Document:

EXHIBIT 10.27

EXECUTIVE
EMPLOYMENT AGREEMENT

(“Agreement”)

EXECUTIVE EMPLOYMENT AGREEMENT, effective December 5, 2006 (“Effective Date”), by and between Jacobs Entertainment, Inc., a
Colorado corporation (the “Company”) and Stanley Politano (the “Executive”).

WHEREAS, the Company desires to employ the Executive
on a full-time basis, and the Executive desires to be so employed by the
Company, from and after the date of this Agreement.

NOW, THEREFORE, in consideration of the mutual
covenants contained herein, the parties agree as follows:

ARTICLE
I

EMPLOYMENT DUTIES AND BENEFITS

Section 1.1                                   Employment.  The
Company hereby employs the Executive as Executive Vice President of the
Company.  The Executive accepts such
employment and agrees to perform the duties and responsibilities assigned to
him under this Agreement.

Section 1.2                                   Duties and Responsibilities. 
During the period of employment, Executive agrees to serve as the
Executive Vice President of the Company and in such other offices and
directorships of the Company and of its subsidiaries and related companies
(collectively, “affiliates”) to which he may be elected or appointed, and to
perform the duties commensurate with such positions and such other reasonable
and appropriate duties as may be requested of him by the Chief Executive
Officer and/or President of the Company, in accordance with this Agreement and
in compliance with all applicable laws and regulations.  Excluding periods of vacation and sick leave to
which Executive is entitled, Executive shall devote such time, energy, and
skill to the business and affairs of the Company and its affiliates and to the
promotion of their interests as is necessary to perform the duties required of
him by this Agreement.

Section 1.3                                   Working Facilities; Location.  The
Executive shall be furnished with facilities and services suitable to his
position and adequate for the performance of his duties under this
Agreement.  The principal place of
performance by Executive of his duties hereunder shall be at the offices of the
Company in Golden, Colorado or at such other location as may reasonably be
required to travel outside that area in the performance of Executive’s
responsibilities.

Section 1.4                                   Vacations.  The
Executive shall be entitled each year during the Term, as defined below, to a
vacation with full salary and benefits, for the number of weeks set forth in
the Company’s Employee Handbook.

Section 1.5                                   Vehicle Allowance.  The
Executive shall be paid a vehicle allowance of approximately $600 per month, or
at his election, the Company shall lease for not more than $600 per month a
vehicle suitable for travel from Denver to Black Hawk, Colorado in all weather
conditions.

Section 1.6                                   Expenses.  The
Executive is authorized to incur reasonable expenses for promoting the business
of the Company in all respects, including expenses for entertainment, travel
and 

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similar items.  The Company will
promptly reimburse the Executive for all such expenses upon the presentation by
the Executive, from time-to-time, of an itemized account of such expenditures.

Section
1.7                                   Benefit Plans.  From
the effective date of this Agreement, the Executive shall be entitled to
participate in benefit plans provided to employees of the Company.  Such participation shall be based upon the
policies established in the Company’s Employee Handbook as applicable to the
Executive.

ARTICLE
II

COMPENSATION

Section 2.1                                   Base Salary.  The
Company shall pay to the Executive a Base Salary of $155,000 in the first year
of this Agreement, $165,000 in the second year of this Agreement, and $175,000
in the final year of this Agreement payable in accordance with the Company’s
payroll and withholding policies.

Section
2.2                                   Bonus and Bonus Plan
Participation.  The
Executive is entitled to participate in a bonus plan or incentive plan as
formulated by the Company’s Board of Directors, Compensation Committee or Chief
Executive Officer and/or President.  Within
60 days after the date of this Agreement, and at the beginning of each calendar
year thereafter during the Term hereof, the Chief Executive Officer and/or
President of the Company shall establish written goals and performance criteria
for the Executive.  If such goals and
performance criteria for the Executive are met for a particular year, the
Executive shall be entitled to a bonus of up to 35% of his Base Salary.  Subject to Sections 3.3 and 3.4, the bonus shall be payable only if the
Executive is employed by the Company at December 31 of each year for which the
bonus is determined.

ARTICLE
III

TERM OF EMPLOYMENT AND TERMINATION

Section 3.1                                   Term.  This
Agreement shall be for a period of three years commencing on December 5, 2006 and ending three years thereafter, subject, however, to earlier
termination during such period as provided in this Article (the “Term”).

