Document:

Exhibit 10.3

 

	
  7961 Shaffer Parkway l Suite 5 l Littleton, CO USA 80127

  	
   

  	
  

  	
   

  	
  Telephone: (720) 981-1185 l Facsimile: (720) 981-1186

  

 

August 20, 2006

Carl Pescio

Janet Pescio

Greg Hryhorchuk

Robert Lipsett

 

305-395 Howe Street

Vancouver, B.C.

V6C 2T5

 

Second Amendment to Letter of Intent
dated July 6, 2006

 

We refer to the terms
of our binding letter of intent dated July 6, 2006, as amended by our letter
dated August 15, 2006 (together, the “LOI”).  The purpose of this letter (the “Amendment”) is to confirm our agreement to
further amend the terms of the LOI as described below.  All capitalized terms used and not otherwise
defined herein have the meanings ascribed to those terms in the LOI.

 

1.             Section 3 of the LOI is deleted and
replaced with the following:

 

“2.           Arrangement and Merger Agreement

 

The Arrangement and Merger Agreement will contain
terms, conditions, representations, warranties, covenants and indemnities which
are customary for transactions such as those contemplated by this LOI.  The parties expect that the Arrangement and
Merger Agreement will be executed and delivered by September 29, 2006 and they
will each use commercially reasonable efforts to complete, execute and deliver
the Arrangement and Merger Agreement within such timeframe.”

 

3.                                        Section 6 of the LOI is deleted and replaced with the following:

 

“4.           Exclusivity Agreement

 

Each of the parties to this LOI agree that it will
not, directly or indirectly, through any representative or otherwise, solicit
or entertain offers from, negotiate with or in any manner encourage, discuss,
accept or consider any proposal from any other person relating to a transaction
similar in nature to the transactions contemplated in this LOI (or otherwise
involving the sale of all or any substantial part of the Pescio/G & R
Assets) until the date (the “Release Date”)
which is the earlier of:

 

(a)                                  September 29,
2006; and

 

(b)                                 the date on which
the parties execute and deliver the Arrangement and Merger Agreement.

 

 

In addition to the foregoing, between the date hereof
and the Release Date, if any party receives any unsolicited offer or proposal,
or has actual knowledge of any unsolicited offer or proposal, relating to any
of the above, such member shall immediately notify the other parties of the
details thereof, including the identity of the party making such offer or
proposal and the specific terms of such offer or proposal.”

 

Except as specifically amended by this Amendment, the
LOI remains in full force and effect.

 

Please sign where indicated below to confirm your
agreement to amend the LOI as described in this Amendment.

 

	
   

  	
  Yours
  truly,

  
	
   

  	
   

  	
   

  
	
   

  	
  VISTA GOLD CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Michael Richings

  	
   

  
	
   

  	
   

  	
  Michael
  Richings

  
	
   

  	
   

  	
  President

  

 

 

Agreed to and accepted effective as of the 20th day of
August, 2006

 

 

	
  /s/
  Carl Pescio

  	
   

  	
   

  
	
  Carl Pescio

  	
   

  	
   

  

 

 

Agreed to and accepted effective as of the 20th day of
August, 2006

 

 

	
  /s/
  Janet Pescio

  	
   

  	
   

  
	
  Janet Pescio

  	
   

  	
   

  

 

 

Agreed to and accepted effective as of the 20th day of
August, 2006

 

 

	
  /s/
  Greg Hryhorchuk

  	
   

  	
   

  
	
  Greg Hryhorchuk

  	
   

  	
   

  

 

 

Agreed to and accepted effective as of the 20th day of
August, 2006

 

 

	
  /s/
  Robert Lipsett

  	
   

  	
   

  
	
  Robert Lipsett

  	
   

  	
   

  

 

 

2EXHIBIT 10.1
 

 

CREDIT
AND SECURITY AGREEMENT

BY AND BETWEEN

WELLS GARDNER ELECTRONICS
CORPORATION AND

AMERICAN GAMING &
ELECTRONICS, INC.

AND

WELLS FARGO BANK,
NATIONAL ASSOCIATION

Acting through its Wells
Fargo Business Credit operating division

August
21, 2006

 

   
 

 

 

ACKNOWLEDGMENT

IT
IS HEREBY ACKNOWLEDGED, by and between WELLS FARGO BANK, NATIONAL ASSOCIATION
(the “Lender”) acting through its Wells Fargo Business Credit operating
division, WELLS-GARDNER ELECTRONICS CORPORATION, an Illinois corporation (“Wells Gardner”), and AMERICAN GAMING &
ELECTRONICS, INC., a Nevada corporation (“American”), Wells Gardner and American, each a Borrower, are
hereinafter, unless referenced individually, collectively referred to as
(the “Borrower”), that all references to WELLS GARDNER ELECTRONICS CORPORATION in the Credit and Security Agreement
dated August 21, 2006 by and between the Lender and the Borrower (the “Credit
Agreement”), and in the Loan
Documents (as that term is defined in the Credit Agreement) and any and all
documents executed in relation thereto shall also refer to WELLS-GARDNER
ELECTRONICS CORPORATION.

Dated this 21st day of August, 2006.

 

	
  

  	
  WELLS FARGO BANK, NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
  /s/ Brian T. Sprink

  
	
   

  	
  By:

  	
  Brian T. Sprink

  
	
   

  	
  Its:

  	
  Vice President

  

 

	
  

  	
  WELLS-GARDNER ELECTRONICS CORPORATION

  
	
   

  	
   

  
	
   

  	
  /s/ James F. Brace

  
	
   

  	
  By:

  	
  James F. Brace

  
	
   

  	
  Its:

  	
  Vice President, Secretary, Treasurer & CFO

  

 

	
  

  	
  AMERICAN GAMING & ELECTRONICS, INC.

  
	
   

  	
   

  
	
   

  	
  /s/ James F. Brace

  
	
   

  	
  By:

  	
  James F. Brace

  
	
   

  	
  Its:

  	
  Vice President & CFO

  

 

 

 

CREDIT AND SECURITY
AGREEMENT

Dated as of August
21, 2006

WELLS GARDNER ELECTRONICS
CORPORATION, an Illinois corporation (“Wells Gardner”) and AMERICAN GAMING
& ELECTRONICS, INC., a Nevada corporation (“American”), Wells Gardner and
American, each a Borrower are hereinafter, unless referenced individually,
collectively referred to as (the “Borrower”), and WELLS FARGO BANK, NATIONAL
ASSOCIATION (as more fully defined in Article I herein, the “Lender”) acting
through its Wells Fargo Business Credit operating division, hereby agree as
follows:

ARTICLE
I

DEFINITIONS

Section 1.1   Definitions.
Except as otherwise expressly provided in this Agreement, the following terms shall have the meanings given
them in this Section:

“Accounts” shall have the
meaning given it under the UCC.

“Accounts Advance Rate”
means up to eighty-five percent (85%), or such lesser rate as the Lender in its sole discretion may deem
appropriate from time to time.

“Advance”
means a Revolving Advance.

“Affiliate” or “Affiliates”
means Wells East Asia Display, Inc. and any Person controlled by, controlling or under common control with the
Borrower, including any Subsidiary of the Borrower. For purposes of this definition, “control,” when used with
respect to any specified Person,
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise.

“Aggregate
Face Amount” is defined in Section 2.6(d).

“Agreement”
means this Credit and Security Agreement.

“Approved
Buyer” means an account debtor domiciled in a country not listed as ineligible
in any policy or policies of trade credit insurance acceptable to the Lender
and of which the Lender is the beneficiary or loss payee, as said policy
or policies may be amended by the Lender
from time to time.

“Availability”
means the amount, if any, by which the Borrowing Base exceeds the sum of
(i) the outstanding principal balance of the Revolving Note, (ii) any reserves,
and (iii) the L/C Amount.

“Book Net Worth” means
the aggregate of the common and preferred shareholders’ equity in the Borrower, determined in accordance with GAAP.

 

 

“Borrowing Base” means at any time the lesser of:

(a)       The Maximum Line
Amount; or

(b)       Subject to change
from time to time in the Lender’s sole discretion, the sum of:

(i)     The
lesser of (A) the product of the Accounts Advance Rate times Eligible Accounts
or (B) $15,000,000.00, plus

(ii)    During
the Foreign Accounts Eligibility Period and subject to Lender’s and the
insurance underwriter’s approval, the lesser of (A) the product of the Accounts
Advance Rate times Eligible Foreign
Accounts or (B) $2,000,000.00; provided, however, that a
limit of $500,000.00 shall apply for all customers, excluding Aristrocrat
Leisure Industries PTY.LTD (limitation of
$700,000.00 shall apply) and Recreativos Franco S.A. (limitation of
$700,000.00 shall apply) and Globexpsa (limitation of $600,000.00 shall apply), plus

(iii)   The
lesser of (A) $8,000,000.00 or (B) the sum of:

(1)                    The lesser of
(A) the product of the Raw Material Inventory Advance Rate times Eligible Raw
Material Inventory or (B) $2,400,000.00, plus

(2)                    The lesser of
(A) the product of the Work in Process Inventory Advance Rate times Eligible
Work in Process Inventory or (B) $450,000.00, plus

(3)                    The lesser of
(A) the product of the Finished Goods Inventory Advance Rate times Eligible
Finished Goods Inventory or (B) $4,150,000.00, plus

(4)                    The lesser of
(A) the product of the In-Transit Inventory Advance Rate times Eligible
In-Transit Inventory or (B) $1,000,000.00, less

(iv)   The
Borrowing Base Reserve, less

(v)    Indebtedness
that the Borrower owes to the Lender that has not yet been advanced on
the Revolving Note, and the dollar amount that the Lender in its discretion
believes is a reasonable determination of the Borrower’s credit exposure with
respect to any swap, derivative, foreign exchange, hedge, deposit, treasury
management or other similar transaction or
arrangement offered to Borrower by Lender that is not described in Article
II of this Agreement and any indebtedness owed by Borrower to Wells Fargo Merchant Services, LLC.

“Borrowing Base Reserve”
means, as of any date of determination, such amounts (expressed as either a
specified amount or as a percentage of a specified category or item) as the
Lender may from time to time establish and adjust in reducing Availability (a)
to reflect events, conditions, contingencies or risks which, as reasonably
determined by the Lender based on its

 

 

standard and customary credit practices, do or may affect (i) the
Collateral or its value, (ii) the assets, business or prospects of the
Borrower, or (iii) the security interests and other rights of the Lender in the
Collateral (including the enforceability, perfection and priority thereof), or
(b) to reflect the Lender’s judgment that any collateral report or financial
information furnished by or on behalf of the Borrower to the Lender is or may
have been incomplete, inaccurate or misleading in any material respect, or (c)
in respect of any state of facts that the Lender determines constitutes a
Default or an Event of Default.

“Business Day” means a
day on which the Federal Reserve Bank of New York is open for business, and, if
such day relates to a LIBOR Advance, a day on which dealings are carried on in
the London interbank eurodollar market.

“Capital Expenditures”
means for a period, any expenditure of money during such period for the lease,
purchase or other acquisition of any capital asset, or for the lease of any
other asset whether payable currently or in the future.

“Change of Control” means
the occurrence of the following event:

(a) During any
consecutive two-year period, individuals who at the beginning of such period
constituted the board of Directors of the Borrower (together with any new
Directors whose election to such board of Directors, or whose nomination for
election by the Owners of the Borrower, was approved by a vote of two thirds of
the Directors then still in office who were either Directors at the beginning
of such period or whose election or Domination for election was previously so
approved) cease for any reason to constitute a majority of the board of
Directors of the Borrower then in office; provided, further, however,
that in the event of a death of a Director, if said Director is replaced by the
remaining Directors such replacement Director shall not be deemed as a new
Director for the purposes of this provision.

“Collateral” means all of
the Borrower’s Accounts, chattel paper and electronic chattel paper, deposit
accounts, documents, Equipment, General Intangibles (including, but not limited
to leasehold and contract rights), goods, instruments, Inventory, Investment
Property, letter-of-credit rights, letters of credit, all sums on deposit in
any Collateral Account, and any items in any Lockbox; together with (i) all
substitutions and replacements for and products of any of the foregoing; (ii)
in the case of all goods, all accessions; (iii) all accessories, attachments,
parts, equipment and repairs now or hereafter attached or affixed to or used in
connection with any goods; (iv) all warehouse receipts, bills of lading and
other documents of title now or hereafter covering such goods; (v) all
collateral subject to the Lien of any Security Document; (vi) any money, or
other assets of the Borrower that now or hereafter come into the possession,
custody, or control of the Lender; (vii) all sums on deposit in the Special
Account; (viii) proceeds of any and all of the foregoing; (ix) books and
records of the Borrower, including all mail or electronic mail addressed to the
Borrower; and (x) all of the foregoing, whether now owned or existing or
hereafter acquired or arising or in which the Borrower now has or hereafter
acquires any rights.

“Collateral Account”
means the “Lender Account” as defined in the Wholesale Lockbox and Collection
Account Agreement.

 3
 

 

 

“Commercial Letter of Credit Agreement” means an
agreement governing the issuance of documentary letters of credit by the
Lender, entered into between the Borrower as applicant and the Lender as
issuer.

“Commitment” means the
Lender’s commitment to make Advances to, and to issue Letters of Credit for the
account of, the Borrower.

“Constituent Documents”
means with respect to any Person, as applicable, such Person’s certificate of
incorporation, articles of incorporation, by-laws, certificate of formation,
articles of organization, limited liability company agreement, management
agreement, operating agreement, shareholder agreement, partnership agreement or
similar document or agreement governing such Person’s existence, organization
or management or concerning disposition of ownership interests of such Person
or voting rights among such Person’s owners.

“Credit Facility” means
the credit facility under which Revolving Advances and Letters of Credit may be
made available to the Borrower by the Lender under Article II.

“Cut-off Time” means
11:00 a.m. Milwaukee, Wisconsin time.

“Debt” means of a Person
as of a given date, all items of indebtedness or liability which in accordance
with GAAP would be included in determining total liabilities as shown on the
liabilities side of a balance sheet for such Person and shall also include the
aggregate payments required to be made by such Person at any time under any
lease that is considered a capitalized lease under GAAP.

“Default” means an event
that, with giving of notice or passage of time or both, would constitute an
Event of Default.

“Default Period” means
any period of time beginning on the day a Default or Event of Default occurs
and ending on the date identified by the Lender in writing as the date that
such Default or Event of Default has been cured or waived.

“Default Rate” means an
annual interest rate in effect during a Default Period or following the
Termination Date, which interest rate shall be equal to two and one half
percent (2.5%) over the applicable Floating Rate, or the LIBOR Advance Rate, as
the case may be, as such rate may change from time to time.

“Deposit Account Control
Agreement” means the Deposit Account Control Agreement of even date herewith,
executed by the Borrower in the Lender’s favor.

“Director” means a
director if the Borrower is a corporation, a governor or manager if the
Borrower is a limited liability company, or a general partner if the Borrower
is a partnership.

“ERISA” means the
Employee Retirement Income Security Act of 1974, as amended from time to time.

 4
 

 

 

“ERISA Affiliate” means any trade or business (whether
or not incorporated) that is a member of a group which includes the Borrower
and which is treated as a single employer under Section 414 of the IRC.

“Earnings Before Taxes”
means pretax earnings from operations, excluding extraordinary gains, but
including extraordinary losses.

“Eligible Accounts” means
all unpaid Accounts of the Borrower arising from the sale or lease of goods or
the performance of services, net of any credits, but excluding any such
Accounts having any of the following characteristics:

(i) That portion of Accounts unpaid 90 days or more
after the invoice date;

(ii) That portion of Accounts related to goods or
services with respect to which the Borrower has received notice of a claim or
dispute, which are subject to a claim of offset or a contra account, or which
reflect a reasonable reserve for warranty claims or returns;

(iii) That portion of Accounts not yet earned by the
final delivery of goods or rendition of services, as applicable, by the
Borrower to the customer, including progress billings and that portion of
Accounts for which an invoice has not been sent to the applicable account
debtor;

(iv) Accounts constituting (i) proceeds of
copyrightable material unless such copyrightable material shall have been
registered with the United States Copyright Office, or (ii) proceeds of
patentable inventions unless such patentable inventions have been registered
with the United States Patent and Trademark Office;

(v) Accounts owed by any unit of government, whether
foreign or domestic (provided, however, that there shall be
included in Eligible Accounts that portion of Accounts owed by such units of
government for which the Borrower has provided evidence satisfactory to the
Lender that (A) the Lender has a first priority perfected security interest and
(B) such Accounts may be enforced by the Lender directly against such unit of
government under all applicable laws);

(vi) Accounts denominated in any currency other than
United States dollars;

(vii) Accounts owed by an account debtor located
outside the United States and Canada (but not for the Canadian province of
Quebec) which are not (A) backed by a bank letter of credit naming the Lender
as beneficiary or assigned to the Lender, in the Lender’s possession or
control, and with respect to which a control agreement concerning the
letter-of-credit rights is in effect, and acceptable to the Lender in all
respects, in its sole discretion, or (B) covered by a foreign receivables
insurance policy acceptable to the Lender in its sole discretion;

(viii) Accounts owed by an account debtor that is
insolvent, the subject of bankruptcy proceedings or has gone out of business;

 5

 

          (ix)  Accounts owed by an Owner, Subsidiary,
Affiliate, Officer or employee of the
Borrower;

           (x)  Accounts not subject to a duly perfected
security interest in the Lender’s favor or which are subject to any Lien
in favor of any Person other than the Lender;

          (xi)  That portion of Accounts that has been
restructured, extended, amended or modified;

         (xii)  That portion of Accounts that constitutes
advertising, finance charges, service charges or sales or excise taxes;

        (xiii)  Accounts owed by an account debtor, regardless
of whether otherwise eligible, to the extent that the aggregate balance
of such Accounts exceeds fifteen percent (15%)
of the aggregate amount of all Eligible Accounts, except for Aristocrat
(limitation of 35% shall apply, Bally (limitation of 25% shall apply)
and WMS (limitation of 25% shall apply);

        (xiv)  Accounts owed by an account debtor, regardless
of whether otherwise eligible, if twenty-five percent (25%) or more of
the total amount of Accounts due from such debtor is ineligible under clauses
(i), (ii), or (x) above; and

         (xv)  Accounts, or portions thereof, otherwise
deemed ineligible by the Lender in its sole discretion.

