Document:

ex4_1.htm

    
      

    

    
      EXHIBIT
4.1

      

      

      INX
INC. 2008 EMPLOYEE STOCK PURCHASE PLAN

      

      1. Purpose. The
purpose of the Plan is to provide employees of the Company and its Designated
Subsidiaries with an opportunity to purchase Common Stock of the Company. It is
the intention of the Company to have the Plan qualify as an “employee stock
purchase plan” under Code Section 423 (including any amendments or
replacements of such Section). The provisions of the Plan shall, accordingly, be
construed in a manner consistent with the requirements of Code Section 423
and the applicable guidance of the Internal Revenue Service related
thereto.

      

      2. Definitions.

      

      (a) ”Board” means the Board of
Directors of the Company.

      

      (b) ”Code” means the Internal Revenue
Code of 1986, as amended.

      

      (c) ”Common
Stock” means the
Common Stock of the Company.

      

      (d) ”Company” means INX, Inc., a Delaware
corporation.

      

      (e) ”Compensation” means all W-2 cash
compensation, including, but not limited to, base salary, wages, bonuses,
incentive compensation, commissions, overtime, shift premiums, plus draws
against commissions, provided, however that compensation shall not include any
long term disability or workmen’s compensation payments, sabbatical payments,
car allowances, tuition, relocation payments, expense reimbursements and any
income realized as a result of participation in any stock option, stock
purchase, or similar plan of the Company or of any Designated Subsidiary, and
further provided, however, that for purposes of determining a participant’s
compensation, any election by such participant to reduce his or her regular cash
remuneration under Code Sections 125 or 401(k) shall be treated as if the
participant did not make such election.

      

      (f) ”Continuous
Status as an Employee”
means the absence of any interruption or termination of service as an
Employee. Continuous Status as an Employee shall not be considered interrupted
in the case of (i) transfers between locations of the Company or between
the Company and its Designated Subsidiaries, or (ii) any sick leave,
military leave, or any other leave of absence approved by the Company, provided
that any such leave is for a period of not more than ninety (90) days,
unless reemployment upon the expiration of such leave is guaranteed by contract
or statute, or unless provided otherwise pursuant to Company policy adopted from
time to time.

      

      (g) ”Contributions” means all amounts credited
to the account of a participant pursuant to the Plan.

      

      (h) ”Corporate
Transaction”
means a sale of all or substantially all of the Company’s assets, or a
merger, consolidation or other capital reorganization of the Company with or
into another corporation.

      

      (i) ”Designated
Subsidiaries”
means the Subsidiaries which have been designated by the Plan
Administrator from time to time in its sole discretion as eligible to
participate in the Plan.

      

      (j) ”Employee” means any common law
employee of the Company or one of its Designated Subsidiaries.

      

      (k) ”Exchange
Act” means the
Securities Exchange Act of 1934, as amended.

      

      (l) ”Fair
Market Value”
means the market price of a Share as determined in good faith by the
Board. Such determination shall be conclusive and binding on all persons. The
Fair Market Value shall be determined by the following:

      

      (i) If
the Shares are admitted to trading on any established national stock exchange or
market system on the date in question then the Fair Market Value shall be equal
to the closing sales price for such Shares as quoted on such national exchange
or system on such date; or

      

      (ii) if
the Shares are admitted to quotation or are regularly quoted by a recognized
securities dealer but selling prices are not reported on the date in question,
then the Fair Market Value shall be equal to the mean between the bid and asked
prices of the Shares reported for such date.

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      In each
case, the applicable price shall be the price reported in such source as the
Board deems reliable; provided, however, that if there is no such reported price
for the Shares for the date in question, then the Fair Market Value shall be
equal to the price reported on the last preceding date for which such price
exists. If neither (i) or (ii) are applicable, then the Fair Market
Value shall be determined by the Board in good faith on such basis as it deems
appropriate.

      

      (m) ”Offering
Date” means the
first trading day of each Offering Period under the Plan.

      

      (n) ”Offering
Period” means a
period of a duration to be determined by the Plan Administrator prior to the
commencement of the Offering Period as set forth in
Section 4(a).

      

      (o) ”Plan” means this INX, Inc. 2008
Employee Stock Purchase Plan.

      

      (p) ”Plan
Administrator”
means the Board or a committee comprised of at least two or more Board
members appointed from time to time by the Board.

      

      (q) ”Purchase
Date” means the
last trading day of each Purchase Period under the Plan.

      

      (r) ”Purchase
Period” means a
period within an Offering Period of a duration to be determined by the Plan
Administrator prior to the commencement of the Purchase Period as set forth in
Section 4(b) .

      

      (s) ”Purchase
Price” means
with respect to a Purchase Period an amount equal to eighty-five percent (85%)
of the Fair Market Value of a Share on the Offering Date or on the Purchase
Date, whichever is lower; provided, however, that in the event (i) of any
increase in the number of Shares available for issuance under the Plan as a
result of a stockholder-approved amendment to the Plan, (ii) all or a
portion of such additional Shares are to be issued with respect to one or more
Offering Periods that are underway at the time of such increase (“Additional Shares”),
and (iii) the Fair Market Value of a Share on the date of such increase
(the “Approval Date
Fair Market Value”) is higher than the Fair Market Value on the Offering
Date for any such Offering Period, then in such instance the Purchase Price with
respect to Additional Shares shall be eighty-five percent (85%) of the Approval
Date Fair Market Value or the Fair Market Value of a Share on the Purchase Date,
whichever is lower.

      

      (t) ”Share” means a share of Common
Stock.

      

      (u) ”Subsidiary” means any corporation
(other than the Company) in an unbroken chain of corporations beginning with the
Company if, at the time of grant of the Award, each of the corporations other
than the last corporation in the unbroken chain owns stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain. A corporation that attains the
status of a Subsidiary on a date after the adoption of the Plan shall be
considered a Subsidiary commencing as of such date.

      

      3. Eligibility.

      

      (a) Any
person who is an Employee and who meets the eligibility provisions for an
Offering Period set forth in Section 3(b) below as of a date on or prior to
the Offering Date established by the Plan Administrator shall be eligible to
participate in such Offering Period, subject to the requirements of
Section 5(a) and the limitations imposed by Code Section 423(b), and
provided however that eligible Employees may not participate in more than one
Offering Period at a time.

      

      (b) Subject
to Section 3(a) above and only to the extent determined by the Plan
Administrator for all Employees prior to the applicable deadline date
established by the Plan Administrator for an Offering Period, any Employee,
other than the Employees set forth below, shall be eligible to participate in
such Offering Period:

      

      (i) Employees
who are customarily employed for twenty (20) hours or less per
week; and

      

      (ii) Employees
who are customarily employed for five (5) months or less in a calendar
year.

      

      (c) Any
provisions of the Plan to the contrary notwithstanding, no Employee shall be
granted an option under the Plan (i.e., be permitted to participate in an
Offering Period) (i) if, immediately after the grant, such Employee (or any
other person whose stock would be attributed to such Employee pursuant to Code
Section 424(d)) would own capital stock of the Company and/or hold
outstanding options to purchase stock possessing five percent (5%) or more of
the total combined voting power or value of all classes of stock of the Company
or of any subsidiary, or (ii) if such option would permit his or her rights
to purchase stock under all Code Section 423 employee stock purchase
plans of the Company and its Subsidiaries to accrue at a rate which exceeds
twenty-five thousand dollars ($25,000) of the Fair Market Value of such stock
(determined at the time such option is granted) for each calendar year in which
such option is outstanding at any time.

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      4. Offering
Periods and Purchase Periods.

