Termination and Non-Competition Agreement - Rick's Cabaret International Inc., RCI Entertainment Louisiana Inc. and Norton White
TERMINATION AND NON-COMPETITION AGREEMENT
(WHITE)
This Termination and Non-Competition Agreement (this "Agreement") dated
March 29, 1999, by and between RICK'S CABARET INTERNATIONAL, INC., a Texas
corporation having its principal office and place of business in Harris County,
Texas (the "Company"), RCI ENTERTAINMENT LOUISIANA, INC., a Louisiana
corporation having its principal office in New Orleans, Louisiana, and ERICH
NORTON WHITE, an individual residing in Louisiana ("White").
W I T N E S S E T H:
WHEREAS, on or about April 15, 1997, White executed an Employment Agreement
(the "Employment Agreement") with the Company's subsidiary, RCI Entertainment
Louisiana, Inc. ("RCI Louisiana") pursuant to which White is named, inter alia,
as Vice-President of Operations of the Company; and
WHEREAS, on or about May 14, 1998, there was an amendment to the Employment
Agreement which was executed by White and RCI Louisiana and the Company; and
WHEREAS, it is the intention of White to resign as an employee of the
Company on or about March 15, 1999; and
WHEREAS, it is the desire of White to terminate his existing Employment
Agreement with RCI Louisiana and to terminate all of the 65,000 outstanding
options of the Company which White presently holds (the "Options"); and
WHEREAS, the Company and RCI Louisiana are willing to terminate the
Employment Agreement of White and to terminate all of the outstanding Options of
the Company which White presently holds; and
WHEREAS, effective upon the date of termination of White as an employee of
the Company, the aforementioned Employment Agreement and the Options will be
terminated and neither the Company, RCI Louisiana nor White shall have any
further obligations to the other with respect thereto; and
WHEREAS, contemporaneously herewith, Robert L. Watters is acquiring the
stock of RCI Louisiana, in order to operate an adult entertainment facility
currently located in New Orleans, Louisiana; and
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WHEREAS, it is the desire of White to continue his employment with RCI
Louisiana subsequent to the sale of RCI Louisiana to Watters by entering into a
new employment agreement with RCI Louisiana; and
WHEREAS, in consideration of the termination of the Employment Agreement
and the Company's rights thereunder, White has agreed to execute a
Non-Competition Agreement as evidenced by the terms and conditions hereof.
NOW, THEREFORE, for a valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the Company and White agree as follows:
1. TERMINATION OF EMPLOYMENT AGREEMENT.
a. White hereby tenders his resignation as Vice-President of Operations of
the Company.
b. This Agreement constitutes termination of the Employment Agreement with
no further obligation of White to the Company or the Company to White pursuant
to the Employment Agreement, and White shall have no further obligation to
continue to act or provide services to the Company under the terms of the
Employment Agreement and the Company shall have no further obligation to pay
White any compensation under the terms of the Employment Agreement.
c. The salary of White will cease on February 28, 1999.
2. NON-COMPETITION AGREEMENT.
a. Definitions. "Trade secrets and other proprietary and confidential
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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 the Company; (iii)
personnel information of the Company; (iv) lists of customers and accounts,
contracts, sales information, pricing list, vendor and supplier list of the
Company; and (v) other information of a confidential nature of the Company which
must remain confidential for the continuing success of the Company.
Confidential information shall not include information available to the public
through no fault of White or information required to be disclosed by court
order.
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b. Non-Disclosure and Confidentiality Covenants of White. White
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acknowledges that the Company's trade secrets and other proprietary and
confidential information, are valuable, special and unique assets of the
Company's business. Additionally, White acknowledges that the business goodwill
of the Company is the sole property of the Company and are among the Company's
most valuable business property. 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 the Company, White expressly covenants and agrees
as follows:
Except as required in the course of White involvement with the current
operations in New Orleans, Louisiana, which he is acquiring from the Company
contemporaneously herewith, and except in the course of his current or future
exploitation of business opportunities throughout the States of Louisiana,
Florida, Mississippi and Alabama, White will not, during the Term hereof (as
defined below):
(i) Disclose, directly or indirectly, the Company'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
(ii) Directly or indirectly use the Company'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.
c. Covenants of White
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(i) Covenant Not to Compete. For a period of thirty-six (36) months after
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the date hereon (the "Term"), White 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, partner,
consultant, owner or part-owner of any corporation, partnership or any type of
business entity (except that White may own up to 2% of the capital stock of
any publicly held company), anywhere within the United States of America, except
in Louisiana, Florida, Mississippi and Alabama directly or indirectly, own,
manage, operate, control, be employed by, participate in, or be connected in any
manner with the ownership, management, operation, or control of any
establishment which has live female nude or semi-nude entertainment or is in any
business similar to or competitive with the female entertainment business
presently conducted by the Company.
