyer shall have received corporate resolutions of the Board
of Directors of Seller, certified by an authorized officer, which 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;
(h) The Seller shall have assigned its rights and obligations under
the existing lawsuit with the City of Houston and the Buyer shall have been
substituted in as a party to such litigation;
(i) The Seller shall have delivered to Buyer all instruments of
assignment and bills of sale necessary to transfer to Buyer good and
marketable title to the Purchased Assets;
(j) 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 against Seller.
ARTICLE IX
THE CLOSING
9.1 Time and Place of Closing. The Closing of the transactions
-----------------------------
provided for in this Agreement ("Closing") shall be held at the offices of
Xxxxxxx, Xxxxx & Xxxxxxxxx, 0000 Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000
commencing at 10:00 a.m. Central Daylight Time on the third business day after
the issuance and approval of the required liquor license issued by the Texas
Alcoholic Beverage Commission. In the event that the full service liquor
license has not been approved and issued to Buyer by 5:00 p.m. Central Daylight
Time on March 5, 2001, then, unless otherwise provided below, either party may
provide written notice to the other that this Agreement is canceled and
terminated. In the event that the Closing does not occur by March 8, 2001, the
parties hereto shall have the right, but not the obligation, to extend the date
of Closing. The day on which the Closing occurs is referred to herein as the
"Closing Date."
Nothing in this Section 9.1 shall alter any rights that the Buyer has that
are set forth in that certain Management Agreement dated May 4, 2000 by and
between Seller and Buyer.
9.2 Related Transactions. In addition to the purchase and sale of the
--------------------
Purchased Assets, the following action shall take place contemporaneously at the
Closing:
(e) The Seller and Buyer shall enter into a Lease for the
Real Property in the form set forth in Exhibit 9.2(b);
(b) [Intentionally Left Blank]
(c) [Intentionally Left Blank]
(d) The Seller shall assign its rights and obligations
under the existing lawsuit against the City of Houston to the Buyer
or its is assigns and the Seller shall substitute in the Buyer
or its assigns into the lawsuit.
ARTICLE X
INDEMNIFICATION
10.1 Indemnification from the Seller. The Seller agrees to and shall
---------------------------------
indemnify, defend (with legal counsel reasonably acceptable to Buyer), and hold
Buyer and Rick's, its officers, directors, shareholders, employees, agents,
affiliates, and assigns harmless at all times after the date of this
Agreement, from and against and in respect of, any liability, claim, deficiency,
loss, damage or injury, and all reasonable costs and expenses (including
reasonable attorneys' fees and costs of any suit related thereto) suffered or
incurred by Buyer arising from (a) any misrepresentation by, or breach of any
covenant or warranty of Seller contained in this Agreement, or any Exhibit,
certificate, or other instrument furnished or to be furnished by Seller
hereunder, or any claim by a third party (regardless of whether the claimant is
ultimately successful) which if true would be such a misrepresentation or
breach; (b) any nonfulfillment of any agreement on the part of Seller under this
Agreement, or from any material misrepresentation in or material omission from,
any certificate or other instrument furnished or to be furnished to Buyer
hereunder; and (c) any suit, action, proceeding, claim or investigation, pending
or threatened against or affecting Buyer or Rick's which arises from, which
arose from, or which is based upon or pertaining to Seller's conduct or
operation of the business of the Seller or Seller's ownership, possession or use
of the Purchased Assets and employment of employees, and any other matter or
state of facts relating to the transactions contemplated herein existing prior
to May 1, 2000.
