Document:

ex10_2.htm

    
      

    

    Exhibit
10.2

    

    {EXECUTION
VERSION}

    

    ASSIGNMENT AND ASSUMPTION
AGREEMENT

    

    This
Assignment and Assumption Agreement (this “Assignment Agreement”) is made and
entered into this 18th day
of December, 2009, by and among Spiridon Karamalegos, an
individual (the “Assignor”), and RCI Entertainment (3105 I-35),
Inc., a Texas corporation (the “Assignee”), with the consent of Evangelos Polycrates, an
individual (“Polycrates”).

    

    WITNESSETH:

    

    WHEREAS, Polycrates, the
Assignor, JOY, and NIII entered into a Purchase Agreement effective as of
December 18, 2009 (the “Polycrates Purchase Agreement”); and

    

    WHEREAS, Assignor desires to
assign the Polycrates Purchase Agreement, subject to the limitations contained
therein to the Assignee; and

    

    WHEREAS, Assignee desires to
be assigned the Polycrates Purchase Agreement, subject to the limitations
contained therein.

    

    NOW THEREFORE, in
consideration of the mutual terms and conditions herein contained, and other
good and valuable consideration, the receipt of which is hereby acknowledged,
the parties hereto hereby agree as follows:

    

    1.        
    Assignment and
Assumption.   The Assignor hereby assigns to the Assignee
Assignor’s rights and interest in, to and under the Polycrates Purchase
Agreement as set forth therein and limited thereby and Assignee hereby accepts
such assignment and assumes such rights and interest of Assignor under the
Polycrates Purchase Agreement as set forth therein and as limited
thereby.  Polycrates, as seller under the Polycrates Purchase
Agreement, hereby approves and consents to this Assignment.

    

    2.     
       Assignor’s Representations and
Warranties.

    

    a.           Assignor
has duly executed and delivered this Assignment Agreement, and this Assignment
Agreement constitutes the legal, valid, binding and enforceable obligation of
Assignor in accordance with its terms, enforceable against the Assignor in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, and other similar laws of general application relating to or
affecting creditors’ rights and to general equitable principles.

    

    b.           No
approval or consent of any person is required in connection with the execution
and delivery by the Assignor of this Assignment Agreement and the consummation
and performance by the Assignor of the transactions contemplated by this
Assignment Agreement.

    

    c.           The
execution, delivery and performance of this Assignment Agreement and the other
documents executed in connection herewith and the consummation of the
transactions contemplated by this Assignment Agreement will not violate or
conflict with, or result in any breach or violation of any instrument, contract
or agreement to which the Assignor is bound or subject, or to the best knowledge
of Assignor, any statute or any other regulation, order, judgment, injunction,
demand or decree of any court, arbitrator or governmental or regulatory
body.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    d.           There
are no other assignments of the Polycrates Purchase Agreement.

    

    3.        
    Assignee’s Representations and
Warranties.

    

    a.           Assignee
has duly executed and delivered this Assignment Agreement, and this Assignment
Agreement constitutes the legal, valid, binding and enforceable obligation of
Assignee in accordance with its terms, enforceable against the Assignee in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, and other similar laws of general application relating to or
affecting creditors’ rights and to general equitable principles.

    

    b.           No
approval or consent of any person is required in connection with the execution
and delivery by the Assignee of this Assignment Agreement and the consummation
and performance by the Assignee of the transactions contemplated by this
Assignment Agreement.

    

    c.           The
execution, delivery and performance of this Assignment Agreement and the other
documents executed in connection herewith and the consummation of the
transactions contemplated by this Assignment Agreement will not violate or
conflict with, or result in any breach or violation of any instrument, contract
or agreement to which the Assignee is bound or subject, or to the best knowledge
of Assignee, any statute or any other regulation, order, judgment, injunction,
demand or decree of any court, arbitrator or governmental or regulatory
body.

    

    4.         
   Polycrates’
Representations and Warranties.

    

    a.           Polycrates
has duly executed and delivered this Assignment Agreement, and this Assignment
Agreement constitutes the legal, valid, binding and enforceable obligation of
Polycrates in accordance with its terms, enforceable against Polycrates in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, and other similar laws of general application relating to or
affecting creditors’ rights and to general equitable principles.

    

    b.           No
approval or consent of any person is required in connection with the execution
and delivery by the Polycrates of this Assignment Agreement and the consummation
and performance by the Polycrates of the transactions contemplated by this
Assignment Agreement.

    

    c.           The
execution, delivery and performance of this Assignment Agreement and the other
documents executed in connection herewith and the consummation of the
transactions contemplated by this Assignment Agreement will not violate or
conflict with, or result in any breach or violation of any instrument, contract
or agreement to which the Polycrates is bound or subject, or to the best
knowledge of Polycrates, any statute or any other regulation, order, judgment,
injunction, demand or decree of any court, arbitrator or governmental or
regulatory body.

    

    Assignment
and Assumption Agreement - Page 2

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the
parties have executed this Assignment Agreement as of the date first above
written.

    

    
      	
              ASSIGNOR:

            	
              SPIRIDON
      KARAMALEGOS

            
	 
      	 
      	 
      
	 
      	
              By:

            	
               

            
	 
      	 
      	
              Spiridon
      Karamalegos, Individually

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              ASSIGNEE:

            	
              RCI
      ENTERTAINMENT (3105 I-35), INC.

            
	 
      	 
      	 
      
	 
      	
              By:

            	 
      
	 
      	 
      	
              Eric
      Langan, President

            
	 
      	 
      	 
      
	
              WITH
      CONSENT BY:

            	 
      	 
      
	 
      	 
      	 
      
	
              SELLER:

            	
              EVANGELOS
      POLYCRATES

            
	 
      	 
      	 
      
	 
      	
              By:

            	
               

            
	 
      	 
      	
              Evangelos
      Polycrates, Individually

            

    

    

    Assignment
and Assumption Agreement - Page 3ex10_3.htm

    
      

    

    Exhibit
10.3

    

    [EXECUTION
VERSION]

    PURCHASE
AGREEMENT

    

    This
Purchase Agreement (the “Agreement”) is made and entered into this _____ day
of  December, 2009, by and among Evangelos Polycrates (“Seller” or
“Polycrates”), and Spiridon Karamalegos or his assigns (“Buyer” or
“Karamalegos”), the Joy Club of Austin, Inc. and North IH 35 Investments,
Inc.

