Document:

EXHIBIT 10.1

 Exhibit 10.1 
  
 Execution Copy 
  
 AMENDMENT AND CONVERSION AGREEMENT 
  
 This Amendment and Conversion Agreement (this “Agreement”) is being entered into as of January 10, 2005 by and between STAR SCIENTIFIC,
INC., a Delaware corporation (the “Company”), and MANCHESTER SECURITIES CORP., a New York Corporation (“Manchester”). 
  
 R E C I T A L S: 
  
 WHEREAS, the Company and Purchaser entered into a Securities Purchase Agreement dated as of March 25, 2004 (the “Manchester Agreement”)
pursuant to which the Company issued to Manchester an aggregate of $9,000,000 in principal amount of a 8% Senior Convertible Debenture Due March 25, 2006 (the “Initial Debenture”) on the terms and conditions set forth
therein; 
  
 WHEREAS, in connection with the issuance of the
Initial Debenture: (i) the Company and Manchester entered into the Registration Rights Agreement, dated as of March 25, 2004 (the “Registration Rights Agreement”); (ii) the Company, Star Tobacco, Inc., a Virginia corporation (the
“Star Tobacco”) and Manchester entered into the Security Agreement, dated as of March 25, 2004 (the “Security Agreement”); (iii) Star Tobacco issued to Manchester the Guaranty, dated as of March 25, 2004 (the
“Guaranty”); and (iv) the Company, Jonnie R. Williams and Manchester entered into the Subordination Agreement, dated as of March 25, 2004 (the “Subordination Agreement”); 
  
 WHEREAS, the Company and Manchester amended and restated the Initial
Debenture (as amended and restated, the “Amended Debenture”) as of April 15, 2004 and further amended and restated the Amended Debenture as of September 15, 2004 (as further amended and restated, the “Second Amended
Debenture”); 
  
 WHEREAS, the Second Amended Debenture is
convertible into shares of the Company’s $0.0001 par value common stock (the “Common Stock”); 
  
 WHEREAS, the Company and Manchester desire to amend the Second Amended Debenture to adjust the Conversion Price (as defined in the Second Amended
Debenture) and cause the Second Amended Debenture, as amended hereby (the “Debenture”), to be converted into the number of shares of Common Stock set forth below; and 
  
 WHEREAS, capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Second Amended
Debenture; 
  
 NOW THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 
  
 T E R M S: 
  
 1. Amendment of the Second Amended Debenture. The Second Amended Debenture is hereby amended so that the Conversion Price is adjusted to equal $2.897028 (the “Applicable Conversion Price”). 

 2. Conversion and Cancellation of the Debenture. 
  
 (a) Pursuant to Section 3(a) of the Debenture, Manchester hereby issues and
delivers to the Company the fully executed Conversion Notice attached hereto as Exhibit A and, in accordance with Sections 3(c)(i) and 3(h) of the Debenture, the Debenture is hereby (i) converted into 3,179,810 shares of Common Stock (the
“Conversion Shares”) and (ii) deemed cancelled. As of the date of this Agreement, Manchester has no rights under the Debenture and shall be treated for all purposes as having become an owner of Common Stock. Manchester shall
promptly mark the originally signed Second Amended Debenture, and any copies of such documents, as “Cancelled,” and promptly surrender such documents to the Company at the Company’s principal executive offices. 
  
 (b) Pursuant to Section 3(c)(iii) of the Debenture, the Company will deliver
to Manchester not later than five (5) Trading Days after the date of this Agreement a certificate or certificates representing 3,179,810 shares of Common Stock. Manchester shall not sell, transfer, assign, hypothecate or pledge in any way any shares
of Common Stock, except for sales (A) in accordance with the terms of the Plan of Distribution section of the prospectus contained in the registration statement (Reg. No. 333-115293) (the “Registration Statement”) filed by the
Company in accordance with the Registration Rights Agreement and in compliance with prospectus delivery requirements (including using any prospectus supplement timely delivered by the Company to Manchester) or (B) in compliance with the requirements
of Rule 144 under the Securities Act of 1933, as amended. Manchester further undertakes to indemnify the Company against any loss, cost or expense, including reasonable legal fees, incurred as a result of the issuance of the Common Stock without a
restrictive legend. 
  
