Exhibit 10.86
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the
“Agreement”) between VCG Holding Corp., a Colorado
corporation (“VCGH”), and TROY LOWRIE, the Chairman and
Chief Executive Officer of VCGH (hereinafter the
“Chairman”), is effective as of the 4 day of
December , 2008 (the “Effective
Date”).
1. Employment Period . VCGH
hereby agrees to employ and continue in its employ the Chairman,
and the Chairman hereby accepts such employment and agrees to
remain in the employ of VCGH, for the period commencing on the
Effective Date and ending on the fifth anniversary of such date
(the “Employment Period”). This Employment Agreement
shall be automatically extended and renewed for one
(1) additional five (5) year period unless, at least
ninety (90) days prior to the last day of the Employment
Period, VCGH or the Chairman shall give written notice to the other
that the Employment Agreement shall not be extended and
renewed.
2. Duties .
(a) Chairman’s Position and
Duties . During the Employment Period, the Chairman’s
position (including titles), authority and responsibilities with
respect to VCGH shall be similar to, but no less than, those held
by the Chairman on the date hereof with such additions and
modifications consistent with responsibilities generally assigned
to a Chairman and Chief Executive Officer. The Chairman’s
services shall primarily be performed at VCGH headquarters located
at 390 Union Blvd., Suite 540, Lakewood, CO 80228. The location for
the performance of the Chairman’s primary duties shall not be
transferred outside the City of Denver, Colorado without the
Chairman’s consent, other than for normal business travel and
temporary assignments. It is further agreed that during the
Employment Period, the Chairman shall be duly nominated for
election to the Board of Directors of VCGH (the
“Board”) prior to the expiration of each of the
Chairman’s terms as a member of the Board at the appropriate
annual meeting of VCGH’s shareholders. The Chairman agrees to
comply with all lawful directions that have been communicated to
the Chairman by the Board.
(b) Full Time . The Chairman
agrees to devote his full business time to the business and affairs
of VCGH and to use his best efforts to perform faithfully and
efficiently the responsibilities assigned to him hereunder to the
extent necessary to discharge such responsibilities, except for:
(i) services on corporate, civic or charitable boards or
committees that do not materially interfere with the performance of
the Chairman’s responsibilities hereunder; (ii) periods
of vacation and sick leave to which he is entitled under this
Agreement and VCGH’s policies; and (iii) the management
of his personal investments and affairs that do not materially
interfere with the performance of the Chairman’s
responsibilities hereunder. During the Employment Period, the
Chairman shall be permitted to engage in any outside business
activity and provide counsel and advice to any individual,
corporation or other business enterprise, provided that
(A) the Chairman shall not violate Section 10(c) and
(B) such activity and counsel shall not materially interfere
with the Chairman’s performance of the Chairman’s
responsibilities hereunder. The Chairman agrees not to commit any
act or omit to take any action that constitutes a breach of
fiduciary duty owed by the Chairman to VCGH pursuant to applicable
law or that constitutes a conflict of interest with
VCGH.
3. Compensation During the
Employment Period .
(a) Base Salary . During the
Employment Period, the Chairman shall receive a base salary of
Seven Hundred Thousand Dollars ($700,000.00) per calendar year
payable at a by-weekly rate of Twenty-Nine Thousand One Hundred
Sixty-Six and 66/100 Dollars ($29,1666.66) (the “Base
Salary”). The Base Salary shall be reviewed at least once
every twenty-four (24) months during the Employment Period and
Base Salary may be increased at any time and from time to time by
action of the Board or the Compensation
Committee of the Board (the “Compensation
Committee”). Any increase in the Base Salary shall not serve
to limit or reduce any other obligation of VCGH hereunder and,
after any such increase, the Base Salary shall not be reduced. For
purposes of calculating the Chairman’s compensation in the
event of his termination of employment with VCGH for any reason
other than Cause (as defined below), the Base Salary amount shall
be defined as Seven Hundred Thousand Dollars ($700,000.00) or any
higher amount paid the Chairman at the time of said termination of
employment and approved by the Board or the Compensation Committee
plus the highest bonus amount paid to the Chairman in the three
(3) years prior to his termination of employment.
