Document:

Prepared by R.R. Donnelley Financial -- Trademark License Agreement

  
 EXHIBIT 10.7 
  
 TRADEMARK LICENSE AGREEMENT 
  
 This
Trademark License Agreement (the “Agreement”) is made effective as of June 30, 2002, by and between Lowrie Management, LLLP, a Colorado limited liability limited partnership (“Licensor”), and VCG Holding
Corp., a Colorado corporation including all of its existing and future subsidiaries (“Licensee”). 
  
 RECITALS

  
 A.  Licensor owns all right, title and interest in the trademark for the “PT’s” name
and logo (the “Trademark”) registered with the United Stated Patent and Trademark Office, Reg. No. 2,043,156. 
  
 B.  Licensee desires to license the Trademark from Licensor for use in its nightclub business, and, Licensor is willing to grant the license, on the terms and conditions set forth herein. 
  
 AGREEMENT 
  
 NOW, THEREFORE, in consideration of the mutual covenants herein contained, the adequacy and sufficiency of which are acknowledged, the parties agree as follows: 
  
 Article I:    Grant of Trademark License and Release 
  
 Section 1.1    Subject to all of the terms and conditions of this Agreement, Licensor hereby grants to Licensee in perpetuity, subject to termination provisions herein, a
non-exclusive, non-transferable, license to use the Trademark. Licensor reserves the right to use, or license others to use, the Trademark in connection with any and all activities and products. 
  

Section 1.2    Because Licensor and Licensee are affiliates of each other, it is agreed that no license fee shall be charged to Licensee
unless and until, either: 1.) an independent valuation is performed to determine a fair and reasonable fee for the license; or 2.) a majority of independent directors of Licensee determines a reasonable and fair fee for the license. Licensee shall
be obligated to pay Licensor license fees established in accordance with the foregoing. 
  
 Section
1.3    Licensee shall not have the right to sublicense any rights granted hereby to any party without the prior written consent of Licensor. 
  
 Article II:    Term 
  
 Section
2.1    This Agreement shall remain in full force and effect unless and until terminated in accordance with Article V hereunder. 

	

 

  
 Article III:    Quality Standards and Inspection 

 
 Section 3.1    Licensee agrees that the nature and quality of products and services it sells or
otherwise provides in connection with the Trademark (the “Trademarked Products and Services”), and all related advertising, promotional and other related uses of the Trademark by Licensee, shall conform to reasonable quality standards set
by, and be subject to the ultimate control of Licensor. Parties agree that so long as the quality of Licensee’s advertising, promotional and other related uses of the Trademark conform to such standard, it shall be deemed to be in compliance
with this provision. 
  
 Section 3.2    Upon reasonable request by Licensor and no more
than once per calendar year during the term of this Agreement, Licensee shall submit to Licensor a reasonable number of samples of the Trademarked Products and Services packaged as they actually appear on the market. 
  
 Article IV:    Covenants 
  
 Section 4.1    Licensee acknowledges the validity and value of the Trademark and Licensor’s rights thereto and the goodwill represented thereby and agrees that at no
time, during or subsequent to the term of this Agreement, shall it directly or indirectly contest the validity of Licensor’s rights to the Trademark and the goodwill represented thereby. Licensee agrees that its use of the Trademark will inure
to the benefit of Licensor. 
  
 Section 4.2    Licensee shall not use the Trademark except
as permitted by this Agreement, nor shall it, at any time during or after termination of this Agreement, use the name PT’s or its logo, any other mark, or any variation, or “knock off” thereof, for any purpose intended to trade upon
the good will represented by the Trademark, other than the sale of the Trademarked Products and Services in conformity with this Agreement. 
  
 Section 4.3    If Licensor becomes aware of any activity by any unlicensed third party which raises a question of infringement of the Trademark, Licensor shall take such
action and institute such proceedings as, in its sole direction, it believes necessary and appropriate under the circumstances to cause the unauthorized use to be terminated. Any suit or other proceeding on account thereof shall be prosecuted by
Licensor in its discretion and, whenever possible, in the name of Licensor. Licensee shall not institute any legal action against infringers or potential infringers of the Trademark. The expenses of any such proceedings shall be borne by Licensor
and any damages recovered shall be retained by Licensor. If, however, Licensee shall, in the judgment of Licensor, be required as a party plaintiff, Licensee hereby authorizes Licensor to so add it as such party, and to conduct the prosecution of
the action in joint name through Licensor’s counsel, at Licensor’s expense and with any recovery to be retained by Licensor. Licensor shall reimburse any reasonable expenses incurred by Licensee in connection with being a joint party,
however, if Licensee elects to hire its own counsel, rather than being represented by counsel of Licensor in such proceeding, its shall be responsible for payment of its own legal fees. 
 

