Document:

Parent Guarantee Agreement

 Exhibit 10.4 
  
 PARENT GUARANTEE 
  
 PARENT GUARANTEE, dated as of November 9, 2004, made by VCG Holding Corp. (the “Guarantor”), in favor of the lenders holding (the
“Lenders”) those certain 12% Senior Subordinated Notes of Glenarm Restaurant LLC (“Subsidiary”) due in November, 2006. As there is only one Guarantee, references in this Guarantee that reference multiple Guarantees
shall be disregarded. 
  
 W I T N E S S E T H: 

 
 Whereas, the Subsidiary has agreed to sell and issue to the Lenders, and
the Lenders have agreed to purchase from the Subsidiary the Subsidiary’s 12% Senior Subordinated Notes due in November 2006 (the “Notes”), subject to the terms and conditions set forth therein; and 
  
 NOW, THEREFORE, in consideration of the premises and to induce the Lenders to
enter into the Subscription Agreement and to carry out the transactions contemplated thereby, each Guarantor hereby agrees with the Lenders as follows: 
  
 SECTION 1. DEFINED TERMS 
  
 1.1 DEFINITIONS 
  
 (a) Unless otherwise defined herein, terms defined in the subscription agreements pursuant to which the Lenders purchased the Notes (the
“Subscription Agreements”). 
  
 (b) The following terms shall have the following meanings: 
  
 “GUARANTEE”: this Parent Guarantee, as the same may be amended, supplemented or otherwise modified from time to time. 
  
 “OBLIGATIONS”: the collective reference to all obligations and undertakings of the
Subsidiary of whatever nature, monetary or otherwise, under the Notes, the Subscription Agreement, the Security Agreement, the Warrants, the AIRs, the securities underlying the AIRs or any other future agreement (collectively, the
“Transaction Documents”) or obligations undertaken by the Subsidiary to the Lenders, together with all reasonable attorneys’ fees, disbursements and all other costs and expenses of collection incurred by Lenders in enforcing
any of such Obligations and/or this Guarantee. 
  
 1.2 OTHER DEFINITIONAL
PROVISIONS. The words “hereof,” “herein,” “hereto” and “hereunder” and words of similar import when used in this Guarantee shall refer to this Guarantee as a whole and not to any particular provision of this
Guarantee, and Section and Schedule references are to this Guarantee unless otherwise specified. The 

  

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meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. 
  
 SECTION 2. GUARANTEE 
  
 2.1 GUARANTEE 
  
 (a) The Guarantors hereby, jointly and severally, unconditionally and irrevocably, guarantee to the Lenders
and their respective successors, indorsees, transferees and assigns, the prompt and complete payment and performance by the Subsidiary when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations. 
  
 (b) Anything herein or in any other Transaction Document to
the contrary notwithstanding, the maximum liability of each Guarantor hereunder and under the other Transaction Documents shall in no event exceed the amount which can be guaranteed by such Guarantor under applicable federal and state laws,
including laws relating to the insolvency of debtors, fraudulent conveyance or transfer or laws affecting the rights of creditors generally (after giving effect to the right of contribution established in Section 2.2). 
  
 (c) Each Guarantor agrees that the Obligations may at any
time and from time to time exceed the amount of the liability of such Guarantor hereunder without impairing the guarantee contained in this Section 2 or affecting the rights and remedies of the Lenders hereunder. 
  
 (d) The guarantee contained in this Section 2 shall remain
in full force and effect until all the Obligations and the obligations of each Guarantor under the guarantee contained in this Section 2 shall have been satisfied by payment in full. 
  
 (e) No payment made by the Subsidiary, any of the Guarantors, any other guarantor or any other Person or
received or collected by the Lenders from the Subsidiary, any of the Guarantors, any other guarantor or any other Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in
reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of any Guarantor hereunder which shall, notwithstanding any such payment (other than any payment made by such Guarantor in
respect of the Obligations or any payment received or collected from such Guarantor in respect of the Obligations), remain liable for the Obligations up to the maximum liability of such Guarantor hereunder until the Obligations are paid in full.

  
 (f) Notwithstanding anything to the contrary
in this Agreement, with respect to any defaulted non-monetary Obligations the specific performance of which by the Guarantors is not reasonably possible (e.g. the issuance of the Subsidiary’s Common Stock), the Guarantors shall only be liable
for making the 

  

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Lenders whole on a monetary basis for the Subsidiary’s failure to perform such Obligations in accordance with the Transaction Documents. 
  
 2.2 RIGHT OF CONTRIBUTION. Each Guarantor hereby agrees that to the extent that a Guarantor
shall have paid more than its proportionate share of any payment made hereunder, such Guarantor shall be entitled to seek and receive contribution from and against any other Guarantor hereunder which has not paid its proportionate share of such
payment. Each Guarantor’s right of contribution shall be subject to the terms and conditions of Section 2.3. The provisions of this Section 2.2 shall in no respect limit the obligations and liabilities of any Guarantor to the Lenders, and each
Guarantor shall remain liable to the Lenders for the full amount guaranteed by such Guarantor hereunder. 
  
 2.3 NO SUBROGATION. Notwithstanding any payment made by any Guarantor hereunder or any set-off or application of funds of any Guarantor by the Lenders, no Guarantor shall be entitled to be subrogated to any of the
rights of the Lenders against the Subsidiary or any other Guarantor or any collateral security or guarantee or right of offset held by the Lenders for the payment of the Obligations, nor shall any Guarantor seek or be entitled to seek any
contribution or reimbursement from the Subsidiary or any other Guarantor in respect of payments made by such Guarantor hereunder, until all amounts owing to the Lenders by the Subsidiary on account of the Obligations are paid in full. If any amount
shall be paid to any Guarantor on account of such subrogation rights at any time when all of the Obligations shall not have been paid in full, such amount shall be held by such Guarantor in trust for the Lenders, segregated from other funds of such
Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Lenders in the exact form received by such Guarantor (duly indorsed by such Guarantor to the Lenders, if required), to be applied against the Obligations, whether
matured or unmatured, in such order as the Lenders may determine. 
  
