**Exhibit 10.20**

 

**REVOLVING CREDITAGREEMENT**

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This Revolving Credit Agreement (the “Agreement”) ismade and entered into by and between the undersigned borrower (the “Borrower”)and the undersigned bank (the “Bank”) as of the date set forth on the last page ofthis Agreement.

 

# **ARTICLEI.  LOANS**

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## 1.1.                              **Revolving Credit Loans**. From time to time prior to December 31, 2008 (the “Maturity Date”)or the earlier termination hereof, the Borrower may borrow from the Bank forworking capital purposes up to the aggregate principal amount outstanding atany one time of the lesser of (i) $ 500,000.00 (the “Loan Amount”), lessletters of credit issued by the Bank, or (ii) if applicable, the BorrowingBase (defined below).  All revolvingloans hereunder will be evidenced by a single promissory note of the Borrowerpayable to the order of the Bank in the principal amount of the Loan Amount(the “Note”).  Although the Note will beexpressed to be payable in the full Loan Amount, the Borrower will be obligatedto pay only the amounts actually disbursed hereunder, together with accrued intereston the outstanding balance at the rates and on the dates specified therein andsuch other charges provided for herein, in the event that the principal amountoutstanding under the Note exceeds the Borrowing Base at anytime, the Borrowerwill immediately, without request, prepay an amount sufficient to eliminatesuch excess.

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## 1.2.                              **Borrowing Base**.  TheBorrowing Base, if any, will be as set forth in an addendum to this Agreement.

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## 1.3.                              **Advances After Maturity or In Excess of Maximum Loan Amount**.  The Bank shall have no obligation whatsoever,and the Bank has no present Intention, to make any advance after the MaturityDate or which would cause the principal amount outstanding under this Agreementto exceed the maximum loan amount or any other limitations on advances statedIn this Agreement.  Notwithstanding theforegoing, the Bank may from time to time.  In its sole and absolute discretion, agree tomake an advance after the Maturity Date or which would cause the principalamount of advances outstanding under this Agreement to exceed the maximum loanamount or any of the other limitations on advances.  The Borrower is and shall be and remainunconditionally liable to the Bank for the amount of all advances, including,without limitation, advances in excess of the maximum loan amount or any other limitationon advances and advances made after the Maturity Date.  Immediately upon the Banks demand, theBorrower shall pay to the Bank the amount of any advances made after theMaturity Date or in excess of the maximum loan amount or any other limitationon advances contained in this Agreement, together with interest on theprincipal amount of such excess advances, for so long as such advances areoutstanding, at the highest interest rate from time to time in effect for suchadvances.  Any such advances shall not bedeemed an extension of this Agreement nor an increase in the maximum loanamount available for borrowing under this Agreement.

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## 1.4.                              **Advances and Paying Procedure**.  The Bank is authorized and directed to creditany of the Borrower’s accounts with the Bank (or to the account the Borrowerdesignates in writing) for all loans made hereunder, and the Bank is authorizedto debit such account or any other account of the Borrower with the Bank forthe amount of any principal, interest or expenses due under the Note or otheramount due hereunder on the due date with respect thereto.  

 

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If, upon any request by the Borrower to the Bank to issue a wire transfer,there is an inconsistency between the name of the recipient of the wire and itsidentification number as specified by the Borrower, the Bank may, withoutliability, transmit the payment via wire based solely upon the identificationnumber.

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## 1.5.                              **Closing Fee**.  TheBorrower will pay the Bank a one-time closing fee of $5,000.00contemporaneously with execution of this Agreement.  This fee is in addition to all other fees,expenses and other amounts due hereunder.

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## 1.6.                              **Loan Facility Fee**. The Borrower will pay a loan facility fee equal to:

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o                                    $n/a per annum, payable annually in advance; (or)

 

o                                    n/a%per annum of the Loan Amount, payable annually in advance; (or)

 

o                                    n/a%per annum of the difference between the Loan Amount and the actual daily unpaidprincipal amount of the Note outstanding from time to time, payable quarterly,in arrears, on the last business day of each third calendar month, and atmaturity; (or)

 

o                                    n/a%per annum of the actual daily unpaid principal amount of the Note outstandingfrom time to time, payable quarterly, in arrears, on the last business day ofeach third calendar month, and at maturity.

 

The loan facility fee is payable for the entire periodthat this Agreement is in effect, regardless of whether any amounts areoutstanding hereunder at any given time.

 

## 1.7.                              **Expenses and Attorneys’ Fees**.  Upon demand, the Borrower will immediatelyreimburse the Bank and any participant in the Obligations (defined below) (“Participant”)for all attorneys’ fees and all other costs, fees and out-of-pocketdisbursements incurred by the Bank or any Participant in connection with thepreparation, execution, delivery, administration, defense, and enforcement ofthis Agreement or any of the other Loan Documents (defined below), includingattorneys’ fees and all other costs and fees (a) incurred before or aftercommencement of litigation or at trial, on appeal or in any other proceeding, (b) incurredin any bankruptcy proceeding and (o) related to any waivers or amendmentswith respect thereto (examples of costs and fees include but are not limited tofees and costs for:  filing, perfectingor confirming the priority of the Banks lien, title searches or insurance,appraisals, environmental audits and other reviews related to the Borrower, anycollateral or the loans, if requested by the Bank).  The Borrower will also reimburse the Bank andany Participant for all costs of collection, including all attorneys’ fees,before and after judgment, and the costs of preservation and/or liquidation ofany collateral.

