EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
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This Stock Purchase Agreement (the "Agreement") is made and entered into
this ____ day of September, 2004, by and among Peregrine Enterprises, Inc., a
New York corporation (the "Company" or "Peregrine"), Philip Eisenberg and Lena
Eisenberg, Individually ("the Eisenbergs" or "Sellers"), RCI Entertainment (New
York) Inc., a New York corporation ("Purchaser" or "RCI New York"), and Rick's
Cabaret International, Inc., a Texas corporation ("Rick's").
WHEREAS, the Sellers own 100 shares of common stock, no par value (the
"Shares") of the Company, which Shares represent all of the shares of capital
stock of Peregrine presently outstanding; and
WHEREAS, Philip Eisenberg serves as President to the Company; and
WHEREAS, Peregrine owns and operates an adult entertainment cabaret known
as The Paradise Club ("The Paradise Club") located at 50 West 33rd Street, New
York, New York (the "Premises").
WHEREAS, the Sellers desire to sell the Shares of Peregrine to RCI New York
on the terms and conditions set forth herein; and
WHEREAS, RCI New York desires to purchase the Shares of Peregrine from
Sellers on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements and the respective representations and warranties herein contained,
and on the terms and subject to the conditions herein set forth, the parties
hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF THE SHARES
Section 1.1 Sale of the Shares. Subject to the terms and conditions
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set forth in this Agreement, at the Closing (as hereinafter defined) the Sellers
hereby agree to sell, transfer, convey and deliver to RCI New York all of the
Shares of common stock of Peregrine, free and clear of all encumbrances, which
represents all of the outstanding capital stock of Peregrine, and shall deliver
to RCI New York stock certificates representing the Shares, duly endorsed to RCI
New York or accompanied by duly executed stock powers in form and substance
satisfactory to RCI New York.
Section 1.2 Purchase Price. As consideration for the purchase of the
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Shares, RCI New York shall pay to Sellers total consideration of $7,625,000 (the
"Purchase Price") payable as follows:
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(i) $2,500,000 payable to the Shareholders by cashier's check, certified
funds or wire transfer at the Closing (as hereinafter defined); and
(ii) $5,125,000 as evidenced by a Promissory Note (part of which is
convertible as set forth below) bearing simple interest of 4.00% per
annum (the "Promissory Note") payable commencing 120 days after the
Closing as follows: (a) the payment of $58,333.33 per month for
twenty-four (24) consecutive months; (b) the payment of $63,333.33 for
twenty-four (24) consecutive months; (c) the payment of $68,333.33 for
twelve (12) consecutive months; and (d) a lump sum payment of the
remaining balance to be paid on the sixty-first (61st) month. All
payments shall be credited first to accrued interest and thereafter to
principal on the Promissory Note. $2,000,000 of the principal amount
of the Promissory Note is convertible into shares of restricted common
stock of Rick's Cabaret International, Inc. ("Rick's Common Stock") as
follows: (1) $200,000 convertible at $4.00 per share; (2) $225,000
convertible at $4.50 per share; (3) $250,000 convertible at $5.00 per
share; (4) $275,000 convertible at $5.50 per share; (5) $300,000
convertible at $6.00 per share; (6) $325,000 convertible at $6.50 per
share; (7) $350,000 convertible at $7.00 per share; and (8) $75,000
convertible at $7.50 per share. RCI New York shall not have the right
to force conversion of the Promissory Note. The Promissory Note shall
be secured by the shares and the assets of RCI New York and Peregrine,
including a collateral reassignment of the lease for the business
premises at 50 West 33rd Street, New York, New York. A copy of the
Form Promissory Note is attached hereto as Exhibit 1.2.
Section 1.3 Payments into Escrow. As of the date of execution of this
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Agreement, the Purchaser has deposited $800,000 in an escrow account (the
"Escrow") with Prestige Title Agency, Inc., Brooklyn, New York (the "Escrow
Agent"). The $800,000 shall be held in Escrow until the Closing as defined
herein.
If the NYS liquor authority for the State of New York denies the addition
of a representative of Purchaser to the existing Liquor License which allows for
the sale of liquor on the Premises (the "Liquor License") by December 1, 2004,
then the Purchaser or Peregrine will have the right at any time thereafter, by
written notice to the other party to terminate this Agreement and the Purchaser
shall be refunded all funds then held in Escrow except for $150,000, which shall
have been or be paid to Peregrine. The Purchaser and Peregrine will use their
best efforts on the date of execution hereof to cause a representative of the
Purchaser to be added to the existing Liquor License. If the Closing does occur
then the $800,000 held in Escrow will be paid to Peregrine and credited against
the $2,500,000 due at Closing. If Purchaser, through no fault of Peregrine,
fails to close the transaction by December 1, 2004, time being of the essence,
Peregrine shall be entitled, as its sole legal or equitable remedy, to terminate
this Agreement and receive and retain $250,000 deposited into Escrow by
Purchaser as and for its liquidated damages. The balance of the funds then held
in Escrow ($550,000) shall be refunded to the Purchaser. If Peregrine, through
no fault of the Purchaser, fails to the close the transaction by December 1,
2004, time being of the essence, Purchaser shall have the right, in
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lieu of any other legal or equitable remedy, to either seek specific performance
of this Agreement or to terminate this Agreement and receive back all sums
deposited into Escrow. In no event shall any party be liable to the other for
any consequential, special or punitive damages.
ARTICLE II
CLOSING
Section 2.1 The Closing. The closing of the transactions contemplated
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by this Agreement shall take place on or before December 1, 2004, provided that
a representative of the Purchaser has been added to the existing Liquor License
by the NYS Liquor Authority of the State of New York that allows Purchaser to
sell alcoholic beverages on the Premises (the "Closing Date"), at the law
offices of Jaffe & Asher, LLP, 600 Third Avenue, New York, New York 10016, or at
such other time and place as agreed upon among the parties hereto (the
"Closing").
Section 2.2 Delivery and Execution. At the Closing: (a) the Sellers
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shall deliver to RCI New York certificates evidencing the Shares of Peregrine,
free and clear of any liens, claims, equities, charges, options, rights of first
refusal or encumbrances, duly endorsed to RCI New York or accompanied by duly
executed stock powers in form and substance satisfactory to RCI New York against
delivery by RCI New York to the Sellers of payment in an amount equal to the
Purchase Price of the Shares being purchased by RCI New York in the manner set
forth herein; (b) the Related Transactions (as defined below) shall be
consummated concurrently with the Closing; and (c) the Conditions to Closing of
the Sellers and RCI New York as set forth in Article V and VI, respectively,
shall have been satisfied or waived in writing by the party authorized to waive
such condition.
