Exhibit 10.3

Exhibit 2(b)(1)(a)

PROMISSORY NOTE

 

U.S. $3,293,027.00    Anaheim, California Due Date: Three Years From Execution
   July 28, 2008

1. FOR VALUE RECEIVED, the undersigned Borrower, VCG-IS, LLC, promises to pay to
2640 W. Woodland, Inc. or order (Note Holder) the principal sum of Three Million
Two Hundred Ninety-Three Thousand Twenty-Seven ($3,293,027.00) U.S. Dollars,
along with an annual interest rate of Eight (8%) percent. This Note shall be
amortized as follows:

Thirty-five (35) consecutive monthly payments of Forty-Three Thousand Forty-One
Dollars and Twenty-Eight Cents ($43,041.28) beginning thirty (30) days after the
date of execution of this Note, as set forth above, and a thirty-sixth
(36th) and final payment of Two Million Four Hundred Eighty-One Thousand Two
Hundred Sixty-Four Dollars and Twenty Cents ($2,481,264.20) thirty (30) days
after the due date of the thirty-fifth (35th) payment. Said payments shall be
made at 1171 E. Ash Ave., Fullerton, California 92831, or at such other address
as is provided in writing by Note Holder.

2. Payments received for application to this Note shall be applied first to the
payment of accrued interest at the rate specified above, if any, second, to
accrued interest first specified above, and the balance applied in reduction of
the principal amount owed.

3. If any payment required by this Note is not paid when due, or if any default
under this Note occurs, the entire principal amount outstanding and accrued
interest thereon shall at once become due and payable at the option of the Note
Holder (Acceleration); and the indebtedness shall bear interest at the rate of
twelve percent (12%) per annum from the date of default, provided, however, said
rate shall be adjusted downward to the highest rate allowed by law if the legal
rate is lower. The Note Holder shall be entitled to collect all reasonable costs
and expense of collection and/or suit, including but not limited to reasonable
attorneys’ fees.

4. Borrower may prepay the principal amount outstanding under this Note, in
whole or in part, at any time without penalty. Any partial prepayment shall be
applied against the principal amount outstanding and shall not postpone the due
date of any subsequent payments or change the amount of such payments.

5. Borrower and all other makers, sureties, guarantors, and endorsers hereby
waive presentment, notice of dishonor and protest, and they hereby agree to any
extensions of time of payment and partial payments before, at, or after
maturity. This Note shall be the joint and several obligation of Borrower and
all other makers, sureties, guarantors and endorsers, and their successors and
assigns.

 

/s/ MO

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6. The failure of Note Holder to strictly enforce any provision of this Note
shall not be deemed a waiver of Note Holder’s rights to strictly enforce that or
any other term of this Note at any other time.

7. Any notice to Borrower provided for in this Note shall be in writing and
shall be given and be effective upon (1) delivery to Borrower or (2) mailing
such notice by first-class U.S. mail, addressed to Borrower at the Borrower’s
address stated below, or to such other address as Borrower may designate by
notice to the Note Holder. Any notice to the Note Holder shall be in writing and
shall be given and be effective only upon (1) delivery to Note Holder or (2) by
mailing such notice by first-class U.S. mail, to the Note Holder at the address
stated in the first paragraph of this Note, or to such other address as Note
Holder may designate by notice to Borrower.

8. This Note is collateralized by all of the membership interests in VCG-IS, LLC
dba Imperial Showgirls and the assets of said entity.

9. This Note shall be construed pursuant to the laws of the State of California.
Venue for any lawsuit regarding this Note shall be a court of competent
jurisdiction in Orange County, California.

10. It is the intention of Note Holder and the undersigned to comply strictly
with all applicable usury laws; and, accordingly, in no event and upon no
contingency shall Note Holder ever be entitled to receive, collect or apply as
interest any interest, fees, charges or other payments equivalent to interest,
in excess of the maximum rate which Note Holder may lawfully charge under
applicable statutes and laws from time to time in effect. In determining whether
or not the interest paid or payable, under any specific contingency, exceeds the
highest contract rate permitted by applicable law from time to time in effect,
the undersigned hereof and Note Holder shall, to the maximum extent permitted
under applicable law, characterize the non-principal payment as a reasonable
loan charge, rather than as interest. Any provision hereof, or of any other
agreement between Note Holder and the undersigned, that operates to bind,
obligate or compel the undersigned to pay interest in excess of such maximum
lawful contract rate shall be construed to require the payment of the maximum
rate only. The provisions of this paragraph shall be given precedence over any
other provision contained herein or in any

[This space intentionally left blank.]

 

 

Kdlls/vcg/imperial/promissory note.doc    2    /s/ MO 6/30/08 - MAG - V. 1      

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other agreement between Note Holder and the undersigned that is in conflict with
the provisions of this paragraph.

 

BORROWER VCG-IS, LLC By:   /s/ Micheal Ocello Its:   Chief Manager   Vice
President

 

PAYMENT GUARANTEED BY: VCG HOLDING CORP. By:   /s/ Micheal Ocello Its:   Chief
Executive Officer   President

Borrower’s address:

390 Union Blvd., Suite 540

Lakewood, CO 80228

 

Kdlls/vcg/imperial/promissory note.doc    3    /s/ MO 6/30/08 - MAG - V. 1