10.2 Indemnification from the Buyer. The Buyer agrees to and shall
---------------------------------
indemnify, defend (with legal counsel reasonably acceptable to Seller) and hold
Seller, its officers, directors, shareholders, employees, agents and assigns
harmless at all times after the date of Closing from and against, and in
respect of any liability, claim, deficiency, loss, damage, or injury, and all
reasonable costs and expenses (including reasonably attorneys' fees and costs of
any suit related thereto) suffered or incurred by Seller, from (a) any
misrepresentation by, or breach of any covenant or warranty of, the Buyer
contained in this Agreement or any Exhibit, certificate, or other agreement or
instrument furnished or to be furnished by Buyer hereunder, or any claim by a
third party (regardless of whether the claimant is ultimately successful), which
if true, would be such a misrepresentation or breach; (b) any nonfulfillment of
any agreement on the part of Buyer under this Agreement, or from any
misrepresentation in or omission from, any certificate or other agreement or
instrument furnished or to be furnished to Seller hereunder; and (c) any suit,
action, proceeding, claim or investigation against or affecting the Seller which
arises from, which arose from, or which is based upon or pertaining to the
Buyer's conduct or operation of the business of Chesapeake and employment of
employees, and any other matter or state of facts relating to the transactions
contemplated herein existing subsequent to May 1, 2000.
10.3 Indemnification from Rick's. Rick's agrees to and shall
-----------------------------
indemnify, defend (with legal counsel reasonably acceptable to Seller) and hold
Seller, its officers, directors, shareholders, employees, agents and assigns
harmless at all times after the date of Closing from and against, and in
respect of any liability, claim, deficiency, loss, damage, or injury, and all
reasonable costs and expenses (including reasonably attorneys' fees and costs of
any suit related thereto) suffered or incurred by Seller, from (a) any
misrepresentation by, or breach of any covenant or warranty of, Rick's contained
in this Agreement or any Exhibit, certificate, or other agreement or instrument
furnished or to be furnished by Rick's hereunder, or any claim by a third party
(regardless of whether the claimant is ultimately successful), which if true,
would be such a misrepresentation or breach; (b) any nonfulfillment of any
agreement on the part of Rick's under this Agreement, or from any
misrepresentation in or omission from, any certificate or other agreement or
instrument furnished or to be furnished to Seller hereunder; and (c) any suit,
action, proceeding, claim or investigation against or affecting the Seller which
arises from, which arose from, or which is based upon or pertaining to Rick's
conduct or operation of the business of Chesapeake and employment of employees,
and any other matter or state of facts relating to the transactions contemplated
herein existing subsequent to May 1, 2000.
10.4 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, if the
indemnifying party shall acknowledge in writing to such indemnified party that
this Agreement applies with respect to such lawsuit or action, then the
indemnifying party shall be entitled, if it so elects, to take control of the
defense and investigation of such lawsuit or action and to employ and engage
attorneys of its own choice to handle and defend the same, at the indemnifying
party's cost, risk and expense; and such indemnified party shall cooperate in
all reasonable respects, at its cost, risk and expense, with the indemnifying
party and such attorneys in the investigation, trial and defense of such lawsuit
or action and any appeal arising therefrom; provided, however, that the
indemnified party may, at its own cost, participate in such investigation, trial
and defense of such lawsuit or action and any appeal arising therefrom. The
indemnifying party shall not, without the prior written consent of the
indemnified parties, effect any settlement of any proceeding in respect of which
any indemnified parties 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 parties from all liability
on claims that are the subject matter of such proceeding.
10.5 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
individual's or entities' absolute sole discretion and to charge the cost of any
such settlement, payment, expense and costs, including reasonable attorneys'
fees, to the entity or individual that had the obligation to provide such
indemnification, defense and hold harmless obligation and same shall constitute
an additional obligation of the entity or of the individual or both, as the case
may be.
ARTICLE XI
MISCELLANEOUS
11.1 Notices. All notices and other communications provided for herein
-------
shall be in writing and shall be duly given if delivered personally or sent by
registered or certified mail, return receipt requested, postage prepaid, or
overnight air courier guaranteeing next day delivery:
(a) If to Seller, to:
WMF Investments, Inc.
Attention: Xxxxxxx X. Xxxxxxxxxx
00000 Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
With a copy to:
Xxxxxx Xxxxxxx
00 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
(b) If to Buyer or Rick's, to:
Xx. Xxxx Xxxxxx, President
Rick's Cabaret International, Inc.