Section 3.2                                   Termination by the Company With
Cause.  The
Company may terminate the Executive’s employment, at any time, for cause upon
ten days’ written notice and opportunity for the Executive to remedy any
non-compliance with the terms of this Agreement (if such non-compliance can be
remedied).  Grounds for termination “for
cause” shall be one or more of the following: 
(i) intentional and material breach of his duty of loyalty or care to
the Company, (ii) gross negligence or willful misconduct in performance of his
duties during the course of his employment, (iii) failure to abide by the
corporate policies and procedures set forth in the Company’s Employee Handbook;
(iv) failure to execute the reasonable and lawful instructions of the Company’s
Chief Executive Officer and/or President relating to the operation of the
Company’s business; (v) conviction of any felony crime or loss or material
impairment of his gaming license in Colorado, Nevada, or any jurisdiction in
which the Company conducts its business; and (vi) Executive’s inability to
perform his duties hereunder for a period of more than 30 days because of a
restraining order, injunction or other legal prohibition..  Upon the date of termination of the Executive’s
employment pursuant to this Section 3.2, the Company’s obligation to pay any
compensation including bonuses shall terminate, at which time the Company shall
be responsible for compensating the Executive for any unpaid salary, vacation
time not taken and unreimbursed expenses. 
Subject to this exception and the obligation of the Company to
compensate the

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Executive through the notice period, no other compensation shall be
payable to the Executive should this Agreement be terminated pursuant to this
Section 3.2.  The one-year noncompetition
covenant in Section 4.1(c) below shall begin to run on the date of termination
under this Section 3.2.

Section 3.3                                 Termination by the Company Without
Cause.  If
the Executive’s employment is terminated by the Company, without cause, all
compensation shall cease, but the Company shall be obligated to compensate the
Executive with a lump sum severance payment equal to a total of six months of
salary compensation (i.e. one-half of the Base Salary then being paid to the
Executive).  In the event the Executive’s
employment is terminated pursuant to this Section 3.3, the Executive shall be
entitled to participate in the bonus payable pursuant to Section 2.2, with
respect to the year in which his employment is terminated, prorated for the
year based on the number of full months employed during such year compared to
12.  In addition, the non-competition
covenants in Sections 4.1 (a) and (c) below shall be automatically terminated
on the effective date of any termination of Executive’s employment by the
Company without cause.

Section 3.4                                 Termination upon Death of the
Executive.  In
addition to any other provision relating to termination, this Agreement shall
terminate upon the Executive’s death.  In
such event, all unpaid compensation, compensation for vacation time not taken
by the Executive and all expense reimbursements due to the Executive shall be
paid to the Executive’s estate.  In the
event Executive’s employment is terminated pursuant to this Section 3.4, the
Executive’s estate shall be entitled to a death benefit equal to six months of
salary compensation (i.e. one-half of the Base Salary then being paid to the
Executive), and to participate in the bonus pursuant to Section 2.2 with
respect to the year in which his employment is terminated pro rated for the year
based on the number of full months worked during such year compared to 12.

Section 3.5                                 Termination by the Executive. 
This Agreement may be
terminated by the Executive upon 60 days prior written notice, in which event
the Executive shall be entitled to salary compensation only during the notice
period (i.e. two months from the date of notice at the Base Salary rate then in
effect) and no pro rated bonus shall be paid or payable.  In the event the Executive’s employment is
terminated pursuant to this Section 3.5 the one-year noncompetition covenants
in Sections 4.1 (a) and (c) below shall begin to run 60 days after such notice
of termination.

Section 3.6                                   Termination upon Change of
Control.  (a) If during the Term there is a
Change of Control of the Company and the Executive is not offered, by the
acquiring company or person, an employment position, or not offered an
employment position satisfactory to him, he shall be deemed Terminated Without
Cause and shall be entitled to a severance payment in an amount equal to one
year’s Base Salary, which shall be in addition to amounts payable to the
Executive under Section 3.3 above.

