Document:

Exhibit 10.20

 

THE SECURITIES
REPRESENTED BY THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”) OR THE LAWS OF ANY STATE. THIS NOTE AND
THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF MAY BE PLEDGED, HYPOTHECATED,
SOLD, TRANSFERRED OR OTHERWISE DISPOSED ONLY IF REGISTERED AND QUALIFIED
PURSUANT TO THE RELEVANT PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF
THE COMPANY IS PROVIDED AN OPINION OF COUNSEL, WHICH OPINION IS SATISFACTORY IN
FORM AND SUBSTANCE TO THE COMPANY, TO THE EFFECT THAT SUCH REGISTRATION AND
QUALIFICATION IS NOT REQUIRED.

 

SECURED CONVERTIBLE
PROMISSORY NOTE

 

	
  $[100,000]

  	
   

  	
  12/29, 2004

  

 

For value received, RevCare, Inc., a Nevada corporation (the “Company”), the principal offices of which are located at 5400 Orange
Avenue, Suite 200, Cypress, California 90630, for value received hereby
promises to pay to FBR Financial Services Partners, L.P. (the “Holder”), the principal sum of One Hundred Thousand Dollars ($100,000),
plus interest thereon from the date hereof until paid on the terms and
conditions set forth herein; provided, however, that in the event
this Note is converted into Stock (as defined below) as provided herein, any
obligation of the Company with respect to payment of such amount shall be
terminated as provided in this Note. Payment for all amounts due hereunder
shall be made by mail or by wire to the address of the Holder.

 

The following is a statement of the rights of the Holder and the
conditions to which this Note is subject, and to which the Holder hereof, by
the acceptance of this Note, agrees:

 

1.               Maturity
Date. The unpaid principal
balance of this Note and all accrued but unpaid interest shall be due and
payable on the earlier of (i) [November 1,
2005] or (ii) when declared due
and payable by the Holder upon the occurrence of an Event of Default (as
defined below) (the occurrence of any event under either subclause (i) or (ii)
shall constitute the “Maturity Date”), unless
this Note is earlier converted or paid in accordance with the terms hereof.

 

2.               Interest. This Note shall bear interest at the rate of
the prime rate of interest plus four percent (4%) per annum, compounded
quarterly. Interest will compound on the first day of the quarter subsequent to
the quarter earned. The outstanding amount of the loan including interest will
be calculated using the following formula:

 

C0*(1+R/M)^N

 

Where:

 

C0
= the principal sum of Fifty Thousand Dollars ($100,000),

 

R
= the prime rate of interest plus four percent (4%) per annum,

 

M
= the number of compounding periods per year,

 

N
= the number of compounding periods since the inception of the note.

 

 

The
interest shall be paid on the Maturity Date. Prime shall be defined as the base
rate on corporate loans posted by at least 75% of the nation’s 30 largest banks
as posted daily in the Wall Street Journal.

 

3.               Security
Interest. Payment of this
Note is secured by a security interest in certain collateral, pursuant to the
terms and conditions of that certain Amended and Restated Security Agreement
entered into among the Company, the Holder and the other lenders named therein
concurrently with the execution of this Note (the “Security Agreement”).

 

4.               Events
of Default. If any of the
following events specified in this Section 4 shall occur (herein
individually referred to as an “Event of Default”), the Holder may,
so long as such condition exists, declare the entire outstanding principal and
any accrued and unpaid interest thereon due and payable within 30 days, by
notice in writing to the Company:

 

(a)          The
institution by the Company of proceedings to be adjudicated as bankrupt or
insolvent, or the consent by it to the institution of bankruptcy or insolvency
proceedings against it or the filing by it of a petition or answer or consent seeking
reorganization or release under the federal Bankruptcy Act, or any other
similar federal or state bankruptcy or insolvency law, or the consent by it to the
filing of any such petition or the appointment of a receiver, liquidator,
assignee, trustee or other similar official of the Company, or of any
substantial part of its property, or the making by it of an assignment for the
benefit of creditors, or the taking of corporate action by the Company in
furtherance of any such action; or

 

(b)         If,
within thirty (30) days after the commencement of an action against the Company
(and service of process in connection therewith on the Company) seeking any
bankruptcy, insolvency, reorganization, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, such action
shall not have been resolved in favor of the Company or all orders or proceedings
thereunder affecting the operations or the business of the Company stayed, or
if the stay of any such order or proceeding shall thereafter be set aside, or
if, within thirty (30) days after the appointment without the consent or
acquiescence of the Company of any trustee, receiver or liquidator of the
Company or of all or any substantial part of the properties of the Company,
such appointment shall not have been vacated; or

 