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## 1.8.                              **Compensating Balances**. The Borrower will maintain on deposit with the Bank in non-interestbearing accounts average daily collected balances, in excess of that requiredto support account activity and other credit facilities extended to the Borrowerby the Bank, an amount at least equal to the sum of (i) $ n/a and (ii) n/a% of the Loan Amount as computed on a monthly basis.  If the Borrower fails to keep and maintainsuch balances, it will pay a deficiency fee, payable within five days after receiptof a statement therefor calculated on the amount by which the Borrower’saverage daily balances are less than the requirements set forth above, computedat a rate equal to the rate set forth in the Note.

 

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## 1.9.                              **Conditions to Borrowing**. The Bank will not be obligated to make (or continue to make) advanceshereunder unless (i) the Bank has received executed originals of the Noteand all other documents or agreements applicable to the loans described herein,including but not limited to the documents specified in Article III(collectively with this Agreement the Loan Documents), in form and contentsatisfactory to the Bank; (ii) if the loan is secured, the Bank hasreceived confirmation satisfactory to it that the Bank has a properly perfectedsecurity interest, mortgage or lien, with the proper priority; (iii) theBank has received certified copies of the Borrower’s governance documents andcertification of entity status satisfactory to the Bank and all other relevantdocuments; (iv) the Bank has received a certified copy of a resolution orauthorization in form and content satisfactory to the Bank authorizing the loanand all acts contemplated by this Agreement and all related documents, andconfirmation of proper authorization of all guaranties and other acts of thirdparties contemplated hereunder; (v) if required by the Bank, the Bank hasbeen provided with an Opinion of the Borrower’s counsel in form and contentsatisfactory to the Bank confirming the matters outlined in Section 2.2and such other matters as the Bank requests; (vi) no default exists underthis Agreement or under any other Loan Documents, or under any other agreementsby and between the Borrower and the Bank; and (vii) all proceedings takenin connection with the transactions contemplated by this Agreement (includingany required environmental assessments), and all instruments, authorizationsand other documents applicable thereto, are satisfactory to the Bank and itscounsel.

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# **ARTICLEII.  WARRANTIES AND COVENANTS**

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While any part of the credit granted to the Borrowerunder this Agreement or the other Loan Documents is available or anyobligations under any of the Loan Documents are unpaid or outstanding, theBorrower continuously warrants and agrees as follows:

 

## 2.1.                              **Accuracy of Information**.  All information, certificates or statementsgiven to the Bank pursuant to this Agreement and the other Loan Documents willbe true and complete when given.

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## 2.2.                              **Organization and Authority; Litigation**.  This Agreement and the other Loan Documentsare the legal, valid and binding obligations of the Borrower, enforceableagainst the Borrower in accordance with their terms.  The execution, delivery and performance ofthis Agreement and all other Loan Documents to which the Borrower is a party (i) arewithin the borrower’s power; (ii) have been duly authorized by allappropriate entity action; (iii) do not require the approval of anygovernmental agency; and (iv) will not violate any law, agreement or restrictionby which the Borrower is bound.  If theBorrower is not an individual, the Borrower is validly existing and in goodstanding under the laws of its state of organization, has all requisite powerand authority and possesses all licenses necessary to conduct its business andown its properties.  There is nolitigation or administrative proceeding threatened or pending against theBorrower which would, if adversely determined, have a material adverse effecton the Borrower’s financial condition or its property.

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## 2.3.                              **Existence; Business Activities; Assets; Change of Control**.  The Borrower will (i) preserve itsexistence, rights and franchises; (ii) not make any material change in thenature or manner of its business activities; (iii) not liquidate, dissolve,acquire another entity or merge or consolidate with or into another entity orchange its form of organization; (iv) not amend its 

 

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organizational documents in any manner that may conflict with any termor condition of the Loan Documents; and (v) not sell, lease, transfer orotherwise dispose of all or substantially all of its assets.  Other than the transfer to a trustbeneficially controlled by the transferor, no event shall occur which causes orresults in a transfer of majority ownership of the Borrower while anyObligations are outstanding or while the Bank has any obligation to providefunding to the Borrower.

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## 2.4.                              **Use of Proceeds; Margin Stock; Speculation**.  Advances by the Bank hereunder will be usedexclusively by the Borrower for working capital and other regular and validpurposes.  The Borrower will not, withoutthe prior written consent of the Bank, redeem, purchase, or retire any of thecapital stock or declare or pay any dividends, or make any other payments ordistributions of a similar type or nature including withdrawaldistributions.  The Borrower will not useany of the loan proceeds to purchase or carry “margin” stock (as defined inRegulation U of the Board of Governors of the Federal Reserve System).  No part of any of the proceeds will be usedfor speculative investment purposes, including, without limitation, speculatingor hedging in the commodities and/or futures market.