      

      (a) Offering
Periods. The Plan shall be
implemented by a series of Offering Periods, which may or may not be consecutive
and each of which will be of such duration as determined by the Plan
Administrator prior to the commencement of the Offering Period, provided that no
Offering Period may exceed twenty-seven (27) months. Offering Periods may
commence at any time as determined by the Plan Administrator (e.g., at quarterly
or semi-annual intervals over the term of the Plan). The Company will announce
the date each Offering Period will commence and the duration of that Offering
Period in advance of the first day of such Offering Period. The Plan shall
continue until terminated in accordance with Section 19 hereof. The Plan
Administrator shall have the power to change the duration and/or the frequency
of Offering Periods with respect to future offerings without stockholder
approval if such change is announced at least five (5) days prior to the
scheduled beginning of the first Offering Period to be affected, or later if
permitted by applicable law.

      

      (b) Purchase
Periods. Each Offering Period
shall consist of one (1) or more Purchase Periods as determined by the Plan
Administrator. The last trading day of each Purchase Period shall be the “Purchase Date” for
such Purchase Period. Subject to Section 2(r), the Plan Administrator shall
have the power to change the duration and/or frequency of Purchase Periods with
respect to future purchases without stockholder approval if such change is
announced at least five (5) days prior to the scheduled beginning of the
first Purchase Period to be affected, or later, if permitted by applicable
law.

      

      5. Participation.

      

      (a) An
eligible Employee may become a participant in the Plan by completing a
subscription agreement on the form provided by the Company and filing it with
the Company in such manner and at such time prior to the applicable Offering
Date as specifically required by the Company, unless a later time for filing the
subscription agreement is set by the Company for all eligible Employees with
respect to a given Offering Period. The subscription agreement shall set forth
the percentage of the participant’s Compensation (subject to Section 6(a)
below) to be submitted as Contributions under the Plan. A participant may
increase or decrease the rate of such Contributions for any Offering Period by
filing with the Company a new subscription agreement prior to the beginning of
such Offering Period, or such other time as specified by the Plan
Administrator.

      

      (b) Payroll
deductions shall commence with the first payroll paid following the Offering
Date and shall end with the last payroll paid on or prior to the applicable
Purchase Date for the Purchase Period to which the subscription agreement is
applicable, unless sooner terminated by the participant as provided in
Section 10.

      

      6. Method
of Payment of Contributions.

      

      (a) A
participant shall elect to have payroll deductions submitted as Contributions on
each payday during the Offering Period in an amount not less than one percent
(1%) and not more than twenty percent (20%) (or such lesser or greater
percentage as the Plan Administrator may establish from time to time before an
Offering Date or if permitted under applicable law, the first day of any
Purchase Period) of such participant’s Compensation on each payday during the
Offering Period. All payroll deductions made by a participant shall be credited
to his or her account under the Plan. A participant may not (i) make any
additional payments into such account or (ii) change the rate of his or her
payroll deductions with respect to an Offering Period or Purchase period, except
as permitted by the Plan Administrator; provided, however, that a participant
may discontinue his or her participation in the Plan as provided in
Section 10.

      

      (b) Notwithstanding
the foregoing, to the extent necessary to comply with Code
Section 423(b)(8) and Section 3(b) above, the Company may decrease a
participant’s payroll deductions during any Purchase Period to zero percent
(0%). Payroll deductions shall re-commence at the rate provided in such
participant’s subscription agreement at the beginning of the first Purchase
Period which is scheduled to end in the following calendar year, unless
terminated by the participant as provided in Section 10.

      

      7. Grant of
Option. On the Offering Date of each Offering Period, each eligible
Employee participating in such Offering Period shall be granted an option to
purchase on each Purchase Date a number of Shares determined by dividing such
Employee’s Contributions accumulated prior to such Purchase Date and retained in
the participant’s account as of the Purchase Date by the applicable Purchase
Price; provided that such purchase shall be subject to the limitations set forth
in Sections 3(b) and 13, and such purchase may be subject to a limitation
on the maximum number or value of Shares that may be purchased by an Employee
that is established by the Plan Administrator, subject to compliance with
applicable law.

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      8. Exercise
of Option. Unless a participant
withdraws from the Plan as provided in Section 10, his or her option will
be exercised automatically on each Purchase Date of an Offering Period, and the
maximum number of full Shares subject to the option that are permitted to be
purchased pursuant to the Plan will be purchased at the applicable Purchase
Price with the accumulated Contributions in his or her account. No fractional
Shares may be purchased under the Plan. Any payroll deductions accumulated in a
participant’s account which are not sufficient to purchase a full Share shall be
retained in the participant’s account, without interest, for the subsequent
Purchase Period or Offering Period, subject to earlier withdrawal by the
participant as provided in Section 10 below. The Shares purchased upon
exercise of an option hereunder shall be deemed to be transferred to the
participant on the Purchase Date. During his or her lifetime, a participant’s
option to purchase Shares hereunder is exercisable only by him or
her.

      

      9. Delivery. As promptly as
practicable after each Purchase Date of each Offering Period, the Company shall
arrange the delivery to each participant, as appropriate, of the Shares
purchased upon exercise of his or her option.

      

      10. Voluntary
Withdrawal; Termination of Employment. 

      

      (a) A
participant may withdraw all but not less than all of the Contributions credited
to his or her account under the Plan prior to any Purchase Date by giving
written notice to the Company on or prior to the deadline date before the end of
the Purchase Period specified by the Company. Upon any such election to
withdraw, all of the participant’s Contributions credited to his or her account
will be paid to him or her promptly after receipt of his or her notice of
withdrawal, his or her option for the current period will be automatically
terminated, and no further Contributions for the purchase of Shares will be made
during the Offering Period.

      

      (b) Upon
termination of the participant’s Continuous Status as an Employee for any
reason, including retirement or death, the Contributions credited to his or her
account will be returned to him or her or, in the case of his or her death, to
the executor or administrator of the estate of the participant, or if no such
executor or administrator has been appointed (to the knowledge of the Company),
the Company, in its discretion, may deliver such Contributions to such other
person as the Company may determine.

      

      (c) In
the event an Employee fails to remain in Continuous Status as an Employee for at
least twenty (20) hours per week during the Offering Period in which the
Employee is a participant, he or she will be deemed to have elected to withdraw
from the Plan and the Contributions credited to his or her account will be
returned to him or her and his or her option terminated.

      

      (d) A
participant’s withdrawal from an Offering Period will not have any effect upon
his or her eligibility to participate in a succeeding Offering Period or in any
similar plan which may hereafter be adopted by the Company.

      

      11. Automatic
Withdrawal. If the Fair Market
Value of the Shares on any Purchase Date of an Offering Period is less than the
Fair Market Value of the Shares on the Offering Date for such Offering Period,
then every participant shall automatically (i) be withdrawn from such
Offering Period at the close of such Purchase Date and after the acquisition of
Shares for such Purchase Period, and (ii) be enrolled in the Offering
Period commencing on the first trading day subsequent to such Purchase
Period.

      

      12. Interest. No interest shall
accrue on the Contributions of a participant in the Plan.

      

      13. Share
Reserve. 

      

      (a) Subject
to adjustment as provided in Section 18, the maximum number of Shares which
shall be made available for sale under the Plan shall be five-hundred thousand
(500,000) Shares. Such Shares shall be authorized but unissued Shares or
treasury Shares. If the Plan Administrator determines that, on a given Purchase
Date, the number of Shares with respect to which options are to be exercised may
exceed (i) the number of Shares that were available for sale under the Plan
on the Offering Date of the applicable Offering Period, or (ii) the number
of Shares available for sale under the Plan on such Purchase Date, the Plan
Administrator may in its sole discretion provide that the Company shall make a
pro rata allocation of the Shares available for purchase on such Offering Date
or Purchase Date, as applicable, in as uniform a manner as shall be practicable
and as it shall determine in its sole discretion to be equitable among all
participants exercising options to purchase Shares on such Purchase Date, and
the Company shall (x) continue all Offering Periods then in effect, or
(y) terminate any or all Offering Periods then in effect pursuant to
Section 19 below. The Company may make pro rata allocation of the Shares
available on the Offering Date of any applicable Offering Period pursuant to the
preceding sentence, notwithstanding any authorization of additional Shares for
issuance under the Plan by the Company’s stockholders subsequent to such
Offering Date.