“Eligible Finished Goods Inventory” means all
Inventory of the Borrower consisting of finished goods, valued at the lower of
cost or market in accordance with GAAP, but excluding such Inventory excluded
under the definition of Eligible Inventory.

“Eligible Foreign
Accounts” means, subject to Lender’s and the insurance underwriter’s approval,
Accounts of the Borrower due and owing by an account debtor located outside the
United States; but excluding any Accounts having any of the following
characteristics:

            (i)  (A) That portion of Accounts (other than dated
Accounts) unpaid 120 days or more after the invoice date and (B) that portion
of dated Accounts unpaid more than 60 days after the stated due date;

           (ii)  That portion of Accounts related to goods or
services with respect to which the Borrower has received notice of a
claim or dispute, which are subject to a claim
of offset or a contra account, or which reflect a reasonable reserve for
warranty claims or returns;

          (iii)  That portion of Accounts not yet earned by the
final delivery of goods or rendition of services, as applicable, by the
Borrower to the customer;

 6
 

 

         (iv)  That portion of Accounts for which an invoice
has not been sent to the applicable account debtor;

          (v)  Accounts owed by any unit of government;

         (vi)  Accounts owed by an account debtor that is
insolvent, the subject of bankruptcy proceedings or has gone out of business;

        (vii)  Accounts owed by an Owner, Subsidiary,
Affiliate, Officer or employee of the Borrower;

       (viii)  Accounts not subject to a duly perfected
security interest in the Lender’s favor or which are subject to any Lien in
favor of any Person other than the Lender;

          (ix)  That portion of Accounts that has been
restructured, extended, amended or modified;

           (x)  That portion of Accounts that constitutes
advertising, finance charges, service charges or sales or excise taxes;

          (xi)  Subject to Lender’s and the insurance
underwriter’s approval, that portion of Accounts owed by any one account debtor
that would permit Revolving Advances supported by such account debtor’s
Accounts to exceed $500,000 at any one time with respect to all, excluding
Aristocrat Leisure Industries PTY.LTD (limitation of $700,000 shall apply) and
Recreativos Franco SA. (limitation of $700,000 shall apply) and Globexpsa
(limitation of $600,000 shall apply), except as otherwise provided in (b)(ii)
of the definition of “Borrowing Base”;

         (xii)  Accounts denominated in any currency other
than United States dollars, Canadian dollars, Swiss francs, Japanese yen,
United Kingdom pounds sterling or European Union euros;

        (xiii)  Accounts with respect to which the Borrower
has not instructed the Account debtor to pay the Account to the Collateral
Account;

        (xiv)  Accounts owed by debtors located in countries
not acceptable to the Lender in its sole discretion;

         (xv)  Accounts owed by an account debtor, regardless
of whether otherwise eligible, if twenty-five percent (25%) or more of
the total amount due under Accounts from such debtor is ineligible under
clauses (i), (ii) or (ix) above; and

        (xvi)  Accounts otherwise deemed unacceptable to the
Lender in its sole discretion.

“Eligible In-Transit Inventory” means all Inventory of
the Borrower that is in-transit, valued at
the lower of cost or market in accordance with GAAP; but excluding such
Inventory excluded under the definition of Eligible Inventory.

 7
 

 

“Eligible Inventory” means all Inventory of the Borrower, valued at the
lower of cost or market in accordance with GAAP; but excluding any
Inventory having any of the following characteristics:

            (i)  Inventory that is: located at any warehouse,
job site or other premises not approved by the Lender in writing; not subject
to a duly perfected first priority security interest in the Lender’s favor,
subject to any lien or encumbrance that is subordinate to the Lender’s first
priority security interest; covered by any negotiable or non-negotiable
warehouse receipt, bill of lading or other document of title; on consignment
from any Person; on consignment to any Person or subject to any bailment unless
such consignee or bailee has executed an agreement with the Lender, except
Borrower’s locations in New Jersey, Florida, Nevada and California with
Landlord Disclaimers and/or Warehouseman Acknowledgments acceptable to Lender;

           (ii)  Supplies, packaging, maintenance parts or
sample Inventory, or customer supplied parts
or Inventory;

          (iii)  Inventory that is damaged, defective,
obsolete, slow moving or not currently saleable in the normal course of the
Borrower’s operations, or the amount of such Inventory that has been reduced by
shrinkage;

         (iv)  Inventory that the Borrower has returned, has
attempted to return, is in the process of returning or intends to return to the
vendor thereof;

          (v)  Inventory that is perishable or live;

         (vi)  Inventory manufactured by the Borrower
pursuant to a license unless the applicable licensor has agreed in
writing to permit the Lender to exercise its rights and remedies against such
Inventory,

        (vii)  Inventory that is subject to a Lien in favor
of any Person other than the Lender;

       (viii)  Inventory stored at locations holding less
than ten (10%) of the aggregate value of Borrower’s Inventory, except Borrower’s
locations in New Jersey, Florida, Nevada and California with Landlord’s
Disclaimers and/or Warehouseman Acknowledgments acceptable to Lender; and

          (ix)  Inventory otherwise deemed ineligible by the
Lender in its sole discretion.

“Eligible Raw Material Inventory”
means all Inventory of the Borrower consisting of necessary components
to produce open frame video displays and slot machine parts acceptable to
Lender, valued at the lower of cost or market in accordance with GAAP, but
excluding such Inventory excluded under the definition of Eligible Inventory.

“Eligible Work in Process Inventory” means all
Inventory of the Borrower consisting of work
in process, valued at the lower of cost or market in accordance with GAAP, but
excluding such Inventory excluded under the definition of Eligible
Inventory.

 8

 

 

“Environmental Law” means any
federal, state, local or other governmental statute, regulation, law or
ordinance dealing with the protection of human health and the environment.

“Equipment”
shall have the meaning given it under the UCC.

“Event
of Default” is defined in Section 7.1.

“Financial
Covenants” means the covenants set forth in Section 6.2.

“Finished Goods Inventory
Advance Rate” means up to fifty-five percent (55%), or such lesser rate as the Lender in its sole discretion
may deem appropriate from time to time.

“Floating Rate” means an
annual interest rate equal to the sum of the Prime Rate plus one half of one percent (0.50%), which interest rate
shall change when and as the Prime Rate changes.

“Floating
Rate Advance” means an Advance bearing interest at the Floating Rate.

“Foreign Accounts
Eligibility Period” means the period during the term of this Agreement, or as otherwise provided by Lender in
its sole discretion.

“Funding
Date” is defined in Section 2.1.

“GAAP”
means generally accepted accounting principles, applied on a basis consistent
with the accounting practices applied in the financial statements described in
Section 5.6.

“General
Intangibles” shall have the meaning given it under the UCC.

“Hazardous
Substances” means pollutants, contaminants, hazardous substances, hazardous
wastes, petroleum and fractions thereof, and all other chemicals, wastes,
substances and materials listed in, regulated
by or identified in any Environmental Law.

“Indebtedness”
is used herein in its most comprehensive sense and means any and all advances,
debts, obligations and liabilities of the Borrower to the Lender, heretofore,
now or hereafter made, incurred or created, whether voluntary or involuntary
and however arising, whether due or not due, absolute or contingent, liquidated
or unliquidated, determined or undetermined, including under any swap,
derivative, foreign exchange, hedge, deposit, treasury management or
other similar transaction or arrangement at any time entered into by the
Borrower with the Lender or with Wells Fargo Merchant Services, LLC, and
whether the Borrower may be liable
individually or jointly with others, or whether recovery upon such Indebtedness
may be or hereafter becomes unenforceable.

“Indemnified Liabilities”
is defined in Section 8.6

“Indemnitees”
is defined in Section 8.6.

“In-Transit
Inventory Advance Rate” means up to forty-five percent (45%), o such lesser
rate as the Lender in its sole discretion may deem appropriate from time to
time.

 9
 

 

 

“IRC” means the Internal Revenue Code of 1986, as
amended from time to time.

“Infringement” or “Infringing”
when used with respect to Intellectual Property Rights means any infringement or other violation of Intellectual
Property Rights.

“Intellectual
Property Rights” means all actual or prospective rights arising in connection
with any intellectual property or other proprietary rights, including all
rights arising in connection with copyrights, patents, service marks, trade
dress, trade secrets, trademarks, trade names or mask works.

“Interest
Payment Date” is defined in Section 2.7(a).

“Interest Period” means
the period that commences on (and includes) the Business Day on which either a LIBOR Advance is made or
continued or on which a Floating Rate Advance
is converted to a LIBOR Advance and ending on (but excluding) the Business Day
numerically corresponding to such date that is one, two or three months
thereafter as designated by the Borrower, during which period the outstanding
principal balance of the LIBOR Advance shall bear interest at the LIBOR Advance
Rate; provided, however, that:

(a)   LIBOR Advances must be no less than Three Million
Dollars ($3,000,000.00) in the aggregate, with no more than three (3)
different Interest Periods outstanding at
any one time, with each at no less than $1,000,000.00;

(b)   If
an Interest Period would otherwise end on a day which is not a Business Day, then the Interest Period shall end on the
next Business Day thereafter, unless that Business Day is the first
Business Day of a month, in which case the Interest Period shall end on the last Business Day of the preceding
month);

(c)   No Interest Period applicable to a
Revolving Advance may end later than the
Maturity Date; and

(d)   In
no event shall the Borrower select Interest Periods with respect to Advances
which, in the aggregate, would require payment of a contracted funds breakage fee under this Agreement in order to make
required principal payments.

“Inventory”
shall have the meaning given it under the UCC.

 “Investment Property” shall have the
meaning given it under the UCC.

“L/C Amount” means the
sum of (i) the aggregate face amount of any issued and outstanding Letters of Credit and (ii) the unpaid amount of the
Obligation of Reimbursement.

“L/C Application” means
an application for the issuance of documentary letters of credit pursuant to
the terms of a Commercial Letter of Credit Agreement, in form acceptable to the Lender.

 10
 

 

 

“Lender” means Wells Fargo Bank, National Association
in its broadest and most comprehensive sense
as a legal entity, and is not limited in its meaning to Lender’s Wells Fargo Business
Credit operating division, or to any other operating division of Lender.

“Letter of Credit” is
defined in Section 2.3(a).

“LIBOR” means the rate
per annum (rounded upward, if necessary, to the nearest whole l/8th of one
(1%)) determined pursuant to the following formula:

	
  

  	
  LIBOR =

  	
  Base LIBOR

  	
   

  
	
   

  	
   

  	
  100% - LIBOR
  Reserve Percentage

  	
   

  

(i)   “Base
LIBOR” means the rate per annum for United States dollar deposits quoted by
the Lender as the Inter-Bank Market Offered Rate, with the understanding that
such rate is quoted by the Lender for the purpose of calculating effective rates
of interest for loans making reference thereto, on the first day of a Interest
Period for delivery of funds on said date for a period of time approximately
equal to the number of days in such Interest Period and in an amount approximately equal to the principal amount
to which such Interest Period applies. The Borrower understands and
agrees that the Lender may base its quotation of the Inter-Bank Market Offered Rate upon such offers or other
market indicators of the Inter-Bank Market as the Lender in its
discretion deems appropriate including the rate offered for U.S. dollar
deposits on the London Inter-Bank Market.

(ii)   “LIBOR Reserve Percentage” means
the reserve percentage prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for “Eurocurrency Liabilities” (as defined in
Regulation D of the Federal Reserve Board, as amended), adjusted by the Lender for expected changes in such reserve
percentage during the applicable Interest Period.

“LIBOR Advance” means an
Advance bearing interest at the LIBOR Advance Rate.

“LIBOR
Advance Rate” means an annual interest rate equal to the sum of LIBOR plus three
and one quarter percent (3.25%).

“Licensed Intellectual
Property” is defined in Section 5.11(c).

“Lien” means any security
interest, mortgage, deed of trust, pledge, lien, charge, encumbrance, title
retention agreement or analogous instrument or device, including the interest
of each lessor under any capitalized lease and the interest of any bondsman
under any payment or performance bond, in, of or on any assets or properties of
a Person, whether now owned or subsequently acquired and whether arising by
agreement or operation of law.

“Loan
Documents” means this Agreement, the Revolving Note, each L/C Application and the Security Documents, together with every
other agreement, note, document, contract or instrument to which the Borrower
now or in the future may be a party and which is required by the Lender.

 11

 

 

“Lockbox” means “Lockbox” as defined in the Wholesale
Lockbox and Collection Account Agreement.

“Material Adverse Effect”
means any of the following:

(i)                                     A
material adverse effect on the business, operations, results of operations,
prospects, assets, liabilities or financial condition of the Borrower;

(ii)                                  A
material adverse effect on the ability of the Borrower to perform its
obligations under the Loan Documents;

(iii)                               A material adverse
effect on the ability of the Lender to enforce the Indebtedness or to realize
the intended benefits of the Security Documents, including a material adverse
effect on the validity or enforceability of any Loan Document or of any rights
against any Guarantor, or on the status, existence, perfection, priority
(subject to Permitted Liens) or enforceability of any Lien securing payment or
performance of the Indebtedness Indebtedness; or

(iv)                              Any
claim against the Borrower or threat of litigation which if determined
adversely to the Borrower would cause the Borrower to be liable to pay an
amount exceeding $250,000.00 or would result in the occurrence of an event
described in clauses (i), (ii) and (iii) above.

“Maturity Date” means
August 21, 2010.

“Maximum Line Amount”
means $15,000,000.00.

“Minimum Interest Charge”
is defined in Section 2.5(b).

“Multiemployer Plan”
means a multiemployer plan (as defined in Section 4001(a)(3) of ERISA) to which
the Borrower or any ERISA Affiliate contributes or is obligated to contribute.

“Net Cash Proceeds” means
in connection with any asset sale, the cash proceeds (including any cash
payments received by way of deferred payment whether pursuant to a note,
installment receivable or otherwise, but only as and when actually received)
from such asset sale, net of (i) attorneys’ fees, accountants’ fees, investment
banking fees, brokerage commissions and amounts required to be applied to the
repayment of any portion of the Debt secured by a Lien not prohibited hereunder
on the asset which is the subject of such sale, and (ii) taxes paid or
reasonably estimated to be payable as a result of such asset sale.

“Net Earnings” means the
excess of:

(a)                                  All
revenues and income derived from operations in the ordinary course of business
(excluding extraordinary gains and gains and profits upon the disposition of
investments and fixed assets)

Over:

 12
 

 

 

(b)                                 All
expenses and other proper charges against income (including all applicable
taxes, but excluding extraordinary losses and losses upon the disposition of
investments and fixed assets), all as determined in accordance with GAAP.

“Net Loss” means fiscal
year-to-date after-tax net loss from continuing operations as determined in
accordance with GAAP.

“Net Orderly Liquidation
Value” means a professional opinion of the estimated most probable Net Cash
Proceeds which could typically be realized at a properly advertised and
professionally managed liquidation sale, conducted under orderly sale
conditions for an extended period of time (usually six to nine months), under
the economic trends existing at the time of the appraisal.

“Obligation of
Reimbursement” means the obligation of the Borrower to reimburse the Lender
pursuant to the terms of the Commercial Letter of Credit Agreement and any
applicable L/C Application.

“Officer” means with
respect to the Borrower, an officer if the Borrower is a corporation, a manager
if the Borrower is a limited liability company, or a partner if the Borrower is
a partnership.

“OFAC” is defined in
Section 6.12(c).

“Overadvance” means the
amount, if any, by which the outstanding principal balance of the Revolving
Note, plus the L/C Amount, is in excess of the then-existing Borrowing Base.

“Owned Intellectual
Property” is defined in Section 5.11(a).

“Owner” means with
respect to the Borrower, each Person having legal or beneficial title to an
ownership interest in the Borrower or a right to acquire such an interest.

“Pension Plan” means a
pension plan (as defined in Section 3(2) of ERISA) maintained for employees of
the Borrower or any ERISA Affiliate and covered by Title IV of ERISA.

“Permitted Lien” and “Permitted
Liens” are defined in Section 6.3(a).

“Person” means any
individual, corporation, partnership, joint venture, limited liability company,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.

“Plan” means an employee
benefit plan (as defined in Section 3(3) of ERISA) maintained for employees of
the Borrower or any ERISA Affiliate.

“Premises” means all
locations where the Borrower conducts its business or has any rights of
possession, including the locations legally described in Exhibit C attached
hereto.

 13
 

 

 

“Prime Rate” means at any time the rate of interest
most recently announced by the Lender at its principal office as its Prime
Rate, with the understanding that the Prime Rate is one of the Lender’s base
rates, and serves as the basis upon which effective rates of interest are
calculated for those loans making reference thereto, and is evidenced by the
recording thereof in such internal publication or publications as the Lender
may designate. Each change in the rate of interest shall become effective on
the date each Prime Rate change is announced by the Lender.

“Raw Material Inventory
Advance Rate” means up to fifty-five percent (55%), or such lesser rate as the
Lender in its sole discretion may deem appropriate from time to time.

“Reportable Event” means
a reportable event (as defined in Section 4043 of ERISA), other than an event
for which the 30-day notice requirement under ERISA has been waived in
regulations issued by the Pension Benefit Guaranty Corporation.

“Revolving Advance” is
defined in Section 2.1.

“Revolving Note” means
the Borrower’s revolving promissory note, payable to the order of the Lender in
substantially the form of Exhibit A hereto, as same may be renewed and amended
from time to time, and all replacements thereto.