(c)          If
the Company fails to pay (i) any interest or principal when due and payable
hereunder, or (ii) any obligations other than interest and principal payable
hereunder within five (5) days of the date written notice of demand for payment
is received; or

 

(d)         Upon
the occurrence of an event of default under the Security Agreement, should such
default not be cured within five (5) days of the date written notice thereof is
given to the Company;

 

(e)          Upon
the occurrence of an event of default as defined in any material agreement or
instrument to which the Company or its subsidiaries is bound, beyond any period
of grace;

 

(f)            Upon
the incurrence of any indebtedness by the Company or any of its subsidiaries
other than (i) to pay off indebtedness owed by the Company its then existing
lenders, NA or (ii) indebtedness not to exceed $5,000,000 in any single
transaction or series of related transactions; or

 

(g)         any
sale, merger or similar transaction or series of related transactions in which
the holders of the outstanding voting equity securities of the Company
immediately prior to such

 

2

 

transaction
or series of related transactions own less than a majority of the outstanding
voting equity securities of the Company (or the successor entity) upon the
closing of such transaction or series of related transactions, or

 

(h)         the
sale of all or substantially all of the Company’s assets.

 

5.               Prepayment. Subject to the earlier conversion of this
Note pursuant to Section 6, all or any portion of the unpaid principal
balance outstanding under this Note may be prepaid at any time during the term
of this Note at the option of the Company. In the event Company elects to
prepay this Note, notice of such election shall be given to the Holder not less
than sixty (60) days prior to the date of prepayment. Each such notice shall
state the amount of principal to be paid in cash, the date on which such
prepayment will occur and the place at which Holder is to surrender this Note
to the Company. Such notice by the Company shall be delivered to the Holder at
the address last shown on the records of the Company for the Holder or given by
the Holder to the Company for the purpose of notice. In the event only a
portion of this Note is prepaid, the Company shall, at the time of prepayment
and receipt of this Note, deliver to the Holder a new Note evidencing the
remaining unpaid principal balance of this Note, which Note shall in all other
respects be identical with this Note.

 

6.               Optional
Conversion. All or any
portion of the unpaid principal balance and any accrued but unpaid interest
outstanding under this Note may be converted (the “Optional Conversion”) at any
time at the option of the Holder into fully paid and nonassessable shares of
capital common stock of the Company (the “Stock”). The
number of shares of Stock into which this Note is to be converted shall be determined
by dividing said unpaid principal balance and all accrued but unpaid interest by
the Conversion Price. The Conversion Price shall be calculated at the time of
the Optional Conversion based on a company valuation of 90% of 12 times the
average prior 12 months monthly revenue prior to the Optional Conversion, the
result will then be divided by the number of then outstanding shares on a fully
converted basis.

 

7.               Conversion
Procedure.

 

7.1         Notice
of Conversion. If the Holder
desires to convert the Note, this Holder shall provide written notice to the
Company at RevCare, Inc., 5400 Orange Avenue, Suite 200, Cypress, California
90630, Attention: Manuel Occiano, Chief Executive Officer, notifying the
Company of the requested conversion to be effected. Within ten (10) days of
receipt of such notice, the Company shall respond to the Holder’s request in
writing, specifying the number of shares of Stock to be issued upon conversion,
the date on which such conversion will occur and calling upon the Holder to
surrender to the Company, in the manner and at the place designated, this Note.
Such response by the Company shall be delivered to the Holder at the address
last shown on the records of the Company for the Holder or given by the Holder
to the Company for the purpose of notice.

 

7.2         Mechanics
and Effect of Conversion. No
fractional shares of Stock shall be issued upon conversion of this Note. In
lieu of the Company issuing any fractional shares to the Holder upon the conversion
of this Note, the Company shall pay to the Holder the amount of outstanding
principal or interest that is not so converted. Upon the conversion of this
Note, the Holder shall surrender this Note, duly endorsed, at the principal
office of the Company. Upon conversion of this Note, the Company shall be
forever released from all its obligations and liabilities under this Note.

 

7.3         Delivery
of Stock Certificates. As
promptly as practicable after the conversion of this Note, the Company at its
expense will issue and deliver to the Holder a certificate or certificates for the
number of full shares of Stock issuable upon such conversion (bearing such
legends as are required by applicable state and federal securities laws in the
opinion of counsel to the Company), together with any

 

3

 

other
securities and property to which the Holder is entitled upon such conversion
under the terms of this Note, including a check payable to the Holder for any
fractional shares as described above. In the event only a portion of this Note
is converted, the Company shall, at the time of delivery of the stock
certificate or certificates, deliver to the Holder a new Note evidencing the
remaining unpaid principal balance of this Note, which Note shall in all other
respects be identical with this Note.

