Exhibit 10.3
EXECUTION VERSION
LOCK-UP/LEAK-OUT
AGREEMENT
THIS LOCK-UP/LEAK-OUT AGREEMENT (the
“Agreement”) is made and entered into as of the 4th day
of September, 2008, between RICK’S CABARET INTERNATIONAL,
INC. , a Texas corporation (“Rick’s”), and
DI FOOD AND BEVERAGE OF LAS VEGAS, LLC , a Nevada limited
liability company (“Holder”).
WHEREAS , the Holder has agreed to sell, transfer and
convey all of the assets owned by it which are associated or used
in connection with the operations of an adult entertainment cabaret
known as SCORES located at 3355 Procyon Street, Las Vegas, Nevada
89102, to RCI Entertainment (Las Vegas), Inc., a Nevada corporation
(the “Purchaser”), pursuant to the terms and conditions
of the Asset Purchase Agreement by and among Rick’s, the
Purchaser, the Holder, and Harold Danzig, Frank Lovaas and Dennis
DeGori, who are all members of the Holder dated April 17, 2008, as
amended by the Third Amendment to Asset Purchase Agreement, dated
September 4, 2008 (the “Amended and Restated Purchase
Agreement”); and
WHEREAS , under the terms of the Amended and Restated
Purchase Agreement, the Holder shall be entitled to receive 200,000
shares of common stock of Rick’s (“Rick’s
Shares”) upon the Closing of the Amended and Restated
Purchase Agreement (“Closing Date”), which is
conditioned upon, among other things, the execution and delivery of
this Agreement; and
WHEREAS , the Holder has agreed to enter into this
Agreement and to restrict the sale, assignment, transfer,
conveyance, or hypothecation of the Rick’s Shares, all on the
terms set forth below; and
WHEREAS, any capitalized terms not defined herein shall
have the meaning set forth in the Amended and Restated 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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The Holder
agrees it may not sell, pledge, hypothecate, transfer, assign or in
any other manner dispose of the Rick’s Shares for six
(6) months from the date hereof.
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(a)
Thereafter, on or after seven (7) months from the Closing
Date, the Holder shall have the right, but not the obligation, to
have Rick’s purchase from the Holder a total of 150,000 of
the Rick’s Shares (for purposes of this Section 2(a), the
150,000 Rick’s Shares shall hereinafter be referred to as the
“Rick’s Put Share”) in an amount and at a rate of
not more than 6,250 of the Rick’s Put Shares per month (the
“Monthly Shares”) calculated at a price per share equal
to $20.00 per share (“Value of the Rick’s
Shares”) until the Holder has received an aggregate of
$3,000,000 from (i) the sale of the Rick’s Put 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 (as hereinafter defined) by
Rick’s. Holder shall notify Rick’s during
any given month of its 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 the Holder 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 Month
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