NON-COMPETITION AGREEMENT
Exhibit 10.5
EXECUTION
VERSION
This
Non-Competition Agreement dated April 15, 2008 (the "Non-Competition
Agreement"), is by and among Rick’s Cabaret International, Inc., Texas
corporation, (“Rick’s”) and Xxxx Xxxxxxxx (“Xxxxxxxx”).
W
I T N E S S E T H:
WHEREAS, the parties entered into a Purchase Agreement dated
April 15, 2008 (the “Purchase Agreement”), between Xxxxxxxx, Xxx Xxxxx, TEEZE
International, Inc., a Delaware corporation (“TEEZE”), Adult Store Buyer
Magazine, LLC, a Georgia limited liability company (“ASB”), RCI Entertainment
(Media Holdings), Inc., a Texas corporation (“RCI Media”) and Rick’s Cabaret
International, Inc., a Texas corporation (“Rick’s”) pursuant to
which pursuant to which RCI Media would acquire 100% of the issued
and outstanding common stock of TEEZE (the “TEEZE Stock”) and 100% of the issued
and outstanding membership interest in ASB (the “Membership Interest”) from
Xxxxxxxx and Xxxxx (the “Transaction”); and
WHEREAS, pursuant to the terms and condition of the Purchase
Agreement, Xxxxxxxx has agreed to sell to RCI Media his ownership interest in
TEEZE and ASB (the “Acquisition”); and
WHEREAS, Xxxxxxxx will benefit from the Transaction;
and
WHEREAS, in connection with the Transaction, RCI Media and
Rick’s have agreed to pay Xxxxxxxx xxxx and certain other consideration, as more
fully described in the Purchase Agreement; and
WHEREAS, RCI Media and Rick’s require that Xxxxxxxx enter
into this Non-Competition Agreement as a condition to RCI Media and Rick’s
entering into the Transaction; and
WHEREAS, Xxxxxxxx agree to enter into this Non-Competition
Agreement in consideration of acts on the part of RCI Media and Rick’s as
contemplated by the Transaction; and
WHEREAS, all terms not defined herein shall have the meaning
set forth in the Purchase Agreement, as
amended.
NOW,
THEREFORE, in consideration of
the premises, the closing of the Transaction and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1.
Covenants. From and after the date of this Non-Competition
Agreement through and including the five (5) year period immediately following
the date of this Non-Competition Agreement (such five (5) year period, the
“Restricted Period”), Xxxxxxxx shall not compete with Rick’s or any
of Rick’s subsidiaries or affiliates, including, but not limited to, RCI Media,
and shall not either individually or jointly, directly or indirectly, whether
for compensation or not, alone or in association with any other person or
entity, without the express written consent of
Rick’s:
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(a)
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Own
or share in the earnings of, carry on, manage, operate, control, be
engaged in, render services to, solicit customers for, participate in or
otherwise be connected with, any business engaged in the operation
publishing any sexually oriented industry trade print publications, with
the exception of a publication known as “Xcitement” which is currently
owned and operated by Xxxxxxxx; or
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(b)
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Solicit
or induce, or attempt to solicit or induce, any employee, independent
contractor, or agent or consultant of Rick’s or RCI Media to leave his or
her employment or terminate his or her agreement or relationship with
Rick’s or the RCI Media.
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2.
Acknowledgments
and Agreements of Xxxxxxxx. Xxxxxxxx acknowledges and agrees
that:
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(a)
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Due
to the nature of Rick’s business, the foregoing covenants place no greater
restraint upon Xxxxxxxx than is reasonably necessary to protect the
business and goodwill of Rick’s;
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(b)
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These
covenants protect a legitimate interest of Rick’s and do not serve solely
to limit Rick’s future competition;
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(c)
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This
Non-Competition Agreement is not an invalid or unreasonable restraint of
trade;
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(d)
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A
breach of these covenants by Xxxxxxxx would cause irreparable damage to
Rick’s;
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(e)
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These
covenants will not preclude Xxxxxxxx from becoming gainfully employed
following the closing of the Purchase
Agreement;
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(f)
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These
covenants are reasonable in scope and are reasonably necessary to protect
Rick’s business and goodwill and valuable and extensive trade which Rick’s
have established through their own expense and
effort;
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(g)
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The
signing of this Non-Competition Agreement is necessary as part of the
consummation of the Transaction previously discussed;
and
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(h)
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Xxxxxxxx
has carefully read and considered all provisions of this Non-Competition
Agreement and agrees that all of the restrictions set forth are fair and
reasonable and are reasonably required for the protection of the interests
of Rick’s Media.
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3.
