MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT ("Agreement") is made and entered into on this
13th day of February, 2005 (the Effective Date), by and between TOP SHELF
ENTERTAINMENT, LLC, a North Carolina limited liability company (the "Owner") and
RCI ENTERTAINMENT (NORTH CAROLINA), INC., a North Carolina corporation (the
"Manager").
W I T N E S S E T H :
WHEREAS, the Owner owns a nightclub known as The Manhattan Club located at
5300 Old Pineville Road, Charlotte, North Carolina 28217 (the Club); and
WHEREAS, simultaneously with the execution hereof, the Owner has entered
into an Option to Purchase Agreement ("Option Agreement") with Rick's Cabaret
International, Inc., a Texas corporation ("Rick's"), pursuant to which Tony Hege
("Hege") as the sole owner of all of the membership interests in the Owner has
granted to Rick's an option to purchase all of the membership interests owned by
Hege in the Owner (the "Acquisition"); and
WHEREAS, the Manager is a wholly owned subsidiary of Rick's; and
WHEREAS, during the period of time until the Acquisition is completed, the
Owner desires to retain the services of the Manager to act as its exclusive
agent in the operation of the Club; and
WHEREAS, the Manager desires to provide such exclusive management services
to the Owner; and
WHEREAS, the Owner and the Manager have agreed upon the terms and
conditions upon which the Manager shall manage and operate the Club, as set
forth below.
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
mutually agree as follows:
1. APPOINTMENT AND ACCEPTANCE. The Owner hereby appoints the Manager,
and the Manager hereby accepts appointment, on the terms and conditions
hereinafter provided, as the Owner's exclusive managing agent for the
management, operation, maintenance and marketing of the Club.
2. OBLIGATIONS OF MANAGER. The Manager shall render the following
services and shall perform the following duties for the Owner in a faithful,
diligent and efficient manner:
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(a) IN GENERAL. The Manager shall be solely and exclusively responsible
for all management, operational, marketing, and maintenance activities
with respect to the Club, including, but not limited to, such
activities as are more specifically described below.
(b) ADVERTISING. The Manager shall advertise and promote the Club with the
goal of maximizing profitability of the Club and consistent with
budgetary constraints.
(c) MANAGEMENT. The Manager shall manage, operate, market, and maintain
the Club, including, but not limited to, arranging for and supervising
the day-to-day operations of the Club and improvements to the Club.
(i) To make or cause to be made in the name of and at the expense of
the Owner such ordinary repairs or alterations to the Club as may
be necessary;
(ii) To make or cause to be made in the name of and at the expense of
the Owner such modifications, improvements or expansions of the
Club as may be necessary or helpful, provided, however, that the
Manager shall make no improvements in excess of $25,000 in any
calendar month without the prior written approval of the Owner;
and
(iii) To request, demand, collect, receive and give receipts for any
and all charges which become due from the operation of the Club
and to make all payments required for the expenses of managing,
operating, marketing or maintaining the Club as and when they
become due. All sums of money collected by the Manager from the
operation of the Club shall be deposited by the Manager in a bank
account to be designated by the Manager and approved by the Owner
and opened in the name of the Club, with signatory powers to the
Manager. The Manager shall make appropriate disbursements from
this bank account for the payment of expenses as set forth above.
(d) ACCOUNTING. The Manager shall maintain a comprehensive system of
records, books and accounts regarding the operation of the Club. All
records shall be subject to examination by the Owner, or its
authorized agents, attorneys and accountants at all reasonable hours.
No later than the twentieth (20th) day of each month, with respect to
the preceding month, the Manager shall render a statement of receipts
and disbursements, a schedule of accounts
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receivable and payable, together with a reconciled bank statement as
of the last day of the month.
(e) EMPLOYEES. The Manager shall hire such employees as shall be
reasonably necessary for the operation of the Club. The Manager shall
determine the number of employees necessary for the operation of the
Club, the compensation to be paid to such employees, the policies and
procedures applicable to the employment of such employees and the term
of employment of such employees.
(f) RISK OF LOSS. Any losses incurred during the term of this Agreement
shall be paid for and borne by the Owner. The Owner hereby
acknowledges that the Manager is not responsible for any losses
incurred in connection with the management, operation, maintenance and
marketing of the Club during the term of this Agreement.
3. AGENCY RELATIONSHIP. Everything done by the Manager under the
provisions of this Agreement shall be done as agent of the Owner, and all
obligations or expenses incurred thereunder shall be for the account, on behalf,
and at the expense of the Owner. Any payments to be made by the Manager
hereunder shall be made out of such sums as are made available to the Manager by
the Owner, and it is agreed that the Manager shall not be obligated to expend
its own funds for any payments which the Manager is authorized to make
hereunder.
4. TERM OF AGREEMENT. This Agreement shall be effective from the date
of execution hereof and shall remain in full force and effect until the closing
of the Acquisition as provided for in the Option Agreement executed
simultaneously herewith or until the Option Agreement is terminated or expires
as provided for therein.