 

7.4         Identical
Terms.  Subject to the Holder’s execution of any
necessary investment documents executed by the other investors in the
Financing, any shares of Stock received by the Holder pursuant to the
conversion of this Note shall have the same rights, preferences and privileges
granted to the other investors in the Financing and under such investment
documents.

 

8.               Investment
Representations.   The Holder hereby makes the representations,
warranties and covenants set forth on the Representation Statement attached
hereto as Attachment A, as of the date hereof and as of the date of any
conversion of this Note, as though such representations, warranties and covenants
were fully set forth herein.

 

9.               Assignment.  
Subject to the restrictions on transfer described in Section 11
below, the rights and obligations of the Company and the Holder shall be
binding upon and benefit the successors, assigns, heirs, administrators and
transferees of the parties.

 

10.         Amendments;
Waivers. Any term of this
Note may be amended or waived with the written consent of the Company and the
Holder. Any amendment or waiver effected in accordance with this Section 10
shall be binding upon the Holder, each future Holder and the Company. No
waivers of, or exceptions to, any term, condition or provision of this Note, in
any one or more instances, shall be deemed to be, or construed as, a further or
continuing waiver of any such term, condition or provision and shall not be
valid unless in writing.

 

11.         Transfers.  This
Note may not be transferred or assigned in whole or in part without compliance
with all applicable federal and state securities laws by the transferor and the
transferee (including the delivery of investment representation letters).
Subject to compliance with such applicable federal and state securities laws,
title to this Note may be transferred by endorsement and delivery in the same
manner as a negotiable instrument transferable by endorsement and delivery.

 

12.         Attorneys’
Fees; Waivers.   The Company agrees to pay the Holder’s
reasonable costs incurred in collecting and enforcing this Note, including
reasonable attorneys’ fees. The Company hereby waives demand, notice,
presentment, protest and notice of dishonor.

 

13.         Governing
Law. This Agreement shall be
governed by and construed under the laws of the State of California (irrespective
of its conflict of laws principles).

 

14.         Subordination. This Note and the rights of the Holder
hereunder and under the Security Agreement are subordinate to the rights of
Bridge Bank, N.A. pursuant to the terms of a Subordination Agreement (the “Subordination Agreement”). Nothing contained in this Note
shall directly or indirectly modify the provisions of the Subordination
Agreement in any manner which might terminate or impair the subordination of
the Subordinated Debt (as defined in the Subordination Agreement) or the subordination
of the security interest or lien that the Holder may have in any property of
Maker or its subsidiaries.

 

15.         Intercreditor
Agreement.  This Agreement and the rights of Holder
hereunder are subject to the terms of an Amended and Restated Intercreditor
Agreement of August 29, 2003, as such agreement may be amended from time
to time (the Intercreditor Agreement”). Nothing contained in this Note

 

4

 

shall
directly or indirectly modify the provisions of the Intercreditor Agreement in
any manner which might terminate or impair the parties’ rights under such
agreement and in the event of any conflict between this Note and the
Intercreditor Agreement, the Intercreditor Agreement shall control.

 

16.         Miscellaneous.
 Holder will receive copies of all Forms 10-K,
10-Q and 8-K (or equivalents) within 5 days of filing with the Securities and
Exchange Commission, while any debt to lender is outstanding.

 

17.         Use
of Proceeds.  The proceeds of this Note shall be used for
working capital.

 

IN WITNESS WHEREOF, the Company has caused this Secured Promissory Note
to be issued in Cypress, CA as of the date set forth above.

 

	
   

  	
  REVCARE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Manuel Occiano

  	
   

  
	
   

  	
  Name:

  	
    MANUEL OCCIANO

  	
   

  
	
   

  	
  Title:

  	
    PRESIDENT/CEO

  	
   

  
						

 

 

	
  Acknowledged:

  
	
   

  
	
   

  
	
  HOLDER:

  
	
   

  
	
   

  
	
   

  	
   

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
						

 

DO NOT DESTROY THIS ORIGINAL NOTE: When paid, said original
Note must be surrendered to the Company for cancellation and retention.

 

5

 

ATTACHMENT A

 

REPRESENTATION STATEMENT

 

The
undersigned Holder represents, covenants and agrees as follows:

 

1.               Purchase
for Own Account.  The Secured Convertible Promissory Note issued
by Revcare, Inc., a Delaware corporation (the “Company”) to be acquired by Holder (the “Note”) and the shares of capital stock of the Company
issued upon conversion of the Note (the “Shares”) (collectively, the “Securities”) will be acquired for investment for Holder’s own account, not as
a nominee or agent, and not with a view to the public resale or distribution
thereof within the meaning of the Securities Act of 1933, as amended, (the “1933 Act”), and
Holder has no present intention of selling, granting any participation in, or
otherwise distributing the same. Holder also represents that Holder has not
been formed for the specific purpose of acquiring the Securities.