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 Section 4.4    If any suit, action or other proceeding shall be instituted or threatened
against Licensee by a third party for trademark infringement with respect to the Trademark, then Licensor shall have full control of the defense and shall be liable for the entire expense of such suit, action or proceeding. 
  
 Section 4.5    Licensee shall indemnify and hold Licensor harmless from and against all claims, demands and
liabilities, and all costs and expenses (including reasonable attorneys fees) incurred as a result of any claim or action arising out of Licensee’s activities under this Agreement. 
  
 Section 4.6    Licensor shall indemnify and hold Licensee harmless from and against all claims, demands and liabilities, and all costs and
expenses (including reasonable attorneys fees) incurred as a result of any claim or action arising out of Licensor’s activities under this Agreement. 
  
 Section 4.7    Licensee acknowledges that any use of the Trademark other than in accordance with this Agreement may cause irreparable damage to Licensor. Therefore, in the
event of any such breach or threatened breach by Licensee, Licensor shall be entitled, in addition to and not in lieu of damages, to seek specific relief including without limitation, an order preliminarily enjoining any such breach or threatened
breach before trial. 
  
 Section 4.8    Throughout the term of this Agreement, Licensor
shall maintain the registration for the Trademark and shall take such other action as it deems reasonable and necessary to maintain the integrity of the Trademark. 
  
 Article V:    Termination 
  
 Section
5.1    Licensor shall have the right to terminate this Agreement if Licensee breaches any of the material terms or conditions set forth in this Agreement and it shall fail to remedy such breach within 30 days after notice of
the breach is given by Licensor. 
  
 Section 5.2    Licensor shall have the right to
terminate this Agreement if: 
  
 5.2.1  a court having jurisdiction shall enter a
decree or order for relief in respect of in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of Licensee, or for any substantial part of its property, or ordering the winding-up or liquidation of her affairs and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or 

 
 5.2.2    Licensee shall commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, shall consent to the entry of an order for relief in an involuntary case under any such law, or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar official) of Licensee or for any substantial part of her property, 
 

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 or shall make any general assignment for the benefit of creditors, or shall fail to pay her debts as they become due;

  
 5.2.3    There is be a change in control of Licensee. 

 
 5.2.4    Any other event shall arise whereby Licensee’s rights under this
Agreement might, by operation of law or otherwise, devolve upon or pass to any person, firm, corporation or other entity. 
  
 Section 5.3    Upon termination of the license granted by this Agreement for any reason, Licensee shall immediately discontinue all use of the Trademark. 
  
 Article VI:    Miscellaneous 
  
 Section 6.1    Notices.    Any notice required or permitted to be given under this Agreement shall be in writing and shall be
sent via U.S. mail or overnight courier service, to the addresses set forth below. 
  
 If to
Licensor: 
  
 Lowrie Management, LLLP 
 1601 West Evans, Suite 200 
 Denver, CO 80223 
 Attn: Troy Lowrie 
  
 If to Licensee: 
  
 VCG Holding Corp. 
 1601 West Evans, Suite 200 
 Denver, CO 80223

 Attn: Micheal Ocello, President 
  
 Either party may change the address to which notices or requests shall be directed by written notice to the other party, but until such change of address has been received, any notice or request sent
to the above address shall be effective upon mailing and shall be considered as having been received three (3) business days after mailing or, in the case of an overnight courier service, upon the scheduled delivery date. 
  
 Section 6.2    Entire Agreement.    This Agreement contains the
entire understanding between the parties relating to use by Licensee of the Trademark. This Agreement supercedes and cancels all prior provisions and agreements, whether oral or in writing, with respect to such use by Licensee This Agreement may not
be modified or amended in any manner except by an instrument in writing signed by both parties. 
  
 Section
6.3    Governing Law and Venue.    The construction of this Agreement will be governed and construed in accordance with the laws of the State of Colorado. Any claim or

 

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 action arising under this Agreement shall be brought in a federal or state court with subject matter jurisdiction in the state of Colorado.