 3. Right of First Refusal.

  
 (a) In the event that the Company will consummate an offering
of equity or debt securities (other than Excluded Securities) of the Company (“Securities”) (each, an “Offer”) prior to December 31, 2005, the Company shall provide written notice (“Notice”) to
Manchester, which Notice shall set forth the following: (i) the prospective amount and form of consideration to be paid for the Securities, (ii) all other material terms and conditions of the Offer and (iii) the Company’s offer to sell to
Manchester 25% of the aggregate value of the Securities included in the Offer pursuant to the terms and conditions described in the Notice, which shall not be less favorable, taken as a whole, than the terms and conditions of the Offer (the
“Manchester Offer”). In the event that any of the consideration to be paid in the Offer is other than cash, Manchester shall have the right to pay the cash equivalent thereof. For purposes hereof, “Excluded
Securities” means (1) shares of Common Stock issued or issuable to employees, consultants or directors from time to time upon exercise of options, in such case granted or to be granted by the Board of Directors pursuant to one or more stock
option plans or restricted stock plans in effect as of the Closing Date; or (2) shares of common stock issued in 

  

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connection with the acquisition by the Company of any other corporation or entity or other strategic transaction (or other transaction to the extent by which
the Company does not obtain new financing), including, without limitation, additional investments in companies the Company had existing investments in on the Closing Date. 
  
 (b) After the receipt of the Notice, Manchester shall have a 5-day period in which to determine whether to purchase the
Securities included in the Manchester Offer. If Manchester determines to purchase the Securities included in the Manchester Offer, it shall deliver to the Company, prior to the expiration of such 5-day period, notice of its acceptance of the
Manchester Offer. If Manchester fails to accept the Manchester Offer within such 5-day period or fails to consummate the closing of the Manchester Offer in accordance with the terms and conditions therein, then the Manchester Offer will terminate
and the Company shall have the right to consummate the Offer on the terms and conditions contained therein; provided that if the Offer is not consummated within 60 days following the date of the Notice, Manchester’s right of first refusal
hereunder shall again apply to the Offer. In the event that the terms or conditions of the Offer are subsequently modified in any material respect, the Company shall be required to provide a new Notice to Manchester, and Manchester shall have a new
5-day period in which to determine whether to purchase the Securities included in the Manchester Offer. 
  
 (c) Notwithstanding anything to the contrary contained herein, the number of shares of Common Stock that may be acquired by Manchester pursuant to any
Manchester Offer as described above shall not exceed a number that, when added to the total number of shares of Common Stock deemed beneficially owned by Manchester (other than by virtue of the ownership of securities or rights to acquire securities
that have limitations on the Manchester’s right to convert, exercise or purchase similar to the limitation set forth herein (the “Excluded Shares”)), together with all shares of Common Stock deemed beneficially owned (not
counting such affiliate’s Excluded Shares) by the Manchester’s “affiliates” (as defined in Rule 144 of the 1933 Act) (“Aggregation Parties”) that would be aggregated for purposes of determining whether a group under
Section 13(d) of the 1934 Act, exists, would exceed 9.9% of the total issued and outstanding shares of the Company’s Common Stock (the “Restricted Ownership Percentage”). Manchester shall have the right at any time and from
time to time to reduce its Restricted Ownership Percentage immediately upon notice to the Company. 
  
