Sample Business Contracts


Earnest Money Contract [Amendment No. 1] - Larry A. Holmberg, Amusement Center Inc., Buns & Roses II, Rick's Cabaret International Inc. and RCI Entertainment (Minnesota) Inc.


                      AMENDMENT TO ASSET PURCHASE AGREEMENT
                       AMENDMENT TO EARNEST MONEY CONTRACT


         The  parties  to this  Agreement  ("Amendments")  made  this 4th day of
August, 1997, are as follows:

         LARRY A. HOLMBERG  ("Holmberg"  under the Asset Purchase  Agreement and
"Seller" under the Earnest Money Contract);  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&R II" and collectively referred to as "Seller"
with Amusement Center,  Inc., in the Asset Purchase  Agreement);  RICK'S CABARET
INTERNATIONAL,  INC., a Texas  Corporation,  ("Buyer"  under the Asset  Purchase
Agreement;  "Purchaser" under the Earnest Money Contract); 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,  and a certain  Earnest  Money
Contract dated the 24th day of December, 1996; and

         WHEREAS,  the  parties  contemplated  a combined  closing  under  those
Agreements on or about July 31, 1997, which combined closing did not occur; and

         WHEREAS,  the parties desire to amend the Asset Purchase  Agreement and
the Earnest Money Contract provide for the subsequent combined closing.

         NOW,  THEREFORE,  in  consideration  of promises  and mutual  covenants
contained herein, the parties agree as follows:

                                   ARTICLE I.
                            EXPLANATION OF AMENDMENTS

         A.       The   parties   agree  that  the  total   Purchase   Price  of
                  $3,000,000.00  remains  unchanged.  That  all  the  terms  and
                  conditions  of  the  original  Asset  Purchase  Agreement  and
                  Earnest  Money  Contract  shall be in full  force  and  effect
                  unless changed by these  Amendments.  These  Amendments  shall
                  supersede  and  replace  the  terms  of  the  Asset   Purchase
                  Agreement and Earnest Money Contract.

                  1.       The  downpayment,   however   allocated  between  the
                           Purchased  Assets  and  the  Property  should  be  as
                           follows:

<PAGE>

                           (i)      $50,000.00  to be dispersed  from the Escrow
                                    Agreement  to Holmberg on the  execution  of
                                    these Amendments by all parties;

                           (ii)     $150,000.00  to be paid to  Holmberg  at the
                                    time of  Closing  on the  sale of  Purchased
                                    Assets and Property;

                           (iii)    80,000  shares  of  common  stock of  Rick's
                                    Cabaret   International,   Inc.,  issued  to
                                    Holmberg at the time of Closing;

                           (iv)     The total value of the downpayment  shall be
                                    $300,000.00.

                  2.       $200,000.00  of the  purchase  price shall be paid by
                           Buyer's  execution and delivery of a Promissory  Note
                           to  be   executed   at   Closing  in  the  amount  of
                           $200,000.00   amortized   over  18  months,   bearing
                           interest  at the rate of 10% per annum  payable in 17
                           equal monthly installments of principal and interest,
                           and a final  balloon  payment due on the 18th monthly
                           installment payment. The $200,000.00  Promissory Note
                           will be secured by all the  collateral  securing  any
                           and   all   other   indebtedness   owned   from   the
                           Buyer/Purchaser to any of the Sellers.

                  3.       The  remaining  $2,500,000.00  of the purchase  price
                           shall be paid  according  to the  terms of the  Asset
                           Purchase Agreement and Earnest Money Contract.

                  4.       The allocation of the Purchase Price of the Purchased
                           Assets  shall be pursuant to an  appraisal  obtained,
                           prior to closing, by the Buyer/Purchaser as allocated
                           between the tangible  personal property and goodwill.
                           The allocation of the Purchase Price for the Property
                           shall remain at $750,000.00.