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## 2.5.                              **Environmental Matters**. Except as disclosed in a written schedule attached to this Agreement (ifno schedule is attached, there are no exceptions), there exists no uncorrectedviolation by the Borrower of any federal, state or local laws (includingstatutes, regulations, ordinances or other governmental restrictions andrequirements) relating to the discharge of air pollutants, water pollutants orprocess waste water or otherwise relating to the environment or HazardousSubstances as hereinafter defined, whether such laws currently exist or areenacted in the future (collectively “Environmental Laws’).  The term “Hazardous Substances” will mean anyhazardous or toxic wastes, chemicals or other substances, the generation,possession or existence of which is prohibited or governed by any EnvironmentalLaws.  The Borrower is not subject to anyjudgment, decree, order or citation, or a party to (or threatened with) anylitigation or administrative proceeding, which asserts that the Borrower (i) hasviolated any Environmental Laws; (ii) is required to clean up, remove ortake remedial or other action with respect to any Hazardous Substances(collectively “Remedial Action”); or (iii) is required to pay all or aportion of the cost of any Remedial Action, as a potentially responsibleparty.  Except as disclosed on theBorrower’s environmental questionnaire provided to the Bank, there are not now,nor to the Borrower’s knowledge after reasonable investigation have there everbeen, any Hazardous Substances (or tanks or other facilities for the storage ofHazardous Substances) stored, deposited, recycled or disposed of on, under orat any real estate owned or occupied by the Borrower during the periods thatthe Borrower owned or occupied such real estate, which if present on the realestate or in soils or ground water, could require Remedial Action.  To the Borrower’s knowledge, there are noproposed or pending changes in Environmental Laws which would adversely affectthe Borrower or its business, and there are no conditions existing currently orlikely to exist while the Loan Documents are in effect which would subject theBorrower to Remedial Action or other liability. The Borrower currently complies with and will continue to timely complywith all applicable Environmental Laws; and will provide the Bank, immediatelyupon receipt, copies of any correspondence, notice, complaint, order or otherdocument from any source asserting or alleging any circumstance or conditionwhich requires or may require a financial contribution by the Borrower orRemedial Action or other response by or on the part of the Borrower underEnvironmental Laws, or which seeks damages or civil, criminal or punitivepenalties from the Borrower for an alleged violation of Environmental Laws.

 

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## 2.6.                              **Compliance with Laws**. The Borrower has complied with all laws applicable to its business and itsproperties, and has all permits, licenses and approvals required by such laws,copies of which have been provided to the Bank.

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## 2.7.                              **Restriction on Indebtedness**. The Borrower will not create, incur, assume or have outstanding anyindebtedness for borrowed money (including capitalized leases) except (i) anyindebtedness owing to the Bank and its affiliates, and (ii) any otherindebtedness outstanding on the date hereof, and shown on the Borrower’sfinancial statements delivered to the Bank prior to the date hereof, providedthat such other indebtedness will not be increased.

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## 2.8.                              **Restriction on Liens**. The Borrower will not create, incur, assume or permit to exist anymortgage, pledge, encumbrance or other lien or levy upon or security interestin any of the Borrower’s property now owned or hereafter acquired, except (i) taxesand assessments which are either not delinquent or which are being contested ingood faith with adequate reserves provided; (ii) easements, restrictionsand minor title irregularities which do not, as a practical matter, have anadverse effect upon the ownership and use of the affected property; (iii) liensin favor of the Bank and its affiliates; and (iv) other liens disclosed inwriting to the Bank prior to the date hereof.

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## 2.9.                              **Restriction on Contingent Liabilities**.  The Borrower will not guarantee or become asurety or otherwise contingently liable for any obligations of others, exceptpursuant to the deposit and collection of checks and similar matters in theordinary course of business.

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## 2.10.                        **Insurance**.  TheBorrower will maintain insurance to such extent, covering such risks and withsuch insurers as is usual and customary for businesses operating similarproperties, and as is satisfactory to the Bank, including insurance for fireand other risks insured against by extended coverage, public liabilityinsurance and workers’ compensation insurance; and will designate the Bank asloss payee with a “Lender’s Loss Payable” endorsement on any casualty policiesand take such other action as the Bank may reasonably request to ensure thatthe Bank will receive (subject to no other interests) the insurance proceeds onthe Bank’s collateral.

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## 2.11.                        **Taxes and Other Liabilities**. The Borrower will pay and discharge, when due, all of its taxes,assessments and other liabilities, except when the payment thereof is beingcontested in good faith by appropriate procedures which will avoid foreclosureof liens securing such items, and with adequate reserves provided therefor.