  
 Section 6.4    No Waiver.    No waiver
of any breach of any provision of this Agreement shall constitute a waiver of any prior, concurrent or subsequent breach of the same or any other provision hereof, and no waiver shall be effective unless made in writing and signed by an authorized
representative of the waiving party. 
  
 Section
6.5    Assignment.    Licensee may not assign this Agreement without the prior written consent of Licensor. 
  
 Section 6.6    Counterparts.    This Agreement may be executed in two counterparts, which
together shall be considered one and the same agreement and shall become effective when the two counterparts have been signed by both of the parties and delivered to the other, it being understood that all parties need not sign the same counterpart.

  
 EXECUTION 
  
 The parties have caused this Agreement to be signed as of the day and year first above written, whereupon it became a legally binding agreement in accordance with its terms. 
  
 
	 LOWRIE MANAGEMENT, LLLP 
 
	 
	 By:
 	 	 /s/    TROY LOWRIE       
 

	  	 	 Troy Lowrie
 President of
GP,
 

 
  
 
	 VCG HOLDING CORP. 
 
	 
	 By:
 	 	 /s/    MICHEAL OCELLO   
 

	  	 	 Micheal Ocello,
 President
 

 
 

 5Prepared by R.R. Donnelley Financial -- Line of Credit and Security Agreement

 EXHIBIT 10.8 
  
 LINE OF CREDIT AND SECURITY AGREEMENT 
  
 THIS AGREEMENT is entered into effective as
of June 30, 2002, by and between LOWRIE MANAGEMENT, LLLP, a Colorado limited liability limited partnership (“Lowrie”), and VCG HOLDING CORP., a Colorado corporation (“Borrower”). 
  
 RECITALS 
  
 WHEREAS, Lowrie desires to provide to Borrower, and Borrower desires to obtain from Lowrie, a line of credit with a maximum loan amount of One Million Four Hundred Thousand and 00/100 Dollars ($1,400,000.00) (the “Line of
Credit”), on certain terms and conditions as set forth in this Agreement. 
  
 AGREEMENT 
  
 NOW, THEREFORE, in consideration of the mutual promises contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as follows: 
  
 1.  Commitment.    Subject to and in accordance with the provisions of this Agreement, Lowrie agrees to make disbursements under the Line of Credit, and Borrower may draw upon and borrow, in the
manner and upon the terms and conditions expressed in this Agreement, amounts that shall not exceed in the aggregate, at any one time outstanding, One Million Four Hundred Thousand and 00/100 Dollars ($1,400,000.00) (the “Commitment
Amount”). The Line of Credit shall be a revolving line of credit, against which disbursements may be made to Borrower, repaid by Borrower and additional disbursements made to Borrower, subject to the limitations contained in this Agreement;
provided, that Lowrie shall have no obligation to make any disbursement (i) that would cause the outstanding principal balance of the Line of Credit plus all outstanding principal, accrued but unpaid interest and/or Late Charges to exceed the
Commitment Amount or (ii) if there is an Event of Default or a Default (as defined below). The Line of Credit shall bear interest on the outstanding principal balance at an annual rate of nine percent (9%), which interest shall be payable monthly,
on the third day of each month, beginning on August 3, 2002. If not sooner paid or converted into shares of common stock of Borrower, all outstanding principal, accrued but unpaid interest and other outstanding sums due under this Agreement shall be
paid in full on July 3, 2007 (the “Maturity Date”). 
  
 2.  Advances.    Advances under the Line of Credit will be made by Lowrie upon receipt by Lowrie of at least five (5) business days’ advance written notice setting forth the amount of
advance, accompanied by the certification by the President on behalf of Borrower that: (i) neither a Default nor an Event of Default exists, and (ii) that the outstanding principal balance of the Line of Credit after the requested advance, plus all
accrued but unpaid interest will not exceed the Commitment Amount. 
  
 3.  The
Note.    Borrower’s obligation to pay the principal of and interest on the Line of Credit shall be evidenced by a Convertible Promissory Note (the “Note”), substantially in 
 

 the form attached hereto as Exhibit A, which shall (i) be duly executed and delivered by Borrower, (ii) be dated as of
the date hereof, (iii) be in the stated principal amount of the Line of Credit, (iv) mature on the Maturity Date, (v) bear interest as provided in the Note, and (vi) be governed by this Agreement. 
  
 4.  Collateral.    In consideration of the Line of Credit, Borrower hereby grants to
Lowrie a security interest in, and assigns and pledges to Lowrie, the collateral (“Collateral”) described in Exhibit B hereto, to secure the payment, performance and observance of all indebtedness, obligations and liabilities of Borrower
to Lowrie under this Agreement and the Note. 
  