 2.4
AMENDMENTS, ETC. WITH RESPECT TO THE OBLIGATIONS. Each Guarantor shall remain obligated hereunder notwithstanding that, without any reservation of rights against any Guarantor and without notice to or further assent by any Guarantor, any demand for
payment of any of the Obligations made by the Lenders may be rescinded by the Lenders and any of the Obligations continued, and the Obligations, or the liability of any other Person upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by the Lenders, and the Subscription
Agreement and the other Transaction Documents and any other documents executed and delivered in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, as the Lenders may deem advisable from time to time, and
any collateral security, guarantee or right of offset at any time held by the Lenders for the payment of the Obligations may be sold, exchanged, waived, surrendered or released. The Lenders shall have no obligation to protect, secure, perfect or
insure any Lien at any time held by them as security for the Obligations or for the guarantee contained in this Section 2 or any property subject thereto. 
  

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 2.5 GUARANTEE ABSOLUTE AND UNCONDITIONAL. Each Guarantor waives any and all notice of the creation, renewal, extension or
accrual of any of the Obligations and notice of or proof of reliance by the Lenders upon the guarantee contained in this Section 2 or acceptance of the guarantee contained in this Section 2; the Obligations, and any of them, shall conclusively be
deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon the guarantee contained in this Section 2; and all dealings between the Subsidiary and any of the Guarantors, on the one hand, and the
Lenders, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon the guarantee contained in this Section 2. Each Guarantor waives to the extent permitted by law diligence, presentment, protest,
demand for payment and notice of default or nonpayment to or upon the Subsidiary or any of the Guarantors with respect to the Obligations. Each Guarantor understands and agrees that the guarantee contained in this Section 2 shall be construed as a
continuing, absolute and unconditional guarantee of payment without regard to (a) the validity or enforceability of the Subscription Agreement or any other Transaction Document, any of the Obligations or any other collateral security therefor or
guarantee or right of offset with respect thereto at any time or from time to time held by the Lenders, (b) any defense, set-off or counterclaim (other than a defense of payment or performance or fraud or misconduct by Lenders) which may at any time
be available to or be asserted by the Subsidiary or any other Person against the Lenders, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Subsidiary or such Guarantor) which constitutes, or might be construed
to constitute, an equitable or legal discharge of the Subsidiary for the Obligations, or of such Guarantor under the guarantee contained in this Section 2, in bankruptcy or in any other instance. When making any demand hereunder or otherwise
pursuing its rights and remedies hereunder against any Guarantor, the Lenders may, but shall be under no obligation to, make a similar demand on or otherwise pursue such rights and remedies as they may have against the Subsidiary, any other
Guarantor or any other Person or against any collateral security or guarantee for the Obligations or any right of offset with respect thereto, and any failure by the Lenders to make any such demand, to pursue such other rights or remedies or to
collect any payments from the Subsidiary, any other Guarantor or any other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of the Subsidiary, any other Guarantor or any
other Person or any such collateral security, guarantee or right of offset, shall not relieve any Guarantor of any obligation or liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a
matter of law, of the Lenders against any Guarantor. For the purposes hereof, “demand” shall include the commencement and continuance of any legal proceedings. 
  
 2.6 REINSTATEMENT. The guarantee contained in this Section 2 shall continue to be effective, or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by the Lenders upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Subsidiary or any Guarantor, or
upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, 

  

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the Subsidiary or any Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made. 
  
 2.7 PAYMENTS. Each Guarantor hereby guarantees that payments hereunder will be paid to the
Lenders without set-off or counterclaim in U.S. dollars at the address set forth or referred to in the Subscription Agreement. 
  
 SECTION 3. REPRESENTATIONS AND WARRANTIES 
  
 Each Guarantor hereby makes the following representations and warranties to Lenders as of the date hereof: 
  
 3.1 ORGANIZATION AND QUALIFICATION. The Guarantor is a corporation, duly incorporated,
validly existing and in good standing under the laws of the applicable jurisdiction set forth on Schedule 1, with the requisite corporate power and authority to own and use its properties and assets and to carry on its business as currently
conducted. The Guarantor has no subsidiaries other than those identified as such on the Disclosure Schedules to the Subscription Agreement. The Guarantor is duly qualified to do business and is in good standing as a foreign corporation in each
jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not, individually or in the aggregate,
(x) adversely affect the legality, validity or enforceability of any of this Guaranty in any material respect, (y) have a material adverse effect on the results of operations, assets, prospects, or financial condition of the Guarantor or (z)
adversely impair in any material respect the Guarantor’s ability to perform fully on a timely basis its obligations under this Guaranty (a “Material Adverse Effect”). 
  
 3.2 AUTHORIZATION; ENFORCEMENT. The Guarantor has the requisite corporate power and authority to enter into and to consummate the
transactions contemplated by this Guaranty, and otherwise to carry out its obligations hereunder. The execution and delivery of this Guaranty by the Guarantor and the consummation by it of the transactions contemplated hereby have been duly
authorized by all requisite corporate action on the part of the Guarantor. This Guaranty has been duly executed and delivered by the Guarantor and constitutes the valid and binding obligation of the Guarantor enforceable against the Guarantor in
accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and
remedies or by other equitable principles of general application. 
  