Section 2.3 Related Transactions. In addition to the purchase and sale
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of the Shares, the following actions shall take place contemporaneously at the
Closing (collectively, the "Related Transactions"):
(i) The Sellers will enter into a five (5) year covenant not to
compete pursuant to the terms of which the Sellers will agree not
to compete, either directly of indirectly, with Peregrine, the
Paradise Club, RCI New York or Rick's by operating an
establishment featuring live female nude or semi-nude
entertainment within the corporate limits of the city of New
York, New York;
(ii) The Landlord shall consent in writing to the transfer of the
Shares to the Purchaser at the time of Closing and to the
continuation of the existing lease with the Purchaser as the
owner of the Shares. If requested by the Landlord, Rick's or a
creditworthy principal of Rick's satisfactory to the Landlord
will execute a "good-guy" guaranty similar to that signed by
Philip Eisenberg which guaranties the lease payments during the
period of actual use and occupancy of the premises by RCI New
York;
(iii) The estoppel certificate to Purchaser from Peregrine shall have
been executed and the Landlord shall consent and execute a
Non-Disturbance Agreement in a form acceptable to Purchaser; and
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(iv) Purchaser, Rick's and Peregrine, as applicable, shall execute and
deliver the Promissory Note, Stock Pledge Agreements and Security
Agreement securing the Promissory Note and execute and deliver
the other documents required thereby. The form of Stock Pledge
Agreement and Security Agreement are as annexed hereto as Exhibit
2.3 (i, ii and iii).
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SELLERS AND PEREGRINE
The Sellers and Peregrine, jointly and severally, hereby represent and
warrant to RCI New York and Rick's as follows:
Section 3.1. Organization, Good Standing and Qualification. Peregrine
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(i) is an entity duly organized, validly existing and in good standing under the
laws of the New York, (ii) has all requisite power and authority to carry on its
business, and (iii) is duly qualified to transact business and is in good
standing in all jurisdictions where its ownership, lease or operation of
property or the conduct of its business requires such qualification, except
where the failure to do so would not have a material adverse effect to the
Sellers or Peregrine, respectively.
At Closing, the authorized capital stock of Peregrine consists of 200
shares of common stock, no par value, of which 100 shares are validly issued and
outstanding. There are no shares of preferred stock authorized or issued and
there is no other class of capital stock authorized or issued by Peregrine. All
of the issued and outstanding shares of common stock of Peregrine are owned by
the Sellers and are fully paid and non-assessable. None of the shares issued
are in violation of any preemptive rights. Peregrine has no obligation to
repurchase, reacquire, or redeem any of its outstanding capital stock. There
are no outstanding securities convertible into or evidencing the right to
purchase or subscribe for any shares of capital stock of Peregrine, there are no
outstanding or authorized options, warrants, calls, subscriptions, rights,
commitments or any other agreements of any character obligating Peregrine to
issue any shares of its capital stock or any securities convertible into or
evidencing the right to purchase or subscribe for any shares of such stock, and
there are no agreements or understandings with respect to the voting, sale,
transfer or registration of any shares of capital stock of Peregrine.
Section 3.2 Subsidiaries. Peregrine has no subsidiaries.
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Section 3.3 Ownership of the Shares. The Sellers own, beneficially and
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of record, all of the Shares of Peregrine free and clear of any liens, claims,
equities, charges, options, rights of first refusal, or encumbrances. The
Sellers have the unrestricted right and power to transfer, convey and deliver
full ownership of the Shares without the consent or agreement of any other
person and without any designation, declaration or filing with any governmental
authority. Upon the transfer of the Shares to RCI New York as contemplated
herein, RCI New York will receive good and valid title thereto, free and clear
of any liens, claims, equities, charges, options, rights of first refusal,
encumbrances or other restrictions (except those imposed by applicable
securities laws).
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Section 3.4 Authorization. Sellers represent that they are persons of
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full age of majority, with full power, capacity, and authority to enter into
this Agreement and perform the obligations contemplated hereby by and for
themselves. All action on the part of Sellers necessary for the authorization,
execution, delivery and performance of this Agreement by him has been taken and
will be taken prior to Closing. This Agreement, when duly executed and
delivered in accordance with its terms, will constitute legal, valid and binding
obligations of Sellers enforceable against him in accordance with its terms,
except as may be limited by bankruptcy, insolvency, reorganization and other
similar laws of general application affecting creditors' rights generally or by
general equitable principles.
All corporate action on the part of Peregrine necessary for the
authorization, execution, delivery and performance of this Agreement by
Peregrine has been taken or will be taken prior to the Closing. As a New York
corporation, Peregrine has the requisite corporate power and authority to
execute, deliver and perform this Agreement. This Agreement, when duly executed
and delivered in accordance with its terms, will constitute a valid and binding
obligation of Peregrine, enforceable against Peregrine in accordance with its
terms, except as may be limited by bankruptcy, insolvency, reorganization, and
other similar laws of general application relating to or affecting creditors'
rights and to general equitable principles.
Section 3.5 Sellers' Access to Information. The Sellers hereby confirm
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and represent that they (a) have received a copy of Rick's Form 10-KSB for the
year ended September 30, 2003, as amended, and a copy of Rick's Form 10-QSB for
the quarter ended December 31, 2003, March 31, 2004 and June 30, 2004; (b) has
been afforded the opportunity to ask questions of and receive answers from
representatives of Rick's concerning the business and financial condition,
properties, operations and prospects of Rick's; (c) has such knowledge and
experience in financial and business matters so as to be capable of evaluating
the relative merits and risks of the transactions contemplated hereby; (d) has
had an opportunity to engage and is represented by an attorney of its choice;
(e) has had an opportunity to negotiate the terms and conditions of this
Agreement; (f) has been given adequate time to evaluate the merits and risks of
the transactions contemplated hereby; and (g) has been provided with and given
an opportunity to review all current information about Rick's. The Sellers have
asked such questions about Rick's as it desires to ask and all such questions
have been answered to the full satisfaction of the Seller.
Section 3.6 Acquisition of Stock for Investment. The Sellers
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understand that any issuance of Rick's Common Stock upon the conversion of the
Promissory Note (as referenced in Section 1.2 herein) will not have been
registered under the Securities Act of 1933, as amended (the "Act"), or any
state securities acts, and are accordingly, are restricted securities, and the
Sellers represent and warrant to the Purchaser and Rick's that the Sellers'
present intention if Purchaser chooses to convert, is to receive and hold the
Rick's Common Stock for investment only and not with a view to the distribution
or resale thereof.
Additionally, the Sellers understand that any sale of any Rick's Common
Stock issued, under current law, will require either (a) the registration of the
Rick's Common Stock under the Act and applicable state securities acts; (b)
compliance with Rule 144 of the Act; or (c) the availability of an exemption
from the registration requirements of the Act and applicable state securities
acts. The Sellers understand that Rick's intends to file a Registration
Statement to register the Rick's Common
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Stock that may be issued to the Sellers as contemplated herein within sixty (60)
days after the Closing.
