Purchase Agreement between Don Waitt, ED Publications, Inc., Ricks Cabaret International, Inc. and RCI Entertainment (Media Holdings), Inc. dated April 15, 2008

EX-10.1 2 ex10_1.htm EXHIBIT 10.1 ex10_1.htm

EXHIBIT 10.1

PURCHASE AGREEMENT

This Purchase Agreement (the “Agreement”) is made and entered into this 15th day of April, 2008, by and among Don Waitt (“Waitt” or “Seller”), ED Publications, Inc., a Texas corporation (“ED” or the “Company”) and Rick’s Cabaret International, Inc., a Texas corporation (“Rick’s”), and its wholly owned subsidiary, RCI Entertainment (Media Holdings), Inc., a Texas corporation (the “Buyer”).

WHEREAS, Seller owns 100% of the issued and outstanding common stock of the Company (the “ED Stock”); and

WHEREAS, the Company owns and operates the publications listed on Exhibit “A” (the “Publications”); and

WHEREAS, the Company owns the rights to the trade show commonly known as Exotic Dancer Gentlemen’s Club Owners Expo (hereinafter referred to as the “Exotic Dancer Trade Show”); and

WHEREAS, the Seller desires to sell 100% of the issued and outstanding ED Stock to Buyer on the terms and conditions set forth herein; and

WHEREAS, Buyer desires to purchase 100% of the issued and outstanding ED Stock from Seller on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the premises, the mutual covenants and agreements and the respective representations and warranties herein contained, and on the terms and subject to the conditions herein set forth, the parties hereto, intending to be legally bound, hereby agree as follows:

ARTICLE I

PURCHASE AND SALE OF THE ED STOCK

AND EXOTIC DANCER TRADE SHOW

Section 1.1 Sale of the ED Stock. Subject to the terms and conditions set forth in this Agreement, on the Closing Date (as hereinafter defined) Seller hereby agrees to sell, transfer, convey and deliver to Buyer 1,000 shares of the Company which represents 100% of the issued and outstanding common stock of the Company free and clear of all encumbrances, and shall deliver to Buyer certificates representing the ED Stock, duly endorsed to Buyer or accompanied by duly executed stock powers in form and substance satisfactory to Buyer.

Section 1.2 Conveyance of Rights to Exotic Dancer Trade Show. Subject to the terms and conditions set forth in this Agreement, at the Closing (as hereinafter defined), the Company hereby agrees that it has all rights, agreements and contracts to the Exotic Dancer Trade Show and by the conveyance of the ED Stock to Buyer that the Company is transferring, conveying and delivering to Buyer all rights in and to the Exotic Dancer Trade Show.

Section 1.3 Purchase Price for the ED Stock. As consideration for the purchase of the ED Stock, Buyer shall pay to Seller as follows:

(a)

Payment at the Closing or six months after Closing:

(i)

$300,000 by cashier’s check, certified funds or wire transfer at Closing;

(ii)

$200,000 by cashier’s check, certified funds or wire transfer payable six (6) months after Closing; and

(iii)

8,696 shares of restricted common stock of Rick’s at Closing.

(b)

Earn Out Payment:

During the three (3) year period following the Closing Date (the “Earn Out Period”), the Seller shall be entitled to earn additional consideration (the “Additional Consideration”) up to a maximum amount of $2,000,000 (the “Maximum Amount”), consisting of $500,000 cash (the “Cash”) and 65,217 shares of restricted common stock of Rick’s valued at $23.00 per share (the “Earn Out Shares”), based upon the earnings before income tax, depreciation and amortization (“EBITDA”) of the Buyer. Buyer will pay the Maximum Amount of the Additional Consideration to Seller, if the Buyer’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 (each such period hereinafter referred to as a “Twelve Month Anniversary”), the Buyer shall determine its EBITDA based upon the financial statements of the Buyer for such Twelve Month Anniversary. In the event that there is EBITDA during that Twelve Month Anniversary, then the Seller shall be entitled to receive a percentage of the Additional Consideration, up to the Maximum Amount of $2,000,000, based upon the following formula: the amount of EBITDA during such Twelve Month Anniversary divided by $2,400,000, to be paid 25% in Cash and 75% in the Earn Out Shares. By way of illustration only, if the EBITDA of the Buyer during the first Twelve Month Anniversary is $1,200,000, then Buyer shall be entitled to Additional Consideration of $1,000,000, payable $250,000 in cash and 32,609 Earn Out Shares. The Earn Out Period shall terminate three (3) years after the Closing Date. In no event shall the Seller be entitled to any Additional Consideration in excess of the Maximum Amount.

The shares of common stock issued to the Seller at Closing and the Earn Out Shares, if any, issued to the Seller are hereinafter collectively referred to as the “Rick’s Transaction Shares.”

Section 1.4 Right of Seller to “Put” Rick’s Transaction Shares.