 3.3 NO
CONFLICTS. The execution, delivery and performance of this Guaranty by the Guarantor and the consummation by the Guarantor of the transactions contemplated thereby do not and will not (i) conflict with or violate any provision of its Certificate of
Incorporation or By-laws or (ii) conflict with, constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or 

  

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instrument to which the Guarantor is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the Guarantor is subject (including Federal and state securities laws and regulations), or by which any material property or asset of the Guarantor is bound or affected, except in the case
of each of clauses (ii) and (iii), such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as could not, individually or in the aggregate, have or result in a Material Adverse Effect. The business of the
Guarantor is not being conducted in violation of any law, ordinance or regulation of any governmental authority, except for violations which, individually or in the aggregate, do not have a Material Adverse Effect. 
  
 3.4 CONSENTS AND APPROVALS. The Guarantor is not required to obtain any consent, waiver,
authorization or order of, or make any filing or registration with, any court or other federal, state, local, foreign or other governmental authority or other person in connection with the execution, delivery and performance by the Guarantor of this
Guaranty. 
  
 3.5 SUBSCRIPTION AGREEMENT. The representations and warranties of
the Subsidiary set forth in the Subscription Agreement as they relate to such Guarantor, each of which is hereby incorporated herein by reference, are true and correct as of each time such representations are deemed to be made pursuant to such
Subscription Agreement, and the Lenders shall be entitled to rely on each of them as if they were fully set forth herein, PROVIDED that each reference in each such representation and warranty to the Subsidiary’s knowledge shall, for the
purposes of this Section 3, be deemed to be a reference to such Guarantor’s knowledge. 
  
 3.6 FOREIGN LAW. Each Guarantor has consulted with appropriate foreign legal counsel with respect to any of the above representations for which non-U.S. law is applicable. Such foreign counsel have advised each
applicable Guarantor that such counsel knows of no reason why any of the above representations would not be true and accurate. Such foreign counsel were provided with copies of this Parent Guarantee and the Transaction Documents prior to rendering
their advice. 
  
 SECTION 4. COVENANTS 
  
 Each Guarantor covenants and agrees with the Lenders that, from and after the
date of this Guarantee until the Obligations shall have been paid in full, such Guarantor shall take, and/or shall refrain from taking, as the case may be, each commercially reasonable action that is necessary to be taken or not taken, as the case
may be, so that no Event of Default is caused by the failure to take such action or to refrain from taking such action by such Guarantor. 
  

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 SECTION 5. MISCELLANEOUS 
  
 5.1 AMENDMENTS IN WRITING. None of the terms or provisions of this Guarantee may be waived, amended, supplemented or otherwise modified
except in writing by the Lenders. 
  
 5.2 NOTICES. All notices, requests and
demands to or upon the Lenders or any Guarantor hereunder shall be effected in the manner provided for in the Subscription Agreement; PROVIDED that any such notice, request or demand to or upon any Guarantor shall be addressed to such Guarantor at
its notice address set forth on SCHEDULE 5.2. 
  
 5.3 NO WAIVER BY COURSE OF
CONDUCT; CUMULATIVE REMEDIES. The Lenders shall not by any act (except by a written instrument pursuant to Section 5.1), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any
default under the Transaction Documents or Event of Default. No failure to exercise, nor any delay in exercising, on the part of the Lenders, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of
any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Lenders of any right or remedy hereunder on any one occasion shall not be construed
as a bar to any right or remedy which the Lenders would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies
provided by law. 
  
 5.4 ENFORCEMENT EXPENSES; INDEMNIFICATION. 
  
 (a) Each Guarantor agrees to pay, or reimburse the Lenders
for, all its costs and expenses incurred in collecting against such Guarantor under the guarantee contained in Section 2 or otherwise enforcing or preserving any rights under this Guarantee and the other Transaction Documents to which such Guarantor
is a party, including, without limitation, the reasonable fees and disbursements of counsel to the Lenders. 
  
 (b) Each Guarantor agrees to pay, and to save the Lenders harmless from, any and all liabilities with respect to, or resulting from any
delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable in connection with any of the transactions contemplated by this Guarantee. 
  
 (c) Each Guarantor agrees to pay, and to save the Lenders
harmless from, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with 

  

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respect to the execution, delivery, enforcement, performance and administration of this Guarantee to the extent the Subsidiary would be required to do so
pursuant to the Subscription Agreement. 
  
 (d)
The agreements in this Section shall survive repayment of the Obligations and all other amounts payable under the Subscription Agreement and the other Transaction Documents. 
  
 5.5 SUCCESSORS AND ASSIGNS. This Guarantee shall be binding upon the successors and assigns of each Guarantor and shall inure to the benefit
of the Lenders and their respective successors and assigns; PROVIDED that no Guarantor may assign, transfer or delegate any of its rights or obligations under this Guarantee without the prior written consent of the Lenders. 
  
 5.6 SET-OFF. Each Guarantor hereby irrevocably authorizes the Lenders at any time and from
time to time while an Event of Default under any of the Transaction Documents shall have occurred and be continuing, without notice to such Guarantor or any other Guarantor, any such notice being expressly waived by each Guarantor, to set-off and
appropriate and apply any and all deposits, credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by the Lenders to or for the credit or the
account of such Guarantor, or any part thereof in such amounts as the Lenders may elect, against and on account of the obligations and liabilities of such Guarantor to the Lenders hereunder and claims of every nature and description of the Lenders
against such Guarantor, in any currency, whether arising hereunder, under the Subscription Agreement, any other Transaction Document or otherwise, as the Lenders may elect, whether or not the Lenders have made any demand for payment and although
such obligations, liabilities and claims may be contingent or unmatured. The Lenders shall notify such Guarantor promptly of any such set-off and the application made by the Lenders of the proceeds thereof, PROVIDED that the failure to give such
notice shall not affect the validity of such set-off and application. The rights of the Lenders under this Section are in addition to other rights and remedies(including, without limitation, other rights of set-off) which the Lenders may have.

