Termination of Management Agreement - RMI Montclair Inc. and Headliners Entertainment Group Inc.
TERMINATION OF MANAGEMENT AGREEMENT
This Agreement is made as of the 18th day of August, 2006, by and
between RMI Montclair, Inc., a New Jersey corporation having its
principal place of business in New Jersey ("RMI"), and Headliners
Entertainment Group, Inc., a Delaware corporation having its principal
place of business in New Jersey ("HLEG").
WHEREAS, RMI and HLEG entered into an Management Agreement dated
June 7, 2005 (the "Management Agreement") whereunder HLEG agreed to
manage certain property leased to RMI located at 499-501 Bloomfield
Avenue, Montclair, New Jersey (the "Property") and to pay obligations
arising in connection with the Property in exchange for the right to
receive certain revenues; and
WHEREAS, the parties have decided it is in their mutual best
interests to terminate the Management Agreement;
NOW, THEREFORE, in consideration of the premises and mutual
promises herein contained, the parties agree as follows:
1. Termination of Agreement. RMI and HLEG agree to terminate the
Management Agreement, effective as of September 1, 2006 (the
"Termination Date"). Neither RMI nor HLEG shall have any
further rights or obligations under or in connection with the
Management Agreement from and after the Termination Date.
2. License of Certain Intangible Rights. HLEG hereby grants to
RMI a license ("License") to use the names "Rascals Comedy
Club" and "The Red Cheetah" in connection with RMI'S operation
of the existing club and dance hall on the Property. If RMI
discontinues regular and continuous operation of the club or
dance hall on the Property, whether voluntarily or
involuntarily, for a period exceeding two months, the License
to use the name associated with the club or dance hall (as
applicable) shall terminate. For further clarity, RMI shall
not be permitted to use either of the licensed names at any
other location or in connection with any new business at the
current location. Nor shall RMI be permitted to use any
tradename or trademark that is now used or hereafter used by
HLEG or its subsidiaries in connection with the operation of an
entertainment facility. This License is not transferable or
assignable, except in connection with the sale by RMI of the
business operated at the Property, and then only for the
purpose of carrying on business at that location.
3. Release from Guarantees, Release of Pledged Securities, and
Undertakings.
a. RMI agrees to use its best efforts to secure the release of
HLEG from its obligations as guarantor of the following
obligations of RMI: (a) RMI's obligations to the landlord
under the lease of the Property as set forth in the Lease
Agreement between N.K. Gray Development, LLC as landlord
and RMI as tenant; (b) RMI's obligations to N.K. Gray
Development, LLC with respect to the purchase of the liquor
license associated with the Property; and (c) RMI's
obligations to Anomaly Capital, LLC in connection with a
loan for the development of the Property in the original
principal amount of $360,000 from Anomaly Capital to RMI.
HLEG's guarantees of the foregoing obligations are referred
to collectively herein as the "HLEG Guarantees."
b. RMI shall use its best efforts to secure the release of
certain shares of common stock of HLEG pledged by HLEG to
Anomaly Capital as collateral for HLEG's guaranty of the
Anomaly Capital loan.
c. RMI agrees to use its best efforts to hold HLEG and its
officers and directors harmless from and indemnify it
against all liability for sales taxes, payroll taxes and
other taxes arising prior to the date hereof or hereafter as
a result of the operations of the restaurant, dance club
and/or comedy club on the Property.
4. Indemnification. RMI shall indemnify, defend and hold harmless
HLEG, any subsidiary or affiliate thereof and each person who
is now, or has been at any time prior to the date hereof, a
shareholder, officer, director or employee of HLEG or any
subsidiary or affiliate thereof and their respective heirs,
legal representatives, successors and assigns (the "Indemnified
Parties") against all losses, claims, damages, costs, expenses
(including reasonable attorneys' fees), liabilities or
judgments or amounts that are paid in settlement of or in
connection with any threatened or actual third party claim,
action, suit, proceeding or investigation based in whole or in
part on or arising in whole or in part out of the Management
Agreement or the HLEG Guarantees or out of any obligation or
liability of RMI to any third party or governmental authority.
Any Indemnified Party wishing to claim indemnification under
this Section 5, upon learning of any such claim, action, suit,
proceeding or investigation, shall notify RMI in writing, but
the failure to so notify shall not relieve RMI from any
liability that it may have hereunder, except to the extent that
such failure would materially prejudice RMI.
5. Miscellaneous.
a. Governing Law: This Agreement shall be governed by and
construed in accordance with the laws of the State of New
Jersey.
b. Binding Effect: This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their
respective successors and assigns provided, however,
neither party may assign any rights, nor secure the
assumption of any obligations hereunder, to any third
party without the prior written consent of the other
party to this Agreement.
c. Notices. All notices and other communications under
this Agreement shall be in writing and shall be deemed to
have been duly given or made as follows:
i. If sent by reputable overnight air courier (such as
Federal Express), 2 business days after being sent;
ii. If sent by facsimile transmission, with a copy mailed
on the same day in the manner provided in clause (i)
above, when transmitted and receipt is confirmed by
the fax machine; or
iii. If otherwise actually personally delivered, when
delivered.
All notices and other communications under this Agreement shall be
sent or delivered as follows:
If to HLEG to:
Mr. Michael Margolies, Chief Executive Officer
Headliners Entertainment Group, Inc.
14 Garrison Inn Lane
Garrison, New York 10524
Facsimile: 845-424-4003
If to RMI to:
Mr. Eduardo Rodriguez, President
Rascals Montclair, Inc.
501 Bloomfield Avenue
Montclair, NJ 07042
Facsimile: 973-233-1299
Each Party may change its address by written notice in accordance
with this Section.
d. Entire Agreement: This Agreement constitutes the entire
agreement between the parties with respect to the subject
matter hereof and supersedes all prior agreements,
representations, and promises by any party or between RMI
and HLEG related thereto, including without limitation the
Management Agreement.
e. Legal and Professional Advice: The parties agree that they
have been represented by counsel during the negotiation and
execution of this Agreement and, therefore, waive the
application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or
other document will be construed against the party drafting
such agreement or document.
IN WITNESS WHEREOF, the parties have executed this Agreement, to be
effective as of the date first above written.
Headliners Entertainment Group, Inc.
By: /s/ Michael Margolies
Michael Margolies
Title: Secretary
RMI Montclair, Inc.
By: /s/ Eduardo Rodriguez
Eduardo Rodriguez
Title: President
INDEMNITY BY SHAREHOLDER
Eduardo Rodriguez hereby agrees that in the event of the sale by Anomaly
Capital of any of the pledged shares referred to in Section 4(b) of the
foregoing agreement, he will surrender to HLEG shares of its common
stock equal to the lesser of (a) the number of shares sold by Anomaly
Capital and (b) the number of shares owned by him or by members of his
immediate family or by entities under his control.
/s/ Eduardo Rodriguez
Eduardo Rodriguez