Agreement and Plan of Reorganization

Exhibit 10.1

CONFIDENTIAL TREATMENT REQUESTED

Portions of this exhibits indicated by “(*[TEXT]*)” have been omitted pursuant to a request for confidential treatment and such omitted portions have been filed separately with the Securities and Exchange Commission.

Agreement and Plan of Reorganization

AGREEMENT AND PLAN OF REORGANIZATION, dated as of February 9, 2008, by and among VCG Holding Corp., a Colorado corporation (“Parent”), (*NAME CONFIDENTIAL*), a (*STATE CONFIDENTIAL*) limited liability company and a wholly-owned entity of Parent (“Sub”), (*NAME CONFIDENTIAL*), Inc., a (*STATE CONFIDENTIAL*) corporation (the “Target”) (Sub and Target being hereinafter collectively referred to as the “Constituent Companies”) and (*NAME CONFIDENTIAL*) (“Controlling Shareholder”).

RECITALS

A. The Boards of Directors and/or Members of Parent, Sub and Target have approved the acquisition of Target by Parent.

B. The Boards of Directors and/or Members of Parent, Sub and Target have approved the merger of Target into Sub (the “Merger”), pursuant to the Agreement of Merger set forth in Schedule B hereto (“Agreement of Merger”) and the transactions contemplated hereby, in accordance with the applicable provisions of the statutes of the States of (*STATE CONFIDENTIAL*) and Colorado which permit such Merger.

C. For federal income tax purposes, it is intended that the Merger shall qualify as reorganization with the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”).

D. Each of the parties to this Agreement desires to make certain representations, warranties and agreements in connection with the Merger and also to prescribe various conditions thereto.

AGREEMENT

Therefore, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

ARTICLE I

THE MERGER

1.1 The Merger . At the Effective Time (as defined in Section 1.2) and subject to the terms and conditions of this Agreement and the Agreement of Merger, Target shall be merged into Sub and the separate existence of Target shall thereupon cease, in accordance with the applicable provisions of the (*STATE CONFIDENTIAL*) Business Corporation Act of the State of (*STATE CONFIDENTIAL*) (the “(*NAME CONFIDENTIAL*)”) and the (*STATE CONFIDENTIAL*) Limited Liability Company Act (the “(*NAME CONFIDENTIAL*)”) and the Colorado Business Corporation Act of the State of Colorado (the “CBCA”).

(b) Sub will be the Surviving Company in the Merger (sometimes referred to herein as the “Surviving Company”) and will continue to be governed by the laws of the State of (*STATE CONFIDENTIAL*), and the separate corporate existence of Sub and all of its rights, privileges, immunities and franchises, public or private, and all its duties and liabilities as a corporation organized under the (*NAME CONFIDENTIAL*), will continue unaffected by the Merger.

(c) The Merger will have the effects specified by the (*NAME CONFIDENTIAL*) and the CBCA.

1.2 Effective Time. As soon as practicable following fulfillment or waiver of the conditions specified in Article VII and Article VIII hereof, and provided that this Agreement has not been terminated or abandoned pursuant to Article IX hereof, the Constituent Companies will cause a Certificate of Merger (the “Certificate of

Kdills/vcg/(*NAME CONFIDENTIAL*)/reorg plan redlined.doc

MAG - V.8 FINAL

2/9/08

CONFIDENTIAL TREATMENT REQUESTED

Portions of this exhibits indicated by “(*[TEXT]*)” have been omitted pursuant to a request for confidential treatment and such omitted portions have been filed separately with the Securities and Exchange Commission.

Merger”) and, if necessary, Articles of Merger (the “Articles of Merger”) to be filed with the office of the Secretary of State of the State of (*STATE CONFIDENTIAL*) and comply with all requirements for a merger as provided in the (*NAME CONFIDENTIAL*) and (*NAME CONFIDENTIAL*), and will cause the Agreement of Merger together with a duly executed Certificate of Approval of Merger and, if necessary, Articles of Merger, certificates of the officers of Parent and the Constituent Companies and tax clearance certificates to be filed with the office of the Secretary of State of the State of Colorado, as required by the CBCA. Subject to and in accordance with the laws of the States of (*STATE CONFIDENTIAL*) and Colorado, the Merger will become effective at the date and time the Certificate of Merger and, if necessary, Articles of Merger, is filed with the office of the Secretary of State of the State of (*STATE CONFIDENTIAL*) or such later time or date as may be specified in the Certificate of Merger and/or Articles of Merger (the “Effective Time”). Each of the parties will use its best efforts to cause the Merger to be consummated as soon as practicable following the fulfillment or waiver of the conditions specified in Articles VII and VIII hereof.

ARTICLE II

THE SURVIVING COMPANY

2.1 Articles of Organization . The Articles of Organization of Sub as in effect immediately prior to the Effective Time shall be the Articles of Organization of the Surviving Company after the Effective Time.

2.2 Operating Agreement. The Operating Agreement of Sub as in effect immediately prior to the Effective Time shall be the Operating Agreement of the Surviving Company after the Effective Time.