  
 5.7 COUNTERPARTS. This Guarantee may be executed by one or more of the parties
to this Guarantee on any number of separate counterparts (including by telecopy), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 
  
 5.8 SEVERABILITY. Any provision of this Guarantee which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction. 
  

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 5.9 SECTION HEADINGS. The Section headings used in this Guarantee are for convenience of reference only and are not to
affect the construction hereof or be taken into consideration in the interpretation hereof. 
  
 5.10 INTEGRATION. This Guarantee and the other Transaction Documents represent the agreement of the Guarantors and the Lenders with respect to the subject matter hereof and thereof, and there are no promises,
undertakings, representations or warranties by the Lenders relative to subject matter hereof and thereof not expressly set forth or referred to herein or in the other Transaction Documents. 
  
 5.11 GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY PRINCIPLES OF CONFLICTS OF LAWS. 
  
 5.12 SUBMISSION TO JURISDICTION; WAIVERS. Each Guarantor hereby irrevocably and unconditionally: 
  
 (a) submits for itself and its property in any legal action or proceeding relating to this Guarantee and the other Transaction Documents
to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the Courts of the State of New York, located in New York County, New York, the courts of the United States of
America for the Southern District of New York, and appellate courts from any thereof; 
  
 (b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have
to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; 
  
 (c) agrees that service of process in any such action or proceeding may be effected by mailing a copy
thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such Guarantor at its address referred to in the Subscription Agreement or at such other address of which the Lenders shall have been notified
pursuant thereto; 
  
 (d) agrees that nothing
herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and 
  

(e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding
referred to in this Section any special, exemplary, punitive or consequential damages. 
  

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 5.13 ACKNOWLEDGEMENTS. Each Guarantor hereby acknowledges that: 
  
 (a) it has been advised by counsel in the negotiation,
execution and delivery of this Guarantee and the other Transaction Documents to which it is a party; 
  
 (b) the Lenders have no fiduciary relationship with or duty to any Guarantor arising out of or in connection with this Guarantee or any of
the other Transaction Documents, and the relationship between the Guarantors, on the one hand, and the Lenders, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and 
  
 (c) no joint venture is created hereby or by the other
Transaction Documents or otherwise exists by virtue of the transactions contemplated hereby among the Guarantors and the Lenders. 
  
 5.14 RELEASE OF GUARANTORS. Subject to Section 2.6, each Guarantor will be released from all liability hereunder concurrently with the repayment in full of all amounts
owed under the Subscription Agreement, the Notes and the other Transaction Documents. 
  
 5.15 SENIORITY. The Obligations of each of the Guarantors hereunder rank senior in priority to any other unsecured Debt (as defined in the Notes) of such Guarantor. 
  
 5.16 WAIVER OF JURY TRIAL. EACH GUARANTOR AND, BY ACCEPTANCE OF THE BENEFITS HEREOF, THE LENDERS, HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTEE AND FOR ANY COUNTERCLAIM THEREIN. 
  

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 IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee to be duly executed and delivered
as of the date first above written. 
  

			
	VCG HOLDING CORP.
		
	 By:
	 	 
	 	 	 Name: Troy H. Lowrie

	 	 	 Title: Chairman and Chief Executive Officer

  

 11Additional Investment Right Agreement

  
 Exhibit 10.5

  
 NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO GLENARM AND VCG. THIS
SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES. 
  
 ADDITIONAL INVESTMENT RIGHT 
  

To Purchase $                     principal
amount of Convertible Notes of 
  
 Glenarm Restaurant LLC

  
 and 
  
 Warrants of 
  
 VCG Holding Corp. 
  
 [SHOULD THIS ONLY BE EFFECTIVE AFTER SHAREHOLDER APPROVAL?] THIS ADDITIONAL INVESTMENT RIGHT (the “AIR”) certifies that, for value
received,                      (the “Holder”), is entitled, upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) and on or prior to the close of business on the earlier of (a) the 12 month anniversary of the effective date of the
registration statement registering the resale of the Underlying Shares (as defined below) with the Securities and Exchange Commission and (b) the 24 month anniversary of the Initial Exercise Date (the “Termination Date”) but not
thereafter, to subscribe for and purchase from Glenarm Restaurant LLC, a Colorado corporation (the “Glenarm”), up to
$                     principal amount of 12% Senior Subordinated Notes (the “AIR Note”) and, for every $250,000 principal
amount AIR Notes purchased hereunder, warrants (“AIR Warrants”) issued by VCG Holding Corp (“VCG”) to purchase (a) 31,250 shares of common stock of VCG (the “Common Stock”) (subject to adjustment
for reverse and forward 

  

 1 

 
stock splits and the like) at an exercise price of
$                    1 (subject to adjustment hereunder and thereunder) and (b) 31,250 shares of Common Stock (subject to adjustment for reverse and forward stock splits and the like) at an exercise price of
$                    2 (subject to adjustment thereunder and hereunder) (such prices collectively, the “AIR Warrant Exercise Prices”). The number shares of Common Stock underlying the AIR Warrants issued shall be pro rated for lesser
principal amounts of AIR Notes purchased. The AIR Note shall be in the form of the Notes issued pursuant to the Subscription Agreement, mutatis mutandis, except that the conversion price thereof shall be equal to
$                    3, subject to adjustment thereunder and hereunder (“AIR Conversion Price”). Except as set forth above, the AIR Warrants shall be in the form of the Warrants issued pursuant to the Subscription Agreement, mutatis
mutandis, except that, Section 5(b) therein shall be calculated on a customary weighted average formula based on the issued and outstanding common stock as set forth in Section 3(b) hereunder rather than full ratchet. 
  
 Section 1. Definitions. Capitalized terms used and not
otherwise defined herein shall have the meanings set forth in that certain Subscription Agreement (the “Subscription Agreement”), dated October     , 2004, among Glenarm, VCG and the Holder. 
  