    

    WHEREAS, The Joy Club of
Austin, Inc. (“JOY”) is the owner and operator of the adult nightclub business
known as “Joy of Austin” which leases and occupies the real property and
improvements located at 3105 South IH 35, Round Rock, Texas 78664 (the
“Property”).  North IH 35 Investments, Inc. (“NIII”) is the owner
of the Property, and has leased the Property to JOY; and

    

    WHEREAS, Seller and Buyer are
the sole shareholders of JOY and NIII. Karamalegos, as Buyer, is the owner of
51% of the outstanding stock (1,530,000 shares) of JOY, and the owner of 49% of
the outstanding stock (490 shares) of NIII. Polycrates, as Seller, is the owner
of 49% of the outstanding stock (1,470,000 shares) of JOY, and the owner of 51%
of the outstanding stock (510 shares)of NIII; and

    

    WHEREAS, Seller desires to
sell all of his interest in and to JOY, including his 49% of the issued and
outstanding stock of JOY, to Buyer on the terms and conditions set forth herein;
and

    

    WHEREAS, Seller desires to
sell all of his interest in and to NIII, including his 51% of the issued and
outstanding stock of NIII, to Buyer on the terms and conditions set forth
herein; and

    

    WHEREAS, Buyer desires to
purchase all of Seller’s interest in and to JOY and NIII, including Polycrates’
49% of the issued and outstanding stock of JOY and Polycrates’ 51% of the issued
and outstanding stock of NIII, on the terms and conditions set forth herein;
and

    

    WHEREAS, the parties
previously entered a Memorandum of Understanding dated September 23, 2009,
pursuant to which Seller agreed to sell, and Buyer agreed to buy,  all
of Polycrates’ interests in and to JOY and NIII under certain terms and
conditions, which terms and conditions are set forth herein;

    

    WHEREAS, the Seller and Buyer
are responsible for paying the operational expenses of JOY and NIII, and as part
of this Agreement, Seller and Buyer desire to establish an escrow account for
payment of all accrued but unpaid operating expenses of JOY and NIII up through
the date of closing, as set forth in more detail in Article VIII below;
and

    

    WHEREAS, JOY and NIII are
willing to provide reports and information necessary to facilitate this
transaction.

    

    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:

    
      
         

      

      
        Purchase
Agreement - Page | 1

        
          

        

      

      
         

      

    

    ARTICLE
I

    PURCHASE
AND SALE OF POLYCRATES’ INTEREST

    

    Section
1.1             Sale of Polycrates’ Interest
in JOY and NIII.  Subject to the terms and conditions set forth
in this Agreement, at the Closing (as hereinafter defined) Seller hereby agrees
to sell, transfer, convey and deliver to Buyer all of Seller’s interest in and
to JOY and NIII, including Seller’s 49% of the issued and outstanding stock of
JOY and Seller’s 51% of the issued and outstanding stock of NIII, free and clear
of all encumbrances, save and except the lien securing Buyer’s obligation to pay
Seller, and shall deliver to Buyer certificates representing Seller’s interest
in JOY and NIII, duly endorsed to Buyer or accompanied by duly executed stock
powers in form and substance satisfactory to Buyer.

    

    Section
1.2             Purchase Price for
Polycrates’ Interest in JOY and NIII.  As consideration for the
purchase of Seller’s interest in and to JOY and NIII, Buyer shall pay to Seller
the total consideration of $2,200,000, plus assumption of the First State Bank
Note described below (the “Purchase Price”), which shall be payable as
follows:

     

    
      	
               
      

            	
              (a)

            	
              $880,000
      payable in immediately available funds at Closing;
  and

            

    

     

    
      	
               
      

            	
              (b)

            	
              Buyer
      shall execute a Promissory Note in the principal amount of $1,320,000,
      paid over a period of five (5) years in 60 equal monthly installments at
      an annual interest rate of 4.75%, as evidenced by a promissory note
      (“Secured Note”) in the form prescribed by the State Bar of
      Texas.  Said Secured Note
shall:

            

    

     

    
      	
               
      

            	
              i.

            	
              be
      in the original principal amount of $1,320,000, payable to Seller, and
      executed by Buyer in his capacity as an officer of JOY and NIII;
      and

            

    

    

    
      	
               
      

            	
              ii.

            	
              be
      secured by 100% of the outstanding shares of JOY and NIII;
    and

            

    

    

    
      	
               
      

            	
              iii.

            	
              be
      individually guaranteed by Buyer for the first thirty (30) months;
      and

            

    

    

    
      	
               
      

            	
              iv.

            	
              will
      be further secured by a second lien in favor of Seller against the real
      property and improvements located at 3105 South IH 35, Round Rock,
      Texas  78664 (the
“Property”).

            

    

    

    
      	
               
      

            	
              (c)

            	
              Buyer
      shall assume the Promissory Note dated Sept. 10, 2004, in the original
      principal amount of $850,000, executed by NIII and payable to First State
      Bank-Taylor, which Promissory Note had a current balance of $652,489.25 as
      of November 16, 2009.

            

    

     

    Section
1.3             Offset of Purchase
Price.  Seller hereby agrees to offset from the cash portion of
the Purchase Price as set forth in Section 1.2(a) above, $100,000 (“Amount of
Offset”) which represents an escrow deposit previously paid by Buyer to Seller
in accordance with paragraph 1.a. of the Memorandum of Understanding dated
September 23, 2009 (“Memorandum of Understanding”), a copy of which is attached
hereto.

    
      
         

      

      
        Purchase
Agreement - Page | 2

        
          

        

      

      
         

      

    

    ARTICLE
II

    CLOSING

    

    Section
2.1             The
Closing.  The closing of the transactions provided for in this
Agreement shall take place on or before December 31, 2009, 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 law
offices of Hearne & Browder, LLP, 700 Lavaca, Suite 910, Austin, Texas
78701.

