Exhibit 10.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made and entered into as of
March 29, 1999, made by and among ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, a resident of Houston,
Texas, ("Seller"), on the one hand and ▇. ▇. ▇▇▇▇▇▇, L.P., a Texas limited
partnership ("▇▇▇▇▇▇") and ▇▇▇▇▇ ▇▇▇▇▇▇▇, a resident of Austin, Texas
("▇▇▇▇▇▇▇") (▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ collectively referred to as "Purchasers"), on
the other hand.
W I T N E S S E T H:
WHEREAS, Seller owns 1,790,000 shares of common stock of Rick's Cabaret
International, Inc., a Texas corporation (the "Company"); and
WHEREAS, of the shares of the Company owned by Seller, 1,600,000 are in escrow
("Escrowed Shares") pursuant to an escrow agreement dated October 11, 1995,
among the Company, the Seller and Austin Trust Company, as Escrow Agent, a copy
of which is attached hereto as Exhibit A ("Escrow Agreement") and the remainder
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of the shares owned by Seller are unencumbered by the Escrow Agreement
("Unencumbered Shares") (the Escrowed Shares and the Unencumbered shares
collectively referred to herein as "Shares");
WHEREAS, the Seller desires to sell the Shares to the Purchasers and the
Purchasers desire to purchase the Shares from the Seller, on the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements hereinafter set forth and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I.
SALE AND PURCHASE OF STOCK
SECTION 1.1. Sale and Purchase of Stock. Upon the terms and subject to the
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conditions set forth in this Agreement, on the Closing Date (as hereinafter
defined),
a. the Seller shall sell 110,504 of the Unencumbered Shares to ▇▇▇▇▇▇ and
79,496 of the Unencumbered Shares to ▇▇▇▇▇▇▇;
b. the Seller shall transfer and convey all of his rights and interest in
930,560 (58.16%) of the Escrowed Shares to ▇▇▇▇▇▇ and 669,440 (41.84%) of the
Escrowed Shares to ▇▇▇▇▇▇▇ and shall assign all of his rights, title and
interests under the Escrow Agreement to the Purchasers, in accordance with and
pursuant to the terms of an Assignment and Assumption Agreement substantially in
the form attached hereto as form 1.1(b)(i) and Purchasers assume all of his
obligations and limitations under the Escrow Agreement, and a Voting Agreement
pursuant to which Seller grants to Purchasers all of his voting rights with
respect to the Escrowed Shares, substantially in the form attached hereto as
form 1.1(b)(ii) hereof.
Stock Purchase Agreement - Page 1
c. It is the intent of the parties and it is expressly understood that when
the Escrowed Shares are released from escrow, each Purchaser shall have record
title to the number of Escrowed Shares identified in Section 1.1(b) above, or
any number thereof that may be released from time to time. Upon release of
such shares, Seller shall do and take all such further actions as may be deemed
reasonably necessary to vest in Purchasers record title.
SECTION 1.2. Purchase Price. In consideration for such sale and assignment
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by the Seller of the Shares to Purchasers, Purchasers shall collectively deliver
to Seller the Purchase Price at the closing. Subject to and upon the terms and
conditions set forth herein, Purchasers shall pay to Seller an aggregate
purchase price of $1,560,072 ("Purchase Price") for the Shares, payable as
follows:
a. $707,327.39 payable by wire transfer of immediately available funds
("Cash Purchase Price");
b. $200,000 payable pursuant to a Promissory Note of even date herewith
payable to Seller due May 3, 1999 ("▇▇▇▇▇▇ Note") in the form attached hereto as
Form 1.2(b); and
▇. ▇▇▇▇▇▇▇'▇ promissory note, in the original principal amount of
$652,744.61, substantially in the form attached hereto as Form 1.2(b)(i)
("▇▇▇▇▇▇▇'▇ Promissory Note") which shall be secured by ▇▇▇▇▇▇▇'▇ Convertible
Debenture from the Company represented by Certificate-RCI-C.D. No. 100 in the
original principal sum of $366,000, dated August 11, 1998 and a promissory note
from Taurus Entertainment Companies, Inc. dated August 11, 1998, in the original
principal sum of $286,744.61. Such security shall be evidenced by a Security
Agreement between Seller and ▇▇▇▇▇▇▇, substantially in the form attached hereto
as Form 1.2(c) (the Cash Purchase Price, the ▇▇▇▇▇▇ Note and ▇▇▇▇▇▇▇'▇
Promissory Note collectively referred to as the "Purchase Price").