 Section 2. Exercise. 
  
 a) Exercise of AIR. Exercise of the purchase rights
represented by this AIR may be made at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to Glenarm and VCG of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto (or
such other office or agency of Glenarm and VCG as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of Glenarm and VCG) and the payment of the aggregate principal amount of the AIR
Notes and AIR Warrants thereby purchased by wire transfer or cashier’s check drawn on a United States bank. Upon exercise of this AIR, Glenarm shall issue an AIR Note with a principal amount equal to the amount paid by the Holder and VCG shall
issue the respective AIR Warrants. 
  
 b)
Mechanics of Exercise. 
  
 i.
Authorization of AIR Note. VCG covenants that during the period this AIR is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of all of the shares of Common
Stock underlying the AIR Notes (the “AIR Note Shares”) and AIR Warrants (the “AIR Warrant Shares” and collectively with the AIR Note Shares, the “AIR Underlying Shares”). Glenarm and VCG further
covenant that its issuance of this AIR shall constitute full authority to its officers who are charged with the duty of 

	1	The lesser of 110% of the AIR Conversion Price and (b) 121% of the average of the closing prices of the Common Stock during the 20 business days immediately prior to
the date hereof. 

  

	2	The lesser of (a) 125% of the AIR Convertion Price and (b) 132% of the average of the closing prices of the Common Stock during the 20 business days immediately
prior to the date hereof. 

  

	3	110% of the average of the closing prices of the Common Stock during the 20 business days immediately prior to the date hereof. 

  

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 executing certificates to execute and issue the necessary certificates for the AIR Note and AIR Warrant
upon the exercise of the purchase rights under, and in accordance with the terms of the AIR Notes and AIR Warrants, Common Stock certificates upon conversion of the AIR Notes and exercise of the AIR Warrants. Glenarm and VCG covenants that the AIR
Notes and AIR Warrants which may be issued upon the exercise of the purchase rights represented by this AIR and the AIR Underlying Shares issuable thereunder will, upon exercise of the purchase rights represented by this AIR the AIR Notes and AIR
Warrants, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue). Glenarm
and VCG will take all such reasonable action as may be necessary to assure that the AIR Note, AIR Warrants and AIR Underlying Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of
the principal trading market or exchange (the “Trading Market”) upon which the Common Stock may be listed. 
  
 ii. Delivery of Certificates Upon Exercise. Certificates for the AIR Note and AIR Warrants purchased hereunder shall be delivered
to the Holder within 3 Trading Days from the delivery to Glenarm and VCG of the Notice of Exercise Form, surrender of this AIR and payment of the principal amount as set forth above (“AIR Note Delivery Date”). This AIR shall be
deemed to have been exercised on the date the payment of the principal amount is received by Glenarm. The AIR Notes and AIR Warrants shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be
deemed to have become a holder of record of such security for all purposes, as of the date the AIR has been exercised by payment to Glenarm of the principal amount and all taxes required to be paid by the Holder, if any, pursuant to Section 2(b)(v)
prior to the issuance of such security, have been paid. 
  
 iii. Delivery of New AIRs Upon Exercise. If this AIR shall have been exercised in part, Glenarm and VCG shall, at the time of delivery of the certificate or certificates representing the AIR Notes and AIR
Warrants, deliver to Holder a new AIR evidencing the rights of Holder to purchase the remaining principal amount of the AIR Notes and AIR Warrants called for by this AIR, which new AIR shall in all other respects be identical with this AIR.

  
 iv. Rescission Rights. If Glenarm or
VCG fails to deliver to the Holder a certificate or certificates representing the AIR Notes and AIR Warrants pursuant to this Section 2(b)(iv) by the AIR Note Delivery Date, then the Holder will have the right to rescind such exercise. 

 

 3 

 v. Charges, Taxes and Expenses. Issuance of certificates for AIR Notes and AIR
Warrants shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by Glenarm and VCG, as appropriate, and such
certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for AIR Notes or AIR Warrants are to be issued in a name other than the
name of the Holder, this AIR when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and Glenarm or VCG, as applicable, may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto. 
  
 vi. Closing of Books. Glenarm and VCG will not close its records in any manner which prevents the timely exercise of this AIR, pursuant to the terms hereof or the conversion of the AIR Notes or exercise of the
AIR Warrants pursuant to the terms thereof. 
  
 Section
3. Certain Adjustments. 
  
 a)
Stock Dividends and Splits. If VCG, at any time while this AIR is outstanding: (A) pays a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities
payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by VCG pursuant to the AIR Notes, AIR Warrants, the Notes or the Warrants), (B) subdivides outstanding shares of Common Stock into
a larger number of shares, (C) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (D) issues by reclassification of shares of the Common Stock any shares of capital stock of VCG,
then in each case the AIR Conversion Price and AIR Exercise Prices shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which
the denominator shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to
receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification. 
  
 b) Subsequent Equity Sales. At any time following Shareholder Approval (as defined in Section 6(I) of
the Subscription Agreement) or following the occurrence of a breach of Section 6(I) of the Subscription Agreement, if VCG or any Subsidiary thereof, as applicable, at any time while this AIR is outstanding, shall offer, sell, grant any option to
purchase or offer, sell or grant any right to reprice its securities, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition) any Common Stock or Common Stock Equivalents entitling any
Person to acquire shares of Common Stock, at an effective price per share less than the then AIR 

  