 4. Company Representations. The Company hereby represents and warrants to Manchester as of the date hereof that: (a) the Company has all requisite
corporate power and authority to enter into and perform this Agreement and the transactions contemplated hereby and thereby; (b) this Agreement constitute valid and binding obligations of the Company enforceable against the Company in accordance
with their terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies
or by other equitable principles of general application; (c) the execution, delivery and performance of this Agreement and the transactions contemplated hereby will not: (i) result in a violation of the Company’s organizational documents; (ii)
conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or any of its Subsidiaries (as defined in the Manchester Agreement) is a party, except as would not reasonably be expected to have a Material Adverse 

  

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Effect (as defined in the Manchester Agreement) or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including United
States federal and state securities laws and regulations and the rules and regulations of the Nasdaq National Market or other principal securities exchange or trading market on which the Common Stock is traded or listed) applicable to the Company or
any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected; (d) neither the Company or any of its Subsidiaries is required to obtain any consent or authorization of, make any filing with
or seek any other act by or in respect of any governmental authority or any other party in connection with the execution, delivery and performance of this Agreement and the transactions contemplated hereunder; (e) when issued to Manchester, the
Conversion Shares will be duly authorized, fully paid and non-assessable; and (f) the Conversion Shares are Registrable Securities under the Registration Rights Agreement and are duly registered for resale under the Registration Statement.

  
 5. Miscellaneous. 
  
 (a) Governing Law; Jurisdiction. THIS AGREEMENT SHALL BE GOVERNED BY
AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW
YORK, BOROUGH OF MANHATTAN, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN, AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR
PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE OF SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY
HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF TO SUCH PARTY AT THE ADDRESS FOR SUCH NOTICES TO IT UNDER THE MANCHESTER AGREEMENT AND AGREES
THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. EACH PARTY HERETO IRREVOCABLY
WAIVES ANY RIGHT TO TRIAL BY JURY. 
  
 (b) Counterparts.
This Agreement may be executed in two or more identical counterparts, all of which 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; provided
that a facsimile signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile signature. 
  
 (c) Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in writing, must be delivered 

  

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by (i) courier, mail or hand delivery or (ii) facsimile, and will be deemed to have been delivered upon receipt. The addresses and facsimile numbers for such
communications shall be: 
  

					
	If to the Company:
		
	 	 	Star Scientific, Inc.
	 	 	801 Liberty Way
	 	 	Chester, Virginia 23836
	 	 	Telephone:	 	(804) 530-0535
	 	 	Facsimile:	 	(804) 530-8474
	 	 	Attention:	 	Chief Financial Officer
	
	With a copy to:
		
	 	 	Star Scientific, Inc.
	 	 	7475 Wisconsin Ave.
	 	 	Suite 850
	 	 	Bethesda, Maryland 20814
	 	 	Telephone:	 	(301) 654-8300
	 	 	Facsimile:	 	(301) 654-9308
	 	 	Attention:	 	Robert Pokusa, Esq.
	
	If to the Purchaser:
		
	 	 	Manchester Securities Corp.
	 	 	712 Fifth Avenue
	 	 	36th Floor
	 	 	New York, New York 10019
	 	 	Telephone:	 	(212) 506-2999
	 	 	Facsimile:	 	(212) 974-2089
	 	 	Attention:	 	Sundar Srinivasan

  
 Each party shall
provide five (5) days prior written notice to the other party of any change in address, telephone number or facsimile number. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by a nationally recognized overnight delivery
service, shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively. 
  
 (d) Further Assurances. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the 

  

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consummation of the transactions contemplated hereby, including, without limitation, the preparation and filing of UCC-3 Termination Statements to release
liens granted by the Company for the benefit of Manchester pursuant to the Security Agreement. The Company hereby requests as required under Section 8(l) of the Security Agreement that Manchester deliver such Termination Statements to the Company.

  
 (e) Agreements Terminated. Each party acknowledges that
upon the execution and delivery of this Agreement the Security Agreement, Subordination Agreement and Guaranty shall each terminate and be of no force and effect effective immediately. 
  
 (f) Conflicts. All of the terms of the Manchester Agreement and Registration Rights Agreement shall remain in full
force and effect, except as expressly modified by this Amendment. In case of any conflict between this Agreement and the terms of the Manchester Agreement and/or Registration Rights Agreement, as applicable, this Agreement shall govern. 

 

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 IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to be duly executed as of
the date and year first above written. 
  