ARTICLE II.
CLOSING; PROCEDURES AT CLOSING
SECTION 2.1. CLOSING. The consummation of the purchase and sale and
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assignment of the Shares pursuant hereto and the consummation of the other
transactions contemplated hereby ("Closing") shall be effective as of March 29,
1999, and shall take place at the offices of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ or at such other time and
place as the Seller and the Purchasers may mutually agree in writing ("Closing
Date").
SECTION 2.2. CLOSING DELIVERIES BY THE SELLER. On the Closing Date,
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the Seller shall deliver, or cause to be delivered to the Purchasers, the
following:
a. Certificates evidencing the Unencumbered Shares, or appropriate stock
transfer powers with respect to the Unencumbered Shares, duly endorsed for
transfer to the Purchasers;
b. Appropriate stock transfer powers with respect to the Escrowed Shares,
duly endorsed for transfer to the Purchasers;
c. The Assignment and Assumption Agreement, duly executed;
Stock Purchase Agreement - Page 2
d. The Voting Agreement with respect to the Escrowed Shares, duly executed;
e. Appointment of Agents, duly executed;
f. Special Durable Power of Attorney, duly executed; and
g. Such other instruments or documents as the Purchasers may reasonably
request.
SECTION 2.3. Closing Deliveries and Payments by Purchasers. On the Closing
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Date, Purchasers shall deliver or cause to be delivered to the Seller the
following:
a. The Cash Purchase Price;
b. The ▇▇▇▇▇▇▇ Promissory Note;
c. The Security Agreement referred to in Section 1.2(b) hereof and related
documents referred to therein, all duly executed;
d. The ▇▇▇▇▇▇ Note;
e. The Assignment and Assumption Agreement, duly executed;
f. The Voting Agreement with respect to the Escrow Shares, duly executed;
g. Appointment of Agents, duly executed; and
h. Such other instruments or documents as the Seller may reasonably request.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
The Seller hereby represents and warrants to the Purchasers:
SECTION 3.1. AUTHORIZATION. Seller is a person of full age of majority,
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with full power, capacity, and authority to enter into this Agreement and
perform the obligations contemplated hereby by and for himself and his spouse.
All action on the part of Seller necessary for 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 the legal, valid and binding
obligations of Seller, enforceable against Seller in accordance with its terms,
except as limited by laws effecting creditors' rights or equitable principles
generally.
SECTION 3.2. OWNERSHIP OF THE SHARES. The Seller owns beneficially and of
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record all of the Shares free and clear of any liens, claims, equities, charges,
options, rights of first refusal, or encumbrances except for the encumbrance
imposed on the Escrowed Shares pursuant to the Escrow Agreement.
Stock Purchase Agreement - Page 3
SECTION 3.3 TRANSFER OF THE SHARES.
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a. The Seller has the unrestricted right and power to transfer, convey and
deliver full ownership of the Unencumbered Shares without the consent or
agreement of any other person and, except for filings required under the
applicable securities laws, without any designation, declaration or filing with
any governmental authority. Upon the transfer of the Unencumbered Shares to the
Purchasers, as contemplated herein, except as imposed by applicable securities
laws, purchasers will receive good and valid title to the Unencumbered Shares,
free and clear of any liens, claims, charges, options, and rights of first
refusal, encumbrances or other restrictions.
b. Seller has the unrestricted right and power to assign his rights under
the Escrow Agreement and to assign his voting rights with respect to the
Escrowed Shares, and transfer and convey his rights and interest to the Escrowed
Shares, without the consent or agreement of any other person and except for
filings required under the applicable securities laws, without any designation,
declaration or filing with any governmental authority. Upon the assignment of
his rights, title and interests under the Escrow Agreement, his voting rights
with respect to the Escrowed Shares, and the transfer and conveyance of his
rights and interest to the Escrowed Shares, Purchasers shall become the
beneficial holders of the Escrowed Shares free and clear of any liens, claims,
charges, options, and rights of first refusal or other restrictions except for
the encumbrance imposed by the Escrow Agreement to which the Escrowed Shares
will remain subject.