2.3 Managers. From and after the Effective Time, the Managers of Sub shall be the Managers of the Surviving Company.

ARTICLE III

CONVERSION OF SHARES

3.1 Conversion of Target Shares in the Merger. Pursuant to the Agreement of Merger, at the Effective Time, by virtue of the Merger and without any action on the part of any holder of any capital stock of Target:

(a) all shares of Common Stock of Target (“Target Common Stock”) owned by Parent or any subsidiary of Parent or Target shall be cancelled and shall cease to exist from and after the Effective Time; and

(b) each remaining issued and outstanding share of Target Common Stock shall, subject to Section 3.3(e) hereof, be converted into, and become exchangeable for, the number of shares of validly issued, fully paid and nonassessable common stock, without par value, of Parent (“Parent Common Stock”) equal to the Conversion Ratio. In this Agreement, the term “Conversion Ratio” means a fraction, whereby the Numerator is equal to (i) 50% of the Purchase Price, as set forth in Section 3.4, divided by the Per Share Price which is (ii) the 10-day volume weighted average closing sale price (determined as set forth in Schedule 3.1(b)) of a share of Parent Common Stock as reported on NASDAQ under the trading symbol “VCGH” (the “Average Price”) for the 10 trading days immediately preceding the day which is 1 calendar day prior to the date of execution of this Agreement but in no event less than $11.00 per share and the Denominator which is equal to the sum of the number of shares of Target Common stock issued and outstanding as of the date of this Agreement. The consideration referred to in this Section 3.1, together with any cash payments in lieu of fractional shares as provided herein, is hereinafter referred to as the “Merger Consideration.”.

3.2 Status of Sub Shares. At the Effective Time, by virtue of the Merger and without any action on the part of any holder of any membership interest of Sub, each issued and outstanding interest of Sub shall continue unchanged and remain outstanding as a share of common stock of the Surviving Company.

3.3 Exchange of Company Capital Stock Certificates. (a) On or prior to the Closing Date, Parent shall make available to the Escrow Agent the certificates representing shares of Parent Common Stock required to effect the exchange referred to in Section 3.3(b). Parent shall also make available to the Escrow Agent the cash required as set forth in 3.5 below and to make the cash payments in lieu of fractional shares referred to in Section

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CONFIDENTIAL TREATMENT REQUESTED

Portions of this exhibits indicated by “(*[TEXT]*)” have been omitted pursuant to a request for confidential treatment and such omitted portions have been filed separately with the Securities and Exchange Commission.

3.3(e) below. Shares of Parent Common Stock into which shares of Target Common Stock shall be converted in the Merger shall be deemed to have been issued at the Effective Time.

(b) From and after the Effective Time, each holder of a certificate which immediately prior to the Effective Time represented outstanding shares of Target Common Stock are granted by reason of the Merger under the CBCA shall be entitled to receive in exchange therefor upon surrender thereof to (*NAME AND ADDRESS CONFIDENTIAL*) (the “Escrow Agent”), a certificate or certificates representing the number of whole shares of Parent Common Stock into which such holder’s shares of Target Common Stock were converted pursuant to Section 3.1 and cash in lieu of any fractional shares of such Parent Common Stock pursuant to Section 3.3(e) plus that portion of the cash set forth in 3.5 below as represented by each shareholder of shares surrendered of the total shares of Target set forth as to the Denominator in 3.1(b) above. From and after the Effective Time, Parent shall be entitled to treat the certificates which immediately prior to the Effective Time represented shares of Target Common Stock and which have not yet been surrendered for exchange as evidencing the ownership of the number of full shares of Parent Common Stock into which the shares of Target Common Stock represented by such certificates shall have been converted pursuant to Section 3.1, notwithstanding the failure to surrender such certificates. However, notwithstanding any other provision of this Agreement, until holders or transferees of certificates which immediately prior to the Effective Time represented shares of Target Common Stock have surrendered them for exchange as provided herein, no dividends shall be paid with respect to any shares represented by such certificates and no payment for fractional shares shall be made. Upon surrender of a certificate which immediately prior to the Effective Time represented outstanding shares of Target Common Stock, there shall be paid to the holder of such certificate the amount of any dividends which theretofore became payable, but which were not paid by reason of the foregoing, with respect to the number of whole shares of Parent Common Stock represented by the certificate or certificates issued upon such surrender. If any certificate for shares of Parent Common Stock is to be issued in a name other than that in which the certificate, which immediately prior to the Effective Time represented shares of Target Common Stock, surrendered in exchange therefor is registered, it shall be a condition of such exchange that the person requesting such exchange shall pay any transfer or other taxes required by reason of the issuance of certificates for such shares of Parent Common Stock in a name other than that of the registered holder of any such certificate surrendered.

(c) Intentionally Left Blank

(d) As soon as practicable after the Effective Time, the Escrow Agent shall mail to each holder of record of a certificate or certificates that immediately prior to the Effective Time represented outstanding shares of Target Common Stock (collectively, the “Target Certificates”) (i) a form letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to Target Certificates shall pass, only upon actual delivery of Target Certificates to the Escrow Agent) and (ii) instructions for use in effecting the surrender of Target Certificates in exchange for certificates representing shares of Parent Common Stock. Upon surrender of Target Certificates for cancellation to the Escrow Agent, together with a duly executed letter of transmittal and such other documents as the Escrow Agent shall require, the holder of such Target Certificates shall be entitled to receive in exchange therefor a certificate representing that number of whole shares of Parent Common Stock into which the shares of Target Common Stock represented by Target Certificates so surrendered shall have been converted pursuant to the provisions of Section 3.1, and Target Certificates so surrendered shall forthwith be cancelled. Notwithstanding the foregoing, neither the Escrow Agent nor any party hereto shall be liable to a holder of shares of Target Common Stock for any shares of Parent Common Stock or dividends or distributions thereon delivered to a public official pursuant to applicable escheat laws.