 

2.               Disclosure
of Information.  Holder believes it has received or has had
full access to all the information it considers necessary or appropriate to
make an informed investment decision with respect to the Securities to be
received by Holder under the Note. Holder further has had an opportunity to ask
questions and receive answers from the Company regarding the terms and conditions
of the investment in the Securities and to obtain additional information (to
the extent the Company possessed such information or could acquire it without
unreasonable effort or expense) necessary to verify any information furnished to
Holder or to which Holder had access.

 

3.               Investment
Experience. Holder
understands that the investment in the Securities involves substantial risk.
Holder has experience as an investor in securities and acknowledges that Holder
is able to fend for itself, can bear the economic risk of Holder’s investment
in the Securities and has such knowledge and experience in financial or
business matters that Holder is capable of evaluating the merits and risks of
this investment in the Securities and protecting its own interests in connection
with this investment.

 

4.               Accredited
Investor Status. Holder is
an “accredited investor” within the meaning of Regulation D promulgated under
the 1933 Act.

 

5.               Restricted
Securities. Holder
understands that the Securities will be characterized as “restricted securities”
under the 1933 Act inasmuch as they are being acquired from the Company in a transaction
not involving a public offering and that, under the 1933 Act and applicable
regulations thereunder, such securities may be resold without registration
under the 1933 Act only in certain limited circumstances. In this connection,
Holder represents that Holder is familiar with Rule 144 promulgated by the
Securities and Exchange Commission, as presently in effect, and understands the
resale limitations imposed thereby and by the 1933 Act. Holder understands that
the Company is under no obligation to register any of the Securities.

 

6.               Legends. It is understood that the certificates
evidencing the Securities will bear the legends set forth below:

 

(a)          THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR AN EXEMPTION
THEREFROM. THE ISSUER OF

 

6

 

THESE
SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY
TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN
COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

 

(b)         Any
legend required by the laws of the State of California, including any legend
required by the California Department of Corporations and Sections 417 and 418
of the California Corporations Code or any other state securities laws.

 

The legend set forth in (a) above shall be removed by the Company from
any certificate evidencing the Securities upon delivery to the Company of an
opinion by counsel, reasonably satisfactory to the Company, that a registration
statement under the 1933 Act is at that time in effect with respect to the
legended security or that such security can be freely transferred in a public
sale without such a registration statement being in effect; provided,  however,
that no opinion of counsel shall be required for such a transfer in compliance
with Rule 144.

 

7.               “Market
Stand-Off Agreement. If
requested by the Company and an underwriter of shares of the common stock of
the Company, Holder hereby agrees not to sell or otherwise transfer or dispose
of any shares of the common stock (or other securities) of the Company then
owned by Holder (other than those included in the registration) during the one
hundred eighty (180) day period (or such shorter period as is permitted or
requested by the underwriter) following the effective date of a registration
statement of the Company filed under the 1933 Act. In order to enforce the
above covenant, the Company shall have the right to place restrictive legends
on the certificates representing the registrable securities subject to this Section 7
and to impose stop-transfer instructions with respect to the shares (or
securities) subject to the foregoing restriction.

 

 

	
   

  	
  HOLDER

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (Date)

  	
   

  	
  (Signature)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Print Name)

  	
   

  

 

7Exhibit 10.1

                           REVOLVING CREDIT AGREEMENT

                                 BY AND BETWEEN

                             FUN CITY POPCORN, INC.,
                                   as Borrower

                                       AND

                                 Gary J. McAdam,
                          MATHIS FAMILY PARTNERS, LTD.
                               and GARY A. AGRON,
                                    as Lender

                           Dated as of October 2, 2004

<PAGE>

                                TABLE OF CONTENTS

                                                                            Page

ARTICLE 1 - CERTAIN DEFINITIONS...............................................1

         Section 1.1     Certain Definitions..................................1
         Section 1.2     Construction.........................................3

ARTICLE 2 - LOANS, NOTES AND PREPAYMENTS......................................3

         Section 2.1     Loans................................................3
         Section 2.2     Notes................................................3
         Section 2.3     Procedure for Borrowing..............................3
         Section 2.4     Repayment of Loans...................................4
         Section 2.5     Optional Prepayments.................................4
         Section 2.6     Indemnity............................................4
         Section 2.7     Computations.........................................4
         Section 2.8     Repayment of the Loans...............................4

ARTICLE 3 - EVENTS OF DEFAULT.................................................4

         Section 3.1     Events of Default....................................4
         Section 3.2     Remedies.............................................5