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(a)

On or after one (1) year from the date of Closing, or with respect to the Earn Out Shares, if any, on or after seven (7) months from the date of issuance by Rick’s of the Earn Out Shares, the Seller shall have the right, but not the obligation, to have Rick’s purchase from the Seller 5,000 Rick’s Transaction Shares per month (the “Monthly Shares”) calculated at a price per share equal to $23.00 per share (“Value of the Shares”) until the Seller has received an aggregate of $1,700,000 (i) from the sale of the Rick’s Transaction Shares sold by Seller, 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 hereinafter defined) by Rick’s. The Seller shall notify Rick’s during any given month of the Seller’s election to “Put” the Monthly Shares to Rick’s during that particular month and Rick’s shall have three (3) business days to elect to buy the Monthly Shares or instruct the Seller to sell the Monthly Shares in the open market. At Rick’s election, during any given month, it may either buy the Monthly Shares or if Rick’s elects not to buy the Monthly Shares from Seller, then Seller may sell the Monthly Shares in the open market and any deficiency between the amount which Seller receives from the sale of the Monthly Shares and the Value of the Rick’s Shares (the “Deficiency”) shall be paid by Rick’s within three (3) business days after receipt of written notice from the Seller of the sale of the Monthly Shares which shall provide the written sales confirmation in the amount of the Deficiency. Rick’s obligation under this Section 1.4 to purchase any of the Rick’s Transaction Shares from the Seller shall terminate and cease at such time as the Seller has received an aggregate of $1,700,000 (assuming all Earn Out Shares have been issued) from (i) the sale of the Rick’s Transaction Shares, 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 by Rick’s. The Seller agrees to provide monthly statements to Rick’s as to the total number of Rick’s Transaction Shares which Seller sold and the amount of proceeds derived therefrom. Nothing contained in this Section 1.4 shall limit or preclude the Seller from selling his Rick’s Transaction Shares in the open market or require the Seller to “Put” his Rick’s Transaction Shares to Rick’s during any given month. In the event that Seller elects to sell his Rick’s Transaction Shares pursuant to this Section 1.4 and any amount sold at prices less than $23.00 per share shall be deemed to be sold at $23.00 per share for purposes of this Section 1.4.

(b)

By entering into this Agreement, Rick’s agrees to collateralize its obligations under Section 1.3(a)(ii) and Section 1.4(a) above by placing the ED Stock as collateral for the payment of its obligations due under Section 1.3(a)(ii) and for any Deficiency which it is obligated to pay the Seller pursuant to Section 1.4(a) above. In the event that (1) Rick’s fails to pay its obligations due under Section 1.3(a)(ii) or (2) fails to pay the Deficiency, then the Seller shall provide written notice to Rick’s of such failure to make such payment (the “Deficiency Notice”). If Rick’s fails to pay the sum due pursuant to Section 1.3(a)(ii) or the Deficiency to Seller within ten (10) business days of receipt of the Deficiency Notice then the Seller may foreclose upon the collateral and take possession of the ED Stock.

(c)

Seller and Rick’s will enter into an agreement which will provide that in the event that the Seller elects not to “Put” the Rick’s Shares to Rick’s as set forth in Section 1.4(a) above, that Sellers will not sell more than 10,000 Rick’s Transaction Shares in any 30-day period and no more than 70,000 Rick’s Transaction Shares in any 90-day period.

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ARTICLE II

CLOSING

Section 2.1 The Closing. The closing of the transactions provided for in this Agreement shall take place on or before April ___, 2008 (the “Closing Date”), or at such other time and place as agreed upon in writing among the parties hereto (the “Closing”). The parties have agreed further to close at the corporate office of Rick’s located at 10959 Cutten Road, Houston, Texas 77066.

Section 2.2 Delivery and Execution. At the Closing: (a) the Seller shall deliver to Buyer certificates evidencing the ED Stock, free and clear of any liens, claims, equities, charges, options, rights of first refusal or encumbrances, duly endorsed to Buyer or accompanied by duly executed stock powers in form and substance satisfactory to Buyer against delivery by Buyer to the Seller of payment in an amount equal to the Purchase Price set forth in Section 1.3(a); and (b) the Related Transactions (as defined below) shall be consummated concurrently with the Closing.

Section 2.3 Related Transactions. At Closing:

(a)

the Seller will enter into a five (5) year covenant not to compete pursuant to the terms of which the Seller will agree not to compete, either directly or indirectly, with ED, Rick’s or Buyer or any of its affiliates by publishing any sexually oriented industry publications; and

(b)

the Seller and Buyer will enter into a three (3) year Employment Agreement with an annual salary of $250,000.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

OF THE SELLER AND ED

The Seller and ED, jointly and severally, hereby represent and warrant to the Buyer as follows:

Section 3.1 Organization, Good Standing and Qualification.

(a)

ED (i) is duly organized, validly existing and in good standing under the laws of the state of Texas, (ii) ED has the requisite power and authority to own, operate and lease its properties and to carry on its business, and (iii) ED is duly qualified to transact business and is in good standing in all jurisdictions where its ownership, lease or operation of property or the conduct of its business requires such qualification, except where the failure to do so would not have a material adverse effect to the Seller or ED, respectively.