(e) Notwithstanding any other provision of this Agreement or the Agreement of Merger, no certificates or scrip for fractional shares of Parent Common Stock shall be issued upon the surrender for exchange of Target Certificates pursuant to this Article III in the Merger or upon any exchange made pursuant to Section 4.4 hereof and no Parent Common Stock dividend, stock split or interest shall relate to any fractional security, and such fractional interests shall not entitle the owner thereof to vote or to any other rights of a security holder. In lieu of any such fractional shares, each holder of Target Common Stock and each Optionholder who has executed an Option Termination Agreement under Section 4.4 hereof who would otherwise have been entitled to a fraction of a share of Parent Common Stock (i) upon surrender of Target Certificates for exchange pursuant

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CONFIDENTIAL TREATMENT REQUESTED

Portions of this exhibits indicated by “(*[TEXT]*)” have been omitted pursuant to a request for confidential treatment and such omitted portions have been filed separately with the Securities and Exchange Commission.

to this Article III, or (ii) pursuant to Section 4.4 hereof, as applicable, shall be entitled to receive from the Escrow Agent a cash payment in lieu of such fractional share equal to such fraction multiplied by the Per Share Price set forth at 3.1(b)(ii).

(f) (i)  After the Effective Time and the Closing, at the expiration of one (1) year but not prior thereto, and within 10 days and not thereafter (the “Put Period”), the Target Shareholders, or in the event the shares acquired herein (the “Merger Shares” which is the number of shares in the Numerator as set forth in 3.1(b)) have been transferred by the Target Shareholders to a Purchasing Shareholder (collectively hereafter the “New Shareholders”) shall have the right to give notice to Parent of their desire to surrender their remaining Merger Shares herein thereafter (the “Put Shares”) for a minimum price per share (the “Put Price”), determined by dividing the Total Put Price by the Put Shares, as determined in accordance with the following formula:

Formula for the “Total Put Price”

Total Put Price, defined as the Net Earnings as set forth in Section 3.4 x 3.190909 less 50% of the Purchase Price as set forth in Section 3.4.

(Example: Assumed facts:

The Total Put Price is $7,400,000.

($5,500,000 x 3.190909) - $10,150,000 = $7,400,000)

provided, however, the sum of any of the Merger Shares that are sold during the Put Period shall be reduced from the Total Put Price; further provided, however, if Parent’s Average Price per share is equal to or greater than the Termination Price during the Put Period, as determined in the formula below:

Formula for the “Termination Price”

The Termination Price is defined as the Net Earnings set forth in Section 3.4 multiplied by 4.690909 less the cash received as set forth in Section 3.5 divided by the Merger Shares, the Put Provision shall be terminated subject to the Lock-Out Period provisions and the formula set forth herein.

(Example

The Net Earnings are $5,500,000. The cash received was $10,150,000. The Merger Shares are 922,727. [($5,500,000 x 4.690909) - $10,150,000] - 922,727 = $16.96 Per Share.)

then, any of the Merger Shares not sold at the Termination Price below the 50,000 shares that could have been sold free of the Lock-Up Provision set forth in Section 3.3(g) during Months 4 through 12 of the Put Period shall be treated as having been sold at the Termination Price, which sum shall reduce the Total Put Price.

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CONFIDENTIAL TREATMENT REQUESTED

Portions of this exhibits indicated by “(*[TEXT]*)” have been omitted pursuant to a request for confidential treatment and such omitted portions have been filed separately with the Securities and Exchange Commission.

[This space intentionally left blank.]

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CONFIDENTIAL TREATMENT REQUESTED

Portions of this exhibits indicated by “(*[TEXT]*)” have been omitted pursuant to a request for confidential treatment and such omitted portions have been filed separately with the Securities and Exchange Commission.

An Example of the calculation of (f)(i) above is as follows:

(Example

Assume the following facts:

Based on the facts as stated above, the Put Shares may be surrendered to the Parent at $5.37 per share (the Put Price), calculated as follows:

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CONFIDENTIAL TREATMENT REQUESTED

Portions of this exhibits indicated by “(*[TEXT]*)” have been omitted pursuant to a request for confidential treatment and such omitted portions have been filed separately with the Securities and Exchange Commission.

(ii) In the event the New Shareholders shall elect to exercise their rights pursuant to the Put Provision, Parent shall have ninety (90) days from receipt of said notice to pay the New Shareholders such Put Price times the number of Put Shares surrendered, with interest at 10% per annum to be paid from the date of such notice until paid in full. During the Put Period, as set forth in the Put Provision, the Parent agrees to reserve a sum equal to the Total Put Price, as defined above, in twelve (12) equal installments in order to have available funds to pay the New Shareholders should they exercise their rights pursuant to the Put Provision, with no interest thereon; provided, however, that upon the Termination of the Put Provision or reduction of the Total Put Price, the Parent shall no longer be required to reserve said sums in excess of the Total Put Price, as reduced.

(iii) Any shares transferred pursuant to the Put Provision will be transferred free and clear of all liens and encumbrances and the New Shareholders will execute all documents necessary to convey same as set forth herein.

(iv) The Put Provision shall be attached to said shares received pursuant to this Agreement and shall not be separate from said shares.

(g) The New Shareholders’ shares which are the subject of this Agreement shall be the subject of the Lock-Up Agreement as set forth on Schedule 3.3(g) (the “Lock-Up Provision”).

(h) The shares transferred pursuant to this Plan shall be legended to contain the provisions set forth in Sections 3.3(f) and (g), as shown in Schedule 3.3(h). The legend, Put Provision, and Lock-Up Provision shall be removed as and when said shares shall be sold in the open market.

3.4 Purchase Price. The Purchase Price shall be the product rounded to the nearest dollar of 3.690909 times the Net Earnings of the Target calculated in accordance with GAAP consistently applied for the previous successive twelve (12) months prior to the execution of this Agreement. [For example: Assuming the prior 12 months Net Earnings are $5,500,000, the Purchase Price shall be $20,300,000. ($5,500,000 x 3.690909).

