8-K for RICKS CABARET INTERNATIONAL INC
Entry Material Agreement, Financial Statements and Exhibits
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On September 15, 2004, our wholly owned subsidiary, RCI Entertainment
(New York), Inc., a New York corporation ("RCI New York"), entered
a definitive Stock Purchase Agreement (the "Stock Purchase Agreement")
with Peregrine Enterprises, Inc., a New York corporation ("Peregrine")
and its shareholders, pursuant to which RCI New York agreed to purchase
all of the shares of common stock of Peregrine. Peregrine owns and
operates an adult entertainment cabaret located in midtown Manhattan.
The cabaret club is located near the Empire State Building and Madison
Square Garden, and less than 10 blocks from Times Square. The Stock
Purchase Agreement provides for closing the transaction on or before
December 1, 2004, subject to satisfaction of certain conditions,
including obtaining adequate financing, transfer of all existing
licenses and permits to RCI New York, obtaining consent of the Landlord,
execution of a Non-Disturbance Agreement, and other conditions consistent
with transactions of this type.
Under the terms of the Stock Purchase Agreement, the purchase price
of the transaction is $7,625,000, payable $2,500,000 in cash at
closing and $5,125,000 payable in a promissory note bearing simple
interest at the rate of 4.0% per annum (the "Promissory Note").
The Promissory Note is payable commencing 120 days after Closing
as follows: (a) the payment of $58,333.33 per month for twenty-four
(24) consecutive months; (b) the payment of $63,333.33 for twenty-four
(24) consecutive months; (c) the payment of $68,333.33 for twelve
(12) consecutive months; and
(d) a lump sum payment of the remaining balance to be paid on the
sixty-first (61st) month. $2,000,000 of the principal amount of
the Promissory Note is convertible into shares of our restricted
common stock at prices ranging from $4.00 to $7.50 per share. The
parties will also enter a Stock Pledge Agreement and Security Agreement
to secure the Promissory Note.
Upon closing of the transaction, the owners of Peregrine will enter
a five-year covenant not to compete with Peregrine, RCI New York
or Rick's Cabaret International, Inc. We intend to rename the cabaret
club as "Rick's Cabaret" which will occupy 10,000 square feet on
three levels, with an additional 4,000 square feet available for
The terms and conditions of the Stock Purchase Agreement were the
result of extensive arm's length negotiations between the parties.
A copy of the press release related to this transaction is attached
hereto as Exhibit 99.1.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
Exhibit Number Description
release dated September 16, 2004