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      (b) The
participant shall have no interest or voting right in Shares covered by his or
her option until such option has been exercised.

      

      (c) Shares
to be delivered to a participant under the Plan will be registered in the name
of the participant or in the name of the participant and his or her
spouse.

      

      14. Administration. The Plan shall be
supervised and administered by the Plan Administrator. The Plan Administrator
shall have full authority to administer the Plan, including authority to
interpret and construe any provision of the Plan, and to adopt such rules and
regulations not inconsistent with the Plan for administering the Plan as it may
deem necessary in order to comply with the requirements of Code
Section 423. Decisions of the Plan Administrator shall be final and binding
on all parties who have an interest in the Plan.

      

      15. Transferability. Neither Contributions
credited to a participant’s account nor any rights with regard to the exercise
of an option or to receive Shares under the Plan may be assigned, transferred,
pledged, or otherwise disposed of in any way (other than by will, or the laws of
descent and distribution) by the participant. Any such attempt at assignment,
transfer, pledge, or other disposition shall be void and without any effect,
except that the Company may treat such act as an election to withdraw funds in
accordance with Section 10.

      

      16. Use of
Funds. All
Contributions received or held by the Company under the Plan may be used by the
Company for any corporate purpose, and the Company shall not be obligated to
segregate such Contributions.

      

      17. Reports. Individual accounts
will be maintained for each participant in the Plan. Statements of account will
be given to participating Employees at least annually, which statements will set
forth the amounts of Contributions, the per Share Purchase Price, the number of
Shares purchased, and the remaining cash balance, if any.

      

      18. Adjustments
Upon Changes in Capitalization; Corporate Transactions. 

      

      (a) Adjustment. Subject to any
required action by the stockholders of the Company, the number of Shares covered
by each option under the Plan which has not yet been exercised and the number of
Shares which have been authorized for issuance under the Plan but have not yet
been placed under option, as well as the maximum number of Shares which may be
purchased by a participant in a Purchase Period specified pursuant to
Section 7 above, and the price per Share covered by each option under the
Plan which has not yet been exercised, shall be proportionately adjusted for any
increase or decrease in the number of issued Shares resulting from a stock
split, reverse stock split, stock dividend, combination, consolidation,
recapitalization (including a recapitalization through a large nonrecurring cash
dividend) or reclassification of the Shares (including any such change in the
number of Shares effected in connection with a change in domicile of the
Company), subdivision of the Shares, a rights offering, a reorganization,
merger, spin-off, split-up, change in corporate structure or other similar
occurrence, or any other increase or decrease in the number of Shares effected
without receipt of consideration by the Company; provided however that
conversion of any convertible securities of the Company shall not be deemed to
have been “effected without receipt of consideration.” Such adjustment shall be
made by the Plan Administrator, whose determination in that respect shall be
final, binding and conclusive. Except as expressly provided herein, no issue by
the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of Shares subject to the Plan
or any option.

      

      (b) Corporate
Transactions. In the event of a
dissolution or liquidation of the Company, any Purchase Period and Offering
Period then in progress will terminate immediately prior to the consummation of
such action, unless otherwise provided by the Plan Administrator. In the event
of a Corporate Transaction, each option outstanding under the Plan shall be
assumed or an equivalent option shall be substituted by the successor
corporation or a parent or subsidiary of such successor corporation. In the
event that the successor corporation refuses to assume or substitute outstanding
options, then all outstanding options under the Plan shall automatically be
exercised immediately prior to the consummation of such action by applying all
sums previously collected from participants during the Purchase Period of such
transaction to the purchase of whole Shares, subject, however, to all other
applicable provisions of the Plan, including the limits of Section 3(b).
For purposes of this Section 18, an option shall be deemed to be assumed,
without limitation, if, at the time of issuance of the stock or other
consideration upon a Corporate Transaction, each holder of an option would be
entitled to receive upon exercise of the option the same number and kind of
shares of stock or the same amount of property, cash or securities as such
holder would have been entitled to receive upon the occurrence of the
transaction if the holder had been, immediately prior to the transaction, the
holder of the number of Shares covered by the option at such time (after giving
effect to any adjustments in the number of Shares covered by the option as
provided for in this Section 18); provided however that if the
consideration received in the transaction is not solely common stock of the
successor corporation or its parent (as defined in Code Section 424(e)),
the Plan Administrator may, with the consent of the successor corporation,
provide for the consideration to be received upon exercise of the option to be
solely common stock of the successor corporation or its parent equal in Fair
Market Value to the per Share consideration received by holders of Common Stock
in the transaction.

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      (c) Acquisitions
and Dispositions.  The Plan Administrator may, in its sole and
absolute discretion and in accordance with principles under Code
Section 423, create special purchase periods for individuals who become
Employees solely in connection with the acquisition of another company or
business by merger, reorganization or purchase of assets and may provide for
special purchase dates for participants who will cease to be Employees solely in
connection with the disposition of all or a portion of any Designated Subsidiary
or a portion of the Company, which purchase periods and purchase rights granted
pursuant thereto shall, notwithstanding anything stated herein, be subject to
such terms and conditions as the Plan Administrator considers appropriate in the
circumstances.

      

      
        19.
Amendment
or Termination. 

      

      

      (a) The
Board may at any time and for any reason terminate or amend the Plan. Except as
provided in Section 18, no such termination of the Plan may affect options
previously granted, provided that the Plan or an Offering Period may be
terminated by the Board on a Purchase Date or by the Board’s setting a new
Purchase Date with respect to an Offering Period and Purchase Period then in
progress if the Board determines that termination of the Plan and/or the
Offering Period is in the best interests of the Company and the stockholders.
Except as provided in Section 18 and in this Section 19, no amendment
to the Plan shall make any change in any option previously granted which
adversely affects the rights of any participant. In addition, to the extent
necessary to comply with any applicable law, rule or regulation, the Company
shall obtain stockholder approval in such a manner and to such a degree as so
required.

      

      (b) For
purposes of clarity, without stockholder consent and without regard to whether
any participant rights may be considered to have been adversely affected, the
Plan Administrator may change the Offering Periods and Purchase Periods, limit
the frequency and/or number of changes in the amount of payroll deductions that
may be withheld during an Offering Period or Purchase Period, establish the
exchange ratio applicable to amounts withheld in a currency other than
U.S. dollars, permit payroll withholding in excess of the amount designated
by a participant in order to adjust for delays or mistakes in the Company’s
processing of properly completed withholding elections, establish reasonable
waiting and adjustment periods and/or accounting and crediting procedures to
ensure that amounts applied toward the purchase of Shares for each participant
properly correspond with amounts withheld from the participant’s Compensation,
and establish such other limitations or procedures as the Plan Administrator
determines in its sole discretion advisable which are consistent with the
Plan.

      

      20. Notices. All notices or other
communications by a participant to the Company under or in connection with the
Plan shall be deemed to have been duly given when received in the form specified
by the Company at the location, or by the person, designated by the Company for
the receipt thereof. Notwithstanding anything to the contrary contained in the
Plan, to the extent permitted by applicable law, the Company or a third party
designated by the Company may provide copies of the Plan and any related Plan
documentation (including subscription and other documents related to
participation in the Plan) to Employees by electronic delivery or other
paperless technology and, if permitted by the Company, eligible Employee may
submit any subscription agreement or any other Plan related documents or make
Plan-related decisions electronically or via other paperless technology in
accordance with such procedures as may be established by the Company from time
to time.