(b) Long-Term Care Policy .
During the Employment Period, VCGH shall pay, when due, all
premiums on a long-term care policy, which has been approved by the
Board or the Compensation Committee and owned by the Chairman (the
“Long-Term Care Policy”).
(d) Disability Insurance
Policy . During the Employment Period, VCGH shall pay, when
due, all premiums on a disability insurance policy, which has been
approved by the Board or the Compensation Committee and owned by
the Chairman (the “Disability Insurance
Policy”).
(c) Benefit, Incentive and
Savings Plans . The Chairman and/or his Family (as defined
below), as the case may be, shall be entitled to participate in or
receive benefits under any employee benefit plan, arrangement,
perquisite and incentive and savings plans and programs that may be
in effect from time to time during the Employment Period and made
available to VCGH’s employees (collectively, the
“Benefit Plans”), including but not limited to, each
qualified or non-qualified retirement, thrift, 401(k), profit
sharing, bonus or stock option plan, group life insurance and
accidental death plan, group health and dental insurance plan,
disability plan, travel accident insurance plan, and any other
welfare or fringe benefit plan, subject to and on a basis
consistent with the terms, conditions and overall administration of
each such Benefit Plan and which the Chairman or his Family is or
may be a participant at levels and in amounts commensurate with the
Chairman’s responsibilities and approved by the Board or the
Compensation Committee. For purposes of this Agreement,
“Family” means the Chairman’s parents, siblings,
spouse, children and grandchildren.
(d) Fringe Benefits . During
the Employment Period, the Chairman shall be entitled to additional
fringe benefits, including a leased automobile and related expenses
as well as the use of a company-issued credit card, club
memberships and related expenses in accordance with the policies of
VCGH as may be in effect from time to time and as approved by the
Board or the Compensation Committee (the “Additional Fringe
Benefits”).
(e) Vacation . During the
Employment Period, the Chairman shall be entitled to no less than
four (4) weeks paid vacation per year in accordance with the
policies of VCGH as in effect from time to time. The Chairman shall
be paid for all vacation time not taken during the relevant
calendar year. Said payment, if any, shall be paid no later than
January 15 of the following calendar year. Vacation time shall
not carry over from one calendar year to the next. Vacation time
may be increased as approved by the Board or Compensation
Committee.
(f) Expense Reimbursement .
During the Employment Period, the Chairman shall be entitled to
receive prompt reimbursement for all reasonable expenses incurred
by the Chairman in accordance with the policies and practices of
VCGH as in effect from time to time.
(g) Certain Changes . Nothing
herein shall be construed to prevent VCGH from amending, altering,
eliminating or reducing any Benefit Plan or any of its other plans,
benefits or programs so long as the Chairman continues to have the
right to receive compensation and benefits reasonably equivalent to
(but in any event no less favorable to the Chairman than those
referenced in Sections 3(b) through (g).
4. Termination .
(a) Death . This Agreement
shall terminate automatically upon the Chairman’s
death.
(b) Disability . VCGH may
terminate this Agreement and the Chairman’s employment with
VCGH after having established the Chairman’s Disability (as
defined below) by giving to the Chairman written notice of its
intention to terminate his employment. The Chairman’s
employment with VCGH shall terminate effective on the thirtieth day
after the Chairman’s receipt of such notice (the
“Disability Effective Date”).
(i) “Disabled” and
“Disability” shall mean that the Chairman will be
deemed to be disabled upon the earlier of:
(A) the end of a six
(6) consecutive month period, or an aggregate period of nine
(9) months out of any consecutive twelve (12) months,
during which, by reason of physical or mental injury, illness or
disease determined by a licensed and reputable physician selected
by the Board, and as to whom the Chairman has no reasonable basis
for objection, the Chairman has been unable to perform
substantially all of the Chairman’s duties under this
Agreement; or
(B) the date that a licensed and
reputable physician selected by the Board, and as to whom the
Chairman has no reasonable basis for objection, determines in
writing that the Chairman will, by reason of physical or mental
injury, illness or disease, be unable to perform substantially all
of the Chairman’s usual and customary duties under this
Agreement on a regular and continuous basis for a period of at
least six (6) consecutive months.