    

    Section
2.2             Actions at the
Closing.  At the Closing:

    

    
      	
               
      

            	
              (a)

            	
              the
      Buyer shall deliver to Seller $880,000 cash, less the $100,000 Amount of
      Offset;

            

    

    

    
      	
               
      

            	
              (b)

            	
              the
      Buyer, in his capacity as an officer of JOY and NIII, shall execute the
      Secured Note as set forth in Section 1.2 (b) above, which Secured Note
      shall be individually guaranteed by Buyer for the first thirty (30)
      months;

            

    

    

    
      	
               
      

            	
              (c)

            	
              the
      Buyer and, as applicable, JOY and NIII, shall execute appropriate security
      instruments, including a 2nd
      lien deed of trust and stock pledge agreement, to secure the Secured Note
      as set forth in Section 1.2 (b)
above;

            

    

    

    
      	
               
      

            	
              (d)

            	
              the
      Buyer shall assume the Promissory Note dated Sept. 10, 2004, in the
      original principal amount of $850,000, executed by NIII and payable to
      First State Bank-Taylor, as set forth in Section 1.2 (c)
      above;

            

    

    

    
      	
               
      

            	
              (e)

            	
              Seller
      shall execute a Covenant Not to Compete which shall provide for terms and
      conditions consistent with Article V of the July 1, 2009 Stock Purchase
      Agreement for JOY and NIII;

            

    

    

    
      	
               
      

            	
              (f)

            	
              Seller
      shall resign as an officer and director of JOY and
  NIII;

            

    

    

    
      	
               
      

            	
              (g)

            	
              the
      Buyer shall execute any other documents necessary to finalize this
      Agreement;

            

    

    

    
      	
               
      

            	
              (h)

            	
              the
      Seller shall deliver to Buyer originally issued certificates representing
      all of Seller’s interest in and to JOY and NIII, including Seller’s 49% of
      the issued and outstanding stock of JOY and Seller’s 51% of the issued and
      outstanding stock of NIII, free and clear of any liens, claims, equities,
      charges, options, rights of first refusal or encumbrances, save for the
      lien securing Buyer’s obligation to pay Seller, duly endorsed to Buyer or
      accompanied by duly executed stock powers in form and substance
      satisfactory to Buyer;

            

    

    
      
         

      

      
        Purchase
Agreement - Page | 3

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (i)

            	
              the
      Seller shall deliver to Buyer Certificates of Existence issued by the
      Texas Secretary of State that both JOY and NIII are in existence as of the
      date of Closing, and a certificate of account status issued by the Texas
      Comptroller that both JOY and NIII are in good
  standing;

            

    

    

    
      	
               
      

            	
              (j)

            	
              NIII
      and JOY shall issue to the Buyer stock certificates representing the
      shares purchased from Seller with a notation on the share certificates
      that the share certificates are subject to a security
      agreement.  Any replacement certificates shall contain the same
      restriction until such time as the amounts due Seller are
      paid.

            

    

    

    
      	
               
      

            	
              (k)

            	
              Seller
      and Buyer shall deliver to one another the various certificates,
      instruments and documents (and shall take the required actions) referred
      to in Article V below;

            

    

    

    ARTICLE
III

    REPRESENTATIONS
AND WARRANTIES

    OF
SELLER

    

    Seller
hereby represents and warrants to the Buyer and any of its assignees as
follows:

    

    Section
3.1             Ownership of the Stock
Interests.  Seller owns, beneficially and of record, 49% of the
issued and outstanding stock of JOY and  51% of the issued and
outstanding stock of NIII (said stock interests collectively referred to herein
as “Stock Interests”), free and clear of any liens, claims, equities, charges,
options, rights of first refusal, or encumbrances.  Seller has the
unrestricted right and power to transfer, convey and deliver full ownership of
the Stock Interests 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 Stock Interests 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, save and except the lien securing Buyer’s
obligation to pay Seller.

    

    Section
3.2            
Authorization.   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.  All action on the part of
Seller necessary for the authorization, execution, delivery and performance of
this Agreement by him has been taken and will be taken prior to the
Closing.  This Agreement, when duly executed and delivered in
accordance with its terms, will constitute legal, valid and binding obligations
of Seller enforceable against him in accordance with its terms.

    

    Section
3.3             Consents.  No
consent of, approval by, order or authorization of, or registration, declaration
or filing by the Seller or JOY or NIII  with any court or any
governmental or regulatory agency or authority having jurisdiction over the
Seller or JOY or NIII  or any of their  property or assets
is required on the part of the Seller or JOY or NIII  (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 Seller, JOY or NIII  of this Agreement.

    
      
         

      

      
        Purchase
Agreement - Page | 4

        
          

        

      

      
         

      

    

    Section
3.4             Sellers’ Access to
Information.  The Seller hereby confirms and represents that he
(a) has been afforded the opportunity to ask questions of and receive answers
from representatives of  JOY and NIII concerning the business and
financial condition, properties, operations and prospects of JOY and NIII; (b)
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; (c) has had an opportunity to engage and is represented by
an attorney of his choice; (d) has had an opportunity to negotiate the terms and
conditions of this Agreement; (e) has been given adequate time to evaluate the
merits and risks of the transactions contemplated hereby; and (f) has been
provided with and given an opportunity to review all current information about
JOY and NIII.  Seller has asked such questions to representatives of
JOY and NIII as he desires to ask and all such questions have been answered to
the full satisfaction of Seller.

    

    Section
3.5             Brokerage
Commission.  No broker or finder has acted for 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 Seller.

    

    Section
3.6             Disclosure.  No
representation or warranty of 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.

    

    Section
3.7             Compliance with Laws;
Permits.  JOY is, and at all times prior to the date hereof has
been, to the best of Seller’s knowledge, in compliance with all statutes,
orders, rules, ordinances and regulations applicable to it or to the operation
of its business or ownership of its assets or the operation of its businesses,
except for failures to be in compliance that would not have a material adverse
effect on the business, properties or condition (financial or otherwise) of JOY
or as otherwise specifically disclosed in Section 8.1.  JOY presently
owns, or as of the Closing will own, hold or possess all permits and licenses
which are in any manner necessary for it to conduct its sexually oriented
business, including the right to serve alcoholic beverages.

    

    Section
3.8            
Pending
Claims.  Except as disclosed in Section 8.1 below, to the best
of Seller’s knowledge and belief, there is no claim, suit, arbitration,
investigation, action or other proceeding, whether judicial, administrative or
otherwise, now pending or, to the best of the Seller’s knowledge, 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 a material adverse effect upon JOY, nor is there any basis known to Seller
for any such action.  No litigation is pending, or, to Seller’s
knowledge, threatened against JOY or its assets or properties.

    

    Section
3.9             Organization, Good Standing
and Qualification of JOY and NIII.  JOY and NIII (i) are
entities 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 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 JOY and
NIII, respectively.