To assist in implementing the above provisions, the Sellers hereby consent
to the placement of the legend, or a substantially similar legend, set forth
below, on all certificates representing ownership of the Rick's Common Stock
acquired hereby until the Rick's Common Stock has been sold, transferred, or
otherwise disposed of, pursuant to the requirements hereof. The legend shall
read substantially as follows:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES ACTS.
THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT, ARE
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RESTRICTED AS TO TRANSFERABILITY, AND MAY NOT BE SOLD,
HYPOTHECATED, OR OTHERWISE TRANSFERRED WITHOUT COMPLIANCE WITH
THE REGISTRATION AND QUALIFICATION PROVISIONS OF APPLICABLE
FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS
THEREFROM."
Section 3.7 No Breaches or Defaults. Except as set forth in Exhibit
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3.7, the execution, delivery, and performance of this Agreement by the Sellers
and Peregrine does not: (i) conflict with, violate, or constitute a breach of
or a default under, (ii) result in the creation or imposition of any lien,
claim, or encumbrance of any kind upon the Shares, or (iii) require any
authorization, consent, approval, exemption, or other action by or filing with
any third party or Governmental Authority under any provision of: (a) any
applicable Legal Requirement, or (b) any credit or loan agreement, promissory
note, or any other agreement or instrument to which the Sellers or Peregrine is
a party or by which the Shares may be bound or affected. For purposes of this
Agreement, "Governmental Authority" means any foreign governmental authority,
the United States of America, any state of the United States, and any political
subdivision of any of the foregoing, and any agency, department, commission,
board, bureau, court, or similar entity, having jurisdiction over the parties
hereto or their respective assets or properties. For purposes of this
Agreement, "Legal Requirement" means any law, statute, injunction, decree,
order or judgment (or interpretation of any of the foregoing) of, and the terms
of any license or permit issued by, any Governmental Authority.
Section 3.8 Consents. Except as set forth in Exhibit 3.8, no permit,
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consent, approval or authorization of, or designation, declaration or filing
with, any Governmental Authority or any other person or entity is required on
the part of the Sellers or Peregrine in connection with the execution and
delivery by the Sellers or Peregrine of this Agreement or the consummation and
performance of the transactions contemplated hereby.
Section 3.9 Pending Claims. Except as set forth in Exhibit 3.9, there
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is no claim, suit, arbitration, investigation, judgment, action or other
proceeding, whether judicial, administrative or otherwise, now pending or, to
the best of the Sellers' or Peregrine's knowledge, threatened before any court,
arbitration, administrative or regulatory body or any governmental agency which
may result in any judgment, order, award, decree, liability or other
determination which will or could reasonably be expected to have any effect upon
Sellers or Peregrine or the transfer by Sellers to RCI New York of the Shares
under this Agreement, nor is there any basis known to Sellers for any such
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action. No litigation is pending, or, to Sellers' or Peregrine's knowledge,
threatened against Sellers or Peregrine, or their assets or properties which
seeks to restrain or enjoin the execution and delivery of this Agreement or any
of the documents referred to herein or the consummation of any of the
transactions contemplated thereby or hereby. Neither Sellers nor Peregrine is
subject to any judicial injunction or mandate or any quasi-judicial or
administrative order or restriction directed to or against them or which would
affect Peregrine or the Shares to be transferred under this Agreement.
Section 3.10 Taxes. Peregrine has timely and accurately filed all
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federal, state, foreign and local tax returns and reports required to be filed
prior to such dates and have timely paid all taxes shown on such returns as owed
for the periods of such returns, including all sales taxes and withholding or
other payroll related taxes shown on such returns. Peregrine 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 are not delinquent in the
payment of any tax or governmental charge of any nature. No assessments or
notices of deficiency or other communications have been received by Peregrine
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
Peregrine and any taxing authority, including, without limitation, the Internal
Revenue Service, waiving or extending any statute of limitations with respect to
any tax return.
Section 3.11 Financial Statements. Sellers and Peregrine have
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delivered to RCI New York the balance sheet of Peregrine as of December 31, 2002
and 2003, together with the related statements of income, changes in
shareholder's equity and cash flow for the year then ended, including the
related notes, all prepared by its certified public accountants. In addition,
Peregrine has delivered to RCI New York the interim unaudited financial
statements for Peregrine for the six month period ended June 30, 2004 (the
unaudited balance sheet and interim financial statements are collectively
referred to as the "Financial Statements"). Such Financial Statements,
including the related notes, are in accordance with the books and records of
Peregrine and fairly represent the financial position of Peregrine and the
results of operations and changes in financial position of Peregrine as of the
dates and for the periods indicated, in each case in conformity with generally
accepted accounting principles applied on a consistent basis. Except as, and to
the extent reflected or reserved against in the Financial Statements, Peregrine,
as of the date of the Financial Statements, has no material liability or
obligation of any nature, whether absolute, accrued, continued or otherwise, not
fully reflected or reserved against in the Financial Statements. As of the
Closing Date, Sellers and Peregrine represent there have been no adverse changes
in the financial condition or other operations, business, properties or assets
of Peregrine in excess of $25,000 from that reflected in the latest financial
statements of Peregrine as furnished pursuant to this Agreement.
Section 3.12 Labor Matters. Peregrine is not a party or otherwise
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subject to any collective bargaining agreement with any labor union or
association. There are no discussions, negotiations, demands or proposals that
are pending or have been conducted or made with or by any labor union or
association, and there are not pending or threatened against Peregrine any labor
disputes, strikes or work stoppages. To the best of Sellers' and Peregrine's
knowledge, Peregrine is in compliance with all federal and state laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, and, to its knowledge, is not engaged in any unfair labor
practices. Peregrine is not a party to any written or oral contract, agreement
or understanding for the employment of any officer, director or employee of
Peregrine.
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Section 3.13 Compliance with Laws. Peregrine is, and at all times
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prior to the date hereof have been, to the best of their knowledge, in
compliance with all statutes, orders, rules, ordinances and regulations
applicable to it or to the ownership of their assets or the operation of their
businesses, except for failures to be in compliance that would not have a
material adverse effect on the business, properties, condition (financial or
otherwise) or prospects of Peregrine. Sellers and Peregrine have no basis to
expect, nor have they received, any order or notice of any such violation or
claim of violation of any such statute, order, rule, ordinance or regulation by
Peregrine. Exhibit 3.13 sets forth all licenses and permits held by Peregrine
used in the operation of their businesses. These licenses and permits represent
all of the licenses and permits required by Peregrine for the operation of their
business.