ARTICLE 4 - MISCELLANEOUS.....................................................5

         Section 4.1     Amendments, etc......................................5
         Section 4.2     Notices, etc.........................................5
         Section 4.3     No Waiver; Remedies..................................5
         Section 4.4     Binding Effect.......................................5
         Section 4.5     Governing Law........................................6
         Section 4.6     Usury Laws...........................................6
         Section 4.7     Section Headings.....................................6
         Section 4.8     Execution............................................6

EXHIBITS

         Exhibit A - Form of Request for Borrowing
         Exhibit B - Form of Revolving Loan Note

<PAGE>

                           REVOLVING CREDIT AGREEMENT

     THIS REVOLVING CREDIT AGREEMENT is made as of October 2, 2004 by and
between FUN CITY POPCORN, INC., a Nevada corporation (the "Borrower"), and Gary
J. McAdam, MATHIS FAMILY PARTNERS, LTD. and GARY A. AGRON (collectively, the
"Lender").

                              EXPLANATORY STATEMENT

     A. The Borrower may need access to additional capital.

     B. The Borrower has requested, and the Lender has agreed to make, certain
loans, advances and other financial accommodations to the Borrower on the terms
and conditions set forth herein;

     NOW, THEREFORE, in consideration of the promises set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

                                    ARTICLE 1
                               CERTAIN DEFINITIONS

     Section 1.1 Certain Definitions. In addition to words and terms defined
elsewhere in this Agreement, the following words and terms shall have the
following meanings, respectively, unless the context clearly requires otherwise:

     "Agreement" shall mean this Revolving Credit Agreement, as the same may be
amended, restated, supplemented or otherwise modified from time to time
hereafter, including all Schedules and Exhibits hereto.

     "Authorized Officer" shall mean James Eller.

     "Borrower's Account" shall mean the Borrower's bank account as may be
designated by the Borrower from time to time by written notice to the Lender.

     "Business Day" shall mean any day other than a Saturday or Sunday or other
day upon which banks or the Lender are authorized or required to close in the
State of Colorado.

     "Dollar," "Dollars," "U.S. Dollars" and the symbol "$" shall mean the
lawful currency of the United States of America.

     "Event of Default" shall mean any of the Events of Default described in
Section 3.1.

     "Funding Date" shall mean the date on which a Loan is made hereunder.

     "Insolvency Event" shall mean, with respect to any Person, (i) such Person
generally shall not pay its debts as such debts become due, or shall admit in
writing its inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be instituted
by or against such Person seeking to adjudicate it a bankrupt or insolvent, or

                                       1

<PAGE>

seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any Law related to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee, or other
similar official for it or for any substantial part of its property provided;
however, any proceeding instituted against such Person shall not constitute an
Insolvency Event if such proceeding has been dismissed within 60 days of the
institution of such proceeding against such Person; or (ii) such Person shall
take any action to authorize any of the actions set forth in clause (i) herein.

     "Interest Rate" shall have the meaning provided in Section 2.4(b).

     "Law" shall mean any law (including common law), constitution, statute,
treaty, regulation, rule, ordinance, opinion, release, ruling, order,
injunction, writ, decree or award of any Governmental Authority.

     "Loan" shall have the meaning provided in Section 2.1

     "Loan Documents" shall mean this Agreement, the Revolving Loan Note and any
other instruments, certificates or documents delivered or contemplated to be
delivered hereunder or thereunder or in connection herewith or therewith, as the
same may be supplemented or amended from time to time hereafter in accordance
herewith or therewith, and "Loan Document" shall mean any of the Loan Documents.

     "Person" shall mean any individual, corporation, partnership, limited
liability company, joint-stock company, trust, unincorporated organization or
association, joint venture, government or political subdivision or agency
thereof, or any other entity.

     "Post-Default Rate" shall mean, in respect of any principal of any Loan or
any other amount under this Agreement, the Revolving Loan Note or any other Loan
Document that is not paid when due to the Lender (whether at stated maturity, by
acceleration, by optional or mandatory prepayment or otherwise), a rate per
annum during the period from and including the due date to but excluding the
date on which such amount is paid in full equal to the lesser of 15% or the
maximum amount permitted by applicable Law.

     "Request for Borrowing" has the meaning assigned to such term in Section
2.3(a).

     "Revolving Loan Note" means the promissory note of the Borrower, payable to
the order of the Lender, in substantially the form of Exhibit B hereto,
evidencing the aggregate indebtedness of the Borrower to the Lender resulting
from Loans made by the Lender.

     "Term of this Agreement" means from the date hereof and to the earlier of
either (i) a period of one year from the date of this Agreement or (ii) upon the
merger of the Borrower with, or the acquisition of the Borrower or a controlling
interest thereof by, any other entity unless this Agreement is sooner terminated
by the Lender.