“Security Documents”
means this Agreement, the Wholesale Lockbox and Collection Account Agreement,
the Deposit Account Control Agreement, the Trademark Security Agreement, and
any other document delivered to the Lender from time to time to secure the
Indebtedness.

“Security Interest” is
defined in Section 3.1.

 “Servicing Agent” is defined in Section 8.14.

“Special Account” means a
specified cash collateral account maintained with Lender or another financial
institution acceptable to the Lender in connection with Letters of Credit, as
contemplated by Section 2.4.

“Subsidiary” means any
Person of which more than fifty percent (50%) of the outstanding ownership
interests having general voting power under ordinary circumstances to elect a
majority of the board of directors or the equivalent of such Person, regardless
of whether or not at the tune ownership interests of any other class or classes
shall have or might have voting power by reason of the happening of any
contingency, is at the time directly or indirectly owned by the Borrower, by
the Borrower and one or more other Subsidiaries, or by one or more other
Subsidiaries.

“Termination Date” means
the earliest of (i) the Maturity Date, (ii) the date the Borrower terminates
the Credit Facility, or (iii) the date the Lender demands payment of the
Indebtedness, following an Event of Default, pursuant to Section 7.2.

“Trademark Security
Agreement” means each Trademark Security Agreement now or hereafter executed by
the Borrower in favor of the Lender dated the same date as this Agreement.

 14

 

 

“UCC” means the Uniform Commercial Code in effect in
the state designated in this Agreement as the state whose laws shall govern
this Agreement, or in any other state whose laws are held to govern this
Agreement or any portion of this Agreement.

“Work in Process
Inventory Advance Rate” means up to fifty-five percent (55%), or such lesser
rate as the Lender in its sole discretion may deem appropriate from time to
time.

“Wholesale Lockbox and
Collection Account Agreement” means the Wholesale Lockbox and Collection
Account Agreement by and between the Borrower and the Lender dated the same
date as this Agreement.

Section 1.2                                      Other
Definitional Terms: Rules of Interpretation.   The words “hereof”, “herein”
and “hereunder” and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement. All accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with GAAP. All terms defined in the UCC and not
otherwise defined herein have the meanings assigned to them in the UCC.
References to Articles, Sections, subsections, Exhibits, Schedules and the
like, are to Articles, Sections and subsections of, or Exhibits or Schedules
attached to, this Agreement unless otherwise expressly provided. The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation”. Unless the context in which used herein otherwise clearly
requires, “or” has the inclusive meaning represented by the phrase “and/or”.
Defined terms include in the singular number the plural and in the plural
number the singular. Reference to any agreement (including the Loan Documents),
document or instrument means such agreement, document or instrument as amended
or modified and in effect from time to time in accordance with the terms
thereof (and, if applicable, in accordance with the terms hereof and the other
Loan Documents), except where otherwise explicitly provided, and reference to
any promissory note includes any promissory note which is an extension or
renewal thereof or a substitute or replacement therefor. Reference to any law,
rule, regulation, order, decree, requirement, policy, guideline, directive or
interpretation means as amended, modified, codified, replaced or reenacted, in
whole or in part, and in effect on the determination date, including rules and
regulations promulgated thereunder.

ARTICLE II

AMOUNT
AND TERMS OF THE CREDIT FACILITY

Section 2.1                                      Revolving
Advances.   The Lender agrees, subject to the terms and conditions of
this Agreement, to make advances (“Revolving Advances”) to the Borrower from
time to time from the date that all of the conditions set forth in 4.1 are
satisfied (the “Funding Date”) to and until (but not including) the Termination
Date in an amount not in excess of the Maximum Line Amount. The Lender shall
have no obligation to make a Revolving Advance to the extent that the amount of
the requested Revolving Advance exceeds Availability. The Borrower’s obligation
to pay the Revolving Advances shall be evidenced by the Revolving Note and
shall be secured by the Collateral. Within the limits set forth in this Section
2.1, the Borrower may borrow, prepay pursuant to Section 2.9, and reborrow.

 15
 

 

 

Section 2.2                                      Procedures for
Requesting Advances.   The Borrower shall comply with the following
procedures in requesting Revolving Advances:

(a)                                  Type of Advances.   Each Advance shall be funded as
either a Floating Rate Advance or a LIBOR Advance, as the Borrower shall
specify in a request delivered to the Lender conforming to the requirements of
Section 2.2(b); Floating Rate Advances and LIBOR Advances may be outstanding at
the same time. Each request for a LIBOR Advance after the initial Advance shall
be in multiples of $1,000,000, with a minimum request of at least $1,000,000.
LIBOR Advances shall not be available during Default Periods.

(b)                                 Time for Requests.   The Borrower shall request each
Advance not later than the Cut-off Time on the Business Day on which the
Advance is to be made. Each request that conforms to the terms of this
Agreement shall be effective upon receipt by the Lender, shall be in writing or
by telephone or telecopy transmission, and shall be confirmed in writing by the
Borrower if so requested by the Lender, by (i) an Officer of the Borrower; or
(ii) a Person designated as the Borrower’s agent by an Officer of the Borrower
in a writing delivered to the Lender; or (iii) a Person whom the Lender
reasonably believes to be an Officer of the Borrower or such a designated
agent, which confirmation shall specify whether the Advance shall be a Floating
Rate Advance or a LIBOR Advance and, with respect to any LIBOR Advance, shall
specify the principal amount of the LIBOR Advance and the Interest Period
applicable thereto. The Borrower shall repay all Advances even if the Lender
does not receive such confirmation and even if the Person requesting an Advance
was not in fact authorized to do so. Any request for an Advance, whether
written or telephonic, shall be deemed to be a representation by the Borrower
that the conditions set forth in Section 4.2 have been satisfied as of the time
of the request.

(c)                                  Disbursement.   Upon fulfillment of the applicable
conditions set forth in Article IV, the Lender shall disburse the proceeds of
the requested Advance by crediting the same to the Borrower’s demand deposit
account maintained with the Lender unless the Lender and the Borrower shall
agree in writing to another manner of disbursement.

Section 2.3                                      Letters
of Credit.

(a)                                  The
Lender agrees, subject to the terms and conditions of this Agreement, to issue,
at any time after the Funding Date and prior to the Termination Date, one or
more irrevocable standby or documentary letters of credit (each, a “Letter of
Credit”) for the Borrower’s account. The Lender will not issue any Letter of
Credit if the face amount of the Letter of Credit to be issued would exceed the
lesser of:

(i)                                     $500,000.00
less the L/C Amount, or

(ii)                                  Availability.

Each Letter of Credit, if
any, shall be issued pursuant to a separate L/C Application made by the
Borrower to the Lender, which must be completed in a manner satisfactory to the
Lender. The terms and conditions set forth in each such L/C Application shall
supplement the terms and conditions of the Commercial Letter of Credit
Agreement, as applicable.

 16
 

 

 

“Borrowing Base” means at any time the lesser of:

(a)                                  The
Maximum Line Amount; or

(b)                                 Subject
to change from time to time in the Lender’s sole discretion, the sum of:

(i)                                     The
lesser of (A) the product of the Accounts Advance Rate times Eligible Accounts
or (B) $15,000,000.00, plus

(ii)                                  During
the Foreign Accounts Eligibility Period and subject to Lender’s and the
insurance underwriter’s approval, the lesser of (A) the product of the Accounts
Advance Rate times Eligible Foreign Accounts or (B) $2,000,000.00; provided,
however, that a limit of $500,000.00 shall apply for all customers,
excluding Aristrocrat Leisure Industries PTY.LTD (limitation of $700,000.00
shall apply) and Recreativos Franco S.A. (limitation of $700,000.00 shall
apply) and Globexpsa (limitation of $600,000.00 shall apply), plus

(iii)                               The lesser of (A)
$8,000,000.00 or (B) the sum of:

(1)                                  The
lesser of (A) the product of the Raw Material Inventory Advance Rate times
Eligible Raw Material Inventory or (B) $2,400,000.00, plus

(2)                                  The
lesser of (A) the product of the Work in Process Inventory Advance Rate times
Eligible Work in Process Inventory or (B) $450,000.00, plus

(3)                                  The
lesser of (A) the product of the Finished Goods Inventory Advance Rate times
Eligible Finished Goods Inventory or (B) $4,150,000.00, plus

(4)                                  The
lesser of (A) the product of the In-Transit Inventory Advance Rate times
Eligible In-Transit Inventory or (B) $1,000,000.00, less

(iv)                              The
Borrowing Base Reserve, less

(v)                                 Indebtedness
that the Borrower owes to the Lender that has not yet been advanced on the
Revolving Note, and the dollar amount that the Lender in its discretion
believes is a reasonable determination of the Borrower’s credit exposure with
respect to any swap, derivative, foreign exchange, hedge, deposit, treasury
management or other similar transaction or arrangement offered to Borrower by
Lender that is not described in Article II of this Agreement and any
indebtedness owed by Borrower to Wells Fargo Merchant Services, LLC.

“Borrowing Base Reserve”
means, as of any date of determination, such amounts (expressed as either a
specified amount or as a percentage of a specified category or item) as the
Lender may from time to time establish and adjust in reducing Availability (a)
to reflect events, conditions, contingencies or risks which, as reasonably
determined by the Lender based on its

 17

 

 

“IRC” means the Internal Revenue Code of 1986, as
amended from time to time.

“Infringement” or “Infringing” when used with respect
to Intellectual Property Rights means any infringement or other violation of
Intellectual Property Rights.

“Intellectual Property Rights” means all actual or
prospective rights arising in connection with any intellectual property or
other proprietary rights, including all rights arising in connection with
copyrights, patents, service marks, trade dress, trade secrets, trademarks,
trade names or mask works.

“Interest Payment Date” is defined in Section 2.7(a).

“Interest Period” means the period that commences on
(and includes) the Business Day on which either a LIBOR Advance is made or
continued or on which a Floating Rate Advance is converted to a LIBOR Advance
and ending on (but excluding) the Business Day numerically corresponding to
such date that is one, two or three months thereafter as designated by the
Borrower, during which period the outstanding principal balance of the LIBOR
Advance shall bear interest at the LIBOR Advance Rate; provided, however,
that:

(a)                                  LIBOR
Advances must be no less than Three Million Dollars ($3,000,000.00) in the
aggregate, with no more than three (3) different Interest Periods outstanding
at any one time, with each at no less than $1,000,000.00;

(b)                                 If
an Interest Period would otherwise end on a day which is not a Business Day,
then the Interest Period shall end on the next Business Day thereafter, unless
that Business Day is the first Business Day of a month, in which case the
Interest Period shall end on the last Business Day of the preceding month);

(c)                                  No
Interest Period applicable to a Revolving Advance may end later than the
Maturity Date; and

(d)                                 In
no event shall the Borrower select Interest Periods with respect to Advances
which, in the aggregate, would require payment of a contracted funds breakage
fee under this Agreement in order to make required principal payments.

“Inventory” shall have the meaning given it under the
UCC.

“Investment Property” shall have the meaning given it
under the UCC.

“L/C Amount” means the sum of (i) the aggregate face
amount of any issued and outstanding Letters of Credit and (ii) the unpaid
amount of the Obligation of Reimbursement.

“L/C Application” means an application for the
issuance of documentary letters of credit pursuant to the terms of a Commercial
Letter of Credit Agreement, in form acceptable to the Lender.

 18
 

 

 

(b)                                 No
Letter of Credit shall be issued with an expiry date later than one (1) year
from the date of issuance or the Maturity Date in effect as of the date of
issuance, whichever is earlier.

(c)                                  Any
request for issuance of a Letter of Credit shall be deemed to be a
representation by the Borrower that the conditions set forth in Section 4.2
have been satisfied as of the date of the request.

(d)                                 If
a draft is submitted under a Letter of Credit when the Borrower is unable,
because a Default Period exists or for any other reason, to obtain a Revolving
Advance to pay the Obligation of Reimbursement, the Borrower shall pay to the
Lender on demand and in immediately available funds, the amount of the
Obligation of Reimbursement together with interest, accrued from the date of
the draft until payment in full at the Default Rate. Notwithstanding the
Borrower’s inability to obtain a Revolving Advance for any reason, the Lender
is irrevocably authorized, in its sole discretion, to make a Revolving Advance
in an amount sufficient to discharge the Obligation of Reimbursement and all
accrued but unpaid interest thereon.

Section 2.4                                      Special
Account.   If the Credit Facility is terminated for any reason while
any Letter of Credit is outstanding, the Borrower shall thereupon pay the
Lender in immediately available funds for deposit in the Special Account an
amount equal to the L/C Amount plus any anticipated fees and costs. If the
Borrower fails to promptly make any such payment in the amount required
hereunder, then the Lender may make a Revolving Advance against the Credit
Facility in an amount sufficient to fulfill this obligation and deposit the
proceeds to the Special Account. The Special Account shall be an interest
bearing account either maintained with the Lender or with a financial
institution acceptable to the Lender. Any interest earned on amounts deposited
in the Special Account shall be credited to the Special Account. The Lender may
apply amounts on deposit in the Special Account at any time or from time to
time to the Indebtedness in the Lender’s sole discretion. The Borrower may not
withdraw any amounts on deposit in the Special Account as long as the Lender
maintains a security interest therein. The Lender agrees to transfer any
balance in the Special Account to the Borrower when the Lender is required to
release its security interest in the Special Account under applicable law.

Section 2.5                                      Interest;
Minimum Interest Charge; Default Interest Rate; Application of Payments;
Participations; Usury.

(a)                                  Interest.   Except as provided in Section 2.5(c) and
Section 2.6(f), the principal amount of each Advance shall bear interest as a
Floating Rate Advance.

(b)                                 Minimum Interest Charge.   Notwithstanding
any other terms of this Agreement to the contrary, the Borrower shall pay to
the Lender interest of not less than $30,000.00 per calendar month in arrears
(the “Minimum Interest Charge”) from the date of execution of this Agreement
and until the second anniversary of the Funding Date, and the Borrower shall
pay any deficiency between the Minimum Interest Charge and the amount of
interest otherwise calculated under Section 2.5(a) on the first day of each
month and on the Termination Date. Provided, further, however,
that notwithstanding any other terms of this Agreement to the contrary, the
Borrower shall pay to the Lender interest of not less than $20,000.00 per
calendar month in arrears (the “Minimum Interest Charge”) from the second
anniversary of the Funding Date until

 19
 

 

 

the fourth anniversary of the Funding Date, and the Borrower shall pay
any deficiency between the Minimum Interest Charge and the amount of interest
otherwise calculated under Section 2.5(a) on the first day of each month and on
the Termination Date. When calculating this deficiency, the Default Rate, if
applicable, shall be disregarded, and any interest that accrues on a payment
following its receipt on those days specified in Section 2.6(d) shall be
included in determining the total amount of interest otherwise calculated under
Section 2.6(a).

(c)                                  Default Interest Rate.   At any time
during any Default Period or following the Termination Date, in the Lender’s
sole discretion and without waiving any of its other rights or remedies, the
principal of the Revolving Note shall bear interest at the Default Rate or such
lesser rate as the Lender may determine, effective as of the first day of the
fiscal month in which any Default Period begins through the last day of such
Default Period, or any shorter time period that the Lender may determine. The
decision of the Lender to impose a rate that is less than the Default Rate or
to not impose the Default Rate for the entire duration of the Default Period
shall be made by the Lender in its sole discretion and shall not be a waiver of
any of its other rights and remedies, including its right to retroactively
impose the full Default Rate for the entirety of any such Default Period or
following the Termination Date.

(d)                                 Application of Payments.   Payments
shall be applied to the Indebtedness on the Business Day of receipt by the
Lender in the Lender’s general account, but the amount of principal paid shall
continue to accrue interest at the interest rate applicable under the terms of
this Agreement from the calendar day the Lender receives the payment, and
continuing through the end of the Business Day following receipt of the
payment.

(e)                                  Participations. If any Person shall acquire
a participation in the Advances or the Obligation of Reimbursement, the
Borrower shall be obligated to the Lender to pay the full amount of all
interest calculated under this Section 2.5, along with all other fees, charges
and other amounts due under this Agreement, regardless if such Person elects to
accept interest with respect to its participation at a lower rate than that
calculated under this Section
2.5, or otherwise elects to accept less than its prorata share of such fees,
charges and other amounts due under this Agreement. However, Lender shall
notify Borrower of any intended participation and allow Borrower to comment
within 5 business days of such notice.

(f)                                    Usury.   In any event no rate change
shall be put into effect which would result in a rate greater than the highest
rate permitted by law. Notwithstanding anything to the contrary contained in
any Loan Document, all agreements which either now are or which shall become
agreements between the Borrower and the Lender are hereby limited so that in no
contingency or event whatsoever shall the total liability for payments in the
nature of interest, additional interest and other charges exceed the applicable
limits imposed by any applicable usury laws. If any payments in the nature of
interest, additional interest and other charges made under any Loan Document
are held to be in excess of the limits imposed by any applicable usury laws, it
is agreed that any such amount held to be in excess shall be considered payment
of principal hereunder, and the indebtedness evidenced hereby shall be reduced
by such amount so that the total liability for payments in the nature of
interest, additional interest and other charges shall not exceed the applicable
limits imposed by any applicable usury laws, in compliance with the desires of
the Borrower and the Lender. This provision shall never be superseded or waived
and

 20

 

 

shall control every other provision of the Loan Documents and all
agreements between the Borrower and the Lender, or their successors and
assigns.

Section 2.6                                      Fees.

(a)                                  Origination Fee.   The Borrower shall
pay the Lender a fully earned and non-refundable origination fee of
$100,000.00, due and payable upon the earlier of the funding under this
Agreement or August 18, 2006.