For
purposes of this Section 3.6, “Change of Control” means the occurrence of any
of the following:

(1)                                  any
person or group of related persons for purposes of Section 13(d) of the
Exchange Act (a “Group”), other than Richard E. Jacobs, Jeffrey P. Jacobs and
their related trusts becomes the beneficial owner of more than 331¤3% of the total
voting power of the Company’s or its parent’s voting stock, and Richard E.
Jacobs, Jeffrey P. Jacobs and their related trusts beneficially own, in the
aggregate, a lesser percentage of the total voting power of the voting stock of
the Company or its parent than such other person or group and do not have the
right or ability by voting power, contract or otherwise to elect or designate
for election a majority of the Board of Directors of the Company or its parent;

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(2)                                  there
is consummated any sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of all or substantially all of the assets
of the Company to any person or group, together with any affiliates thereof
and/or any of their affiliates; or

(3)                                  there
is consummated any consolidation or merger of the Company or its parent in
which the Company or its parent is not the continuing or surviving person or
pursuant to which the common stock of the Company or its parent would be
converted into cash, securities or other property, other than a merger or
consolidation of the Company or its parent in which the holders of the capital
stock of the Company or its parent outstanding immediately prior to the
consolidation or merger hold, directly or indirectly, at least a majority of
the voting power of the surviving corporation immediately after such
consolidation or merger.

ARTICLE IV

CONFIDENTIALITY AND COMPETITION

Section 4.1                                   Further Obligations of the
Executive During and After Employment.

(a)                                  The Executive agrees that during the term of
his employment under this Agreement and for an additional period of one year,
he will engage in no business activities which are or may be competitive with,
or which might place him in a competing position to that of, the Company or any
Affiliate except as authorized by the Company’s Board of Directors in its
reasonable discretion.

(b)                                 The Executive realizes that during the course
of his employment, the Executive will have produced and/or have access to
confidential business plans, information, business opportunity records,
notebooks, data, marketing strategies, trade secrets, customer lists and
account lists of the Company and its affiliates (“Confidential Information”).  Therefore, during or subsequent to his
employment by the Company, or by an affiliate, the Executive agrees to hold in
confidence and not to directly or indirectly disclose or use or copy or make
lists of any such Confidential Information, except to the extent authorized by
the Company in writing.  All records,
files, business plans, documents, equipment and the like, or copies thereof,
relating to Company’s business, or the business of an affiliated company, which
the Executive shall prepare, or use, or come into contact with, shall remain
the sole property of the Company, or of an affiliated company, and shall not be
removed from the Company’s or the affiliated company’s premises without its
written consent, and shall be promptly returned to the Company upon termination
or resignation of employment with the Company or its affiliated companies.

(c)                                  Because of his employment by the Company, the
Executive will have access to secrets and confidential information about the
Company, its business plans, its customers, its business opportunities, its
expansion plans into other geographic areas and its methods of doing business.  The Executive agrees that for the Term of
this Agreement and an additional period of one year he will not take any
actions which are calculated to persuade any employee, customer, vendor or
supplier of the Company to terminate or modify in any adverse manner his or its
association with the Company.

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(d)                                 In the event a court of competent
jurisdiction finds any provision of this Section 4.1 to be so overbroad as to
be unenforceable, then such provision shall be reduced in scope by the court,
to the extent deemed necessary by the court to render the provision reasonable
and enforceable.  Executive acknowledges
and agrees that any breach of this Agreement by Executive would cause immediate
irreparable harm to the Company. 
Executive agrees that should he violate any of the terms and conditions
of this Agreement, the Company, at its sole discretion, shall be entitled to
seek to obtain immediate injunctive relief and enjoin further and future
violations of this Agreement.

ARTICLE V

DISABILITY AND ILLNESS

Section 5.1                                   Disability and Salary
Continuation.

(a)                                  Definition of Total Disability.  For
purposes of this Agreement, the terms “totally disabled” and “total disability”
shall mean disability as defined in any total disability insurance policy or
policies, if any, in effect with respect to the Executive.  If no insurance policy is in effect, “total
disability” shall mean a medically determinable physical or mental condition,
which, in the opinion of two physicians chosen by the mutual consent of the
parties, renders the Executive unable to perform substantially all of the
duties required pursuant to this Agreement. 
Total disability shall be deemed to have occurred on the date of the
disabling injury or onset of the disabling illness, as determined by the two
independent physicians.  In the event
that the two independent physicians are unable to agree as to the date of the
disabling injury or onset of the disabling illness, such date shall be deemed
to be the later of the two dates determined by the physicians chosen pursuant to
this Section 5.1(a).