     "Total Loan Amount" shall mean up to $100,000, as such amount may be
reduced from time to time in accordance with this Agreement.

                                       2

<PAGE>

     Section 1.2 Construction. Unless the context of this Agreement otherwise
clearly requires, references to the plural shall include the singular,
references to the singular shall include the plural, references to the part
shall include the whole and references to any masculine, feminine or neuter
pronoun shall include all other genders. References in this Agreement to
"determination" of or by the Lender shall be deemed to include good faith
estimates by the Lender (in the case of quantitative determinations) and good
faith beliefs by the Lender (in the case of qualitative determinations). The
words "hereof," "herein," "hereunder" and similar terms in this Agreement refer
to this Agreement as a whole and not to any particular provision of this
Agreement. Any references herein to Articles, Sections, Exhibits or Schedules
are references to Articles, Sections, Exhibits and Schedules of or to this
Agreement unless otherwise expressly specified. The Section and other headings
contained in this Agreement and the Table of Contents preceding this Agreement
are for reference purposes only and shall not control or affect the construction
of this Agreement or the interpretation thereof in any respect.

                                    ARTICLE 2
                          LOANS, NOTES AND PREPAYMENTS

     Section 2.1 Loans.

     (a) The Lender agrees, on the terms and conditions of this Agreement, to
make Loans (individually, a "Loan"; collectively, the "Loans") to the Borrower
in Dollars, on any Business Day during the Term of this Agreement in an
aggregate principal amount at any one time outstanding up to but not exceeding
the Total Loan Amount. All Loans made up to the Total Loan Amount will be
pursuant to the terms and conditions of this Agreement and the Revolving Loan
Note. Subject to the terms and conditions of this Agreement, during such period
the Borrower may borrow, repay and re-borrow hereunder.

     (b) In no event shall a Loan be made when any Event of Default has occurred
and is continuing or would exist after the making of such Loan on such Funding
Date.

     Section 2.2 Notes.

     (a) The Loans made by the Lender shall be collectively evidenced by the
Revolving Loan Note, dated the date hereof, payable to the Lender in a principal
amount equal to the amount of the Total Loan Amount then outstanding plus
accrued interest.

     (b) The date and amount of each Loan made by the Lender to the Borrower,
and each payment made on account of the principal thereof, shall be recorded by
the Lender on its books and, prior to any transfer of the Revolving Loan Note,
endorsed by the Lender on the schedule attached to the Revolving Loan Note or
any continuation thereof; provided that the failure of the Lender to make any
such recordation or endorsement shall not affect the obligations of the Borrower
to make a payment when due of any amount owing hereunder or under the Revolving
Loan Note in respect of the Loans.

     Section 2.3 Procedure for Borrowing.

     (a) The Borrower may request a borrowing hereunder, on any Business Day
during the Term of this Agreement by delivering to the Lender a written Request
for Borrowing, substantially in the form of Exhibit A hereto signed by an
Authorized Officer.

                                       3

<PAGE>

     (b) If the Lender agrees to fund the Request for Borrowing, the amount of
the requested borrowing shall be advanced in immediately available funds,
without deduction, set-off or counterclaim, to the Borrower's Account, not later
than ten days after receipt of the Request for Borrowing.

     Section 2.4 Repayment of Loans.

     (a) The total outstanding principal balance of each outstanding Loan shall
be immediately due and payable on demand by the Lender.

     (b) Each Loan shall bear interest at a rate per annum equal to six percent
(6%).

     (c) Notwithstanding the foregoing, the Borrower hereby promises to pay to
the Lender interest at the applicable Post-Default Rate on any principal of any
Loan and on any other amount payable by the Borrower hereunder or under the
Revolving Loan Note that shall not be paid in full when due (whether at stated
maturity, by acceleration or by mandatory prepayment or otherwise), for the
period from and including the due date thereof to but excluding the date the
same is paid in full (both before and after judgment). Any payment due and owing
at the Post-Default Rate shall be payable on demand by the Lender.

     Section 2.5 Optional Prepayments.

     (a) The Loans are pre-payable at any time without premium or penalty, in
whole or in part. Any amounts prepaid shall be applied first to the payment of
interest then to the payment of outstanding principal until paid in full.
Amounts prepaid may be re-borrowed in accordance with the terms of this
Agreement.

     Section 2.6 Indemnity. Upon demand by the Lender, the Borrower agrees to
indemnify the Lender and to hold the Lender harmless from any net loss or
expense (not to include any lost profit or opportunity) which the Lender may
sustain or incur as a consequence of default by the Borrower in making any
payments due under this Agreement.