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(ii) Covenant of Non-Solicitation and Employment of Employees and
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Independent Contractors. During the Term hereof, White agrees not to hire,
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solicit or attempt to solicit for employment by White or any company to which he
may be involved, either directly or indirectly, any party who is an employee or
independent contractor of the Company or any entity which is affiliated with the
Company, or any person who was an employee or independent contractor of the
Company or any entity which is affiliated with the Company within the one year
period immediately preceding the date hereof, except for employees and
independent contractors that presently work at RCI Entertainment Louisiana,
Inc., provided however, that White may hire any independent contractor or former
independent contractor, if White does not solicit or attempt to solicit such
independent contractor. If White is approached by any independent contractor or
former independent contractor, such hiring would not be in violation of this
Agreement.
d. Acknowledgments and Agreements. White acknowledges that he has carefully
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read and considered all provisions of this Agreement and agrees that:
(i) Due to the nature of the Company's business, the foregoing covenants
place no greater restraint upon White than is reasonably necessary to protect
the business and goodwill of the Company;
(ii) These covenants protect the legitimate interests of the Company and do
not serve solely to limit the Company's future competition;
(iii) This Agreement is not an invalid or unreasonable restraint of trade;
(iv) A breach of these covenants by White would cause irreparable damage to
the Company;
(v) These covenants are reasonable in scope and are reasonably necessary to
protect the Company's business and goodwill which the Company has established
through its own expense and effort; and
(vi) The signing of this Agreement is necessary as part of the consummation
of the transactions described in the preamble.
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e. Remedies, Injunction. In the event of White's actual breach of any
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provisions of this Agreement, White agrees that the Company shall be entitled
without the necessity of a bond or other security to a temporary restraining
order, preliminary injunction and/or permanent injunction restraining and
enjoining White from violating the provisions herein. Nothing in this Agreement
shall be construed to prohibit the Company from pursuing any other available
remedies for such breach or threatened breach, including the recovery of damages
from White. White further agrees that for the purpose of any such injunction
proceeding, it shall be presumed that the Company's legal remedies would be
inadequate and that the Company would suffer irreparable harm as a result of
White's violation of the provisions of this Agreement. In any proceeding
brought by the Company to enforce the provisions of this Agreement, no other
matter relating to the terms of any claim or cause of action of White against
the Company will be defense thereto.
3. CANCELLATION OF OPTIONS.
Upon the execution of this Agreement, the Company shall cause to be cancelled on
the books and records of the Company all of the outstanding Options presently
issued to White.
4. GENERAL PROVISIONS.
a. Notices. Any notices or other communications required or permitted
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hereunder shall be sufficiently given if in writing and delivered in Person,
transmitted by facsimile transmission (fax) or sent by registered or certified
mail (return receipt requested) or recognized overnight delivery service,
postage pre-paid, addressed as follows, or to such other address has such party
may notify to the other parties in writing:
(i) if to the Seller:
Rick's Cabaret International, Inc.
16770 Hedgecroft Drive, #714
Houston, Texas 77060
Attn: Eric Langan
Telephone No.: 281-820-1181
Facsimile No.: 281-820-1445
with a copy to:
Robert D. Axelrod
Axelrod, Smith & Kirshbaum
5300 Memorial Drive, Suite 700
Houston, Texas 77007
Telephone No.: 713-861-1996
Facsimile No.: 713-552-0202
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(ii) if to White:
Erich Norton White
930 Joans Street
Mandeville, Louisiana 70448
Telephone No.: 504-626-7956
Facsimile No.: 504-524-3240
b. Law Governing and Venue. This Agreement shall be governed by and
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construed in accordance with the laws of the State of Texas. This Agreement is
executed in Houston, Texas. Venue shall be in Harris County, Texas for any
legal proceeding to enforce the terms, conditions or covenants contained herein.
c. Contract Terms to be Exclusive. This Agreement contains the sole and
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entire agreement between the parties with respect to the subject matter hereof
and shall supersede any and all other agreements between the parties with
respect thereto. The parties acknowledge and agree that neither of them has made
any representation with respect to the subject matter of this Agreement or any
other agreement executed between them or any representations inducing the
execution and delivery hereof or any other agreement executed between them
except such representations as are specifically set forth herein and each of the
parties hereto acknowledges that he or it has relied on his or its own judgment
in entering into the same. The parties hereto further acknowledge that any
statements or representations that may have heretofore been made by either of
them to the other are void and of no effect and that neither of them has relied
thereon in connection with his or its dealings with the other.
d. Waiver or Modification Ineffective Unless in Writing. It is further
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agreed that no waiver or modification of this 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 Agreement, or the rights or obligations of any party hereunder, unless such
waiver or modification is in writing, duly executed as aforesaid, and the
parties further agree that the provisions of this paragraph may not be waived as
herein set forth.
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e. Severability. In the event that any of the provisions of this Agreement
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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 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. White 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.
f. Binding Effect; Assignment. The rights and benefits of the Company under
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this Agreement shall inure to the benefit of and be binding upon the successors
and assigns of the Company. The rights of White hereunder are personal and
nontransferable except that the rights and benefits hereof shall inure to the
benefit of the heirs, executors, legal representatives, administrators,
successors and assigns of White.
[Signatures on following page]
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IN WITNESS WHEREOF, this Agreement has been executed as of the date first
above mentioned.
RICK'S CABARET INTERNATIONAL, INC.
BY: /s/ Eric Langan
NAME: Eric Langan
TITLE: VICE-PRESIDENT
RCI ENTERTAINMENT LOUISIANA, INC.
BY: /S/ ROBERT L. WATTERS
NAME: ROBERT L. WATTERS
TITLE: President
/s/ ERICH NORTON WHITE
ERICH NORTON WHITE
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