Earnest Money Contract [Amendment No. 2] - Larry A. Holmberg, Amusement Center Inc., Buns & Roses II, Rick's Cabaret International Inc. and RCI Entertainment (Minnesota) Inc.
SECOND AMENDMENT TO ASSET PURCHASE AGREEMENT
AND TO EARNEST MONEY CONTRACT
The parties to this Second Amendment to Asset Purchase Agreement and to
Earnest Money Contract (the "Second Amendment") made this 31st day of October,
1997, are as follows:
LARRY A. HOLMBERG ("Holmberg" or "Seller"); AMUSEMENT CENTER, INC., a
Minnesota Corporation ("Amusement Center" and collectively referred to as
"Seller" with Buns & Roses II, Inc., under the Asset Purchase Agreement); BUNS &
ROSES II, INC., a Minnesota Corporation ("B&RII" and collectively referred to as
"Seller" with Amusement Center, Inc., in the Asset Purchase Agreement): RICK'S
CABARET INTERNATIONAL, INC., a Texas Corporation ("Rick's Cabaret"); and RCI
ENTERTAINMENT (MINNESOTA), INC., a Minnesota Corporation ("RCI"), a wholly owned
subsidiary of Rick's Cabaret International, Inc., and its designee to acquire
all of the assets under the Asset Purchase Agreement and Earnest Money Contract.
WHEREAS, the various parties have entered into a certain Asset Purchase
Agreement dated the 24th day of December, 1996 ("Asset Purchase Agreement"), and
a certain Earnest Money Contract dated the 24th day of December, 1996 ("Earnest
Money Contract"); and
WHEREAS, the various parties entered into an Amendment to the Asset
Purchase Agreement and to the Earnest Money Contract dated the 4th day of
August, 1997 ("First Amendment"); and
WHEREAS, the parties contemplated a combined closing under those
Agreements, as amended, on or about October 31, 1997, which combined closing did
not occur; and
WHEREAS, the parties desire to further amend the Asset Purchase
Agreement and the Earnest Money Contract to provide for the subsequent combined
closing and for the other changes as referred to herein.
NOW, THEREFORE, in consideration of promises and mutual covenants
contained herein, the parties agree as follows:
1. SCOPE OF SECOND AMENDMENT. All of the terms and conditions of the
original Asset Purchase Agreement and Earnest Money Contract, as amended
pursuant to the First Amendment, shall be in full force and effect unless
amended and changed by this Second Amendment. This Second Amendment shall
supersede and replace the terms of the Asset Purchase Agreement and Earnest
Money Contract, as amended by the First Amendment, to the extent contemplated
and so amended hereby.
2. MODIFICATION OF PROMISSORY NOTES. The $500,000 Mortgage Promissory
Note in the form attached to the Asset Purchase Agreement and the $2,000,000
Promissory Note in the form attached to the Asset Purchase Agreement
(collectively the "Long Term Notes"), both as
<PAGE>
contemplated by the terms of the Asset Purchase Agreement and the Earnest Money
Contract are hereby modified to provide that the first payment due under the
Long Term Notes shall be due on April 1, 1998 and, thereafter, shall be due
pursuant to the terms and conditions as contemplated in the Asset Purchase
Agreement and Earnest Money Contract. The interest accrued on the Long Term
Notes from the date of Closing (as set forth herein) until April 1, 1998, shall
be added to the principal amount of the Long Term Notes and will be amortized
over the term of the Long Term Notes.
3. AMENDMENT TO GUARANTY. The Guaranty referred to in Section 2.c. of
the Earnest Money Contract, as reflected in the form attached thereto, as
Exhibit F, shall be and is hereby amended to provide that in the event that the
existing litigation filed by Robert W. Sabes and Classic Affairs, Inc., or if
any other action is filed by Sabes or by any related party against Rick's
Cabaret or any of its subsidiaries or its officers, directors or employees,
including specifically, Robert L. Watters, (hereinafter collectively referred to
as "Rick's") results in any injunctive relief or prohibitive relief granted to
Sabes against Rick's, then the Guaranty will be terminated and of no force and
effect and the obligations of Rick's Cabaret with respect to the Long Term Notes
will be extinguished, provided however, that if any liens attach to the Property
(as defined in the Earnest Money Contract) as a result of improvements made by
Rick's Cabaret or RCI to the Property subsequent to the Closing Date that Rick's
Cabaret will continue to be obligated to repay only those existing liens.
4. ISSUANCE OF ADDITIONAL COMMON STOCK. As consideration for entering
into this Second Amendment, Rick's Cabaret hereby agrees to cause to be issued
upon the execution of this Second Amendment 10,000 shares of restricted common
stock of Rick's Cabaret International, Inc. ("Common Stock"), registered in the
name of Holmberg. The Common Stock to be issued pursuant to this Second
Amendment shall have the same registration rights as provided for the 80,000
shares of Common Stock contemplated to be issued at Closing to Holmberg pursuant
to the First Amendment. Holmberg shall be entitled to retain the 10,000 shares
of Common Stock regardless of whether the transactions contemplated by the Asset
Purchase Agreement and Earnest Money Contract are consummated on the Closing
Date, provided, however, that in the event that the Asset Purchase Agreement and
Earnest Money Contract do not close and no further shares are issued to
Holmberg, then the registration rights as provided by the First Amendment will
terminate.
5. CLOSING. The Closing of the transactions provided for in the Asset
Purchase Agreement and Earnest Money Contract, both as amended pursuant to the
First Amendment and this Second Amendment (the "Closing") shall be held at the
offices of Messerli & Kramer, P.A., 1800 Fifth Street Towers, Minneapolis,
Minnesota 55402, commencing at 10:00 a.m. Central Daylight Time on January 5,
1998. The day on which the Closing occurs is referred to in the Asset Purchase
Agreement and the Earnest Money Contract as the "Closing Date".
6. EXECUTION IN COUNTERPART. This Second Amendment may be executed in
any number of counterparts, which taken together shall constitute one and the
same instrument and each of which shall be considered an original for all
purposes.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
these Amendments as of the date first above written.
AMUSEMENT CENTER, INC. RICK'S CABARET INTERNATIONAL, INC.
By: /s/ LARRY HOLMBERG By: /s/ ROBERT L. WATTERS
-------------------------------- --------------------------------
Larry A. Holmberg, President Robert L. Watters, President
BUNS & ROSES, INC. RCI ENTERTAINMENT (MINNESOTA), INC.
By: /s/ LARRY HOLMBERG By: /s/ ROBERT L. WATTERS
-------------------------------- --------------------------------
Larry A. Holmberg, President Robert L. Watters, President
/s/ LARRY HOLMBERG
-----------------------------------
Larry A. Holmberg, Individually