     Section 2.7 Computations. Interest on the Loans shall be computed on the
basis of a 365-day year and the actual number of days elapsed in any Interest
Period.

     Section 2.8 Repayment of the Loans. All payments shall be applied first, to
the payment of interest, if any, which is due and payable with respect to the
Loans; second, to the payment of all fees, expenses and indemnities due and
payable hereunder; and then to the repayment of the aggregate unpaid principal
amount of the Loans which is due and payable.

                                    ARTICLE 3
                                EVENTS OF DEFAULT

     Section 3.1 Events of Default. Each of the following events shall
constitute an "Event of Default" hereunder:

     The Borrower shall be the subject of an Insolvency Event; or

     (a) The Borrower shall fail to perform or observe any material term,
covenant or agreement contained in this Agreement or any other agreement or
document executed in connection herewith or therewith on its part to be
performed or observed and any such failure shall remain unremedied for 20
Business Days, after written notice thereof shall have been given by the Lender
to the Borrower; or

                                       4

<PAGE>

     (b) There shall have been any material adverse change in the financial
condition or operations of the Borrower and such material adverse change remains
unremedied for 14 days thereafter; or

     (c) The Borrower shall fail to pay any principal of or interest on the
indebtedness evidenced by the Revolving Loan Note when the same becomes due and
payable.

     Section 3.2 Remedies.

     Upon the occurrence of one or more Events of Default in Section 3.1, the
Lender may immediately declare the principal amount of the Loans then
outstanding under the Revolving Loan Note to be immediately due and payable,
together with all interest thereon and fees and expenses accruing under this
Agreement.

                                    ARTICLE 4
                                  MISCELLANEOUS

     Section 4.1 Amendments, etc. No amendment or waiver of any provision of
this Agreement or the Revolving Loan Note, nor consent to any departure by the
Borrower therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Lender, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.

     Section 4.2 Notices, etc. All notices and other communications provided for
hereunder shall be in writing (including telegraphic, facsimile or cable
communication) and mailed, telegraphed, faxed, cabled or delivered, if to the
Borrower, at its address at 2560 W. Main Street, Suite 200, Littleton, Colorado
80120, Attention: James Eller, President, and if to the Lender, at their address
at 5445 DTC Parkway, Suite 520, Greenwood Village, Colorado 8011, Attention:
Gary A. Agron, or, as to each party, at such other address as shall be
designated by such party in a written notice to the other party. All such
notices and communications shall be effective, upon receipt, or in the case of
(i) notice by mail, upon return of the completed delivery receipt when sent via
United States certified mail, (ii) notice by overnight courier, one Business Day
after being deposited with a national overnight courier service, or (iii) notice
by facsimile, when faxed against receipt of answer back, except that notices and
communications to the Lender pursuant to Article 2 shall not be effective until
received by the Lender.

     Section 4.3 No Waiver; Remedies. No failure on the part of the Lender to
exercise, and no delay in exercising, any right hereunder or under the Revolving
Loan Note shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by Law.

     Section 4.4 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the Borrower and the Lender and their respective successors
and assigns.

                                       5

<PAGE>

     Section 4.5 Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Colorado.

     Section 4.6 Usury Laws. It is not intended hereby to charge interest at a
rate in excess of the maximum rate of interest permitted to be charged to
Borrower under applicable Law, but if, notwithstanding such intention, interest
in excess of the maximum rate shall be paid under this Agreement or the
Revolving Loan Note, the excess shall be applied to principal and the Interest
Rate on the Revolving Loan Note shall be adjusted to the maximum permitted under
applicable Law during the period or periods that the Interest Rate otherwise
provided herein would exceed such rate.

     Section 4.7 Section Headings. All section headings are inserted for
convenience of reference only and shall not affect any construction or
interpretation of this Agreement.

     Section 4.8 Execution. This Agreement may be executed, manually or by
facsimile signature, in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the
same agreement.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers hereunto duly authorized, as of the date
first above written.

Fun City Popcorn, Inc.,                     Gary J. McAdam, Mathis Family
a Nevada corporation, as Borrower           Partners, Ltd. and Gary A. Agron,
                                            as Lender

By:
   -------------------------------          -----------------------------------
        James Eller, President              Gary J. McAdam

                                            Mathis Family Partners, Ltd.

