PURCHASE
AGREEMENT
This
Purchase Agreement (the “Agreement”) is made and entered into this 15th day of
April, 2008, by and among Don Waitt (“Waitt”), John Cornetta (“Cornetta”),
TEEZE International, Inc., a Delaware
corporation (“TEEZE”), Adult
Store Buyer Magazine, LLC, a Georgia
limited liability company (“ASB”), RCI Entertainment (Media Holdings), Inc., a
Texas corporation (the “Buyer”), and Rick’s Cabaret International, Inc., a Texas
corporation (“Rick’s”). Waitt and Cornetta are sometimes collectively
referred to herein as “Sellers”.
WHEREAS
, Buyer is a wholly
owned subsidiary of Rick’s; and
WHEREAS
, the Sellers own 100%
of the issued and outstanding common stock of TEEZE (the “TEEZE Stock”) and 100%
of the membership interest in ASB (the “Membership
Interest”); and
WHEREAS
, TEEZE owns and
operates “TEEZE Magazine” and ASB owns and operates “Adult Store Buyers
Magazine” (the “Publications”); and
WHEREAS
, the Sellers desire to
sell 100% of the issued and outstanding TEEZE Stock and 100% of the issued and
outstanding Membership Interest of ASB to Buyer 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 TEEZE STOCK
AND
THE MEMBERSHIP INTEREST
Section
1.1
Sale of the TEEZE Stock and
Membership Interest
. Subject to the terms and conditions set
forth in this Agreement, at the Closing (as hereinafter defined) Sellers hereby
agree to sell, transfer, convey and deliver to Buyer 100% of the issued and
outstanding common stock of TEEZE and 100% of the issued and outstanding
Membership Interest of ASB free and clear of all encumbrances, and shall deliver
to Buyer certificates representing the TEEZE Stock and the ASB Membership
Interest, duly endorsed to Buyer or accompanied by duly executed stock powers in
form and substance satisfactory to Buyer.
Section
1.2
Purchase Price for the TEEZE
Stock and Membership Interest
. As consideration for the
purchase of the TEEZE Stock and Membership Interest, Buyer shall pay to Sellers
a total purchase price of $500,000.00 (the “Purchase Price”), payable to the
Sellers as follows:
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a.
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$200,000
by cashier’s check, certified funds or wire transfer at Closing (as
hereinafter defined); and
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b.
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The
issuance of 6,522 shares of restricted common stock by Rick’s to each of
Messrs. Waitt and Cornetta, for an aggregate of 13,044 shares of
restricted common stock (collectively, the “Rick’s Shares”) at Closing to
be valued at $23.00 per share.
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Section
1.3
Right of Sellers to “Put”
Shares
. On or after one (1) year from the date of Closing,
each of Messrs. Waitt and Cornetta shall have the right, but not the obligation,
to have Rick’s purchase the Rick’s Shares from each of Messrs. Waitt and
Cornetta calculated at a price per share equal to $23.00 per share
(“Value of the Rick’s Shares”) until Messrs. Waitt and Cornetta have each
received $150,000 from (i) the sale of the Rick’s Shares sold by them,
regardless of whether sold to Rick’s, sold in the open market or in a private
transaction or otherwise and (ii) the payment of any Deficiency (as hereinafter
defined) by Rick’s. Each Seller, individually, shall notify Rick’s
during any given month of his election to “Put” the Rick’s Shares to Rick’s
during that particular month and Rick’s shall have three (3) business days to
elect to buy the Rick’s Shares or instruct the respective Seller(s) to sell the
Rick’s Shares in the open market. At Rick’s election, during
any given month, it may either buy the Rick’s Shares or, if Rick’s elects not to
buy the Rick’s Shares from the respective Seller(s), then such Seller(s) shall
sell the Rick’s Shares in the open market and any deficiency between the amount
which the Seller(s) receive from the sale of the Rick’s Shares and the Value of
the Rick’s Shares (the “Deficiency”) shall be paid by Rick’s within three (3)
business days after receipt of written notice from the respective Seller(s) of
the sale of the Rick’s Shares which shall provide the written sales confirmation
and the amount of the Deficiency. Rick’s obligation under this
Section 1.3 to purchase the Rick’s Shares from any respective Seller shall
terminate and cease at such time as such Seller has received an aggregate amount
of $150,000 from (i) the sale of the Rick’s Shares, regardless of whether sold
to Rick’s, sold in the open market or in a private transaction or otherwise, and
(ii) the payments of any Deficiency by Rick’s. Each of the Sellers,
individually, agree to provide monthly statements to Rick’s as to the total
number of Rick’s Shares which Seller sold and the amount of proceeds derived
therefrom. Nothing contained in this Section 1.3 shall limit or
preclude any Seller from selling their Rick’s Shares in the open market or
require any Seller to “Put” their Rick’s Shares to Rick’s during any given
month. In the event that Sellers elect to sell their Rick’s Shares
pursuant to this Section 1.3, then any amount sold at prices less than $23.00
shall be deemed to be sold at $23.00 for purposes of Section 1.3.