(b)                                 Facility Fee.   The Borrower agrees to
pay to the Lender an annual facility fee of $15,000.00, which facility fee
shall be due and payable upon the execution of this Agreement and then on each
August 1st thereafter.

(c)                                  Collateral Exam Fees.   The Borrower
shall pay the Lender fees in connection with any collateral exams, audits or
inspections conducted by or on behalf of the Lender of any Collateral or the
Borrower’s operations or business at the rates established from time to time by
the Lender as its collateral exam fees (which fees are currently $900.00 per
day per collateral examiner), together with all actual out-of-pocket costs and
expenses incurred in conducting any such collateral examination or inspection; provided,
however, that during Default Periods, the Borrower shall reimburse the
Lender for such fees, costs and expenses as the Lender deems necessary in its
sole discretion.

(d)                                 Letter of Credit Fees.   The Borrower
shall pay to the Lender a fee with respect to each Letter of Credit that has
been issued, if any, which fee shall be calculated on a per diem basis at an
annual rate equal to one and one half percent (1.5%) of the aggregate amount
that may then be drawn under the Letter of Credit, assuming compliance with all
conditions for drawing (the “Aggregate Face Amount”), from and including the
date of issuance of the Letter of Credit until the date that the Letter of
Credit terminates or is returned to the Lender, which fee shall be due and
payable monthly in arrears on the first day of each month and on the date that
the Letter of Credit terminates or is returned to the Lender; provided, however,
effective as of the first day of the month in which any Default Period begins
through the last day of such Default Period, or any shorter time period that
the Lender may determine, in the Lender’s sole discretion and without waiving
any of its other rights and remedies, such fee shall increase to two and one
half percent (2.5%) of the Aggregate Face Amount. The foregoing fee shall be in
addition to any and all other fees, commissions and charges imposed by Lender
with respect to or in connection with such Letter of Credit.

(e)                                  Letter of Credit Administrative Fees.   The
Borrower shall pay all administrative fees charged by Lender in connection with
the honoring of drafts under any Letter of Credit, amendments thereto,
transfers thereof and all other activity with respect to the Letters of Credit
at the then — current rates published by Lender for such services rendered on
behalf of customers of Lender generally.

(f)                                    Termination Fees.   If (i) the Lender
terminates the Credit Facility during a Default Period, or if (ii) the Borrower
terminates the Credit Facility on a date prior to the Maturity Date, then the
Borrower shall pay the Lender as liquidated damages and not as a penalty a
termination fee in an amount equal to a percentage of the Maximum Line Amount

 21
 

 

 

calculated as follows: (A) three percent (3.0%) if the termination
occurs on or before the first anniversary of the Funding Date; (B) two percent
(2.0%) if the termination occurs after the first anniversary of the Funding
Date, but on or before the second anniversary of the Funding Date; (C) one
percent (1.0%) if the termination occurs after the second anniversary of the
Funding Date, but on or before the third anniversary of the Funding Date; and
(D) zero percent (0%) if the termination occurs after the third anniversary of
the Funding Date.

(g)                                 Waiver of Termination Fees.   The
Borrower, at the Lender’s discretion, will be excused from the payment of
termination and prepayment fees otherwise due under this Agreement if such
termination or prepayment is made because of refinancing through another one of
Lender’s operating divisions.

(h)                                 Overadvance Fees.   The Borrower shall pay an
Overadvance fee in the amount of $1,000.00 for each day or portion thereof
during which an Overadvance exists, regardless of how the Overadvance arises or
whether or not the Overadvance has been agreed to in advance by the Lender; provided,
further, however, that from the date on which any Default or
Event of Default occurs or exists at any time, the Borrower shall pay an
Overadvance fee in the amount of $2,000.00 for each day or portion thereof
during which an Overadvance exists, regardless of how the Overadvance arises or
whether or not the Overadvance has been agreed to in advance by the Lender. The
acceptance of payment of an Overadvance fee by the Lender shall not be deemed
to constitute either consent to the Overadvance or a waiver of the resulting
Event of Default, unless the Lender specifically consents to the Overadvance in
writing and waives the Event of Default on whatever conditions the Lender deems
appropriate.

(i)                                     Processing Fees.   Accounts receivable agings and
Inventory reports shall be submitted electronically by Borrower to Lender via
Collateral Services, Inc. A monthly processing fee in an amount to be
determined by Lender in its sole discretion shall be charged by Lender to
Borrower.

(j)                                     Other Fees and Charges.   The Lender may
from time to time impose additional fees and charges as consideration for
Advances made in excess of Availability or for other events that constitute an
Event of Default or a Default hereunder, including fees and charges for the
administration of Collateral by the Lender, and fees and charges for the late
delivery of reports, which may be assessed in the Lender’s sole discretion on
either an hourly, periodic, or flat fee basis, and in lieu of or in addition to
imposing interest at the Default Rate.

(k)                                  Contracted Funds Breakage Fees.   The Borrower may
prepay the principal amount of the Revolving Note at any time in any amount,
whether voluntarily or by acceleration, provided, however, that
if the principal amount of any Revolving Note LIBOR Advance is prepaid, the
Borrower shall pay to the Lender immediately upon demand a contracted funds
breakage fee equal to the sum of the discounted monthly differences for each
month from the month of prepayment through the month in which such Interest
Period matures, calculated as follows for each such month:

(i)                                     Determine
the amount of interest which would have accrued each month on the amount
prepaid at the interest rate applicable to such amount had it remained
outstanding until the last day of the applicable Interest Period.

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(ii)                                  Subtract
from the amount determined in (i) above the amount of interest which would have
accrued for the same month on the amount prepaid for the remaining term of such
Interest Period at LIBOR in effect on the date of prepayment for new loans made
for such term in a principal amount equal to the amount prepaid.

(iii)                               If the result obtained
in (ii) for any month is greater than zero, discount that difference by LIBOR
used in (ii) above.

The Borrower acknowledges
that prepayment of the Revolving Note may result in the Lender incurring
additional costs, expenses or liabilities, and that it is difficult to
ascertain the full extent of such costs, expenses or liabilities. The Borrower
therefore agrees to pay the above-described contracted funds breakage fee and
agrees that said amount represents a reasonable estimate of the contracted
funds breakage costs, expenses and/or liabilities of the Lender.

Section 2.7                                      Time
for Interest Payments; Payment on Non-Business Days; Computation of Interest
and Fees.

(a)                                  Time For Interest Payments.   Accrued
and unpaid interest accruing on Floating Rate Advances shall be due and payable
on the first day of each month and on the Termination Date (each an “Interest
Payment Date”), or if any such day is not a Business Day, on the next succeeding
Business Day. Interest will accrue from the most recent date to which interest
has been paid or, if no interest has been paid, from the date of advance to the
Interest Payment Date. If an Interest Payment Date is not a Business Day,
payment shall be made on the next succeeding Business Day. Interest accruing on
each LIBOR Advance shall be due and payable on the last day of the applicable
Interest Period; provided, however, for Interest Periods that are
longer than one month, interest shall nevertheless be due and payable monthly
on the last day of each month, and on the last day of the Interest Period.

(b)                                 Payment on Non-Business Days.   Whenever
any payment to be made hereunder shall be stated to be due on a day which is
not a Business Day, such payment may be made on the next succeeding Business
Day, and such extension of time shall in such case be included in the
computation of interest on the Advances or the fees hereunder, as the case may
be.

(c)                                  Computation of Interest and Fees.   Interest
accruing on the outstanding principal balance of the Advances and fees
hereunder outstanding from time to time shall be computed on the basis of
actual number of days elapsed in a year of 360 days.

Section 2.8                                      Lockbox
and Collateral Account; Sweep of Funds.

(a)                                  Lockbox and Collateral Account.

(i)                                     The
Borrower shall instruct all account debtors to pay all Accounts directly to the
Lockbox. If, notwithstanding such instructions, the Borrower receives any
payments on Accounts, the Borrower shall deposit such payments into the
Collateral Account. The Borrower shall also deposit all other cash proceeds of
Collateral regardless of source or nature directly into the Collateral Account.
Until so deposited, the Borrower

 23

 

 

shall hold all such payments and cash proceeds in trust for and as the
property of the Lender and shall not commingle such property with any of its
other funds or property. All deposits in the Collateral Account shall
constitute proceeds of Collateral and shall not constitute payment of the
Indebtedness.

(ii)                                  All
items deposited in the Collateral Account shall be subject to final payment. If
any such item is returned uncollected, the Borrower will immediately pay the
Lender, or, for items deposited in the Collateral Account, the bank maintaining
such account, the amount of that item, or such bank at its discretion may
charge any uncollected item to the Borrower’s commercial account or other
account. The Borrower shall be liable as an endorser on all items deposited in
the Collateral Account, whether or not in fact endorsed by the Borrower.

(b)                                 Sweep of Funds.   The Lender shall from
time to time, in accordance with the Wholesale Lockbox and Collection Account
Agreement, cause funds in the Collateral Account to be transferred to the
Lender’s general account for payment of the Indebtedness. Amounts deposited in
the Collateral Account shall not be subject to withdrawal by the Borrower,
except after payment in full and discharge of all Indebtedness.

Section 2.9                                      Voluntary
Prepayment; Termination of the Credit Facility by the Borrower.   Except
as otherwise provided herein, the Borrower may prepay the Advances in whole at
any time or from time to time in part. The Borrower may terminate the Credit
Facility at any time if it (i) gives the Lender at least 30 days advance
written notice prior to the proposed Termination Date, and (ii) pays the Lender
applicable prepayment fees in accordance with the terms of this Agreement. If
the Borrower terminates the Credit Facility, all Indebtedness shall be
immediately due and payable, and if the Borrower gives the Lender less than the
required 30 days advance written notice, then the interest rate applicable to
borrowings evidenced by Revolving Note shall be the Default Rate for the period
of time commencing 30 days prior to the proposed Termination Date through the
date that the Lender actually receives such written notice. If the Borrower
does not wish the Lender to consider renewal of the Credit Facility on the next
Maturity Date, then the Borrower shall give the Lender at least 30 days written
notice prior to the Maturity Date that it will not be requesting renewal. If
the Borrower fails to give the Lender such timely notice, then the interest
rate applicable to borrowings evidenced by the Revolving Note shall be the
Default Rate for the period of time commencing 30 days prior to the Maturity
Date through the date that the Lender actually receives such written notice.

Section 2.10                                Mandatory
Prepayment.   Without notice or demand, if the sum of the outstanding
principal balance of the Revolving Advances plus the L/C Amount shall at any
time exceed the Borrowing Base, the Borrower shall (i) first, immediately
prepay the Revolving Advances to the extent necessary to eliminate such excess;
and (ii) if prepayment in full of the Revolving Advances is insufficient to
eliminate such excess, pay to the Lender in immediately available funds for
deposit in the Special Account an amount equal to the remaining excess. Any
voluntary or mandatory prepayment received by the Lender may be applied to the
Indebtedness, in such order and in such amounts as the Lender in its sole
discretion may determine from time to time.

 24
 

 

 

Section 2.11                                Revolving Advances
to Pay Indebtedness.   Notwithstanding the terms of Section 2.1, the
Lender may, in its discretion at any time or from time to time, without the
Borrower’s request and even if the conditions set forth in Section 4.2 would
not be satisfied, make a Revolving Advance in an amount equal to the portion of
the Indebtedness from time to time due and payable and may deliver the proceeds
of any such Revolving Advance to Wells Fargo Merchant Services, LLC in
satisfaction of any unpaid obligations due to Wells Fargo Merchant Services, LLC.

Section 2.12                                Use
of Proceeds.   The Borrower shall use the proceeds of Advances and each
Letter of Credit for ordinary working capital purposes and to support Letters
of Credit.

Section 2.13                                Liability
Records.   The Lender may maintain from time to time, at its
discretion, records as to the Indebtedness. All entries made on any such record
shall be presumed correct until the Borrower establishes the contrary. Upon the
Lender’s demand, the Borrower will admit and certify in writing the exact
principal balance of the Indebtedness that the Borrower then asserts to be
outstanding. Any billing statement or accounting rendered by the Lender shall
be conclusive and fully binding on the Borrower unless the Borrower gives the
Lender specific written notice of exception within 30 days after receipt.

Section 2.14                                Lender’s
Election.   Each Borrower hereby acknowledges and agrees that such
Borrower is jointly and severally liable for, and hereby absolutely and
unconditionally obligated to the Lender for the full and prompt payment of all
Indebtedness owed or hereafter owed to the Lender by each Borrower.
Notwithstanding any provision herein contained to the contrary, each Borrower’s
liability to Lender shall be limited to the amount which could be claimed by
the Lender from each Borrower under this section without rendering such claim
voidable or avoidable under Section 548 of the Bankruptcy Code or under any
applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance
Act or similar statute or common law after taking into account, among other
things, its right of contribution and indemnification from other parties.

This Section 2.14 is
intended only to define the relative rights of Wells Gardner and American, and
nothing set forth in this Section 2.14 is intended to nor shall impair the Indebtedness
of any Borrower, jointly and severally, to pay any amounts as and when the same
shall become due and payable in accordance with the terms of this Credit
Agreement including, without limiting any provision herein. Nothing contained
herein shall limit the liability of any Borrower to pay the Advances,
Indebtedness and reimbursement to Lender of any other instrument, interest,
fees, expenses and all other amounts with respect thereto for which such
Borrower shall be liable.

This Section 2.14 shall only
be in effect in the event the Lender, in its sole discretion, declares this
Section 2.14 to be effective.

Section 2.15                                LIBOR
Advances.

(a)                                  Converting
Floating Rate Advances to LIBOR Advances; Procedures.   So long as no
Default Period is in effect, the Borrower may convert all or any part of the
principal amount of any outstanding Floating Rate Advance into a LIBOR Advance
by requesting that the Lender

 25
 

 

 

convert same no later than the Cut-off Time on the Business Day on
which the Borrower wishes the conversion to become effective. Each request that
conforms to the terms of this Agreement shall be effective upon receipt by the
Lender and shall be confirmed in writing by the Borrower if the Lender so
requests by any Officer or designated agent identified in Section 2.2(b) or
Person reasonably believed by the Lender to be such an Officer or designated
agent, which request shall specify the Business Day on which the conversion is
to occur, the total amount of the Floating Rate Advance to be converted, and
the applicable Interest Period. Each such conversion shall occur on a Business
Day, and the aggregate amount of Floating Rate Advances converted to LIBOR
Advances shall be in multiples of $1,000,000, with a minimum conversion amount
of at least $1,000,000.

(b)                                 Procedures
at End of an Interest Period.   Unless the Borrower requests a new LIBOR
Advance in accordance with the procedures set forth below, or prepays the
principal of an outstanding LIBOR Advance at the expiration of an Interest
Period, the Lender shall automatically and without request of the Borrower
convert each LIBOR Advance to a Floating Rate Advance on the last day of the
relevant Interest Period. So long as no Default exists, the Borrower may cause
all or any part of any maturing LIBOR Advance to be renewed as a new LIBOR
Advance by requesting that the Lender continue the maturing Advance as a LIBOR
Advance no later than the Cut-off Time on the Business Day [_immediately
preceding the Business Day_] constituting the first day of the new Interest
Period. Each such request shall be confirmed in writing by the Borrower upon
the Lender’s request by any Officer or designated agent identified in Section
2.2(b), which confirmation shall be effective upon receipt by the Lender, and
which shall specify the amount of the expiring LIBOR Advance to be continued
and the applicable Interest Period. Each new Interest Period shall begin on a
Business Day and the amount of each LIBOR Advance shall be in multiples of
$1,000,000, with a minimum Advance of at least $1,000,000.

(c)                                  Setting
and Notice of Rates.   The Lender shall, with respect to any request for a
LIBOR Advance under Section 2.2 or a conversion or renewal of a LIBOR Advance
under this Section 2.3, provide the Borrower with a LIBOR quote for each
Interest Period identified by the Borrower on the Business Day on which the
request was made, if the request is received by the Lender prior to the Cut-off
Time, or for requests received by the Lender after the Cut-off Time, on the
next Business Day or on the Business Day on which the Borrower has requested
that the LIBOR Advance be made effective. If the Borrower does not immediately
accept a LIBOR quote, the quoted rate shall expire and any subsequent request
from Borrower for a LIBOR quote shall be subject to redetermination by the
Lender of the applicable LIBOR for the LIBOR Advance.

(d)                                 Taxes
and Regulatory Costs.   The Borrower shall pay the Lender with respect to
any Advance, upon demand and in addition to any other amounts due or to become
due hereunder, any and all (i) withholdings, interest equalization taxes, stamp
taxes or other taxes (except income and franchise taxes) imposed by any
domestic or foreign governmental authority and related in any manner to LIBOR,
and (ii) future, supplemental, emergency or other changes in the LIBOR Reserve
Percentage, assessment rates imposed by the Federal Deposit Insurance
Corporation, or similar requirements or costs imposed by any domestic or
foreign governmental authority or resulting from compliance by the Lender with
any request or directive (whether or not having the force of law) from any
central bank or other governmental authority and related in

 26

 

 

any manner to LIBOR to the extent they are not included in the
calculation of LIBOR. In determining which of the foregoing are attributable to
any LIBOR option available to the Borrower hereunder, any reasonable allocation
made by the Lender among its operations shall be conclusive and binding upon
the Borrower.

ARTICLE III

SECURITY
INTEREST; OCCUPANCY; SETOFF 

Section 3.1             Grant of Security Interest.   The
Borrower hereby pledges, assigns and grants to the Lender, for the benefit of
itself and as agent for Wells Fargo Merchant Services, LLC, a lien and security
interest (collectively referred to as the “Security Interest”) in the
Collateral, as security for the payment and performance of: (a) all present and
future Indebtedness of the Borrower to the Lender; (b) all obligations of the
Borrower and rights of the Lender under this Agreement; and (c) all present and
future obligations of the Borrower to the Lender of other kinds. Upon request
by the Lender, the Borrower will grant to the Lender, for the benefit of itself
and as agent for Wells Fargo Merchant Services, LLC, a security interest in all
commercial tort claims that the Borrower may have against any Person.