    
      
         

      

      
        Purchase
Agreement - Page | 5

        
          

        

      

      
         

      

    

    The
authorized capital stock of JOY consists of 3,000,000 shares of common stock, no
par value, of which 3,000,000 shares are validly issued and
outstanding.  The authorized capital stock of NIII consists of 1,000
shares of common stock, no par value, of which 1,000 shares are validly issued
and outstanding. There are no shares of preferred stock authorized or issued and
there is no other class of capital stock authorized or issued by JOY or
NIII.  All of the issued and outstanding shares of common stock of JOY
and NIII are owned by the Seller and Buyer and are fully paid and
non-assessable.  None of the JOY/NIII Shares issued are in violation
of any preemptive rights.  Neither JOY nor NIII has any obligation to
repurchase, reacquire, or redeem any of its outstanding capital
stock.  There are no outstanding securities convertible into or
evidencing the right to purchase or subscribe for any shares of capital stock of
JOY or NIII, there are no outstanding or authorized options, warrants, calls,
subscriptions, rights, commitments or any other agreements of any character
obligating JOY or NIII to issue any shares of its capital stock or any
securities convertible into or evidencing the right to purchase or subscribe for
any shares of such stock, and there are no agreements or understandings with
respect to the voting, sale, transfer or registration of any shares of capital
stock of JOY or NIII.

     

    Section
3.10           Subsidiaries.  Neither
JOY nor NIII have any subsidiaries.

    

    Section
3.11           No
Liabilities.  Except for the promissory note dated September
10, 2004, executed by NIII and payable to First State Bank-Taylor (which Note is
and will be current as of the Closing Date), as of the Closing
Date  JOY and NIII do not have and shall not have any obligation or
liability (contingent or otherwise) or unpaid bill to any third party which will
not either be paid in full at Closing, or paid within sixty (60) days of Closing
under Article VIII of this Agreement.

     

    ARTICLE
IV

    REPRESENTATIONS
AND WARRANTIES

    OF
BUYER

    

    Buyer
hereby represents and warrants to Seller as follows:

    

    Section
4.1             Authorization.  Buyer
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.  All action on the part of
Buyer necessary for the authorization, execution, delivery and performance of
this Agreement by him has been taken and will be taken prior to the
Closing.  This Agreement, when duly executed and delivered in
accordance with its terms, will constitute legal, valid and binding obligations
of Buyer enforceable against him in accordance with its terms.

    

    Section
4.2            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 in connection with the execution and delivery by
Buyer of this Agreement or the consummation and performance of the transactions
contemplated hereby other than consent of Buyer’s wife, which written consent
has been obtained as indicated below.

    
      
         

      

      
        Purchase
Agreement - Page | 6

        
          

        

      

      
         

      

    

    Section
4.3             Buyer’s Access to
Information.  The Buyer hereby confirms and represents that he
(a) has been afforded the opportunity to ask questions of and receive answers
from representatives of  JOY and NIII concerning the business and
financial condition, properties, operations and prospects of JOY and NIII; (b)
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; (c) has had an opportunity to engage and is represented by
an attorney of his choice; (d) has had an opportunity to negotiate the terms and
conditions of this Agreement; (e) has been given adequate time to evaluate the
merits and risks of the transactions contemplated hereby; and (f) has been
provided with and given an opportunity to review all current information about
JOY and NIII.  Buyer has asked such questions to representatives of
JOY and NIII as he desires to ask and all such questions have been answered to
the full satisfaction of Seller.

    

    Section
4.4             Disclosure.  No
representation or warranty of Buyer 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.

    

    Section
4.5             Brokerage
Commission.  No broker or finder has acted for the Buyer 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.

    

    Section
4.6             Compliance with Laws;
Permits.  JOY is, and at all times prior to the date hereof has
been, to the best of Buyer’s knowledge, in compliance with all statutes, orders,
rules, ordinances and regulations applicable to it or to the operation of its
business or ownership of its assets or the operation of its businesses, except
for failures to be in compliance that would not have a material adverse effect
on the business, properties or condition (financial or otherwise) of JOY or as
otherwise specifically disclosed in Section 8.1.  JOY presently owns,
or as of the Closing will own, hold or possess all permits and licenses which
are in any manner necessary for it to conduct its sexually oriented business,
including the right to serve alcoholic beverages.

    

    Section
4.7             Pending
Claims.  Except as disclosed in Section 8.1 below, to the best
of Buyer’s knowledge and belief, there is no claim, suit, arbitration,
investigation, action or other proceeding, whether judicial, administrative or
otherwise, now pending or, to the best of Buyer’s knowledge, 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 a
material adverse effect upon JOY, nor is there any basis known to Buyer for any
such action.  No litigation is pending, or, to Buyer’s knowledge,
threatened against JOY or its assets or properties.

    

    Section
4.8             Organization, Good Standing
and Qualification of JOY and NIII.  JOY and NIII (i) are
entities 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 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 JOY and
NIII, respectively.

    
      
         

      

      
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    The
authorized capital stock of JOY consists of 3,000,000 shares of common stock, no
par value, of which 3,000,000 shares are validly issued and
outstanding.  The authorized capital stock of NIII consists of 1,000
shares of common stock, no par value, of which 1,000 shares are validly issued
and outstanding. There are no shares of preferred stock authorized or issued and
there is no other class of capital stock authorized or issued by JOY or
NIII.  All of the issued and outstanding shares of common stock of JOY
and NIII are owned by the Seller and Buyer and are fully paid and
non-assessable.  None of the JOY/NIII Shares issued are in violation
of any preemptive rights.  Neither JOY nor NIII has any obligation to
repurchase, reacquire, or redeem any of its outstanding capital
stock.  There are no outstanding securities convertible into or
evidencing the right to purchase or subscribe for any shares of capital stock of
JOY or NIII, there are no outstanding or authorized options, warrants, calls,
subscriptions, rights, commitments or any other agreements of any character
obligating JOY or NIII to issue any shares of its capital stock or any
securities convertible into or evidencing the right to purchase or subscribe for
any shares of such stock, and there are no agreements or understandings with
respect to the voting, sale, transfer or registration of any shares of capital
stock of JOY or NIII.

     

    Section
4.9             Subsidiaries.  Neither JOY nor NIII have
any subsidiaries.

    

    Section
4.10           No
Liabilities.  Except for the promissory note dated September
10, 2004, executed by NIII and payable to First State Bank-Taylor (which Note is
and will be current as of the Closing Date), as of the Closing
Date  JOY and NIII do not have and shall not have any obligation or
liability (contingent or otherwise) or unpaid bill to any third party which will
not either be paid in full at Closing, or paid within sixty (60) days of Closing
under Article VIII of this Agreement."

    

    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.