ARTICLE
II
CLOSING
Section
2.1
The
Closing
. The closing of the transactions provided for in this
Agreement shall take place on or before April 15, 2008 (the “Closing Date”), or
at such other time and place as agreed upon in writing among the parties hereto
(the “Closing”). The parties have agreed further to close at the
corporate office of Rick’s located at 10959 Cutten Road, Houston,
Texas 77066.
Section
2.2
Delivery and
Execution
. At the Closing: (a) the Sellers shall deliver to
Buyer certificates evidencing the TEEZE Stock and the Membership Interest of
ASB, free and clear of any liens, claims, equities, charges, options, rights of
first refusal or encumbrances, duly endorsed to Buyer or accompanied by duly
executed stock powers in form and substance satisfactory to Buyer against
delivery by Buyer to the Sellers of payment in an amount equal to the Purchase
Price set forth in Section 1.2; and (b) the Related Transactions (as defined
below) shall be consummated concurrently with the Closing.
Purchase
Agreement - Page 2
Section
2.3
Related
Transactions
. At Closing, each of 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 or indirectly, with TEEZE,
ASB, Buyer, Rick’s or any of their affiliates by publishing any sexually
oriented industry trade print publications, with the exception of a publication
known as “Xcitement” which is currently owned and operated by
Cornetta.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES
OF
THE SELLERS, TEEZE AND ASB
The
Sellers, TEEZE and ASB, jointly and severally, hereby represent and warrant to
the Buyer as follows:
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Section
3.1.
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Organization, Good
Standing and Qualification.
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(a)
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TEEZE
(i) is duly organized, validly existing and in good standing under the
laws of the state of Delaware, (ii) ASB is duly organized, validly
existing and in good standing under the laws of Georgia, (iii) TEEZE and
ASB each have the requisite power and authority to own, operate and lease
its properties and to carry on its business, and (iv) TEEZE and ASB are
duly qualified to transact business and are in good standing in all
jurisdictions where their 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,
TEEZE or ASB,
respectively.
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(b)
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The
authorized capital of TEEZE consists of 1,500 shares of common stock all
of which are validly issued and outstanding. Waitt owns 750 shares of
TEEZE Stock and Cornetta owns 750 shares of TEEZE Stock. There
is no other class of capital authorized or issued by TEEZE. All
of the issued and outstanding TEEZE Stock of TEEZE are owned by the
Sellers and are fully paid and non-assessable. None of the
shares of TEEZE Stock issued are in violation of any preemptive
rights. TEEZE has no obligation to repurchase, reacquire, or
redeem any of its outstanding common stock. There are no
outstanding securities convertible into or evidencing the right to
purchase or subscribe for any common stock of TEEZE, there are no
outstanding or authorized options, warrants, calls, subscriptions, rights,
commitments or any other agreements of any character obligating TEEZE to
issue any common stock or any securities convertible into or evidencing
the right to purchase or subscribe for any common stock, and there are no
agreements or understandings with respect to the voting, sale, transfer or
registration of any common stock of
TEEZE.
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(c)
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The
authorized capital of ASB consist of 50% membership interest owned by John
Cornetta and 50% membership interest owned by Don Waitt, all
of which are validly issued and outstanding. There is no other
class of capital authorized or issued by ASB. All of the issued
and outstanding Membership Interest of ASB are owned by the Sellers and
are fully paid and non-assessable. None of the Membership
Interests issued are in violation of any preemptive rights. ASB
has no obligation to repurchase, reacquire, or redeem any of its
outstanding Membership Interest. There are no outstanding
securities convertible into or evidencing the right to purchase or
subscribe for any Membership Interest of ASB, there are no outstanding or
authorized options, warrants, calls, subscriptions, rights, commitments or
any other agreements of any character obligating ASB to issue any
Membership Interest or any securities convertible into or evidencing the
right to purchase or subscribe for any Membership Interest, and there are
no agreements or understandings with respect to the voting, sale, transfer
or registration of any Membership Interest of
ASB.
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Purchase
Agreement - Page 3
Section
3.2
Ownership of the
TEEZE Stock
. The Sellers own, beneficially and of record, all
of the TEEZE Stock 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 TEEZE Stock 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 TEEZE Stock to Buyer as
contemplated herein, Buyer will receive good and valid title thereto, free and
clear of any liens, claims, equities, charges, options, rights of first refusal,
encumbrances or other restrictions (except those imposed by applicable
securities laws).