Section 3.2             Notification of Account Debtors
and Other Obligors.   The Lender may at any time (whether or not a
Default Period then exists) notify any account debtor or other Person obligated
to pay the amount due that such right to payment has been assigned or
transferred to the Lender for security and shall be paid directly to the
Lender. The Borrower will join in giving such notice if the Lender so requests.
At any time after the Borrower or the Lender gives such notice to an account
debtor or other obligor, the Lender may, but need not, in the Lender’s name or
in the Borrower’s name, demand, sue for, collect or receive any money or
property at any time payable or receivable on account of, or securing, any such
right to payment, or grant any extension to, make any compromise or settlement
with or otherwise agree to waive, modify, amend or change the obligations
(including collateral obligations) of any such account debtor or other obligor.
The Lender may, in the Lender’s name or in the Borrower’s name, as the Borrower’s
agent and attorney-in-fact, notify the United States Postal Service to change
the address for delivery of the Borrower’s mail to any address designated by
the Lender, otherwise intercept the Borrower’s mail, and receive, open and dispose
of the Borrower’s mail, applying all Collateral as permitted under this
Agreement and holding all other mail for the Borrower’s account or forwarding
such mail to the Borrower’s last known address.

Section 3.3             Assignment of Insurance.   As
additional security for the payment and performance of the Indebtedness, the
Borrower hereby assigns to the Lender any and all monies (including proceeds of
insurance and refunds of unearned premiums) due or to become due under, and all
other rights of the Borrower with respect to, any and all policies of insurance
now or at any time hereafter covering the Collateral or any evidence thereof or
any business records or valuable papers pertaining thereto, and the Borrower
hereby directs the issuer of any such policy to pay all such monies directly to
the Lender. At any time, whether or not a Default Period then exists, the
Lender may (but need not), in the Lender’s name or in the Borrower’s name,
execute and deliver proof of claim, receive all such monies, endorse checks and
other

 27
 

 

 

instruments representing payment of such monies, and adjust, litigate,
compromise or release any claim against the issuer of any such policy. Any
monies received as payment for any loss under any insurance policy mentioned
above (other than liability insurance policies) or as payment of any award or
compensation for condemnation or taking by eminent domain, shall be paid over
to the Lender to be applied, at the option of the Lender, either to the
prepayment of the Indebtedness or shall be disbursed to the Borrower under
staged payment terms reasonably satisfactory to the Lender for application to
the cost of repairs, replacements, or restorations. Any such repairs,
replacements, or restorations shall be effected with reasonable promptness and
shall be of a value at least equal to the value of the items or property
destroyed prior to such damage or destruction.

Section 3.4             Occupancy.

(a)           The Borrower hereby irrevocably
grants to the Lender the right to take exclusive possession of the Premises at
any time during a Default Period without notice or consent.

(b)           The Lender may use the Premises only
to hold, process, manufacture, sell, use, store, liquidate, realize upon or
otherwise dispose of goods that are Collateral and for other purposes that the
Lender may in good faith deem to be related or incidental purposes.

(c)           The Lender’s right to hold the
Premises shall cease and terminate upon the earlier of (i) payment in full and
discharge of all Indebtedness and termination of the Credit Facility, and (ii)
final sale or disposition of all goods constituting Collateral and delivery of
all such goods to purchasers.

(d)           The Lender shall not be obligated to
pay or account for any rent or other compensation for the possession, occupancy
or use of any of the Premises; provided, however, that if the
Lender does pay or account for any rent or other compensation for the
possession, occupancy or use of any of the Premises, the Borrower shall
reimburse the Lender promptly for the full amount thereof. In addition, the Borrower
will pay, or reimburse the Lender for, all taxes, fees, duties, imposts,
charges and expenses at any time incurred by or imposed upon the Lender by
reason of the execution, delivery, existence, recordation, performance or
enforcement of this Agreement or the provisions of this Section 3.4.

Section 3.5             License.   Without
limiting the generality of any other Security Document, the Borrower hereby
grants to the Lender a non-exclusive, worldwide and royalty-free license to use
or otherwise exploit all Intellectual Property Rights of the Borrower for the
purpose of: (a) completing the manufacture of any in-process materials during
any Default Period so that such materials become saleable Inventory, all in
accordance with the same quality standards previously adopted by the Borrower
for its own manufacturing and subject to the Borrower’s reasonable exercise of
quality control; and (b) selling, leasing or otherwise disposing of any or all
Collateral during any Default Period.

Section 3.6             Financing Statement.   The
Borrower authorizes the Lender to file from time to time, such financing
statements against collateral described as “all personal property” or “all
assets” or describing specific items of collateral including commercial tort
claims as the Lender deems necessary or useful to perfect the Security
Interest. All financing statements filed

 28
 

 

 

before the date hereof to perfect the Security Interest were authorized
by the Borrower and are hereby re-authorized. A carbon, photographic or other
reproduction of this Agreement or of any financing statements signed by the
Borrower is sufficient as a financing statement and may be filed as a financing
statement in any state to perfect the security interests granted hereby. For
this purpose, the Borrower represents and warrants that the following
information is true and correct:

Name and address of Debtor:

Wells Gardner Electronics Corporation

9500 West 55th Street, Suite A

McCook, Illinois 60525

Federal Employer Identification No. 36-1944630

Organizational Identification No. IL 18348551

American Gaming & Electronics, Inc.

9500 West 55th Street, Suite A

McCook, Illinois 60525

Federal Employer Identification No. 36-4330751

Organizational Identification No. NV C29604-1999

Name and address of Secured Party:

Wells Fargo Bank, National Association

100 East Wisconsin Avenue, Suite 1400

Milwaukee, Wisconsin 53202

Section 3.7             Setoff.   The Lender may
at any time or from time to time, at its sole discretion and without demand and
without notice to anyone, setoff any liability owed to the Borrower by the
Lender, whether or not due, against any Obligation, whether or not due. In
addition, each other Person holding a participating interest in any
Indebtedness shall have the right to appropriate or setoff any deposit or other
liability then owed by such Person to the Borrower, whether or not due, and
apply the same to the payment of said participating interest, as fully as if
such Person had lent directly to the Borrower the amount of such participating
interest.

Section 3.8             Collateral.   This
Agreement does not contemplate a sale of accounts, contract rights or chattel
paper, and, as provided by law, the Borrower is entitled to any surplus and
shall remain liable for any deficiency. The Lender’s duty of care with respect
to Collateral in its possession (as imposed by law) shall be deemed fulfilled
if it exercises reasonable care in physically keeping such Collateral, or in
the case of Collateral in the custody or possession of a bailee or other third
Person, exercises reasonable care in the selection of the bailee or other third
Person, and the Lender need not otherwise preserve, protect, insure or care for
any Collateral. The Lender shall not be obligated to preserve any rights the
Borrower may have against prior parties, to realize on the Collateral at all or
in any particular manner or order or to apply any cash proceeds of the
Collateral in any particular order of application. The Lender has no obligation
to

 29

 

 

clean-up or otherwise prepare the Collateral for sale. The Borrower
waives any right it may have to require the Lender to pursue any third Person
for any of the Indebtedness.

ARTICLE IV

CONDITIONS
OF LENDING 

Section 4.1                                      Conditions
Precedent to the Initial Advances and Letter of Credit.   The Lender’s
obligation to make the initial Advances or to cause any Letters of Credit to be
issued shall be subject to the condition precedent that the Lender shall have
received all of the following, each properly executed by the appropriate party
and in form and substance satisfactory to the Lender:

(a)                                  This
Agreement.

(b)                                 The
Revolving Note.

(c)                                  A
Commercial Letter of Credit Agreement and L/C Application for each Letter of
Credit that the Borrower wishes to have issued thereunder.

(d)                                 A
true and correct copy of any and all leases pursuant to which the Borrower is
leasing the Premises, together with a landlord’s disclaimer and consent with
respect to each such lease.

(e)                                  A
true and correct copy of any and all agreements pursuant to which the Borrower’s
property is in the possession of any Person other than the Borrower, together
with, in the case of any goods held by such Person for resale, (i) a consignee’s
acknowledgment and waiver of Liens, (ii) UCC financing statements sufficient to
protect the Borrower’s and the Lender’s interests in such goods, and (iii) UCC
searches showing that no other secured party has filed a financing statement
against such Person and covering property similar to the Borrower’s other than
the Borrower, or if there exists any such secured party, evidence that each
such secured party has received notice from the Borrower and the Lender
sufficient to protect the Borrower’s and the Lender’s interests in the Borrower’s
goods from any claim by such secured party.

(f)                                    An
acknowledgment and waiver of Liens from each warehouse in which the Borrower is
storing Inventory.

(g)                                 A
true and correct copy of any and all agreements pursuant to which the Borrower’s
property is in the possession of any Person other than the Borrower, together
with, (i) an acknowledgment and waiver of Liens from each subcontractor who has
possession of the Borrower’s goods from time to time, (ii) UCC financing
statements sufficient to protect the Borrower’s and the Lender’s interests in
such goods, and (iii) UCC searches showing that no other secured party has
filed a financing statement covering such Person’s property other than the
Borrower, or if there exists any such secured party, evidence that each such
secured party has received notice from the Borrower and the Lender sufficient
to protect the Borrower’s and the Lender’s interests in the Borrower’s goods
from any claim by such secured party.

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(h)                                 The
Wholesale Lockbox and Collection Account Agreement.

(i)                                     Control
agreements with each bank at which the Borrower maintains deposit accounts.

(j)                                     A
Trademark Security Agreement.

(k)                                  Current
searches of appropriate filing offices showing that (i) no Liens have been
filed and remain in effect against the Borrower except Permitted Liens or Liens
held by Persons who have agreed in writing that upon receipt of proceeds of the
initial Advances, they will satisfy, release or terminate such Liens in a
manner satisfactory to the Lender, and (ii) the Lender has duly filed all
financing statements necessary to perfect the Security Interest, to the extent
the Security Interest is capable of being perfected by filing.

(l)                                     A
certificate of each Borrower’s Secretary or Assistant Secretary certifying that
attached to such certificate are (i) the resolutions of the Borrower’s
Directors and, if required, Owners, authorizing the execution, delivery and
performance of the Loan Documents, (ii) true, correct and complete copies of
the Borrower’s Constituent Documents, and (iii) examples of the signatures of
the Borrower’s Officers or agents authorized to execute and deliver the Loan
Documents and other instruments, agreements and certificates, including Advance
requests, on the Borrower’s behalf.

(m)                               With
respect to Wells Gardner, a current certificate issued by the Illinois
Secretary of State, certifying that Wells Gardner is in compliance with all
applicable organizational requirements of the State of Illinois.

(n)                                 With
respect to American, a current certificate issued by the Nevada Secretary of
State, certifying that American is in compliance with all applicable
organizational requirements of the State of Nevada.

(o)                                 Evidence
that the Borrower is duly licensed or qualified to transact business in all
jurisdictions where the character of the property owned or leased or the nature
of the business transacted by it makes such licensing or qualification
necessary. It will be sufficient if such Evidence consists of the certificates
from the 5 major jurisdictions and a list of all other jurisdictions certified
by an officer of the Borrower.

(p)                                 A
certificate of an Officer of each Borrower confirming, in his personal
capacity, the representations and warranties set forth in Article V.

(q)                                 Certificates
of the insurance required hereunder, with all hazard insurance containing a
lender’s loss payable endorsement in the Lender’s favor and with all liability
insurance naming the Lender as an additional insured.

(r)                                    Payment
of all fees due under the terms of this Agreement through the date of the
initial Advance or the issuance of any Letter of Credit hereunder, and payment
of all expenses incurred by the Lender through such date and that are required
to be paid by the Borrower under this Agreement.

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(s)                                  Evidence
that after making the initial Revolving Advance, satisfying all obligations
owed to the Borrower’s prior lender, satisfying all trade payables older than
30 days from due date, book overdrafts and closing costs, Availability shall be
not less than $1,500,000.00.

(t)                                    A
Customer Identification Information form and such other forms and verification
as the Lender may need to comply with the U.S.A. Patriot Act.

(u)                                 Such
other documents as the Lender in its sole discretion may require.

Section 4.2                                      Conditions
Precedent to All Advances and Letters of Credit.   The Lender’s
obligation to make each Advance or to cause the issuance of a Letter of Credit
shall be subject to the further conditions precedent that:

(a)                                  the
representations and warranties contained in Article V are correct on and as of
the date of such Advance or issuance of a Letter of Credit as though made on
and as of such date, except to the extent that such representations and
warranties relate solely to an earlier date; and

(b)                                 no
event has occurred and is continuing, or would result from such Advance or
issuance of a Letter of Credit which constitutes a Default or an Event of
Default.

ARTICLE V

REPRESENTATIONS
AND WARRANTIES 

The Borrower represents
and warrants to the Lender as follows:

Section 5.1                                      Existence
and Power; Name; Chief Executive Office; Inventory and Equipment Locations;
Federal Employer Identification Number and Organizational Identification Number.   The
Borrower, Wells Gardner, is a corporation, duly organized, validly existing and
in good standing under the laws of the State of Illinois and is duly licensed
or qualified to transact business in all jurisdictions where the character of
the property owned or leased or the nature of the business transacted by it
makes such licensing or qualification necessary. The Borrower, American, is a corporation,
duly organized, validly existing and in good standing under the laws of the
State of Nevada and is duly licenses and qualified to transact business in all
jurisdictions where the character of the property owned or leased or the nature
of the business transacted by it makes such licensing or qualification
necessary. The Borrower has all requisite power and authority to conduct its
business, to own its properties and to execute and deliver, and to perform all
of its obligations under, the Loan Documents. During its existence, the
Borrower has done business solely under the names set forth in Schedule 5.1.
The Borrower’s chief executive office and principal place of business is
located at the address set forth in Schedule 5.1, and all of the Borrower’s
records relating to its business or the Collateral are kept at that location.
All Inventory and Equipment is located at that location or at one of the other
locations listed in Schedule 5.1. The Borrower’s federal employer
identification number and organization identification number are correctly set
forth in Section 3.6.

Section 5.2                                      Capitalization.   Schedule
5.2 refers to Borrower subsidiary. Borrower shall notify Lender, on a
continuing basis, of any recordholder of a 5% or greater interest.

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Section 5.3                                      Authorization
of Borrowing; No Conflict as to Law or Agreements.   The execution,
delivery and performance by the Borrower of the Loan Documents and the
borrowings from time to time hereunder have been duly authorized by all
necessary corporate action and do not and will not (i) require any consent or
approval of the Borrower’s Owners; (ii) require any authorization, consent or
approval by, or registration, declaration or filing with, or notice to, any
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, or any third party, except such authorization, consent,
approval, registration, declaration, filing or notice as has been obtained,
accomplished or given prior to the date hereof; (iii) violate any provision of
any law, rule or regulation (including Regulation X of the Board of Governors
of the Federal Reserve System) or of any order, writ, injunction or decree
presently in effect having applicability to the Borrower or of the Borrower’s
Constituent Documents; (iv) result in a breach of or constitute a default under
any indenture or loan or credit agreement or any other material agreement,
lease or instrument to which the Borrower is a party or by which it or its
properties may be bound or affected; or (v) result in, or require, the creation
or imposition of any Lien (other than the Security Interest) upon or with
respect to any of the properties now owned or hereafter acquired by the
Borrower.

Section 5.4                                      Legal
Agreements.   This Agreement constitutes and, upon due execution by the
Borrower, the other Loan Documents will constitute the legal, valid and binding
obligations of the Borrower, enforceable against the Borrower in accordance
with their respective terms.

Section 5.5                                      Subsidiaries.   Except
as set forth in Schedule 5.5 hereto, the Borrower has no Subsidiaries.

Section 5.6                                      Financial
Condition; No Adverse Change.   The Borrower, Wells Gardner, has
furnished to the Lender its audited financial statements for its fiscal year
ended December 31, 2005 and unaudited financial statements for the
fiscal-year-to-date period ended June 30, 2006, and those statements fairly
present the Borrower’s, Wells Gardner’s, financial condition on the dates
thereof and the results of its operations and cash flows for the periods then
ended and were prepared in accordance with GAAP. The Borrower, American, has
furnished to the Lender its audited financial statements for its fiscal year
ended December 31, 2005 and unaudited financial statements for the
fiscal-year-to-date period ended May 31, 2006, and those statements fairly
present the Borrower’s, American’s, financial condition on the dates thereof
and the results of its operations and cash flows for the periods then ended and
were prepared in accordance with GAAP. Since the date of the most recent
financial statements, there has been no change in Wells Gardner’s or American’s
business, properties or condition (financial or otherwise) which has had a
Material Adverse Effect.

Section 5.7                                      Litigation.   There
are no actions, suits or proceedings pending or, to the Borrower’s knowledge,
threatened against or affecting the Borrower or any of its Affiliates or the
properties of the Borrower or any of its Affiliates before any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which, if determined adversely to the Borrower or any of
its Affiliates, would result in a final judgment or judgments against either
Wells Gardner or American or any of their Affiliates in an amount in excess of
$250,000.00, apart from those matters specifically listed in Schedule 5.7.

 33
 

 

 

Section 5.8                                      Regulation
U.   The Borrower is not engaged in the business of extending credit
for the purpose of purchasing or carrying margin stock (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System), and no
part of the proceeds of any Advance will be used to purchase or carry any
margin stock or to extend credit to others for the purpose of purchasing or
carrying any margin stock.

Section 5.9                                      Taxes.   The
Borrower and its Affiliates have paid or caused to be paid to the proper
authorities when due all federal, state and local taxes required to be withheld
by each of them. The Borrower and its Affiliates have filed all federal, state
and local tax returns which to the knowledge of the Officers of the Borrower or
any Affiliate, as the case may be, are required to be filed, and the Borrower
and its Affiliates have paid or caused to be paid to the respective taxing
authorities all taxes as shown on said returns or on any assessment received by
any of them to the extent such taxes have become due.

