NON-COMPETITION AGREEMENT
Exhibit
10.6
This
Non-Competition Agreement dated September 4, 2008 (the
"Non-Competition Agreement"), is by and among Rick’s Cabaret International,
Inc., a Texas corporation, (“Rick’s”), its wholly owned subsidiary,
RCI Entertainment (Las Vegas), Inc., a Nevada corporation (the “Buyer”) and
Xxxxx Xxxxxx (“Xxxxxx”).
W
I T N E S S E T H:
WHEREAS, the parties entered
into an Asset Purchase Agreement dated April 17, 2008 , as subsequently amended
(the “Asset Purchase Agreement”), between the Buyer, Rick’s, DI Food and
Beverage of Las Vegas, LLC, a Nevada limited liability company (the “Seller”)
and Xxxxxx Xxxxxx (“Danzig”), Xxxxxx XxXxxx (“XxXxxx”) and Xxxxxx pursuant to
which Buyer will acquire substantially all of the assets of Seller in accordance
with the terms and conditions thereof (the “Transaction”); and
WHEREAS, Seller owns and
operates an adult entertainment cabaret known as “SCORES” (“SCORES” or the
“Business”), located at 0000 Xxxxxxx Xxxxxx, Xxx Xxxxx, Xxxxxx 00000 (the “Real
Property”); and
WHEREAS, pursuant to the terms
and condition of the Asset Purchase Agreement, Seller has agreed to sell to
Buyer all of the assets related to the Business (the “Acquisition”);
and
WHEREAS, Xxxxxx is a member of
the Seller and will benefit from the Transaction; and
WHEREAS, in connection with
the Transaction, Buyer has agreed to pay Seller consideration as more fully
described in the Asset Purchase Agreement; and
WHEREAS, Buyer and Rick’s
require that Xxxxxx enter into this Non-Competition Agreement as a condition to
Buyer and Rick’s entering into the Transaction; and
WHEREAS, Xxxxxx agrees to
enter into this Non-Competition Agreement in consideration of acts and payments
on the part of Buyer and Rick’s as contemplated by the Transaction and by this
Non-Competition Agreement; and
WHEREAS, all terms not defined
herein shall have the meaning set forth in the Asset Purchase
Agreement.
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. Definitions. "Trade
Secrets and other proprietary and confidential information" mean and consist of,
for example, and not intending to be inclusive, (i) methods of doing business;
(ii) financial information, consisting of financial cost, and sales data and
other information of SCORES; (iii) personnel information of SCORES; (iv) lists,
whether written or in electronic form, of customers and accounts, contracts,
sales information, pricing lists, vendor and supplier lists of SCORES; and (v)
other information of a confidential nature of SCORES which must remain
confidential for the continuing success of SCORES and of the
Buyer. Confidential information shall not include information
available to the public through no fault of Xxxxxx or information required to be
disclosed by court order.
2. Non-Disclosure and
Confidentiality Covenants. Xxxxxx acknowledges that the
SCORE=s
Trade Secrets and other proprietary and confidential information of SCORES, as
they may exist from time to time, are valuable, special and unique assets of the
SCORES's business. Additionally, Xxxxxx acknowledges that the
business goodwill and business contacts of SCORES are being sold,
transferred and conveyed to the Buyer and will become the sole property of the
Buyer and are among the most valuable business assets being sold, transferred
and conveyed to Buyer. Therefore, in consideration of the mutual
promises herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, and to protect the
foregoing valuable property of SCORES, Xxxxxx expressly covenants and agrees as
follows:
Xxxxxx
will not:
(1) Disclose,
directly or indirectly, the SCORE's Trade Secrets and other proprietary and
confidential information, or any part thereof, to any person, firm, corporation,
association or other entity for any reason or purpose whatsoever;
or
(2) Directly
or indirectly use any of the SCORE's Trade Secrets and other proprietary and
confidential information, or any part thereof, for his own purpose or for his
own benefit in any activity of any nature whatsoever.
