Item 2.01 Completion of
Acquisition or Disposition of Assets.
On September 14, 2007,
the Company closed a transaction pursuant to which the Company purchased 100%
of the issued and outstanding stock of KENKEV II, Inc., f/k/a Mark R. Dean,
Inc., a Maine corporation (KENKEV), which owns and operates an adult
entertainment nightclub commonly known as Platinum Plus located in Portland,
Maine, for $4,500,000 in cash. In accordance with the terms of the Maine
Purchase Agreement (as defined below), all applicable licenses and permits in
order to operate the nightclub have been transferred to the Company. The
transaction occurred pursuant to the terms of a Stock Purchase Agreement (the Maine
Purchase Agreement) that the Company entered into on August 17, 2007 with KENKEV,
KEN-KEV Inc., a South Carolina corporation and the sole stockholder of KENKEV,
and Gaines, the sole stockholder of KEN-KEV Inc., as previously disclosed in the
Companys
2
Current Report on Form
8-K dated August 31, 2007. The Company paid a finders fee of $135,000 in cash to
an unaffiliated third party at the closing of the Maine Purchase Agreement.
In connection with
the closing, the Company entered into a Restrictive Covenant Covenant Not to
Compete (Non-Competition Agreement) with Gaines pursuant to which the parties
mutually agreed not to compete with each other for a period of three years following
the closing date within 50 miles of any present or future nightclub location of
the other, excluding the State of Florida and any metropolitan area with a
population of more than 3,000,000 people. Pursuant to the terms of the
Non-Competition Agreement, Gaines granted to the Company a right of first
refusal to purchase Gaines nightclubs located in Greenville and Columbia,
South Carolina.
The Company also entered into a Consulting-License
Agreement (the Consulting-License Agreement) with Alliance Management
Partners, LLC, a United States Virgin Islands limited liability company and an
affiliate of Gaines (Alliance), pursuant to which Alliance will provide
financial, economic development and management consulting services to the
Company with respect to the Maine nightclub and also convey certain proprietary
materials and license rights to the Company. The Consulting-License Agreement
is effective as of September 1, 2007.
In addition, the Company also entered into a lease for
the real property used in the operation of the nightclub as further reported
under Item 2.03 of this Current Report on Form 8-K, which disclosure is
incorporated herein by reference.
In connection with filing its Current Report on Form
8-K dated August 31, 2007 reporting the entering into of the Maine Purchase
Agreement, the Company submitted a request for confidential treatment of
portions of the Maine Purchase Agreement and attached a redacted version of the
Maine Purchase Agreement to such Current Report on Form 8-K. The reasons
underlying the request for confidential treatment no longer exist and,
accordingly, the Company has attached hereto as Exhibit 10.2 an unredacted copy
of the Maine Purchase Agreement. In addition, the Company has attached hereto
as Exhibits 10.3 and 10.4, respectively, copies of the Non-Competition
Agreement and the Consulting-License Agreement. The foregoing summaries are
qualified in their entirety by the contents of the Maine Purchase Agreement, the
Non-Competition Agreement and the Consulting-License Agreement.
Item 2.03
|
Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a Registrant.
|
On September
14, 2007,
K&R Properties, Inc., a South Carolina corporation and an affiliate of
Gaines (Landlord), and KENKEV entered into an agreement (the Lease) pursuant
to which Landlord leased to KENKEV the real property and premises used in the
operation of the adult entertainment nightclub commonly known as Platinum
Plus, located at 200 Riverside Street in Portland, Maine, for a term of 25
years at an annual rent of $177,000 payable in equal monthly installments,
which increases by three percent in each following year during the term. KENKEV
may renew the Lease for two separate additional five year periods upon the same
terms and conditions as set forth in the Lease. In addition, Landlord granted
to KENKEV a right of first refusal and option to purchase the real property under
certain circumstances. The
3
Company has guaranteed KENKEVs obligations under the
Lease pursuant to a Guaranty of Lease in favor of Landlord (the Guaranty) and
KENKEV has pledged its liquor license and adult entertainment license to
Landlord to secure KENKEVs obligations under the Lease.
The Company has attached hereto as Exhibits 10.5 and
10.6, respectively, copies of the Lease and Guaranty. The foregoing summaries
are qualified in their entirety by the contents of the Lease and the Guaranty.