Exhibit 10.2
ESCROW AGREEMENT
This Escrow Agreement (hereinafter the "Escrow Agreement") is made and
entered into this 6th day of July, 2000 by and among RICK'S CABARET
INTERNATIONAL, INC., a Texas corporation ("Rick's"), and VOICE MEDIA, INC., a
Nevada corporation (the "Shareholder"), Rick's and the Shareholder being
collectively referred to as the "Parties" or individually referred to as a
"Party", and ROBERT D. AXELROD, P.C., as the Escrow Agent ("Escrow Agent").
WHEREAS, RCI Internet Holdings, Inc., Rick's and the Shareholder have
entered into an Asset Purchase Agreement ("Purchase Agreement") of even date
herewith, pursuant to which the Shareholder has agreed to deposit in escrow
250,000 shares of the $.01 par value common stock of Rick's (the "Escrow Stock"
or the "Escrow Shares"); and
WHEREAS, the Shareholder pursuant to the Purchase Agreement is conveying to
RCI Internet Holdings, Inc., a wholly owned subsidiary of Rick's, certain
tangible and intangible assets associated with and used in connection with the
operation of an Internet website known as XXXPassword.com ("Password"); and
WHEREAS, in connection with the execution of the Purchase Agreement it is
necessary to establish an escrow for the Escrow Stock; and
WHEREAS, the Parties desire that Robert D. Axelrod, P.C. serve as the
Escrow Agent in connection with this Escrow Agreement.
THE DEFINED TERMS HEREIN HAVE THE SAME MEANING AS THE DEFINED TERMS IN THE
Purchase Agreement of even date herewith by and among the Parties (THE
"PURCHASE AGREEMENT").
NOW THEREFORE, in consideration of the foregoing recitals and the mutual
covenants and obligations herein contained, the Parties agree hereto as follows:
1. Escrow of Escrow Stock. At the time of executing this Escrow
-------------------------
Agreement, the Shareholder shall deliver to the Escrow Agent the following:
a. Certificates representing the Escrow Stock (250,000 shares of
common stock of Rick's);
b. Stock powers for the Escrow Shares, fully executed by the
Shareholder covering the certificates delivered in escrow. The stock
powers, along with the Escrow Stock, shall hereinafter be collectively
referred to as the "Escrowed Documents."
c. The Shareholder, by the delivery of the 250,000 Escrow Shares to
the Escrow Agent, does hereby acknowledge and represent that the Escrow
Shares are owned, beneficially and of record, by the Shareholder, free and
clear of any liens, claims, equities, charges, options, rights of first
refusal or encumbrances and, further, acknowledges and represents that it
has the unrestricted right and power to transfer, convey and deliver full
ownership of the Escrow Shares without the consent, agreement or joinder of
any other person and without any designation, declaration or filing with
any governmental authority.
2. Conditions for Release from Escrow. The Escrow Agent is hereby
--------------------------------------
instructed to receive and hold the Escrowed Documents in escrow. The Escrowed
Documents shall not be released or dealt with in any manner whatsoever
inconsistent with this Escrow Agreement, unless the Escrow Agent shall receive
other written instructions executed by Rick's and the Shareholder. Absent
contrary written instructions, the Escrow Agent shall:
(a) Subject to Paragraph 2(f), below, release the Escrow Shares to the
Shareholder upon receipt by the Escrow Agent of a written statement
from the auditors of Rick's that the earnings before depreciation,
amortization, interest and taxes ("EBITDA") of XXXPassword.com during
the first full 12 months following the Closing Date (the "Escrow
Period") equaled or exceeded $400,000 (the "Minimum Threshold"). Such
written statement from the auditors of Rick's shall be provided to the
Escrow Agent not later than five (5) days following submission to the
Securities and Exchange Commission of Rick's appropriate reporting
forms. In the event that the Escrow Agent receives a written statement
from the auditors of Rick's that the EBITDA during the Escrow Period
does not meet the Minimum Threshold, then the Escrow Agent shall
release a number of shares of the Escrow Stock to the Shareholder at
the end of the Escrow Period equal to 250,000 multiplied by a
fraction, not to exceed one, the numerator of which is the actual
EBITDA for the Escrow Period, as reflected in the written statement
from the auditors of Rick's, and the denominator of which is $400,000.
