form8k.htm
Securities
and Exchange Commission
Washington,
D.C. 20549
FORM
8-K
Current
Report
Pursuant
To Section 13 or 15(d) Of
The
Securities Exchange Act of 1934
Date of
Report: April 15, 2008
RICK'S
CABARET INTERNATIONAL, INC.
(Exact Name of Registrant As
Specified in Its Charter)
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Texas
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0-26958
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76-0037324
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(State
Or Other Jurisdiction of Incorporation)
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(Commission
File Number)
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(IRS
Employer Identification No.)
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10959
Cutten Road
Houston,
Texas 77066
(Address
Of Principal Executive Offices, Including Zip Code)
(281)
397-6730
(Issuer’s Telephone Number, Including Area Code)
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ITEM
2.01
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COMPLETION
OF ACQUISITION OR DISPOSITION OF
ASSETS.
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On April
15, 2008, our wholly owned subsidiary, RCI Entertainment (Media Holdings), Inc.,
a Texas corporation (“RCI Media”), acquired 100% of the issued and outstanding
common stock (the “ED Stock”) of ED Publications, Inc., a Texas corporation
(“ED”), 100% of the issued and outstanding common stock (the “TEEZE Stock”) of
TEEZE International, Inc., a Delaware corporation (“TEEZE”) and 100% of the
issued and outstanding membership interest (the “Membership
Interest”) of Adult Store RCI Media Magazine, LLC, a Georgia limited liability
company (the “Acquisition”).
ED Publications,
Inc.
Under the
terms of a Purchase Agreement between Don Waitt (“Waitt”), RCI Media and Rick’s
Cabaret International, Inc. (“Rick’s”) dated April 15, 2008 (the “ED Purchase
Agreement”), we agreed to pay Waitt the following consideration for the purchase
of the ED Stock:
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(i)
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$300,000
cash at closing;
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(ii)
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$200,000
cash payable in 6 months; and
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(iii)
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The
issuance of 8,696 shares of restricted common stock valued at $23.00 per
share (the “Closing Shares”).
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Additionally,
during the three (3) year period following the Closing Date (the “Earn Out
Period”), Waitt shall be entitled to earn additional consideration (the
“Additional Consideration”) of up to $2,000,000 (the “Maximum Amount”)
consisting of $500,000 cash (the Cash”) and 65,217 shares of restricted common
stock valued at $23.00 per share (the “Earn Out Shares”), based upon the
earnings before income tax, depreciation and amortization (“EBITDA”) of RCI
Media. RCI Media will pay the Maximum Amount of the Additional
Consideration to the Seller if RCI Media’s EBITDA during the three (3) year
period following the Closing Date totals an aggregate of
$2,400,000. At the end of each twelve (12) month period after the
Closing Date, RCI Media shall determine its EBITDA and shall pay to Waitt any
such portion of the Additional Consideration as has been earned. The
Closing Shares and Earn Out Shares are collectively referred to as the “Rick’s
Shares”). A copy of the ED Purchase Agreement is attached hereto as
Exhibit 10.1.
At
Closing, Waitt entered into a Lock-Up/Leak-Out Agreement with Waitt pursuant to
which on or after one year after the closing date with respect to the Closing
Shares, or on or after seven (7) months from the date of issuance with respect
to the Earn Out Shares, if any, Waitt shall have the right, but not the
obligation to have Rick’s purchase from Waitt 5,000 Rick’s Shares per month (the
“Monthly Shares”), calculated at a price per share equal to $23.00 per share
(“Value of the Rick’s Shares”) until Waitt has received an aggregate of
$1,700,000 (i) from the sale of the Rick’s Shares sold in the open market or in
a private transaction or otherwise, and (ii) the payment of any deficiency (as
defined in the ED Purchase Agreement) by Rick’s. At our election
during any given month, we may either buy the Monthly Shares or, if we elect not
to buy the Monthly Shares from Waitt, then Waitt shall sell the Monthly Shares
in the open market. Any deficiency between the amount which Waitt
receives from the sale of the Monthly Shares and the Value of the Rick’s Shares
shall be paid by us within three (3) business days of the date of sale of the
Monthly Shares during that particular month. Our obligation to
purchase the Monthly Shares from Waitt shall terminate and cease at such time as
Waitt has received an aggregate total of $1,700,000 from the sale of the Rick’s
Shares and any deficiency (as defined in the ED Purchase
Agreement). A copy of the Lock-Up/Leak-Out Agreement with Waitt is
attached hereto as Exhibit 10.2.