    

    
      	
               
      

            	
              (a)

            	
              Representations and
      Warranties of the Seller.  The representations and
      warranties of the Seller shall be true and correct on the date hereof and
      on and as of the date of Closing, as though made on and as of the date of
      Closing.

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (c)

            	
              Delivery of
      Certificates.  The Seller shall provide to Buyer
      certificates, dated as of the date of Closing and signed by Seller 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)

            	
              Corporate
      Resolutions.  Seller shall provide corporate resolutions
      of the Board of Directors of JOY and NII  which approve the
      transactions contemplated herein and 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

            

    

    
      
         

      

      
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              (e)

            	
              No
      Termination.  The Buyer has not terminated this
      Agreement, as allowed under Section 9.1
below.

            

    

     

    
      	
               
      

            	
              (f)

            	
              Delivery of Stock
      Interests.  The Seller shall deliver or cause to be
      delivered to Buyer originally issued certificates representing all of
      Seller’s interest in and to JOY and NIII, including Seller’s 49% of the
      issued and outstanding stock of JOY and Seller’s 51% of the issued and
      outstanding stock of NIII,  free and clear of any liens, claims,
      equities, charges, options, rights of first refusal or encumbrances, save
      and except the lien securing Buyer’s obligations to pay Seller, duly
      endorsed to Buyer or accompanied by duly executed stock powers in form and
      substance satisfactory to Buyer.

            

    

     

    
      	
               
      

            	
              (g)

            	
              Non-Competition
      Agreement.  Seller shall have executed the Covenant Not
      to Compete as set forth in Section
2.2(e).

            

    

     

    
      	
               
      

            	
              (h)

            	
              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, including all permits and
      licenses which are in any manner necessary for JOY to conduct its sexually
      oriented business, including the right to serve alcoholic
      beverages..

            

    

     

    
      
        	
              	
                (i)

              	
                Status of
      Licenses. As
      of the Closing, JOY shall possess all necessary permits, zoning
      classifications and other authorizations, whether city, county, state or
      federal, which may be needed to conduct adult topless entertainment with
      the sale of alcoholic beverages on the Property, without any interruption,
      and all such permits, zoning classifications and authorizations shall be
      in good order, without any administrative actions pending or concluded
      that may challenge or present an obstacle to the continued performance of
      adult topless entertainment or sale of alcoholic beverages at
      JOY.  All necessary transfers of licenses, if any, required for
      the continued operation of JOY shall have been obtained.  The
      City of Round Rock’s Sexually Oriented Business Permit issued to JOY on or
      about July 31, 2009, shall be in full force and
  effect.

              

      

    

     

    
      	
               
      

            	
              (j)

            	
              Resignations.  Seller
      shall have resigned as an officer and director of JOY and
      NIII.

            

    

     

    
      	
               
      

            	
              (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.

            

    

    
      
         

      

      
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    Section
5.2             Conditions to Obligations of
the Seller

    

    
      	
               
      

            	
              (a)

            	
              Representations,
      Warranties and Agreements of Buyer.   The representations
      and warranties of Buyer shall be true and correct on the date hereof and
      on and as of the date of Closing.

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (c)

            	
              Delivery of
      Certificates.  Buyer shall provide to Seller certificates
      dated as of the Closing and signed by Buyer 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)

            	
              Corporate
      Resolutions.  Buyer shall provide appropriate resolutions
      or certificates  approving the transaction herein and
      authorizing the execution, delivery, and performance of this Agreement and
      the documents referred to herein.

            

    

     

    
      	
               
      

            	
              (e)

            	
              Payment of Purchase
      Price.  Buyer (i) shall have tendered the cash portion of
      the Purchase Price set forth in Section 1.2(a) less the Amount of Offset
      as provided for in Section 1.4, and (ii) shall have delivered to Seller
      the Secured Note and security instruments as set forth in Sections 1.2
      (b), and (iii) the assumption by Buyer of the Promissory Note dated Sept.
      10, 2004.

            

    

    

    
      	
               
      

            	
              (f)

            	
              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.

            

    

    

    
      	
               
      

            	
              (g)

            	
              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.

            

    

    

    
      	
               
      

            	
              (h)

            	
              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.

            

    

    
      
         

      

      
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    ARTICLE
VI

    INDEMNIFICATION

    

    Section
6.1            Indemnification from the
Seller.  Subject to the limitations set forth in Section 9.13
(Survival of Representations and Warranties), Section 6.6 (Basket), Section 6.7
(Taxes), Section 6.8 (Cap), and Section 6.9 (Limitation to Amount Not Covered by
Insurance and Subrogation of Indemnitor), Section 6.10 (Repayment of Excess
Benefit), and Section 6.12 (Exclusivity), the Seller agrees to and shall
indemnify, defend (with legal counsel reasonably acceptable to Buyer), and hold
JOY, NIII, and Buyer, his heirs, successors and assigns, including RCI
Entertainment (3105 I-35) Inc, his intended assignee, and any of their officers,
directors, and shareholders (collectively, the “Buyer 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 Group arising from or related to: (a) any material misrepresentation by,
or material breach of any covenant or warranty of  the
Seller  contained in this Agreement, or any exhibit, certificate, or
other instrument furnished or to be furnished by the Seller hereunder; or (b)
any nonfulfillment of any material agreement on the part of  the
Seller under this Agreement, or (c) any suit, action, proceeding, claim or
investigation against any member of the Buyer’s Group which arises from or which
is based upon or pertaining to the Seller’s conduct, or (d) one-half (1/2) of
the costs hereafter incurred by any member of the Buyer Group in defending or
settling any and all actions, suits, claims, demands, debts, liabilities,
obligations, losses, damages, costs, expenses, penalties or injury which have
been, or may hereafter be asserted against any member of the Buyer Group by any
third-party for acts or omissions occurring in connection with the operation of
JOY or NIII prior to the Closing, or (e) one-half (1/2) of any expenses, debts,
obligations or liabilities of JOY or NIII incurred prior to the
Closing.