Section 3.14 Title to Properties; Encumbrances. Peregrine has good and
---------------------------------
marketable title to all of its properties and assets, real and personal,
tangible and intangible, that are material to the condition (financial or
otherwise), business, operations or prospects of Peregrine, free and clear of
all mortgages, claims, liens, security interests, charges, leases, encumbrances
and other restrictions of any kind and nature, except (i) as disclosed in the
Financial Statements of Peregrine, (ii) statutory liens not yet delinquent, and
(iii) such liens consisting of zoning or planning restrictions, imperfections of
title, easements, pledges, charges and encumbrances, if any, as do not
materially detract from the value or materially interfere with the present use
of the property or assets subject thereto or affected thereby. At the time of
Closing, the assets of Peregrine shall include, but shall not be limited to,
those set forth in Exhibit 3.14.
Section 3.15 No Pending Transactions. Except for the transactions
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contemplated by this Agreement, neither Sellers nor Peregrine is a party to or
bound by or the subject of any agreement, undertaking, commitment or discussions
or negotiations with any person that could result in (i) the sale, merger,
consolidation or recapitalization of Peregrine, (ii) the sale of any of the
assets of Peregrine except in the ordinary course of business, or (iii) the sale
of any outstanding capital stock of Peregrine.
Section 3.16 No Undisclosed Liabilities. To the best of Sellers' and
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Peregrine's knowledge, Peregrine does not have any obligation or liability
(contingent or otherwise) that would be required to be reflected in the
financial statements of the Company in accordance with GAAP except as reflected
in the Peregrine Balance Sheet.
Section 3.17 Contracts and Leases. Except as disclosed in Exhibit
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3.17, Peregrine (i) has no leases of personal property relating to the assets of
the Company, whether as lessor or lessee; (ii) has no contractual or other
obligations relating to the assets of the Company, whether written or oral; and
(iii) has not given any power of attorney to any person or organization for any
purpose relating to the assets of the Company. Other than as contemplated by
this Agreement, as of the Closing Date, there will not be any lease agreements
for the Premises where The Paradise Club is located. Peregrine has furnished
Purchaser a copy of each and every contract, lease or other document relating to
the assets of the Company to which they are subject or are a party or a
beneficiary. To Sellers' and Peregrine'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 Peregrine and the other
respective parties thereto and are enforceable in accordance with their terms.
Sellers and Peregrine have no knowledge of any default or breach
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under such contracts, leases or other documents or of any pending or threatened
claims under any such contracts, leases or other documents. Neither the
execution of this Agreement, nor the consummation of all or any of the
transactions contemplated under this Agreement, will constitute a breach or
default under any such contracts, leases or other documents which would have a
material adverse effect on the financial condition of Peregrine for the
operation of its business after the Closing.
Section 3.18 Material Agreements; Action. Except as listed in Exhibit
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3.18 hereto, there are no material contracts, agreements, commitments,
understandings or proposed transactions, whether written or oral, to which
Sellers or Peregrine is a party or by which they are bound that involve or
relate to: (i) any of the respective officers, directors, stockholders or
partners of Peregrine; (ii) the sale of any of the assets of Peregrine other
than in the ordinary course of business; (iii) covenants of Sellers and
Peregrine not to compete in any line of business or with any person in any
geographical area or covenants of any other person not to compete with Peregrine
in any line of business or in any geographical area; (iv) the acquisition by
Peregrine of any operating business or the capital stock of any other Person;
(v) the borrowing of money; or (vi) the expenditure of more than $5,000 in the
aggregate or the performance by Peregrine extending for a period more than one
year from the date hereof, other than in the ordinary course of business.
Section 3.19 No Default. Neither Sellers nor Peregrine is in default
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under any term or condition of any instrument evidencing, creating or securing
any indebtedness of Sellers or Peregrine, and there has been no default in any
material obligation to be performed by Sellers or Peregrine under any other
contract, lease, agreement, commitment or undertaking to which it is a party or
by which it or its assets or properties are bound, nor have Sellers or Peregrine
waived any material right under any such contract, lease, agreement, commitment
or undertaking.
Section 3.20 Books and Records. The books of account, minute books,
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stock record books and other records of Peregrine, all of which have been made
available to RCI New York, are accurate and complete and have been maintained in
accordance with sound business practices. Upon Closing, all books and records
will be in the possession of Sellers or Peregrine.
Section 3.21 Insurance Policies. Copies of all insurance policies
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maintained by Peregrine relating to the operation of The Paradise Club have been
delivered or will be made available to Purchaser. The policies of insurance
held by Peregrine are in such amounts, and insure against such losses and risks,
as Peregrine and Sellers reasonably deem 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.
Section 3.22 Employee Benefit Plans. Peregrine does not have or
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contribute to any pension, profit-sharing, option, other incentive plan, or
other Employee Benefit Plan (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974), or have any obligation to or customary
arrangement with employees for bonuses, incentive compensation, vacations,
severance pay, insurance, or other benefits except as set forth in Schedule
3.22. Schedule 3.22 is a list of each employee and consultant and the
compensation paid to each employee and consultant.
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Section 3.23 Absence of Certain Changes. Since the date of the
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Financial Statements, Peregrine has not:
(a) suffered the damage or destruction of any of its properties or assets
(whether or not covered by insurance) which is materially adverse to
the business or financial condition of Peregrine, taken as a whole, or
made any disposition of any of its material properties or assets other
than in the ordinary course of business;
(b) made any change or amendment in each of their respective certificate
of incorporation and or formation or Bylaws, or other governing
instruments;
(c) issued or sold any equity securities or other securities, acquired,
directly or indirectly, by redemption or otherwise, any such equity
securities, reclassified, split-up or otherwise changed any such
equity security, or granted or entered into any options, warrants,
calls or commitments of any kind with respect thereto;
(d) paid, discharged or satisfied any material claim, liability or
obligation (absolute, accrued, contingent or otherwise), other than in
the ordinary course of business except as described on Exhibit
3.23(d);
(e) prepaid any material obligation having a maturity of more than ninety
(90) days from the date such obligation was issued or incurred;
(f) cancelled any material debts or waived any material claims or rights,
except in the ordinary course of business;
(g) made any capital expenditures or additions to property, plant or
equipment or acquired any other property or assets (other than
materials and supplies) at a cost in excess of $5,000 in the
aggregate;
(h) except as described on Exhibit 3.23(h), written off or been required
to write off any notes or accounts receivable.
Section 3.23 Disclosure. No representation or warranty of the Sellers
----------
or Peregrine contained in this Agreement (including the exhibits hereto)
contains any untrue statement or omits to state a material fact necessary in
order to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading.