At
Closing, Waitt also entered a three (3) year Employment Agreement with RCI Media
(the “Employment Agreement”) pursuant to which he will serve as
President. The Employment Agreement extends through April 15, 2011,
and provides for an annual base salary of $250,000. Pursuant to the Employment
Agreement, Mr. Waitt is also eligible to participate in all benefit plans
maintained by us for salaried employees. Under the terms of the Employment
Agreement, Mr. Waitt is bound to a confidentiality provision and cannot compete
with us upon the expiration of the Employment Agreement. A copy of
the Employment Agreement is attached hereto as Exhibit 10.3.
TEEZE/Adult Store RCI
Media
Under the
terms of a Purchase Agreement between John Cornetta (“Cornetta”), Waitt
(“Waitt”), RCI Media and Rick’s dated April 15, 2008 (the “TEEZE/ASB Purchase
Agreement”), we agreed to pay the following consideration to Cornetta and Waitt
for the purchase of the TEEZE Stock and the Membership Interest:
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(i)
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an
aggregate of $200,000 cash at closing;
and
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(ii)
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the
issuance of 6,522 shares of restricted common stock to each of Messrs.
Waitt and Cornetta, for an aggregate of 13,044 shares of restricted common
stock to be valued at $23.00 per share (the “Rick’s TEEZE
Shares”).
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Pursuant
to the TEEZE/ASB Purchase Agreement, on or after one year after the closing
date, each of Messrs. Waitt and Cornetta shall have the right, but not the
obligation to have Rick’s purchase the Rick’s TEEZE Shares calculated at a price
per share equal to $23.00 per share (“Value of the Rick’s TEEZE Shares”) until
Messrs. Waitt and Cornetta have each received $150,000 (i) from the sale of the
Rick’s TEEZE Shares sold by them, 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 defined in the TEEZE/ASB Purchase Agreement) by
Rick’s. At our election during any given month, we may either buy the
Rick’s TEEZE Shares or, if we elect not to buy the Rick’s TEEZE Shares, then
Cornetta and/or Waitt shall sell the Rick’s TEEZE Shares in the open
market. Any deficiency between the amount which Cornetta or Waitt
receives from the sale of the Rick’s TEEZE Shares and the Value of the Rick’s
TEEZE Shares shall be paid by us within three (3) business days of the date of
sale of the Rick’s TEEZE Shares during that particular month. Our
obligation to purchase the Rick’s TEEZE Shares shall terminate and cease at such
time as Waitt and Cornetta have each received $150,000 from the sale of the
Rick’s TEEZE Shares and any deficiency. A copy of the TEEZE/ASB
Purchase Agreement is attached hereto as Exhibit 10.4.
At
Closing, Cornetta entered a five year Non-Competition Agreement with us pursuant
to which he agreed not to compete with us either directly or indirectly with
TEEZE, ASB, RCI Media, Rick’s or any of their affiliates by publishing any
sexually oriented industry trade print publications, with the exception of a
publication known as “Xcitement” which is currently owned and operated by
Cornetta. A copy of the Non-Competition Agreement with Cornetta is
attached hereto as Exhibit 10.5.
A copy of
the press release related to this transaction is attached hereto as Exhibit
99.1.
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ITEM
9.01
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FINANCIAL
STATEMENTS AND EXHIBITS
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(c)
Exhibits
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Purchase
Agreement between Don Waitt, ED Publications, Inc., Rick’s Cabaret
International, Inc. and RCI Entertainment (Media Holdings), Inc. dated
April 15, 2008
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Lock-Up/Leak-Out
Agreement with Don Waitt dated April 15,
2008
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Employment
Agreement with Don Waitt dated April 15,
2008
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Purchase
Agreement between John Cornetta, Don Waitt, TEEZE International, Inc.,
Adult Store Buyer Magazine, LLC, Rick’s Cabaret International,
Inc. and RCI Entertainment (Media Holdings), Inc. dated April 15,
2008
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Non-Competition
Agreement with John Cornetta dated April 15,
2008
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Press
release dated April 16, 2008
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report on Form 8-K to be signed on its behalf by the
undersigned hereunto duly authorized.
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RICK'S
CABARET INTERNATIONAL, INC.
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By:
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/s/ Eric
Langan
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Date:
April 18, 2008
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Eric
Langan
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President
and Chief Executive Officer
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