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(b)

The authorized capital of ED consists of 1,000 shares of common stock, all of which are validly issued and outstanding to the Seller. There is no other class of capital authorized or issued by ED. All of the issued and outstanding ED Stock are owned by the Seller and are fully paid and non-assessable. None of the shares of ED Stock issued are in violation of any preemptive rights. ED has no obligation to repurchase, reacquire, or redeem any of its outstanding common stock. There are no outstanding securities convertible into or evidencing the right to purchase or subscribe for any common stock of ED, there are no outstanding or authorized options, warrants, calls, subscriptions, rights, commitments or any other agreements of any character obligating ED to issue any common stock or any securities convertible into or evidencing the right to purchase or subscribe for any common stock, and there are no agreements or understandings with respect to the voting, sale, transfer or registration of any common stock of ED.

Section 3.2 Ownership of the ED Stock. The Seller owns, beneficially and of record, all of the ED Stock free and clear of any liens, claims, equities, charges, options, rights of first refusal, or encumbrances. The Seller has the unrestricted right and power to transfer, convey and deliver full ownership of the ED Stock without the consent or agreement of any other person and without any designation, declaration or filing with any governmental authority. Upon the transfer of the ED Stock to Buyer as contemplated herein, Buyer will receive good and valid title thereto, free and clear of any liens, claims, equities, charges, options, rights of first refusal, encumbrances or other restrictions (except those imposed by applicable securities laws).

Section 3.3 Authorization. ED has all requisite corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder and to consummate the transactions contemplated hereby. All action on the part of ED necessary for the authorization, execution, delivery and performance of this Agreement and all documents related to consummate the transactions contemplated herein have been taken or will be taken prior to the Closing Date by ED. This Agreement, when duly executed and delivered in accordance with its terms, will constitute legal, valid and binding obligations of ED enforceable against them in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization and other similar laws of general application affecting creditors’ rights generally or by general equitable principles.

The Seller represents that he is a person of full age of majority, with full power, capacity, and authority to enter into this Agreement and perform the obligations contemplated hereby by and for himself and his spouse (if applicable). All action on the part of the Seller necessary for the authorization, execution, delivery and performance of this Agreement by him has been taken and will be taken prior to Closing Date. This Agreement, when duly executed and delivered in accordance with its terms, will constitute legal, valid and binding obligations of the Seller enforceable against him in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization and other similar laws of general application affecting creditors’ rights generally or by general equitable principles.

Section 3.4 Consents. No consent of, approval by, order or authorization of, or registration, declaration or filing by ED or the Seller with any court or any governmental or regulatory agency or authority having jurisdiction over the ED, or any of their respective property or assets is required on the part of ED or the Sellers (a) in connection with the consummation of the transactions contemplated by this Agreement or (b) as a condition to the legality, validity or enforceability as against ED of this Agreement, excluding any registration, declaration or filing, the failure to effect which would not have a material adverse effect on the financial condition of ED.

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Section 3.5 Acquisition of Stock for Investment. The Seller understands that any issuance of the Rick’s Transaction Shares will not have been registered under the Securities Act of 1933, as amended (the “Act”), or any state securities acts, and accordingly, are restricted securities, and the Seller represents and warrants to the Buyer that the present intention of the Seller is to receive and hold the Rick’s Transaction Shares for investment only and not with a view to the distribution or resale thereof.

Additionally, the Seller understand that any sale of any the Rick’s Transaction Shares issued, under current law, will require either (a) the registration of the Rick’s Transaction Shares under the Act and applicable state securities acts; (b) compliance with Rule 144 of the Act; or (c) the availability of an exemption from the registration requirements of the Act and applicable state securities acts.

To assist in implementing the above provisions, the Seller hereby consents to the placement of the legend, or a substantially similar legend, set forth below, on all certificates representing ownership of the Rick’s Transaction Shares acquired hereby until the Rick’s shares have been sold, transferred, or otherwise disposed of, pursuant to the requirements hereof. The legend shall read substantially as follows:

“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES ACTS. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT, ARE RESTRICTED AS TO TRANSFERABILITY, AND MAY NOT BE SOLD, HYPOTHECATED, OR OTHERWISE TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION AND QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREFROM.”

Section 3.6 Access to Information. The Seller hereby confirms and represents that he (a) has received a copy of Rick’s Form 10-KSB filed with the Securities and Exchange Commission (the “SEC”) for the year ended September 30, 2007, and a copy of Rick’s Form 10-QSB for the quarter ended December 31, 2007, as filed with the SEC; (b) has received a copy of Rick’s Form 14C filed with the SEC on June 27, 2007; (c) has received a copy of the Forms 8-K filed with the SEC on February 13, 2008, March 7, 2008, April 3, 2008 and April 4, 2008, and the Forms 8-K/A filed on January 29, 2008, February 11, 2008, and March 18, 2008; (d) has been afforded the opportunity to ask questions of and receive answers from representatives of Rick’s concerning the business and financial condition, properties, operations and prospects of Rick’s; (e) has such knowledge and experience in financial and business matters so as to be capable of evaluating the relative merits and risks of the transactions contemplated hereby; (f) has had an opportunity to engage and is represented by an attorney of his choice; (g) has had an opportunity to negotiate the terms and conditions of this Agreement; (h) has been given adequate time to evaluate the merits and risks of the transactions contemplated hereby; and (i) has been provided with and given an opportunity to review all current information about Rick’s. The Seller has asked such questions to representatives of Rick’s about Rick’s as he desires to ask and all such questions have been answered to the full satisfaction of the Seller. The forms filed by Rick’s with the SEC as set forth in Section 3.6(a), (b) and (c) are hereafter collectively referred to as “SEC Reports”.