                  5.       The Closing, as contemplated by the parties, shall be
                           on or before October 31, 1997.

                  6.       Following   the   execution   of  these   Amendments,
                           Buyer/Purchaser   shall  be   permitted  to  commence
                           construction  or  improvements  of the  building  for
                           dressing  rooms in the  basement and a kitchen on the
                           ground  floor  following  completion  of the dressing
                           rooms. All such  construction and improvements  shall
                           be  at  the  expense  of  Buyer/Purchaser   and  such
                           constructions  and  improvements  shall not  commence
                           until   the   Sellers   have   been   provided   with
                           certificates   of   insurance    providing    general
                           comprehensive liability insurance and coverage of not
                           less than $1,000,000.00 per occurrence and per person
                           and fire and extended coverages in an amount not less
                           than $750,000.00. Such certificate shall be specified
                           through all policies of insurance in effect and shall
                           not be  canceled  except  upon  ten (10)  days  prior
                           written notice to Sellers, and all

<PAGE>

                           policies  of  insurance  shall  name  Sellers  as  an
                           additional insured thereunder.  Buyer/Purchaser shall
                           obtain  the   consent  of   Holmberg   for  all  such
                           construction  and  improvements,  which consent shall
                           not unreasonably withheld.  Prior to the beginning of
                           any  construction  or  improvements,  Buyer/Purchaser
                           shall  establish  an  escrow  construction  fund  and
                           deposit   all   funds   required   to  pay   for  the
                           construction or improvements contemplated. Holmberg's
                           written   consent   shall   be   required   for   any
                           dispersements     from    the     escrow     account.
                           Buyer/Purchaser   shall  produce   appropriate   lien
                           waivers prior to dispersement.

         B.       Nothing  contained in these  Amendments or the original  Asset
                  Purchase  Agreement and Earnest Money  Contract  shall prevent
                  the Buyer/Purchaser  from prepaying any amount due thereunder;
                  however,  until  all the  obligations  of  Buyer/Purchaser  to
                  Seller  are paid or  performed  according  to the terms of the
                  various Agreements, Buyer/Purchaser shall not be provided with
                  any  satisfaction,  release,  or  termination  of any  and all
                  mortgages,  security  agreements,  and  notes.  It is  further
                  agreed that  Buyer/Purchaser may not sell, assign, or transfer
                  its interest (other than to RCI), and cannot dispose of any of
                  the assets,  other than in the  ordinary  course of  business,
                  without all of the  obligations due to Sellers being performed
                  or paid in full.

                                   ARTICLE II.
                     CHANGES IN THE ASSET PURCHASE AGREEMENT

         A.       As set forth in Article I., of these  Amendments  the changes,
                  additions, and deletions in the Asset Purchase Agreement dated
                  December 24, 1996, are as follows:

                  1.       RCI, the wholly owned  subsidiary  of Rick's  Cabaret
                           International,  Inc.,  shall be the "Buyer",  and all
                           the  closing  documents  should be amended to reflect
                           this  change.  Rick's  Cabaret  International,  Inc.,
                           shall   guarantee  and  remain  liable  for  all  the
                           obligations of RCI.

                  2.       1.3(i) is amended to provide that the  downpayment is
                           changed as set forth in  Article  I. to  provide  for
                           $50,000.00  Earnest Money at the time of execution of
                           these  Amendments  as provided for in Article III. A.
                           2.  (a);   $150,000.00  payable  by  cashiers  check,
                           certified funds, or wire transfer at Closing;  80,000
                           shares   of   common   stock   of   Rick's    Cabaret
                           International,  Inc.,  with a value assigned to those
                           shares of $100,000,00; and a note from Rick's Cabaret
                           International,  Inc.,  payable to Holmberg  amortized
                           and payable over 18 months,  bearing  interest at the
                           rate of 10% per annum,  with the first payment due 30
                           days after Closing.

                 

<PAGE>

                  3.       1.4 is deleted and replaced as follows: "In the event
                           there is no Closing, based upon this Agreement or the
                           Earnest Money Contract,  being canceled or terminated
                           by  Buyer,   Holmberg  shall  retain  the  $50,000.00
                           Earnest  Money  released  and  paid  to  Holmberg  as
                           liquidated  damages,  which  shall  be the  sole  and
                           exclusive remedy of Holmberg,  Amusement Center,  and
                           B&R II,  except that the Seller shall not be required
                           to reimburse  Buyer/Purchaser for any remodeling done
                           prior to Closing."