SECTION 3.4. DISCLOSURE. The representations and warranties contained in
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this Agreement with respect to Seller to do not contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements and information contained in this Agreement not misleading.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each of the Purchasers represents and warrants as to him or itself, as the case
may be, to the Seller as follows:
SECTION 4.1. AUTHORIZATION AND BINDING AGREEMENT. Each Purchaser has all
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requisite power and authority to execute, deliver and perform this Agreement and
to consummate the transactions contemplated hereby. With respect to ▇▇▇▇▇▇, on
the Closing Date, the execution and delivery of this Agreement and all the
transactions provided for herein shall have been duly authorized by proper
partnership proceedings. On the Closing Date, this Agreement will be, in all
respects legally binding upon each of the Purchasers, except as limited by laws
effecting creditors' rights or equitable principles generally.
SECTION 4.2. INVESTMENT CONSIDERATIONS. With respect to the purchase of the
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Shares:
Stock Purchase Agreement - Page 4
a. Securities Laws. Each Purchaser is acquiring the Shares as an investment
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solely for his/its own account and not with the view toward, or for resale in
connection with, the distribution of the Shares within the meaning of the
Securities Act of 1933 (the "Act"). Each Purchaser acknowledges that he or it,
as the case may be, is an Accredited Investor as that term is defined in Rule
501(a) of Regulation D of the Act, as amended.
b. Risk. Each Purchaser and each Purchaser's respective representatives
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have received, or have had access to, and have had sufficient opportunity to
review, all books, records, financial information and other information which
the Purchaser considers necessary or advisable to enable him to make a decision
concerning his/its purchase of the Shares, and that he/it possesses such
knowledge and experience in financial and business matters that renders him/it
capable of evaluating the merits and risks of his investment hereunder.
Purchasers are able to bear the economic risk of the investment which is hereby
being made, including the complete loss of Purchaser's investment in such
securities. The Purchaser understands that the Shares will be deemed restricted
securities under the Act and subject to certain holding periods before they are
able to be resold.
SECTION 4.3 DISCLOSURE. The representations and warranties contained in
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this Agreement with respect to each Purchaser do not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements and information contained in this Agreement not
misleading.
ARTICLE V.
CONDITIONS TO THE CLOSING
The obligations of Seller to sell the Shares and Purchasers to purchase the
Shares shall be subject to the simultaneous or prior fulfillment of each of the
following conditions:
SECTION 5.1 RCI LOUISIANA. The Company shall enter into an agreement with
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Seller whereby the Company will sell to Seller all of the outstanding shares of
common stock of RCI Entertainment Louisiana, Inc.
SECTION 5.2 LICENSE AGREEMENT. The Company shall enter into a License
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Agreement with Seller to license Seller to use the name "Rick's Cabaret" and
related trademarks, in the States of Louisiana, Florida, Alabama and
Mississippi.
SECTION 5.3 AUTHORIZATION OF SALE. With respect to ▇▇▇▇▇▇, all partnership
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action necessary by ▇▇▇▇▇▇ to authorize the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby
shall have been duly and validly taken.
SECTION 5.4 CONSENTS. All consents, authorizations, orders and approvals of
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(or filings or registrations with) any governmental commission, board or other
regulatory body required in connection with the execution, delivery and
performance of this Agreement shall have been obtained.
SECTION 5.5 AUSTIN TRUST ACKNOWLEDGMENT. The parties shall have received
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the written acknowledgment from Austin Trust Company, as Escrow Agent under the
Escrow Agreement, of the appointment by Seller of Purchasers as Seller's agents
and attorneys in fact with respect to the Escrowed Shares.
Stock Purchase Agreement - Page 5
SECTION 5.6 DOCUMENTS. The Purchasers shall have furnished the Seller with
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all documents, certificates and other instruments required to be furnished to
the Seller by the Purchasers pursuant to the terms of this Agreement.
SECTION 5.7 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
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warranties of Seller contained in Article III hereof shall be true and correct
as of the Closing Date and the representations and warranties of Purchasers, and
each of them, contained in Article IV hereof, shall be true and correct as of
the Closing Date.
ARTICLE VI
INDEMNIFICATION
SECTION 6.1 INDEMNIFICATION FROM THE SELLER. The Seller hereby agrees
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to and shall indemnify, defend (with legal counsel reasonably acceptable to
Purchasers), and hold Purchasers, their affiliates, assigns, agents and legal
counsel and successors ( the "Purchaser 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 Purchaser Group arising from
(a) any misrepresentation by, or breach of any covenant or warranty of the
Seller contained in this Agreement, or any exhibit, certificate, or other
instrument furnished or to be furnished by the Seller hereunder, (b) any
nonfulfillment of any agreement on the part of the Seller under this Agreement,
or (c) from any material misrepresentation in or material omission from, any
certificate or other instrument furnished or to be furnished to Purchasers
hereunder.