(b)                                 Salary Continuation.  If
the Executive becomes totally disabled during the term of this Agreement, his
full salary shall be continued for 90 days from the date of the disabling
injury or onset of the disabling illness as determined in accordance with the
provisions of Section 5.1(a) above and thereafter the Executive’s employment
may be terminated in accordance with the provisions of Section 3.3.

Section 5.2                                   Illness.  If
the Executive is unable to perform the services required under this Agreement
by reason of illness or physical injury not amounting to total disability, also
as determined in this Article, the compensation otherwise payable to the
Executive under this Agreement shall be continued for a period of six months
and he shall be entitled to participate in the bonus payable in Section 2.4
with respect to the year in which the illness occurred prorated for the year
based on the number of months worked during such year compared to 12 after
which the Company shall have no further obligation to the Executive.

ARTICLE VI

GENERAL MATTERS

Section 6.1                                   Governing Law.  This
Agreement shall be governed by the laws of the State of Colorado and shall be
construed in accordance therewith.

Section
6.2                                   No Waiver.  No
provision of this Agreement may be waived except by an agreement in writing
signed by the waiving party.  A waiver of
any term or provision shall not be construed as a waiver of any other term or
provision.

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Section 6.3                                   Amendment.  This
Agreement may be amended, altered or revoked at any time, in whole or in part,
by filing with this Agreement a written instrument setting forth such changes,
signed by each of the parties.

Section 6.4                                   Benefit.  This
Agreement shall be binding upon the Executive and the Company, and shall not be
assignable by either party without the other parties’ written consent.

Section 6.5                                   Severability.  If
any provision of this Agreement is declared by any court of competent
jurisdiction to be invalid for any reason, such invalidity shall not affect the
remaining provisions.  On the contrary,
such remaining provisions shall be fully severable, and this Agreement shall be
construed and enforced as if such invalid provisions had not been included in
the Agreement.

Section 6.6                                   Effective Date.  The
effective date of this Agreement shall be December 5, 2006.

Section 6.7                                   Arbitration.  The
Company and the Executive expressly agree that all disputes arising out of this
Agreement shall be resolved by arbitration in accordance with the following
provisions.  Either party must demand in
writing such arbitration within 10 days after the controversy arises by sending
a notice to arbitrate to both the other party and to any recognized and
reputable alternative dispute resolution firm, such as the Judicial Arbitrators
Group located in Denver, Colorado.  The
controversy shall then be arbitrated pursuant to the rules promulgated by any
such firm at the firm’s offices located in Denver, Colorado.  The parties will select by mutual agreement
the arbitrator or arbitrators (hereinafter collectively referred to as “arbitrator”)
to hear and resolve the controversy.  The
express terms of this Agreement and the laws of the State of Colorado shall
govern the arbitrator.  The arbitrator’s
decision shall be final and binding on the parties and shall bar any suit,
action, or proceeding instituted in any federal, state, or local court or
administrative tribunal.  Notwithstanding
the preceding sentence, the arbitrator’s judgment may be entered in any court
of competent jurisdiction.  These
arbitration provisions shall survive the termination of this Agreement.

Section 6.8                                 Executive’s Representation.  The
Executive represents that he has engaged legal counsel to review this Agreement
and advise him with respect to each Section hereof.

	
  

  	
  JACOBS ENTERTAINMENT, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
     /s/ Jeffrey P. Jacobs

  
	
   

  	
   

  	
   Jeffrey P.
  Jacobs

  
	
   

  	
   

  	
   Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Stanley Politano

  
	
   

  	
  Stanley Politano

  

 

 6Exhibit 10.1

REPLACEMENT PROMISSORY NOTE

(Revolving
Line of Credit)

December
4, 2006

	
  Borrower:

  	
   

  	
  1-800 CONTACTS, INC.