                  4.       1.6 shall be amended to read:

                                    "The Purchase Price of the Property shall be
                                    $750,000.00.   The  Purchase  Price  of  the
                                    Purchased  Assets shall be  allocated  among
                                    the Purchased  Assets in accordance with the
                                    schedule  which  shall  be  agreed  upon and
                                    signed  by  all  the  parties  prior  to the
                                    Closing  Date  following an appraisal by the
                                    Buyer."

                  5.       3.1 is amended to refer to "Buyer" as Rick's  Cabaret
                           International,  Inc.,  and a new  sentence  should be
                           added   identical   to  the   first   regarding   RCI
                           Entertainment   (Minnesota),    Inc.,   a   Minnesota
                           corporation.

                  6.       The following  statement should be added to Paragraph
                           4.1:

                           "Effective  July 19,  1997,  the City of  Minneapolis
                           approved an On-Sale  Liquor Class A with Sunday Sales
                           License."

                  7.       Subparagraph  (h) of Paragraph  5.1 should be amended
                           to add the following:

                                     " . . .,  except  for  existing  litigation
                                     filed  by  Robert  W.  Sabes  and   Classic
                                     Affairs, Inc., or any other action filed by
                                     Sabes or a related party."

                  8.       Subparagraphs  (e), and (j) of Paragraph 5.2 shall be
                           deleted.

                  9.       6.1 shall be deleted and replaced as follows:

                           "The Closing of the transactions provided for in this
                           Agreement ("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  October  31,  1997,
                           unless an earlier  Closing date is requested by Buyer
                           with at least five (5) business  days written  notice
                           of such  earlier  date.  The day on which the Closing
                           occurs is referred to herein as the "Closing Date."

<PAGE>

                  10.      6.4 is  amended to delete  Subparagraphs  (a) and (b)
                           and  to  relist  Subparagraphs  (c)  through  (h)  as
                           Subparagraphs  (d) through (i). New Subparagraphs (a)
                           through (c) are as follows:

                           (a)      $150,000.00 payable by certified check, bank
                                    check, or "Fed Funds" wire transfer;

                           (b)      Promissory    Note   from   Rick's   Cabaret
                                    International,   Inc.,   in  the  amount  of
                                    $200,000.00  in the form to be  provided  at
                                    Closing   amortized   and  payable  over  18
                                    months,  bearing interest at the rate of 10%
                                    per annum;

                           (c)      80,000  shares  of  common  stock of  Rick's
                                    Cabaret  International,  Inc., registered in
                                    the name of Holmberg;

                  11.      A new Paragraph 6.5 shall be added:

                           "6.5.    HOLMBERG'S   RIGHTS   REGARDING  THE  COMMON
                                    STOCK.  Holmberg  shall  have  the  right to
                                    demand  sixty  (60) days  after the  Closing
                                    Date of the  Agreement  that Rick's  Cabaret
                                    International,  Inc.,  file  a  Registration
                                    Statement  of  Form  S-3  (or  if S-3 is not
                                    available on any other  available form) with
                                    the  Securities   and  Exchange   Commission
                                    ("Commission")  under the  Securities Act of
                                    1933,  as amended ("the Act"),  which,  when
                                    effective,  will  permit  the  resale of the
                                    shares of common  stock  issued to  Holmberg
                                    pursuant to this  Agreement.  Rick's Cabaret
                                    International, Inc., shall cause to be filed
                                    with the  Commission,  as soon as  practical
                                    after  demand  is  made  by  Holmberg,   the
                                    Registration  Statement  and  shall  use its
                                    best  efforts  to  cause  the   Registration
                                    Statement   to  become   effective  as  soon
                                    thereafter  as practical  and will  maintain
                                    such  effectiveness  for a period of one (1)
                                    year from the Closing Date.