SECTION 6.2 INDEMNIFICATION FROM PURCHASERS. Each of the Purchasers
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hereby agrees to and shall indemnify, defend (with legal counsel reasonably
acceptable to the Seller) and hold the Seller, his officers, directors,
employees, agents, legal counsel, successors and assigns (the "Seller 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 Group, arising from (a) any misrepresentation by, or breach of any
covenant or warranty of Purchasers contained in this Agreement or any exhibit,
certificate, or other agreement or instrument furnished or to be furnished by
Purchasers hereunder; (b) any nonfulfillment of any agreement on the part of
Purchasers 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 Seller hereunder.
Stock Purchase Agreement - Page 6
SECTION 6.3 DEFENSE OF CLAIMS. If any lawsuit or enforcement action is
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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.
SECTION 6.4 DEFAULT OF INDEMNIFICATION OBLIGATION. If an entity or
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individual having an indemnification, defense and hold harmless obligation, as
above provided, shall fail to assume such obligation, then the party or entities
or both, as the case may be, to whom such indemnification, defense and hold
harmless obligation is due shall have the right, but not the obligation, to
assume and maintain such defense (including reasonable counsel fees and costs of
any suit related thereto) and to make any settlement or pay any judgment or
verdict as the individual or entities deem necessary or appropriate in such
individual's or entities' absolute sole discretion and to charge the cost of any
such settlement, payment, expense and costs, including reasonable attorneys'
fees, to the entity or individual that had the obligation to provide such
indemnification, defense and hold harmless obligation and same shall constitute
an additional obligation of the entity or of the individual or both, as the case
may be.
ARTICLE VII.
GENERAL PROVISIONS
SECTION 7. 1. NOTICES. Any notice, request, instrument or other document to
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be given hereunder shall be in writing and shall be delivered () on the date of
delivery when delivered personally, or by facsimile with electronic confirmation
of receipt, () one day after dispatch when sent by a reputable overnight
delivery service maintaining records or receipt; or () three (3) days after
dispatch when sent by certified or registered mail, return receipt requested,
postage prepaid:
If to the Seller:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Stock Purchase Agreement - Page 7
with copies to:
Chaffe, McCall, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.
2300 Energy Center
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Purchasers:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copies to:
Hill, Ducloux, ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: H. ▇▇▇▇▇ ▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 7.2. ENTIRE AGREEMENT. This Agreement constitutes the entire
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agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements and undertakings, both written and oral, between
the parties with respect to the subject matter hereof.
SECTION 7.3. GOVERNING LAW. This Agreement shall be governed by, and
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construed in accordance with, the laws of the State of Texas, regardless of the
laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 7.4. HEADINGS. The descriptive headings contained in this Agreement
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are included for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
SECTION 7.5. NUMBER, GENDER. Whenever the context so requires, the singular
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shall include the plural and the plural shall include the singular, and the
gender of any pronoun shall include the other genders.
Stock Purchase Agreement - Page 8
SECTION 7.6. SEVERABILITY. Wherever possible, each provision of this
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Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be prohibited
by or invalidated under applicable law, such provision shall be ineffective to
the extent of such provision and the remaining provisions of this Agreement
shall remain fully effective.
SECTION 7.7. COUNTERPARTS. This Agreement may be executed in one or more
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counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 7.8. ASSIGNMENT; SUCCESSORS. This Agreement shall be binding upon
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and shall inure to the benefit of the parties hereto, their respective
successors, successors in title, and lawful assigns. No party shall have the
right to assign this Agreement, or any interest under this Agreement, without
the prior written consent of the other party.
SECTION 7.9 COSTS AND EXPENSES. The Seller shall pay all of the fees
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and expenses incurred by him and each Purchaser shall pay all of the fees and
expenses incurred by him or it, as the case may be, in negotiating and preparing
this Agreement (and all other agreements executed in connection herewith or
therewith) and in consummating the transactions contemplated by this Agreement.
IN WITNESS WHEREOF, the Purchasers and the Seller have each caused this
Agreement to be executed by a duly authorized officer as of the date first
written above.
WITNESSES: SELLER:
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
ATTEST: PURCHASERS:
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇, L.P.
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: General Partner
WITNESSES:
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
Stock Purchase Agreement - Page 9