Section 5.10                                Titles
and Liens.   The Borrower has good and absolute title to all Collateral
free and clear of all Liens other than Permitted Liens. No financing statement
naming the Borrower as debtor is on file in any office except to perfect only
Permitted Liens.

Section 5.11                                Intellectual
Property Rights.

(a)                                  Owned Intellectual Property.   Schedule
5.11 is a complete list of all patents, applications for patents, trademarks,
applications to register trademarks, service marks, applications to register
service marks, mask works, trade dress and copyrights for which the Borrower is
the owner of record (the “Owned Intellectual Property”). Except as disclosed on
Schedule 5.11, (i) the Borrower owns the Owned Intellectual Property free and
clear of all restrictions (including covenants not to sue a third party), court
orders, injunctions, decrees, writs or Liens, whether by written agreement or
otherwise, (ii) no Person other than the Borrower owns or has been granted any
right in the Owned Intellectual Property, (iii) all Owned Intellectual Property
is valid, subsisting and enforceable and (iv) the Borrower has taken all
commercially reasonable action necessary to maintain and protect the Owned
Intellectual Property.

(b)                                 Agreements with Employees and Contractors.   The
Borrower has entered into a legally enforceable agreement with each of its
employees and subcontractors obligating each such Person to assign to the
Borrower, without any additional compensation, any Intellectual Property Rights
created, discovered or invented by such Person in the course of such Person’s
employment or engagement with the Borrower (except to the extent prohibited by
law), and further requiring such Person to cooperate with the Borrower, without
any additional compensation, in connection with securing and enforcing any
Intellectual Property Rights therein; provided, however, that the
foregoing shall not apply with respect to employees and subcontractors whose
job descriptions are of the type such that no such assignments are reasonably
foreseeable.

(c)                                  Intellectual Property Rights Licensed from Others.   Schedule
5.11 is a complete list of all agreements under which the Borrower has licensed
Intellectual Property Rights from another Person (“Licensed Intellectual
Property”) other than readily available, non-negotiated licenses of computer
software and other intellectual property used solely for

 34
 

 

 

performing accounting, word processing and similar administrative tasks
(“Off-the-shelf Software”) and a summary of any ongoing payments the Borrower
is obligated to make with respect thereto. Except as disclosed on Schedule 5.11
and in written agreements, copies of which have been given to the Lender, the
Borrower’s licenses to use the Licensed Intellectual Property are free and
clear of all restrictions, Liens, court orders, injunctions, decrees, or writs,
whether by written agreement or otherwise. Except as disclosed on Schedule
5.11, the Borrower is not obligated or under any liability whatsoever to make
any payments of a material nature by way of royalties, fees or otherwise to any
owner of, licensor of, or other claimant to, any Intellectual Property Rights.

(d)                                 Other Intellectual Property Needed for Business.   Except
for Off-the-shelf Software and as disclosed on Schedule 5.11, the Owned
Intellectual Property and the Licensed Intellectual Property constitute all
Intellectual Property Rights used or necessary to conduct the Borrower’s
business as it is presently conducted or as the Borrower reasonably foresees
conducting it.

(e)                                  Infringement.   Except as disclosed on
Schedule 5.11, the Borrower has no knowledge of, and has not received any
written claim or notice alleging, any Infringement of another Person’s Intellectual
Property Rights (including any written claim that the Borrower must license or
refrain from using the Intellectual Property Rights of any third party) nor, to
the Borrower’s knowledge, is there any threatened claim or any reasonable basis
for any such claim.

Section 5.12                                Plans.   Except
as disclosed to the Lender in writing prior to the date hereof, neither the
Borrower nor any ERISA Affiliate (a) maintains or has maintained any Pension
Plan, (b) contributes or has contributed to any Multiemployer Plan or (c)
provides or has provided post-retirement medical or insurance benefits with
respect to employees or former employees (other than benefits required under
Section 601 of ERISA, Section 4980B of the IRC or applicable state law).
Neither the Borrower nor any ERISA Affiliate has received any notice or has any
knowledge to the effect that it is not in full compliance with any of the
requirements of ERISA, the IRC or applicable state law with respect to any
Plan. No Reportable Event exists in connection with any Pension Plan. Each Plan
which is intended to qualify under the IRC is so qualified, and no fact or
circumstance exists which may have an adverse effect on the Plan’s
tax-qualified status. Neither the Borrower nor any ERISA Affiliate has (i) any accumulated
funding deficiency (as defined in Section 302 of ERISA and Section 412 of the
IRC) under any Plan, whether or not waived, (ii) any liability under Section
4201 or 4243 of ERISA for any withdrawal, partial withdrawal, reorganization or
other event under any Multiemployer Plan or (iii) any liability or knowledge of
any facts or circumstances which could result in any liability to the Pension
Benefit Guaranty Corporation, the Internal Revenue Service, the Department of
Labor or any participant in connection with any Plan (other than routine claims
for benefits under the Plan).

Section 5.13                                Default.   The
Borrower is in compliance with all provisions of all agreements, instruments,
decrees and orders to which it is a party or by which it or its property is
bound or affected, the breach or default of which could have a Material Adverse
Effect.

 35

 

Section 5.14   Environmental Matters.

(a)        Except as disclosed on Schedule 5.14, there are not
present in, on or under the Premises any
Hazardous Substances in such form or quantity as to create any material
liability or obligation for either the Borrower or the Lender under the
common law of any jurisdiction or under any Environmental Law, and no Hazardous
Substances have ever been stored, buried, spilled, leaked, discharged, emitted
or released in, on or under the Premises in such a way as to create any such material liability.

(b)       Except as disclosed on Schedule 5.14, the Borrower has
not disposed of Hazardous Substances in such a manner as to create any material
liability under any Environmental Law.

(c)        Except as disclosed on Schedule 5.14, there have not existed
in the past, nor are there any threatened or impending requests, claims,
notices, investigations, demands, administrative proceedings, hearings or
litigation relating in any way to the Premises or the Borrower, alleging
material liability under, violation of, or noncompliance with any Environmental
Law or any license, permit or other authorization issued pursuant thereto.

(d)       Except as disclosed on Schedule 5.14, the Borrower’s
businesses are and have in the past always been conducted in accordance with
all Environmental Laws and all licenses, permits and other authorizations
required pursuant to any Environmental Law and necessary for the lawful and
efficient operation of such businesses are in the Borrower’s possession and are
in full force and effect, nor has the Borrower been denied insurance on grounds
related to potential environmental
liability. No permit required under any Environmental Law is scheduled to
expire within 12 months and there is no threat that any such permit will
be withdrawn, terminated, limited or
materially changed.

(e)        Except as disclosed on Schedule 5.14, the Premises are
not and never have been listed on the National Priorities List, the
Comprehensive Environmental Response, Compensation and Liability Information
System or any similar federal, state or local list, schedule, log, inventory or
database.

(f)         The Borrower has delivered to the Lender all
environmental assessments, audits, reports,
permits, licenses and other documents describing or relating in any way to the
Premises or the Borrower’s businesses.

Section 5.15   Submissions to Lender.   All
financial and other information provided to the Lender by or on behalf of the
Borrower in connection with the Borrower’s request for the credit facilities
contemplated hereby (i) is true and correct in all material respects, (ii) does
not omit any material fact necessary to make such information not misleading
and, (iii) as to projections, valuations or
proforma financial statements, presents a good faith opinion as to such projections,
valuations and proforma condition and results.

Section 5.16   Financing Statements.   The Borrower has authorized the filing of financing statements sufficient when filed to
perfect the Security Interest and the other security interests created
by the Security Documents. When such financing statements are filed in the

 36
 

 

offices noted therein, the Lender will have a valid
and perfected security interest in all Collateral which is capable of being perfected by filing financing statements.
None of the Collateral is or will
become a fixture on real estate, unless a sufficient fixture filing is in
effect with respect thereto.

Section 5.17   Rights to Payment.   Each
right to payment and each instrument, document, chattel paper and other
agreement constituting or evidencing Collateral is (or, in the case of all
future Collateral, will be when arising or issued) the valid, genuine and
legally enforceable obligation, subject to no defense, setoff or counterclaim,
of the account debtor or other obligor named
therein or in the Borrower’s records pertaining thereto as being obligated to
pay such obligation.

Section 5.18   Financial Solvency.   Both
before and after giving effect to the refinancing and all of the transactions
contemplated in the Loan Documents, none of the Borrower or its Affiliates:

(a)        Was or will be “insolvent”, as that term is used and
defined in Section 101(32) of the United States Bankruptcy Code and Section 2
of the Uniform Fraudulent Transfer Act;

(b)       Has unreasonably small capital or is engaged or about
to engage in a business or a transaction for which any remaining assets of the
Borrower or such Affiliate are unreasonably small;

(c)        By executing, delivering or performing its obligations
under the Loan Documents or other documents to which it is a party or by taking
any action with respect thereto, intends to, nor believes that it will, incur
debts beyond its ability to pay them as they mature;

(d)       By executing, delivering or performing its obligations
under the Loan Documents or other documents to which it is a party or by taking
any action with respect thereto, intends to hinder, delay or defraud either its
present or future creditors; and

(e)        At this time contemplates filing a petition in
bankruptcy or for an arrangement or reorganization
or similar proceeding under any law of any jurisdiction, nor, to the best knowledge
of the Borrower, is the subject of any actual, pending or threatened
bankruptcy, insolvency or similar proceedings under any law of any
jurisdiction.

ARTICLE VI

COVENANTS

So long as the Indebtedness shall
remain unpaid, or the Credit Facility shall remain outstanding, the
Borrower will comply with the following requirements, unless the Lender shall
otherwise consent in writing:

Section 6.1   Reporting Requirements.   The Borrower will deliver, or cause to be delivered,
to the Lender each of the following, which shall be in form and detail
acceptable to the Lender:

 37
 

 

(a)   Annual
Financial Statements.   As
soon as available, and in any event within 90 days after the end of each fiscal
year of the Borrower, the Borrower’s audited financial statements on a consolidating and consolidated basis with the
unqualified opinion of independent certified public accountants selected by the
Borrower and acceptable to the Lender, which annual financial statements
shall include the Borrower’s balance sheet as at the end of such fiscal year
and the related statements of the Borrower’s income, retained earnings and cash
flows for the fiscal year then ended, prepared, if the Lender so requests, on a
consolidating and consolidated basis to include any Affiliates, all in
reasonable detail and prepared in accordance with GAAP, together with (i) copies
of all management letters prepared by such accountants; (ii) a report signed by
such accountants stating that in making the investigations necessary for said
opinion they obtained no knowledge, except
as specifically stated, of any Default or Event of Default and all
relevant facts in reasonable detail to evidence, and the computations as to,
whether or not the Borrower is in compliance with the Financial Covenants; and
(iii) a certificate of the Borrower’s chief financial officer stating that such
financial statements have been prepared in accordance with GAAP, fairly
represent the Borrower’s financial position and the results of its operations,
and whether or not such Officer has knowledge of the occurrence of any Default
or Event of Default and, if so, stating in reasonable detail the facts with
respect thereto.

(b)   Monthly
Financial Statements.   As
soon as available and in any event within 20
days after the end of each month, the unaudited/internal balance sheet and
statements of income, profits and losses of the Borrower as at the end
of and for such month and of retained earnings and cash flow quarterly and for
the year to date period then ended, prepared, if the Lender so requests, on a
consolidating and consolidated basis to include any Affiliates, in reasonable
detail and stating in comparative form the figures for the corresponding date
and periods in the previous year, all prepared in accordance with GAAP, subject
to year-end audit adjustments and which fairly represent the Borrower’s
financial position and the results of its operations; and accompanied by a certificate
of the Borrower’s chief financial officer, substantially in the form of Exhibit
B hereto stating (i) that such financial statements have been prepared in
accordance with GAAP, subject to year-end audit adjustments, and fairly
represent the Borrower’s financial position and the results of its operations,
(ii) whether or not such Officer has knowledge of the occurrence of any Default
or Event of Default not theretofore reported and remedied and, if so, stating
in reasonable detail the facts with respect thereto, and (iii) all relevant
facts in reasonable detail to evidence, and the computations as to, whether or
not the Borrower is in compliance with the Financial Covenants.

(c)   Collateral
Reports.   Within
15 days after the end of each month or more frequently
if the Lender so requires, the Borrower’s accounts receivable and its accounts payable,
a detailed inventory report, an inventory certification report, and a
calculation of the Borrower’s Accounts, Eligible Accounts, Inventory and
Eligible Inventory as at the end of such month or shorter time period.

(d)   Projections.   No later than 30 days prior to the
beginning of each fiscal year, the Borrower’s projected balance sheets, income
statements, statements of cash flow and projected Availability for each month
of the succeeding fiscal year, each in reasonable detail. Such items will be certified by the Officer who is the
Borrower’s chief financial officer as being the most accurate projections available and identical to
the projections used by the Borrower for internal 

 38

 

planning purposes and be delivered with a statement of
underlying assumptions and such supporting schedules and information as the
Lender may in its discretion require.

(e)   Supplemental
Reports.   Weekly, or more
frequently if the Lender so requires, the
Borrower’s “daily collateral reports”, receivables schedules, collection
reports, copies of invoices to account debtors, in excess of $75,000.00
with respect to Wells Gardner and in excess of $25,000.00 with respect to
American, signed and dated shipment documents and delivery receipts for goods
sold to said account debtors, bills of lading in excess of $75,000.00 with
respect to Wells Gardner and in excess of $25,000.00 with respect to American; provided,
however, that with respect to Aristocrat Australia, Aristocrat Nevada,
all foreign drop ships and AG&E, Lender
will accept facsimile copies of the bills of lading or other equivalent
document required to be provided by Borrower herein; provided, further,
however, that the time in which Borrower has to provide Lender
with copies of the bills of lading with respect to foreign drop ships shall be
extended by seven (7) days.

(f)   Litigation.   Immediately after the commencement
thereof, notice in writing of all litigation and of all proceedings before any
governmental or regulatory agency affecting the Borrower (i) of the type
described in Section 5.14(c) or (ii) which seek a monetary recovery against the
Borrower in excess of $10,000.

(g)   Defaults.   When
any Officer of the Borrower becomes aware of the probable occurrence of
any Default or Event of Default, and no later than 3 days after such Officer
becomes aware of such Default or Event of Default, notice of such occurrence,
together with a detailed statement by a responsible Officer of the Borrower of
the steps being taken by the Borrower to cure the effect thereof.

(h)   Plans.   As soon as possible, and in any event
within 30 days after the Borrower knows or
has reason to know that any Reportable Event with respect to any Pension Plan
has occurred, a statement signed by the Officer who is the Borrower’s chief
financial officer setting forth details as to such Reportable Event and
the action which the Borrower proposes to take with respect thereto, together
with a copy of the notice of such Reportable Event to the Pension Benefit Guaranty Corporation. As soon as possible,
and in any event within 10 days after the Borrower fails to make any
quarterly contribution required with respect to any Pension Plan under Section 412(m) of the IRC, the Borrower will
deliver to the Lender a statement signed by the Officer who is the Borrower’s
chief financial officer setting forth details as to such failure and the
action which the Borrower proposes to take with respect thereto, together with
a copy of any notice of such failure required to be provided to the Pension
Benefit Guaranty Corporation. As soon as possible, and in any event within ten
days after the Borrower knows or has reason to know that it has or is reasonably expected to have any liability under
Sections 4201 or 4243 of ERISA for any withdrawal, partial withdrawal,
reorganization or other event under any Multiemployer Plan, the Borrower will
deliver to the Lender a statement of the Borrower’s chief financial officer
setting forth details as to such liability and the action which the Borrower
proposes to take with respect thereto.

(i)   Disputes.   Promptly upon knowledge thereof,
notice of (i) any disputes or claims by the Borrower’s customers exceeding
$50,000 in the aggregate during any fiscal year;

 39
 

 

(ii) credit memos exceeding $50,000.00 with respect to
Wells Gardner and $20,000.00 with respect to
American; and (iii) any goods returned to or recovered by the Borrower.

(j)   Officers
and Directors.   Promptly
upon knowledge thereof, notice of any change in the persons constituting
the Borrower’s Officers and Directors.

(k)   Collateral.   Promptly upon knowledge thereof,
notice of any loss of or material damage to
any Collateral or of any substantial adverse change in any Collateral or the
prospect of payment thereof.

(l)   Commercial
Tort Claims.   Promptly upon
knowledge thereof, notice of any commercial tort claims it may bring
against any Person, including the name and address of each defendant, a summary
of the facts, an estimate of the Borrower’s damages, copies of any complaint or demand letter submitted by the
Borrower, and such other information as the Lender may request.

(m)   Intellectual
Property.

            (i)  30 days prior written notice of Borrower’s
intent to acquire material Intellectual Property Rights; except for
transfers permitted under Section 6.18, the Borrower
will give the Lender 30 days prior written notice of its intent to dispose of
material Intellectual Property Rights and upon request shall provide the Lender
with copies of all proposed documents and agreements concerning such
rights.

           (ii)  Promptly upon knowledge thereof, notice of (A)
any Infringement of its Intellectual Property Rights by others, (B)
claims that the Borrower is Infringing another Person’s Intellectual Property
Rights and (C) any threatened cancellation, termination or material limitation
of its Intellectual Property Rights.

          (iii)  Promptly upon receipt, copies of all
registrations and filings with respect to its Intellectual Property Rights.

(n)   Reports
to Owners.   Promptly upon
their distribution, copies of all financial statements, reports and
proxy statements which the Borrower shall have sent to its Owners.