Section 3.24 Brokerage Commission. To the extent a brokerage
---------------------
commission is due in connection with this Agreement or the transactions
contemplated hereby, Seller assumes the obligation of paying the total brokerage
commission.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF RCI NEW YORK AND RICK'S
RCI New York and Rick's hereby represent and warrants to the Sellers and
Peregrine as follows:
Section 4.1 Authorization. RCI New York is a corporation duly
-------------
organized in the state of New York and has full power, capacity, and authority
to enter into this Agreement and perform the obligations contemplated hereby.
All action on the part of RCI New York necessary for the authorization,
execution, delivery and performance of this Agreement by it has been taken and
will
10
be taken prior to Closing. This Agreement, when duly executed and delivered in
accordance with its terms, will constitute legal, valid, and binding obligations
of RCI New York enforceable against RCI New York in accordance with its terms,
except as may be limited by bankruptcy, insolvency, and other similar laws
affecting creditors' rights generally or by general equitable principles.
Rick's is a corporation duly organized in the state of Texas and has full
power, capacity, and authority to enter into this Agreement and perform the
obligations contemplated hereby. All action on the part of Rick's necessary for
the authorization, execution, delivery and performance of this Agreement by it
has been taken and will be taken prior to Closing. This Agreement, when duly
executed and delivered in accordance with its terms, will constitute legal,
valid, and binding obligations of Rick's enforceable against Rick's in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
and other similar laws affecting creditors' rights generally or by general
equitable principles.
Section 4.2 Valid Issuance. The Rick's Common Stock which may be
---------------
issued to the Sellers pursuant to the terms of the Promissory Note referred to
in Section 1.2 above, when issued in accordance with the provisions of the
Promissory Note and this Agreement, will be validly issued, fully paid and
non-assessable, and entitled to all of the benefits and rights stated in Rick's
Articles of Incorporation and other charter documents.
Section 4.3 Restricted Stock. The shares of Rick's Common Stock to be
----------------
issued to the Sellers pursuant to the terms of the Promissory Note referred to
in Section 1.2 above are restricted securities and may only be sold, under
current law, either by (a) the registration of the Rick's Common Stock under the
Act and applicable state securities acts; (b) compliance with Rule 144 of the
Act; or (c) the availability of an exemption from the registration requirements
of the Act and applicable state securities acts. Rick's will use its best
efforts to maintain current information by complying with its reporting
requirements under The Securities Act of 1934, as amended. Rick's will
undertake to file a Registration Statement with the Securities and Exchange
Commission to register the Rick's Common Stock within 60 days following Closing.
Section 4.4 No Breaches or Defaults. Except as set forth in Exhibit
-------------------------
4.4, the execution, delivery, and performance of this Agreement by RCI New York
and Rick's does not: (i) conflict with, violate, or constitute a breach of or a
default under or (ii) require any authorization, consent, approval, exemption,
or other action by or filing with any third party or Governmental Authority
under any provision of: (a) any applicable Legal Requirement, or (b) any credit
or loan agreement, promissory note, or any other agreement or instrument to
which RCI New York or Rick's is a party.
Section 4.5 Consents. Except as set forth in Exhibit 4.5, no permit,
--------
consent, approval or authorization of, or designation, declaration or filing
with, any Governmental Authority or any other person or entity is required on
the part of RCI New York or Rick's in connection with the execution and delivery
by RCI New York and Rick's of this Agreement or the consummation and performance
of the transactions contemplated hereby other than as required under the federal
securities laws.
Section 4.6 Disclosure. No representation or warranty of RCI New York
----------
or Rick's contained in this Agreement (including the exhibits hereto) contains
any untrue statement or omits to state a material fact necessary in order to
make the statements contained herein or therein, in light of the circumstances
under which they were made, not misleading.
11
ARTICLE V
CONDITIONS TO CLOSING OF SELLERS
AND PEREGRINE
Each obligation of Sellers and Peregrine to be performed on the Closing
Date shall be subject to the satisfaction of each of the conditions stated in
this Article V, except to the extent that such satisfaction is waived by Sellers
and Peregrine in writing.
Section 5.1 Representations and Warranties Correct. The
-----------------------------------------
representations and warranties made by RCI New York and Rick's contained in this
Agreement shall be true and correct as of the Closing Date.
Section 5.2 Covenants. All covenants, agreements and conditions
---------
contained in this Agreement to be performed by RCI New York and Rick's on or
prior to the Closing Date shall have been performed or complied with in all
respects.
Section 5.3 Delivery of Certificate. RCI New York and Rick's shall
-------------------------
provide to Sellers and Peregrine Certificates, dated the Closing Date and signed
by the President of RCI New York and the President of Rick's, respectively, to
the effect set forth in Section 5.1 and 5.2 for the purpose of verifying the
accuracy of such representations and warranties and the performance and
satisfaction of such covenants and conditions.
Section 5.4 Consents. All necessary consents and approvals of
--------
governmental bodies, lenders, lessors and other third parties shall have been
obtained.
Section 5.5 Payment of Purchase Price. RCI New York shall have
----------------------------
tendered the Purchase Price for the Shares as referenced in Section 1.2 to the
Sellers concurrently with the Closing.
Section 5.5 Related Transactions. The Related Transactions as set
---------------------
forth in Section 2.3 shall be consummated concurrently with the Closing.
Section 5.7 Corporate Resolutions. RCI New York and Rick's shall
----------------------
provide corporate resolutions of the Board of Directors of RCI New York and
Rick's, respectively, which approve the transactions contemplated herein and
authorize the execution, delivery and performance of this Agreement and the
documents referred to herein to which it is or is to be a party dated as of the
Closing Date.
Section 5.8 Absence of Proceedings. No action, suit or proceeding by
-----------------------
or before any court or any governmental or regulatory authority shall have been
commenced and no investigation by any governmental or regulatory authority shall
have been commenced seeking to restrain, prevent or challenge the transactions
contemplated hereby or seeking judgments against RCI New York or Rick's.
12
ARTICLE VI
CONDITIONS TO CLOSING OF
RCI NEW YORK AND RICK'S
Each obligation of RCI New York and Rick's to be performed on the Closing
Date shall be subject to the satisfaction of each of the conditions stated in
this Article VI, except to the extent that such satisfaction is waived by RCI
New York and Rick's in writing.
Section 6.1 Representations and Warranties Correct. The
-----------------------------------------
representations and warranties made by the Sellers and Peregrine hereof shall be
true and correct as of the Closing Date.
Section 6.2 Covenants. All covenants, agreements and conditions
---------
contained in this Agreement to be performed by the Sellers and Peregrine on or
prior to the Closing Date shall have been performed or complied with in all
respects.