    

    Section
6.2             Indemnification from
Buyer.  Subject to the limitations set forth in Section 9.13,
(Survival of Representations and Warranties), and Section 6.6 (Basket), Section
6.10 (Repayment of Excess Benefit), and Section 6.12 (Exclusivity),. Buyer
agrees to and shall indemnify, defend (with legal counsel reasonably acceptable
to Seller) and hold the Seller and his heirs, 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 the Seller’s Group, arising from or
related to: (a) any material misrepresentation by, or material breach of any
covenant or warranty of Buyer 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 under this Agreement; (c) any suit, action, proceeding, claim or
investigation against any member of the Seller’s Group which arises from or
which is based upon or pertaining to the Buyer’s conduct, or (d) the costs
hereinafter incurred by Seller in defending or settling any and all actions,
suits, claims, demands, debts, liabilities, obligations, losses, damages, costs,
expenses, penalties or injury which have been, or may hereafter be asserted
against any member of the Seller’s Group by any third-party for acts or
omissions occurring in connection with the operation of JOY or NIII subsequent
to the Closing, or (e) any expenses, debts, obligations or liabilities of JOY or
NIII incurred subsequent to the Closing.

    
      
         

      

      
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    Section
6.3             Defense of
Claims.  If any claim, demand, 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) except in cases where
the indemnified party has less than sixteen (16) days prior notice of such
hearing or action which must be taken.  The indemnifying party shall
have no obligation pursuant to this Agreement if the indemnified party fails to
provide notice to the indemnifying party of the claims, demand, or lawsuit
unless the indemnified party can show that the indemnifying party was not
prejudiced by the failure to provide such notice.  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.

    

    Notwithstanding
the above paragraph, JOY or NIII, as the case may be, shall have the right to
defend (using counsel reasonably acceptable to Seller) any suit, action,
proceeding or claim where Seller has an indemnity obligation pursuant to Section
6.1(d).  Buyer and JOY or NIII, as the case may be, shall promptly
inform the Seller of such suit, action, proceeding or claim.  Seller
shall have the right through counsel of its choice to participate in the
defense, at its own cost.  Seller shall have no obligation to
indemnify any party for any settlement made of any suit, action proceeding or
claim for any settlement and the accompanying legal fees and expenses incurred
if the Seller did not agree to such settlement.

    

    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 is entitled to
indemnification in accordance with Section 6.1 hereof, including the payment by
the Buyer of any debts or liabilities of JOY or NIII which were incurred prior
to, but unpaid as of the Closing, then Buyer shall have the right to offset any
such amount from any obligations that are then due and payable to the
Seller.

    
      
         

      

      
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    Section
6.6             Basket.  Neither
Buyer nor Seller is entitled to seek indemnification under this Article until
the aggregate of the Indemnifiable Losses to the applicable party exceeds $5,000
in which the Indemnifying Party shall indemnify the Indemnified Party pursuant
to this Article for losses in excess of $5,000.

    

    Section
6.7             Taxes.  Any
indemnity obligation of Seller for federal income tax, state sales tax or state
margin tax pursuant to Section 6.1(c) or 6.1 (e) shall be limited to one-half of
(1) any payment of tax actually required, plus one-half of interest and penalty
less (2) a reduction for one-half of any increased deductions that have or will
occur in any subsequent year as a result of the adjustment that gave rise to the
increased tax liability.

    

    Section
6.8          
  Maximum
Indemnity Obligation.  The aggregate obligation of Seller under
this Article is limited to $2, 200,000, except that the obligations are
unlimited with respect to any Indemnifiable Loss arising out of or relating to
fraud or willful misconduct by Seller

    

     

    Section
6.9            Indemnity, Obligation Net of
Insurance Proceeds.  JOY and NIII shall maintain the same type
and amount of insurance coverage as JOY and NIII provided immediately prior to
the execution and exchange of this Agreement and as described on Exhibit A
attached to this Agreement. Notwithstanding the other sections of this
Agreement, an Indemnifying Party shall only have an indemnity obligation with
regard to claims for amounts in excess of (1) amounts covered by applicable
insurance proceeds payable as a result of the incident or (2) amounts that would
have been covered by insurance proceeds that would have been payable as a result
of the incident if the insurance of the type and amount listed on Exhibit A had
been maintained.  An insurer who is otherwise obligated to pay a claim
is not relieved of the responsibility with respect to the claim and has no
subrogation rights with respect to the claim, in either instance, solely by
virtue of the indemnification provisions of this Article.

    

    Section
6.10           Indemnified Party’s
Obligation to Refund Excess Payment.  If any indemnified party
recovers an amount from a third party in respect of an Indemnifiable Loss for
which indemnification is provided in this Agreement and an indemnifying party
has either (i) previously paid the full amount of the Indemnifiable Loss, or
(ii) has made a partial payment of the Indemnifiable Loss and the aggregate
amount of that partial payment, plus the amount of the payment received from the
third party exceeds the amount of the Indemnifiable Loss, then (iii) the
indemnified party shall promptly remit to the indemnifying party the amount of
the payment received from the third party that exceeds the Indemnifiable Loss,
up to but not exceeding the amount that indemnifying party previously paid in
respect of the Indemnifiable Loss.

    

    Section
6.11           Exclusivity.  The
rights and remedies set forth in this Article constitute the exclusive rights
and remedies of the parties in respect to the matters indemnified under Sections
6.1 and 6.2.

    

    ARTICLE
VII

    LIMITED
MUTUAL RELEASE OF CLAIMS

    

    Section
7.1            
Release by
Seller. The Seller hereby releases and discharges Buyer, JOY and
NIII  and their officers, directors, shareholders, employees,
attorneys, affiliates and assigns from any and all claims, demands, or causes of
action, relating to the ownership, activities, operations, or management of JOY
or NIII; PROVIDED, HOWEVER, Seller does not release Buyer from this Agreement,
including Buyer’s obligations under Article VI hereof (and accompanying
agreements, covenants, and obligations executed in connection herewith, or made
a part hereof).

    
      
         

      

      
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    Section
7.2             Release by
Buyer.  Buyer, JOY and NIII hereby release and discharge the
Seller from any and all claims, demands, or  causes of action relating
to the activities, operations, or management of JOY or NIII; PROVIDED, HOWEVER,
Seller does not release Buyer from this Agreement, including Seller’s
obligations under Article VI hereof (and accompanying agreements, covenants, and
obligations executed in connection herewith, or made a part
hereof).