If any question arises as to whether
the Chairman is Disabled, upon reasonable request therefore by the
Board, the Chairman shall submit to a reasonable medical
examination for the purpose of determining the existence, nature
and extent of any such Disability. Any and all costs associated
with such medical examination shall be paid in full by
VCGH.
(c) Cause . VCGH may
terminate the Chairman’s employment for “Cause”
if at least 66-2/3% of the members of the Board determine that
“Cause” exists. For purposes of this Agreement,
“Cause” means:
(i) conviction of, or a plea of
nolo contendre to, a felony, solely with respect to conduct
unrelated to the operation of VCGH’s business;
(ii) the Chairman’s willful
breach of any material provision of this Agreement or habitual
absence from work;
(iii) unlawful conduct or willful
misconduct, solely with respect to conduct related to the operation
of VCGH’s business but excluding conduct that is exercised in
the good faith, reasonable judgment of the Chairman and consistent
with the customary and ordinary course of operation of VCGH’s
clubs;
(iv) violation of applicable state
or federal securities laws;
(v) misappropriation of VCGH funds
or embezzlement in a manner that violates VCGH’s policies and
procedures regarding the incurrence or reimbursement of business
expenses; or
(vi) the Chairman’s willful
failure or refusal to follow the lawful directives of the Board or
to perform the duties of his position in any material
respect.
If VCGH asserts subparts
(iii) or (vi) as Cause for the Chairman’s
termination, VCGH must provide the Chairman with written notice of
each alleged violation and a statement providing the specific
reasons for VCGH’s intention to terminate the
Chairman’s employment for Cause. The Chairman, together with
his counsel, shall have the opportunity to be heard before the
Board regarding the actions or inactions specified in the written
notice. The Chairman shall have thirty (30) days from the date
of receipt of such notice from VCGH to cure such default before the
Chairman can be terminated for Cause pursuant to subpart
(iii) or (vi).
(d) Good Reason . The
Chairman may terminate his employment for Good Reason within thirty
(30) days of the occurrence of any such Good Reason event
except for a Change of Control (as defined below), in which case
the Chairman may terminate his employment for Good Reason within
nine (9) months of the occurrence of a Change of Control. For
purposes of this Agreement, “Good Reason” means the
determination by the Chairman that any one or more of the following
have occurred:
(i) without the express written
consent of the Chairman, any material adverse change(s) in, or
reduction of, any of the duties, authority, or responsibilities of
the Chairman which is (are) inconsistent in any substantial respect
with the Chairman’s position, authority, duties, or
responsibilities as contemplated by Section 2;
(ii) any willful failure by VCGH to
comply with any of the material provisions of this
Agreement;
(iii) VCGH notifies the Chairman
that it will not renew the Employment Period upon the expiration of
the initial term pursuant to Section 1 of this
Agreement;
(iv) any failure by VCGH to obtain
the assumption and agreement to perform this Agreement by a
successor; or
(v) a “Change of
Control,” which shall be deemed to have occurred
if:
(A) any “Person,” as
such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”),
is or becomes the “beneficial owner” (as defined in
Rule 13d-3 promulgated under the Exchange Act), directly or
indirectly, of securities of VCGH representing fifteen percent
(15%) or more of the combined voting power of VCGH’s
then outstanding voting securities (other than VCGH, any trustee or
other fiduciary holding securities under an employee benefit plan
of VCGH, or any Person who on the Effective Date is the beneficial
owner, directly or indirectly, of securities of VCGH representing
fifteen percent (15%) or more of the combined voting power of
VCGH’s then outstanding voting securities);
(B) during any period of twenty-four
(24) consecutive months, individuals, who at the beginning of
such period constitute the Board, and any new director whose
election by the Board, or whose nomination for election by
VCGH’s shareholders, was approved by the Board or the
Board’s Governance and Nominating Committee (other than in
connection with a contested election), cease for any reason to
constitute at least a majority of the Board;
(C) the shareholders of VCGH approve
(I) a plan of complete liquidation of VCGH or (II) the sale or
other disposition by VCGH of all or substantially all of
VCGH’s assets unless the acquirer of the assets or its board
of directors shall meet the conditions for a merger or
consolidation in subparagraphs (D)(I) or (D)(II) below;
or
(D) the consummation of a merger or
consolidation of VCGH with any other entity other than:
(I) a merger or consolidation which
results in the voting securities of VCGH outstanding immediately
prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity) more than fifty percent (50%) of the
combined voting power of the surviving entity’s outstanding
voting securities immediately after such merger or consolidation;
or
(II) a merger or consolidation which
would result in the directors of VCGH (who were directors
immediately prior thereto) continuing to constitute more than fifty
percent (50%) of all directors of the surviving entity
immediately after such merger or consolidation.