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Section 3.7 Purchase for Investment. The Seller is acquiring the Rick’s Transaction Shares for his own accounts, for investment purposes only and not with view to any public resale or other distribution thereof. The Seller represents and warrants that he is an Accredited Investor as that term is defined in Rule 501(a) of Regulation D of the Securities Act of 1933, as amended. The Seller and his respective representatives have received, or have had access to, and have had sufficient opportunity to review, all books, records, financial information and other information which the Seller considers necessary or advisable to enable him to make a decision concerning its acquisition of the Rick’s Transaction Shares, and that he possesses such knowledge and experience in financial and business matters so that he is capable of evaluating the merits and risks of his investment hereunder.

Section 3.8 No Default. ED is not (a) in violation of any provision of its Articles of Incorporation or Bylaws, (b) in default under any term or condition of any instrument evidencing, creating or securing any indebtedness of ED, and there has been no default in any material obligation to be performed by ED under any other contract, lease, agreement, commitment or undertaking to which it is a party or by which it or its assets or properties are bound, nor has ED waived any material right under any such contract, lease, agreement, commitment or undertaking.

Section 3.9 Taxes. ED has timely and accurately filed all federal, state, foreign and local tax returns and reports required to be filed prior to such dates and has timely paid all taxes shown on such returns as owed for the periods of such returns, including all sales taxes and withholding or other payroll related taxes shown on such returns and any taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, creditor or independent contractor. ED has made adequate provision for the payment of all taxes accruable for all periods ending on or before the Closing Date to any taxing authority and are not delinquent in the payment of any tax or governmental charge of any nature. No assessments or notices of deficiency or other communications have been received by ED or the Seller with respect to any tax return which has not been paid, discharged or fully reserved against and no amendments or applications for refund have been filed or are planned with respect to any such return. Neither ED nor the Seller has knowledge of any action by any taxing authority in connection with assessing additional taxes against or in respect of it for any past period. There are no agreements between ED and any taxing authority waiving or extending any statute of limitations with respect to any tax return.

Section 3.10 Financial Statements. The Seller has delivered to Buyer the financial information available relating to ED (the “Financial Information”). Such Financial Information is in accordance with the books and records of ED, and fairly represent the financial position of ED and the results of operations and changes in financial position of ED as of the dates and for the periods indicated. ED does not have, as of the date of the Financial Information, any material liability or obligation of any nature, whether absolute, accrued, continued or otherwise. As of the Closing Date, the Seller represents there have been no adverse changes in the financial condition or other operations, business, properties or assets of ED from that reflected in the latest Financial Information of ED as furnished pursuant to this Agreement.

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Section 3.11 Labor Matters. ED is not a party or otherwise subject to any collective bargaining agreement with any labor union or association. Except as noted on Exhibit 3.11, ED is not a party to any written or oral contract, agreement or understanding for the employment of any officer, director or employee of ED. ED is not a party to any employee benefits plans (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended) or any other fringe or employee benefits plan, programs or arrangements.

Section 3.12 Compliance with Laws; Permits. ED is, and at all times prior to the date hereof have been in compliance with all statutes, orders, rules, ordinances and regulations applicable to it or to the ownership of its assets or the operation of its businesses.

Section 3.13 No Conflicts. The execution and delivery by ED and the Seller of this Agreement does not, and the performance and consummation by ED and the Seller of the transactions contemplated hereby will not (i) conflict with the articles of incorporation or bylaws of ED; (ii) conflict with or result in a breach or violation of, or default under, or give rise to any right of acceleration or termination of, any of the terms, conditions or provisions of any note, bond, lease, license, agreement or other instrument or obligation to which ED is a party or by which the assets or properties of ED are bound; (iii) result in the creation of any encumbrance on any of the assets or properties of ED; or (iv) violate any law, rule, regulation or order applicable to ED or the Seller or any of the assets or properties of ED.

Section 3.14 Title to Properties; Encumbrances. ED has good and marketable title to all of the personal property and assets, that are used in the business that are material to the condition (financial or otherwise), business, operations or prospects of ED, including all Publications and the Exotic Dancer Trade Show, free and clear of all mortgages, claims, liens, security interests, charges, leases, encumbrances and other restrictions of any kind and nature, except (i) as disclosed in the Financial Statements of ED, (ii) statutory liens not yet delinquent, and (iii) such liens consisting of zoning or planning restrictions, imperfections of title, easements, pledges, charges and encumbrances, if any, as do not materially detract from the value or materially interfere with the present use of the property or assets subject thereto or affected thereby. ED does not own any real property.

