Plan of Acquisition, Reorganization, Arrangement, Liquidation Or Succession

SECOND LOAN MODIFICATION AGREEMENT



This Second Loan Modification Agreement (this "Agreement") is effective as of the 30th day of December, 2005, by and between 1-800 CONTACTS, INC. ("Borrower") and ZIONS FIRST NATIONAL BANK ("Lender").



Recitals





A. Borrower executed and delivered to Lender that certain Promissory Note (Reducing Revolving Line of Credit) dated February 27, 2004 in the original principal amount of $28,000,000.00 (the "Note").



B. In connection with the Note, Borrower executed and delivered to Lender a Restated Loan Agreement dated February 27, 2004, as modified by that certain Loan Modification Agreement dated June 25, 2004 (the "Loan Agreement").





C. Borrower has requested that Lender increase the amount of the Note and modify certain terms and conditions contained in the Loan Agreement and Lender has agreed to such increase and modifications provided, among other things, Borrower executes and delivers this Agreement to Lender.



NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Loan Agreement is hereby modified as follows:



1. Except as otherwise expressly provided herein, terms assigned defined meanings in the Loan Agreement shall have the same defined meanings in this Agreement.



2. The definition for "EBITDA" contained in Section 1.1 of the Loan Agreement is hereby deleted in its entirety and replaced with the following:



"EBITDA" means net income (excluding extraordinary gains and losses realized other than in the ordinary course of business up to a maximum of $2,500,000.00) before interest, taxes, depreciation, and amortization, and other non-cash charges, including stock-based compensation expenses and foreign currency translation gains or losses, determined in accordance with generally accepted accounting principles consistent with the financial statements of Borrower delivered to Lender.



3. The definition for "LIBOR Rate Applicable Margin" contained in Section 1.1 of the Loan Agreement is hereby deleted in its entirety and replaced with the following:



"LIBOR Rate Applicable Margin" means two percent (2.00%) until the rate changes pursuant to the terms of the Promissory Note, and thereafter:



a. If the Maximum Leverage Ratio is greater than or equal to two (2.0) but less than two and five-tenths (2.5), two and twenty-five hundredths percent (2.25%).



b. If the Maximum Leverage Ratio is greater than or equal to one (1.0) but less than two (2.0), two percent (2.00%).






c. If the Maximum Leverage Ratio is less than one (1.0), one and seventy-five hundredths percent (1.75%).





4. The definition for "Maximum Available Advance Amount" contained in Section 1.1 of the Loan Agreement is hereby deleted in its entirety and replaced with the following:



"Maximum Available Advance Amount" means (1) $30,000,000.00 at all times that Borrower92s Minimum Fixed Charge Coverage Ratio is equal to or greater than one and five-tenths (1.50) but less than two (2.0); (2) $35,000,000.00 at all times that Borrower92s Minimum Fixed Charge Coverage Ratio is equal to or greater than two (2.0) but less than two and five-tenths (2.5); or (3) $40,000,000.00 at all times that Borrower92s Minimum Fixed Charge Coverage Ratio is equal to or greater than two and five-tenths (2.5).



5. The definition for "Prime Rate Applicable Margin" contained in Section 1.1 of the Loan Agreement is hereby deleted in its entirety and replaced with the following:



"Prime Rate Applicable Margin" means zero percent (0.00%) until the rate changes pursuant to the terms of the Promissory Note, and thereafter:



a. If the Maximum Leverage Ratio is greater than or equal to two (2.0) but less than two and five-tenths (2.5), twenty-five hundredths percent (0.25%).



b. If the Maximum Leverage Ratio is greater than or equal to one (1.0) but less than two (2.0), zero percent (0.00%).



c. If the Maximum Leverage Ratio is less than one (1.0), minus twenty-five hundredths percent (-0.25%).



6. The definition for "Promissory Note" contained in Section 1.1 of the Loan Agreement is hereby deleted in its entirety and replaced with the following:



"Promissory Note" means the Replacement Promissory Note (Revolving Line of Credit) to be executed by Borrower pursuant to Section 2.3 Promissory Note in the form of Exhibit A hereto, which is incorporated herein by reference, and any and all renewals, extensions, modifications, and replacements thereof.