 5.  Default.    The occurrence of any of the following events shall constitute an “Event of Default” hereunder: 
  
 a.  The non-payment of any interest due and owing to Lowrie under the Line of Credit and such failure to make payment shall continue for a period
of five (5) days or longer from the due date. 
  
 b.  Violation by Borrower of any covenant
or obligation contained in this Agreement or the Note, or breach of any representation or warranty contained herein or in the Note; 
  
 c.  Borrower (i) admits in writing its inability to pay its debts as they become due; (ii) files a petition under any chapter of the Federal Bankruptcy Code or similar law, state or federal,
not or hereafter existing; (iii) makes an assignment for the benefit of its creditors; or (iv) is adjudged a bankrupt or insolvent; or 
  
 d.  Borrower, without prior written consent of Lowrie, is merged or consolidated with another entity, or sells, transfers or otherwise disposes of substantialy all its assets to another
person or entity other than in the ordinary course of business; 
  
 Upon occurrence of an Event of Default, Lowrie
shall notify Borrower in writing. If the Event of Default is not cured within ten (10) days after the giving of such notice of default, Borrower shall be deemed to be in default under this Agreement (a “Default”). 
  
 6.  Default Rate; Late Charges; Acceleration.    Upon Default, Lowrie shall have the
right to collect interest on the outstanding principal balance, together with accrued but unpaid interest and Late Charges under the Line of Credit at a rate of eighteen percent (18%) per annum (the “Default Rate”). In the event any of
interest or other sum due in connection with the Line of Credit is not made within five (5) days after the due date, Lowrie may, at its option, require the payment of a late charge in the amount of four percent (4%) of the delinquent sum (the
“Late Charge”). In addition to any other remedies which Lowrie has hereunder or by law, upon Default, at its option and upon written notice, Lowrie may declare the payment of outstanding principal balance and accrued but unpaid interest
and/or Late Charges under the Line of Credit immediately due and payable. 
 

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 7.  Enforcement of Collateral.    In addition to any other remedies
which Lowrie has hereunder or by law, upon Default, Lowrie shall have the right to enforce its rights in the Collateral by giving notice of the Default to Borrower and foreclosing on the Collateral. 
  
 8.  Cumulative Remedies.    All remedies of Lowrie provided for herein are cumulative
and shall be in addition to all other rights and remedies provided by law. The exercise of any right or remedy by Lowrie hereunder shall not in any way constitute a cure or waiver of default hereunder or invalidate any act done pursuant to any
notice of default, or prejudice Lowrie in the exercise of any of its rights hereunder unless, in the exercise of its rights, Lowrie realizes all amounts owed to it under the Line of Credit. 
  
 9.  Prepayment and Cancellation of the Line of Credit.    Borrower shall have the right to prepay the Line of Credit,
in whole or in part, in accordance with the terms of the Note. 
  
 10.  Representations
and Warranties of the Borrower.    Borrower hereby represents and warrants as follows: 
  
 a.  Organization; Authority to Enter into Agreement. Borrower is a corporation, duly formed and validly in existence and in good standing under the laws of the State of Colorado. Borrower has full power and authority to
enter into this Agreement and to execute and to carry out the provisions of this Agreement. The execution, delivery and performance of this Agreement have been duly authorized by all necessary action of Borrower. 
  
 b.  No Consents. The execution, delivery and performance by Borrower of this Agreement does not require consent,
approval, authorization or license of any governmental authority or a third party. 
  
 11.  Warranties and Covenants Regarding Collateral.    Borrower expressly warrants and covenants the following: (i) except for the security interest granted hereby now or hereafter existing,
Borrower is the owner of the Collateral free from any adverse lien, security interest or encumbrances and Borrower will defend the Collateral against all claims and demands of all persons at any time claiming the same or interest therein; and (ii)
except as otherwise permitted herein, Borrower shall not permit or allow any adverse lien, security interest, or encumbrance upon the Collateral now or hereafter existing, and shall not permit the same to be attached. Borrower further covenants
that, until all of the obligations of Borrower under this Agreement have been satisfied in full, Borrower will: (i) not enter into any agreement(s), which are inconsistent with the Borrower’s undertakings and covenants under this Agreement or
which restrict or impair Lowrie’ rights hereunder; and (ii) sign any documentation requested by Lowrie which is reasonably necessary or advisable to preserve Lowrie’s security interest in the Collateral. 
  