 4 

 
Conversion Price and/or Exercise Prices (such lower price, the “Base Share Price” and such issuances collectively, a “Dilutive
Issuance”), as adjusted hereunder (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange
prices or otherwise, or due to warrants, options or rights per share which is issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share which is less than the AIR Conversion Price, such
issuance shall be deemed to have occurred for less than the AIR Conversion Price), then, (i) (A) the AIR Conversion Price shall be reduced to equal the Base Share Price and (B) the AIR Exercise Prices shall be reduced (and only reduced) by
multiplying the AIR Exercise Price by a fraction, the numerator of which is the number of shares of Common Stock issued and outstanding immediately prior to the Dilutive Issuance plus the number of shares of Common Stock which the offering price for
such Dilutive Issuance would purchase at the then Exercise Price, and the denominator of which shall be the sum of the number of shares of Common Stock issued and outstanding immediately prior to the Dilutive Issuance plus the number of shares of
Common Stock so issued or issuable in connection with the Dilutive Issuance and (ii) the number of AIR Warrant Shares issuable hereunder shall be increased such that the aggregate Exercise Price payable hereunder, after taking into account the
decrease in the Exercise Price, shall be equal to the aggregate Exercise Price prior to such adjustment. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. VCG shall notify the Holder in writing, no
later than the business day following the issuance of any Common Stock or Common Stock Equivalents subject to this section, indicating therein the applicable issuance price, or of applicable reset price, exchange price, conversion price and other
pricing terms. 
  
 c) Pro Rata
Distributions. If VCG, at any time while this AIR is outstanding, distributes to all holders of Common Stock (and not to Holders) evidences of its indebtedness or assets or rights or warrants to subscribe for or purchase any security other than
the Common Stock (which shall be subject to Section 3(b)), then in each such case the AIR Conversion Price and AIR Exercise Prices shall be determined by multiplying such AIR Conversion Price and AIR Exercise Prices in effect immediately prior to
the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the closing bid price of the Common Stock on the principal trading market or exchange (the “Closing
Price”) determined as of the record date mentioned above, and of which the numerator shall be such Closing Price on such record date less the then fair market value at such record date of the portion of such assets or evidence of
indebtedness so distributed applicable to one outstanding share of the Common Stock as determined by the Board of Directors in good faith. In either case the adjustments shall be described in a statement provided to the Holder of the portion of
assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date
mentioned above. 
  
 d) Calculations. All
calculations and adjustments to the AIR Conversion Price and AIR Exercise Prices under this Section 3 shall be made to the nearest cent or 

  

 5 

 
the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock outstanding as of a given date shall
be the sum of the number of shares of Common Stock (excluding treasury shares, if any) outstanding. 
  
 e) Notice to Holders. 
  
 i. Adjustment to AIR Conversion Price and AIR Exercise Prices. Whenever the AIR Conversion Price or AIR Exercise Prices are
adjusted pursuant to this Section 3, VCG shall promptly mail to each Holder a notice setting forth the AIR Conversion Price and AIR Exercise Prices after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

  
 ii. Notice to Allow Exercise by
Holder. If (A) VCG shall declare a dividend (or any other distribution) on the Common Stock; (B) VCG shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock; (C) VCG shall authorize the granting to all holders
of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights; (D) the approval of any stockholders of VCG shall be required in connection with any reclassification of the Common Stock,
any consolidation or merger to which Glenarm or VCG is a party, any sale or transfer of all or substantially all of the assets of Glenarm or VCG, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or
property; (E) Glenarm or VCG shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of Glenarm or VCG; then, in each case, Glenarm or VCG, as applicable, shall cause to be mailed to the Holder at its last
addresses as it shall appear upon the AIR Register of Glenarm or VCG, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of
such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be
entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided, that the failure to mail such notice or
any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. The Holder is entitled to exercise this AIR during the 20-day period commencing the date of such notice to
the effective date of the event triggering such notice. 
  

 6 

 f) Fundamental Transaction. If, at any time while this AIR is outstanding, (A)
Glenarm or VCG effects any merger or consolidation of Glenarm or VCG, as applicable, with or into another Person, (B) Glenarm or VCG effects any sale of all or substantially all of its assets in one or a series of related transactions, (C) any
tender offer or exchange offer (whether by Glenarm or VCG or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (D) Glenarm effects any
reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a “Fundamental
Transaction”), then, upon any subsequent exercise of this AIR the Holder shall have the right to receive upon conversion of the AIR Note and exercise of the AIR Warrants, for each AIR Underlying Share that would have been issuable upon such
exercise and then subsequent conversion or exercise, as applicable, absent such Fundamental Transaction shares of Common Stock of the successor or acquiring corporation or of Glenarm or VCG, if it is the surviving corporation, and Alternate
Consideration receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which the underlying AIR Notes are convertible and
Underlying AIR Warrants are exercisable immediately prior to such event (the “Alternate Consideration”). For purposes of any such deemed conversion, the determination of the AIR Conversion Price and AIR Exercise Prices shall be
appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and VCG shall apportion the AIR Conversion Price and AIR
Exercise Prices among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property
to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of the AIR Note and any exercise of the AIR Warrants following such Fundamental
Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to Glenarm or VCG or surviving entity in such Fundamental Transaction shall issue to the Holder a new additional investment right consistent with the
foregoing provisions and evidencing the Holder’s right to exercise such additional investment right ultimately into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms
requiring any such successor or surviving entity to comply with the provisions of this paragraph (f) and insuring that this AIR (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental
Transaction. 
  
 g) Exempt Issuance.
Notwithstanding the foregoing, no adjustments, Alternate Consideration nor notices shall be made, paid or issued under this Section 3 in respect of an issuance of (a) shares of Common Stock or options to employees, officers or directors of VCG
pursuant to any stock or option plan duly adopted by a majority of the non-employee members of the Board of Directors of VCG or a majority of the members of a committee of non-employee directors established for such purpose, (b) securities upon the
exercise of or conversion of any securities issued hereunder, convertible securities, options or warrants issued and outstanding on the date of this AIR, provided 

  

 7 

 
that such securities have not been amended since the date of this AIR to increase the number of such securities, and (c) securities issued pursuant to
acquisitions or strategic transactions, provided any such issuance shall only be to a person or entity which is, itself or through its subsidiaries, an operating company in a business synergistic with the business of VCG and in which VCG receives
benefits in addition to the investment of funds, but shall not include a transaction in which VCG is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities. 
  
 h) Voluntary Adjustment By Company. VCG may at any
time during the term of this AIR reduce the then current AIR Conversion Price and AIR Exercise Prices to any amount and for any period of time deemed appropriate by the Board of Directors of VCG. 
  