                  12.      A new Paragraph 6.6 shall be added:

                           "6.6     FAILURE  TO CLOSE.  In the event  that Buyer
                                    fails or refuses  to close the  transactions
                                    contemplated   by  this   Agreement  or  the
                                    Earnest Money Contract,  then Holmberg shall
                                    retain the  $50,000.00  previously  released
                                    and paid to  Holmberg  on  August 4, 1997 as
                                    liquidated damages,  which shall be the sole
                                    and exclusive remedy of Holmberg,  Amusement
                                    Center  and/or B & R II, except that Sellers
                                    shall  not have to  reimburse  Buyer for any
                                    improvements  made by Buyer to the  Property
                                    before Closing.  In the event that Holmberg,
                                    Amusement  Center or B & R II fail or refuse
                                    to close the  transactions  contemplated  by
                                    this   Agreement   or  the   Earnest   Money
                                    Contract,  then  the  Buyer  shall  have the
                                    right to seek relief  available  at law, and
                                    in addition to any other remedy available at

<PAGE>

                                    law, to apply for and  receive  from a court
                                    of competent  jurisdiction  equitable relief
                                    by way of restraining  order,  injunction or
                                    otherwise,   prohibitory  or  mandatory,  to
                                    prevent  a  breach  of  the  terms  of  this
                                    Agreement or the Earnest Money Contract,  or
                                    by way of  specific  performance  to enforce
                                    performance  of the terms of this  Agreement
                                    and  the  Earnest   Money   Contract,   plus
                                    reimbursement    for    costs,     including
                                    reasonable  attorney's fees, incurred in the
                                    securing of such relief."

                  13.      9.16 is deleted in its entirety.

         B.       Unless amended, added, or deleted by Article I. above or under
                  this Article II., all the  remaining  terms and  conditions of
                  the Asset  Purchase  Agreement  shall remain in full force and
                  effect according to its terms.

                                  ARTICLE III.
                             EARNEST MONEY CONTRACT

         A.       As set forth in Article I. of these  Amendments,  the changes,
                  additions,  and deletions in the Earnest Money  Contract dated
                  December 24, 1996, are as follows:

                  1.       RCI, the wholly owned  subsidiary  of Rick's  Cabaret
                           International,  Inc., shall be the  "Purchaser",  and
                           all  the  closing  documents  should  be  amended  to
                           reflect this change.  Rick's  Cabaret  International,
                           Inc.,  shall  guarantee and remain liable for all the
                           obligations of RCI.
                  2.       Subparagraphs   2.a.   through  c.  are  deleted  and
                           replaced as follows:

                           a.       $50,000.00  earnest money previously paid to
                                    Seller; and

                           b.       $700,000.00  by Purchaser  executing two (2)
                                    Promissory  Notes  in the form  attached  as
                                    Exhibit  C-1 in the  amount  of  $200,000.00
                                    from Rick's Cabaret International, Inc., and
                                    as Exhibit C-2 in the amount of  $500,000.00
                                    from RCI secured by a Combination  Mortgage,
                                    Security Agreement and Fixture and Financing
                                    Statement in the form attached as Exhibit D,
                                    and UCC-2  Financing  Statement  in the form
                                    attached  as  Exhibit  E.  The  Exhibit  C-2
                                    Promissory    Note   and   all   the   other
                                    obligations  of RCI shall be  guaranteed  by
                                    Rick's Cabaret  International,  Inc., in the
                                    form attached hereto as Exhibit F.

                  3.       A new Paragraph 8. shall be added and old  Paragraphs
                           8 through 22 shall be  renumbered.  New  Paragraph 8.
                           shall be as follows:

                           "8.      REMODELING.  The parties  hereto  agree that
                                    the Purchaser may commence remodeling of the
                                    real property after the execution of

<PAGE>

                                    these Amendments and before the contemplated
                                    closing of October 31,  1997.  The  parties'
                                    agreement   to  allow  the   remodeling   to
                                    commence  prior to closing on this Agreement
                                    shall be subject to the following:

                                    a.      The  remodeling  shall be limited to
                                            the  construction  or improvement to
                                            the dressing rooms in the basements,
                                            which shall be done first,  and then
                                            for the construction of a kitchen on
                                            the ground floor.