                                           By:
                                              ---------------------------------
                                                   Earnest Mathis,
                                                   General Partner

                                            -----------------------------------
                                            Gary A. Agron

                                       6

<PAGE>

                                    EXHIBIT A
                                       TO
                           REVOLVING CREDIT AGREEMENT

                          FORM OF REQUEST FOR BORROWING

Gary A. Agron, Gary J. McAdam and Mathis Family Partners, Ltd
5445 DTC Parkway, Suite 520
Greenwood Village, Colorado 80111
Attention: Gary A. Agron

Ladies and Gentlemen:

     The undersigned, FUN CITY POPCORN, INC. (the "Company"), refers to the
Revolving Credit Agreement dated as of October 2, 2004 (as amended, restated,
supplemented or otherwise modified from time to time, the "Loan Agreement"; the
terms defined therein being used herein) among the Company and Gary J. McAdam,
MATHIS FAMILY PARTNERS, LTD. and GARY A. AGRON (collectively, the "Lender"), and
hereby gives you notice pursuant to Section 2.3(b) of the Loan Agreement that
the Company requests a Loan under Section 2.1 of $_______________.

Dated:  ________________, _________

                                            FUN CITY POPCORN, INC.,
                                            a Nevada corporation

                                            By:
                                               --------------------------------

                                            Name:
                                                 ------------------------------

                                            Title:
                                                  -----------------------------

<PAGE>

                                    EXHIBIT B
                                       TO
                           REVOLVING CREDIT AGREEMENT

                           FORM OF REVOLVING LOAN NOTE

<PAGE>

                               REVOLVING LOAN NOTE

Greenwood Village, Colorado

$100,000                                                         October 2, 2004

     FOR VALUE RECEIVED, Fun City Popcorn, Inc., a Nevada corporation (the
"Borrower"), hereby promises to pay to the order of Gary J. McAdam, Mathis
Family Partners, Ltd. and Gary A. Agron (collectively, the "Lender"), at the
principal office of the Lender at 5445 DTC Parkway, Suite 520, Greenwood
Village, Colorado 80111, in lawful money of the United States, and in
immediately available funds, the principal sum of ONE HUNDRED thousaND AND
NO/100 DOLLARS ($100,000) (or such lesser amount as shall equal the aggregate
unpaid principal amount of the Loans made by the Lender to the Borrower under
the Revolving Credit Agreement by and between Borrower and Lender dated as of
October 2, 2004, as amended, supplemented or otherwise modified and in effect
from time to time, the "Agreement"), on the dates and in the principal amounts
provided in the Agreement, and to pay interest on the unpaid principal amount of
each such Loan, at such office, in like money and funds, for the period
commencing on the date of such Loan until such Loan shall be paid in full, at
the rates per annum and on the dates provided in the Agreement. Terms used but
not defined in this Note have the respective meanings assigned to them in the
Agreement.

     The date and amount of each Loan made by the Lender to the Borrower, and
each payment made on account of the principal thereof, shall be recorded by the
Lender on its books and, prior to any transfer of this Revolving Loan Note (this
"Note"), endorsed by the Lender on the Schedule attached hereto or any
continuation thereof; provided that the failure of the Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrower to
make a payment when due of any amount owing under the Agreement or hereunder in
respect of the Loans made by the Lender.

     The Borrower agrees to pay all of the Lender's costs of collection and
enforcement (including reasonable attorneys' fees and disbursements of Lender's
counsel) in respect of this Note when incurred, including, without limitation,
reasonable attorneys' fees through appellate proceedings.

     The Borrower waives diligence, presentment, protest and demand and also
notice of protest, demand, dishonor and non-payments of this Note and expressly
agrees that this Note, or any payment hereunder, may be extended from time to
time.

     It is not intended hereby to charge interest at a rate in excess of the
maximum rate of interest permitted to be charged to Borrower under applicable
law, but if, notwithstanding such intention, interest in excess of the maximum
rate shall be paid hereunder, the excess shall be applied to principal and the
interest rate on this Note shall be adjusted to the maximum permitted under
applicable law during the period or periods that the interest rate otherwise
provided herein would exceed such rate.

<PAGE>

     Any reference herein to the Lender shall be deemed to include and apply to
every subsequent holder of this Note. Reference is made to the Agreement for
provisions concerning optional prepayments, acceleration and other material
terms affecting this Note.

     This Note shall be governed by and construed in accordance with the laws of
the State of Colorado, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof. The Borrower agrees that
process may be served upon it in any manner authorized by the laws of the State
of Colorado for such person and waives and covenants not to assert or plead any
objection that it might otherwise have to such jurisdiction and such process.

                                            Fun City Popcorn, Inc.,
                                            a Nevada corporation

                                            By:
                                               --------------------------------
                                                    James Eller, President

<PAGE>

                                SCHEDULE OF LOANS

     This Note evidences Loans made under the within-described Agreement to the
Borrower, on the dates and in the principal amounts set forth below, and subject
to the payments and prepayments of principal set forth below:

                   Principal                          Unpaid
                     Amount         Amount Paid      Principal        Notation
  Date Made         of Loan         or Prepaid        Amount           Made By
  ---------         -------         ----------        ------           -------

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