 12.  Restrictions on Sale or Further Encumbrance.    Other than in the ordinary
course of business, Borrower agrees not to sell, assign, exchange, or further encumber Borrower’s rights and interests in the Collateral without prior written consent of Lowrie. 
 

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 13.  Fee, Costs and Expenses.    Any and all fees, costs and
expenses, including reasonable attorneys’ fees and expenses incurred by Lowrie in connection with the enforcement of its rights under this Agreement, including those incurred in defending or prosecuting any actions or proceedings arising out of
or related to the Collateral, shall be paid by Borrower on demand by Lowrie and, until paid, shall be added to the amounts due to Lowrie under the Line of Credit. 
  
 14.  Waiver.    No waiver by Lowrie of any default shall operate as a waiver of any other default or of the same
default on a future occasion. 
  
 15. Time.    Time is of essence hereof.

  
 16.  Assignment.    The terms hereof shall be binding upon
and shall inure to the benefit of the parties hereto and their personal representatives, successors and assigns, provided, however, that Borrower may not assign its rights or delegate its duties and obligations hereunder without the prior written
consent of Lowrie. 
  
 17.  Notices.    Any notice required or
permitted to be given hereunder shall be in writing and will be deemed received (a) upon personal delivery or upon confirmed transmission by telecopier or similar facsimile transmission device, (b) on the first business day after receipted delivery
to a courier service which confirms next-business-day delivery, or (c) on the third business day after mailing, by registered or certified United States mail, postage prepaid, to the appropriate party at its address set forth below: 

 
 If to LOWRIE: 
  
 Lowrie Managment, LLLP 
 1601 W. Evans Avenue,
Suite 200 
 Denver, Colorado 80223 
 Attn: Troy Lowrie 
  
 If to BORROWER: 
  
 VCG Holding Corp. 
 1601 W. Evans Avenue, Suite 200 
 Denver, Colorado 80223 
 Attn: Micheal Ocello 
  
 With a copy to:

  
 A. Thomas Tenenbaum, Esq. 
 Gorsuch Kirgis LLP 
 Tower I, Suite 1000 
 1515 Arapahoe Street 
 Denver, Colorado 80202

 

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 18.  Amendments.    No amendment, modification or termination of any
provisions of this Agreement shall in any event be effective unless the same shall be in writing and signed by all parties hereto. 
  
 19.  Survival of Representations and Warranties.    All agreements, representations and warranties made herein shall survive the execution and delivery of this
Agreement and continue in full force and effect until the obligations of Borrower hereunder evidenced by the Note have been fully paid and satisfied. 
  
 20.  Entire Agreement; Severability.    This Agreement, together will all Exhibits hereto, constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof, and supersedes all prior agreements and understandings. In the event that any clause or provision of this Agreement shall be determined to be invalid, illegal or
unenforceable, such clause or provision may be severed or modified to the extent necessary, and as severed and/or modified, this Agreement shall remain in full force and effect. 
  
 21.  Governing Law; Jurisdiction and Venue.    This Agreement and other documents delivered pursuant hereto and the
legal relations between the parties shall be governed and construed in accordance with the law of the State of Colorado. Any dispute or litigation with respect to the representations, warranties, terms and conditions of this Agreement, or any other
matter between the parties, shall be litigated in the Colorado District Court in and for the City and County of Denver, Colorado and the parties hereby expressly consents to the exclusive jurisdiction and venue in said Colorado District Court.

  
 22.  Counterparts.    This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 
  
 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. 
  
 
	 LOWRIE MANAGEMENT, LLLP
 	 	  	 	 VCG HOLDING CORP.
 
	 
	 By:
 	 	 /s/    TROY LOWRIE
 
	 	  	 	 By:
 	 	 /s/     MICHEAL L. OCELLO
 

	 
	 Name:
 	 	 Troy Lowrie
 
	 	  	 	 Name:
 	 	 Micheal Ocello
 

	 
	 Title:
 	 	 Pres. of GP
 
	 	  	 	 Title:
 	 	 Pres. of VCG
 

 
 

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 EXHIBIT A 
  
 CONVERTIBLE PROMISSORY NOTE 
  

	$ 1,400,000.00 
 	Denver, Colorado 
 

June 30, 2002 

 
 FOR VALUE RECEIVED, the undersigned VCG HOLDING CORP., a Colorado corporation (“Borrower”), hereby promises to
pay to the order of LOWRIE MANAGEMENT, LLLP, a Colorado limited liability limited partnership (“Lowrie”), at 1601 W. Evans Avenue, Suite 200, Denver, Colorado 80223, or at such other place as Lowrie or any subsequent holder hereof
(the “Holder”) may, from time to time, designate in writing, the principal sum OF ONE MILLION FOUR HUNDRED THOUSAND AND 00/100 DOLLARS ($1,400,000.00), or so much of that sum as may be advanced under this Note by Lowrie pursuant to the
Line of Credit and Security Agreement (defined below), with principal and interest thereon payable as specified in this Note. Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Line of Credit and
Security Agreement. 
  
