Item
2.01. Completion of Acquisition or Disposition of
Assets.
On December 21, 2007, Stout Restaurant Concepts, Inc. (the “Buyer”),
a wholly-owned subsidiary of VCG Holding Corp., a Colorado corporation (the “Company”),
completed the acquisition of the operating assets and tradename of La Boheme
Gentlemen’s Cabaret located at 1443 Stout Street, Denver, Colorado (the “Nightclub”)
pursuant to an Agreement for the Purchase and Sale of Assets (the “Purchase
Agreement”) dated December 5, 2007 by and between the Buyer and 1443 Corp., Inc.
(the “Seller”). The purchase price for
the Nightclub was $3,500,000 in cash. In addition to the purchase price, the
Buyer will pay when due the sales and use taxes on the first $250,000 of
taxable property which may become payable as a result of the transaction. The
Seller will pay any remaining sales and use taxes due as a result of the
transaction and will pay all applicable taxes, prorated through the closing
date, including but not limited to, state and local sales and use taxes,
unemployment taxes, worker’s compensation, state and federal withholding taxes,
and income taxes. The Purchase Agreement
contains customary provisions for transactions of this nature, including,
without limitation, representations, warranties, covenants and indemnities.
In connection with the Purchase Agreement, the Buyer and its affiliates
entered into the following additional agreements:
Pursuant to an Assignment Agreement dated December 21, 2007 (the “Intellectual
Property Assignment Agreement”), the Company purchased from VVSM, Inc., an
affiliate of the Seller (the “VVSM”), all of VVSM’s right, title and interest
in and to certain intellectual property associated with the Nightclub,
including URLs, promotional material, pricing information, employee handbooks,
guidelines, proprietary information and the goodwill associated therewith
(collectively, the “Intellectual Property”).
The purchase price for the Intellectual Property was $1,500,000 in cash.
The Buyer entered into a Non-Competition Agreement (the “Non-Competition
Agreement”) with the Seller and the officers, directors and holders of 10% or
more of the outstanding capital stock of the Seller (the “Non-Compete Parties”)
dated December 21, 2007 whereby the Non-Compete Parties agreed not to
compete with the Buyer within a 15 mile radius of the current location of the
Nightclub for a three year period from the closing date of the Purchase
Agreement.
Bradshaw Hotel, Inc. (“Bradshaw”), a wholly-owned subsidiary of
the Company, purchased the operating assets of the Bradshaw Hotel/Studios (the “Hotel
Assets”) located above the Nightclub at 1443 Stout Street, Denver, Colorado
from 1447, Inc., an affiliate of the seller (“1447”), pursuant to an
Agreement for the Purchase and Sale of the Assets dated December 5, 2007
(the “Hotel Purchase Agreement”) by and between Bradshaw and 1447. The purchase price for the Hotel Assets was
$200,000 in cash. In addition to the
purchase price, Bradshaw will pay when due the sales and use taxes on the first
$10,000 of taxable property which may become payable as a result of the
transaction. 1447 will pay any remaining sales and use taxes due as a result of
the transaction and will pay all applicable taxes, prorated through the closing
date, including but not limited to, state and local sales and use taxes,
unemployment taxes, worker’s compensation, state and federal withholding taxes,
and income taxes. The Hotel Purchase Agreement contains customary
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provisions for transactions of this nature, including, without
limitation, representations, warranties, covenants and indemnities.
Effective December 4, 2007, the Company entered into a Consulting
Agreement (the “Consulting Agreement”) with Lance C. Migliaccio (“Migliaccio”)
pursuant to which the Company retained Migliaccio as an advisor and consultant
for marketing, promotions and special events. As compensation for his services,
Migliaccio received 80,000 shares of the Company’s restricted common stock (the
“Shares”). Additionally, under the terms of the Consulting Agreement, the
Company shall reimburse Migliaccio for all reasonable and necessary expenses
incurred by him while carrying out his duties under the Consulting Agreement.
The term of the Consulting Agreement is five years and may be terminated by
either party if the other party fails to fulfill any material obligation under
the Consulting Agreement and such breach is not cured within 10 days after
receiving a notice of such breach. Any termination or expiration of the
Consulting Agreement does not extinguish the Company’s obligation to deliver
the Shares to Migliaccio. Pursuant to the terms of the Consulting Agreement, Migliaccio
agreed not to disclose confidential information of the Company to any
unauthorized person during the term of the Consulting Agreement and thereafter.