5. COMPENSATION OF MANAGER. The Manager shall be entitled to receive
as compensation for its management of the Club a fee computed and payable
monthly, not later than the 20th day of each month in an amount equal to one
hundred percent (100%) of the Net Cash Flow, if any. For purposes of this
Agreement, the term Net Cash Flow" means the aggregate amount of all cash
received with respect to the Club from cash sales and receipts, credit or charge
card sales and receipts, or sales on open account, or any combination of the
same, using a cash receipts and disbursements method of accounting, less (i)
refunds; (ii) fees and charges payable to the companies issuing the credit or
charge card(s) approved by the Owner in connection with such credit or charge
card sales; (iii) bank charges assessed against the Owner for insufficient funds
or other uncollectible checks received from users of the Club; (iv) insufficient
funds or other uncollectible checks received from users of the Club; and (v)
costs of maintenance, advertising and operation of the Club.
6. LIMITED GRANT OF LICENSE RIGHTS. Manager and Owner acknowledge that
during the term of this Agreement only, that Rick's has granted to the Owner the
license rights to use and exploit, at the Club's location in Charlotte, North
Carolina, only, the name "Rick's Cabaret" and all
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logos, trademarks and service marks attendant thereto. The Owner acknowledges
that the license rights granted in the Option Agreement executed simultaneously
herewith and acknowledged hereunder will terminate upon the termination of this
Agreement or the termination or expiration of the Option Agreement.
7. BINDING AGREEMENT; ASSIGNMENT. This Agreement shall inure to the
benefit of and constitute a binding obligation upon the contracting parties and
their respective successors, assigns and legal representatives, but this
Agreement and the rights and obligations may not be assigned or delegated
without the prior written consent of the parties hereto and any permitted
assignee hereunder must agree to assume and discharge the duties and obligations
of his assignor hereunder.
8. SOLE AGREEMENT; AMENDMENT. Except for the Option Agreement, this
Agreement contains all of the oral and written agreements and all of the
representations and arrangements between the parties hereto, and any rights
which the parties may have had under any previous oral arrangements are hereby
cancelled and terminated, and no representations or warranties are made or
implied other than those expressly set forth herein. This Agreement may only be
modified by the written agreement signed by or on behalf of all of the parties
hereto.
9. TIME. Time shall be deemed to be of the essence of this Agreement
whenever time limits are imposed herein for the performance of any obligations
by any of the parties hereto, or whenever the accrual of any rights to either of
the parties hereto depends on the passage of time.
10. REMEDIES CUMULATIVE. The rights, options, elections and remedies
of any of the parties contained in this Agreement shall be cumulative; and no
one of them shall be construed as excluding any other or any right, priority or
remedy provided by this Agreement or law.
11. NO WAIVER. None of the terms, conditions, covenants, or provisions
of this Agreement can be waived by either party except by appropriate written
instruments. The waiver by either party of any breach of any term, condition,
covenant or provision herein contained shall not be deemed a waiver of the same
of any other term, condition, covenant or provision herein contained, or of any
subsequent breach of the same or any other term, condition, covenant or
provision herein contained.
12. GOVERNING LAW; VENUE. This Agreement shall be governed by, and its
provisions construed to be in compliance with, the laws of the State of Texas,
and in the event any provision of this Agreement cannot be so construed without
rendering such provision inoperable, such provision (i) shall be void and of no
effect and (ii) shall be deemed to be severable, and this Agreement shall remain
in full force and effect as though such provision had not been included herein.
The parties agree that venue for purposes of construing or enforcing this
Agreement shall be proper in Harris County, Texas.
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13. NOTICES. Any notice required or permitted under this Agreement
shall be given in writing effectively given upon personal delivery or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid. The mailing addresses of the parties for notice purposes are
as follows:
a. If to the Manager, addressed to:
RCI Entertainment (North Carolina), Inc.
Attn: Eric Langan
10959 Cutten Road
Houston, Texas 77066
b. If to the Owner, addressed to:
Top Shelf Entertainment, LLC
5300 Old Pineville Road
Charlotte, North Carolina 28217
14. INVALIDITY OF PROVISIONS. The invalidity or an enforceability of
any particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if such invalid
or unenforceable provisions were omitted.
15. MISCELLANEOUS.
(a) Any words used herein in the singular shall be deemed to include
the plural, any words used herein in the plural shall be deemed
to include the singular, as the context requires. Pronouns used
herein, whether masculine, feminine or neuter, shall be
interpreted as the context requires.
(b) This Agreement shall not be construed to have created any rights
or benefits for, or be deemed to inure to the benefit if, any
person or entity not a party hereto. Further, this Agreement
shall not be deemed to have made the Owner and the Manager
partners for any purposes. The rights and powers of the Manager
hereunder are to be strictly construed and limited to the
specific matters hereinabove set forth.
(c) This Agreement may be executed in multiple counterparts on the
day and date first hereinabove written, and each executed
counterpart hereof shall be deemed to be an original for all
purposes.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE.]
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IN WITNESS WHEREOF, the parties hereto have executed this Management
Agreement as of the date first above written.
OWNER:
TOP SHELF ENTERTAINMENT, LLC
By: /s/ Tony Hege
-------------------------------------
Name: Tony Hege
MANAGER:
RCI ENTERTAINMENT (NORTH CAROLINA), INC.
By: /s/ Eric Langan
-------------------------------------
Name: Eric Langan
Title: President
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