    

    ARTICLE
VIII

    PAYMENT
OF OPERATIONAL EXPENSES

    OBLIGATIONS
OF JOY AND NIII

    

    Section
8.1             Payment of Certain
Claims.  At the Closing, Seller will receive one-half (1/2) of
the funds then existing in the JOY operating account after payment of and/or
deduction of the following items of expenses:

     

    
      	
               
      

            	
              (a)

            	
              settlement
      of the IRS claim relating to employment taxes, in an amount equal to
      whatever is outstanding at the time of Closing (estimated to be
      approximately $42,000); provided, however, in the event the IRS claim is
      not satisfied as of Closing, $45,000 will be added to the Escrow Fund
      described below, and said IRS claim will be paid within sixty (60) days of
      Closing; and

            

    

     

    
      	
               
      

            	
              (b)

            	
              payment
      of the ad valorem taxes on the Property due December of 2009 (estimated to
      be approximately $44,000); and

            

    

     

    
      	
               
      

            	
              (c)

            	
              payment
      of all existing and accrued liabilities related to the operation of JOY.
      In connection therewith, Seller and Buyer agree that $50,000 will be
      withheld from JOY’s operating account and placed into escrow (“Escrow
      Fund”), as further described in Section 8.2
  below.

            

    

    

    Section
8.2            
Escrow
Fund.   At Closing an Escrow Fund will be established for
payment of all accrued but unpaid operating expenses of JOY and
NIII.  In addition to the $50,000 to be deposited into the Escrow Fund
under Section 8.1 above, all JOY revenues that are generated prior to the
Closing but received after the Closing will likewise be placed into the Escrow
Fund. The Escrow Fund will be utilized to pay all JOY’s and
NIII’s  unpaid operating expenses incurred up through the date of
Closing that have not been paid pursuant to Section 8.1(c) above. Said expenses
will be prorated as of the date of Closing, and will include, without
limitation, payroll, TABC taxes, utilities, mortgage payments, equipment rental,
and all other normal and routine operating expenses incurred by JOY and NIII
prior to the date of Closing but unpaid as of the date of Closing.

    

    Section
8.2.1          Escrow
Account.   The Escrow Fund will be established at the
Closing, and held in the IOLTA account of Hearne & Browder, LLP (“Escrow
Account”).    Any items to be paid from the Escrow Account
may be submitted by Seller,  Buyer, or Assignee to Douglass D. Hearne,
Jr. via email or facsimile, with a copy of said request being sent to Dimitri
Georgantas and Robert Axelrod. Seller Buyer, and Assignee, through their
respective counsel, will jointly approve all disbursements from the Escrow
Account. To the extent Buyer, Seller and Assignee disagree as to an expense item
to be paid from the Escrow Account, their respective counsel will determine if a
disputed item should be paid. The operating expenses to be paid from the Escrow
Account will be paid within sixty (60) days of Closing, at which time the Escrow
Account will terminate and any remaining balance in the Escrow Account, if any,
will be dispersed equally to Seller and Spiridon Karamalegos.

    
      
         

      

      
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    Section
8.3             Obligations of JOY and
NIII.  JOY and NIII shall maintain the same type and amount of
insurance  coverage as JOY and NIII provided immediately prior to the
execution and exchange of this Agreement and as described on Exhibit A attached
to this Agreement.  JOY and NIII agree that any replacement shares
issued to Buyer or Buyer’s assigns in replacement of the shares issued pursuant
to Section 2.2(j) shall bear the notation that the shares are subject to a
Security Agreement until such time as the obligation to Buyer is paid in
full.  Upon reasonable request, JOY and NIII agree to provide to
Seller annually financial statements, including a profit & loss and balance
sheet, as long as the obligation to the Seller is outstanding; provided,
however, Seller’s right to receive annual financial statements is conditioned
upon Seller executing a Confidentiality Agreement covering said financial
statements.

    

    ARTICLE
IX

    MISCELLANEOUS

    

    Section
9.1             Buyer’s Right to Terminate
and Receive Partial Refund of Escrow Deposit.  In accordance
with the terms of the Memorandum of Understanding, Buyer delivered a $100,000
escrow deposit (“Escrow Deposit”) to the IOLTA account of Seller’s counsel,
Chaffe McCall, via wire transfer, which entire Escrow Deposit is to be applied
to the $2,200,000 purchase price.   The Memorandum of
Understanding provided that of the $100,000 Escrow Deposit that $33,333.34 would
be non-refundable if the Buyer did not cancel the Memorandum of Understanding by
November 17, 2009, which cancellation did not
occur.   Thereafter, the Memorandum of Understanding provided
that the remaining Escrow Deposit ($66,666.66) would be refundable to Buyer as
follows:

    

    
      	
               
      

            	
              (a)

            	
              The
      remaining Escrow Deposit ($66,666.66) shall be refunded to Buyer or his
      designee if prior to 4:00 p.m. on December 17,
      2009, Buyer or his counsel deliver to Seller or his counsel via email or
      facsimile written notice that Buyer elects to terminate this Agreement. If
      Buyer does not timely send written notice of Buyer’s election to cancel
      this transaction by 4:00 p.m. on December 17,
      2009, then Seller’s counsel is thereafter immediately authorized to
      disburse to Seller or his designee $33,333.33 from the Escrow Deposit,
      which disbursement will be non-refundable and immediately available to
      Seller;

            

    

    

    
      	
               
      

            	
              (b)

            	
              The remaining Escrow Deposit
      ($33,333.33) shall be refunded to Buyer or his designee if prior to noon
      on December 30, 2009, Buyer or his counsel deliver to Seller or his
      counsel via email or facsimile written notice that Buyer elects to
      terminate this Agreement If Buyer does not timely send written of Buyer’s
      election to cancel this transaction by noon on December 30, 2009, then
      Seller’s counsel is thereafter immediately authorized to disburse to Buyer
      or his designee all funds remaining in the Escrow Deposit, which
      disbursement will be non-refundable and immediately available to
      Angelo.

            

    

    
      
         

      

      
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    Section
9.2             Failure to Close/ Seller’s
Remedy:  Notwithstanding any other provision contained in this
Agreement, if this transaction does not close by December 31, 2009, then this
Agreement, and all instruments hereafter prepared and executed in connection
with this transaction, shall be null and void, and Seller’s sole remedy shall be
his receipt of the Escrow Deposit as detailed in Section 9.1 above.

    

    Section
9.3            
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
9.4             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:

            	
              Evangelos
      Polycrates

            

    

    

    
      	
               
      

            	
              with
      a copy to:

            	
              Dimitri
      Georgantas

            

    

    

    
      	
               
      

            	
              (b)

            	
              if
      to Buyer:

            	
              Spiro
      Karamalegos

            

    

     

    
      	
               
      

            	
              with
      a copy to:

            	
              Douglass
      D. Hearne, Jr.