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## 2.12.                        **Financial Statements and Reporting**.  The financial statements and otherinformation previously provided to the Bank or provided to the Bank in thefuture are or will be complete and accurate and prepared in accordance withgenerally accepted accounting principles. There has been no material adverse change in the Borrower’s financialcondition since such information was provided to the Bank.  The Borrower will (i) maintain accountingrecords in accordance with generally recognized and accepted principles ofaccounting consistently applied throughout the accounting periods involved; (ii) providethe Bank with such information concerning its business affairs and financialcondition (including insurance coverage) as the Bank may request; and (iii) withoutrequest, provide the Bank with such specific financial statements,certifications and/or information as may be set forth in an addendum to thisAgreement.

 

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## 2.13.                        **Inspection of Properties and Records; Fiscal Year**.  The Borrower will permit representatives ofthe Bank to visit and inspect any of the properties and examine any of thebooks and records of the Borrower at any reasonable time and as often as theBank may reasonably desire.  The Borrowerwill not change its fiscal year.

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## 2.14.                        **Financial Status**. Financial Covenants, if any, will be as set forth in an addendum to thisAgreement.

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## 2.15.                        **Paid-In-Full Period**.  oIf checked here, all revolving loans under this Agreement and the Note must bepaid in full for a period of at least n/a consecutive days during eachfiscal year.

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# **ARTICLEIII.  COLLATERAL AND GUARANTIES**

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## 3.1.                              **Collateral**.  ThisAgreement and the Note are secured by any and all security interests, pledges,mortgages/deeds of trust (except any mortgage/deed of trust expressly limitedby its terms to a specific obligation of Borrower to Bank) or liens now orhereafter in existence granted to the Bank to secure indebtedness of theBorrower to the Bank, including without limitation as described in thefollowing documents:

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o                                    RealEstate Mortgage(s)/Deed(s) of Trust dated                                                 covering real estate located at                                                                                                         .

 

o                                    SecurityAgreement(s) dated                                                                                 .

 

o                                    PossessoryCollateral Pledge Agreement(s) dated                                               .

 

o                                    Other                                                                                                                  .

 

## 3.2.                              **Guaranties**.  ThisAgreement and the Note are guarantied by each and every guaranty now or hereafterin existence guarantying the indebtedness of the Borrower to the Bank (exceptfor any guaranty expressly limited by its terms to a specific separateobligation of Borrower to the Bank) including, without limitation, thefollowing:  Victor J. Salerno, Terina M.Salerno.

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## 3.3.                              **Credit Balances; Setoff**. As additional security for the payment of the obligations described inthe Loan Documents and any other obligations of the Borrower to the Bank of anynature whatsoever (collectively the “Obligations”), the Borrower hereby grantsto the Bank a security interest in, a lien on and an express contractual rightto set off against all depository account balances, cash and any other propertyof the Borrower now or hereafter in the possession of the Bank and the right torefuse to allow withdrawals from any account (collectively “Setoff”).  The Bank may, at any time upon the occurrenceof a default hereunder (notwithstanding any notice requirements or grace/cureperiods under this or other agreements between the Borrower and the Bank)Setoff against the Obligations whether or not the Obligations (including futureinstallments) are then due or have been accelerated, all without any advance orcontemporaneous notice or demand of any kind to the Borrower, such notice anddemand being expressly waived.

 

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The omission of any reference to an agreement inSections 3.1 and 3.2 above will not affect the validity or enforceabilitythereof.  The rights and remedies of theBank outlined in this Agreement and the documents identified above are intendedto be cumulative.

 

# **ARTICLEIV.  DEFAULTS**

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## 4.1.                              **Defaults**. Notwithstanding any cure periods described below, the Borrower willimmediately notify the Bank in writing when the Borrower obtains knowledge ofthe occurrence of any default specified below. Regardless of whether the Borrower has given the required notice, theoccurrence of one or more of the following will constitute a default:

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(a)                                  **Nonpayment**.  TheBorrower shall fail to pay (i) any interest due on the Note or any fees,charges, costs or expenses under the Loan Documents by 5 clays after the samebecomes due; or (ii) any principal amount of the Note when due.

 

(b)                                 **Nonperformance**.  TheBorrower or any guarantor of Borrower’s Obligations to the Bank (“Guarantor”)shall fail to perform or observe any agreement, term, provision, condition, orcovenant (other than a default occurring under (a), (c), (d), (a), (t) or (g) ofthis Section 4.1) required to be performed or observed by the Borrower orany Guarantor hereunder or under any other Loan Document or other agreementwith or in favor of the Bank.

 

(c)                                  **Misrepresentation**. Any financial information, statement, certificate, representation orwarranty given to the Bank by the Borrower or any Guarantor (or any of their representatives)in connection with entering into this Agreement or the other Loan Documentsand/or any borrowing thereunder, or required to be furnished under the termsthereof, shall prove untrue or misleading in any material respect (asdetermined by the Bank in the exercise of its judgment) as of the time whengiven.

 

(d)                                 **Default on Other Obligations**.  The Borrower or any Guarantor shall be indefault under the terms of any loan agreement, promissory note, lease, conditionalsale contract or other agreement, document or instrument evidencing, governingor securing any indebtedness owing by the Borrower or any Guarantor to the Bankor any indebtedness in excess of $10,000 owing by the Borrower to any thirdparty, and the period of grace, if any, to cure said default shall have passed.