The Buyer agreed to assume the
Building
Lease dated as of July 7, 2001, as amended and assigned, originally
between Dikeou Realty, as landlord, and 2222, Inc., as tenant (the “Lease”),
for the real property used in the operation of the Nightclub and the Hotel
located at 1443 - 1447 Stout Street, Denver,
Colorado
(the “Premises”)
, as further reported under Item 2.03 of this Current
Report on Form 8-K, which disclosure is incorporated herein by reference.
The foregoing descriptions of the Purchase Agreement, the Intellectual
Property Assignment, the Non-Competition Agreement, the Hotel Purchase
Agreement and the Consulting Agreement are qualified in their entirety by
reference to the complete agreements, copies of which are filed as exhibits
hereto and incorporated herein by reference.
The reader is advised to read the exhibits in their entirety.
Item 2.03
Creation of a Direct Financial
Obligation or an Obligation under an Off-Balance Sheet Arrangement of a
Registrant.
In connection
with the Purchase Agreement, on December 19, 2007, the Buyer entered into
an Assignment and Assumption of Building Lease (the “Lease Assignment”) with
P.P.P., LLC (the “Sublandlord”) and Migliaccio, Gidget Bridget Sanders,
Anthony Scott Falcone,
Frank Henry Walley, IV
and Ted R. Bullard
(collectively, the “Existing Guarantors”) pursuant to which the Buyer agreed to
assume the Lease from the Sublandlord upon the closing of the Purchase
Agreement. The Existing Guarantors
previously guaranteed the Sublandlord’s performance under the Lease and, in
connection with the Lease Assignment, they agreed to continue to guarantee the
Buyer’s performance under the Lease. The
Company has also provided BK-Stout, LLC, the current master landlord under the
Lease, with a separate guarantee of the Buyer’s performance under the
Lease. In addition, pursuant to the
terms of an Indemnification Agreement dated December 21, 2007 between the
Company, the Seller and the Existing Guarantors, the Company agreed to
indemnify the Existing Guarantors and hold them harmless
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from and
against any loss, cost, liability, damage, claim or expense suffered or
incurred by the Existing Guarantors in connection with their guarantee of the
Lease.
Pursuant to
the terms of the Lease, the Buyer is required to make initial base monthly
rental payments of $17,000, which monthly payments escalate to $21,000 during
the term of the Lease. The Buyer is also
required to pay the landlord real estate taxes, personal property taxes,
insurance premiums and assessments associated with the Premises and the
improvements thereon. The Lease expires
on August 31, 2016.
The foregoing descriptions of the Lease Assignment, the Indemnification
Agreement and the Lease are qualified in their entirety by reference to the
complete agreements, copies of which are filed as exhibits hereto and
incorporated herein by reference. The
reader is advised to read the exhibits in their entirety.
Item
3.02 Unregistered Sales of Equity Securities.
The disclosure set forth under Item 2.01 of this Current Report on Form 8-K
with respect to the Consulting Agreement is incorporated herein by
reference. T
he issuance of
the Shares was exempt from registration under Section 4(2) of the
Securities Act of 1933, as amended (the “Securities Act”), and
Regulation D promulgated thereunder (“Regulation D”), based upon the
Company’s compliance with such rules and regulations. The Company received
representations and warranties from Migliaccio that he is an “accredited
investor” (as such term is defined in Rule 501 of Regulation D) and no
form of general solicitation or general advertising was conducted in connection
with the issuance of the Shares. The Shares contain restrictions on transfer in
accordance with the rules and regulations of the Securities Act and
Regulation D.
Item 8.01
Other Events.
On December 26,
2007, the Company issued a press release announcing the closing of the Purchase
Agreement and the related transactions. A copy of the press release is
furnished as Exhibit 99.1 to this Current Report.
The information contained in this item 8.01 shall not be deemed “filed”
for purposes of Section 18 of the Securities Act of 1934, nor shall it be
deemed incorporated by reference in any filing under the Securities Act of
1933, except as shall be expressly set forth by specific reference in such
filing.
Item
9.01 Financial Statements and Exhibits.
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Exhibit No.
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Identification of Exhibits
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10.1
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Agreement
for the Purchase and Sale of Assets dated December 5, 2007 by and
between 1443 Corp., Inc. and Stout Restaurant Concepts, Inc.
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10.2
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Assignment
Agreement dated as of December 21, 2007 by and between VVSM, Inc.
and VCG Holding Corp.
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10.3
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Non-Competition
Agreement dated December 21, 2007 by and between 1443 Corp., Inc.,
Lance Migliaccio, Gidget Sanders, Ted R. Bullard and Stout Restaurant
Concepts, Inc.
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