Section 3.15 No Pending Transactions. Except for the transactions contemplated by this Agreement, neither ED nor the Seller is a party to or bound by or the subject of any agreement, undertaking, commitment or discussions or negotiations with any person that could result in (i) the sale, merger, consolidation or recapitalization of ED, (ii) the sale of any of the assets of ED except in the ordinary course of business, (iii) the sale of any outstanding ED Stock, (iv) the acquisition by ED of any operating business or the capital stock of any other person or entity, (v) the borrowing of money by ED, whether secured or unsecured, or (vi) any agreement with any of the respective officers, managers or affiliates of ED.

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Section 3.16 Contracts and Leases. Except as set forth in Exhibit 3.16, ED (i) does not have any leases of personal property relating to the assets of ED, whether as lessor or lessee; (ii) does not have any contractual or other obligations relating to the assets of ED, whether written or oral; and (iii) has not given any power of attorney to any person or organization for any purpose relating to the assets of ED. ED has provided Buyer access to each and every contract, lease or other document relating to the assets of ED to which they are subject or are a party or a beneficiary. To the knowledge of the Seller, such contracts, leases or other documents are valid and in full force and effect according to their terms and constitute a legal, valid and binding obligation of ED and the other respective parties thereto and are enforceable in accordance with their terms. The Seller does not have knowledge of any default or breach under such contracts, leases or other documents or of any pending or threatened claims under any such contracts, leases or other documents.

Section 3.17 [INTENTIONALLY LEFT BLANK]

Section 3.18 Books and Records. The books of account, minute books, stock record books or other records of ED that exist are accurate and complete and have been maintained in accordance with sound business practices and will be located at the offices of ED upon Closing.

Section 3.19 Insurance Policies. Copies of all insurance policies maintained by ED relating to the operation of its businesses have been delivered or made available to Buyer. The policies of insurance held by ED are in such amounts, and insure against such losses and risks, as ED reasonably deems appropriate for its property and business operations. All such insurance policies are in full force and effect, and all premiums due thereon have been paid. Valid policies for such insurance will be outstanding and duly in force at all times prior to the Closing.

Section 3.20 Pending Claims. There are no claims, suits, arbitrations, investigations, actions or other proceedings, whether judicial, administrative or otherwise, now pending or, to the best knowledge of ED or the Seller, threatened before any court, arbitration, administrative or regulatory body or any governmental agency which may result in any judgment, order, award, decree, liability or other determination which will or could reasonably be expected to have any effect upon ED, or the transfer of the ED Stock by the Seller to Buyer under this Agreement, nor is there any basis known to ED or the Seller for any such action. No litigation is pending, or, to the knowledge of ED or the Seller, threatened against ED, or the assets or properties of ED which seeks to restrain or enjoin the execution and delivery of this Agreement or any of the documents referred to herein or the consummation of any of the transactions contemplated thereby or hereby. Neither ED nor the Seller is subject to any judicial injunction or mandate or any quasi-judicial or administrative order or restriction directed to or against them which would affect ED or the ED Stock to be transferred under this Agreement.

Section 3.21 No Liabilities. As of the Closing Date, ED shall not have any obligations or liability (contingent or otherwise) to any third party.

Section 3.22 Brokerage Commission. No broker or finder has acted for the ED or the Seller in connection with this Agreement or the transactions contemplated hereby, and no person is entitled to any brokerage or finder’s fee or compensation in respect thereof based in any way on agreements, arrangements or understandings made by or on behalf of ED or the Seller.

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Section 3.23 Banks and Brokerage Accounts. Exhibit 3.23 sets forth (a) a true and complete list of the names and locations of all banks, trust companies, securities brokers and other financial institutions at which ED has an account or safe deposit box or maintains a banking, custodial, trading or other similar relationship, and (b) a true and complete list and description of each such account, box and relationship, indicating in each case the account number and the names of the respective officers, employees, agents or other similar representatives of ED having signatory power with respect thereto.

Section 3.24 Disclosure. No representation or warranty of ED or the Seller contained in this Agreement (including the exhibits hereto) contains any untrue statement or omits to state a material fact necessary in order to make the statements contained herein or therein, in light of the circumstances under which they were made, not misleading.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

OF BUYER AND RICK’S

Buyer and Rick’s hereby represent and warrant to ED and the Seller as follows:

Section 4.1 Organization, Good Standing and Qualification. Buyer and Rick’s (i) are duly organized, validly existing and in good standing under the laws of the state of Texas, (ii) have all requisite power and authority to carry on their respective business, and (iii) are duly qualified to transact business and are in good standing in all jurisdictions where their ownership, lease or operation of property or the conduct of their business requires such qualification, except where the failure to do so would not have a material adverse effect to Buyer or Rick’s.

Section 4.2 Authorization. Buyer and Rick’s are corporations duly organized in the state of Texas and have full power, capacity, and authority to enter into this Agreement and perform the obligations contemplated hereby. All action on the part of Buyer and Rick’s necessary for the authorization, execution, delivery and performance of this Agreement by them have been or will be taken before Closing. This Agreement, when duly executed and delivered in accordance with its terms, will constitute legal, valid, and binding obligations of Buyer and Rick’s enforceable against them in accordance with its terms, except as may be limited by bankruptcy, insolvency, and other similar laws affecting creditors' rights generally or by general equitable principles.