3.5 Cash Portion of Purchase Price. Fifty (50%) Percent of the Purchase Price rounded to the nearest dollar as set forth in Section 3.4 above shall be paid in cash at the Closing.

3.6 Closing of Transfer Books. From and after the Effective Time, the stock transfer books of Target shall be closed and no transfer of shares of Target Common Stock shall thereafter be made. If, after the Effective Time, Target Certificates are presented to Parent, they shall be cancelled and exchanged for the Merger Consideration in accordance with the procedures set forth in this Article III.

3.7 Closing. The closing (the “Closing”) of the transactions contemplated by this Agreement shall take place (a) at the offices of Target’s counsel at 10:00 a.m., local time, on the earlier of (i) May 1, 2008, but not before the conditions set forth in Articles VII and VIII are fulfilled or waived and (ii) the third business day immediately following the date on which the last of the conditions set forth in Articles VII and VIII hereof are fulfilled or waived, or (b) at such other time and place and on such other date as Parent and Target shall agree (the “Closing Date”).

ARTICLE IV

FURTHER AGREEMENTS

4.1 Transition Period. Controlling Shareholder and (*NAME CONFIDENTIAL*) hereby covenant that they shall from the Closing and for one hundred twenty (120) consecutive days thereafter assist Sub in every reasonable manner in the transition of the day-to-day operations of the Target. The assistance shall include, but not be limited to, physical presence at the Target facility, and good faith activities including phone calls, face to face meetings, and other such activities to assist Sub in the transition for one hundred twenty (120) days immediately after the Closing.

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CONFIDENTIAL TREATMENT REQUESTED

Portions of this exhibits indicated by “(*[TEXT]*)” have been omitted pursuant to a request for confidential treatment and such omitted portions have been filed separately with the Securities and Exchange Commission.

4.2 Non-Competition Agreement. At or prior to the Closing, (i) Controlling Shareholder and (*NAME CONFIDENTIAL*) shall execute non-competition agreements (the “Covenants Not to Compete”) in the form attached as Schedule 4.2(a) and 4.2(b) hereto.

4.3 Delivery into Escrow. The parties agree to execute the Escrow Agreement as attached hereto on Schedule 4.3 and to allow (*NAME CONFIDENTIAL*) to act as Escrow Agent according to the terms set forth therein.

4.4 Options. On or prior to the Closing, Target and Controlling Shareholder shall obtain the agreement (“Option Termination Agreements”), in substantially the form attached hereto as Schedule 4.4, of each of the holders (“Option-holders”) of outstanding options (“Options”) to purchase Target Common Stock listed in Schedule 5.3(c), to the termination of the Options held by such Optionholder upon the Merger in consideration for the receipt, promptly following the Effective Time, of a number of shares of Parent Common Stock equal to (a) the product of (i) the Conversion Ratio, and (ii) the number of shares of Target Common Stock subject to each such Option held by such Optionholder, minus (b) the number of shares of Target Common Stock subject to each such Option held by such Optionholder, multiplied by the exercise price of the Option, divided by the Valuation Price. Cash payments in lieu of fractional shares will be made in the manner provided for in Section 3.3(e) hereof.

4.5 Post-Closing Adjustments. (a) For the purpose of this Agreement, the “Net Book Value” shall be the amount by which the aggregate book amount of the total assets of Target and its subsidiaries on a consolidated basis at the Effective Time, as determined in accordance with this Section 4.5 and as shown on the Closing Balance Sheet (as hereinafter defined in Section 4.5(b)) exceeds the aggregate book amount of the total liabilities of Target and its subsidiaries on a consolidated basis at the Effective Time, as determined in accordance with this Section 4.5 and as shown on the Closing Balance Sheet.

(b) The Net Book Value shall be determined in U.S. Dollars from statements of total assets and total liabilities of Target and its subsidiaries on a consolidated basis as of the Effective Time (the “Closing Balance Sheet”). The Closing Balance Sheet shall be prepared by Controlling Shareholder and audited at the Surviving Company’s expense. The inventory of Target and its subsidiaries on a consolidated basis shall be determined pursuant to a physical count, or such other procedures as may be mutually agreed upon.

(c) For the purpose of this Agreement, the Net Earnings (“Net Earnings”), as set forth in Section 3.4 hereof, for the previous twelve (12) successive months shall be recalculated in accordance with GAAP so as to allow for a verification of the Purchase Price, as used herein (“Closing Net Earnings”).

(d) The Closing Balance Sheet and the Closing Net Earnings shall be prepared in accordance with United States generally accepted accounting principles (“GAAP”) applied on a basis consistent with those applied in the preparation of the Financial Statements (as defined in Section 5.3(h) hereof) (to the extent that the principles applied in the preparation thereof were in accordance with GAAP) and auditing procedures will be carried out in accordance with generally accepted auditing standards or as Parent, Target and Controlling Shareholder have otherwise herein agreed.

(e) The parties shall cooperate in the preparation of the Closing Balance Sheet and the Closing Net Earnings and the compilation of the information to be used in the preparation thereof, and shall use their respective best efforts to cause their respective accountants to make available to each other their respective work papers with respect to the Closing Balance Sheet and Closing Net Earnings. The Closing Balance Sheet and Closing Net Earnings shall contain the draft opinion of the Target’s accountants, addressed to Parent and Target, which shall be unqualified.

(f) Controlling Shareholder shall use his best efforts to cause the Closing Balance Sheet and Closing Net Earnings to be delivered to Parent no later than 75 days next following the Effective Time.