 1.  Principal and Interest.    Interest
shall accrue on the Line of Credit from and after the date of disbursement at an annual rate of nine percent (9%) (the “Interest Rate”). The Interest Rate shall be payable monthly on the third day of each month, beginning on August 3,
2002. Subject to conversion provision of this Note, on July 3, 2002 (the “Maturity Date”), the entire unpaid principal amount and any interest accrued but unpaid and all other sums due under this Convertible Promissory Note
(“Note”) shall be paid in full to the Holder. 
  
 All payments under this Note shall be made only in lawful
money of the United States of America, at such place as the Holder hereof may designate in writing from time to time.  
  
 2.  Revolving Loan.    Up to One Million Four Hundred Thousnd and 00/100 Dollars ($1,400,000.00) of the principal amount of this Note may be disbursed, repaid and reborrowed
in accordance with the terms of the Line of Credit and Security Agreement, provided that the aggregate of such advances outstanding plus any accrued but unpaid interest at any time does not exceed $1,400,000.00. 
  
 3.  Prepayment.    Except for that portion of the outstanding principal, accrued
but unpaid interest and/or Late Charges for which Borrower has received a Conversion Notice in accordance with Section 4, this Note may be prepaid in part (or in full) at any time prior to the Maturity Date (except as expressly provided herein), and
from time to time, without premium or penalty, and without the prior consent of the Holder hereof, on the conditions that (a) Borrower shall concurrently pay all accrued but unpaid interest on the amount of principal outstanding at the time of each
prepayment and any Late Charges then due, and that (b) Borrower shall provide Holder with thirty (30) days’ prior written notice (“Prepayment Notice”) of the amount of the prepayment. If the Holder does not receive the stated
prepayment within thirty (30) days a Notice of Prepayment, such nonpayment shall constitute a 

 Default under this Note and the Line of Credit and Security Agreement and such Notice of Prepayment shall be of no further force or effect.

  
 4.  Conversion. 
  
 (a)  Except for that portion of the outstanding principal, accrued but unpaid interest and/or Late Charges for
which the Holder has received a Prepayment Notice from Borrower in accordance with Section 3, at the election of the Holder, all or any portion of the outstanding principal, accrued but unpaid interest and/or Late Charges may be converted (a
“Conversion”) at any time one year after the date hereof, at the election of the Holder, into shares of Borrower’s Common Stock (“Shares”) at a Conversion price of $1.00 per share (the “Conversion Price”).

  
 (b)  To effect a Conversion of this Note, the Holder shall deliver a written request to
convert all or a portion of the outstanding principal, accrued but unpaid interest and/or Late Charges (“Conversion Notice”) to Borrower at its principal office, together with this Note. At its expense, Borrower shall within fifteen (15)
business days of its receipt of the original Conversion Notice and this Note, issue and deliver to the Holder at Borrower’s principal office, or at such other place designated by the Holder, a certificate (“Certificate”) evidencing
such Shares to which the Holder is entitled upon such Conversion. 
  
 (c)  Conversion shall
be deemed to be effective on the date Borrower receives the original Conversion Notice and this Note (“Conversion Date”). Thereafter, the Holder shall be treated for all purposes as the record holder of such shares as of the Conversion
Date. 
  
 (d)  No fractional Shares will be issued in connection with any Conversion
hereunder. 
  
 (e)  All Shares which may be issued upon the exercise of the rights
represented by this Note will, upon issuance, be fully paid and nonassessable, and free from all taxes, liens and charges with respect to the issuance thereof. During the period within which the conversion rights represented by this Note may be
exercised, the Borrower will at all times have authorized, and reserved for the purpose of issuance upon exercise of the conversion rights evidenced by this Note, a sufficient number of shares of Common Stock, to provide for the exercise of the
conversion rights represented by this Note. 
  