Section 4.3 Consents. No permit, consent, approval or authorization of, or designation, declaration or filing with, any governmental authority or any other person or entity is required on the part of Buyer or Rick’s in connection with the execution and delivery by Buyer and Rick’s of this Agreement or the consummation and performance of the transactions contemplated hereby other than as may be required under the federal securities laws.

Section 4.4 Disclosure. No representation or warranty of Buyer and Rick’s contained in this Agreement (including the exhibits hereto) contains any untrue statement or omits to state a material fact necessary in order to make the statements contained herein or therein, in light of the circumstances under which they were made, not misleading.

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Section 4.5 Brokerage Commission. No broker or finder has acted for the Buyer or Rick’s in connection with this Agreement or the transactions contemplated hereby, and no person is entitled to any brokerage or finder’s fee or compensation in respect thereof based in any way on agreements, arrangements or understandings made by or on behalf of Buyer or Rick’s.

ARTICLE V

CONDITIONS TO CLOSING

The obligations of the parties to effect the transactions contemplated hereby are subject to the satisfaction at or prior to the Closing of the following conditions:

Section 5.1 Conditions to Obligations of Buyer and Rick’s.

(a)

Representations and Warranties of ED and the Seller. The representations and warranties of ED and the Seller shall be true and correct on the Closing Date;

(b)

Covenants. All covenants, agreements and conditions contained in this Agreement to be performed by ED and the Seller on or prior to the Closing Date shall have been performed or complied with in all respects;

(c)

Delivery of Certificates. The Sellers and ED shall provide to Buyer certificates, dated as of the Closing Date and signed the Seller and by representatives of ED, respectively, to effect set forth in Section 5.1(a) and 5.1(b) for the purpose of verifying the accuracy of such representations and warranties and the performance and satisfaction of such covenants and conditions;

(d)

Resolutions. ED shall have delivered resolutions of ED which authorize the execution, delivery and performance of this Agreement and the documents referred to herein to which it is or is to be a party dated as of the Closing Date;

(e)

Delivery of ED Stock. The Seller shall deliver or cause to be delivered to Buyer (i) originally issued certificates representing the shares of ED Stock duly endorsed over to the Buyer in a form satisfactory to the Buyer;

(f)

Related Transactions. The Related Transactions set forth in Section 2.3 shall be consummated concurrently with the Closing;

(g)

Financial Records. The financial records of ED shall be maintained and exist in such a manner as to allow for a certified audit as determined by Rick’s;

(h)

Liabilities. ED shall not have any liabilities as of the date of Closing;

(i)

Third-Party Consents. Any and all consents or waivers required from third parties relating to this Agreement or any of the other transactions contemplated hereby shall have been obtained;

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(j)

Satisfactory Diligence. Buyer shall have concluded its due diligence investigation of ED and its assets and properties and all other matters related to the foregoing, and shall be satisfied, in its absolute and sole discretion, with the results thereof;

(k)

No Actions or Proceedings. No claim, action, suit, investigation or proceeding shall be pending or threatened before any court or governmental agency which presents a substantial risk of the restraint or prohibition of the transactions contemplated by this Agreement;

(l)

Government Approvals. All authorizations, permits, consents, orders, licenses or approvals of, or declarations or filings with, or expiration of waiting periods imposed by, any governmental entity necessary for the consummation of the transactions contemplated by this Agreement shall have been filed, occurred or been obtained; and

(m)

Appointment of Director and Officer; Resignations. At Closing, (i) Eric Langan shall have been appointed as the sole director of ED; and (ii) the Seller shall resign as a director of ED.

Section 5.2 Conditions to Obligations of ED and the Seller

(a)

Representations, Warranties and Agreements of Buyer and Rick’s. The representations and warranties of Buyer and Rick’s shall be true and correct on the Closing Date;

(b)

Covenants. All covenants, agreements and conditions contained in this Agreement to be performed by the Buyer and Rick’s on or prior to the Closing Date shall have performed or complied with in all respects;

(c)

Delivery of Certificates. Buyer and Rick’s shall provide to ED and the Seller certificates dated as of the Closing Date and signed by a representative of the Buyer and Rick’s to the effect set forth in Section 5.2(a) and 5.2(b) for the purpose of verifying the accuracy of such representations and warranties and the performance and satisfaction of such covenants and conditions;

(d)

Resolutions. Buyer and Rick’s shall deliver resolutions, which authorize the execution, delivery and performance of this Agreement and the documents referred to herein to which it is or is to be a party dated as of the Closing Date;

(e)

Payment of Purchase Price. Buyer shall have (i) tendered the cash portion of the Purchase Price set forth in Section 1.3 and (ii) delivered the 8,696 shares of common stock of Rick’s representing the stock portion of the Purchase Price to the Seller as set forth in Section 1.3 or shall deliver a letter of instruction to the transfer agent instructing the issuance of the shares to the Seller;

(f)

Related Transactions. The Related Transactions set forth in Section 2.3 shall be consummated concurrently with the Closing;

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(g)

Third Party Consents. Any and all consents or waivers required from third parties relating to this Agreement or any of the other transactions contemplated hereby shall have been obtained;

(h)

(i)

Government Approvals. All authorizations, permits, consents, orders or approvals of, or declarations or filings with, or expiration of waiting periods imposed by, any governmental entity necessary for the consummation of the transactions contemplated by this Agreement shall have been filed, occurred or been obtained.