(g) Parent shall have forty five (45) days after receipt by it of the Closing Balance Sheet and Closing Net Earnings (the “Dispute Period”) to dispute any of the elements of such Closing Balance Sheet and Closing Net Earnings (a “Dispute”). If Parent does not give written notice of a Dispute (a “Dispute Notice”) to Controlling Shareholder within the Dispute Period, such Closing Balance Sheet and Closing Net Earnings shall be deemed to

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CONFIDENTIAL TREATMENT REQUESTED

Portions of this exhibits indicated by “(*[TEXT]*)” have been omitted pursuant to a request for confidential treatment and such omitted portions have been filed separately with the Securities and Exchange Commission.

have been accepted by Parent in the form in which it was delivered by Controlling Shareholder and shall be final and binding upon the parties in the absence of fraud or manifest error. In the event Parent does not agree with any amount or element reflected on the Closing Balance Sheet or Closing Net Earnings, Parent may give Controlling Shareholder a Dispute Notice within the Dispute Period, setting forth in reasonable detail the elements and amounts with which it disagrees, and Controlling Shareholder and Parent shall, within thirty (30) days after receipt by Controlling Shareholder of such Dispute Notice, attempt to resolve such Dispute and agree in writing upon the final content of such Closing Balance Sheet and Closing Net Earnings. In the event that Controlling Shareholder and Parent are unable to resolve any such Dispute within such thirty (30) day period, then the certified public accounting firm of (*NAME AND ADDRESS CONFIDENTIAL*) [a third accounting firm] (the “Arbitrating Accountant”) shall be employed as arbitrator hereunder to settle such Dispute as soon as practicable. In connection with the resolution of any Dispute, the Arbitrating Accountant shall have access to all documents and facilities necessary to perform its functions as arbitrator. The Arbitrating Accountant’s function shall be to conform the Closing Balance Sheet and Closing Net Earnings to the standards required by the terms and provisions of this Section 4.5. The Arbitrating Accountant’s determination with respect to any Dispute shall be final and binding upon the parties hereto. Controlling Shareholder and Parent shall each pay one-half of the fees and expenses of the Arbitrating Accountant. Following the resolution of any Disputes, the Closing Balance Sheet and Closing Net Earnings shall be revised to reflect such resolution. Following such resolution, or, if there are no Disputes, following the expiration of the Dispute Period, Controlling Shareholder shall cause the Closing Balance Sheet and Closing Net Earnings, containing the signed unqualified opinion of Target’s accountants, to be issued and delivered to Parent.

(h) In the event the Net Book Value is less than $50,000.00 from the Statements as presented by Target, then Parent shall, as soon as is practicable after the delivery in final form to Parent of the Closing Balance Sheet in accordance with Section 4.5 hereof, make a written demand on Controlling Shareholder for the amount by which the actual Net Book Value is less than $50,000.00 from the Statements as presented by the Target and such amount shall be paid by Controlling Shareholder to Parent by one-half (  ¹ / 2 ) of said amount being returned to Parent of the Parent Common Stock transferred herein pursuant to Section 3.1(b), and the other one-half (  ¹ / 2 ) of such amount after the release of such shares of Parent Common Stock shall be paid by Controlling Shareholder to Parent in cash within three business days after the return of such shares of Parent Common Stock. Controlling Shareholder’s obligation to make payments pursuant to this Section 4.5 is independent of, and in addition to, the indemnity obligations set forth in Article IX of this Agreement, and will not in any way be subject to the limitations referred to in Section 9.3 hereof.

(i) In the event the Purchase Price is less than the amount determined in Section 3.4, then Parent shall, as soon as is practicable after the delivery in final form to Parent of the Closing Net Earnings in accordance with this Section 4.5 hereof, make a written demand on Controlling Shareholder for the amount by which the Purchase Price is less than the Purchase Price as set forth in Section 3.4, calculated in the same manner, and such amount shall be paid by Controlling Shareholder to Parent by one-half (  ¹ / 2 ) of said amount being returned to Parent of the Parent Common Stock transferred herein pursuant to Section 3.1(b), and the other one-half (  ¹ / 2 ) of such amount after the release of such shares of Parent Common Stock shall be paid by Controlling Shareholder to Parent in cash within three business days after the return of such shares of Parent Common Stock. Controlling Shareholder’s obligation to make payments pursuant to this Section 4.5 is independent of, and in addition to, the indemnity obligations set forth in Article IX of this Agreement, and will not in any way be subject to the limitations referred to in Section 9.3 hereof. The repayment of the shares of Parent Common Stock and the cash due as set forth herein shall be calculated in the same manner as provided for in this Agreement.

4.6 Fixed Asset Inventory. On or prior to the Closing Date, Target will conduct an inventory of each of the fixed assets of Target and its subsidiaries with an individual net book value of $2000 or more, and there shall be at the time of Closing a minimum inventory valued at $10,000.00.

4.7 Special Permits. (*NAME CONFIDENTIAL*) holds at (*ADDRESS CONFIDENTIAL*) a Sexually Oriented Business license (“SOB license”) issued under (*CODE CONFIDENTIAL) of the (*COUNTY CONFIDENTIAL*) City Code and Permits issued by the (*STATE CONFIDENTIAL*) Alcoholic Beverage Commission to sell and provide liquor for onsite consumption (“(*NAME CONFIDENTIAL*) permit”)( collectively “special permits”). Said special permits are not transferable.

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CONFIDENTIAL TREATMENT REQUESTED

Portions of this exhibits indicated by “(*[TEXT]*)” have been omitted pursuant to a request for confidential treatment and such omitted portions have been filed separately with the Securities and Exchange Commission.