(b) Subject to Paragraph 2(f), below, release the Escrow Shares to the
Shareholder upon receipt by the Escrow Agent of a written statement
from the auditors of Rick's that the EBITDA of XXXPassword.com, at any
time during the first full 12 months following the Closing Date,
equals or exceeds $400,000.
(c) Following release to the Shareholder pursuant to Paragraphs 2(a) or
2(b) as appropriate, any Escrow Stock remaining in Escrow shall be
returned by the Escrow Agent to Rick's for cancellation.
(d) In the event that the shareholders of Rick's are requested to vote on
any matter while any shares of Common Stock are held in Escrow, such
shares of Common Stock shall be voted by Eric Langan or pursuant to
the written instructions of Eric Langan.
(e) The term "Earnings before depreciation, amortization, interest and
taxes" for purposes of this Escrow Agreement shall have the same
definition contained in the Purchase Agreement.
ESCROW AGREEMENT - PAGE 2
(f) Upon receipt by the Escrow Agent of any written statement from the
auditors of Rick's pursuant to either Paragraph 2(a) or 2(b) above,
the Escrow Agent shall give written notice of such fact, together with
a copy of the written statement, to each of the Parties within three
(3) business days. If no objection is received by the Escrow Agent
from either of the Parties within five (5) business days following
such notification, the Escrow Agent shall release the Escrow Shares in
accordance with Paragraph 2(a) or 2(b), as the case may be. If an
objection is received within five (5) business days, the Escrow Agent
shall so notify each of the Parties of such fact. In such event the
Escrow Agent may, but shall not be required, to interplead the
Escrowed Documents with any court of competent jurisdiction in Harris
County, Texas. Attorney's fees and costs of court shall be borne by
the party losing any action brought to recover the Escrowed Documents.
3. Escrow Period and Delivery. The escrow period shall commence on the
--------------------------
date of the execution of this Escrow Agreement, which shall be the same date as
the date of the Closing of the Purchase Agreement, and shall continue until the
final disposition of the Escrowed Documents in accordance with the terms of this
Escrow Agreement (the "Termination"). Once the Escrow Agent has delivered the
Escrowed Documents in accordance with the terms of this Escrow Agreement, its
duties pursuant to this Escrow Agreement shall be completed and it shall have no
further responsibility whatsoever hereunder.
4. The Shareholder hereby agrees that so long as the Escrow Stock is
held in escrow pursuant to this Escrow Agreement, it will not take any action to
cancel, sell, pledge, assign, dispose of or otherwise transfer the Escrow Stock,
except as otherwise provided by this Escrow Agreement. If Rick's declares a
cash dividend or stock dividend or if Rick's splits or subdivides its shares of
common stock or issues any shares of its common stock in a reclassification then
any cash dividend or stock dividend to which the Shareholder would be entitled
shall be issued directly to the Escrow Agent to hold in escrow in accordance
with the terms and conditions of this Escrow Agreement.
5. The Escrow Agent is hereby authorized to exchange the share
certificates delivered to it for any number and any denomination of share
certificates that the Escrow Agent, in its sole discretion, requires to enable
it to release the Escrow Stock as required pursuant to this Escrow Agreement.
6. The Escrow Agent shall have no duties or obligations other than
those specifically set forth herein or required by law. The acceptance by the
Escrow Agent of its duties under this Escrow Agreement is subject to the terms
and conditions hereof, which shall govern and control with respect to its
rights, duties, liabilities and immunities.
ESCROW AGREEMENT - PAGE 3
7. Rick's and the Shareholder understand and agree that Escrow Agent is
not a principal, participant, or beneficiary of the underlying transactions
which necessitate this Escrow Agreement. The Escrow Agent shall be obligated
only for the performance of such duties as are specifically set forth herein and
may rely and shall be protected in acting or refraining from acting on any
instrument reasonably believed by it to be genuine and to have been signed or
presented by the proper Party or Parties, their officers, representatives or
agents. So long as the Escrow Agent has acted in good faith or on the advice of
counsel or has not been guilty of willful misconduct, the Escrow Agent shall
have no liability under, or duty to inquire beyond the terms and provisions of
this Escrow Agreement, and it is agreed that its duties are purely ministerial
in nature. Escrow Agent shall in no event be liable for any exemplary or
consequential damages, the Parties understanding that this limitation is
provided for in view of the fact that Escrow Agent will receive no compensation
(other than reimbursement for expenses), for its services hereunder.
