Exhibit 10.5


 


EXECUTION COPY


 


RESTRICTIVE CONVENANT- COVENANT NOT TO COMPETE


 


This agreement is made on 10/29,
2007 between Gregory Kenwood Gaines, (“selling Equityholder”) and VCG Holding
Corp. (“Purchaser”), collectively referred to as the “Parties”.


 


Recitals


 


This Agreement is made
reference to the following facts, circumstances, and objectives:


 


A.                                 Gregory
Kenwood Gaines has been associated with a certain adult business as shareholder
know as Platinum Plus, located in Hialeah, Florida.


 


B.                                   Gregory
Kenwood Gaines as owner of all (or substantially all) of the issued and
outstanding shares of the capital common stock of Kenja, II, Inc., a Florida
Corporations and Kenja Ventures, Inc., a Florida Corporation, has agreed that
Company shall sell to Purchaser all the interest of the business operated under
the name of Platinum Plus (the “Business”) at 7565 W. 20th Avenue,
Hialeah, Florida, 33014, (the “location”).


 


C.                                   The
Parties have consented that to enable Purchaser to conduct a profitable
business, it would be of genuine and material consideration to Purchaser for
Selling Equityholder to agree that he shall not directly or indirectly engage
in a Competing Business for a Reasonable Period of Time within a Geographic
Area determined by the Parties to be the market area of Company, in which such
good will may exist.


 


D.                                  As
additional consideration for this Agreement, Purchaser, including its
subsidiaries and affiliates have agreed not to compete with Selling
Equityholder in certain markets.


 


E.                                    The
Parties have determined that such an Agreement would not be prohibited or void
under the law because its only objective is to protect the value of each others
business, including those purchased for valuable consideration and good faith
and without any intent to establish a monopoly.


 


Agreement


 


1.                                                               Definitions.


 


1.1                                                         Competing
Business. Any business, trade, or operation similar to Business.


 


1.2                                                         Reasonable
Period of Time. A period of time commencing on the closing date and
terminating three (3) years after the Effective Date.


 


(INITIALED:
MO, KW)     


 


1.3                                                         Determined
Geographic Area. A radius of 50 miles from the Location and as set forth
below.


 


1.4                                                         Effective
Date. 10/29, 2007


 

















 


2.                                                               Covenant
Not to Compete. Seller Equityholder shall not, directly or indirectly, or
through agent compete with the Buyer, for a period of 5 years and a radius of
50 miles from the Location.


 


In addition, in order to
induce Seller to enter into the Purchase and Sale agreement, VCG agrees not to
compete with Seller Equityholder for a period of three years in any area within
50 miles of any existing businesses of Seller Equityholder or in any market
which Seller Equityholder has a controlling interest, except for Maine. A
listing of all such businesses is attached as Addendum A to this Agreement. Seller
Equityholder has granted VCG a first right of refusal on the sale of such
businesses as consideration for this provision.


 


3.                                                               Consideration.
The Consideration is set forth in a purchase agreement dated this same date and
as set forth in this Agreement.


 


4.                                                               Default.
The Parties agree that a breach of the Covenant could cause economic harm to
the other which may be difficult to precisely measure in terms of money
damages. To protect and enable each party to fully realize the benefit of the
business and good will being acquired, each party agrees that in the event of a
breach in the Covenant either party may proceed in the circuit court or any
other tribunal having equitable jurisdiction over the other party to obtain any
appropriate equitable remedies, including, but not limited to, ex parte
restraining orders and injunctive orders during litigation and following
judgment; in addition to all other remedies provided by law or in equity for
the breach of the Covenant.


 


5.                                                               Notice.
All notices and payments given under this Covenant shall be either personally
delivered or mailed by first-class mail, postage prepaid, addressed to the
Respective parties at all addresses set forth in the notice provision of the
Purchase Agreement, or to any other address that each Party may designate in
writing in conformance with the terms of this paragraph.


 


6.                                                               Miscellaneous.


 


6.1                                                         Entire
Agreement. This Agreement sets forth the entire understanding of the
Parties.


 


6.2                                                         Amendment.
This Agreement may not be changed except by a written document executed by the
Parties. This agreement shall be interpreted in accordance with the law of the
state in which enforcement is sought.


 


(INITIALED: MO, KW)


 


6.3                                                         Binding
Effect. This Agreement shall be binding on and inure to the benefit of the
Parties and their respective heirs, successors, administrators, personal
representatives, and assigns.


 


The Parties
have executed this Agreement on the dates set forth below. This Agreement is
effective as of the Effective Date.


 


	
   

  	
  Landlord’s Initials 

  	
  KW

  
	
   

  	
   

  
	
   

  	
  Tenant’s Initials 

  	
  MO

  



 

















 


	
   

  	
  PURCHASER

  
	
   

  	
   

  
	
  Dated: 

  	
  10/29/07

  	
   

  	
  By:

  	
  /s/ Micheal
  L. Ocello

  	
   

  
	
   

  	
  VCG
  HOLDING CORP.

  
	
   

  	
  By:
  President

  
	
   

  	
  Its:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GREGORY
  KENWOOD GAINES

  
	
   

  	
   

  
	
  Dated: 

  	
  10/29/07

  	
   

  	
  By:

  	
  /s/ G.
  Kenwood Gaines

  	
   

  
							



 


 


(INITIALED: KW)


 

















 


EXECUTION
COPY


 


ADDENDUM A


 


For Seller Equityholder


 


Greenville, South Carolina   /s/
MO


 


Columbia, South Carolina   /s/ KW


 


(INITIALED: KW)


 


	
   

  	
  Landlord’s Initials 

  	
  KW

  
	
   

  	
   

  
	
   

  	
  Tenant’s Initials 

  	
  MO