(o)   SEC
Filings.   Promptly after the
sending or filing thereof, copies of all regular and periodic reports
which the Borrower shall file with the Securities and Exchange Commission or
any national securities exchange.

(p)   Violations of Law.   Promptly upon knowledge
thereof, notice of the Borrower’s violation of any law, rule or regulation, the
non-compliance with which could have a Material Adverse Effect on the Borrower.

(q)   Other
Reports.   From time to time,
with reasonable promptness, any and all receivables schedules, inventory
reports, collection reports, deposit records, equipment schedules, copies of invoices to account debtors, shipment documents and
delivery receipts for goods sole, and such other material, reports,
records or information as the Lender may request.

 40
 

 

Section 6.2   Financial Covenants.

Minimum
Book Net Worth.   While
any part of the Indebtedness remains unpaid, the Borrower shall, unless waived in writing by Lender, continuously
maintain: (a) a minimum Book Net Worth as of the quarter ending June 30,
2006 of not more than a negative Two Hundred Thirty-Four Thousand Dollars
(<$234,000.00>) less than the Book Net Worth as of the end of the
preceding fiscal year end, (b) a minimum Book Net Worth as of the quarter
ending September 30, 2006 of not more than a negative One Hundred Eighty-Four
Thousand Dollars (<$184,000.00>) less than the Book Net Worth as of the
end of the preceding fiscal year end, (c) a minimum Book Net Worth as of the
fiscal year ending December 31, 2006 of not more than a negative One Hundred
Twenty-Five Thousand Dollars (<$125,000.00>) less than the Book Net Worth
as of the end of the preceding fiscal year end, (d) a minimum Book Net Worth as
of each quarter ending March 31st,
commencing March 31, 2007, of not more than a negative One Hundred Thousand Dollars
(<$100,000.00>) less than the Book Net Worth as of the end of the
preceding fiscal year end, (e) a minimum Book Net Worth as of each quarter
ending June 30th,
commencing June 30, 2007, of not less than Seventy-Five Thousand Dollars
($75,000.00) more than the Book Net Worth as of the end of the preceding fiscal
year end, (f) a minimum Book Net Worth as of each quarter ending September 30th, commencing September 30,
2007, of not less than One Hundred Twenty-Five Thousand Dollars ($125,000.00)
more than the Book Net Worth as of the end of the preceding fiscal year end,
and (g) a minimum Book Net Worth as of each fiscal year ending December 31st, commencing December 31,
2007, of not less than One Hundred Fifty Thousand Dollars ($150,000.00) more
than the Book Net Worth as of the end of the preceding fiscal year end.

(b)   Net
Earnings.   While any part of the Indebtedness remains unpaid,
the Borrower shall, unless waived in writing by the Lender, demonstrate Net
Earnings of: (i) not more than a negative Two Hundred Thirty-Four Thousand
Dollars (<$234,000.00>) for the quarter ending June 30, 2006, (ii) not
more than a negative One Hundred Eighty-Four Thousand Dollars
(<$184,000.00>) for the quarter ending September 30, 2006, (iii) not more
than a negative One Hundred Twenty-Five Thousand Dollars (<$125,000.00>)
for the fiscal year ending December 31,
2006, (iv) not more than a negative One Hundred Thousand Dollars
(<$100,000.00>), year to date, for each quarter ending March 31st, commencing March 31, 2007,
(v) not less than Seventy-Five Thousand Dollars ($75,000.00), year to date, for
each quarter ending June 30th,
commencing June 30, 2007, (vi) not less than One Hundred Twenty-Five Thousand
Dollars ($125,000.00), year to date, for each quarter ending September 30th, commencing September 30,
2007, and (vii) not less than One Hundred Fifty Thousand Dollars ($150,000.00)
for each fiscal year thereafter ending December 31st, commencing on December 31, 2007.

(c)   Capital
Expenditures.   The Borrower will not incur or contract to incur
Capital Expenditures of more than $250,000.00 in the aggregate during any
fiscal year, with no more than $100,000.00 coming from working capital.

(d)   Intercompany
Balances.   While any part of the Indebtedness remains unpaid,
the Borrower shall, unless waived in writing by the Lender, maintain not less
than $1,000,000.00 

 41

 

 

more in accounts payable owed by Borrower to Affiliates than accounts
receivable owed by Affiliates to Borrower.

Section 6.3   Permitted
Liens; Financing Statements.

(a)   The Borrower will not create, incur or suffer to
exist any Lien upon or of any of its assets, now owned or hereafter acquired,
to secure any indebtedness; excluding, however, from the
operation of the foregoing, the following (each a “Permitted Lien”;
collectively, “Permitted Liens”):

(i)   In the case of any of the
Borrower’s property which is not Collateral, covenants, restrictions, rights,
easements and minor irregularities in title which do not materially interfere
with the Borrower’s business or operations as presently conducted;

(ii)   Liens in existence on the
date hereof and listed in Schedule 6.3 hereto, securing indebtedness for borrowed money permitted under this Agreement;
and

(iii)   The Security Interest and Liens created by the
Security Documents.

(b)   The Borrower
will not amend any financing statements in favor of the Lender except as
permitted by law. Any authorization by the Lender to any Person to amend
financing statements in favor of the Lender shall be in writing.

Section 6.4   Indebtedness.
The Borrower will not incur, create, assume or permit to exist any indebtedness
or liability on account of deposits or advances or any indebtedness for
borrowed money or letters of credit issued on the Borrower’s behalf, or any
other indebtedness or liability evidenced by notes, bonds, debentures or
similar obligations, except:

(a)   Any existing
or future Indebtedness or any other obligations of the Borrower to the Lender;

(b)   Any
indebtedness of the Borrower in existence on the date hereof and listed in Schedule 6.4 hereto; and

(c)   Any indebtedness relating to Permitted Liens.

Section 6.5   Guaranties.
The Borrower will not assume, guarantee, endorse or otherwise become directly
or contingently liable in connection with any obligations of any other Person, except:

(a)   The
endorsement of negotiable instruments by the Borrower for deposit or collection or similar transactions in the ordinary
course of business; and

(b)   Guaranties,
endorsements and other direct or contingent liabilities in connection with the
obligations of other Persons, in existence on the date hereof and listed in
Schedule 6.4 hereto.

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Section 6.6   Investments and Subsidiaries. The Borrower will not make or permit to exist
any loans or advances to, or make any investment or acquire any interest
whatsoever in, any other Person or Affiliate,
including any partnership or joint venture, nor purchase or hold beneficially
any stock or other securities or evidence of indebtedness of any other Person
or Affiliate, except:

(a)   Investments in
direct obligations of the United States of America or any agency or
instrumentality thereof whose obligations constitute full faith and credit
obligations of the United States of America having a maturity of one year or
less, commercial paper issued by U.S. corporations
rated “A-l” or “A-2” by Standard & Poor’s Ratings Services or “P-l” or “P-2”
by Moody’s Investors Service or certificates of deposit or bankers’
acceptances having a maturity of one year or less issued by members of the
Federal Reserve System having deposits in excess of $100,000,000 (which
certificates of deposit or bankers’ acceptances are fully insured by the
Federal Deposit Insurance Corporation);

(b)   Travel
advances or loans to the Borrower’s Officers and employees not exceeding at any
one time an aggregate of $20,000.00, except as to Anthony Spier as to such
amounts provided in that certain
Indemnification and Reimbursement Agreement dated August 3, 2006;

(c)   Prepaid rent
not exceeding one month or security deposits, except for the Florida, Nevada
and New Jersey locations, a period not exceeding two months and for the
Illinois location, a period not exceeding five months; and

(d)   Current
investments in the Subsidiaries in existence on the date hereof and listed in
Schedule 5.5 hereto.

Section
6.7   Dividends and Distributions. The Borrower will not declare or pay any dividends
(other than dividends payable solely in stock of the Borrower) on any class of
its stock, or make any payment on account of the purchase, redemption or other
retirement of any shares of such stock, or other securities or evidence of its
indebtedness or make any distribution in respect thereof, either directly or
indirectly.

Section 6.8   Salaries.
The Borrower will not pay excessive or unreasonable salaries, bonuses,
commissions, consultant fees or other compensation; or increase the salary,
bonus, commissions, consultant fees or other compensation of any Director,
Officer or consultant, or any member of their families, by more than twenty
percent (20%) in any one year, either individually or for all such persons in
the aggregate, or pay any such increase from any source other than profits
earned in the year of payment.

Section 6.9   Intentionally
Deleted.

Section 6.10   Books and
Records; Collateral Examination, Inspection and Appraisals.

(a)   The Borrower
will keep accurate books of record and account for itself pertaining to the
Collateral and pertaining to the Borrower’s business and financial condition
and such other matters as the Lender may from
time to time request in which true and complete entries will be made in
accordance with GAAP and, upon the Lender’s request, will permit any officer, employee,
attorney, accountant or other agent of the Lender to audit, review, make
extracts from

 43
 

 

 

or copy any and all company and financial books and records of the
Borrower at all times during ordinary business hours, to send and discuss with
account debtors and other obligors requests for verification of amounts owed to the Borrower, and to discuss the Borrower’s
affairs with any of its Directors, Officers, employees or agents.

(b)   The Borrower
hereby irrevocably authorizes all accountants and third parties to disclose and
deliver to the Lender or its designated agent, at the Borrower’s expense, all
financial information, books and records, work papers, management reports and
other information in their possession regarding the Borrower.

(c)   The Borrower
will permit the Lender or its employees, accountants, attorneys or agents, to
examine and inspect any Collateral or any other property of the Borrower at any
time during ordinary business hours.

(d)   If a Default
or Event of Default exists, the Lender shall obtain, at the Borrower’s expense,
an appraisal of Inventory by an appraiser acceptable to the Lender in its sole
discretion.

Section 6.11   Account
Verification.

(a)   The Lender or
its agent may at any time and from time to time send or require the Borrower to
send requests for verification of accounts or notices of assignment to account debtors and other obligors. The Lender or its
agent may also at any time and from time to time telephone account
debtors and other obligors to verify accounts.

(b)   The Borrower
shall pay when due each account payable due to a Person holding a Permitted
Lien (as a result of such payable) on any Collateral.

Section
6.12   Compliance with Laws.

(a)   The Borrower shall (i) comply, and cause each
Subsidiary to comply, with the requirements of applicable laws and regulations,
the non-compliance with which would materially and adversely affect its
business or its financial condition and (ii) use and keep the Collateral, and
require that others use and keep the Collateral, only for lawful purposes,
without violation of any federal, state or local law, statute or ordinance.

(b)   Without
limiting the foregoing undertakings, the Borrower specifically agrees that it will comply, and cause each Subsidiary to
comply, with all applicable Environmental Laws and obtain and comply
with all permits, licenses and similar approvals required by any Environmental
Laws, and will not generate, use, transport, treat, store or dispose of any
Hazardous Substances in such a manner as to create any material liability or
obligation under the common law of any jurisdiction or any Environmental Law.

(c)   The Borrower
shall (i) ensure, and cause each Subsidiary to ensure, that no Owner shall be
listed on the Specially Designated Nationals and Blocked Person List or other
similar lists maintained by the Office of Foreign
Assets Control (“OFAC”), the Department of the Treasury or included in any
Executive Orders, (ii) not use or permit the use of the proceeds of the
Credit Facility or any other financial accommodation from the Lender to violate
any of the foreign asset control regulations of OFAC or other applicable law,
(iii) comply, and cause each

 44

 

 

Subsidiary to comply, with all applicable Bank Secrecy Act laws and
regulations, as amended from time to time, and (iv) otherwise comply with the
USA Patriot Act as required by federal law and the Lender’s policies and
practices.

Section 6.13                                             Payment
of Taxes and Other Claims.   The Borrower will pay or discharge, when
due, (a) all taxes, assessments and governmental charges levied or imposed upon
it or upon its income or profits, upon any properties belonging to it
(including the Collateral) or upon or against the creation, perfection or
continuance of the Security Interest, prior to the date on which penalties
attach thereto, (b) all federal, state and local taxes required to be withheld
by it, and (c) all lawful claims for labor, materials and supplies which, if
unpaid, might by law become a Lien upon any properties of the Borrower;
provided, that the Borrower shall not be required to pay any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings and for which proper
reserves have been made.

Section 6.14                                             Maintenance
of Properties.

(a)          The Borrower will keep and maintain
the Collateral and all of its other properties necessary or useful in its
business in good condition, repair and working order (normal wear and tear
excepted) and will from time to time replace or repair any worn, defective or
broken parts; provided, however, that nothing in this covenant
shall prevent the Borrower from discontinuing the operation and maintenance of
any of its properties if such discontinuance is, in the Borrower’s judgment,
desirable in the conduct of the Borrower’s business and not disadvantageous in
any material respect to the Lender. The Borrower will take all commercially
reasonable steps necessary to protect and maintain its Intellectual Property
Rights.

(b)         The Borrower will defend the Collateral
against all Liens, claims or demands of all Persons (other than the Lender)
claiming the Collateral or any interest therein. The Borrower will keep all
Collateral free and clear of all Liens except Permitted Liens. The Borrower
will take all commercially reasonable steps necessary to prosecute any Person
Infringing its Intellectual Property Rights and to defend itself against any
Person accusing it of Infringing any Person’s Intellectual Property Rights.

Section 6.15                                             Insurance.   The
Borrower will obtain and at all times maintain insurance with insurers
acceptable to the Lender, in such amounts, on such terms (including any
deductibles) and against such risks as may from time to time be required by the
Lender, but in all events in such amounts and against such risks as is usually
carried by companies engaged in similar business and owning similar properties
in the same general areas in which the Borrower operates. Without limiting the
generality of the foregoing, the Borrower will at all times maintain business
interruption insurance including coverage for force majeure and keep all
tangible Collateral insured against risks of fire (including so-called extended
coverage), theft, collision (for Collateral consisting of motor vehicles) and
such other risks and in such amounts as the Lender may reasonably request, with
any loss payable to the Lender to the extent of its interest, and all policies
of such insurance shall contain a lender’s loss payable endorsement for the
Lender’s benefit. All policies of liability insurance required hereunder shall
name the Lender as an additional insured.

 45
 

 

 

Section 6.16                                             Preservation
of Existence.   The Borrower will preserve and maintain its existence
and all of its rights, privileges and franchises necessary or desirable in the
normal conduct of its business and shall conduct its business in an orderly,
efficient and regular manner.

Section 6.17                                             Delivery
of Instruments, etc.   Upon request by the Lender, the Borrower will
promptly deliver to the Lender in pledge all instruments, documents and chattel
paper constituting Collateral, duly endorsed or assigned by the Borrower.

Section 6.18                                             Sale
or Transfer of Assets; Suspension of Business Operations.   The
Borrower will not sell, lease, assign, transfer or otherwise dispose of (i) the
stock of any Subsidiary, (ii) all or a substantial part of its assets, or (iii)
any Collateral or any interest therein (whether in one transaction or in a
series of transactions) to any other Person other than the sale of Inventory in
the ordinary course of business and will not liquidate, dissolve or suspend
business operations. The Borrower will not transfer any part of its ownership
interest in any Intellectual Property Rights and will not permit any agreement
under which it has licensed Licensed Intellectual Property to lapse, except
that the Borrower may transfer such rights or permit such agreements to lapse
if it shall have reasonably determined that the applicable Intellectual
Property Rights are no longer useful in its business. If the Borrower transfers
any Intellectual Property Rights for value, the Borrower will pay over the
proceeds to the Lender for application to the Indebtedness. The Borrower will
not license any other Person to use any of the Borrower’s Intellectual Property
Rights, except that the Borrower may grant licenses in the ordinary course of
its business in connection with sales of Inventory or provision of services to
its customers.

Section 6.19                                             Consolidation
and Merger; Asset Acquisitions.   The Borrower will not consolidate
with or merge into any Person, or permit any other Person to merge into it, or
acquire (in a transaction analogous in purpose or effect to a consolidation or
merger) all or substantially all the assets of any other Person.

Section 6.20                                             Sale
and Leaseback.   The Borrower will not enter into any arrangement,
directly or indirectly, with any other Person whereby the Borrower shall sell
or transfer any real or personal property, whether now owned or hereafter
acquired, and then or thereafter rent or lease as lessee such property or any
part thereof or any other property which the Borrower intends to use for
substantially the same purpose or purposes as the property being sold or
transferred.

Section 6.21                                             Restrictions
on Nature of Business.   The Borrower will not engage in any line of
business materially different from that presently engaged in by the Borrower
and will not purchase, lease or otherwise acquire assets not related to its
business.

Section 6.22                                             Accounting.   The
Borrower will not adopt any material change in accounting principles other than
as required by GAAP. The Borrower will not adopt, permit or consent to any
change in its fiscal year.

Section 6.23                                             Discounts,
etc.   After notice from the Lender, the Borrower will not grant any discount,
credit or allowance to any customer of the Borrower or accept any return of
goods

 46
 

 

 

sold. The Borrower will not at any time modify, amend, subordinate,
cancel or terminate the obligation of any account debtor or other obligor of
the Borrower.

Section 6.24                                             Plans.   Except
as disclosed to the Lender in writing prior to the date hereof, neither the
Borrower nor any ERISA Affiliate will (i) adopt, create, assume or become a
party to any Pension Plan, (ii) incur any obligation to contribute to any
Multiemployer Plan, (iii) incur any obligation to provide post-retirement
medical or insurance benefits with respect to employees or former employees
(other than benefits required by law) or (iv) amend any Plan in a manner that
would materially increase its funding obligations.

Section 6.25                                             Place
of Business; Name.   The Borrower will not transfer its chief executive
office or principal place of business, or move, relocate, close or sell any
business location, unless Borrower gives 45 days written notice to Lender of
the same. The Borrower will not permit any tangible Collateral or any records
pertaining to the Collateral to be located in any state or area in which, in
the event of such location, a financing statement covering such Collateral
would be required to be, but has not in fact been, filed in order to perfect the
Security Interest. The Borrower will not change its name or jurisdiction of
organization.