Section 6.3 Delivery of Certificate. Sellers and Peregrine shall
-------------------------
provide to RCI New York and Rick's Certificates, dated the Closing Date and
signed by the Sellers and by the President of Peregrine, respectively, to the
effect set forth in Section 6.1 and 6.2 for the purpose of verifying the
accuracy of such representations and warranties and the performance and
satisfaction of such covenants and conditions.
Section 6.4 Delivery of Shares. Sellers shall have delivered
--------------------
certificates evidencing the Shares of Peregrine, duly endorsed to RCI New York
or accompanied by duly executed stock powers in form and substance satisfactory
to RCI New York and Rick's.
Section 6.5 Corporate Resolutions. Peregrine shall provide to RCI New
---------------------
York and Rick's a corporate resolution of the Board of Directors of Peregrine,
which approves the transactions contemplated herein and authorizes the
execution, delivery and performance of this Agreement and the documents referred
to herein to which it is or is to be a party dated as of the Closing Date.
Section 6.6 Consents; Transfer of Licenses and Leases. All necessary
------------------------------------------
consents and approvals of governmental bodies, lenders, lessors and other third
parties, and any transfer of licenses and leases required for the continued
operation of the business of The Paradise Club, including, but not limited to:
(a) the Cabaret License issued by the New York City Department of
Consumer Affairs, shall be in full force and effect; and
(b) Seller shall have obtained the written consent of the landlord
for the transfer of the Shares to the Purchaser at the time of
Closing and the continuation of the existing lease with the
Purchaser as the owner of the Shares.
(c) A representative of Purchaser shall have been added to the
permanent Liquor License duly issued and approved by the NYS
Liquor Authority, which will allow for the sale of liquor by the
Purchaser on the Premises.
13
(d) Purchaser shall have obtained all necessary permits and other
authorizations which may be needed to conduct topless
entertainment on the Premises, which will serve liquor.
Section 6.7 Related Transactions. The Related Transactions as set
---------------------
forth in Section 2.3 shall be consummated concurrently with the Closing.
Section 6.8 Resignation. The Officers and Directors of Peregrine shall
-----------
have provided to RCI New York their written resignations.
Section 6.9 Ability to Audit. The Purchaser and Rick's shall be
------------------
satisfied that the Seller's financial statements can be audited in compliance
with Regulation S-B promulgated under the Securities Act of 1933, as amended.
Section 6.10 Absence of Proceedings. No action, suit or proceeding by
----------------------
or before any court or any governmental or regulatory authority shall have been
commenced and no investigation by any governmental or regulatory authority shall
have been commenced seeking to restrain, prevent or challenge the transactions
contemplated hereby or seeking judgments against Peregrine or any of its assets.
ARTICLE VII
COVENANTS OF SELLERS AND PURCHASER
Section 7.1 Covenants of Sellers
----------------------
a. Stand Still. To induce RCI New York and Rick's to proceed with this
-----------
Agreement, Sellers and Peregrine agree that until the Closing Date or the
termination of this Agreement, neither Sellers nor any representative of
Peregrine will offer to sell or solicit any offer to purchase or engage in any
discussions or activities of any nature whatsoever, directly or indirectly,
involving in any manner the actual or potential sale, transfer, encumbrance,
pledge, collateralization or hypothecation of any assets of Peregrine. Sellers
and Peregrine hereby agree to advise RCI New York and Rick's of any contact from
any third party regarding the acquisition or other investment in Peregrine or of
any contact which would relate to the transactions contemplated by this
Agreement.
b. Access; Due Diligence. Between the date of this Agreement and the
-----------------------
Closing Date, Sellers and Peregrine shall (a) provide RCI New York, Rick's and
their authorized representatives reasonable access to all plants, offices,
warehouse and other facilities and properties of Peregrine and to the books and
records of Peregrine; (b) permit RCI New York and Rick's to make inspections
thereof; and (c) cause the officers and advisors of Peregrine to furnish RCI New
York and Rick's with such financial and operating data and other information
with respect to the business and properties of Peregrine and to discuss with RCI
New York, Rick's and their authorized representatives the affairs of Peregrine
as RCI New York and Rick's may from time to time reasonably request.
14
c. Conduct of Business. From the date of the execution hereof until
---------------------
the Closing Date, Sellers and Peregrine shall operate the business of Peregrine
in the ordinary course consistent with past practices, and:
(i) the Company will not authorize, declare, pay or effect any
dividend except as is consistent with past practices of the
Company or liquidation or other distribution in respect of the
stock of the Company or other equity interest or any direct or
indirect redemption, purchase or other acquisition of any equity
interest of the Company;
(ii) the Company will not make any changes in its condition (financial
or otherwise), liabilities, assets, or business or in any of its
business relationships, including relationships with suppliers or
customers, that, when considered individually or in the
aggregate, might reasonably be expected to have a material
adverse effect on the Company;
(iii) the Company will not increase the salary or other compensation
payable or to become payable by the Company to any employee, or
the declaration, payment, or commitment or obligation of any kind
for the payment by the Company of a bonus or other additional
salary or compensation to any such person except in the normal
course of business, consistent with past practices of the
Company;
(iv) the Company will not sell, lease, transfer or assign any of their
assets, tangible or intangible, other than for a fair
consideration in the ordinary course of business;
(v) the Company will not accelerate, terminate, modify or cancel any
agreement, contract, lease or license (or series of related
agreements, contracts, leases and licenses) involving more than
$5,000 to which the Company is a party;
(vi) the Company will not make any loans to any person or entity, or
guarantee any loan;
(vii) the Company will not waive or release any right or claim held by
the Company;
(viii) the Company will operate its business in the ordinary course and
consistent with past practices so as to preserve its business
organization intact, to retain the services of its employees and
to preserve its goodwill and relationships with suppliers,
creditors, customers, and others having business relationships
with it;
(ix) the Company will not issue any note, bond or other debt security
or create, incur or assume, or guarantee any indebtedness for
borrowed money or capitalized lease obligations;
(x) the Company will not delay or postpone the payment of accounts
payable and other liabilities outside the ordinary course of
business;
(xi) the Company will not make any loan to, or enter into any other
transaction with, any of its directors, officers, and employees,
outside the ordinary course of business;
15
(xii) the Company will not make any change in any method, practice, or
principle of accounting involving the business or assets of
Peregrine;
(xiii) the Company will not issue, sell or otherwise dispose of any of
its equity securities, or create, sell or dispose of any options,
rights, conversion rights or other agreements or commitments of
any kind relating to the issuance, sale or disposition of any of
its equity securities;
(xiv) the Company will not reclassify, split up or otherwise change any
of its equity securities;
(xv) the Company will not be a party to any merger, consolidation or
other business combination; and
(xvi) the Company will not agree to take any action described in this
Section 7.1(c).