Remedies,
Injunction. In the
event of an actual breach of any provisions of this Non-Competition Agreement by
Xxxxxxxx, Xxxxxxxx agrees that Rick’s shall be entitled to a temporary
restraining order, preliminary injunction and/or permanent injunction
restraining and enjoining Xxxxxxxx from violating the provisions
herein. Nothing in this Non-Competition Agreement shall be construed
to prohibit Rick’s from pursuing any other available remedies for such breach or
threatened breach, including the recovery of damages from
Xxxxxxxx. Xxxxxxxx further agrees that, for the purpose of any such
injunction proceeding, it shall be presumed that Rick’s legal remedies would be
inadequate and that Rick’s would suffer irreparable harm as a result of any
violation of the provisions of this Non-Competition Agreement by
Xxxxxxxx.
Non-Competition
Agreement - Page 2
4.
Severability. In the
event that any of the provisions of this Non-Competition Agreement are held to
be invalid or unenforceable in whole or in part, those provisions to the extent
enforceable and all other provisions shall nevertheless continue to be valid and
enforceable as though the invalid or unenforceable parts had not been included
in this Non-Competition Agreement. In the event that any provision
relating to the time period or scope of a restriction shall be declared by a
court of competent jurisdiction to exceed the maximum time period or scope such
court deems reasonable and enforceable, then the time period or scope of the
restriction deemed reasonable and enforceable by the court shall become and
shall thereafter be the maximum time period or the applicable scope of the
restriction. Xxxxxxxx further agrees that such covenants and/or any
portion thereof are severable, separate and independent, and should any specific
restriction or the application thereof, to any person, firm, corporation, or
situation be held to be invalid, that holding shall not affect the remainder of
such provisions or covenants.
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5.
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General
Provisions.
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(a)
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Notices. Any
notices to be given hereunder by either party to the other may be effected
either by personal delivery in writing or by mail, registered or
certified, postage prepaid with return receipt requested or by a
recognized overnight delivery service. Mailed notices shall be
addressed to the parties at the addresses set forth below, but each party
may change their address by written notice in accordance with this
Paragraph (a). Notices delivered personally shall be
deemed communicated as of actual receipt; mailed notices shall be deemed
communicated as of three (3)
days
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after
mailing; and overnight delivery service shall be deemed delivered one (1) day
after depositing with the overnight delivery service.
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If
to Rick’s or
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Xxxx
Xxxxxx, President
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Or
RCI Media:
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00000
Xxxxxx Xxxx
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Xxxxxxx,
Xxxxx 00000
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With
a copy to:
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Xx.
Xxxxxx X. Xxxxxxx
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Xxxxxxx,
Xxxxx & Xxxxxxxxx
0000
Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx,
Xxxxx 00000
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If
to Xxxxxxxx:
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Xxxx
Xxxxxxxx
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0000
Xxxx Xxx Xxxxxxx, Xxxxx X
Xxxxxxxx,
XX 00000
Non-Competition
Agreement - Page 3
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with
a copy to:
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Xxxxxxxxxxx
X. Xxxxxx, Esq.
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0000
Xxxxxxxxx Xx. XX, #000
Xxxxxxxx,
Xxxxxxx 00000
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(b)
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Law
Governing Non-Competition Agreement and Venue. This
Non-Competition 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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(c)
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Execution. 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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(d)
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Contract
Terms to be Exclusive. This Non-Competition Agreement
contains the sole and entire agreement between the parties and shall
supersede any and all other agreements between the parties with respect to
the agreement of Xxxxxxxx not to compete with
Rick’s.
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(e)
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Waiver or
Modification Ineffective Unless in Writing. It is
further agreed that no waiver or modification of this Non-Competition
Agreement or of any covenant, condition, or limitation herein contained
shall be valid unless in writing and duly executed by the party to be
charged therewith and that no evidence of any waiver or modification shall
be offered or received in evidence in any proceeding or litigation between
the parties hereto arising out of or affecting this Non-Competition
Agreement, or the rights or obligations of any party hereunder, unless
such waiver or modification is in writing, duly executed as
aforesaid.
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(f)
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Assignment. The
rights and benefits of Rick’s under this Non-Competition Agreement shall
inure to the benefit of and be binding upon the successors and assigns of
Rick’s. The rights of Xxxxxxxx hereunder are personal and
nontransferable except that the rights and benefits hereof shall inure to
the benefit of the heirs, executors and legal representatives of
Xxxxxxxx.
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(g)
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Binding
Effect. Except as otherwise provided herein, this
Non-Competition Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and
assigns.
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[SIGNATURES
APPEAR ON THE FOLLOWING PAGE.]
Non-Competition
Agreement - Page 4
IN
WITNESS WHEREOF, this Non-Competition Agreement has been executed as of the 15th
day of April, 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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/s/ Xxxx
Xxxxxxxx
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Xxxx
Xxxxxxxx, Individually
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Non-Competition
Agreement - Page 5