Section
3.3
Ownership of the Membership
Interest
. The Sellers own, beneficially and of record, all of
the Membership Interest of ASB 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 Membership Interest 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 Membership Interest
to Buyer as contemplated herein, Buyer will receive good and valid title
thereto, free and clear of any liens, claims, equities, charges, options, rights
of first refusal, encumbrances or other restrictions (except those imposed by
applicable securities laws).
Section
3.4
Authorization
. TEEZE
and ASB have all requisite corporate power and authority to execute and deliver
this Agreement and to perform its obligations hereunder and to consummate the
transactions contemplated hereby. All action on the part of TEEZE and
ASB necessary for the authorization, execution, delivery and performance of this
Agreement and all documents related to consummate the transactions contemplated
herein have been taken or will be taken prior to the Closing Date by TEEZE and
ASB. This Agreement, when duly executed and delivered in accordance with its
terms, will constitute legal, valid and binding obligations of TEEZE and ASB
enforceable against them 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.
Each of
the Sellers represents that he is a person of full age of majority, with full
power, capacity, and authority to enter into this Agreement and perform the
obligations contemplated hereby by and for himself and his spouse (if
applicable). All action on the part of the Sellers necessary for the
authorization, execution, delivery and performance of this Agreement by him has
been taken and will be taken prior to Closing Date. This Agreement,
when duly executed and delivered in accordance with its terms, will constitute
legal, valid and binding obligations of the Sellers enforceable against each of
them 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.
Purchase
Agreement - Page 4
Section
3.5
Consents
. No
consent of, approval by, order or authorization of, or registration, declaration
or filing by TEEZE, ASB, or the Sellers with any court or any governmental or
regulatory agency or authority having jurisdiction over the TEEZE or ASB, or any
of their respective property or assets is required on the part of
TEEZE, ASB, or the Sellers (a) in connection with the consummation of
the transactions contemplated by this Agreement or (b) as a condition to the
legality, validity or enforceability as against TEEZE or ASB of 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 TEEZE or
ASB.
Section
3.6
Acquisition of Stock for
Investment
. Each of the Sellers understand that any issuance
of the Rick’s Shares (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 accordingly, are restricted securities, and each of
the Sellers represents and warrants to the Buyer that the present intention of
Sellers is to receive and hold the Rick’s Shares for investment only and not
with a view to the distribution or resale thereof.
Additionally,
each of the Sellers understand that any sale of any the Rick’s Shares issued,
under current law, will require either (a) the registration of the Rick’s Shares
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.
To assist
in implementing the above provisions, each of the Sellers hereby consents to the
placement of the legend, or a substantially similar legend, set forth below, on
all certificates representing ownership of the Rick’s Shares acquired hereby
until the Rick’s Shares have 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 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
Access to
Information
. Each of the Sellers hereby confirms and
represents that they (a) have received a copy of Rick’s Form 10-KSB filed with
the Securities and Exchange Commission (the “SEC”) for the year ended September
30, 2007, and a copy of Rick’s Form 10-QSB for the quarter ended December 31,
2007, as filed with the SEC; (b) a copy of Rick’s Form 14C filed with the SEC on
June 27, 2007; (c) a copy of the Forms 8-K filed with the SEC on February 13,
2008, March 7, 2008, April 3, 2008 and April 4, 2008, and the Forms 8-K/A filed
on January 29, 2008, February 11, 2008, and March 18, 2008; (d) have 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; (e) have 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; (f) have had an opportunity to engage and is represented by an attorney
of his choice; (g) have had an opportunity to negotiate the terms and conditions
of this Agreement; (h) have been given adequate time to evaluate the merits and
risks of the transactions contemplated hereby; and (i) have been provided with
and given an opportunity to review all current information about
Rick’s. The Sellers have asked such questions to representatives of
Rick’s about Rick’s as they desire to ask and all such questions have been
answered to the full satisfaction of each of the Sellers. The forms
filed by Rick’s with the SEC as set forth in Section 3.7(a), (b) and (c) are
hereafter collectively referred to as “SEC Reports”.
Purchase
Agreement - Page 5
Section
3.8
Purchase
for Investment
. Each of the Sellers are acquiring the Rick’s
Shares for their own accounts, for investment purposes only and not with view to
any public resale or other distribution thereof. Each of the Sellers
represents and warrants that each is an Accredited Investor as that term is
defined in Rule 501(a) of Regulation D of the Securities Act of 1933, as
amended. Each of the Sellers, and their respective representatives
have received, or have had access to, and have had sufficient opportunity to
review, all books, records, financial information and other information which
each of the Sellers consider necessary or advisable to enable him to make a
decision concerning its acquisition of the Rick’s Shares, and that each of them
possesses such knowledge and experience in financial and business matters that
each is capable of evaluating the merits and risks of his investment
hereunder.