ARTICLE VI

INDEMNIFICATION

Section 6.1 Indemnification from the Seller. The Seller hereby agrees to and shall indemnify, defend (with legal counsel reasonably acceptable to Buyer), and hold Buyer, Rick’s, their officers, directors, shareholders, employees, affiliates, parent, agents, legal counsel, successors and assigns (collectively, the “Buyer’s Group”) harmless at all times after the date of this Agreement, from and against any and all actions, suits, claims, demands, debts, liabilities, obligations, losses, damages, costs, expenses, penalties or injury (including reasonable attorneys fees and costs of any suit related thereto) (collectively, “Indemnifiable Loss” or “Indemnifiable Losses”) suffered or incurred by any or all of the Buyer’s Group arising from: (a) any material misrepresentation by, or material breach of any covenant or warranty of the Seller or ED contained in this Agreement, or any exhibit, certificate, or other instrument furnished or to be furnished by the Seller or ED hereunder; (b) any nonfulfillment of any material agreement on the part of the Seller or ED under this Agreement; (c) from any liability or obligation due to any third party by ED and/or the Seller incurred prior to the Closing Date, including all damages resulting to the Buyer’s Group from a breach by the Seller or ED of any contracts occurring prior to the Closing Date; or (d) any liabilities of ED incurred prior to the Closing Date.

Section 6.2 Indemnification from Buyer. Buyer agrees to and shall indemnify, defend (with legal counsel reasonably acceptable to Seller) and hold the Seller and his agents, legal counsel, successors and assigns, (collectively, the "Seller’s Group") harmless at all times after the date of the Agreement from and against any and all actions, suits, claims, demands, debts, liabilities, obligations, losses, damages, costs, expenses, penalties or injury (including reasonably attorneys fees and costs of any suit related thereto) suffered or incurred by any or all of Seller’s Group, arising from (a) any material misrepresentation by, or material breach of any covenant or warranty of Buyer or Rick’s contained in this Agreement or any exhibit, certificate, or other agreement or instrument furnished or to be furnished by Buyer hereunder; (b) any nonfulfillment of any material agreement on the part of Buyer or Rick’s under this Agreement; or (c) any liabilities of ED incurred subsequent to the Closing Date.

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Section 6.3 Defense of Claims. If any lawsuit or enforcement action is filed against any party entitled to the benefit of indemnity hereunder, written notice thereof shall be given to the indemnifying party as promptly as practicable (and in any event not less than fifteen (15) days prior to any hearing date or other date by which action must be taken); provided that the failure of any indemnified party to give timely notice shall not affect rights to indemnification hereunder except to the extent that the indemnifying party demonstrates actual damage caused by such failure. After such notice, the indemnifying party shall be entitled, if it so elects, to take control of the defense and investigation of such lawsuit or action and to employ and engage attorneys of its own choice to handle and defend the same, at the indemnifying party's cost, risk and expense; and such indemnified party shall cooperate in all reasonable respects, at its cost, risk and expense, with the indemnifying party and such attorneys in the investigation, trial and defense of such lawsuit or action and any appeal arising therefrom; provided, however, that the indemnified party may, at its own cost, participate in such investigation, trial and defense of such lawsuit or action and any appeal arising therefrom. The indemnifying party shall not, without the prior written consent of the indemnified party, effect any settlement of any proceeding in respect of which any indemnified party is a party and indemnity has been sought hereunder unless such settlement of a claim, investigation, suit, or other proceeding only involves a remedy for the payment of money by the indemnifying party and includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding.

Section 6.4 Default of Indemnification Obligation. If an entity or individual having an indemnification, defense and hold harmless obligation, as above provided, shall fail to assume such obligation, then the party or entities or both, as the case may be, to whom such indemnification, defense and hold harmless obligation is due shall have the right, but not the obligation, to assume and maintain such defense (including reasonable counsel fees and costs of any suit related thereto) and to make any settlement or pay any judgment or verdict as the individual or entities deem necessary or appropriate in such individual’s or entities’ absolute sole discretion and to charge the cost of any such settlement, payment, expense and costs, including reasonable attorneys fees, to the entity or individual that had the obligation to provide such indemnification, defense and hold harmless obligation and same shall constitute an additional obligation of the entity or of the individual or both, as the case may be.

Section 6.5 Right to Offset. In the event that the Buyer or Rick’s is entitled to indemnification in accordance with Section 6.1 and 6.3 hereof, including the payment by the Buyer of any debts or liabilities resulting from the purchase of the Company which were incurred prior to the Closing Date, then Buyer or Rick’s shall have the right to offset any such amount from any obligations that are then due and payable to the Seller.

Section 6.6 Survival of Representations and Warranties. The respective representations, warranties and indemnities given by the parties to each other pursuant to this Agreement shall survive the Closing for a period ending twenty-four (24) months from the Closing Date (“Survival Date”). Notwithstanding anything to the contrary contained herein, no claim for indemnification may be made against the party required to indemnify (the “Indemnitor”) under this Agreement unless the party entitled to indemnification (the “Indemnitee”) shall have given the Indemnitor written notice of such claim as provided herein on or before the Survival Date. Any claim for which notice has been given prior the expiration of the Survival Date shall not be barred hereunder.

