UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Date of Report (Date of Earliest Event Reported):
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November 9, 2010
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VCG HOLDING CORP.
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(Exact name of registrant as specified in its charter)
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Colorado
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001-32208
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841157022
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_____________________
(State or other jurisdiction
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_____________
(Commission
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(I.R.S. Employer
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of incorporation)
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File Number)
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Identification No.)
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390 UNION BLVD, SUITE 540, LAKEWOOD, Colorado
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80228
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(Address of principal executive offices)
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(Zip Code)
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Registrants telephone number, including area code:
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303-934-2424
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Not Applicable
______________________________________________
Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[x] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement
On November 9, 2010, VCG Holding Corp., a Colorado corporation (the Company), entered into an
Agreement and Plan of Merger (the Merger Agreement) with Family Dog, LLC (Parent), FD
Acquisition Co. (Merger Sub), the Companys Chairman of the Board and Chief Executive, Troy
Lowrie, and the Companys President and Chief Operating Officer, Micheal Ocello. Under the terms
of the Merger Agreement, Merger Sub will be merged with and into the Company, with the Company
continuing as the surviving corporation and becoming a wholly-owned subsidiary of Parent (the
Merger). Parent and Merger Sub are currently owned and controlled by Mr. Lowrie. Mr. Ocello and
two entities owned or controlled by either of Messrs. Lowrie or Ocello (together with Mr. Lowrie,
collectively, the Executive Group) will become owners of Parent before consummation of the Merger
as described below and in the Merger Agreement.
Pursuant to the Merger Agreement, as of the effective time of the Merger, each issued and
outstanding share of the Companys common stock, par value $0.001 per share (collectively, the
Common Stock), except for any shares of Common Stock held by Parent and Dissenting Shares (as
such term is defined in the Merger Agreement) will be converted into the right to receive a cash
payment in the amount of $2.25 per share, without interest (the Merger Consideration). In
addition, each vested option to acquire shares of Common Stock outstanding at the effective time of
the Merger will be converted into the right to receive an amount in cash equal to the excess, if
any, of the Merger Consideration over the exercise price per share for each share of Common Stock
subject to the option. Unvested options will be terminated at the effective time of the Merger
except as otherwise provided in the Merger Agreement or as required by law.
Before consummation of the Merger, the Executive Group will contribute to Parent all of their
shares of the Companys Common Stock and assign to Parent their rights to any debt of the Company
held by them in exchange for membership interests in Parent. In addition, certain other lenders of
the Company may elect to assign their rights to debt of the Company held by them to Parent in
exchange for membership interests in Parent (such debt, together with the debt assigned to Parent
as described in the foregoing sentence, the Converting Debt). At any time after the approval of
the Merger Agreement and the Merger by the Companys shareholders, but prior to the closing date,
and in exchange for Parents agreement to cancel the Companys obligations with respect to the
Converting Debt, at the election of Parent in its sole discretion, the Company shall issue to
Parent that number of shares of Common Stock equal to: (a) the aggregate outstanding principal
balance and all unpaid accrued interest on the Converting Debt divided by (b) the Merger
Consideration.
The Companys Board of Directors (with Troy Lowrie abstaining from voting) unanimously approved the
Merger and the Merger Agreement following the unanimous recommendation of a special committee
comprised entirely of independent members of the Companys Board of Directors (the Special
Committee). Before the Companys Board of Directors unanimously approved the Merger and the
Merger Agreement, the Special Committee and the Companys Board of Directors received an opinion
from an independent financial advisor to the effect that, based on and subject to the various
assumptions and qualifications set forth therein, as of the date of such opinion, the Merger
Consideration to be received by the Companys shareholders in the Merger is fair to such
shareholders from a financial perspective.
The transaction is expected to close in the first quarter of 2011. Upon the closing of the Merger,
the Companys Common Stock will no longer be traded on the Nasdaq Stock Market and the Company will
cease reporting to the U.S. Securities and Exchange Commission. Certain members of the Companys
management are expected to participate in the ownership of the Company following the closing of the
Merger.
As described in the Merger Agreement, completion of the Merger is subject to several closing
conditions, including, but not limited to:
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approval of the Merger and the Merger Agreement by (a) a majority of the votes entitled to
be cast thereon at the special meeting of the Companys shareholders to be called for such
purpose (the Special Shareholders Meeting) in accordance with 7-111-103(5) of the Colorado
Business Corporation Act, and (b) a majority of the votes actually cast at the Special
Shareholders Meeting (the Majority of Minority Vote); shares of Common Stock held by
Messrs. Lowrie and Ocello and certain entities owned or controlled by them, as well as certain
other shares of Common Stock as further described in the Merger Agreement, will not be taken
into account for any purpose with regard to the Majority of Minority Vote (e.g. in calculating
votes cast in favor or total votes cast);
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the representations and warranties made by the respective parties to the Merger Agreement
being true and correct as of the effective time of the Merger, except for such failures as
have not had a Material Adverse Effect (as such term is defined in the Merger Agreement) on
the Company, Parent or Purchaser, as the case may be;
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each party to the Merger Agreement having performed, in all material respects, all
obligations that it is required to perform under the Merger Agreement;
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the absence of any event which has had a Material Adverse Effect on the Company between the
date of the Merger Agreement and the effective time of the Merger;
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holders of no greater than 10% of the shares of Common Stock held by the Public
Shareholders (as such term is defined in the Merger Agreement) having exercised their
dissenters rights and delivered payment demand to the Company pursuant to Section 7-113-101
of the Colorado Business Corporation Act; and
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receipt of certain consents, waivers, releases and permits.