Section
3.9
No
Default
. Neither TEEZE nor ASB is (a) in violation of any
provision of its Articles of Incorporation, Bylaws, Articles of Organization or
Regulations or (b) in default under any term or condition of any instrument
evidencing, creating or securing any indebtedness of TEEZE or ASB, and there has
been no default in any material obligation to be performed by TEEZE or ASB under
any other contract, lease, agreement, commitment or undertaking to which either
of them is a party or by which they or their assets or properties are bound, nor
has TEEZE or ASB waived any material right under any such contract, lease,
agreement, commitment or undertaking.
Section
3.10
Taxes
. TEEZE
and ASB have timely and accurately filed all federal, state, foreign and local
tax returns and reports required to be filed prior to such dates and have timely
paid all taxes shown on such returns as owed for the periods of such returns,
including all sales taxes and withholding or other payroll related taxes shown
on such returns and any taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, creditor or independent
contractor. TEEZE and ASB have 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 TEEZE, ASB or the
Sellers 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. None of TEEZE, ASB or
either of the Sellers has knowledge of any action by any taxing authority in
connection with assessing additional taxes against or in respect of it for any
past period. There are no agreements between TEEZE or ASB and any
taxing authority waiving or extending any statute of limitations with respect to
any tax return.
Purchase
Agreement - Page 6
Section
3.11
Financial
Statements
. The Sellers have delivered to Buyer the financial
information available relating to TEEZE and ASB, respectively (the “Financial
Information”). Such Financial Information, are in accordance with the
books and records of TEEZE and ASB, and fairly represent the financial position
of TEEZE and ASB, and the results of operations and changes in financial
position of TEEZE and ASB as of the dates and for the periods
indicated. Neither TEEZE nor ASB has, as of the date of the Financial
Information, any material liability or obligation of any nature, whether
absolute, accrued, continued or otherwise. As of the Closing Date,
the Sellers represent there have been no adverse changes in the financial
condition or other operations, business, properties or assets of TEEZE or ASB,
respectively, from that reflected in the latest Financial Information of TEEZE
and ASB as furnished pursuant to this Agreement.
Section
3.12
Labor
Matters
. Neither TEEZE nor ASB is a party or otherwise subject
to any collective bargaining agreement with any labor union or
association. Neither TEEZE nor ASB is a party to any written or oral
contract, agreement or understanding for the employment of any officer, director
or employee of TEEZE or ASB. Neither TEEZE nor ASB is a party to any
employee benefits plans (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended) or any other fringe or employee
benefits plan, programs or arrangements.
Section
3.13
Compliance with Laws;
Permits
. TEEZE and ASB are, and at all times prior to the date
hereof have been in compliance with all statutes, orders, rules, ordinances and
regulations applicable to each of them or to the ownership of their respective
assets or the operation of their respective businesses.
Section
3.14
No
Conflicts
. The execution and delivery by TEEZE, ASB and the
Sellers of this Agreement does not, and the performance and consummation by
TEEZE, ASB and the Sellers of the transactions contemplated hereby will not (i)
conflict with the articles of incorporation, organization, bylaws or regulations
of TEEZE or ASB; (ii) conflict with or result in a breach or violation of, or
default under, or give rise to any right of acceleration or termination of, any
of the terms, conditions or provisions of any note, bond, lease, license,
agreement or other instrument or obligation to which TEEZE or ASB is a party or
by which the assets or properties of TEEZE or ASB are bound; (iii) result in the
creation of any encumbrance on any of the assets or properties of TEEZE or ASB;
or (iv) violate any law, rule, regulation or order applicable to TEEZE, ASB or
the Sellers or any of the assets or properties of TEEZE or
ASB.
Section
3.15
Title to Properties;
Encumbrances
. TEEZE and ASB have good and marketable title to
all of the personal property and assets, that are used in the business that are
material to the condition (financial or otherwise), business, operations or
prospects of TEEZE and ASB, 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 TEEZE
and ASB, (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. Neither TEEZE
nor ASB owns any real property.
Purchase
Agreement - Page 7
Section
3.16
No Pending
Transactions
. Except for the transactions contemplated by this
Agreement, none of TEEZE, ASB or the Sellers 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 TEEZE or ASB, (ii) the sale of any of the assets of TEEZE or
ASB except in the ordinary course of business, (iii) the sale of any outstanding
TEEZE Stock or outstanding Membership Interest of ASB, (iv) the acquisition by
TEEZE or ASB of any operating business or the capital stock of any other person
or entity, (v) the borrowing of money by TEEZE or ASB, whether secured or
unsecured, or (vi) any agreement with any of the respective officers, managers
or affiliates of TEEZE or ASB.