			
	STAR SCIENTIFIC, INC.
		
	By:	 	 /s/ Paul L. Perito

	Name:	 	Paul L. Perito
	Title:	 	Chairman, President & C.O.O.
	
	MANCHESTER SECURITIES CORP.
		
	By:	 	 /s/ Elliot Greenberg

	Name:	 	Elliot Greenberg
	Title:	 	Vice President

  

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 Exhibit A 
  
 FORM OF CONVERSION NOTICE 
  
 (To be Executed by the Holder 
 in order to Convert a Debenture) 

 
 The undersigned hereby elects to convert the aggregate outstanding Principal Amount (as
defined in the Debenture) indicated below of this Debenture into shares of Common Stock, $0.0001 par value per share (the “Common Stock”), of STAR SCIENTIFIC, INC. (the “Company”) according to the conditions hereof, as of the
date written below. If shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably
requested by the Company in accordance therewith, including an opinion of counsel reasonably satisfactory to the Company that registration of this issuance is not required under the Securities Act of 1933, as amended. No fee will be charged to the
holder for any conversion, except for such transfer taxes, if any. The undersigned represents as of the date hereof that, after giving effect to the conversion of this Debenture pursuant to this Conversion Notice, the undersigned will not exceed the
“Restricted Ownership Percentage” contained in Section 3(j)(A) of this Debenture. 
  

			
	Conversion information:	 	 January 10, 2005

	 	 	Date to Effect Conversion
		
	 	 	 $9,212,000

	 	 	Aggregate Principal Amount of Debenture Being Converted
		
	 	 	 3,179,810

	 	 	Number of shares of Common Stock to be Issued
		
	 	 	 $2.897028

	 	 	Applicable Conversion Price
		
	 	 	 /s/ Elliot Greenberg

	 	 	Signature
		
	 	 	 Elliot Greenberg of Manchester Securities Corp.

	 	 	Name
		
	 	 	Manchester Securities Corp
	 	 	712 Fifth Avenue. 36th Floor
	 	 	 New York, New York 10019

	 	 	Address

  

 8Purchase Agreement

 Exhibit 10.1 
  
 AGREEMENT FOR PURCHASE AND SALE OF 
 BUSINESS AND ASSETS OF TENNESSEE RESTAURANT CONCEPTS. 
  
 This agreement is made on the day and dates shown below and by and between Tennessee Restaurant Concepts., hereinafter referred to as Seller, and Tennessee Entertainment Concepts, Inc., a Tennessee Corporation,
referred to as Buyer. 
  
 WHEREAS, Seller a Tennessee Corporation,
desires to sell all of the business and assets of Tennessee Restaurant Concepts., consisting of all furniture, tables and chairs, furnishings, hot tubs, sound systems, lighting systems, bar and kitchen equipment, coolers, inventory as of date of
closing or possession, which ever may come first, and all of which is contained in or located at PT’s Showclub, 3918 Winchester, Memphis, TN, and 
  
 WHEREAS. Seller desires to sell to the extent permitted by law any, and all licenses and permits. And 
  
 WHEREAS, Buyer desires to purchase all of the afore mentioned assets of
Tennessee Restaurant Concepts, Inc. Seller, including the right to operate an Adult Entertainment Establishment at 3918 Winchester, Memphis, Tennessee, insofar as is permitted by existing City of Memphis Ordinances. 
  
 IT IS AGREED AS FOLLOWS: 
  
 1. Subject to the following terms and conditions of this Agreement, Seller
shall sell, convey, transfer and assign and deliver to the buyer all of the Assets of Seller, as shown on the attached Exhibit “A”, and including the right to operate an Adult Entertainment Establishment at 3918 Winchester, Memphis,
Tennessee, insofar as permitted by state and city law, for the total sum of Five Hundred Thousand Dollars ($500,000.00) paid at closing as set forth below. Buyer is not purchasing the name “PT’s Showclub” nor any rights thereto and
agrees remove all signage or other items which contain that mark or name within six months of the closing date. 
  