                                    b.      Purchaser  shall retain a Contractor
                                            licensed  to do business in the City
                                            of   Minneapolis    and   State   of
                                            Minnesota to perform the  remodeling
                                            work.  The  Contractor  shall secure
                                            any     necessary     permits    and
                                            inspections necessary for the proper
                                            completion of the work.

                                    c.      All   plans    and    specifications
                                            relating to the remodeling  shall be
                                            approved in writing by Seller  prior
                                            to any  work  being  commenced.  Any
                                            material  change or  modification to
                                            those plans and specifications shall
                                            also  be   approved  in  writing  by
                                            Seller.  Seller's  approval will not
                                            be unreasonably withheld.

                                    d.      The Contractor  shall provide a firm
                                            bid  for  the  remodeling  prior  to
                                            construction  and any changes to the
                                            bid  shall  be in  writing  from the
                                            Contractor,  which  will  include  a
                                            sworn construction statement listing
                                            subcontractors and materialmen.

                                    e.      Purchaser  agrees to  deposit  funds
                                            equal   to   the   amount   of   the
                                            remodeling  costs  as set  forth  in
                                            Contractor's    firm   bid   in   an
                                            interest-bearing    escrow   account
                                            requiring  two  signatures,  one  by
                                            Seller and one by Purchaser.  Seller
                                            agrees to sign  checks  to  disburse
                                            funds  from  that   escrow   account
                                            directly   to   Contractor    and/or
                                            Subcontractors  in exchange for full
                                            or partial  mechanic's  lien waivers
                                            from        Contractor        and/or
                                            Subcontractors. Purchaser shall also
                                            sign those checks.  Seller agrees to
                                            cooperate    with    Purchaser    in
                                            disbursing    reasonable    progress
                                            payments  to  Contractor  based upon
                                            Contractor's   completion  of  work.
                                            Seller   may  use  those   funds  to
                                            discharge any mechanic's liens filed
                                            against the real  property  relating
                                            to remodeling work done by Purchaser
                                            by paying them into Hennepin  County
                                            District Court for that purpose,  or
                                            if  Purchaser  does not  dispute the
                                            mechanic's  lien  claim,  by  paying
                                            them directly

<PAGE>

                                            to Contractor  and/or  Subcontractor
                                            for  a   mechanic's   lien   waiver.
                                            Purchaser   agrees  to  execute  the
                                            checks  necessary to accomplish  the
                                            above. Prior to or contemporaneously
                                            with  the  release  of  all  of  the
                                            escrowed  funds  to the  Contractor,
                                            Contractor   shall  provide  a  full
                                            mechanic's  lien  waiver from itself
                                            and    its     subcontractors    and
                                            materialmen to Seller and Purchaser.

                                    f.      Contractor    shall   carry   public
                                            liability  insurance covering claims
                                            for  injury,   wrongful   death,  or
                                            property damage, covering the period
                                            of  construction in an amount of not
                                            less    than    $1,000,000.00    per
                                            occurrence  and  in  the  amount  of
                                            $750,000.00   for  property   damage
                                            insurance.   Contractor  shall  also
                                            carry,    during   the   period   of
                                            construction,     builder's     risk
                                            insurance   on   the    improvements
                                            against loss or damage by vandalism,
                                            malicious    mischief,    fire   and
                                            extended  insurance  coverage.  Said
                                            insurance  shall name  Purchaser and
                                            Seller and its  Mortgagees,  if any,
                                            as loss payees  under the policy and
                                            provide  that no act or  omission of
                                            Contractor  shall operate to deny or
                                            limit coverage to Purchaser, Seller,
                                            and/or   Seller's   Mortgagee.   The
                                            policy  shall  be in an  amount  not
                                            less than the full replacement value
                                            of the  improvements.  Prior  to the
                                            commencement   of  the   remodeling,
                                            Contractor  shall  deliver to Seller
                                            and   Purchaser    certificates   of
                                            liability   and    builder's    risk
                                            insurance required herein.