Section
3.17
Contracts and
Leases
. Neither TEEZE nor ASB (i) has any leases of personal
property relating to the assets of TEEZE or ASB, whether as lessor or lessee;
(ii) has any contractual or other obligations relating to the assets of TEEZE or
ASB, whether written or oral; and (iii) have given any power of attorney to any
person or organization for any purpose relating to the assets of TEEZE or
ASB. TEEZE and ASB have provided Buyer access to each and every
contract, lease or other document relating to the assets of TEEZE and ASB to
which they are subject or are a party or a beneficiary. To the
knowledge of each of the Sellers, 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 TEEZE and ASB and the other respective
parties thereto and are enforceable in accordance with their
terms. None of the Sellers have knowledge of any default or breach
under such contracts, leases or other documents or of any pending or threatened
claims under any such contracts, leases or other documents.
Section
3.18
No
Default
. Neither TEEZE nor ASB is (a) in violation of any
provision of its articles of incorporation, organization, bylaws or regulations
or (b) in default under any term or condition of any instrument evidencing,
creating or securing any indebtedness of TEEZE or ASB. Further, there
has been no default in any material obligation to be performed by TEEZE or ASB
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
TEEZE or ASB waived any material right under any such contract, lease,
agreement, commitment or undertaking.
Section
3.19
Books and
Records
. The books of account, minute books, stock record
books or other records of TEEZE and ASB that exist are accurate and complete and
have been maintained in accordance with sound business practices and will be
located at the offices of TEEZE and ASB upon Closing.
Section
3.20
Insurance
Policies
. Copies
of all insurance policies maintained by TEEZE and ASB relating to the operation
of their respective businesses have been delivered or made available to
Buyer. The policies of insurance held by TEEZE and ASB are in such
amounts, and insure against such losses and risks, as TEEZE and ASB reasonably
deem appropriate for their respective 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.
Purchase
Agreement - Page 8
Section
3.21
Pending
Claims.
There are no claims, suits, arbitrations,
investigations, actions or other proceedings, whether judicial, administrative
or otherwise, now pending or, to the best knowledge of TEEZE, ASB or
either of the Sellers, 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 TEEZE and/or ASB, or the transfer
of the TEEZE Stock or the Membership Interest by the Sellers to Buyer under this
Agreement, nor is there any basis known to TEEZE, ASB, or either of the Sellers
for any such action. No litigation is pending, or, to the knowledge of TEEZE,
ASB, or either of the Sellers, threatened against TEEZE or ASB, or the assets or
properties of TEEZE and ASB 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. None of TEEZE, ASB or either of the Sellers is subject to any
judicial injunction or mandate or any quasi-judicial or administrative order or
restriction directed to or against them which would affect TEEZE, ASB, or the
TEEZE Stock and the Membership Interest to be transferred under this
Agreement.
Section
3.22
No Liabilities
. As of
the Closing Date, neither TEEZE nor ASB shall have any obligations or liability
(contingent or otherwise) to any third party.
Section
3.23
Brokerage
Commission
. No broker or finder has acted for the TEEZE, ASB
or the Sellers 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 TEEZE, ASB or the
Sellers.
Section
3.24
Banks and Brokerage
Accounts
.
Exhibit
3.24
sets forth (a) a true and complete list of the names and locations
of all banks, trust companies, securities brokers and other financial
institutions at which TEEZE and ASB have an account or safe deposit box or
maintains a banking, custodial, trading or other similar relationship, and (b) a
true and complete list and description of each such account, box and
relationship, indicating in each case the account number and the names of the
respective officers, employees, agents or other similar representatives of TEEZE
or ASB having signatory power with respect thereto.
Section
3.25
Disclosure
. No
representation or warranty of TEEZE, ASB or the Sellers 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.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES
OF
BUYER AND RICK’S
Buyer and
Rick’s hereby represent and warrant to TEEZE, ASB and the Sellers as
follows:
Purchase
Agreement - Page 9
Section
4.1
Organization, Good Standing
and Qualification.
Buyer and Rick’s (i) are duly organized,
validly existing and in good standing under the laws of the state of Texas, (ii)
have all requisite power and authority to carry on their respective businesses,
and (iii) are duly qualified to transact business and are in good standing in
all jurisdictions where their ownership, lease or operation of property or the
conduct of their business requires such qualification, except where the failure
to do so would not have a material adverse effect to Buyer or
Rick’s.
Section
4.2
Authorization
. Buyer
and Rick’s are each corporations duly organized in the state of Texas and have
full power, capacity, and authority to enter into this Agreement and perform the
obligations contemplated hereby. All action on the part of Buyer and
Rick’s necessary for the authorization, execution, delivery and performance of
this Agreement by them has been or will be taken before Closing. This
Agreement, when duly executed and delivered in accordance with its terms, will
constitute legal, valid, and binding obligations of Buyer and Rick’s enforceable
against Buyer and 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
4.3
Consents
. No
permit, consent, approval or authorization of, or designation, declaration or
filing with, any governmental authority or any other person or entity is
required on the part of Buyer or Rick’s in connection with the execution and
delivery by Buyer or Rick’s of this Agreement or the consummation and
performance of the transactions contemplated hereby other than as may be
required under the federal securities laws.