  
	
   

  	
   

  	
   

  
	
  Lender:

  	
   

  	
  Zions First National Bank

  
	
   

  	
   

  	
   

  
	
  Amount:

  	
   

  	
  $40,000,000.00

  
	
   

  	
   

  	
   

  
	
  Maturity:

  	
   

  	
  June 1, 2009

  

 

For value received, Borrower
promises to pay to the order of Lender at its Commercial Banking Group, 10 E.
South Temple, Suite 200, UT KC02 0321, Salt Lake City, Utah, 84133, the sum of
forty million dollars ($40,000,000.00) or such other principal balance as may
be outstanding hereunder in lawful money of the United States with interest
thereon calculated and payable as provided herein.

Definitions

Terms used in the singular
shall have the same meaning when used in the plural and vice versa. As used in
this Replacement Promissory Note (this “Promissory Note”), the term:

“Banking Business Day” means
any day other than a Saturday, Sunday or other day on which commercial banks in
the State of Utah are authorized or required to close and, when used in
reference to an Interest Period, a day on which dealings in dollar deposits are
also carried on in the London Interbank market and banks are open for business
in London.

“Dollars” and the sign “$” mean lawful money of the
United States.

“Event of Default” shall have the meaning set forth
in the Loan Agreement

“Interest Period” means,
with respect to any advance or balance for which interest is based on the LIBOR
Rate, the period commencing on the date such advance is made or, as to an
existing balance, the date selected by Borrower and ending, as Borrower may
select, on the numerically corresponding day in the first, second, third or
sixth calendar month thereafter, except that each such Interest Period that
commences on the last Banking Business Day of a calendar month (or on any day
for which there is no numerically corresponding day in the appropriate
subsequent calendar month) shall end on the last Banking Business Day of the
appropriate subsequent calendar month; provided that all of the foregoing
provisions relating to Interest Periods are subject to the following:

a.              No Interest Period may extend
beyond the termination of the Loan Agreement;

b.                                         No Interest Period may extend beyond the
aforesaid Maturity Date or such later date to which it is extended; and

c.                                          If an Interest Period would end on a day that
is not a Banking Business Day, such Interest Period shall be extended to the
next Banking Business Day unless such Banking Business Day would fall in the
next calendar month, in which event such Interest Period shall end on the
immediately preceding Banking Business Day.

 

 

“LIBOR Rate” applicable to
any Interest Period means the rate per annum quoted by Lender as its LIBOR
Rate, rounded to the nearest thousandth. The LIBOR Rate shall be related to
quotes for the London Interbank Offered Rate from the British Bankers
Association Interest Settlement Rates, Lasser Marshall Inc., or other
comparable services for the applicable Interest Period. This definition of
LIBOR Rate is to be strictly interpreted and is not intended to serve any
purpose other than providing an index to determine the interest rate used
herein. The LIBOR Rate of Lender may not necessarily be the same as the quoted
London Interbank Offered Rate quoted by any particular institution or service
applicable to any Interest Period.

“Loan Agreement” means the
Restated Loan Agreement dated February 27, 2004, between Lender and Borrower,
together with any exhibits, amendments, addenda, and modifications.

“Prime Rate” means an index
which is determined daily by the published commercial loan variable rate index
held by any two of the following banks: J. P. Morgan Chase & Co., Wells
Fargo Bank, National Association, and Bank of America, N.A. In the event no two
of the above banks have the same published rate, the bank having the median
rate will establish the Prime Rate. If, for any reason beyond the control of
Lender, any of the aforementioned banks becomes unacceptable as a reference for
the purpose of determining the Prime Rate used herein, Lender may, five days
after posting notice in Lender’s bank offices, substitute another comparable
bank for the one determined unacceptable. As used in this paragraph, “comparable
bank” shall mean one of the ten largest commercial banks headquartered in the
United States of America. This definition of Prime Rate is to be strictly
interpreted and is not intended to serve any purpose other than providing an
index to determine the variable interest rate used herein. It is not the lowest
rate at which Lender may make loans to any of its customers, either now or in
the future.

Revolving Line of Credit

This Promissory Note shall
be a revolving line of credit under which Borrower may repeatedly draw and
repay funds, so long as no default has occurred hereunder or under the Loan
Agreement.  All disbursements under this
Promissory Note shall be made in accordance with the Loan Agreement and the
amount available for disbursement shall be as provided in the Loan Agreement.