 5.  Adjustments.    The number and kind of Shares issuable upon conversion of this Note and the Conversion Price shall be subject to adjustment from time to time upon the
occurrence of certain events, as follows: 
  
 (a)  In case of any reclassification or
change of outstanding Shares issuable upon conversion of this Note (other than a change in par value, or from par value to no par value, or from no par value to par value) or in case of any merger of Borrower with or into another corporation (other
than a merger with another corporation in which Borrower is a continuing corporation and which does not result in any reclassification or change of outstanding Shares issuable upon conversion of this Note), or in case of any sale of all or

 

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 substantially all of Borrowers assets, Borrower shall, as condition precedent to such transaction, execute a new Note, or
cause such successor or purchasing corporation, as the case may be, to execute a new Note, substantially in the form, and with the terms, conditions and provisions, of this Note, and providing that the Holder of this Note shall have the right to
convert such new Note and, upon such conversion, to receive, in lieu of each Share theretofore issuable upon exercise of this Note, the kind and amount of shares of stock, other securities, money and property receivable upon such reclassification,
change or merger by the holder of one share of the Borrower’s Common Stock. Such new Note shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section. The provisions of
this Section shall similarly apply to successive reclassifications, changes, mergers and sales of assets. 
  
 (b)  If Borrower at any time while this Note remains outstanding shall subdivide or combine its Common Stock, the Conversion Price shall be proportionately decreased in the case of a subdivision or increased in the case of
a combination. 
  
 (c)  Whenever the Conversion Price shall be adjusted pursuant to this
Section, Borrower shall prepare a certificate signed by an officer of Borrower setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the
Conversion Price after giving effect to such adjustment, and shall cause such certificate to be mailed by first class mail, postage prepaid, to the Holder. 
  
 6.  Compliance with Securities Act.    By acceptance hereof, the Holder agrees that this Note and the Shares to be issued
upon Conversion are being acquired for investment and that it will not offer, sell or otherwise dispose of this Note or any Shares to be issued upon Conversion except under circumstances which will not result in a violation of the Securities Act of
1933, as amended (the “Act”). In the absence of registration of the Securities issuable upon Conversion, the Holder shall execute a subscription agreement provided by Borrower, which, among other things, confirms that the Shares are being
acquired for investment and not with a view to resale or distribution. All Shares issued upon exercise of this Note (unless registered under the Act) shall be stamped or imprinted with a legend in substantially the following form: 

 
 THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”). NO SALE OR
DISPOSITION MAY BE EFFECTED WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMPANY AND WITHOUT REGISTRATION UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, IF ANY, OR PURSUANT TO EXEMPTIONS THEREFROM. 
  
 7.  Rights of Holders.    The Holder shall not be entitled to vote
or receive dividends or be deemed the record owner of Shares which may at any time be issuable on the Conversion hereof for any purpose, nor shall anything contained herein be construed to confer 
 

 3 

 upon the Holder, as such, any of the rights of a shareholder of Borrower or any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value or change of stock to no par value,
consolidation, merger, conveyance, or otherwise), or to receive notice of meetings, or to receive dividends or subscription rights or otherwise, until the Note shall have been converted and the Shares issuable upon the Conversion hereof shall have
become deliverable, as provided herein. 
  
 8.  Default and
Acceleration.    Time is of the essence in the performance of Borrower’s obligations pursuant to this Note. Upon the occurrence of a Default as set forth in Section 3, and/or as defined in the Line of Credit
and Security Agreement, at the option of the Holder hereof, (i) the entire outstanding principal balance, all accrued but unpaid interest and/or Late Charges at once shall become due and payable upon written notice to Borrower, (ii) the Holder may
fully enforce its rights in the Collateral given to secure the payment of this Note, and (iii) the Holder may pursue all other rights and remedies available under this Note, any instrument securing payment of this Note, or by law. 

 
 9.  Default Rate of Interest.    Upon the occurrence of
a Default, Borrower promises to pay interest on the outstanding principal balance of this Note, together with all accrued but unpaid, interest and Late Charges, at a rate of interest equal to eighteen percent (18%) per annum (“Default
Rate”). 
  
 10.  Late Charge.    If Borrower shall fail to
make any payment due under this Note, within five (5) days after the date the same is due and payable, the Holder, at its option, may require the payment of a late charge (“Late Charge”) in the amount of four percent (4%) of the delinquent
sum. 
  