 

(e)                                  **Judgments**.  Anyjudgment shall be obtained against the Borrower or any Guarantor which,together with all other outstanding unsatisfied judgments against the Borrower(or such Guarantor), shall exceed the sum of $10,000 and shall remainunvacated, unbonded or unstayed for a period of 30 days following the date ofentry thereof.

 

(f)                                    **Inability to Perform; Bankruptcy/Insolvency**.  (i) The Borrower or any Guarantor shalldie or cease to exist; or (ii) any Guarantor shall attempt to revoke anyguaranty of the Obligations described herein, or any guaranty becomesunenforceable in whole or in part for any reason; or (iii) any bankruptcy,insolvency or receivership proceedings, or an assignment for the benefit ofcreditors, shall be commenced under any Federal or state law by or against theBorrower or any Guarantor; or (iv) the Borrower or any Guarantor shallbecome the subject of any out-of-court settlement with its creditors; or (v) theBorrower or any Guarantor is unable or admits in writing its inability to payits debts as they mature; or (vi) if the Borrower is a limited 

 

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liability company, any member thereof shall withdraw or otherwisebecome disassociated from the Borrower.

 

(g)                                 **Adverse Change; Insecurity**. (i) There is a material adverse change in the business, properties,financial condition or affairs of the Borrower or any Guarantor, or in anycollateral securing the Obligations; or (ii) the Bank in good faith deemsitself insecure.

 

## 4.2.                              **Termination of Loans; Additional Bank Rights**.  Upon the Maturity Date or the occurrence ofany of the events identified in Section 4.1, the Bank may at any time(notwithstanding any notice requirements or grace/cure periods under this orother agreements between the Borrower and the Bank) (i) immediatelyterminate its obligation, if any, to make additional loans to the Borrower; (ii) Setoff;and/or (iii) take such other steps to protect or preserve the Bank’sinterest in any collateral, including without limitation, notifying accountdebtors to make payments directly to the Bank, advancing funds to protect anycollateral and insuring collateral at the Borrower’s expense; all withoutdemand or notice of any kind, all of which are hereby waived.

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## 4.3.                              **Acceleration of Obligations**.  Upon the Maturity Date or the occurrence ofany of the events identified in Sections 4.1(a) through 4.1(e) and4.1(g), and the passage of any applicable cure periods, the Bank may at anytime thereafter, by written notice to the Borrower, declare the unpaidprincipal balance of any Obligations, together with the interest accruedthereon and other amounts accrued hereunder and under the other Loan Documents,to be immediately due and payable; and the unpaid balance will thereupon be duesort payable, all without presentation, demand, protest or further notice ofany kind, all of which are hereby waived, and notwithstanding anything to thecontrary contained herein or in any of the other Loan Documents.  Upon the occurrence of any event under Section 4.1(f),the unpaid principal balance of any Obligations, together with all interestaccrued thereon and other amounts accrued hereunder and under the other LoanDocuments, will thereupon be immediately due and payable, all withoutpresentation, demand, protest or notice of any kind, all of which are herebywaived, and notwithstanding anything to the contrary contained herein or in anyof the other Loan Documents.  Nothingcontained in Section 4.1, Section 4.2 or this section will limit theBank’s right to Setoff as provided in Section 3.3 or otherwise in thisAgreement.

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## 4.4.                              **Other Remedies**. Nothing in this Article IV is intended to restrict the Bank’srights under any of the Loan Documents or at law, and the Bank may exercise allsuch rights and remedies as and when they are available.

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# **ARTICLEV.  OTHER TERMS**

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## 5.1.                              **Additional Terms; Addendum/Supplements**.  The warranties, covenants, conditions andother terms described in this Section and/or in the Addendum and/or otherattached document(s) referenced in this Section are incorporated intothis Agreement:

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# **ARTICLEVI.  MISCELLANEOUS**

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## 6.1.                              **Delay; Cumulative Remedies**.  No delay on the part of the Bank in exercisingany right, power or privilege hereunder or under any of the other LoanDocuments will operate as a waiver thereof, nor will any single or partialexercise of any right, power or privilege hereunder preclude other or furtherexercise thereof or the exercise of any other right, power or 

 

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privilege.  The rights andremedies herein specified are cumulative and are not exclusive of any rights orremedies which the Bank would otherwise have.

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## 6.2.                              **Relationship to Other Documents**.  The warranties, covenants and otherobligations of the Borrower (and the rights and remedies of the Bank) that areoutlined in this Agreement and the other Loan Documents are intended tosupplement each other.  In the event ofany inconsistencies in any of the terms in the Loan Documents, all terms willbe cumulative so as to give the Bank the most favorable rights set forth in theconflicting documents, except that if there is a direct conflict between anypreprinted terms and specifically negotiated terms (whether included in anaddendum or otherwise), the specifically negotiated terms will control.