      

      21. Conditions
Upon Issuance of Shares. Shares shall not be
issued with respect to an option unless the exercise of such option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
applicable laws, rules and regulations, domestic or foreign, including, without
limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules
and regulations promulgated thereunder, applicable state securities laws and the
requirements of any stock exchange upon which the Shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance.

      

      As a
condition to the exercise of an option, the Company may require the person
exercising such option to represent and warrant at the time of any such exercise
that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for
the Company, such a representation is required by any of the aforementioned
applicable provisions of law.

      

      22. Term of
Plan; Effective Date. The Plan shall become
effective upon its approval by the Company’s stockholders. It shall continue in
effect to May 31, 2018 unless sooner terminated under
Section 19.

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      23. General
Provisions

      

      (a) All
costs and expenses incurred in the administration of the Plan shall be paid by
the Company.

      

      (b) Neither
the action of the Company in establishing the Plan, nor any action taken under
the Plan by the Board or the Plan Administrator, nor any provision of the Plan
itself shall be construed so as to grant any person the right to remain in the
employ of the Company or any of its Designated Subsidiaries for any period of
specific duration, and such person’s employment may be terminated at any time,
with or without cause.

      

      (c) The
provisions of the Plan shall be governed by the laws of the State of
Texas.ex10_1.htm

    
      

    

    Exhibit
10.1

    EXECUTION
VERSION

     

    ASSET PURCHASE
AGREEMENT

    

    This
Asset Purchase Agreement (the “Agreement”) is made and entered into
this 10th day of
May, 2008, by and among Rick’s Cabaret International, Inc., a Texas corporation
(“Rick’s”), its wholly owned subsidiary, RCI Entertainment (Northwest Highway),
Inc., a Texas corporation (hereinafter the “Purchaser”), North by East
Entertainment, Ltd., a Texas limited partner (hereinafter the “Seller”) by and
through its General Partner, Northeast Platinum, L.L.C. doing business as
Platinum Club II, and John Auletta (“Auletta”)

    

    WHEREAS, Auletta owns 100% of
the limited partnership interest of the Seller and 100% of the membership
interest of Northeast Platinum, L.L.C., the general partner of the Seller;
and

    

    WHEREAS, the Seller presently
owns a business that operates an adult entertainment cabaret known as “Platinum
Club II” (the “Business” or “PLATINUM”) located at 2501 Northwest Highway,
Dallas, Texas 75220 (the “Real Property” or the “Premises”); and

    

    WHEREAS, Seller desires to
sell, transfer and convey all of the assets owned by it which are associated or
used in connection with the operation of PLATINUM to the Purchaser, on the terms
and conditions set forth herein; and

    

    WHEREAS, the Purchaser desires
to purchase the assets from Seller on the terms and conditions set forth herein;
and

    

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

    

    ARTICLE
I

    PURCHASE
AND SALE OF THE ASSETS

    

    Section
1.1    Assets of Seller to be
Transferred to Purchaser.  On the Closing Date (as defined in
Section 4.1 hereof), and subject to the terms and conditions set forth in this
Agreement, Seller shall sell, convey, transfer and assign, or cause to be sold,
conveyed, transferred and assigned to Purchaser free and clear of all liens and
encumbrances, and Purchaser shall acquire all of the tangible and intangible
assets and personal property of every kind and description and wherever situated
of the business of PLATINUM from the Seller, including but not limited to, the
following personal property of the Seller:

    

    
      	
               
      

            	
              (i)

            	
              all
      of the tangible and intangible assets and personal properties of every
      kind and description and wherever situated of the business of PLATINUM,
      including, without limitation, inventories, furniture, fixtures, equipment
      (including office and kitchen equipment), computers and software,
      appliances, sign inserts,  sound and lighting and telephone
      systems not incorporated into the building, telephone numbers, and other
      personal property of whatever kind and nature owned or leased by Seller,
      installed, located, situated or used in, on, or about, or in connection
      with the operation, use and enjoyment of the Premises and all other items
      on the subject Premises and used in connection with the operation of
      PLATINUM;

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (ii)

            	
              all
      of Seller's inventory of supplies, accessories and any and all other items
      of personal property of whatever nature, sold by the Seller in the
      operation of PLATINUM  (the "Inventory"), provided that the
      transfer of any alcoholic inventory shall be done in accordance with the
      regulations of the TABC;

            

    

    

    
      	
               
      

            	
              (iii)

            	
              all
      supplies (other than Inventory) and other "consumable supplies" used in
      connection with the operation of PLATINUM (the
  "Supplies");

            

    

    

    
      	
               
      

            	
              (iv)

            	
              all
      of Seller's right, title, and interest, as lessee, of any and all
      equipment leased by Seller and located at PLATINUM (the "Leased
      Equipment");

            

    

    

    
      	
               
      

            	
              (v)

            	
              all
      right, title, and interest of Seller to the use of the telephone numbers
      presently being used by the Business, including all rotary extensions
      thereto, and all advertisements in the "Yellow Pages", "City Directory"
      and other similar publications (the "Telephone Numbers") and after the
      Closing, Purchaser shall assume all expenses for the Telephone Numbers and
      advertising; and

            

    

    

    
      	
               
      

            	
              (vi)

            	
              copies
      of Seller's lists of suppliers compiled in connection with the operation
      of PLATINUM which are requested by Purchaser (the
    "Records").

            

    

    

    All of
the items set forth in this Section 1.1 are collectively referred to as the
“Purchased Assets”.

     

    Section
1.2    Excluded
Assets.  Specifically excluded from the Purchased Assets are
the corporate seals, books, accounting records and records related to corporate
governance of the Seller, cash on hand at time of Closing, those assets listed
on Exhibit 1.2 hereto, and any and all necessary permits and authorizations
which are needed to conduct an adult entertainment business serving alcoholic
beverages at PLATINUM, which Purchaser acknowledges that it will need for such
purpose, including  its sexually oriented business permit and license
(hereinafter collectively referred to as the “Excluded Assets”).  In
the event that the parties agree to transfer the cash on hand at Closing from
the Seller to the Purchaser, then the Purchaser will agree to pay Seller for
such cash amount.

    

    Notwithstanding
the foregoing, Seller agrees to cooperate with Purchaser by surrendering its
necessary permit to conduct an adult entertainment business upon closing of this
Agreement, receipt of the Purchase Price and issuance to Purchaser by the City
of Dallas its necessary permit to conduct an adult entertainment business on the
Premises.  Similarly, Seller agrees to cooperate with Purchaser in
obtaining necessary licenses and permits to serve alcoholic beverages on the
premises, including the potential use of existing licenses and permits, if
appropriate, and by surrendering such licenses and permits necessary to serve
alcoholic beverages on the Premises upon Closing of this Agreement, receipt of
the Purchase Price and issuance to Purchaser of the necessary permits and
licenses necessary to serve alcoholic beverages on the Premises.

    

    Section
1.3    Intent of the
Parties.  Although the Exhibits to this Agreement are intended
to be complete, in the event such Exhibits fail to contain the description of
any asset belonging to Seller which is used solely for the business of PLATINUM
at the Premises, such assets shall nonetheless be deemed transferred to
Purchaser at the Closing.