Section
4.4
Disclosure
. No
representation or warranty of Buyer 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.
Section
4.5
Brokerage
Commission
. No broker or finder has acted for the Buyer or
Rick’s in connection with this Agreement or the transactions contemplated
hereby, and no person is entitled to any brokerage or finder’s fee or
compensation in respect thereof based in any way on agreements, arrangements or
understandings made by or on behalf of Buyer or Rick’s.
ARTICLE
V
CONDITIONS
TO CLOSING
The
obligations of the parties to effect the transactions contemplated hereby are
subject to the satisfaction at or prior to the Closing of the following
conditions:
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Section
5.1
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Conditions to
Obligations of Buyer and
Rick’s
.
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(a)
|
Representations and
Warranties of TEEZE, ASB and the Sellers
. The
representations and warranties of TEEZE, ASB and the Sellers shall be true
and correct on the Closing Date;
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Purchase
Agreement - Page 10
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(b)
|
Covenants
. All
covenants, agreements and conditions contained in this Agreement to be
performed by TEEZE, ASB and the Sellers on or prior to the Closing Date
shall have been performed or complied with in all
respects;
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(c)
|
Delivery of
Certificates
. The Sellers, TEEZE and ASB shall provide
to Buyer and Rick’s certificates, dated as of the Closing Date and signed
by each of the Sellers and by representatives of TEEZE and ASB,
respectively, to effect set forth in Section 5.1(a) and 5.1(b) for the
purpose of verifying the accuracy of such representations and warranties
and the performance and satisfaction of such covenants and
conditions;
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(d)
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Resolutions
. TEEZE
and ASB shall have delivered resolutions of TEEZE and ASB 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;
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(e)
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Delivery of TEEZE
Stock and Membership Interest
. The Sellers shall deliver
or cause to be delivered to Buyer and Rick’s (i) originally issued
certificates representing the shares of TEEZE Stock and (ii) the
originally issued certificate representing the Membership Interest of ASB
duly endorsed over to the Buyer in a form satisfactory to the Buyer and
Rick’s;
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(f)
|
Related
Transaction
. The Related Transaction set forth in
Section 2.3 shall be consummated concurrently with the
Closing;
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(g)
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Financial
Records
. The financial records of TEEZE and ASB shall be
maintained and exist in such a manner as to allow for a certified audit as
determined by Rick’s;
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(h)
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Liabilities
. Neither
TEEZE nor ASB shall have any liabilities as of the date of
Closing;
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(i)
|
Third-Party
Consents
. Any and all consents or waivers required from
third parties relating to this Agreement or any of the other transactions
contemplated hereby shall have been
obtained;
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(j)
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Satisfactory
Diligence
. Buyer and Rick’s shall have concluded their
due diligence investigation of TEEZE and ASB and their respective assets
and properties and all other matters related to the foregoing, and shall
be satisfied, in its absolute and sole discretion, with the results
thereof;
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(k)
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No Actions or
Proceedings
. No claim, action, suit, investigation or
proceeding shall be pending or threatened before any court or governmental
agency which presents a substantial risk of the restraint or prohibition
of the transactions contemplated by this
Agreement;
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(l)
|
Government
Approvals
. All authorizations, permits, consents,
orders, licenses or approvals of, or declarations or filings with, or
expiration of waiting periods imposed by, any governmental entity
necessary for the consummation of the transactions contemplated by this
Agreement shall have been filed, occurred or been obtained;
and
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Purchase
Agreement - Page 11
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(m)
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Appointment of
Manager/Officer/Resignations
. At Closing, (i) Eric
Langan shall have been appointed as President/Chief Executive
Officer and sole director of TEEZE and Manager of ASB; and (ii)
each of the Sellers shall resign any and all officer, director and/or
manager positions held in TEEZE and/or ASB,
respectively.