            

    

    700
Lavaca, Suite 910

    Austin,
Texas 78701

    (512)
494-8811

    (512)
494-8819 (fax)

    
      
         

      

      
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              (c)

            	
              if
      to Assignee:

            	
              RCI
      Entertainment (3105 I-35), Inc.

            

    

    Attn:     Eric
Langan, President

    10959
Cutten Road

    Houston,
Texas 77066

    

    
      	
               
      

            	
              with
      a copy to:

            	
              Robert
      D. Axelrod

            

    

    Axelrod,
Smith & Kirshbaum

    5300
Memorial Drive, Suite 700

    Houston,
Texas  77007

    713 861
1996 – telephone

    713 552
0202 - facsimile

    

    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.

    

    Section
9.5        
    Assignment; Successors and
Assigns.  Except as otherwise provided herein, the provisions
hereof shall inure to the benefit of, and be binding upon, the personal
representatives, heirs and permitted assigns of the parties
hereto.  Buyer may assign this Agreement, and Buyer’s rights
hereunder, to a third party, which assignment does not require the consent of
the Seller. Seller acknowledges that Buyer is intending to assign this Agreement
to RCI Entertainment (3105 I-35), Inc., a wholly owned subsidiary of Rick’s
Cabaret International, Inc. Upon said assignment, RCI Entertainment (3105 I-35),
Inc. shall:

    

    a.          
  execute the Secured Note and all security instruments related
thereto;

    

    b.       
     except as provided in subsection 9.5.1 below,
become solely responsible for discharging all monetary obligations under this
Agreement, including without limitation those obligations found in Articles I,
II, and VI, and Section 8.3; and

    

    c.         
   except as provided in subsection 9.5.1 below, receive all
benefits conferred upon Buyer under this Agreement, including without limitation
Seller’s representations, warranties, and obligations found in Articles I, II,
III, and VI, and Section 9.13 below.

    

    Section
9.5.1          Continuing Benefits and
Obligations of Spiridon Karamalegos. Notwithstanding Section 9.5 above,
Spirdon Karamalegos shall remain responsible for and/or receive the benefits of
the representations, warranties, and obligations found in Articles IV and VII
and Sections 1.2 (b) iii, 6.2(a), 6.2 (c), 8.1, 8.2, 8.2.1, 9.1, and
9.2.

    

    Section
9.6            
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.

    
      
         

      

      
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    Section
9.7            
Jurisdiction/
Arbitration.  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 Travis
County, Texas. In the event of any dispute arising between Seller and Buyer
regarding this Agreement, the enforcement, interpretation, breach and/or
application of this Agreement, the management or operation of JOY or NIII, the
Stock Intersts, or otherwise, Seller and Buyer agree that it is their express
intent that any such dispute not be settled through the judicial system, but
rather, after consultation with their respective legal advisors, Seller and
Buyer agree to submit any such dispute to binding arbitration.  Seller
and Buyer agree that binding arbitration, as fully described below, is the most
effective, prudent and reasonable manner to resolve disputes relating to or
concerning the contents of this Agreement.  Furthermore, Seller and
Buyer expressly wish that this matter not be heard in the public court system,
and desire that all disputes which may arise amongst or between the signatories
hereto remain confidential.  Therefore, Seller and Buyer hereby agree
that ANY CONTROVERSY OR CLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
MANAGEMENT OR OPERATION OF JOY, THE STOCK INTEREST BEING CONVEYED HEREUNDER, OR
OTHERWISE, SHALL BE SETTLED IN TRAVIS COUNTY, TEXAS, BY ARBITRATION IN
ACCORDANCE WITH THE RULES OF THE AMERICAN ARBITRATION ASSOCIATION AND JUDGMENT
UPON THE AWARD RENDERED BY THE ARBITRATOR(S) MAY BE ENTERED IN ANY COURT HAVING
JURISDICTION THEREOF. If the parties are unable to agree on the number and/or
selection of an Arbitrator(s), the parties agree that the Arbitrator (s) shall,
upon application filed in travis County, be appointed by a Travis County
District Judge.

    

    Section
9.8            
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
9.9             Costs and
Expenses.   Each party shall pay their own respective
fees, costs and disbursements incurred in connection with this
Agreement.

    

    Section
9.10           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
9.11           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
9.12           Further
Assurances.  Each party covenants that at any time, and from
time to time, after the Closing , it will execute such additional instruments
and take such actions as may be reasonably requested by the other party to
confirm or perfect or otherwise to carry out the intent and purposes of this
Agreement.

    
      
         

      

      
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    Section
9.13           Survival of Representations,
Warranties and Covenants.  All representations, warranties and
indemnities made in, pursuant to or in connection with this Agreement shall
survive the Closing for a period ending twenty-four months from the Closing,
provided, however, that any claim arising pursuant to Section 6.7 above shall
survive until 30 days following the expiration of its applicable statute of
limitations (“Survival Date”). Notwithstanding the foregoing, however, no claim
for indemnification may be made against the party required to indemnify under
this Agreement unless the party entitled to indemnification shall have given
written notice of such claim to the other party before the Survival Date. Any
claim for which notice has been given prior to the expiration of the Survival
Date shall not be barred hereunder.

    

    Section
9.14           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
9.15           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
9.16           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
APPEAR ON THE FOLLOWING PAGE.]

    
      
         

      

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

     

    
      	 
      	
              SELLER

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              Evangelos
      Polycrates, Individually

            
	 
      	
              Date:

            	 
      
	 
      	 
      	 
      
	 
      	
              BUYER

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              Spiridon
      Karamalegos, Individually

            
	 
      	
              Date:

            	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              JOY CLUB OF AUSTIN,
      INC.

            
	 
      	 
      	 
      
	 
      	
              By:

            	 
      
	 
      	
              Name:

            	 
      
	 
      	
              Title:

            	 
      
	 
      	
              Date:

            	 
      
	 
      	 
      	 
      
	 
      	
              NORTH
      IH 35 INVESTMENTS, INC.

            
	 
      	 
      	 
      
	 
      	
              By:

            	 
      
	 
      	
              Name:

            	 
      
	 
      	
              Title:

            	 
      
	 
      	
              Date:

            	 
      

    

     

    SPOUSAL
CONSENT:

     

    The undersigned, being the
wife of Spiridon Karamalegos, has reviewed this Stock Purchase Agreement, and
hereby consents to the terms thereof.

    

    
      	 
      
	
              Jacquelyn
      Karamalegos

            

    

    
      
         

      

      
        Purchase
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    EXHIBITS

     

     

    Purchase Agreement - Page
21

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