    
      
         

      

      
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Purchase Agreement - Page 2

        
          

        

      

      
         

      

    

    ARTICLE
II

    NO
ASSUMPTION OF LIABILITIES

    

    Section
2.1    Excluded
Liabilities.  Notwithstanding anything contained in this
Agreement to the contrary, Purchaser shall have no obligation and is not
assuming, and Seller shall retain, pay, perform, defend and discharge all of the
liabilities and obligations of every kind whatsoever related or connected to the
Purchased Assets or the business of PLATINUM arising or accruing prior to the
Closing Date, whether disclosed or undisclosed, known or unknown on the Closing
Date, direct or indirect, absolute or contingent, secured or unsecured,
liquidated or unliquidated, accrued or otherwise, whether liabilities for taxes,
liabilities of creditors, liabilities arising under any profit sharing, pension
or other benefit under any plan of Seller, liabilities to any Governmental
Agency (as hereinafter defined) or third parties, liabilities assumed or
incurred by Seller by operation of law or otherwise (collectively, the “Excluded
Liabilities”), including, but not limited to, (i) contractual liabilities
arising from PLATINUM’S business or ownership of the Purchased Assets prior to
the Closing Date, and (ii) any taxes owing by Seller, whether occurring before
or after Closing and whether related to the business of PLATINUM, the Purchased
Assets or otherwise and any Liens on the Purchased Assets relating to any such
taxes.

    

    Section
2.2    Taxes.  Seller
shall pay when due any sales, transfer, excise, or other taxes which may be
imposed in any jurisdiction in connection with or arising from the sale and
transfer of any of the Purchased Assets to Purchaser.

    

    Section
2.3    Bulk Sales
Laws.  Seller acknowledges that any applicable provisions of
any tax clearance or bulk sales laws pertaining to the transactions contemplated
by this Agreement are  being complied with and that Seller agrees to
indemnify and hold harmless Purchaser from and against any and all liabilities
arising out of or relating to any such tax clearance or bulk sales
law.  Any such liability shall be an Excluded Liability.

    

    ARTICLE
III

    PURCHASE
PRICE FOR

    THE
PURCHASED ASSETS

    

    Section
3.1    Purchase
Price.  As consideration for the purchase of the Purchased
Assets, Purchaser shall pay to Seller, at Closing, $1,500,000.00, payable by
cashier’s check, certified funds or wire transfer.  The $1,500,000.00
cash payment is referred to as the “Purchase Price”.

    

    ARTICLE
IV

    CLOSING

    

    Section
4.1    The
Closing.  The closing of the transactions provided for in this
Agreement (the “Closing”) shall take place on the later of: (i) June 10, 2008;
or (ii) ten (10) days after the approval of Purchaser’s application for a
Sexually Oriented Business License by the City of Dallas and the transfer of all
other permits utilized to operate the Club to Purchaser or affiliates of
Purchaser (the “Closing Date”), provided however that in no event shall the
Closing Date be later than August 31, 2008.  The parties hereto hereby
agree that the Closing Date shall be extended until August 31, 2008, if the
Purchaser determines, in its sole discretion, to extend the Closing Date if the
City of Dallas denies the initial transfer of the sexually oriented business and
the Purchaser elects to appeal that decision.  The parties have agreed
further to close at the law offices of Quilling, Selander, Cummiskey &
Lownds, P.C., 2001 Bryan Street, Suite 1800, Dallas, Texas 75201, or at such
other place as agreed upon in writing among the parties hereto.

    
      
         

      

      
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Purchase Agreement - Page 3

        
          

        

      

      
         

      

    

    Section
4.2    Delivery and
Execution.  At the Closing: (a) the Seller shall deliver to
Purchaser all instruments of assignment and bills of sale necessary to transfer
to Purchaser good and marketable title to the Purchased Assets free and clear of
all liens, charges or encumbrances against delivery by Purchaser to the Seller
of payment in an amount equal to the Purchase Price of the Purchased Assets
being purchased by Purchaser in the manner set forth herein; (b) the Seller and
Purchaser shall deliver the various certificates, instruments and documents (and
shall take the required actions) referred to in Articles VII and VIII below; and
(c) the Related Transactions (as defined below) shall be consummated
concurrently with the Closing.

    

    Section
4.3    Related
Transactions.  In addition to the purchase and sale of the
Purchased Assets, the following actions shall take place contemporaneously at
the Closing (collectively, the "Related Transactions"):

    

    (i)           Covenant Not to
Compete.  At Closing, Auletta will enter into a five (5) year
covenant not to compete either directly of indirectly, with the adult nightclub
presently known as PLATINUM CLUB II by operating an establishment with an urban
theme that both serves liquor and provides live female nude or semi-nude adult
entertainment in Dallas County,  Tarrant County, Texas, or any of the
adjacent counties thereto; provided, however, that any Non-Competition Agreement
will permit Auletta the right to own and/or operate an establishment without an
urban theme that both serves liquor and provides live female nude or semi-nude
adult entertainment in Dallas County, Texas, Tarrant County, Texas, or any of
the adjacent counties thereto.

    

    (ii)           Real Estate Purchase and Sale
Agreement  to Purchase Real Property.  RCI Holdings,
Inc., a Texas corporation (“RCI”) and WIRE WAY, LLC, a Texas limited liability
company (“Wire Way”) will enter into a REAL ESTATE PURCHASE AND SALE AGREEMENT
pursuant to which RCI will purchase the Real Property from Wire Way (the “Real
Estate  Agreement”), pursuant to which  the purchase and
sale of the Real Property shall be governed.  A true and correct copy
of the Real Estate Agreement is attached hereto as Exhibit 4.3(ii).

    

    ARTICLE
V

    REPRESENTATIONS
AND WARRANTIES

    OF
AULETTA AND THE SELLER

    

    Auletta
and the Seller hereby represent and warrant to Purchaser and Rick’s as
follows:

    
      
         

      

      
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Purchase Agreement - Page 4

        
          

        

      

      
         

      

    

    Section
5.1    Organization, Good Standing
and Qualification.  The Seller (i) is an entity duly organized,
validly existing and in good standing under the laws of the state of Texas, (ii)
has all requisite power and authority to operate the Business, and (iii) is duly
qualified to transact business and is in good standing in Texas.

    

    Section
5.2    Ownership of the Purchased
Assets.  Seller owns or will own at Closing, all of the
Purchased Assets 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 Purchased
Assets 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 Purchased Assets to Purchaser as
contemplated herein, Purchaser 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.

    

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

    

    Section
5.4    No Breaches;
Consents.  Except as set forth in Schedule 5.4, the execution,
delivery, and performance of this Agreement and the transactions contemplated
hereby by the Seller does not:  (i) violate any provision of its
Articles of Organization or Regulations; (ii) conflict with, violate, or
constitute a breach of or a default under; (iii) result in the creation or
imposition of any lien, claim, or encumbrance of any kind upon the Purchased
Assets; or (iv) require any authorization, consent, approval, exemption, or
other action by or filing with any third party or Governmental Authority under
any provision of:  (a) any applicable Legal Requirement; or (b) any
credit or loan agreement, promissory note, or any other agreement or instrument
to which the Seller is a party or by which the Purchased Assets may be bound or
affected.  For purposes of this Agreement, "Governmental Authority"
means any foreign governmental authority, the United States of America, any
state of the United States, and any political subdivision of any of the
foregoing, and any agency, department, commission, board, bureau, court, or
similar entity, having jurisdiction over the parties hereto or their respective
assets or properties.  For purposes of this Agreement, "Legal
Requirement" means any law, statute, injunction, decree, order or judgment (or
interpretation of any of the foregoing) of, and the terms of any license or
permit issued by, any Governmental Authority.