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Section
5.2
|
Conditions to
Obligations of TEEZE, ASB and the
Sellers
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(a)
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Representations,
Warranties and Agreements of Buyer and Rick’s
. The
representations and warranties of Buyer shall be true and correct on the
Closing Date;
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(b)
|
Covenants
. All
covenants, agreements and conditions contained in this Agreement to be
performed by the Buyer and Rick’s on or prior to the Closing Date shall
have performed or complied with in all
respects;
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(c)
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Delivery of
Certificates
. Buyer and Rick’s shall provide to TEEZE,
ASB and the Sellers certificates dated as of the Closing Date and signed
by a representative of the Buyer and Rick’s to the effect set forth in
Section 5.2(a) and 5.2(b) for the purpose of verifying the accuracy of
such representations and warranties and the performance and satisfaction
of such covenants and conditions;
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(d)
|
Resolutions
. Buyer
and Rick’s shall deliver resolutions of the Buyer and Rick’s, 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;
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(e)
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Payment of Purchase
Price
. (i) Buyer shall have tendered the cash portion of
the Purchase Price set forth in Section 1.2(a), and (ii) Rick’s shall have
delivered the Rick’s Shares representing the stock portions of the
Purchase Price to the Sellers as set forth in Section 1.2(b) or shall
deliver a letter of instruction to the transfer agent instructing the
issuance of the Rick’s Shares to the
Sellers;
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(f)
|
Related
Transactions
. The Related Transaction set forth in
Section 2.3 shall be consummated concurrently with the
Closing;
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(g)
|
Third Party
Consents
. Any and all consents or waivers required from
third parties relating to this Agreement or any of the other transactions
contemplated hereby shall have been
obtained;
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(i)
|
No Actions or
Proceedings
. No claim, action, suit, investigation or
proceeding shall be pending or threatened before any court or governmental
agency which presents a substantial risk of the restraint or prohibition
of the transactions contemplated by this Agreement;
and
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Purchase
Agreement - Page 12
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(j)
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Government
Approvals
. All authorizations, permits, consents, orders
or approvals of, or declarations or filings with, or expiration of waiting
periods imposed by, any governmental entity necessary for the consummation
of the transactions contemplated by this Agreement shall have been filed,
occurred or been obtained.
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ARTICLE
VI
INDEMNIFICATION
Section
6.1
Indemnification from the
Sellers
. Each of the Sellers, jointly and
severally, hereby agree to and shall indemnify, defend (with legal
counsel reasonably acceptable to Buyer), and hold Buyer, Rick’s, their officers,
directors, shareholders, employees, affiliates, parent, agents, legal counsel,
successors and assigns (collectively, the “Buyer’s 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) (collectively,
“Indemnifiable Loss” or “Indemnifiable Losses”) suffered or incurred by any or
all of the Buyer’s Group arising from: (a) any material
misrepresentation by, or material breach of any covenant or warranty
of the Sellers, ASB or TEEZE contained in this Agreement, or any
exhibit, certificate, or other instrument furnished or to be furnished by the
Sellers, ASB or TEEZE hereunder; (b) any nonfulfillment of any material
agreement on the part of the Sellers, ASB or TEEZE under this
Agreement;
or
(c) from any liability or obligation due to any third party by TEEZE,
ASB, and/or the Sellers incurred prior to the Closing Date, including all
damages resulting to the Buyer’s Group from a breach by either of the Sellers,
ASB or TEEZE of any contracts occurring prior to the Closing Date; or (d) any
liabilities of TEEZE or ASB incurred prior to the Closing Date.
Section
6.2
Indemnification from Buyer
and Rick’s
. Buyer and Rick’s agree to and shall indemnify,
defend (with legal counsel reasonably acceptable to Company) and hold the
Sellers and their agents, legal counsel, successors and assigns, (collectively,
the "Sellers’ 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 or all of Sellers’ Group, arising from (a) any material
misrepresentation by, or material breach of any covenant or warranty of Buyer or
Rick’s contained in this Agreement or any exhibit, certificate, or other
agreement or instrument furnished or to be furnished by Buyer or Rick’s
hereunder; (b) any nonfulfillment of any material agreement on the part of Buyer
or Rick’s under this Agreement; or (c) any liabilities of ASB or TEEZE incurred
subsequent to the Closing Date.
Section
6.3
Defense of
Claims
. If any lawsuit or enforcement action is filed against
any party entitled to the benefit of indemnity hereunder, written notice thereof
shall be given to the indemnifying party as promptly as practicable (and in any
event not less than fifteen (15) days prior to any hearing date or other date by
which action must be taken); provided that the failure of any indemnified party
to give timely notice shall not affect rights to indemnification hereunder
except to the extent that the indemnifying party demonstrates actual damage
caused by such failure. After such notice, the indemnifying party
shall be entitled, if it so elects, to take control of the defense and
investigation of such lawsuit or action and to employ and engage attorneys of
its own choice to handle and defend the same, at the indemnifying party's cost,
risk and expense; and such indemnified party shall cooperate in all reasonable
respects, at its cost, risk and expense, with the indemnifying party and such
attorneys in the investigation, trial and defense of such lawsuit or action and
any appeal arising therefrom; provided, however, that the indemnified party may,
at its own cost, participate in such investigation, trial and defense of such
lawsuit or action and any appeal arising therefrom. The indemnifying
party shall not, without the prior written consent of the 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.