This Promissory Note
succeeds and replaces that certain Promissory Note dated February 27, 2004
executed by Borrower in favor of Lender in the original principal amount of
twenty-eight million dollars ($28,000,000.00) and that certain Replacement
Promissory Note dated December 30, 2005 executed by Borrower in favor of Lender
in the commitment amount of forty million dollars ($40,000,000.00).

Principal and interest shall
be payable as follows: Interest accrued is to be paid monthly commencing
December 1, 2006, and on the same day of each month thereafter.  All principal and unpaid interest shall be
paid in full on June 1, 2009.

All payments shall be
applied first to fees, then accrued interest, and the remainder, if any, to
principal.

Interest shall accrue from
the date of disbursement of the principal amount or portion thereof until paid,
both before and after judgment, in accordance with the terms set forth herein.

Prime Rate or LIBOR Rate
Election

Each advance under this Promissory Note shall
initially bear interest based on the Prime Rate.

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Provided no Event of Default
has occurred, Borrower may elect at any time and from time to time to convert
the interest rate on all or any portion of the outstanding principal balance
from the Prime Rate based interest rate to the LIBOR Rate based interest rate
by giving Lender two (2) Banking Business Days written notice of such election,
specifying the amount of the outstanding principal balance to be converted and
the Interest Period.  The amount for
which such election is exercised must be two hundred fifty thousand dollars
($250,000.00) or multiples thereof.  An
election to convert to the LIBOR Rate based interest rate may not be changed to
the Prime Rate based interest rate without consent of Lender until expiration
of the selected Interest Period.

Interest Based on Prime
Rate

Interest based on the Prime
Rate shall be at a variable rate computed on the basis of a three hundred sixty
(360) day year as follows: the Prime Rate Applicable Margin (as defined in the
Loan Agreement) per annum above the Prime Rate from time to time in effect,
adjusted as of the date of any change in the Prime Rate.

Interest Based on LIBOR
Rate

Interest based on the LIBOR Rate shall be calculated
as follows:

1.                                       Interest shall be at a rate computed on the
basis of a three hundred sixty (360) day year at a rate equal to the LIBOR Rate
for the applicable Interest Period plus the LIBOR Rate Applicable Margin (as
defined in the Loan Agreement) per annum.

2.                                        Notwithstanding any other provision in this
Promissory Note, if the adoption of any applicable law, rule, or regulation, or
any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank, or comparable agency
charged with the interpretation or administration thereof, or compliance by
Lender with any request or directive (whether or not having the force of law)
of any such authority, central bank, or comparable agency, shall make it
unlawful or impossible for Lender to maintain balances based on the LIBOR Rate,
then upon notice to Borrower by Lender the outstanding principal amount of the
balances based on the LIBOR Rate, together with interest accrued thereon, shall
be repaid immediately upon demand of Lender if such change or compliance with
such request, in the reasonable judgment of Lender, requires immediate repayment
or, if such repayment is not required, at the election of Borrower shall be
converted to a balance based on Prime Rate or repaid at the expiration of the
last Interest Period to expire before the effective date of any such change or
request.

3.                                       Notwithstanding anything to the contrary
herein, if Lender reasonably determines (which determination shall be
conclusive) that (a) quotations of interest rates are not being provided for
purposes of determining the LIBOR Rate, or (b) the LIBOR Rate does not accurately
cover the cost to Lender of making or maintaining advances based on the LIBOR
Rate, then Lender may give notice thereof to Borrower, whereupon until Lender
notifies Borrower that the circumstances giving rise to such suspension no
longer exist, then (1) the right of Borrower to request interest pricing based
on the LIBOR Rate shall be suspended; and (2) Borrower shall repay in full the
then outstanding principal amount based on LIBOR Rate together with accrued
interest thereon, on the last day of the then current Interest Period
applicable to such balance, or, at Borrower’s option, convert the

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                                                outstanding principal balances based on LIBOR
Rate to balances based on Prime Rate on the last day of the then current
Interest Period applicable to such balances.

