LOCK-UP/LEAK-OUT AGREEMENT
Exhibit
10.2
THIS LOCK-UP/LEAK-OUT AGREEMENT (the
“Agreement”) is made and entered into as of the 15th day of April, 2008, between
RICK’S CABARET INTERNATIONAL,
INC., a Texas corporation (“Rick’s”), and XXX XXXXX (“Holder” or
“Xxxxx”).
WHEREAS, the parties entered
into a Purchase Agreement dated April 15, 2008 (the “Purchase
Agreement”), by and among Xxxxx, XX Publications, Inc., a Texas corporation (the
“Company”), Rick’s and its wholly owned subsidiary, RCI Entertainment (Media
Holdings), Inc., a Texas corporation (the “Buyer”); and
WHEREAS, pursuant to the terms
and condition of the Purchase Agreement, Xxxxx has agreed to sell to Buyer his
ownership interest in the Company (the “Acquisition”); and
WHEREAS, under the terms of
the Purchase Agreement, Xxxxx shall be entitled to receive 8,696 shares of
common stock of Rick’s upon the Closing of the Purchase Agreement and has the
right to earn out an additional 65,217 shares of common stock of Rick’s (the
“Earn Out Shares”), which is conditioned upon, among other things, the execution
and delivery of this Agreement; and
WHEREAS, the shares of common
stock issued to Xxxxx at Closing and the Earn Out Shares, if any, issued to
Xxxxx are hereinafter collectively referred to as the “Rick’s Transaction
Shares”; and
WHEREAS, Xxxxx has agreed to
enter into this Agreement and to restrict the sale, assignment, transfer,
conveyance, or hypothecation of the Rick’s Transaction Shares, all on the terms
set forth below; and
WHEREAS, any capitalized terms
not defined herein shall have the meaning set forth in the Purchase
Agreement.
NOW, THEREFORE, in
consideration of the foregoing premises and the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as
follows:
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1.
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The
Holder agrees he may not sell, pledge, hypothecate, transfer, assign or in
any other manner dispose of the Rick’s Transaction Shares for one
year from the date hereof.
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2.
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(a)
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On
or after one (1) year from the date of Closing, or with respect to
the Earn Out Shares, if any, on or after seven (7) months from
the date of issuance by Rick’s of the Earn Out Shares, Xxxxx shall have
the right, but not the obligation, to have Rick’s purchase from Xxxxx
5,000 Rick’s Transaction Shares per month (the “Monthly Shares”)
calculated at a price per share equal to $23.00 per share (“Value of the
Shares”) until Xxxxx has received an aggregate of $1,700,000 (i) from the
sale of the Rick’s Transaction Shares sold by Xxxxx, 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. Xxxxx shall notify Rick’s during any given month
of Xxxxx’x election to “Put” the Monthly Shares
to Rick’s during that particular month and Rick’s shall have
three (3) business days to elect to buy the Monthly Shares or instruct
Xxxxx to sell the Monthly Shares in the open market. At Rick’s
election, during any given month, it may either buy the Monthly Shares or
if Rick’s elects not to buy the Monthly Shares from Xxxxx, then Xxxxx may
sell the Monthly Shares in the open market and any deficiency between the
amount which Xxxxx receives from the sale of the Monthly Shares and the
Value of the Shares (the “Deficiency”) shall be paid by Rick’s within
three (3) business days after receipt of written notice from Xxxxx of the
sale of the Monthly Shares which shall provide the written sales
confirmation and the amount of the Deficiency. Rick’s
obligation to purchase any of the Rick’s Transaction Shares from Xxxxx
shall terminate and cease at such time as Xxxxx has received an aggregate
of $1,700,000 (assuming all Earn Out Shares have been issued) from (i) the
sale of the Rick’s Transaction Shares, 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 by Rick’s. Xxxxx agrees
to provide monthly statements to Rick’s as to the total number of Rick’s
Transaction Shares which Xxxxx sold and the amount of proceeds derived
therefrom. Nothing contained herein shall limit or preclude
Xxxxx from selling his Rick’s Transaction Shares in the open market or
require Xxxxx to “Put” his Rick’s Transaction Shares to Rick’s during any
given month. In the event that the Holder elects to sell the
Rick’s Transaction Shares pursuant to this Section 2(a), then any amount
sold at prices less than the Value of the Shares shall be deemed to be
sold at $23.00 for purposes of this Section
2(a).
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(b)
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In
the event the Holder elects not to “Put” the Rick’s Transaction Shares to
Rick’s, the Holder shall sell (i) not more than 10,000 Rick’s Transaction
Shares per 30-day period, and (ii) not more than 70,000 Rick’s Transaction
Shares per 90-day period regardless of whether the Holder “Puts” the
Rick’s Transaction Shares to Rick’s or sells them in the open market, in a
private transaction or otherwise.
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3.
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The
Holder acknowledges and agrees that Rick’s may advise its Transfer Agent
of this Agreement and issue a stop transfer order to the Transfer Agent to
ensure that any sale of the Rick’s Transaction Shares by the Holder is in
accordance with the terms and conditions
hereof.
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Lock-Up/Leak-Out
Agreement – Page 2
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4.
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The
Holder agrees that it will not engage in any short selling of any shares
of common stock of Rick’s during the term of this
Agreement.
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5.
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Except
as otherwise provided in this Agreement or any other agreements between
the parties, the Holder shall be entitled to his respective beneficial
rights of ownership of the issued Rick’s Transaction Shares, including the
right to vote any issued Rick’s Transaction Shares for any and all
purposes.
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6.
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The
resale restrictions on the Rick’s Transaction Shares set forth in this
Agreement shall be in addition to all other restrictions on transfer
imposed by applicable United States and state securities laws, rules and
regulations.
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7.
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If
either Rick’s or the Holder fails to fully adhere to the terms and
conditions of this Agreement, it shall be liable to the other party for
any damages suffered by the other party by reason of any such breach of
the terms and conditions hereof. Rick’s and the Holder agree
that in the event of a breach of any of the terms and conditions of this
Agreement by Rick’s or the Holder, that in addition to all other remedies
that may be available in law or in equity to Rick’s or the Holder, as the
case may be, a preliminary and permanent injunction and an order of a
court requiring Rick’s or the Holder to cease and desist from violating
the terms and conditions of this Agreement and specifically requiring
Rick’s or the Holder to perform their obligations hereunder is fair and
reasonable by reason of the inability of the parties to this Agreement to
presently determine the type, extent or amount of damages that Rick’s or
the Holder may suffer as a result of any breach or continuation thereof.
In the event of default hereunder, the non-defaulting party shall be
entitled to recover reasonable attorney's fees incurred in the enforcement
of this Agreement.
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8.
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This
Agreement sets forth the entire understanding of the parties hereto with
respect to the subject matter hereof, and may not be amended except by a
written instrument executed by the parties
hereto.
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9.
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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.
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10.
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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.
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Lock-Up/Leak-Out
Agreement – Page 3
IN WITNESS WHEREOF, the
undersigned have duly executed and delivered this Lock-Up/Leak-Out Agreement as
of the day and year first above written.
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Date:
April 15, 2008
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RICK’S
CABARET INTERNATIONAL, INC.
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By:
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/s/ Xxxx Xxxxxx
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Xxxx Xxxxxx,
President
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HOLDER
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/s/ Xxx Xxxxx
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XXX XXXXX
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Number
of Shares of Rick’s Common Stock Subject to this
Agreement:
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8,696 shares of Rick’s Common
Stock
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65,217 Earn Out Shares, if
issued
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Lock-Up/Leak-Out
Agreement – Page 4