 11.  Early Discharge.    Upon Conversion of this
Note in full, the outstanding principal balance and all accrued but unpaid interest and Late Charges which are converted as provided herein, shall be fully discharged and the Note shall be cancelled and surrendered to Borrower. 

 
 12.  Remedies Cumulative.    The rights or
remedies of the Holder as provided in this Note and any instrument securing payment of this Note shall be cumulative and concurrent and may be pursued at the sole discretion of the Holder singly, successively, or together against Borrower and/or the
Collateral described in the Line of Credit and Security Agreement. The failure to exercise any such right or remedy shall in no event be construed as a waiver or release of such rights or remedies or the right to exercise them at any later time.

  
 13.  Forbearance.    Any forbearance of the Holder in
exercising any right or remedy hereunder or under the Line of Credit and Security Agreement, or otherwise afforded by applicable law, shall not be a waiver of or preclude the exercise of any right or remedy. The acceptance by the Holder of payment
of any sum payable hereunder after the due date of such payment shall not be a waiver of the Holder’s right to either require prompt payment when due of all other sums payable hereunder or to declare a Default for failure to make prompt

 

 4 

 payment. The Holder shall at all times have the right to proceed against any portion of the security held herefor in such order and in such
manner as the Holder may deem fit, without waiving any rights with respect to any other security. No delay or omission on the part of the Holder in exercising any right hereunder shall operate as a waiver of such right or of any other right under
this Note. 
  
 14.  Application of
Payments.    All payments made on this Note shall be applied first to any collection costs the Holder may have incurred by procuring Borrower’s performance hereunder, then to payment of the Late Charges, then
to payment of accrued but unpaid, interest and the remainder of all such payments shall be applied to the reduction of the outstanding principal balance on this Note. 
  
 15.  Usury.    In the event the interest provisions hereof, any exactions provided for herein
or in the Line of Credit and Security Agreement or any other instrument securing this Note, shall result, in an effective rate of interest which, exceeds the limit of the usury or any other applicable law, all sums in excess of those lawfully
collectible as interest for the period in question shall, without further agreement or notice between or by any party hereto, be applied upon the outstanding principal balance of this Note immediately upon receipt of such moneys by the Holder, and
any such amount in excess of such outstanding principal balance shall be returned to Borrower. 
  
 16.  Line of Credit and Security Agreement.    This Note is executed by Borrower in connection with that certain Line of Credit and Security Agreement between Borrower and
Lowrie of even date herewith (the “Line of Credit and Security Agreement”) and this Note is secured by the Collateral described in the Line of Credit and Security Agreement. In the event of any conflict between any provision of the Line of
Credit and Security Agreement and any provisions of this Note, the provision of the Line of Credit and Security Agreement shall control. 
  
 17.  Jurisdiction.    This Note is to be governed according to the laws of the State of Colorado, without giving effect to conflict of law
principles 
  
 18.  Binding Effect.    This Note shall be
binding upon Borrower, and its successors and assigns and shall inure to the benefit of the Holder and its successors and assigns. 
  
 19.  Notice.    All notices required or permitted in connection with this Note shall be given at the place and in the manner provided in the Line
of Credit and Security Agreement for the giving of notices. 
  
 20.  Attorneys’ Fees.    Borrower further promises to pay all reasonable attorneys’ fees incurred by the Holder in connection with any Default
hereunder and in any proceeding brought to enforce any of the provisions of this Note. 
 

 5 

  
 IN WITNESS WHEREOF, Borrower has duly executed this Convertible Promissory Note
effective as of the day and year first above written. 
  
 
	 BORROWER:
  
 VCG HOLDING, CORP.,
 a Colorado corporation
 
	 
	 By:
 	 	 /s/    MICHEAL L. OCELLO
 

	 
	 Name:
 	 	 Micheal Ocello
 

	 
	 Title:
 	 	 Pres. of VCG
 

 
 

 6 

  
 EXHIBIT B 
  
 DESCRIPTION OF COLLATERAL: 
  
 Borrower’s obligations under the Line of Credit and Security Agreement and Convertible Promissory Note are secured with the following: 
  
 All assets of Borrower, including intellectual property, and Borrower’s shares in Indy Restaurant Concepts, Inc. and VCG Restaurants Indy Inc.

  
 All assets of Indy Restaurant Concepts, Inc., including intellectual property. 

 
 All assets of VCG Restaurants Indy Inc., including intellectual property. 
  
 All assets of Platinum of Illinois, Inc., including intellectual property.

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