 2. Seller shall in further consideration and as a condition precedent to Buyer’s obligations hereunder, cause the property known as 3918 Winchester,
Memphis, Tennessee, hereinafter referred to as the Real Estate, to be sold to the Buyer through VCG Real Estate Holding Company, subject to the terms and conditions set forth on the purchase contract, which is attached hereto as Exhibit
“B”. The closing of the purchase of the Real Estate shall take place at the same time as the closing of the purchase of the assets or such other date as the parties may agree. The purchase price of the real estate will be One Million One
Hundred Thousand Dollars (1,100,000.00). Buyer agrees not to allow the first mortgage on the property to exceed Six Hundred Thousand Dollars ($600,000.00) until the second mortgage securing the note held by VCG Real Estate Holding Company is
retired. 
  
 3. Buyer shall pay VCG Real Estate Holding Company
the sum of One Million One Hundred Thousand Dollars ($1,100,000.00) at closing for the Real Estate and to Seller the sum of Five Hundred Thousand Dollars for the Business and Assets at closing. This will be paid in the following manner (1) Buyer
will pay to Seller cash in the sum of Four Hundred Thousand Dollars ($400,000.00), including the deposit already paid, (2) A wraparound note secured by a wraparound deed of trust in the principle sum of $1,100,000.00 due to VCG Real Estate Holding
Company and (3) A One Hundred Thousand Dollars ($100,000.00) Note due to Seller. The $100,000.00 Note shall be secured by a UCC-1 Financing Statement and Security Agreement filed as against the Assets. The $100,000.00 Note shall also be personally
guaranteed and cross-collateralized against the Real Estate in the Wraparound Deed of Trust which $600,000.00 of the wrap note shall be paid in full within 6 months of the date of execution of this document. The balance of the Wrapnote will at all
times be secured by a second mortgage on the property, subject to subordination as set forth above, with 7% interest amortized over 30 years with a balloon payment in 5 years. Buyer agrees to provide financial statements to VCG Real Estate Holding
Company sufficient to satisfy VCG Real Estate Holding Company of buyer’s ability to pay the note. 

 4. Buyer confirms by the execution of this agreement that it has visually and physically inspected the
premises at 3918 Winchester and that the items listed on Exhibit “A”, fairly and reasonably reflects those items listed therein as being on the premises on the day and date of closing. Buyer asserts that the purchase price and the
allocation of the funds for the real estate and the assets of Tennessee Restaurant Concepts represent fair value for each and were negotiated at arms length. Buyer also agrees to close on the purchase of the Assets and the Real Estate within 24
hours of the approval for a liquor license from the City of Memphis Alcohol Commission. 
  
 5. Seller makes no representations or warranties regarding the condition or character of any of the listed assets and such are sold AS IS and WHERE IS. It is acknowledged that the Buyer has inspected the equipment and
has knowingly made a decision to purchase said assets without any warranties or representations by the Seller as to the condition, merchantability, or fitness for particular purpose of use. Provided, however, Seller warrants that the said assets
shall be in as good working condition as of the date of possession. 
  
 6. Seller warrants that it has tile sole and lawful right and title to sell such assets; that there are no known judgments or tax liens on said assets; and that there are no known encumbrances, attachments, liens or levies existing as of
the date of execution of this agreement. Provided, however, that in the event such encumbrances do exist, the Seller shall hold the Buyer harmless from any such liens, encumbrances, attachments or levies arising out of Seller’s possession,
ownership or use of said assets prior to the sale herein. 
  
 7.
Seller does not warrant or guarantee that the State of Tennessee or the City of Memphis Tennessee will always permit the right to operate an Adult Entertainment Establishment at 3918 Winchester, Memphis, Tennessee, although Seller does represent
that the said location is and has been an Adult Entertainment location since 1981 and that such has been zoned and grandfathered into existing zoning ordinances; further, Seller represents that he knows of no City or State zoning ordinance or
statute that would prohibit buyer from continuing to operate an Adult Entertainment Establishment at that location. 
  