    

    Section
5.5    Pending
Claims.  Except as set forth in Schedule 5.5, there is no known
claim, suit, arbitration, investigation, action or other proceeding, whether
judicial, administrative or otherwise, now pending or, to the best of the
Seller’s or Auletta’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 any effect upon the Seller, or the
business of PLATINUM or the operation of PLATINUM after the Closing Date, nor is
there any basis known to the Seller or Auletta for any such
action.  No litigation is pending, or, to the Seller’s or Auletta’s
knowledge, threatened against the Seller, or the business of PLATINUM, or the
Purchased Assets which seeks to restrain or enjoin the execution and delivery of
this Agreement or any of the documents referred to herein or the consummation of
any of the transactions contemplated hereby. Seller is not subject to any
judicial injunction or mandate or any quasi-judicial or administrative order or
restriction directed to or against them which would affect the Seller or the
Business.

    

    
      
        
        

      

      
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Purchase Agreement - Page 5

        
          

        

      

      
        
        

      

    

     

    Section
5.6    Taxes.  The
Seller has timely and accurately prepared and filed all federal, state, foreign
and local tax returns and reports required to be filed prior to such dates and
have timely paid all taxes shown on such returns as owed for the periods of such
returns, including all sales taxes and withholding or other payroll related
taxes shown on such returns.  The Seller is not delinquent in the
payment of any tax or governmental charge of any nature.  Neither the
Seller nor Auletta has knowledge of any liability for any tax to be imposed by
any taxing authorities as of the date of this Agreement and as of the Closing
that is not adequately provided for.  No assessments or notices of
deficiency or other communications have been received by the Seller with respect
to any tax return which has not been paid, discharged or fully reserved against
and no amendments or applications for refund have been filed or are planned with
respect to any such return.  None of the federal, state, foreign and
local tax returns of the Seller have been audited by any taxing
authority.  The Seller has no knowledge of any additional assessments,
adjustments or contingent tax liability (whether federal or state) of any nature
whatsoever, whether pending or threatened against the Seller for any period, nor
of any basis for any such assessment, adjustment or
contingency.  There are no agreements between the Seller and any
taxing authority, including, without limitation, the Internal Revenue Service,
waiving or extending any statute of limitations with respect to any tax
return.

    

    Section
5.7    Labor
Matters.  The Seller is not a party or otherwise subject to any
collective bargaining agreement with any labor union or
association.  There are no discussions, negotiations, demands or
proposals that are pending or have been conducted or made with or by any labor
union or association, and there are not pending or threatened against the Seller
any labor disputes, strikes or work stoppages.  To the best of
Seller’s and Auletta’s knowledge, the Seller is in compliance with all federal
and state laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, and, to its knowledge, is not
engaged in any unfair labor practices.

    

    Section
5.8    Compliance with
Laws.  The Seller is, and at all times prior to the date
hereof, has been in compliance with all statutes, orders, rules, ordinances and
regulations applicable to it or to the ownership of its assets or the operation
of its businesses, except for failures to be in compliance that would not have a
material adverse effect on the business, properties, condition (financial or
otherwise) or prospects of the Seller.  The Seller has no basis to
expect, nor has it received any order or notice of any such violation or claim
of violation of any such statute, order, rule, ordinance or regulation by the
Seller.

    

    Section
5.9    Title to Properties;
Encumbrances.  Seller has (or will have at Closing) good and
marketable title to all of the Purchased Assets, free and clear of all
mortgages, claims, liens, security interests, charges, leases, encumbrances and
other restrictions of any kind and nature.

    
      
         

      

      
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Purchase Agreement - Page 6

        
          

        

      

      
         

      

    

    Section
5.10    Contracts and
Leases.  Except as previously provided to Purchaser, the
Seller does not (i) have any leases of personal property relating to the
Purchased Assets, whether as lessor or lessee; (ii) have any contractual or
other obligations relating to the Purchased Assets, whether written or oral; and
(iii) have given any power of attorney to any person or organization for any
purpose relating to the Purchased Assets or the business of
PLATINUM.  The Seller has previously provided to Purchaser or will
provide to Purchaser prior to the Closing Date each and every contract, lease or
other document relating to the Purchased Assets to which it is subject or is a
party or a beneficiary.  To Seller’s knowledge, such contracts, leases
or other documents are valid and in full force and effect according to their
terms and constitute legal, valid and binding obligations of the Seller and the
other respective parties thereto and are enforceable in accordance with their
terms.  Seller  has no knowledge of any default or breach
under such contracts, leases or other documents or of any pending or threatened
claims under any such contracts, leases or other documents. Neither the
execution of this Agreement, nor the consummation of all or any of the
transactions contemplated under this Agreement, will constitute a breach or
default under any such contracts, leases (unless waived by Landlord) or other
documents which would have a material adverse effect on the Purchased
Assets.

    

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

    

    Section
5.12    Brokerage
Commission.  The Seller represents and warrants that there is
no broker and no brokerage commission associated with this asset sale and Seller
shall indemnify, defend and hold harmless Purchaser and Rick’s from
same.

    

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

    

    ARTICLE
VI

    REPRESENTATIONS
AND WARRANTIES

    OF
PURCHASER AND RICK’S

    

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

    

    Section
6.1    Organization, Good Standing
and Qualification.  Purchaser and Rick’s (i) are
corporations  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 its business; and (iii) are duly qualified to transact
business and is in good standing in Texas.

    
      
         

      

      
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Purchase Agreement - Page 7

        
          

        

      

      
         

      

    

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

    

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

    

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

    

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

    

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

    

    ARTICLE
VII

    CONDITIONS
TO CLOSING OF

    SELLER
AND AULETTA

    

    Each
obligation of Seller and Auletta to be performed on the Closing Date shall be
subject to the satisfaction of each of the conditions stated in this Article
VII, except to the extent that such satisfaction is waived by Seller and Auletta
in writing.

    

    Section
7.1    Representations and
Warranties Correct.  The representations and warranties made by
Purchaser and Rick’s contained in this Agreement shall be true and correct as of
the Closing Date.

    
      
         

      

      
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Purchase Agreement - Page 8

        
          

        

      

      
         

      

    

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

    

    Section
7.3    Delivery of
Certificate.  Purchaser and Rick’s shall provide to Seller and
Auletta certificates, dated the Closing Date and signed by the President of
Purchaser and Rick’s to the effect set forth in Section 7.1 and 7.2 for the
purpose of verifying the accuracy of such representations and warranties and the
performance and satisfaction of such covenants and conditions.

    

    Section
7.4    Payment of Purchase
Price.  Purchaser shall have tendered the Purchase Price for
the Purchased Assets as referenced in Section 3.1 to the Seller concurrently
with the Closing.

    

    Section
7.5    Related
Transactions.  The Related Transactions set forth in Section
4.3 shall be consummated concurrently with the Closing.

    

    Section
7.6    New Lease
Agreement.  Wire Way, the landlord under the existing Lease
Agreement on the Premises, shall have agreed to and shall have terminated the
lease with Seller upon Closing, receipt by Seller of the Purchase Price and the
issuance of a sexually oriented business permit to Purchaser and,
contemporaneously Wire Way and Purchaser shall execute a similar Lease Agreement
under which Purchaser as tenant shall pay $45,000.00 month to Wire Way as
Landlord.

    

    Section
7.7    Corporate
Resolutions.  Purchaser and Rick’s shall provide corporate
resolutions of their Board of Directors 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.

    

    Section
7.8    Absence of
Proceedings.   No action, suit or proceeding by or before
any court or any governmental or regulatory authority shall have been commenced
and no investigation by any governmental or regulatory authority shall have been
commenced seeking to restrain, prevent or challenge the transactions
contemplated hereby against Purchaser or Rick’s.

    

    
       
ARTICLE
VIII

    

    CONDITIONS
TO CLOSING OF

    PURCHASER
AND RICK’S

    

    Each
obligation of Purchaser and Rick’s to be performed on the Closing Date shall be
subject to the satisfaction of each of the conditions stated in this Article
VIII, except to the extent that such satisfaction is waived by Purchaser and
Rick’s in writing.