                                    g.      In  the  event   that  there  is  no
                                            Closing,   Seller   shall   not   be
                                            required to reimburse  Purchaser for
                                            any   remodeling   done   prior   to
                                            Closing,  and Purchaser shall remain
                                            liable  to  Seller  for  any  unpaid
                                            remodeling costs.


                           4.       The  following  sentence  shall  be added to
                                    Paragraph 11 (old Paragraph 10):

                                    "Until all the  obligation of Rick's Cabaret
                                    International,  Inc.,  and RCI to  Seller or
                                    Holmberg under the Asset Purchase  Agreement
                                    or Earnest  Money  Contract  are  completed,
                                    Purchasers  will not receive a  satisfaction
                                    of the Exhibit D, Mortgage or termination of
                                    the Exhibit E., Financing Statement."

<PAGE>

                           5.       Paragraph  20 (old  Paragraph  19)  shall be
                                    deleted and replaced as follows:

                                    "REMEDIES.   If  Seller   defaults   in  the
                                    performance  of this Agreement and Purchaser
                                    does not terminate  this  Agreement,  Seller
                                    acknowledges that the Property is unique and
                                    that money damages to Purchaser in the event
                                    of  default   by  Seller   are   inadequate.
                                    Accordingly,  Purchaser shall have the right
                                    to seek any other  relief  available at law,
                                    and  in   addition   to  any  other   remedy
                                    available  at  law,  to  apply  for  and  to
                                    receive    from   a   court   of   competent
                                    jurisdiction  equitable  relief  by  way  of
                                    restraining order,  injunction or otherwise,
                                    prohibitory  or  mandatory,   to  prevent  a
                                    breach of the terms of this Agreement, or by
                                    way  of  specific   performance  to  enforce
                                    performance of the terms of this  Agreement,
                                    or by way or specific performance to enforce
                                    performance  of the terms of this  Agreement
                                    or rescission, plus reimbursement for costs,
                                    including   reasonable    attorneys'   fees,
                                    incurred  in the  securing  of such  relief.
                                    This right to equitable  relief shall not be
                                    construed  to be in lieu  of or to  preclude
                                    Purchaser's  right to seek a remedy  at law.
                                    If Purchaser  defaults in the performance of
                                    this Agreement,  Seller's sole and exclusive
                                    remedy  shall be to  retain  the  $50,000.00
                                    Earnest  Money  released  and paid to him as
                                    liquidated  damages except that Seller shall
                                    not be required to reimburse  Purchaser  for
                                    any remodeling done prior to Closing."

         B.       To the extent  that  these  Amendments  to the Asset  Purchase
                  Agreement  and  Earnest  Money   Contract  cause  any  change,
                  addition,  or deletion to any of the Exhibits herein, then the
                  parties  agree that such Exhibits  shall be modified  prior to
                  Closing to conform to these Amendments.

         C.       Unless amended, added, or deleted by Article I. above or under
                  this Article III.,  all the remaining  terms and conditions of
                  the  Earnest  Money  Contract  shall  remain in full force and
                  effect according to its terms.

<PAGE>


         IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
these Amendments as of date first above written.


SELLERS:                               BUYER/PURCHASER

AMUSEMENT CENTER, INC.                 RICK'S CABARET INTERNATIONAL, INC.

<PAGE>

By /s/ LARRY A. HOLMBERG                      By /s/ ROBERT L. WATTERS
   ---------------------                         ---------------------
       Larry A. Holmberg                             Robert L. Watters
       President                                     President



BUNS & ROSES, INC.                            RCI ENTERTAINMENT (MINNESOTA) INC.

By /s/ LARRY A. HOLMBERG                      By /s/ ROBERT L. WATTERS
   ---------------------                         ---------------------
       Larry A. Holmberg                             Robert L. Watters
       President                                     President




       /s/ LARRY A. HOLMBERG
       ---------------------
           Larry A. Holmberg
           Individually


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