 8. Buyer acknowledges that it has not relied on any representation or warranties of either the Seller, or of its legal counsel, regarding the duration or
continuing permissible and lawful operation of an Adult Entertainment Establishment at the said location. Buyer further acknowledges that it owns and operates Adult Entertainment Establishments in other States; that it has legal counsel to review
and advise as to all legal matters, laws and contracts; and that it has been expressly advised by The Law office of Edward Bearman, that for the purposes of this contract he represents the Seller only and have given no independent advice or counsel
to Buyer regarding the terms or conditions of this sale. 
  

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 9. Seller shall be responsible for all obligations, liens and encumbrances owed with respect to the
assets prior to and up to the day of the closing and shall hold the buyer exempt and harmless from any such obligations, liens, and liabilities. 
  
 A. If any claim that is Seller’s responsibility arises after the date of possession and the claim is asserted against Buyer, Buyer: shall give notice
of the said claim to Seller within ten days by certified mail. If Seller fails to answer the claim or to resolve the matter and to hold the Buyer harmless, Buyer may resolve the said claim and in the event of any money that Buyer is required to pay
to resolve the said claim, the Buyer shall give notice to the Seller and Seller shall reimburse Buyer within 15 days thereafter. If Seller fails to reimburse Buyer for any monies paid by Buyer to resolve any unanswered claim by Seller; Buyer may
deduct the monies paid and offset the same from any sums due to Seller under the lease of these premises. 
  
 10. Buyer shall be responsible for all obligations, duties, and liabilities owed with respect to the business and assets owned and after the date of
possession and shall hold Seller harmless from any such obligations, duties and liabilities arising after the date of possession. 
  
 11. If any claim that is Buyer’s responsibility arises after the date of possession and the claim is asserted against Seller, Seller shall give
notice of such claim to the Buyer within fifteen days by notifying Buyers registered agent by certified mail. Buyer shall be responsible for resolving the said claim and if such is not resolved and the Seller is compelled to resolve the claim or to
pay any monies, Seller shall give Buyer notice of such and Buyer shall be obligated to reimburse Seller within fifteen days thereafter. If Buyer fails to reimburse Seller for any monies paid to resolve any claim, the Seller may bring an action
against Buyer to enforce the collection of the said monies including reasonable attorney fees and incidental cost for collecting the same. 
  
 12. Buyer shall take possession of the business and assets conditioned upon approval or the granting of a beer permit issued by the City of Memphis and
any other permits or licenses necessary to operate an Adult Nightclub, unless the parties agree to a Temporary Management Agreement pending such application being granted. 
  
 A. Buyer understands that it is its responsibility to make appropriate and proper application for the necessary transfer of
the beer permit, health inspections, and business permits and shall be responsible for all fees and expenses required in connection with such. 
  
 B. Buyer acknowledges that it is its responsibility to apply for either a transfer of the beer permit, which is not guaranteed, or to obtain a new beer
permit in the name of Buyer. 
  

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 13. Seller has advised Buyer that there is currently pending a lawsuit against the Seller, which lawsuit
is filed as a result of an alleged assault. Seller will be responsible to defend said suit and for any and all damages awarded, if any. 
  
 14. Seller is not aware of any other action, order, or judgment that would prevent the sale of Sellers business or assets. Seller is not in default with
respect to any order, injunction or decree of any Federal, State, Local or Foreign Court, government department or agency. 
  
 15. Buyer represents that it is a Corporation duly organized and existing and in good standing under the laws of Tennessee. 
  
 16. Buyer acknowledges that it has had access to the buildings, books and
records of Tennessee Restaurant Concepts. 
  
 A. Buyer agrees that
its officers, directors, partners” agents and other representatives will hold in strict confidence and will not disclose or use to the detriment of Seller any data or information contained in connection with this purchase. 
  
 B. Seller shall provide Buyer with a bill of sale for the business and
Furniture, equipment, mailing list and email list. 
  
 17. Seller
covenants that it shall not compete, own, operate, or manage directly or indirectly an adult entertainment club or business, within the City of Memphis, TN for one year from the execution of this agreement. 
  