8. The Escrow Agent shall not be obligated to take any legal actions
hereunder against any third party who is not a party to this Escrow Agreement
which might, in the Escrow Agent's judgment, involve any expense or liability,
unless the Escrow Agent shall have been furnished with reasonable indemnity.
9. The Escrow Agent is not bound in any way by any other contract or
agreement between or among the Parties hereto whether or not the Escrow Agent
has knowledge thereof of its terms and conditions and the Escrow Agent's only
duty, liability and responsibility shall be to hold and deal with the Escrowed
Documents as herein directed.
10. The Escrow Agent shall not be bound by any modification, amendment,
termination, cancellation, rescission or supersession of this Escrow Agreement
unless the same shall be in writing and signed by all of the other Parties
hereto and, if its duties as Escrow Agent hereunder are affected thereby, unless
it shall have given prior written consent thereto.
11. The Parties hereto each jointly and severally agree to indemnify
the Escrow Agent against and hold the Escrow Agent harmless from anything which
the Escrow Agent may do or refrain from doing in connection with its performance
or non-performance as Escrow Agent under this Escrow Agreement and any and all
losses, costs, damages, expenses, claims and reasonable attorneys' fees suffered
or incurred by the Escrow Agent as a result of, in connection with or arising
from or out of the acts of omissions of the Escrow Agent in performance of or
pursuant to this Escrow Agreement, except such acts or omissions as may result
from the Escrow Agent's willful misconduct.
ESCROW AGREEMENT - PAGE 4
12. In the event of any disagreement between Rick's and the Shareholder
or any or either of them concerning this Escrow Agreement or between them, or
demands being made in connection with the Escrow Stock, or in the event that the
Escrow Agent is in doubt as to what action the Escrow Agent should take
hereunder, the Escrow Agent may, at its option, refuse to comply with any claims
or demands on it, or refuse to take any other action hereunder, so long as such
disagreement continues or such doubt exists, and in any such event, the Escrow
Agent shall not be or become liable in any way or to any person for its failure
or refusal to act, and the Escrow Agent shall be entitled to continue so to
refrain from acting until:
a. the rights of Rick's and the Shareholder shall have been fully and
finally adjudicated by a court of competent jurisdiction; or
b. all differences shall have been adjusted and all doubt resolved by
agreement between Rick's and the Shareholder, and the Escrow Agent shall
have been notified thereof in writing signed by all Parties.
13. Should Escrow Agent become involved in litigation in any manner
whatsoever on account of this Escrow Agreement or the Escrow Stock, the Parties
hereto (other than Escrow Agent), hereby bind and obligate themselves, their
heirs, personal representatives, successors, assigns to pay Escrow Agent, in
addition to any charge made hereunder for acting as Escrow Agent, reasonable
attorneys' fees incurred by Escrow Agent, and any other disbursements, expenses,
losses, costs and damages in connection with or resulting from such actions,
unless such litigation is the direct result of the Escrow Agent's own willful
misconduct.
14. The terms of these instructions are irrevocable by the undersigned
unless such revocation is consented to in writing by each of Rick's and the
Shareholder.
15. The terms herein shall be binding upon the Escrow Agent and its
successors, and upon Rick's and the Shareholder.
16. The Escrow Agent may resign as escrow agent in respect of the
Escrow Stock by giving written notice to Rick's and the Shareholder. The
resignation of the Escrow Agent shall be effective, and the Escrow Agent shall
cease to be bound by this Escrow Agreement, thirty (30) days following the date
such notice of resignation is given.
Rick's and the Shareholder shall, before the effective date of the
resignation of the Escrow Agent, appoint another escrow holder who shall be
acceptable to them and that appointment, when made, shall be binding on them.
Upon appointment by the new escrow holder, the Escrow Agent shall deliver the
Escrowed Documents to the new escrow holder whereupon the Escrow Agent shall not
be liable for the completion of any further acts pursuant to this Escrow
Agreement. In the event that Rick's and the Shareholder do not appoint a new
escrow holder prior to the expiration of the thirty (30) day period, the Escrow
Agent shall be entitled to make application to a court of competent jurisdiction
in the State of Texas to be relieved of the obligations upon it and/or to
interplead the Escrowed Documents into such court and for directions with
respect to the delivery of the Escrowed Documents. The Escrow Agent shall be
entitled to act in accordance with the direction of the court without any
further liability to any other Party whatsoever.