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## 6.3.                              **Successors**.  Therights, options, powers and remedies granted in this Agreement and the otherLoan Documents shall be binding upon the Borrower and the Bank and theirrespective successors and assigns, and shall inure to the benefit of theBorrower and the Bank and the successors and assigns of the Bank, includingwithout limitation any purchaser of any or all of the rights and obligations ofthe Bank under the Note and the other Loan Documents.  The Borrower may not assign its rights orobligations under this Agreement or any other Loan Documents without the priorwritten consent of the Bank.

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## 6.4.                              **Disclosure**.  The Bankmay, in connection with any sate or potential sale of all or any interest inthe Note and other Loan Documents, disclose any financial information the Bankmay have concerning the Borrower to any purchaser or potential purchaser.  From time to time, the Bank may, in itsdiscretion and without obligation to the Borrower, any Guarantor or any otherthird party, disclose information about the Borrower and this loan to anyGuarantor, surety or other accommodation party. This provision does not obligate the Bank to supply any information orrelease the Borrower from its obligation to provide such information, and theBorrower agrees to keep all Guarantors, sureties or other accommodation partiesadvised of its financial condition and other matters which may be relevant totheir obligations to the Bank.

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## 6.5.                              **Indemnification**.  Except for harm arising from the Bank’swillful misconduct, the Borrower hereby indemnifies and agrees to defend andhold the Bank harmless from any and all losses, costs, damages, claims andexpenses of any kind suffered by or asserted against the Bank relating toclaims by third parties arising out of the financing provided under the LoanDocuments or related to any collateral (including, without limitation, theBorrower’s failure to perform its obligations relating to Environmental Mattersdescribed in Section 2.5 above). This indemnification and hold harmless provision will survive thetermination of the Loan Documents and the satisfaction of the Obligations duethe Bank.

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## 6.6.                              **Notice of Claims Against Bank; Limitation of Certain Damages**.  In order to allow the Bank to mitigate anydamages to the Borrower from the Bank’s alleged breach of its duties under theLoan Documents or any other duty, if any, to the Borrower, the Borrower agreesto give the Bank immediate written notice of any claim or defense it hasagainst the Bank, whether in tort or contract, relating to any action orinaction by the Bank under the Loan Documents, or the transactions relatedthereto, or of any defense to payment of the Obligations for any reason.  The requirement of providing timely notice tothe Bank represents the parties’ agreed-to standard of performance regardingclaims against the Bank.  Notwithstandingany claim that the Borrower may have against the Bank, and regardless of anynotice the Borrower may have given the Bank, the Bank will not be liable to theBorrower for consequential and/or 

 

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special damages arising therefrom, except those damages arising fromthe Bank’s willful misconduct.

 

## 6.7.                              **Notices**.  Notice ofany record shall be deemed delivered when the record has been (a) depositedin the United States Mail, postage pre-paid, (b) received by overnightdelivery service, (c) received by telex, (d) received by telecopy, (e) receivedthrough the Internet, or (f) when personally delivered.

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## 6.8.                              **Payments**.  Paymentsdue under the Note and other Loan Documents will be made in lawful money of theUnited States.  All payments may beapplied by the Bank to principal, interest and other amounts due under the LoanDocuments in any order which the Bank elects.

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## 6.9.                              **Applicable Law and Jurisdiction; Interpretation; Joint Liability;Severability**.  This Agreementand all other Loan Documents will be governed by and interpreted in accordancewith the internal Jaws of the State of Nevada, except to the extent supersededby Federal law.  THE BORROWER HEREBYCONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT SITUATEDIN THE COUNTY OR FEDERAL JURISDICTION OF THE BANKS BRANCH WHERE THE LOAN WAS ORIGINATED,AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, WITH REGARD TO ANYACTIONS, CLAIMS, DISPUTES OR PROCEEDINGS RELATING TO THIS AGREEMENT, THE NOTE,THE COLLATERAL, ANY OTHER LOAN DOCUMENT, OR ANY TRANSACTIONS ARISING THEREFROM,OR ENFORCEMENT AND/OR INTERPRETATION OF ANY OF THE FOREGOING.  Nothing herein will affect the Bank’s rightsto serve process in any manner permitted by law, or limit the Bank’s right tobring proceedings against the Borrower in the competent courts of any otherjurisdiction or jurisdictions.  ThisAgreement, the other Loan Documents and any amendments hereto (regardless ofwhen executed) will be deemed effective and accepted only upon the Bank’sreceipt of the executed originals thereof. If there is more than one Borrower, the liability of the Borrowers willbe joint and several, and the reference to Borrower will be deemed to refer toall Borrowers.  Invalidity of anyprovision of this Agreement shall not affect the validity of any otherprovision.

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## 6.10.                        **Copies; Entire Agreement; Modification**.  The Borrower hereby acknowledges the receiptof a copy of this Agreement and all other Loan Documents.  This Agreement is a “transferable record” asdefined in applicable law relating to electronic transactions.  Therefore, the holder of this Agreement may,on behalf of Borrower, create a microfilm or optical disk or other electronicimage of this Agreement that is an authoritative copy as defined in suchlaw.  The holder of this Agreement maystore the authoritative copy of such Agreement in its electronic form and thendestroy the paper original as part of the holder’s normal businesspractices.  The holder, on its ownbehalf, may control and transfer such authoritative copy as permitted by suchlaw.