7. The definition for "Unused Facility Fee Applicable Margin" contained in Section 1.1 of the Loan Agreement is hereby deleted in its entirety and replaced with the following:



"Unused Facility Fee Applicable Margin" means three hundred seventy-five hundredths percent (0.375%) until the fee changes pursuant to the terms of the Loan Agreement, and thereafter:



a. If the Maximum Leverage Ratio is greater than or equal to one (1.0) but less than two and five-tenths (2.5), three hundred seventy-five hundredths percent (0.375%).



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b. If the Maximum Leverage Ratio is less than one (1.0), twenty-five hundredths percent (0.25%).



8. Section 2.1 of the Loan Agreement is hereby deleted in its entirety and replaced with the following:



2.1 Amount of Loan



Upon fulfillment of all conditions precedent set forth in Section 4 Conditions to Loan Disbursements , and so long as no Event of Default exists, Lender agrees to loan Borrower up to forty million dollars ($40,000,000.00) as a revolving line of credit.



9. The first paragraph of Section 2.2 of the Loan Agreement is hereby deleted in its entirety and replaced with the following:



2.2 Nature and Duration of Loan



The Loan shall be a revolving loan payable in full upon the dates and upon the terms and conditions provided in the Promissory Note. Lender and Borrower intend the Loan to be in the nature of a line of credit under which Borrower may repeatedly draw and repay funds on a revolving basis in accordance with the terms and conditions of this Loan Agreement and the Promissory Note. The right of Borrower to draw funds and the obligation of Lender to advance funds shall not accrue until all of the conditions set forth in Section 4, Conditions to Loan Disbursements , have been fully satisfied, and shall terminate: (i) upon occurrence of an Event of Default or (ii) upon maturity of the Promissory Note, unless the Promissory Note is renewed or extended by Lender, in which case such termination shall occur upon the maturity of the final renewal or extension of the Promissory Note. Upon such termination, any and all amounts owing to Lender pursuant to the Promissory Note shall thereupon be due and payable in full.



10. Section 2.5 of the Loan Agreement is hereby deleted in its entirety and replaced with the following:



2.5 Limitations on Advances



Notwithstanding anything to the contrary in the Loan Documents, no advance shall be made on the Promissory Note if, after making the requested advance, the total principal amount of all advances outstanding, together with the amount of all outstanding letters of credit issued against the Promissory Note pursuant to Section 2.2, Nature and Duration of Loan , will exceed the Maximum Available Advance Amount.



If at any time the aggregate, principal amount of all advances outstanding and unpaid on, together with the amount of all outstanding letters of credit issued against, the Promissory Note exceeds the amount allowable under the Maximum Available Advance Amount, Borrower shall immediately make payment to Lender in a sufficient amount to bring the amount of such advances and letters of credit issued back into compliance with the Maximum Available Advance Amount. If the foregoing covenant requires prepayment of an advance based on the LIBOR Rate (as defined in the Promissory Note), such prepayment shall be subject to a prepayment fee as provided in the Promissory Note.



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11. Section 2.7 of the Loan Agreement is hereby deleted in its entirety and replaced with the following:



2.7 Non-Use Fee



Borrower shall pay to Lender a non-use fee for the Loan for so long as this Loan Agreement is in effect. The non-use fee shall be an amount equal to the Unused Facility Fee Applicable Margin per annum of the unused portion of the Maximum Available Advance Amount, calculated on the average unused portion of the Loan for each calendar quarter or portion thereof. The fee shall be payable quarterly, in arrears, and shall be due no later than the fifth Banking Business Day after the first day of the month following each calendar quarter. Changes in the Unused Facility Fee 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 monthly financial statements for the quarter or quarterly financial statements provided in Section 6.8, Financial Statements and Reports .



12. Subsection b. of Section 6.8, Financial Statements and Reports , is hereby deleted in its entirety and replaced with the following:



b. Borrower shall provide quarterly unaudited financial statements of Borrower and all Subsidiaries for each fiscal quarter. The quarterly unaudited financial statements shall be in a for ...