Section 7.2 Covenants of Purchaser. Purchaser hereby agrees to use its
----------------------
best efforts until the Closing Date to obtain a permanent state liquor license
duly issued and approved by the NYS Liquor Authority, which will allow for the
sale of liquor by the Purchaser on the Premises and as soon as reasonably
possible thereafter Purchaser shall arrange for a representative of Purchaser to
be added to the aforesaid liquor license.
ARTICLE VIII
INDEMNIFICATION
Section 8.1 Indemnification from Sellers and Peregrine. Sellers and
--------------------------------------------
Peregrine, jointly and severally, hereby agree to and shall indemnify, defend
(with legal counsel reasonably acceptable to RCI New York and Rick's), and hold
RCI New York, Rick's, their officers, directors, employees, affiliates, assigns,
agents and legal counsel (collectively, the "RCI New York Group") harmless at
all times after the date of this Agreement, from and against any and all
actions, suits, claims, demands, debts, liabilities, obligations, losses,
damages, costs, expenses, penalties or injury (including reasonable attorneys'
fees and costs of any suit related thereto) suffered or incurred by any of the
RCI New York Group arising from: (a) any material misrepresentation by, or
material breach of any covenant or warranty of the Sellers or Peregrine
contained in this Agreement, or any exhibit, certificate, or other instrument
furnished or to be furnished by Sellers or Peregrine hereunder; (b) any
nonfulfillment of any material agreement on the part of Sellers or Peregrine
under this Agreement; (c) from any material misrepresentation in or material
omission from, any certificate or other instrument furnished or to be furnished
to RCI New York hereunder and/or any agreement related to or entered into in
connection with the transactions contemplated hereby; or (d) any suit, action,
proceeding, claim or investigation against RCI New York which arises from or
which is based upon or pertaining to Sellers' or Peregrine's conduct or the
operation or liabilities of the business of Peregrine prior to the Closing
Date.
If any action is brought against RCI New York or Rick's (the "Indemnified
Party") in respect of which indemnity may be sought against Sellers or Peregrine
pursuant to the foregoing paragraph, the Indemnified Party shall promptly notify
Sellers and Peregrine in writing of the institution of such action (but the
omission to so notify Sellers or Peregrine shall not relieve it from any
liability that it
16
may have to such Indemnified Party except to the extent Sellers and Peregrine
are materially prejudiced or otherwise forfeits substantive rights or defenses
by reason of such failure), and Sellers and Peregrine shall assume the defense
of such action, including the employment of counsel to be chosen by Sellers to
be reasonably satisfactory to the Indemnified Party, and payment of expenses.
The Indemnified Party shall have the right to employ the counsel chosen by
Sellers or their own counsel in any such case, but the fees and expenses of such
counsel shall be at the Indemnified Party's expense, unless the employment of
such counsel shall have been authorized in writing by Sellers in connection with
the defense of such action, or Sellers shall not have employed counsel to take
charge of the defense of such action, or counsel employed by Sellers shall not
be diligently defending such action, or the Indemnified Party shall have
reasonably concluded that there may be defenses available to it which are
different from or additional to those available to Sellers, or that
representation of such Indemnified Party and Sellers and Peregrine by the same
counsel would be inappropriate under applicable standards of professional
conduct due to actual or potential differing interests between them (in which
case Sellers shall not have the right to direct the defense of such action on
behalf of the Indemnified Party), in any of which event such fees and expenses
shall been borne by Sellers. Anything in this paragraph to the contrary
notwithstanding, Sellers shall not be liable for any settlement of, or any
expenses incurred with respect to, any such claim or action effected without
Sellers' written consent, which consent shall not be unreasonably withheld.
Neither Sellers nor Peregrine shall, without the prior written consent of the
Indemnified Party, effect any settlement of any proceeding in respect of which
the Indemnified Party is a party and indemnity has been sought hereunder unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such proceeding.
Section 8.2 Indemnification from RCI New York and Rick's. RCI New York
--------------------------------------------
and Rick's agree to and shall indemnify, defend (with legal counsel reasonably
acceptable to the Sellers) and hold Sellers, Peregrine, its officers, directors,
employees, agents, affiliates, legal counsel, successors and assigns
(collectively, the "Seller's Group") harmless at all times after the date of the
Agreement from and against any and all actions, suits, claims, demands, debts,
liabilities, obligations, losses, damages, costs, expenses, penalties or injury
(including reasonably attorneys' fees and costs of any suit related thereto)
suffered or incurred by any of the Seller's Group, arising from (a) any material
misrepresentation by, or material breach of any covenant or warranty of RCI New
York or Rick's contained in this Agreement or any exhibit, certificate, or other
agreement or instrument furnished or to be furnished by RCI New York or Rick's
hereunder; (b) any nonfulfillment of any material agreement on the part of RCI
New York or Rick's under this Agreement; or (c) from any material
misrepresentation in or material omission from, any exhibit, certificate or
other agreement or instrument furnished or to be furnished to the Sellers
hereunder and/or any agreement related to or entered into in connection with the
transactions contemplated hereby.
Section 8.3 Defense of Claims. If any lawsuit or enforcement action is
-----------------
filed against any party entitled to the benefit of indemnity hereunder, written
notice thereof shall be given to the indemnifying party as promptly as
practicable (and in any event not less than fifteen (15) days prior to any
hearing date or other date by which action must be taken); provided that the
failure of any indemnified party to give timely notice shall not affect rights
to indemnification hereunder except to the extent that the indemnifying party
demonstrates actual damage caused by such failure. After such notice, the
indemnifying party shall be entitled, if it so elects, to take control of the
defense and investigation of such lawsuit or action and to employ and engage
attorneys of its own choice to handle and defend the same, at the indemnifying
party's cost, risk and expense; and such indemnified
17
party shall cooperate in all reasonable respects, at its cost, risk and expense,
with the indemnifying party and such attorneys in the investigation, trial and
defense of such lawsuit or action and any appeal arising therefrom; provided,
however, that the indemnified party may, at its own cost, participate in such
investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom. The indemnifying party shall not, without the prior written
consent of the indemnified party, effect any settlement of any proceeding in
respect of which any indemnified party is a party and indemnity has been sought
hereunder unless such settlement of a claim, investigation, suit, or other
proceeding only involves a remedy for the payment of money by the indemnifying
party and includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.
Section 8.4 Default of Indemnification Obligation. If an entity or
----------------------------------------
individual having an indemnification, defense and hold harmless obligation, as
above provided, shall fail to assume such obligation, then the party or entities
or both, as the case may be, to whom such indemnification, defense and hold
harmless obligation is due shall have the right, but not the obligation, to
assume and maintain such defense (including reasonable counsel fees and costs of
any suit related thereto) and to make any settlement or pay any judgment or
verdict as the individual or entities deem necessary or appropriate in such
individual's or entities' absolute sole discretion and to charge the cost of any
such settlement, payment, expense and costs, including reasonable attorneys'
fees, to the entity or individual that had the obligation to provide such
indemnification, defense and hold harmless obligation and same shall constitute
an additional obligation of the entity or of the individual or both, as the case
may be.