##  

IMPORTANT READ BEFORE SIGNING.  THE TERMS OF THIS AGREEMENT SHOULD BE READCAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING, EXPRESSING CONSIDERATION ANDSIGNED BY THE PARTIES ARE ENFORCEABLE. NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BELEGALLY ENFORCED.  THE TERMS OF THISAGREEMENT 

 

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MAY ONLY BE CHANGED BY ANOTHER WRITTEN AGREEMENT.  THIS NOTICE SHALL ALSO BE EFFECTIVE WITHRESPECT TO ALL OTHER CREDIT AGREEMENTS NOW IN EFFECT BETWEEN BORROWER AND THEBANK.  A MODIFICATION OF ANY OTHER CREDITAGREEMENTS NOW IN EFFECT BETWEEN BORROWER AND THE BANK, WHICH OCCURS AFTERRECEIPT BY BORROWER OF THIS NOTICE, MAY BE MADE ONLY BY ANOTHER WRITTENINSTRUMENT.  ORAL OR IMPLIEDMODIFICATIONS TO SUCH CREDIT AGREEMENTS ARE NOT ENFORCEABLE AND SHOULD NOT BERELIED UPON.

 

## 6.11.                        **Waiver of Jury Trial**.  TO THE EXTENT PERMITTED BY LAW, THE BORROWERAND THE BANK HEREBY JOINTLY AND SEVERALLY WAIVE ANY AND ALL RIGHT TO TRIAL BYJURY IN ANY ACTION OR PROCEEDING RELATING TO ANY OF THE LOAN DOCUMENTS, THEOBLIGATIONS THEREUNDER, ANY COLLATERAL SECURING THE OBLIGATIONS, OR ANYTRANSACTION ARISING THEREFROM OR CONNECTED THERETO.  THE BORROWER AND THE BANK EACH REPRESENTS TOTHE OTHER THAT THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY GIVEN.

##  

## 6.12.                        **Attachments**.  Alldocuments attached hereto, including any appendices, schedules, riders, andexhibits to this Agreement, are hereby expressly incorporated by reference.

##  

IN WITNESS WHEREOF, the undersigned have executed thisREVOLVING CREDIT AGREEMENT as of April 17, 2008.

 
| (Individual Borrower) |   | American  Wagering, Inc.  a Nevada Corporation |
|-----------------------|--------|-----------------------------------------------------|
|                  |   |                                                |
|                  |   |                                                |
| Borrower Name         | n/a    |                                                | By: |   /s/ Victor  J. Salerno |
|                  |   | Name:                                               | Victor J. Salerno |
|                  |   | Title:                                              | President |
|                  |   |                                                |
|                  |   | U.S. Bank N.A.                                      |
|                  |   |                                                |
|                  |   | By:                                                 |   /s/ Karal  A.Presley |
| Borrower Name         | n/a    |                                                | Name: | Karal A.Presley |
|                  |   |                                                | Title: | Vice President |
|                       |        |                                                     |  |  |  |

 

Borrower Address:  675 Grier Drive, Las Vegas, NV 89119

Borrower Telephone No.:

 

11

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|   | For Bank Use Only                                                     | Reviewed by |
|--------|-----------------------------------------------------------------------|-------------|
|   | Due December 31,  2008  Customer # 1842832664   Loan # |

 

**REVOLVING CREDIT NOTE**

 
| $500,000.00 | April 17,  2008 |
|-------------|----------------------|

 

FOR VALUE RECEIVED, the undersigned borrower (the “Borrower”),promises to pay to the order of U.S. BANK N.A. (the “Bank”), the principal sumof FIVE HUNDRED THOUSAND AND NO/100 Dollars ($500,000.00), payable December 31,2008 (the “Maturity Date”).

 

**Interest**.  The unpaid principal balance will bearInterest at an annual rate equal to the prime rate announced by the Bank.  The interest rate hereunder will be adjustedeach time that the prime rate changes.

 

**Payment Schedule**.  Interest is payable beginning May 1,2008, and on the same date of each consecutive month thereafter (except that ifa given month does not have such a date, the last day of such month), plus afinal interest payment with the final payment of principal.

 

Interest will be computed for the actual number ofdays principal is unpaid, using a daily factor obtained by dividing the statedinterest rate by 360.

 

Notwithstanding any provision of this Note to thecontrary, upon any default or at any time during the continuation thereof(including failure to pay upon maturity), the Bank may, at its option andsubject to applicable law, increase the interest rate on this Note to a rate of5% per annum plus the interest rate otherwise payable hereunder.  Notwithstanding the foregoing and subject toapplicable law, upon the occurrence of a default by the Borrower or anyguarantor involving bankruptcy, insolvency, receivership proceedings or anassignment for the benefit of creditors, the Interest rate on this Note shallautomatically increase to a rate of 5% per annum plus the rate otherwisepayable hereunder.