 Section 4. Transfer of AIR. 
  
 a) Transferability. Subject to compliance with any
applicable securities laws and the conditions set forth in Sections 5(a) and 4(d) hereof and to the provisions of Section 4.1 of the Subscription Agreement, this AIR and all rights hereunder are transferable, in whole or in part, upon surrender of
this AIR at the principal office of VCG, together with a written assignment of this AIR substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the
making of such transfer. Upon such surrender and, if required, such payment, Glenarm and VCG shall execute and deliver a new AIR or AIRs in the name of the assignee or assignees and in the denomination or denominations specified in such instrument
of assignment, and shall issue to the assignor a new AIR evidencing the portion of this AIR not so assigned, and this AIR shall promptly be cancelled. An AIR, if properly assigned, may be exercised by a new holder for the purchase of AIR Notes and
AIR Warrants without having a new AIR issued. 
  
 b) New AIRs. This AIR may be divided or combined with other AIRs upon presentation hereof at the aforesaid office of Glenarm and VCG, together with a written notice specifying the names and denominations in which new AIRs are to be
issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, Glenarm and VCG shall execute and deliver a new AIR or AIRs in exchange for the
AIR or AIRs to be divided or combined in accordance with such notice. 
  
 c) AIR Register. Glenarm and VCG shall register this AIR, upon records to be maintained by Glenarm and VCG for that purpose (the “AIR Register”), in the name of the record Holder hereof from
time to time. Glenarm and VCG may deem and treat the registered Holder of this AIR as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the
contrary. 
  
 d) Transfer
Restrictions. If, at the time of the surrender of this AIR in connection with any transfer of this AIR, the transfer of this AIR shall not be registered 

  

 8 

 
pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws, Glenarm and VCG may require,
as a condition of allowing such transfer (i) that the Holder or transferee of this AIR, as the case may be, furnish to Glenarm and VCG a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of
counsel in comparable transactions) to the effect that such transfer may be made without registration under the Securities Act and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to Glenarm
and VCG an investment letter in form and substance acceptable to Glenarm and VCG and (iii) that the transferee be an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8) promulgated under the Securities Act
or a qualified institutional buyer as defined in Rule 144A(a) under the Securities Act. 
  
 Section 5. Miscellaneous. 
  
 a) Title to the Additional Investment Right. Prior to the Termination Date and subject to compliance with applicable laws and Section 4 of this AIR, this AIR and all rights hereunder are transferable, in whole
or in part, at the office or agency of Glenarm and VCG by the Holder in person or by duly authorized attorney, upon surrender of this AIR together with the Assignment Form annexed hereto properly endorsed. The transferee shall sign an investment
letter in form and substance reasonably satisfactory to Glenarm and VCG. 
  
 b) No Rights as Creditor/Noteholder or Shareholder Until Exercise. This AIR does not entitle the Holder to any rights as a creditor of Glenarm or VCG pursuant to the AIR Note prior to the exercise hereof nor
does this AIR entitle the Holder to any voting rights or other rights as a shareholder of VCG prior to any conversion of the AIR Note or exercise of the AIR Warrants. Upon the surrender of this AIR and the payment of the aggregate principal amount,
the AIR Notes and AIR Warrants so purchased shall be and be deemed to be issued to such Holder as the record owner of such AIR Notes and AIR Warrants as of the close of business on the later of the date of such surrender or payment. 
  
 c) Loss, Theft, Destruction or Mutilation of AIR.
Glenarm and VCG covenant that upon receipt by Glenarm and VCG of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this AIR or any certificate relating to the AIR Notes or AIR Warrants, and in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the AIR, shall not include the posting of any bond), and upon surrender and cancellation of such AIR or certificate, if mutilated, Glenarm and VCG
will make and deliver a new AIR or certificate of like tenor and dated as of such cancellation, in lieu of such AIR or certificate. 
  
 d) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right
required or granted herein shall be a Saturday, Sunday or a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday. 
  

 9 

 e) Authorized Shares. 
  
 VCG covenants that during the period the AIR is outstanding,
it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of all of the AIR Underlying Shares. Glenarm and VCG further covenant that its issuance of this AIR shall constitute full
authority to its officers who are charged with the duty of executing certificates to execute and issue the necessary certificates for the AIR Notes and AIR Warrants upon the exercise of the purchase rights under, and in accordance with the terms of,
this AIR. Glenarm and VCG will take all such reasonable action as may be necessary to assure that such AIR Notes, AIR Warrants and AIR Underlying Shares may be issued as provided herein without violation of any applicable law or regulation, or of
any requirements of the Trading Market upon which the Common Stock may be listed. 
  
 Except and to the extent as waived or consented to by the Holder, Glenarm and VCG shall not by any action, including, without limitation,
amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any
of the terms of this AIR, the AIR Notes or the AIR Warrants, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as
set forth in this AIR, the AIR Notes and AIR Warrants against impairment. Without limiting the generality of the foregoing, Glenarm and VCG will (a) take all such action as may be necessary or appropriate in order that Glenarm and VCG may validly
and legally issue fully paid and nonassessable AIR Notes and AIR Warrants upon the exercise of this AIR, AIR Note Shares upon conversion of the AIR Notes and AIR Warrant Shares upon exercise of the AIR Warrants and (b) use commercially reasonable
efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable Glenarm and VCG to perform their obligations under this AIR, the AIR Notes and the AIR
Warrants. 
  