Section 8.5 Right to Offset. In the event that the RCI New York Group
---------------
is entitled to indemnification in accordance with Section 8.1 hereof, then
Purchaser shall have the right to offset any such amount in excess of $50,000
from any obligations that are then due and payable to the Sellers or the
Company.
Section 8.6 Termination. Indemnification obligations of Peregrine,
-----------
Sellers, RCI New York and Rick's terminate eighteen (18) months after the date
of Closing.
ARTICLE IX
TERMINATION
This Agreement shall terminate upon the occurrence of any of the following
events:
(i) the transactions contemplated by this Agreement are not consummated
on or before the Closing Date (as defined in Section 2.1 (unless
extended by all of the parties hereto in writing). In the event of
termination as a result of this Section 9.1, then the funds held by
the Escrow Agent will be disbursed in accordance with Section 1.3;
(ii) all of the parties mutually agree in writing to terminate this
Agreement;
(iii) if the NYS liquor authority for the state of New York denies the
addition of a representative of Purchaser to the existing Liquor
License to sell alcohol on the Premises by December 1, 2004 then the
Purchaser or Peregrine will have the right at
18
any time by written notice to the other party to terminate this
Agreement and the Purchaser shall be refunded $650,000 then held in
Escrow and Peregrine will receive $150,000 then held in Escrow; or
(iv) any state or federal agency having jurisdiction over approval of
this transaction shall disapprove of any part of the proposed
transaction.
ARTICLE X
MISCELLANEOUS
Section 10.1 Amendment; Waiver. Neither this Agreement nor any
------------------
provision hereof may be amended, modified or supplemented unless in writing,
executed by all the parties hereto. Except as otherwise expressly provided
herein, no waiver with respect to this Agreement shall be enforceable unless in
writing and signed by the party against whom enforcement is sought. Except as
otherwise expressly provided herein, no failure to exercise, delay in
exercising, or single or partial exercise of any right, power or remedy by any
party, and no course of dealing between or among any of the parties, shall
constitute a waiver of, or shall preclude any other or further exercise of, any
right, power or remedy.
Section 10.2 Notices. Any notices or other communications required or
-------
permitted hereunder shall be sufficiently given if in writing and delivered in
Person, transmitted by facsimile transmission (fax) or sent by registered or
certified mail (return receipt requested) or recognized overnight delivery
service, postage pre-paid, addressed as follows, or to such other address has
such party may notify to the other parties in writing:
(a) if to the Sellers or Peregrine: Philip and Lena Eisenberg
38 Evergreen Pl.
Demarest, New Jersey 07627
with a copy to: Jaffe and Asher
600 Third Avenue
New York, New York 10016
(b) if to RCI New York or Rick's: Eric Langan
505 North Belt, Suite 630
Houston, Texas 77060
with a copy to: Robert D. Axelrod
Axelrod, Smith & Kirshbaum
5300 Memorial Drive, Suite 700
Houston, Texas 77007
A notice or communication will be effective (i) if delivered in Person or by
overnight courier, on the business day it is delivered, (ii) if transmitted by
telecopier, on the business day of actual confirmed
19
receipt by the addressee thereof, and (iii) if sent by registered or certified
mail, three (3) business days after dispatch.
Section 10.3 Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
Section 10.4 Assignment; Successors and Assigns. Except as otherwise
----------- ----------------------
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors and permitted assigns of the parties hereto. No
party hereto may assign its rights or delegate its obligations under this
Agreement without the prior written consent of the other parties hereto, which
consent will not be unreasonably withheld.
Section 10.5 Survival of Representations, Warranties and Covenants. All
-----------------------------------------------------
representations and warranties made in, pursuant to or in connection with this
Agreement shall survive the execution and delivery of this Agreement for the
maximum period allowed by law.
Section 10.6 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.
Section 10.7 Entire Agreement. This Agreement and the other documents
----------------
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subject matter hereof and
thereof and supersede and cancel all prior representations, alleged warranties,
statements, negotiations, undertakings, letters, acceptances, understandings,
contracts and communications, whether verbal or written among the parties hereto
and thereto or their respective agents with respect to or in connection with the
subject matter hereof.
Section 10.8 Choice of Law. This Agreement shall be governed by, and
--------------
construed in accordance with, the laws of the State of New York, without regard
to principles of conflict of laws.
Section 10.9 Counterparts and Facsimiles. This Agreement may be
-----------------------------
executed in multiple counterparts and in any number of counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute and be deemed to be one and the same instrument and each of which
shall be considered and deemed an original for all purposes. This Agreement
shall be effective with the facsimile signature of any of the parties set forth
below and the facsimile signature shall be deemed as an original signature for
all purposes and the Agreement shall be deemed as an original for all purposes.
20
Section 10.10 Costs and Expenses. Each party shall pay their own
--------------------
respective fees, costs and disbursements incurred in connection with this
Agreement.
Section 10.11 Section Headings. The section and subsection headings in
----------------
this Agreement are used solely for convenience of reference, do not constitute a
part of this Agreement, and shall not affect its interpretation.
Section 10.12 No Third-Party Beneficiaries. Nothing in this Agreement
----------------------------
will confer any third party beneficiary or other rights upon any person
(specifically including any employees of Peregrine) or any entity that is not a
party to this Agreement.
Section 10.13 Validity. The invalidity or unenforceability of any
--------
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
Section 10.14 Further Assurances. Each party covenants that at any
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time, and from time to time, after the Closing Date, it will execute such
additional instruments and take such actions as may be reasonably be requested
by the other parties to confirm or perfect or otherwise to carry out the intent
and purposes of this Agreement.
Section 10.15 Exhibits Not Attached. Any exhibits not attached hereto
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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.
IN WITNESS WHEREOF, the undersigned have executed this Stock Purchase
Agreement to become effective as of the date first set forth above.
RCI ENTERTAINMENT (NEW YORK). INC.
/s/ Eric Langan
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By: Eric Langan, President
Date: 9/15/04
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RICK'S CABARET INTERNATIONAL, INC.
/s/ Eric Langan
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By: Eric Langan, President
Date: 9/15/04
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21
PEREGRINE ENTERPRISES, INC.
/s/ Philip Eisenberg
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By: Philip Eisenberg, President
/s/ Philip Eisenberg
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Philip Eisenberg, Individually
/s/ Lena Eisenberg
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Lena Eisenberg, Individually
22