Purchase
Agreement - Page 13
Section
6.4
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
6.5
Right to
Offset
. In the event that the Buyer or Rick’s is entitled to
indemnification in accordance with Section 6.1 and 6.3 hereof, including the
payment by the Buyer of any debts or liabilities resulting from the purchase of
the Company which were incurred prior to the Closing Date, then Buyer or Rick’s
shall have the right to offset any such amount from any obligations that are
then due and payable to the Seller.
Section
6.6
Survival of Representations
and Warranties
. The respective representations, warranties and
indemnities given by the parties to each other pursuant to this Agreement shall
survive the Closing for a period ending twenty-four (24) months from the Closing
Date (“Survival Date”). Notwithstanding anything to the contrary
contained herein, no claim for indemnification may be made against the party
required to indemnify (the “Indemnitor”) under this Agreement unless the party
entitled to indemnification (the “Indemnitee”) shall have given the Indemnitor
written notice of such claim as provided herein on or before the Survival
Date. Any claim for which notice has been given prior the expiration
of the Survival Date shall not be barred hereunder
ARTICLE
VII
MISCELLANEOUS
Section
7.1
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.
Purchase
Agreement - Page 14
Section
7.2
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:
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(a)
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if
to Waitt:
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Don
Waitt
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_________________________________
_________________________________
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with
a copy to:
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_________________________________
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_________________________________
_________________________________
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(b)
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if
to Cornetta:
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John
Cornetta
|
_________________________________
_________________________________
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with
a copy to:
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_________________________________
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_________________________________
_________________________________
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(c)
|
if
to Buyer,
Rick’s,
Rick’s
Cabaret International, Inc.
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TEEZE
or ASB:
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Attn: Eric
Langan, President
|
10959
Cutten Road
Houston,
Texas 77066
Fax: (281)
397-6765
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with
a copy to:
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Robert
D. Axelrod
|
Axelrod,
Smith & Kirshbaum, P.C.
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 receipt by the addressee thereof, and
(iii) if sent by registered or certified mail, three (3) business days after
dispatch.
Section
7.3
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.
Purchase
Agreement - Page 15
Section
7.4
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
7.5
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
7.6
Jurisdiction
. This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of Texas, without regard to principles of conflict of
laws. The parties agree that venue for purposes of construing or
enforcing this Agreement shall be proper in Harris County, Texas.
Section
7.7
Execution
. This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile or “.pdf” signature page were an original thereof.
Section
7.8
Costs and
Expenses
. Each party shall pay their own respective
fees, costs and disbursements incurred in connection with this
Agreement.
Section
7.9
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
7.10
No Third-Party
Beneficiaries
. Nothing in this Agreement will confer any third
party beneficiary or other rights upon any person or any entity that is not a
party to this Agreement.
Section
7.11
Attorneys’
Review
. In connection with the negotiation and drafting of
this Agreement, the parties represent and warrant to each other they have had
the opportunity to be advised by attorneys of their own choice.
Section
7.12
Further
Assurances
. Each party covenants that at any time, and from
time to time, after the Closing Date, it will execute such additional
instruments and take such actions as may be reasonably be requested by the other
parties to confirm or perfect or otherwise to carry out the intent and purposes
of this Agreement.
Purchase
Agreement - Page 16
Section
7.13
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
7.14
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
7.15
Exhibits Not
Attached
. Any exhibits not attached hereto on the date of
execution of this Agreement shall be deemed to be and shall become a part of
this Agreement as if executed on the date hereof upon each of the parties
initialing and dating each such exhibit, upon their respective acceptance of its
terms, conditions and/or form.
[SIGNATURES
APPEAR ON THE FOLLOWING PAGE.]
Purchase
Agreement - Page 17
IN
WITNESS WHEREOF, the undersigned have executed this Purchase Agreement to become
effective as of the date first set forth above.
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RCI
ENTERTAINMENT
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(MEDIA
HOLDINGS), INC.
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/s/ Eric Langan
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By: Eric
Langan, President
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Date: April
15, 2008
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RICK’S
CABARET INTERNATIONAL, INC.
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/s/ Eric Langan
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By: Eric
Langan, President
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Date: April
15, 2008
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TEEZE
PUBLICATIONS, INC.
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/s/ Don Waitt
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By: Don
Waitt
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Its: President
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Date:
April 15, 2008
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ADULT
STORE BUYER MAGAZINE, LLC
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/s/ John Cornetta
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By: John
Cornetta
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Its: Manager
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Date: April
15, 2008
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THE
SELLERS
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/s/ Don Waitt
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Don
Waitt, Individually
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Date: April
15, 2008
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/s/ John J. Cornetta
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John
Cornetta, Individually
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Date: April
15, 2008
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Purchase
Agreement - Page 18
FOR
IMMEDIATE RELEASE