General

Borrower
may prepay all or any portion of all Prime Rate based balances at any time
without penalty. Any prepayment, in full or in part, of any LIBOR Rate based
balances shall be subject to a prepayment fee if the Original LIBOR Rate (hereinafter
defined) is greater than the Current LIBOR Rate (hereinafter defined) on the
prepayment date. The prepayment fee shall be an amount equal to the net present
value (using the Original LIBOR Rate plus one and five-­tenths percent (1.5%)
as the discount rate) of the prepaid principal amount over the remaining term
of the respective Interest Period, times the difference between (i) the Current
LIBOR Rate and (ii) the Original LIBOR Rate times the number of years and
fractional years remaining until the end of the respective Interest Period. “Original
LIBOR Rate” means the LIBOR Rate in effect as of the first day of the Interest
Period applicable to any balances subject to the LIBOR Rate. “Current LIBOR
Rate” means the LIBOR Rate on the date a prepayment of any balances subject to
the LIBOR Rate is made for the Interest Period which most closely matches the
period from the date the prepayment is received until the end of the Interest
Period applicable to the balance prepaid.

Any prepayment received by
Lender after 2:00 p.m. mountain standard or daylight time (whichever is in
effect on the date the prepayment is received) shall be deemed received on the
following Banking Business Day.

Upon default in payment of
any principal or interest when due, whether due at stated maturity, by
acceleration, or otherwise, all outstanding principal shall bear interest at a
default rate from the date when due until paid, both before and after judgment,
which default rate shall be 4 percent (4%) per annum above the foregoing rates
and upon maturity of the applicable Interest Periods all balances bearing
interest based on the LIBOR Rate shall be converted to balances bearing
interest based on the Prime Rate.

Changes in the Prime Rate
Applicable Margin and the LIBOR Rate Applicable Margin shall take effect on the
later of (i) the first day of the month following forty-five (45) days after
the end of each fiscal quarter of Borrower, or (ii) provided no Event of
Default exists, the first day of the month following receipt by Lender of the
annual financial statements as provided in Section 6.8, Financial Statements
and Reports, of the Loan Agreement.

If, at any time prior to the
maturity of this Promissory Note, this Promissory Note shall have a zero
balance owing, this Promissory Note shall not be deemed satisfied or terminated
but shall remain in full force and effect for future draws unless terminated
upon other grounds.

This Promissory Note is made
in accordance with the Loan Agreement and is secured by the collateral
identified in and contemplated by the Loan Agreement.

If an Event of Default
occurs, time being the essence hereof, then the entire unpaid balance, with
interest as aforesaid, shall, at the election of the holder hereof and without
notice of such election, become immediately due and payable in full.

If an Event of Default
occurs, Borrower agrees to pay to the holder hereof all collection costs,
including reasonable attorney fees and legal expenses, in addition to all other
sums due hereunder.

This Promissory Note shall
be governed by and construed in accordance with the laws of the State of Utah.

 4
 

 

 

Borrower acknowledges that
by execution and delivery of this Promissory Note, Borrower has transacted
business in the State of Utah and Borrower voluntarily submits to, consents to,
and waives any defense to the jurisdiction of courts located in the State of
Utah as to all matters relating to or arising from this Promissory Note. EXCEPT
AS EXPRESSLY AGREED IN WRITING BY LENDER AND EXCEPT AS PROVIDED IN THE
ARBITRATION PROVISIONS IN THE LOAN AGREEMENT, THE STATE AND FEDERAL COURTS
LOCATED IN THE STATE OF UTAH SHALL HAVE SOLE AND EXCLUSIVE JURISDICTION OF ANY
AND ALL CLAIMS, DISPUTES, AND CONTROVERSIES, ARISING UNDER OR RELATING TO THIS
PROMISSORY NOTE. NO LAWSUIT, PROCEEDING, OR ANY OTHER ACTION RELATING TO OR
ARISING UNDER THIS PROMISSORY NOTE MAY BE COMMENCED OR PROSECUTED IN ANY OTHER
FORUM EXCEPT AS EXPRESSLY AGREED IN WRITING BY LENDER.

Borrower hereby waives
presentment for payment, demand, protest, notice of protest, notice of protest
and of non-payment and of dishonor, and consent to extensions of time, renewal,
waivers or modifications without notice and further consent to the release of
any collateral or any part thereof with or without substitution.

	
  

  	
  Borrower:

  
	
   

  	
   

  
	
   

  	
  1-800 CONTACTS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Robert G. Hunter, Chief Financial Officer

  

 

 5

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