 

In no event will the interest rate hereunder exceedthat permitted by applicable law.  If anyinterest or other charge is finally determined by a court of competentjurisdiction to exceed the maximum amount permitted by law, the interest orcharge shall be reduced to the maximum permitted by law, and the Bank maycredit any excess amount previously collected against the balance due or refundthe amount to the Borrower.

 

Subject to applicable law, if any payment is not madeon or before its duo date, the Bank may collect a delinquency charge of 5.00%of the unpaid amount.  Collection of thelate payment fee shall not be deemed to be a waiver of the Bank’s right todeclare a default hereunder.

 

Without affecting the liability of any Borrower,endorser, surety or guarantor, the Bank may, without notice, renew or extendthe time for payment, accept partial payments, release or 

 

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impair any collateral security for the payment of this Note, or agreenot to sue any party liable on it.

 

This Revolving Credit Note constitutes the Note issuedunder a Revolving Credit Agreement dated as of the date hereof between theBorrower and the Bank, to which Agreement reference is hereby made for astatement of the terms and conditions under which loans evidenced hereby wereor may be made and a description of the terms and conditions upon which thematurity of this Note may be accelerated, and for a description of thecollateral securing this Note.

 

This Note is a “transferable record” as defined inapplicable law relating to electronic transactions.  Therefore, the holder of this Note may, onbehalf of Borrower, create a microfilm or optical disk or other electronic imageof this Note that is an authoritative copy as defined in such law.  The holder of this Note may store theauthoritative copy of such Note in its electronic form and then destroy thepaper original as part of the holder’s normal business practices.  The holder, on its own behalf, may controland transfer such authoritative copy as permitted by such law.

 

All documents attached hereto, including anyappendices, schedules, riders, and exhibits to this Revolving Credit Note, arehereby expressly incorporated by reference.

 

The Borrower hereby acknowledges the receipt of a copyof this Note.

 
| (Individual Borrower) |            | American  Wagering, Inc.  a Nevada Corporation |
|-----------------------|-----------------|-----------------------------------------------------|
|                  |            |                                                |   |
|                  |            |                                                |
| Borrower Name         |   n/a |                                                | By: |   /s/ Victor  J. Salerno |
|                  |            |                                                | Name and Title: | Victor J. Salerno,  President |
|                  |            |                                                |   |   |
|                  |            | By:                                                 |   |
| Borrower Name         |   n/a |                                                | Name and Title: |   |
|                       |                 |                                                     |  |  |  |

 

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**ADDENDUM TO REVOLVINGCREDIT AGREEMENT AND NOTE**

** **

This Addendum is made part of the Revolving CreditAgreement and Note (the “Agreement”) made and entered into by and between theundersigned borrower (the “Borrower”) and the undersigned bank (the “Bank”) asof the date identified below.  Thewarranties, covenants and other terms described below are hereby added to theAgreement.

 

**Financial Information and Reporting**.  This provision replaces in its entirety theprovision of the Agreement titled “Financial Information and Reporting”.  Financial terms used herein which are notspecifically defined herein shall have the meanings ascribed to them undergenerally accepted accounting principles. For any Borrower who does not have a separate fiscal year end for taxreporting purposes, the fiscal year will be deemed to be the calendaryear.  The financial statements and otherinformation previously provided to Bank or provided to Bank in the future areor will be complete and accurate and prepared in accordance with generallyaccepted accounting principles.  Therehas been no material adverse change in Borrower’s financial condition sincesuch information was provided to Bank.  Borrower will (i) maintain accounting recordsin accordance with generally recognized and accepted principles of accounting consistentlyapplied throughout the accounting periods involved; (ii) provide Bank withsuch information concerning its business affairs and financial condition(including insurance coverage) as Bank may request; and (iii) withoutrequest, provide to Bank the following financial information, in form andcontent acceptable to Bank, pertaining to Borrower:

 

**Annual Financial Statements**:  Not later than 180 days after the end of eachfiscal year, annual financial statements, audited by a certified publicaccounting firm acceptable to Bank.

 

**Interim Financial Statements**:  Not later than 120 days after the end of eachfiscal quarter, interim financial statements, prepared by Borrower.

 

Dated as of April 17,2008

 
| (Individual)  |            | (Non-Individual)                                   |
|---------------|-----------------|----------------------------------------------------|
|          |            |                                               |
|          |            | American Wagering, Inc.  a Nevada Corporation |
|          |            |                                               |   |
|          |            |                                               |
| Borrower Name |   n/a |                                               | By: |   /s/ Victor  J. Salerno |
|          |            |                                               | Name and Title: | Victor J. Salerno,  President |
|          |            |                                               |   |
|          |            |                                               |
| Borrower Name |   n/a |                                               |   |
|               |                 |                                                    |  |  |  |

 

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|   | Agreed to:      |
|--------|-----------------|
|   |            |
|   | U.S. BANK N.A.  |
|   |            |
|   |            |
|   | By:             |  /s/ Karal A. Presley |
|   | Name and Title: | Karal A. Presley, Vice  President |
|        |                 |  |  |

 

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