    

    Section
8.1    Representations and
Warranties Correct.  The representations and warranties made by
the Seller and Auletta shall be true and correct as of the Closing
Date.

    
      
         

      

      
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Purchase Agreement - Page 9

        
          

        

      

      
         

      

    

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

    

    Section
8.3    Delivery of
Certificate.  Seller and Auletta shall provide to Purchaser and
Rick’s certificates, dated the Closing Date and signed by the General Partner of
Seller and Auletta to the effect set forth in Section 8.1 and 8.2 for the
purpose of verifying the accuracy of such representations and warranties and the
performance and satisfaction of such covenants and conditions.

    

    Section
8.4    Delivery of Purchased
Assets.  The Seller shall have delivered to Purchaser all
instruments of assignment and bills of sale necessary to transfer to Purchaser
good and marketable title to the Purchased Assets.

    

    Section
8.5   Corporate
Resolutions.  The Seller shall provide to Purchaser resolutions
of the Seller which approves all of the transactions contemplated herein and
authorizes 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.

    

    Section
8.6    Ownership of Purchased
Assets.  The Seller shall own not less than 100% of the
Purchased Assets which represent all of the assets, personal, tangible and
intangible that are required and material to the condition (financial or
otherwise), business, operations or prospects of PLATINUM.

    

    Section
8.7    Related
Transactions.  The Related Transactions set forth in Section
4.3 shall be consummated concurrently with the Closing.

    

    Section
8.8    Permits.  Purchaser
shall possess all necessary permits, zoning classifications and other
authorizations, whether city, county, state or federal, which may be needed to
conduct topless entertainment with the sale of alcoholic beverages on the
Premises and all such permits, zoning classifications and authorizations shall
be in good order, and, unless otherwise waived by the Purchaser and Rick’s,
without any administrative actions pending or concluded that may challenge or
present an obstacle to the continued performance of topless entertainment and
sale of alcoholic beverages at PLATINUM and the Certificate of Occupancy issued
by the City of Dallas which zones the Premises for an adult oriented business
shall be in full force and effect.

     

    Section
8.9    No Assumption of
Liabilities.  Neither the Purchaser nor Rick’s shall assume any
liabilities as of the date of Closing.

    

    Section
8.10  New
Lease Agreement.  Wire Way, the landlord under the existing
Lease Agreement on the Premises, shall have agreed to and shall have terminated
the lease with Seller upon Closing, receipt by Seller of the Purchase Price and
the issuance of a sexually oriented business permit to Purchaser and,
contemporaneously Wire Way and Purchaser shall execute a similar Lease Agreement
under which Purchaser as tenant shall pay $45,000.00 month to Wire Way as
Landlord.

    
      
         

      

      
        Asset
Purchase Agreement - Page 10

        
          

        

      

      
         

      

    

    Section
8.11    Satisfactory
Diligence.  Purchaser and Rick’s shall have concluded their due
diligence investigation of the Seller’s assets and shall be satisfied, in its
sole discretion, with the results thereof.

    

    Section
8.12    Absence of
Proceedings.  No action, suit or proceeding by or before any
court or any governmental or regulatory authority shall have been commenced and
no investigation by any governmental or regulatory authority shall have been
commenced seeking to restrain, prevent or challenge the transactions
contemplated hereby or seeking judgments against the Seller, Auletta or any of
their assets.

    

    Section
8.13   Board
Approval.  The Board of Directors of Purchaser and Rick’s shall
have approved all of the transactions contemplated hereby and shall have
authorized the execution, delivery and performance of all agreements and
documents referred to herein to which it is or is to be a party.

    

    Section
8.14   Delivery
of Additional $15,000.00 to Seller.  Purchaser shall pay Seller
$15,000.00 for its role in D.A.F.E. and Purchaser shall substitute in for Seller
therein.

    

    ARTICLE
IX

    COVENANTS
OF THE SELLER AND  AULETTA

    

    Section
9.1      Stand
Still.  To induce Purchaser and Rick’s to proceed with this
Agreement, the Seller and Auletta agree that until the Closing Date or the
termination of this Agreement, no representative of the Seller or Auletta will
offer to sell or solicit any offer to purchase or engage in any discussions or
activities of any nature whatsoever, directly or indirectly, involving in any
manner the actual or potential sale, transfer, encumbrance, pledge,
collateralization or hypothecation of any of the Purchased
Assets.  The Seller and Auletta hereby agree to advise the Purchaser
and Rick’s of any contact from any third party regarding the acquisition of the
Purchased Assets or other investment in the Seller, or of any contact which
would relate to the transactions contemplated by this Agreement.

    

    Section
9.2    Access; Due
Diligence.  Between the date of this Agreement and the Closing
Date or the termination of this Agreement, Seller and Auletta shall permit the
Purchaser and Rick’s to make inspections of the Premises and Seller shall
discuss with the Purchaser and Rick’s and their authorized representatives the
assets of Seller and Auletta as the Purchaser and Rick’s may from time to time
reasonably want to discuss.

    

    Section
9.3    Preservation of
Business.  Subsequent to the execution of this Agreement, and
prior to the Closing Date of this Agreement, the Seller will carry on its
business and operate the business of PLATINUM in substantially the same manner
as it has heretofore, consistent with past practices, and:

    

    
      	
               
      

            	
              (a)

            	
              The
      Seller shall perform in all material respects all of its obligations under
      material contracts, leases and other documents relating to or affecting
      any of its assets, property or its business or the business of
      PLATINUM;

            

    

    
      
         

      

      
        Asset
Purchase Agreement - Page 11

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (b)

            	
              The
      Seller will not sell, lease, transfer or assign any of its assets,
      tangible or intangible, other than inventory for a fair consideration, and
      in the ordinary course of business;

            

    

    

    
      	
               
      

            	
              (c)

            	
              The
      Seller will operate its business and the business of PLATINUM in the
      ordinary course and consistent with past practices so as to preserve its
      business organization intact, to retain the ser­vices of its employees
      and to preserve its goodwill and relationships with suppliers, creditors,
      cus­tomers, and others having business relationships with
      it;

            

    

    

    
      	
               
      

            	
              (d)

            	
              The
      Seller will not delay or postpone the payment of accounts payable and
      other liabilities outside the ordinary course of business;
    and

            

    

    

    (e)           The
Seller will not agree to take any action described in this Section
9.3

    

    ARTICLE
X

    INDEMNIFICATION

    

    Section
10.1    Indemnification from Seller
and Auletta.  Seller and Auletta hereby agree to and shall
indemnify, defend (with legal counsel reasonably acceptable to Purchaser and
Rick’s), and hold Purchaser and Rick’s, its officers, directors, shareholders,
employees, affiliates, agents, legal counsel, successors and assigns
(collectively, the "Purchaser 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) suffered or incurred by any of the
Purchaser Group arising from: (a) any misrepresentation by, or breach of any
covenant, representation or warranty of the Seller or Auletta contained in this
Agreement, or any exhibit or other instrument furnished or to be furnished by
Seller or Auletta; (b) any nonfulfillment of any agreement on the part of Seller
or Auletta under this Agreement; (c) any liability or obligation due to any
third party by the Seller or the business of PLATINUM arising or incurred at or
prior to the Closing Date; (d) any suit, action or proceeding, against any of
the Purchaser Group which arises from or which is based upon or pertaining to
the conduct or the operation or liabilities of Seller or the business of
PLATINUM at or prior to the Closing Date.