3. Covenant
Not to Compete. For a period of twelve (12) months after the
date of execution of this Non-Competition Agreement (the “Term”), Xxxxxx
specifically agrees that he will not, for himself, on behalf of or in
conjunction with any person, firm, corporation or entity (either as principal,
employee, shareholder, member, director, officer, partner, consultant, owner or
part owner of any corporation, partnership or any type of business entity),
directly or indirectly, whether for compensation or not, compete
with Rick’s or Buyer or any of Rick’s subsidiaries or affiliates, or
the club known as SCORES by owning or sharing in the earnings of, carrying on,
managing, operating, controlling, being engaged in, rendering services to,
soliciting customers for, participating in or otherwise being connected with,
any business engaged in the operation of an establishment providing live female
nude or semi-nude adult entertainment in Xxxxx County, Nevada, or any of its
surrounding counties; provided, however, that this Non-Competition Agreement
shall specifically exclude the Penthouse Club and the Bada Bing Club located in
Xxxxx County, Nevada.
4. Covenant
of Non-Solicitation and Employment of Employees and Independent
Contractors. During the Term hereof, Xxxxxx agrees not to
solicit or induce or attempt to solicit or induce any employee, independent
contractor, or agent or consultant of Buyer, Rick’s or SCORES or any entity
which is affiliated with the Buyer, Rick’s or SCORES to leave his or her
employment or terminate his or her agreement or relationship or independent
contractor relationship with the Buyer, Rick’s or SCORES or any entity which is
affiliated with any of them.
5. Acknowledgments
and Agreements of Xxxxxx. Xxxxxx
acknowledges and agrees that:
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(a)
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Due
to the nature of Rick’s and Buyer’s business, the foregoing covenants
place no greater restraint upon Xxxxxx than is reasonably necessary to
protect the business and goodwill of Rick’s or the
Buyer;
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(b)
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These
covenants protect a legitimate interest of Rick’s and the Buyer and do not
serve solely to limit Rick’s and the Buyer’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 Xxxxxx would cause irreparable damage to
Rick’s and Buyer;
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(e)
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These
covenants will not preclude Xxxxxx from becoming gainfully employed
following the closing of the Asset 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 and the Buyer’s business and goodwill and valuable and extensive
trade which Rick’s has established through its 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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Xxxxxx
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 and the Buyer.
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6. Remedies,
Injunction. In the event of
an actual breach of any provisions of this Non-Competition Agreement by Xxxxxx,
Xxxxxx agrees that Rick’s and the Buyer shall be entitled to a temporary
restraining order, preliminary injunction and/or permanent injunction
restraining and enjoining Xxxxxx from violating the provisions
herein. Nothing in this Non-Competition Agreement shall be construed
to prohibit Rick’s or Buyer from pursuing any other available remedies for such
breach, including, without limitation, the recovery of damages, including
actual, indirect, incidental, consequential or punitive damages or lost or
imputed profits from Xxxxxx. Xxxxxx further agrees that, for the
purpose of any such injunction proceeding, it shall be presumed that Rick’s and
the Buyer’s legal remedies would be inadequate and that Rick’s and the Buyer
would suffer irreparable harm as a result of any violation of the provisions of
this Non-Competition Agreement by Xxxxxx.
7. 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. Xxxxxx 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.
Non-Competition
Agreement - Page 3
8. 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 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 Buyer:
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Xxxx
Xxxxxx, President
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00000
Xxxxxx Xxxx
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 Xxxxxx:
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Xxxxx
Xxxxxx
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_____________________
_____________________
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With
a copy to:
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Xxxxx
Xxxxxx
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Xxxxxx
& Lehtinen, P.C.
0000 X.
Xxxxxxxxxx Xxxx., Xxxxx 000
Xxx
Xxxxx, Xxxxxx 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 Nevada, without regard to principles of conflict of
laws. In any action between the Parties, each of the Parties
consents to the exclusive jurisdiction and venue of the federal and state
courts located in Xxxxx County,
Nevada.
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Non-Competition
Agreement - Page 4
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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
Xxxxxx not to compete with Rick’s or the Buyer or
SCORES.
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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 and the Buyer under this Non-Competition
Agreement shall inure to the benefit of and be binding upon the successors
and assigns of Rick’s and the Buyer. The rights of Xxxxxx
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 Xxxxxx.
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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
ON FOLLOWING PAGE]
Non-Competition
Agreement - Page 5
IN
WITNESS WHEREOF, this Non-Competition Agreement has been executed as of the 4th
day of September, 2008.
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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RCI
ENTERTAINMENT (LAS VEGAS), 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/ Xxxxx Xxxxxx
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Xxxxx
Xxxxxx, Individually
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Non-Competition Agreement - Page 6