In this subpart (D),
“surviving entity” shall mean only an entity in which
all of VCGH’s shareholders immediately before such merger or
consolidation (determined without taking into account any
shareholders properly exercising appraisal or similar rights)
become shareholders by the terms of such merger or consolidation,
and the phrase “directors of VCGH (who were directors
immediately prior thereto)” shall include only individuals
who were directors of VCGH at the beginning of the twenty-four
(24) consecutive month period preceding the date of such
merger or consolidation.
If the Chairman asserts subparts
(i) or (ii) as Good Reason for the Chairman’s
termination, the Chairman must provide VCGH with written notice of
such alleged violation and a statement providing the specific
reasons for the Chairman’s intention to terminate the
Chairman’s employment for Good Reason. VCGH shall have thirty
(30) days from the date of receipt of such notice from the
Chairman to cure such default before the Chairman may terminate his
employment for Good Reason pursuant to subpart (i) or
(ii).
(e) Notice of Termination .
Any termination of the Chairman’s employment by VCGH for
Cause or by the Chairman for Good Reason shall be communicated by
Notice of Termination to the other party hereto given in accordance
with Section 15(b). Any termination by VCGH due to Disability
shall be given in accordance with Section 4(b).
For purposes of this Agreement, a
“Notice of Termination” means a written notice
which:
(i) indicates the specific
termination provision in this Agreement being relied
upon;
(ii) sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of the Chairman’s employment under the provision
so indicated and if cause is alleged to exist pursuant to
Section 4(c), the facts and circumstances claimed to provide a
basis for alleging that Chairman’s cure was ineffective;
and
(iii) specifies the Date of
Termination (as defined below).
(f) Date of Termination .
“Date of Termination” means the date of transmission of
the Notice of Termination or any later date specified therein, as
the case may be; provided that:
(i) if the Chairman’s
employment is terminated due to the Chairman’s death, the
Date of Termination shall be the date of death;
(ii) if the Chairman’s
employment is terminated due to Disability, the Date of Termination
is the Disability Effective Date;
(iii) if the Chairman’s
employment is terminated by VCGH without Cause, or for Cause
pursuant to Section 4(c)(i) or (iii), or for any reason other
than Death or Disability, or by the Chairman for Good Reason
pursuant to Section 4(d)(iii) or (iv), the Date of Termination
is the date on which VCGH notifies the Chairman, or the Chairman
notifies VCGH, respectively, of such termination; and
(iv) if the Chairman’s
employment is terminated by VCGH for Cause pursuant to
Section 4(c)(ii) or (iv) or by the Chairman for Good
Reason under Section 4(d)(i) or (ii), the Date of Termination
is the date of expiration of the thirty (30) day cure period
if no cure has been effected by the Chairman or VCGH; and VCGH or
the Chairman, as the case may be, so notified the other party in
writing that it has not cured such conduct and specifies the
deficiency in such cure.
5. Obligations of VCGH upon
Termination of Employment . Other than as specifically set
forth or referenced in this Agreement, the Chairman shall not be
entitled to any compensation or benefits on or after the Date of
Termination.
(a) Death . If the
Chairman’s employment is terminated by reason of the
Chairman’s death, this Agreement shall terminate without
further obligati