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ARTICLE VII

MISCELLANEOUS

Section 7.1 Amendment; Waiver. Neither this Agreement nor any provision hereof may be amended, modified or supplemented unless in writing, executed by all the parties hereto. Except as otherwise expressly provided herein, no waiver with respect to this Agreement shall be enforceable unless in writing and signed by the party against whom enforcement is sought. Except as otherwise expressly provided herein, no failure to exercise, delay in exercising, or single or partial exercise of any right, power or remedy by any party, and no course of dealing between or among any of the parties, shall constitute a waiver of, or shall preclude any other or further exercise of, any right, power or remedy.

Section 7.2 Notices. Any notices or other communications required or permitted 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:

(a)	if to the Seller:	Don Waitt
		________________________________
		________________________________

	with a copy to:	________________________________
		________________________________
		________________________________

(b)	if to Rick’s, Buyer
	or ED:	Rick’s Cabaret International, Inc.
		Attn: Eric Langan, President
		10959 Cutten Road
		Houston, Texas 77066
		Fax: ###-###-####

	With a copy to:	Robert D. Axelrod
		Axelrod, Smith & Kirshbaum
		5300 Memorial Drive, Suite 700
		Houston, Texas 77007
		Fax: ###-###-####

A notice or communication will be effective (i) if delivered in person or by overnight courier, on the business day it is delivered, (ii) if transmitted by telecopier, on the business day of actual confirmed receipt by the addressee thereof, and (iii) if sent by registered or certified mail, three (3) business days after dispatch.

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Section 7.3 Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.

Section 7.4 Assignment; Successors and Assigns. Except as otherwise provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors and permitted assigns of the parties hereto. No party hereto may assign its rights or delegate its obligations under this Agreement without the prior written consent of the other parties hereto, which consent will not be unreasonably withheld.

Section 7.5 Entire Agreement. This Agreement and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subject matter hereof and thereof and supersede and cancel all prior representations, alleged warranties, statements, negotiations, undertakings, letters, acceptances, understandings, contracts and communications, whether verbal or written among the parties hereto and thereto or their respective agents with respect to or in connection with the subject matter hereof.

Section 7.6 Jurisdiction. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Texas, without regard to principles of conflict of laws. The parties agree that venue for purposes of construing or enforcing this Agreement shall be proper in Harris County, Texas.

Section 7.7 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

Section 7.8 Costs and Expenses. Each party shall pay their own respective fees, costs and disbursements incurred in connection with this Agreement.

Section 7.9 Section Headings. The section and subsection headings in this Agreement are used solely for convenience of reference, do not constitute a part of this Agreement, and shall not affect its interpretation.

Section 7.10 No Third-Party Beneficiaries. Nothing in this Agreement will confer any third party beneficiary or other rights upon any person or any entity that is not a party to this Agreement.

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Section 7.11 Attorneys’ Review. In connection with the negotiation and drafting of this Agreement, the parties represent and warrant to each other they have had the opportunity to be advised by attorneys of their own choice.

Section 7.12 Further Assurances. Each party covenants that at any time, and from time to time, after the Closing Date, it will execute such additional instruments and take such actions as may be reasonably be requested by the other parties to confirm or perfect or otherwise to carry out the intent and purposes of this Agreement.

Section 7.13 Public Announcements. The parties hereto agree that prior to making any public announcement or statement with respect to the transactions contemplated by this Agreement, the party desiring to make such public announcement or statement shall consult with the other parties hereto and exercise their best efforts to (i) agree upon the text of a joint public announcement or statement to be made by all of such parties or (ii) obtain approval of the other parties hereto to the text of a public announcement or statement to be made solely by the party desiring to make such public announcement; provided, however, that if any party hereto is required by law to make such public announcement or statement, then such announcement or statement may be made without the approval of the other parties.

Section 7.14 Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement, which shall remain in full force and effect.

Section 7.15 Exhibits Not Attached. Any exhibits not attached hereto on the date of execution of this Agreement shall be deemed to be and shall become a part of this Agreement as if executed on the date hereof upon each of the parties initialing and dating each such exhibit, upon their respective acceptance of its terms, conditions and/or form.

{SIGNATURES ON FOLLOWING PAGE}

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IN WITNESS WHEREOF, the undersigned have executed this Purchase Agreement to become effective as of the date first set forth above.

	RCI ENTERTAINMENT
	(MEDIA HOLDINGS), INC.

	/s/ Eric Langan
	By:	Eric Langan, President
	Date:	April 15, 2008


	RICK’S CABARET INTERNATIONAL, INC.

	/s/ Eric Langan
	By:	Eric Langan, President
	Date:	April 15, 2008



	ED PUBLICATIONS, INC.

	/s/ Don Waitt
	By:	Don Waitt
	Its:	President
	Date:	April 15, 2008


	SELLER

	/s/ Don Waitt
	Don Waitt, Individually
	Date:	April 15, 2008

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