000 Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
With a copy to:
Xx. Xxxxxx X. Xxxxxxx
Xxxxxxx, Xxxxx & Xxxxxxxxx
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Fax: (000) 000-0000
All notices and communications shall be deemed to have been duly given: at the
time delivered by hand, if personally delivered; three days after being
deposited in the mail, postage prepaid, sent certified mail, return receipt
requested, if mailed; and the next day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next day delivery. If a notice or
communication is mailed in the manner provided above within the time prescribed,
it is duly given, whether or not the addressee receives it.
11.2 Assignment. Neither this Agreement nor any of the rights,
----------
interests or obligations hereunder shall be assigned by any of the parties
(except that Buyer may assign its rights to an entity which is wholly owned by
Buyer) without the prior written consent of the other parties, which consent
will not be unreasonably withheld. This Agreement will be binding upon, inure
to the benefit of and be enforceable by the parties and their respective heirs,
personal representatives, successors and assigns.
11.3 Counterparts. This Agreement may be executed in any number of
------------
counterparts, which taken together shall constitute one and the same instrument
and each of which shall be considered an original for all purposes.
11.4 Section Headings. The section headings contained in this
-----------------
Agreement are for convenient reference only and shall not in any way affect the
meaning or interpretation of this Agreement.
11.5 Entire Agreement; Amendment. This Agreement, the documents to be
----------------------------
executed hereunder and the exhibits attached hereto constitute the entire
agreement among the parties hereto pertaining to the subject matter hereof and
supersede all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties pertaining to the subject matter hereof,
and there are no warranties, representations or other agreements among the
parties in connection with the subject matter hereof except as specifically set
forth herein or in documents delivered pursuant hereto. No supplement,
amendment, alteration, modification, waiver or termination of this Agreement
shall be binding unless executed in writing by the parties hereto. All of the
exhibits referred to in this Agreement are hereby incorporated into this
Agreement by reference and constitute a part of this Agreement.
11.6 Survival. All warranties and representations herein shall survive
--------
the Closing and shall be true and correct as of the date hereof and as of the
Closing Date. The respective representations, warranties, covenants and
agreements set forth in this Agreement shall survive the Closing for the maximum
period allowed by law.
11.7 Public Announcements. The parties hereto agree that prior to
---------------------
making any public announcement or statement with respect to the transactions
contemplated by this Agreement, the party desiring to make such public
announcement or statement shall consult with the other parties hereto and
exercise their best efforts to (i) agree upon the text of a joint public
announcement or statement to be made by all of such parties or (ii) obtain
approval of the other parties hereto to the text of a public announcement or
statement to be made solely by the party desiring to make such public
announcement; provided, however, that if any party hereto is required by law to
make such public announcement or statement, then such announcement or statement
may be made without the approval of the other parties.
11.8 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.
11.9 Waiver. No waiver by any party of any default or non-performance
------
shall be deemed a waiver of any subsequent default or non-performance, and no
waiver of any kind shall be effective unless set forth in writing and signed by
the party against whom such waiver is to be charged.
11.10 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 requested by the other
parties to confirm or perfect or otherwise to carry out the intent and purposes
of this Agreement.
11.11 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.
11.12 Expenses. All expenses incurred by the parties hereto in
--------
connection with or related to the authorization, preparation and execution of
this Agreement and the Closing of the transactions contemplated hereby, shall be
borne solely and entirely by the party which has incurred the same.
11.13 Gender. All personal pronouns used in this Agreement shall
------
include the other genders, whether used in the masculine, feminine or neuter
gender, and the singular shall include the plural, and vice versa, whenever
appropriate.
11.14 Jurisdiction. This Agreement shall be governed by, and its
------------
provisions construed to be in compliance with, the laws of the State of Texas.
The parties agree that venue for purposes of construing or enforcing this
Agreement shall be proper in Xxxxxx County, Texas.
[[[SIGNATURES ON FOLLOWING PAGE]]]
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed effective as of the day and year first above written.
WMF Investments, Inc.
By:____________________________________
Xxxxxxx X. Xxxxxxxxxx, President
RCI ENTERTAINMENT (HOUSTON), INC.
By:____________________________________
Xxxx Xxxxxx, President
RICK'S CABARET INTERNATIONAL, INC.
By:____________________________________
Xxxx Xxxxxx, President