The Parties hereto agree that they will cooperate with the issuing agencies whose consent is required to obtain the issuance of new special permits to the Sub as survivor of the Merger hereunder prior to and as a condition of closing hereunder, provided (*NAME CONFIDENTIAL*) is not required to cancel or surrender its special permits until such time as this transaction closes and for the instantaneous issuance of a SOB permit to the Sub. The Parties recognize that (*CODE CONFIDENTIAL) and the City of (*CITY CONFIDENTIAL*) require the cancellation of (*NAME CONFIDENTIAL*) SOB license at (*ADDRESS CONFIDENTIAL*) as a condition to issue a new SOB license for the Sub at (*ADDRESS CONFIDENTIAL*) and such new license is effective when issued and must be picked up and paid for immediately upon issuance. Failure by the Sub to do so shall cause substantial damage to (*NAME CONFIDENTIAL*) and Controlling Shareholder. Accordingly, the Parent and Sub warrant and represent they shall timely attempt to obtain such SOB license and the acceptance of such SOB license and the right granted by (*NAME CONFIDENTIAL*) to sell alcoholic beverages under the same terms and conditions as the Target shall constitute an event of Closing. The Parties recognize the (*NAME CONFIDENTIAL*) permits may require the operation after Closing by Sub under (*NAME CONFIDENTIAL*) Permits with the permission of the (*STATE CONFIDENTIAL*) Alcoholic Beverage Commission. The Parties shall fully cooperate with each other and the regulatory agencies/governmental entities referenced above to effectuate the issuance of new Special Permits contemplated hereunder.

4.8 Articles of Merger. The Sub as the surviving (*STATE CONFIDENTIAL*) entity shall upon Closing file Articles of Merger are provided in Exhibit 4.8, attached hereto and incorporated into this Plan at length, the same as if fully copied and set forth herein.

4.9 Certificates of Formation of Sub. The Sub, as the surviving (*STATE CONFIDENTIAL*) entity, Certificate of Formation are provided in Exhibit 4.9, attached hereto and incorporated into this Plan at length, the same as if fully copied and set forth herein.

4.10 Shareholder Approval. This Plan will be submitted for approval separately to the shareholders of the Sub and the Target in the manner provided by the laws of (*STATE CONFIDENTIAL*).

ARTICLE V

REPRESENTATIONS AND WARRANTIES

5.1 General Statement. The parties make the representations and warranties to each other which are set forth in this Article V. The survival of all such representations and warranties shall be in accordance with Section 10.1 hereof. All representations and warranties of the parties are made subject to the exceptions which are noted in the respective schedules delivered by the parties to each other concurrently herewith.

5.2 Representations and Warranties of Parent and Sub. Parent and Sub jointly and severally represent and warrant to Target, as of the date hereof and at the Effective Time, and the Closing as follows:

(a) Parent and Sub are corporations or other legal entities duly formed, validly existing and in good standing under the laws of the State of Colorado and (*STATE CONFIDENTIAL*), respectively. Both Parent and Sub have the requisite corporate power to execute and deliver this Agreement and to carry out the transactions contemplated hereby. If necessary, the Parent and Sub are duly qualified as a foreign corporation in good standing in each jurisdiction in which the conduct of their business requires such qualification.

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CONFIDENTIAL TREATMENT REQUESTED

Portions of this exhibits indicated by “(*[TEXT]*)” have been omitted pursuant to a request for confidential treatment and such omitted portions have been filed separately with the Securities and Exchange Commission.

(b) The execution, delivery and performance by the Parent and Sub of this Agreement and the transactions contemplated hereby are within the powers of the Parent and Sub and have been duly authorized by all necessary action. This Agreement constitutes a valid and binding obligation of the Parent and Sub, enforceable against the Parent and Sub in accordance with its terms, subject to bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar laws of general application affecting the enforcement of creditors’ rights generally.

(c) Prior to the performance by the Parent and Sub of this Agreement and the consummation of the transactions contemplated hereby, the Parent and Sub shall have filed or will have obtained waivers in lieu of filing or have obtained the required approval of or given notice to any governmental or regulatory body, agency or official, as required, to consummate their obligations pursuant to this Agreement, including but not limited to obtaining the License from the City of (*CITY CONFIDENTIAL*) pursuant to (*CITY CONFIDENTIAL*) City Code, Section (*CODE CONFIDENTIAL), allowing Parent and Sub to have the right to operate the business of Target in the same manner and with the same rights as Target prior to the merger.

(d) Neither the execution, delivery and performance by the Parent and Sub of this Agreement, nor the consummation of the transactions contemplated hereby, will violate, conflict with, or result in a breach of any provision of the charter or the articles of organization or by-laws or operating agreement of the Parent or Sub or of any applicable law, regulation, rule, order, judgment, decree or writ of any foreign, federal, state or local governmental or regulatory authority or body or court.

(e) Neither the execution, delivery and performance by the Parent and Sub of this Agreement, nor the consummation of the transactions contemplated hereby, will result in a default (or give rise to any penalty or give to any third party a right of termination, cancellation, acceleration or result in the creation of any material encumbrance) under any of the terms, conditions or provisions of any material contract to which the Parent or Sub are a party or by which either of them is bound.

(f) Parent and Sub hereby warrant that no broker, finder, or investment banker is entitled to any brokerage, finders or other fee of commission in connection with the transaction contemplated by this Agreement based upon arrangements made by or on behalf of the Parent or Sub.