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The transaction is not subject to a financing or due diligence condition.
The Merger Agreement also grants the parties thereto termination rights in certain circumstances
and provides for the payment of termination fees in certain instances, but not all, of termination
of the Merger Agreement, as more fully set forth in the Merger Agreement. If the Company
terminates the Merger Agreement under certain circumstances, the Company will be required to pay a
termination fee to Parent in the amount $1 million or $600,000, depending on such circumstances.
Further, Parent will be required to pay a termination fee to the Company in the amount $1,000,000
under certain circumstances in the event that the Company terminates the Merger Agreement because
the Merger was not consummated as a result of Parent not being able to secure financing for the
Merger.
The Merger Agreement contains certain other provisions which are customary for agreements of this
nature, such as representations and warranties, covenants and indemnification obligations.
The Merger Agreement is attached as Exhibit 2.1 and is incorporated by reference. The foregoing
description of the Merger Agreement and the Merger does not purport to be complete and is qualified
in its entirety by reference to the full text of the Merger Agreement. The Merger Agreement
contains representations and warranties by each of the parties to the Merger Agreement. These
representations and warranties have been made solely for the benefit of the other parties to the
Merger Agreement and (a) may be intended not as statements of fact, but rather as a way of
allocating the risk to one of the parties if those statements prove to be inaccurate, (b) have been
qualified by disclosures that were made to the other party in connection with the negotiation of
the Merger Agreement, which disclosures are not reflected in the Merger Agreement, (c) may apply
standards of materiality in a way that is different from what may be viewed as material to
investors, and (d) were made only as of the date of the Merger Agreement or such other date(s) as
may be specified in the Merger Agreement and are subject to more recent developments. Accordingly,
these representations and warranties may not describe the actual state of affairs as of the date
they were made or at any other time.
North Point Advisors LLC served as financial advisor to the Special Committee in connection with
the Merger and rendered a fairness opinion to the Special Committee and the Companys Board of
Directors as to the fairness, from a financial point of view, of the consideration to be received
by the Companys shareholders in the Merger as of the date of the Merger Agreement.
On November 10, 2010, the Company issued a press release regarding the matters described above. A
copy of the press release is attached hereto as Exhibits 99.1.
Additional Information and Where to Find It
In connection with the proposed transaction, a proxy statement of the Company and other materials
will be filed with the SEC. WE URGE INVESTORS TO READ THE PROXY STATEMENT AND THESE OTHER MATERIALS
CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE COMPANY AND THE PROPOSED TRANSACTION. Investors will be able to obtain free
copies of the Proxy Statement (when available) as well as other documents filed with the SEC
containing information about the Company at http://www.sec.gov, the SECs free internet site. Free
copies of the Companys SEC filings are also available on the Companys internet website at
http://www.vcgh.com. Furthermore, investors may obtain free copies of the Companys SEC filings by
directing such request to VCG Holding Corp., Attn: Corporate Secretary, 390 Union Blvd, Suite 540,
Lakewood, CO 80228 or by requesting the same via telephone at (303) 934-2424.
Participants in the Solicitation of Proxies
The Company and its executive officers and directors may be deemed, under SEC rules, to be
participants in the solicitation of proxies from the Company shareholders with respect to the
proposed transaction. Information regarding the officers and directors of the Company is included
in its Annual Report on Form 10-K for the year ended December 31, 2009 filed with the SEC on March
15, 2010. MORE DETAILED INFORMATION REGARDING THE IDENTITY OF POTENTIAL PARTICIPANTS, AND THEIR
DIRECT OR INDIRECT INTERESTS, BY SECURITIES HOLDINGS OR OTHERWISE, WILL BE SET FORTH IN THE PROXY
STATEMENT AND OTHER MATERIALS TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
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Exhibit No.
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Description
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2.1
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Agreement and Plan of Merger, dated as of
November 9, 2010, by and among Family Dog, LLC,
FD Acquisition Co., Troy Lowrie, Micheal Ocello
and VCG Holding Corp.
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99.1
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Press Release, dated November 10, 2010
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CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
Certain statements in this Current Report on Form 8-K are forward-looking statements within the
meaning of the Securities Litigation Reform Act of 1995, as amended. All statements, other than
statements of historical fact, included in this Current Report on Form 8-K that address activities,
events or developments that we believe or anticipate will or may occur in the future are
forward-looking statements. Such statements are based on current expectations, estimates and
projections about the Companys business based, in part, on assumptions made by management. These
statements are not guarantees of future performance and involve risks and uncertainties that are
difficult to predict, including, without limitation, whether the parties to the Merger Agreement
will successfully consummate the Merger. Therefore, actual outcomes and results may differ
materially from what is expressed or forecasted in such forward-looking statements due to numerous
risks, uncertainties and factors identified from time to time in the Companys reports with the
Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended
December 31, 2009. All forward-looking statements attributable to us or any persons acting on our
behalf are expressly qualified in their entirety by these risks, uncertainties and factors. All
guidance and forward-looking statements in this Current Report on Form 8-K are made as of the date
hereof and we do not undertake any obligation to update any forecast or forward-looking statements,
except as may be required by law.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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VCG HOLDING CORP.
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November 10, 2010
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By:
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Tenicia Bradley
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Name: Tenicia Bradley
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Title: Secretary
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Exhibit Index
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Exhibit No.
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Description
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2.1
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Agreement and Plan of Merger, dated November 9, 2010, by and among Family Dog, LLC, FD Acquisition Co., Troy Lowrie, Micheal Ocello and VCG Holding Corp.
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99.1
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Press Release, dated November 10, 2010
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