ESCROW AGREEMENT - PAGE 5
17. The Escrow Agent will not receive any compensation for the
performance of its services in connection with this Escrow Agreement except for
the reimbursement of any and all out-of-pocket expenses incurred by the Escrow
Agent in connection with the performance of its services hereunder.
18. All notices and other communications provided for herein shall be
in writing and shall be delivered personally or sent by registered or certified
mail, return receipt requested, postage prepaid, or overnight air courier
guaranteeing next day delivery:
(a) If to Rick's:
Rick's Cabaret International Inc.
Mr. Eric Langan, President
505 North Belt, Suite 630
Houston, Texas 77060
Fax: (281) 820 1445
With a copy to:
Robert D. Axelrod
Axelrod, Smith & Kirshbaum
5300 Memorial Drive, Suite 700
Houston, Texas 77007
Fax: (713) 552-0202
(b) If to Voice Media to:
Voice Media, Inc.
Ron Levi, President
2533 North Carson Street, Suite 1091
Carson City, Nevada 89706
Fax: (702) 883-2384
With copies to:
Howard Rosoff
Rosoff, Schiffres & Barta
Suite 1450
11755 Wilshire Blvd.
Los Angeles, California 90025
Fax: (310) 478-1439
Guy Mizrachi
c/o National Telemedia Corporation
5000 North Parkway Calabasas, Suite 205
Calabasas, California 91302
Fax: (818) 591-3434
(c) If to Escrow Agent to:
Robert D. Axelrod, P.C.
c/o Axelrod, Smith & Kirshbaum
5300 Memorial Drive, Suite 700
Houston, Texas 77007
ESCROW AGREEMENT - PAGE 6
All notices and communications shall be deemed to have been duly given: at the
time delivered by hand, if personally delivered; three days after being
deposited in the mail, postage prepaid, sent certified mail, return receipt
requested, if mailed; and the next day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next day delivery. If a notice or
communication is mailed in the manner provided above within the time prescribed,
it is duly given, whether or not the addressee receives it.
19. This Escrow Agreement shall be construed according to the laws of
the State of Texas and the Parties submit themselves to the exclusive
jurisdiction of the courts of the State of Texas in the event of any dispute.
20. This Escrow Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
taken together shall be deemed to constitute one and the same.
21. The Escrow Agent and any stockholder, director, officer, partner or
employee of the Escrow Agent may have a pecuniary interest in any transaction in
which the Parties may be interested, or contract with or lend money to or
otherwise act as fully and freely as though it were not Escrow Agent under this
Agreement. In other words, this Escrow Agreement shall not prevent the Escrow
Agent from performing any other activity which it would normally perform.
Additionally, nothing herein shall preclude the Escrow Agent from acting in any
other capacity for either of the Parties. SPECIFICALLY, THE PARTIES EXPRESSLY
ACKNOWLEDGE AND AGREE THAT THE ESCROW AGENT AND EMPLOYEES OF THE ESCROW AGENT
SERVE AS LEGAL COUNSEL TO RICK'S. THE PARTIES EXPRESSLY WAIVE ANY CONFLICT OF
INTEREST WHICH MAY ARISE FROM SUCH LEGAL REPRESENTATION AND SERVING AS ESCROW
AGENT HEREUNDER. FURTHER, THE SHAREHOLDER EXPRESSLY AGREES THAT SERVING AS
ESCROW AGENT WILL IN NO WAY PRECLUDE ESCROW AGENT OR ANY EMPLOYEE OR PARTNER OF
ESCROW AGENT FROM CONTINUING TO SERVE AS LEGAL COUNSEL TO RICK'S.
[SIGNATURES ON FOLLOWING PAGE]
ESCROW AGREEMENT - PAGE 7
IN WITNESS WHEREOF, the Parties hereto have executed this Escrow Agreement
effective as of the day and year first above written.
RICK'S CABARET INTERNATIONAL, INC.
By: /s/ Eric Langan
Eric Langan, President
SHAREHOLDER:
VOICE MEDIA, INC.
By: /s/ Ron Levi
Ron Levi, President
ROBERT D. AXELROD, P.C., AS THE ESCROW AGENT
By: /s/ Robert D. Axelrod
Robert D. Axelrod, President
ESCROW AGREEMENT - PAGE 8