(g) Parent and Sub have made all required SEC filings and they contain no untrue statements. Parent and Sub represent that the transactions contemplated herein and the sale/transfer of shares hereunder is in compliance with and will be compliant at the time of Closing with all applicable state and federal securities laws, including the Securities Act of 1933 and the Securities Exchange Act of 1934. All actions will be taken to ensure that the Parent common stock issued hereunder to Controlling Shareholder will be registered under said laws and freely marketable (without restriction except in the Lockup Provision hereof). Parent and Sub will timely file all necessary documents to ensure compliance with this representation, including all filings, forms, and notices required by the SEC, the stock exchange/index on which the stock is traded, Colorado, and (*STATE CONFIDENTIAL*).

(h) Neither the Parent nor the Sub has suffered any adverse change in their business, operations, or financial conditions nor become aware of any event which may result in any such adverse change.

(i) Parent and Sub have made no untrue statement or omission of material fact in this Agreement, the Agreement of Merger or in any Registration Statements.

(j) In accordance with Article VII hereof, by the date of the Closing, the Parent and Sub shall have reviewed the books and records of Target and have completed their Due Diligence and shall be satisfied with such Due Diligence inspection, or Parent and Sub shall have provided notice of any deficiencies to Target in accordance with Article VII hereof.

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CONFIDENTIAL TREATMENT REQUESTED

Portions of this exhibits indicated by “(*[TEXT]*)” have been omitted pursuant to a request for confidential treatment and such omitted portions have been filed separately with the Securities and Exchange Commission.

(k) Parent and Sub understand the stock of (*NAME CONFIDENTIAL*) being acquired is not registered with the SEC or the State of (*STATE CONFIDENTIAL*). The acquiring company, the Sub, is a bona fide (*STATE CONFIDENTIAL*) resident as a (*STATE CONFIDENTIAL*) limited liability company and domiciled in the State of (*STATE CONFIDENTIAL*). This Agreement and Plan of Reorganization was executed by Sub and delivered to Sub in (*STATE CONFIDENTIAL*) solely. Sub intends that the (*NAME CONFIDENTIAL*) stock will cease to exist upon merger into Sub and Sub has no intent to divide, resell, or otherwise distribute said stock among or to persons anywhere and, if so, not to persons not domiciled in the State of (*STATE CONFIDENTIAL*).

(l) (i)  Securities Representations/Obligations. The Parent and Sub, on their behalf and on behalf of all predecessor corporations, represent that they are in good standing under all applicable federal and state securities law, including but not limited to the Securities Act of 1993 as a amended (the “Securities Act”), the Securities Act of 1934 as amended (the “Exchange Act”) and the regulations promulgated thereunder and have filed all requisite filings with the Securities and Exchange Commission or any other federal or state agencies and administrators, stock exchanges, and stock quotation and bulletin board services necessary for its continued existence and issuance, trading, or marketing of its share (herein “Securities Facilitators”), including the shares contemplated to be delivered to Controlling Shareholder under this Plan. The Parent and Sub represent that they are not aware of any delinquency or late filing notices from any Securities Facilitators, or any notice received from any other party notifying the Parent and/or Sub of imminent or pending investigation or review to be commenced against the Parent and/or Sub. The Parent and Sub represent that there are no securities matters pertaining to them that is materially adverse to the value of their stock and this Plan. The Parent and Sub represent that this merger, acquisition or transaction, complies with the Exchange Act and the Securities Act and that all actions related to registration, trading, and distribution of stock of the Parent and Sub contemplated hereunder have complied with all applicable federal and state securities law including the Exchange Act and the Securities Act. The Parent and Sub shall hereby indemnify (*NAME CONFIDENTIAL*). and (*NAME CONFIDENTIAL*) from any violations of securities laws up and through and including the Effective Date of the Plan, including those to be done in contemplation of this Plan or to effectuate same.

(ii) Plan/Securities and Exchange Commission Compliance. The parties to this merger warrant mutually that they will follow all necessary procedure under the requirements of federal, Colorado, and (*STATE CONFIDENTIAL*) securities law and the related supervisory commissions to ensure this Plan is properly processed to comply with all federal and state requirements to take full advantage of any lawful or applicable exemption for registration but that the responsibility for same and the costs for same shall be borne by Sub.

(iii) Registration of (*NAME CONFIDENTIAL*) Shares .

(a) Registration of (*NAME CONFIDENTIAL*) Shares. The Parent and Sub hereby agree to file, at their cost and expense, as soon as reasonably practicable, but, in no event later than thirty (30) days from the Closing Date, a registration statement on Form S-3, if reasonably practicable, or on any appropriate form under the Securities Act with respect to all of (*NAME CONFIDENTIAL*) Shares to be acquired hereunder (“(*NAME CONFIDENTIAL) shares”) (the “Registration Statement”). The Parent and Sub agree to use its best efforts to have the Registration Statement declared effective as soon as reasonably practicable after such filing and to keep the Registration Statement continually effective for a period of two (2) years following the date on which the Registration Statement is declared effective by the Commission or until all (*NAME CONFIDENTIAL*) Shares included in the Registration Statement can be publicly offered and sold without registration, whichever is earlier.

(b) Notice to (*NAME CONFIDENTIAL*). The Parent and Sub shall promptly notify (*NAME CONFIDENTIAL*) of the occurrence of any event as a result of which any prospectus included in a Registration Statement filed pursuant to this Section 4 includes any misstatement of a material fact or

12

CONFIDENTIAL TREATMENT REQUESTED

Portions of this exhibits indicated by “(*[TEXT]*)” have been omitted pursuant to a request for confidential treatment and such omitted portions have been filed separately with the Securities and Exchange Commission.

omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing.