    

    Section
10.2    Indemnification from
Purchaser and Rick’s.  Purchaser and Rick’s agree to and shall
indemnify, defend (with legal counsel reasonably acceptable to the Seller) and
hold Auletta, Seller and its members, managers, employees, affiliates, agents,
legal counsel, successors and assigns (collectively, the "Seller 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 attorney’s
fees and costs of any suit related thereto)  suffered or incurred by
any of the Seller Group, arising from (a) any misrepresentation by, or breach of
any covenant, representation or warranty of Purchaser and Rick’s contained in
this Agreement or any exhibit, certificate, or other agreement or instrument
furnished or to be furnished by Purchaser and Rick’s hereunder; (b) any
nonfulfillment of any agreement on the part of Purchaser and Rick’s under this
Agreement; or (c) any suit, action or proceeding against any of the Seller Group
which arises from or which is based upon or pertaining to Purchaser’s conduct or
the operation of the business of PLATINUM subsequent to the Closing
Date.

    
      
         

      

      
        Asset
Purchase Agreement - Page 12

        
          

        

      

      
         

      

    

    Section
10.3    Defense of
Claims.  If any lawsuit enforcement action or any attempt to
collect on an alleged liability is filed against any party entitled to the
benefit of indemnity hereunder, written notice thereof shall be given to the
indemnifying party within ten (10) business days after receipt
of  notice or other date by which action must be taken; provided that
the failure of any indemnified party to give timely notice shall not affect
rights to indemnification hereunder except to the extent that the indemnifying
party demonstrates damage caused by such failure.  After such notice,
the indemnifying party shall be entitled, if it so elects, to take control of
the defense and investigation of such lawsuit or action and to employ and engage
attorneys of its own choice to handle and defend the same, at the indemnifying
party's cost, risk and expense; and such indemnified party shall cooperate in
all reasonable respects, at its cost, risk and expense, with the indemnifying
party and such attorneys in the investigation, trial and defense of such lawsuit
or action and any appeal arising therefrom; provided, however, that the
indemnified party may, at its own cost, participate in such investigation, trial
and defense of such lawsuit or action and any appeal arising therefrom, but the
fees and expenses of such counsel shall be at the expense of such indemnified
party, except to the extent that (i) the employment thereof has been
specifically authorized by the indemnifying party in writing; (ii) the
indemnifying party has failed after a reasonable period of time to assume such
defense and to employ counsel; or (iii) in such action there is, in the
reasonable opinion of such separate counsel, a material conflict on any material
issue between the position of the indemnifying party and the position of such
indemnified party, in which case the indemnifying party shall be responsible for
the reasonable fees and expenses of no more than one such separate
counsel.  The indemnifying party shall not, without the prior written
consent of the indemnified party, effect any settlement of any proceeding in
respect of which any indemnified party is a party and indemnity has been sought
hereunder unless such settlement of a claim, investigation, suit, or other
proceeding only involves a remedy for the payment of money by the indemnifying
party and includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.

    

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

    
      
         

      

      
        Asset
Purchase Agreement - Page 13

        
          

        

      

      
         

      

    

    ARTICLE
XI

    MISCELLANEOUS

    

    Section
11.1    Termination of
Agreement.  This Agreement shall terminate and be of no force
and effect and all other agreements executed herewith shall be of no force and
effect if:  (i) the transactions contemplated by this Agreement,
including the sale of the Purchased Assets are not consummated on or before June
10, 2008, unless all of the parties hereto agree in writing to extend the
Agreement; or (ii) all of the parties agree in writing to terminate this
Agreement sooner.

    

    Section
11.2    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
11.3    Notices.  Any
notices or other communications required or permitted hereunder shall be
sufficiently given if in writing and delivered in person or sent by registered
or certified mail (return receipt requested) or nationally 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 Seller or Auletta:

            	
              Attn:
      John Auletta

            
	 
      	 
      	
              1595
      N. Central Expressway, Suite 100

            
	 
      	 
      	
              Richardson,
      Texas  75080

            
	 
      	 
      	 
      
	 
      	
              with
      a copy to

            	
              Arthur
      Selander

            
	 
      	 
      	
              Quilling
      Selander Cummiskey & Lownds, P.C.

            
	 
      	 
      	
              2001
      Bryan Street, Suite 1800

            
	 
      	 
      	
              Dallas,
      Texas 75201

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              (b)

            	
              If
      to Purchaser or Rick’s:

            	
              Rick’s
      Cabaret International, Inc.

            
	 
      	 
      	
              Attn:  Eric
      Langan, President/CEO

            
	 
      	 
      	
              10959
      Cutten Road

            
	 
      	 
      	
              Houston,
      Texas  77066

            
	 
      	 
      	 
      
	 
      	
              with
      a copy to:

            	
              Robert
      D. Axelrod

            
	 
      	 
      	
              Axelrod,
      Smith & Kirshbaum

            
	 
      	 
      	
              5300
      Memorial Drive, Suite 700

            
	 
      	 
      	
              Houston,
      Texas  77007

            

    

    
      
         

      

      
        Asset
Purchase Agreement - Page 14

        
          

        

      

      
         

      

    

    A notice
or communication will be effective (i) if delivered in person or by overnight
courier, on the business day it is delivered; and (ii) if sent by registered or
certified mail, three (3) business days after dispatch.

    

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

    

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

    

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

    

    Section
11.8    Choice of
Law.  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.  In any action between or among any of the parties,
whether arising out of this Agreement or otherwise, each of the parties
irrevocably consents to the exclusive jurisdiction and venue of the federal and
state courts located in Dallas County, Texas.

    

    Section
11.9    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.

    
      
         

      

      
        Asset
Purchase Agreement - Page 15

        
          

        

      

      
         

      

    

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

    

    Section
11.11    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
11.12    Attorney Review -
Construction.  In connection with the negotiation and drafting
of this Agreement, the parties represent and warrant to each other that they
have had the opportunity to be advised by attorneys of their own choice and,
therefore, the normal rule of construction to the effect that any ambiguities
are to be resolved against the drafting party shall not be employed in the
interpretation of this Agreement or any amendments hereto.

    

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

    

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

    

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

    

    Section
11.16    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.

    

    Section
11.17    Gender.  All
personal pronouns used in this Agreement shall include the other genders,
whether used in the masculine, feminine or neuter gender and the singular shall
include the plural and vice versa, wherever appropriate.

    

    

    [SIGNATURES
APPEAR ON THE FOLLOWING PAGE.]

    
      
         

      

      
        Asset
Purchase Agreement - Page 16

        
          

        

      

      
         

      

    

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

    

    
      	 	
              RICK’S
      CABARET INTERNATIONAL, INC.

            
	 	 
      
	 	
              /s/ Eric
      Langan

            
	 	
              By:  Eric
      Langan, President

            
	 	 
      
	 	Date: 	
              May 10,
      2008

            
	 	 
      
	 	 
      
	 	
              RCI
      ENTERTAINMENT (NORTHWEST HIGHWAY), INC.

            
	 	 
      
	 	
              /s/ Eric
      Langan

            
	 	
              By:  Eric
      Langan, President

            
	 	 
      
	 	
              Date:

            	
              May 10,
      2008

            
	 	 
      
	 	 
      
	 	
              NORTH BY EAST ENTERTAINMENT,
      LTD. BY NORTHEAST PLATINUM, LLC, ITS GENERAL PARTNER

            
	 	 
      
	 	
              Date:

            	
              May 10,
      2008

            
	 	 
      
	 	
              /s/ John
      Auletta

            
	 	
              JOHN
      AULETTA, SOLE MEMBER, of NORTHEAST PLATINUM, LLC

            
	 	 
      
	 	
              Date:

            	
              May 10,
      2008

            
	 	 
      
	 	
              /s/ John
      Auletta

            
	 	
              JOHN
      AULETTA, Individually

            
	 	 
      
	 	
              Date:

            	
              May 10,
      2008

            

    

    

     

    Asset Purchase Agreement -
Page 17

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