 Before taking any action which
would result in an adjustment in the AIR Notes or AIR Warrants for which this AIR is exercisable or in the AIR Conversion Price or AIR Exercise Prices, Glenarm and VCG shall obtain all such authorizations or exemptions thereof, or consents thereto,
as may be necessary from any public regulatory body or bodies having jurisdiction thereof. 
  
 f) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this AIR shall be governed
by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and
defense of the transactions contemplated by this AIR (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting
in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of 

  

 10 

 
New York, borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or
inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this AIR and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner permitted by law. The parties hereby waive, to the fullest extent permitted by applicable law, all rights to a trial by jury. If either party shall commence an action or
proceeding to enforce any provisions of this AIR, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys’ fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such action or proceeding. 
  
 g) Restrictions. The Holder acknowledges that the AIR Notes and AIR Warrants acquired upon the exercise of this AIR, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

  
 h) Nonwaiver and Expenses. No course
of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder
terminate on the Termination Date. If Glenarm or VCG willfully and knowingly fails to comply with any provision of this AIR, which results in any material damages to the Holder, Glenarm and VCG, severally and jointly, shall pay to Holder such
amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise
enforcing any of its rights, powers or remedies hereunder. 
  
 i) Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by Glenarm and VCG shall be delivered in accordance with the notice provisions of the Subscription
Agreement. 
  
 j) Limitation of
Liability. No provision hereof, in the absence of any affirmative action by Holder to exercise this AIR, purchase AIR Notes or purchase AIR Warrants, and no enumeration herein of the rights or privileges of Holder, shall give rise to any
liability of Holder for the purchase price of any AIR Note, AIR Warrants, any AIR Note Shares or any AIR Warrant Shares or as a stockholder of Glenarm or VCG, whether such liability is asserted by Glenarm or VCG or by creditors of Glenarm or
VCG. 
  
 k) Remedies. Holder, in
addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this AIR. Glenarm and VCG agrees that monetary damages would not be adequate compensation
for any loss incurred by reason of a breach by it of the 

  

 11 

 
provisions of this AIR and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

  
 l) Successors and Assigns. Subject to
applicable securities laws, this AIR and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of Glenarm and VCG and the successors and permitted assigns of Holder. The provisions of this AIR
are intended to be for the benefit of all Holders from time to time of this AIR and shall be enforceable by any such Holder or holder of AIR Notes and AIR Warrants. 
  
 m) Amendment. This AIR may be modified or amended or the provisions hereof waived with the written
consent of Glenarm and VCG and the Holder. 
  
 n) Severability. Wherever possible, each provision of this AIR shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this AIR shall be prohibited by or invalid under applicable
law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this AIR. 
  
 o) Headings. The headings used in this AIR are for
the convenience of reference only and shall not, for any purpose, be deemed a part of this AIR. 
  
 ******************** 
  

 12 

 IN WITNESS WHEREOF, Glenarm and VCG has caused this AIR to be executed by its officer thereunto duly
authorized. 
  
 Dated: October     , 2004 

 

			
	VCG HOLDING CORP.
		
	 By:
	 	 
	 	 	 Name:

	 	 	 Title:

	
	GLENARM RESTAURANT LLC
		
	 By:
	 	 
	 	 	 Name:

	 	 	 Title:

  

 13 

  
 NOTICE OF EXERCISE

  

	TO:	VCG HOLDING CORP. 

	 	GLENARM RESTAURANT LLC 

  
 (1) The undersigned hereby elects to purchase $________ principal amount of AIR Notes of Glenarm Restaurant LLC and AIR Warrants of VCG Holding Corp.
pursuant to the terms of the attached AIR and tenders herewith payment of the principal in full, together with all applicable transfer taxes, if any. 
  
 (2) Payment shall take the form of (check applicable box) in lawful money of the United States; or 
  
 (3) Please issue a certificate or certificates representing said AIR Notes
and AIR Warrants in the name of the undersigned or in such other name as is specified below: 
  
 _____________________________________ 
  
 The AIR Notes and AIR Warrants shall be delivered to the following: 
  
 _____________________________________ 
  
 _____________________________________ 
  
 _____________________________________ 
  
 (4)
Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended. 
  
 [SIGNATURE OF HOLDER] 
  
 Name of Investing Entity:                                
                                        
                                        
                                        
                                        
                
  
 Signature of Authorized Signatory of Investing Entity:                       
                                        
                                        
                                        
            
  
 Name of Authorized Signatory:                               
                                        
                                        
                                        
                                        
       
  
 Title of Authorized Signatory:                               
                                        
                                        
                                        
                                        
         
  
 Date:                                     
                                        
                                        
                                        
                                        
                                        
           
  

  
 ASSIGNMENT FORM

  
 (To assign the foregoing warrant, execute 
 this form and supply required information. 
 Do
not use this form to exercise the warrant.) 
  
 FOR VALUE
RECEIVED, the foregoing AIR and all rights evidenced thereby are hereby assigned to 
  
 _____________________________________________________________________________________________whose address is 
  
 ___________________________________________________________________________________________________________. 
  
                                       
                                        
                                        
                                        
                                        
                                        
                    
  

			
	 	  	Dated:                     ,
          
		
	Holder’s Signature:	  	 ________________________________

		
	Holder’s Address:	  	 ________________________________

		
	 	  	 ________________________________

  
 Signature Guaranteed:                                  
                                        
                                        
                                        
                                        
                     
  
 NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the AIR, without alteration or enlargement or any change
whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing AIR.

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