(c) Limitations on Obligations of the Sub. The Parent and Sub’s obligations under this Section 4 with respect to (*NAME CONFIDENTIAL*) are expressly conditioned upon (*NAME CONFIDENTIAL*) promptly furnishing to the Parent and Sub, in writing, upon another request from the Parent and Sub, such information concerning (*NAME CONFIDENTIAL*) as the Parent and Sub shall reasonably request for inclusion in the Registration Statement. If any Registration Statement, including the (*NAME CONFIDENTIAL*) Shares, is filed the Parent and Sub shall indemnify (*NAME CONFIDENTIAL*) (and each underwriter for such holder and each person, if any, who controls such underwriter within the meaning of the Securities Act) from any loss, claim, damage or liability arising out of or based upon any untrue statement of a material fact contained in such Registration Statement or any omissions to state therein a material fact required to be stated herein or necessary to make the statements therein not misleading, except for such statement or omission based on information furnished in writing by (*NAME CONFIDENTIAL*) expressly for use in such Registration Statement; and (*NAME CONFIDENTIAL*) shall indemnify the Parent and Sub and each of its respective officers and directors who has signed such Registration Statement, each director and each person, if any, who controls the Sub within the meaning of the Securities Act against any loss, claim, damage or liability arising from any such statement or omission which was made in reliance upon information furnished in writing to the Parent and Sub expressly for use in such Registration Statement.

5.3 Representations and Warranties of Target and Controlling Shareholder. Target and Controlling Shareholder jointly and severally represent and warrant to each of Parent and Sub, as of the date hereof and at the Effective Time, as follows:

(a) Target is an S-corporation duly formed, validly existing and in good standing under the laws of the State of (*STATE CONFIDENTIAL*). Controlling Shareholder and Target have the requisite corporate power to execute and deliver this Agreement and to carry out the transactions contemplated hereby. If necessary, the Target is a duly qualified as a foreign corporation in good standing in each jurisdiction in which the conduct of its business requires such qualification.

(b) The execution, delivery and performance by the Controlling Shareholder and Target of this Agreement and the transactions contemplated hereby are within the powers of the Controlling Shareholder and Target and have been duly authorized by all necessary action. This Agreement constitutes a valid and binding obligation of the Controlling Shareholder and Target, enforceable against the Controlling Shareholder and Target in accordance with its terms, subject to bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar laws of general application affecting the enforcement of creditors’ rights generally.

(c) All issued and outstanding shares of Target have been duly authorized and issued, are fully paid and non-assessable, are free of preemptive rights, and will at the date of closing be owned of record and merged into Sub by the Controlling Shareholder in accordance with this Agreement. The Target does not have any outstanding options, warrants or similar rights to acquire, or any securities convertible into or exchangeable for, any of its shares that have not been disclosed on Schedule 5.3(c). Upon consummation of the transactions contemplated herein, the Sub will own all the interest in Target. Target shall cooperate with Parent and Sub as to the filing of the application for the License from the City of (*CITY CONFIDENTIAL*) pursuant to (*CITY CONFIDENTIAL*) City Code, Section (*CODE CONFIDENTIAL), and all other applications necessary for Sub to operate the business of Target in the same manner and with the same rights as Target prior to the merger.

13

CONFIDENTIAL TREATMENT REQUESTED

Portions of this exhibits indicated by “(*[TEXT]*)” have been omitted pursuant to a request for confidential treatment and such omitted portions have been filed separately with the Securities and Exchange Commission.

(d) There are no subsidiaries of Target.

(e) Neither the execution, delivery and performance by the Target and Controlling Shareholder of this Agreement, nor the consummation by the Target and Controlling Shareholder of the transactions contemplated hereby, will (a) violate, conflict with, or result in a breach of, any provision of the charter or bylaws of the Target or (b) result in a default (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, franchise, permit, lease, agreement or other instrument or obligation to which the Target is a party, or by which its properties or assets may be bound, except for such violations, breaches or defaults which would not prevent or materially delay consummation of the transactions contemplated hereby.

(f) The Target will furnish to the Parent and Sub copies of the Target’s compiled balance sheets and related statements of income and cash flows along with existing applicable tax documents from all governmental entities, if any, beginning October 1, 2004 through March 31, 2008, as set forth in Schedule 5.3(f), within fifteen (15) days of the execution of this Agreement. In addition thereto, the Controlling Shareholder and Target shall cause to be furnished all compiled balance sheet and related statements of income from the execution of this Agreement through the Effective Time and Closing within 30 days following the Closing. All of the above are herein referred to as the “Financial Statements.” The Financial Statements (i) are and will be complete and correct, (ii) do and will fairly present the financial condition of the Target as of the dates thereof and the results of operations and cash flows of the Target for the periods covered thereby, and (iii) have been and will be prepared in accordance with generally accepted accounting methods consistently applied. There has been no material adverse change in the operations or financial condition of the Target, taken as a whole, and no series of events have occurred that could reasonably be expected to have a Material Adverse Effect, as defined herein. All exceptions to the foregoing, if any, are fully disclosed in Schedule 5.3(f) hereto.

(g) There are no liabilities, debts, obligations or claims against the Target of any nature, absolute or contingent except (i) as and to the extent reflected or reserved against on the balance sheet of the Target as shown in the Financial Statements contained in Schedule 5.3(f), (ii) as specifically described and identified as an exception to this paragraph in any of the schedules delivered to Parent or Sub pursuant to this Agreement or (iii) as incurred since the last date shown on the Financial Statements in the ordinary course of business consistent with prior practice. All exceptions to the foregoing, if any, are fully disclosed in Schedule 5.3(g) hereto.

(h) With respect to Taxes (as defined below):

(i) Target has filed, within the time and in the manner prescribed by law, all returns, declarations, reports, estimates, information returns and statements (“Returns”) required to be filed under federal, s