 18. The following miscellaneous provisions and terms are agreed to:

  
 A. Expenses. Each party shall pay all its own costs and
expenses incurred or to be incurred by it in negotiating and preparing this Agreement and in closing and carrying out the transaction contemplated by this Agreement. 
  
 B. Headings. The subject headings of the Sections and Subsections of this Agreement are included for purposes of convenience
only, and shall not affect the construction or interpretation of any of its provisions. 
  
 C. Modification and Waiver. This Agreement constitutes the entire agreement between parties pertaining to the subject matter contained in it and supersedes all prior and contemporaneous agreements, representations,
and understandings of the parties. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing by all the parties. No waiver of any of the provisions of this Agreement shall be deemed, or shall constitute
a waiver of any other provisions, whether or not similar, not shall any waiver constitute a continuing waiver. No waiver shall be binding unless executed in writing by the party making the waiver. 
  
 D. Counterparts. This Agreement may be executed simultaneously in one or More
counter parts, each of which shall be deemed an original, but all of which together shall constitute one and the same instruments. 
  

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 F. Rights of Parties. Except as stated, nothing in this Agreement, whether express or implied is intended
to confer any rights or remedies under or by reasons of this Agreement on any persons other than the parties to it and their respective successors and assigns, nor is anything in this Agreement intended to relieve or discharge the obligation or
liability of any third persons to any party to this Agreement nor shall any provisions give any third persons any right of subrogation or action over against any party to this Agreement. The parties agree that Tennessee Entertainment Concepts, Inc.
is the intended beneficiary of the Covenant Not to Compete as set forth in paragraph 17, of this Agreement and the Security Agreement. The parties further agree that Tennessee Entertainment. Inc. shall have the right to specifically enforce the
Covenant, assign their rights in the Security Agreement and to enforce this Agreement. 
  
 G. Assignment. This Agreement shall be binding on, and shall inure to benefit of the parties to it and their respective heirs, legal representatives, successors, and assigns. 
  
 H. Specific Performance. The parties agree that no obligation for each under
this Agreement is unique. If either party should default in its obligations under this Agreement, the parties acknowledge that it would be extremely impracticable to measure the other party’s resulting damages. Accordingly, in addition to any
other rights or remedies available at law, the party not in default may sue the other party in equity for specific performance. Each party expressly waives the defense that a remedy in damages should be adequate for the other party to this
transaction. 
  
 I. Notices. All notices, request, demands, and
other communications under this Agreement shall be in writing and shall be deemed to have been duly given on the date of service if served personally on the party to whom notice is to be given, or on the third day after mailing, if mailed to the
party to whom notice is to be given, by first class mail, registered or certified mail, postage prepaid. Notice of default shall require two notices: 1) by regular U.S. mail; and 2) by certified or registered U.S. mail. Mailing may be simultaneous
and properly addressed as follows: 
  
 To Seller at: 

Michael Ocello 
 390 Union Blvd, #540

 Lakewood, Colorado, 80228 
  
 To Buyer at: 
 Charles G Westlund 

P.O. Box 15310 
 Long Beach, Calif. 90815

  

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 Any party may change its address for purposes of this section by giving the other parties written notice
of the new address in the manner set forth above. 
  
 J .
Governing Law This Agreement shall be in accordance with, and governed by, the laws of the State of Tennessee and the parties hereto submit to the jurisdiction of the courts of Shelby County in the State of Tennessee in the event any action or
dispute arising herefrom. 
  
 WHEREFORE, the parties to this
Agreement have duly executed it on the day and year first above written. 
  

							
	SELLER:	 	BUYER:
		
	Tennessee Restaurant Concepts Inc	 	Tennessee Entertainment Concepts, Inc.
				
	BY:	 	 /s/ Micheal Ocello

	 	BY:	 	 /s/ Charles Gerald Westlund

	 	 	Michael Ocello, President	 	 	 	Charles Gerald Westlund, President

  

 6

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