Section 6.26                                             Constituent
Documents.   The Borrower will not amend its Constituent Documents,
unless Borrower gives 45 days written notice in regard to the Articles of
Incorporation and 20 days as to the By-Laws to Lender of the same.

Section 6.27                                             Performance
by the Lender.   If the Borrower at any time fails to perform or
observe any of the foregoing covenants contained in this Article VI or
elsewhere herein, and if such failure shall continue for a period of ten
calendar days after the Lender gives the Borrower written notice thereof (or in
the case of the agreements contained in Section 6.13 and Section 6.15,
immediately upon the occurrence of such failure, without notice or lapse of
time), the Lender may, but need not, perform or observe such covenant on behalf
and in the name, place and stead of the Borrower (or, at the Lender’s option,
in the Lender’s name) and may, but need not, take any and all other actions
which the Lender may reasonably deem necessary to cure or correct such failure
(including the payment of taxes, the satisfaction of Liens, the performance of
obligations owed to account debtors or other obligors, the procurement and
maintenance of insurance, the execution of assignments, security agreements and
financing statements, and the endorsement of instruments); and the Borrower shall
thereupon pay to the Lender on demand the amount of all monies expended and all
costs and expenses (including reasonable attorneys’ fees and legal expenses)
incurred by the Lender in connection with or as a result of the performance or
observance of such agreements or the taking of such action by the Lender,
together with interest thereon from the date expended or incurred at the
Default Rate. To facilitate the Lender’s performance or observance of such
covenants of the Borrower, the Borrower hereby irrevocably appoints the Lender,
or the Lender’s delegate, acting alone, as the Borrower’s attorney in fact
(which appointment is coupled with an interest) with the right (but not the
duty) from time to time to create, prepare, complete, execute, deliver, endorse
or file in the name and on behalf of the Borrower any and all instruments,
documents, assignments, security agreements, financing statements, applications
for insurance and other agreements and writings required to be obtained,
executed, delivered or endorsed by the Borrower hereunder.

 47

 

ARTICLE VII

EVENTS OF DEFAULT, RIGHTS AND REMEDIES

Section 7.1   Events
of Default. “Event of Default”, wherever used herein, means any one of the
following events:

(a)          Default in the
payment of the Revolving Note, any Obligation of Reimbursement, or any default
with respect to any other Indebtedness due from Borrower to Lender as such Indebtedness becomes due and payable;

(b)         Default in the performance, or breach, of any
covenant or agreement of the Borrower contained in this Agreement;

(c)          An Overadvance arises as the result of any
reduction in the Borrowing Base, or arises in any manner on terms not
otherwise approved of in advance by the Lender in writing;

(d)         A Change of
Control shall occur;

(e)          The Borrower
shall be or become insolvent, or admit in writing its or his inability to pay
its or his debts as they mature, or make an assignment for the benefit of
creditors; or the Borrower shall apply for
or consent to the appointment of any receiver, trustee, or similar officer for
it or him or for all or any substantial part of its or his property; or such
receiver, trustee or similar officer shall be appointed without the application
or consent of the Borrower; or the Borrower shall institute (by petition,
application, answer, consent or otherwise) any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, dissolution, liquidation or similar proceeding
relating to it or him under the laws of any jurisdiction; or any such
proceeding shall be instituted (by petition, application or otherwise) against
the Borrower; or any judgment, writ, warrant of attachment or execution or
similar process shall be issued or levied against a substantial part of the
property of the Borrower;

(f)          A petition shall be filed by or against the
Borrower under the United States Bankruptcy Code or the laws of any
other jurisdiction naming the Borrower as debtor;

(g)         Any
representation or warranty made by the Borrower in this Agreement or by the
Borrower (or any of its Officers) in any agreement, certificate, instrument or
financial statement or other statement contemplated by or made or delivered
pursuant to or in connection with this Agreement shall be incorrect in any
material respect;

(h)         The rendering against the Borrower of
an arbitration award, a final judgment, decree
or order for the payment of money in excess of $250,000 and the continuance of
such arbitration award, judgment, decree or order unsatisfied and in
effect for any period of 30 consecutive days without a stay of execution;

(i)           A default under any
bond, debenture, note or other evidence of material indebtedness of the
Borrower owed to any Person other than the Lender, or under any indenture or
other instrument under which any such evidence of indebtedness has been issued
or by which it is governed, or under any
material lease or other contract, and the expiration of the applicable

 48
 

 

 

period of grace, if any, specified in such evidence of indebtedness,
indenture, other instrument, lease or contract;

(j)          Any Reportable Event, which the Lender
determines in good faith might constitute grounds for the termination of any
Pension Plan or for the appointment by the appropriate United States District
Court of a trustee to administer any Pension Plan, shall have occurred and be continuing 30 days after written
notice to such effect shall have been given to the Borrower by the
Lender; or a trustee shall have been appointed by an appropriate United States
District Court to administer any Pension Plan; or the Pension Benefit Guaranty
Corporation shall have instituted proceedings to terminate any Pension Plan or
to appoint a trustee to administer any Pension Plan; or the Borrower or any
ERISA Affiliate shall have filed for a distress termination of any Pension Plan
under Title IV of ERISA; or the Borrower or any ERISA Affiliate shall have failed to make any quarterly contribution
required with respect to any Pension Plan under Section 412(m) of the
IRC, which the Lender determines in good faith may by itself, or in combination
with any such failures that the Lender may determine are likely to occur in the
future, result in the imposition of a Lien on the Borrower’s assets in favor of
the Pension Plan; or any withdrawal, partial withdrawal, reorganization or
other event occurs with respect to a Multiemployer Plan which results or could
reasonably be expected to result in a material liability of the Borrower to the
Multiemployer Plan under Title IV of ERISA;

(k)         An event of default
shall occur under any Security Document;

(1)         Default in the payment
of any amount owed by the Borrower to the Lender other than any
Indebtedness arising hereunder;

(m)        The Lender believes in good faith that
the prospect of payment in full of any part of the Indebtedness, or that full
performance by the Borrower under the Loan Documents, is impaired, or that
there has occurred any material adverse change in the business or financial condition of the Borrower (as to this section (m)
only, Lender shall give Borrower notice of the same in writing and
Borrower shall have 5 days from said notice to cure);

(n)         There has occurred any breach, default
or event of default by or attributable to, any Affiliate under any agreement
between the Affiliate and the Lender; or

(o)         The indictment of any Officer of the Borrower for
a felony offence under state or federal law.

Section 7.2   Rights
and Remedies. During any Default Period, the Lender may exercise any or all
of the following rights and remedies:

(a)         The Lender may, by
notice to the Borrower, declare the Commitment to be terminated,
whereupon the same shall forthwith terminate;

(b)         The Lender may, by
notice to the Borrower, declare the Indebtedness to be forthwith due and payable, whereupon all
Indebtedness shall become and be forthwith due and payable, without
presentment, notice of dishonor, protest or further notice of any kind, all of
which the Borrower hereby expressly waives;

 49
 

 

 

(c)          The Lender may, without notice to the Borrower and without further
action, apply any and all money owing by the Lender to the Borrower to
the payment of the Indebtedness;

(d)         The Lender may
exercise and enforce any and all rights and remedies available upon default to
a secured party under the UCC, including the right to take possession of
Collateral, or any evidence thereof, proceeding without judicial process or by
judicial process (without a prior hearing or
notice thereof, which the Borrower hereby expressly waives) and the right to
sell, lease or otherwise dispose of any or all of the Collateral (with or
without giving any warranties as to the Collateral, title to the
Collateral or similar warranties), and, in connection therewith, the Borrower
will on demand assemble the Collateral and make it available to the Lender at a place to be designated by the Lender
which is reasonably convenient to both parties;

(e)          The Lender may
make demand upon the Borrower and, forthwith upon such demand, the Borrower
will pay to the Lender in immediately available funds for deposit in the
Special Account pursuant to Section 2.4 an amount equal to the aggregate
maximum amount available to be drawn under
all Letters of Credit then outstanding, assuming compliance with all conditions
for drawing thereunder;

(f)          The Lender may exercise and enforce its rights and
remedies under the Loan Documents;

(g)         The Lender may
without regard to any waste, adequacy of the security or solvency of the
Borrower, apply for the appointment of a receiver of the Collateral, to which appointment the Borrower hereby consents, whether
or not foreclosure proceedings have been commenced under the Security Documents
and whether or not a foreclosure sale has occurred; and

(h)         The Lender may exercise
any other rights and remedies available to it by law or agreement.

Notwithstanding
the foregoing, upon the occurrence of an Event of Default described in Section 7.1(f)
or (g), the Indebtedness shall be immediately due and payable automatically
without presentment, demand, protest or notice of any kind. If the Lender sells
any of the Collateral on credit, the
Indebtedness will be reduced only to the extent of payments actually received.
If the purchaser fails to pay for the Collateral, the Lender may resell the
Collateral and shall apply any proceeds actually received to the
Indebtedness.

Section 7.3   Certain
Notices. If notice to the Borrower of any intended disposition of
Collateral or any other intended action is required by law in a particular
instance, such notice shall be deemed commercially reasonable if given (in the
manner specified in Section 8.3) at least ten calendar days before the date of
intended disposition or other action.

ARTICLE VIII

MISCELLANEOUS

Section 8.1   No
Waiver; Cumulative Remedies; Compliance with Laws. No failure or delay by
the Lender in exercising any right, power or remedy under the Loan Documents
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right, power or

 50

 

remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy
under the Loan Documents. The remedies provided in the Loan Documents are
cumulative and not exclusive of any remedies provided by law. The Lender may
comply with any applicable state or federal
law requirements in connection with a disposition of the Collateral and such
compliance will not be considered adversely to affect the commercial
reasonableness of any sale of the Collateral.

Section 8.2   Amendments, Etc.   No
amendment, modification, termination or waiver of any provision of any Loan
Document or consent to any departure by the Borrower therefrom or any release of a Security Interest shall 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. No notice to or demand
on the Borrower in any case shall entitle the Borrower to any other or further
notice or demand in similar or other circumstances.

Section 8.3   Notices; Communication of Confidential
Information; Requests for Accounting.   Except as
otherwise expressly provided herein, all notices, requests, demands and other
communications provided for under the Loan Documents shall be in writing and
shall be (a) personally delivered, (b) sent
by first class United States mail, (c) sent by overnight courier of national
reputation, (d) transmitted by telecopy, or (e) sent as electronic mail, in
each case delivered or sent to the party to whom notice is being given to the
business address, telecopier number, or e mail address set forth below next to
its signature or, as to each party, at such other business address, telecopier
number, or e mail address as it may hereafter designate in writing to the other
party pursuant to the terms of this Section. All such notices, requests,
demands and other communications shall be deemed to be an authenticated record
communicated or given on (a) the date received if personally delivered, (b)
when deposited in the mail if delivered by mail, (c) the date delivered to the
courier if delivered by overnight courier, or (d) the date of transmission if
sent by telecopy or by e mail, except that notices or requests delivered to the
Lender pursuant to any of the provisions of Article II shall not be effective
until received by the Lender. All notices, financial information, or other
business records sent by either party to this Agreement may be transmitted,
sent, or otherwise communicated via such medium as the sending party may deem
appropriate and commercially reasonable; provided, however,
that the risk that the confidentiality or privacy of such notices, financial
information, or other business records sent by either party may be compromised
shall be borne exclusively by the Borrower except for instances in which the
Lender disclosed privacy information with intent or willful and gross neglect.
All requests for an accounting under Section 9-210 of the UCC (i) shall be made
in a writing signed by a Person authorized
under Section 2.2(b), (ii) shall be personally delivered, sent by
registered or certified mail, return receipt requested, or by overnight courier
of national reputation, (iii) shall be deemed to be sent when received by the
Lender and (iv) shall otherwise comply with the requirements of Section 9-210.
The Borrower requests that the Lender respond to all such requests which on
their face appear to come from an authorized individual and releases the Lender
from any liability for so responding. The Borrower shall pay the Lender the maximum
amount allowed by law for responding to such requests.

Section 8.4   Further Documents.   The
Borrower will from time to time execute, deliver, endorse and authorize the
filing of any and all instruments, documents, conveyances, assignments, security agreements, financing
statements, control agreements and other

 51
 

 

agreements and writings that the
Lender may reasonably request in order to secure, protect, perfect or
enforce the Security Interest or the Lender’s rights under the Loan Documents
(but any failure to request or assure that the Borrower executes, delivers,
endorses or authorizes the filing of any such
item shall not affect or impair the validity, sufficiency or enforceability of
the Loan Documents and the Security Interest, regardless of whether any such
item was or was not executed, delivered or endorsed in a similar context or on
a prior occasion).

Section 8.5   Costs and Expenses.   The
Borrower shall pay on demand all costs and expenses, including reasonable
attorneys’ fees, incurred by the Lender in connection with the Indebtedness,
this Agreement, the Loan Documents, any Letter of Credit and any other document
or agreement related hereto or thereto, and the transactions contemplated
hereby, including all such costs, expenses
and fees incurred in connection with the negotiation, preparation, execution,
amendment, administration, performance, collection and enforcement of the
Indebtedness and all such documents and agreements and the creation,
perfection, protection, satisfaction, foreclosure or enforcement of the
Security Interest.

Section 8.6   Indemnity.   In
addition to the payment of expenses pursuant to Section 8.5, the Borrower shall indemnify, defend and hold harmless the Lender,
and any of its participants, parent corporations, subsidiary corporations,
affiliated corporations, successor corporations,
and all present and future officers, directors, employees, attorneys and agents
of the foregoing (the “Indemnitees”)
from and against any of the following (collectively, “Indemnified Liabilities”):

            (i)  Any and all transfer taxes, documentary taxes,
assessments or charges made by any governmental authority by reason of the
execution and delivery of the Loan Documents
or the making of the Advances;

           (ii)  Any claims, loss or damage to which any
Indemnitee may be subjected if any representation or warranty contained in
Section 5.14 proves to be incorrect in any respect or as a result of any
violation of the covenant contained in Section 6.12(b); and

          (iii)  Any and all other liabilities, losses,
damages, penalties, judgments, suits, claims, costs and expenses of any
kind or nature whatsoever (including the reasonable fees and disbursements of
counsel) in connection with the foregoing and any other investigative,
administrative or judicial proceedings, whether or not such Indemnitee shall be
designated a party thereto, which may be imposed on, incurred by or asserted against any such Indemnitee, in any manner related
to or arising out of or in connection with the making of the Advances and the
Loan Documents or the use or intended use of the proceeds of the
Advances.

If any investigative, judicial or administrative
proceeding arising from any of the foregoing is brought against any Indemnitee,
upon such Indemnitee’s request, the Borrower, or counsel designated by the Borrower and satisfactory to the
Indemnitee, will resist and defend such action, suit or proceeding to
the extent and in the manner directed by the Indemnitee, at the Borrower’s sole
costs and expense. Each Indemnitee will use its best efforts to cooperate in
the defense of any such action, suit or proceeding. If the foregoing
undertaking to indemnify, defend and hold harmless may be held to be
unenforceable because it violates any law or public policy, the

 52
 

 

Borrower shall nevertheless make
the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law. The Borrower’s
obligations under this Section 8.6 shall survive the termination of this
Agreement and the discharge of the Borrower’s other obligations hereunder.

Section 8.7   Participants.   The Lender and its participants, if any,
are not partners or joint venturers, and the Lender shall not have any
liability or responsibility for any obligation, act or omission of any of its
participants. All rights and powers specifically conferred upon the Lender may be transferred or delegated to any of
the Lender’s participants, successors or assigns.

Section 8.8   Execution in Counterparts; Telefacsimile
Execution.   This Agreement and other Loan Documents
may be executed in any number of counterparts, each of which when so executed
and delivered shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same instrument. Delivery of
an executed counterpart of this Agreement by telefacsimile shall be equally as
effective as delivery of an original executed counterpart of this Agreement.
Any party delivering an executed counterpart of this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original
executed counterpart shall not affect the validity, enforceability, and binding
effect of this Agreement.

Section 8.9   Retention of Borrower’s Records.   The
Lender shall have no obligation to maintain any electronic records or any
documents, schedules, invoices, agings, or other papers delivered to the Lender
by the Borrower or in connection with the Loan Documents for more than 30 days
after receipt by the Lender. If there is a special need to retain specific
records, the Borrower must inform the Lender of its need to retain those
records with particularity, which must be
delivered in accordance with the notice provisions of Section 8.3 within 30
days of the Lender taking control of same.

Section 8.10   Binding Effect; Assignment;
Complete Agreement; Sharing Information.   The Loan Documents shall be binding
upon and inure to the benefit of the Borrower and the Lender and their
respective successors and assigns, except that the Borrower shall not have the right
to assign its rights thereunder or any interest therein without the Lender’s
prior written consent. To the extent
permitted by law, the Borrower waives and will not assert against any assignee
any claims, defenses or set-offs which the Borrower could assert against the
Lender. This Agreement shall also bind all
Persons who become a party to this Agreement as a borrower. This
Agreement, together with the Loan Documents, comprises the complete and
integrated agreement of the parties on the
subject matter hereof and supersedes all prior agreements, written or
oral, on the subject matter hereof. To the extent that any provision of this
Agreement contradicts other provisions of the Loan Documents, this Agreement
shall control. Without limiting the Lender’s
right to share information regarding the Borrower and its Affiliates with the
Lender’s participants, accountants, lawyers and other advisors, the Lender and
Wells Fargo Bank may share any and all information they may have in their
possession regarding the Borrower and its Affiliates, and the Borrower
waives any right of confidentiality it may have with respect to such sharing of information.

 53

 

 

Section 8.11 Severability
of Provisions. Any provision of this Agreement which is prohibited or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof.

Section 8.12 Headings.
Article, Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.

Section 8.13 Governing
Law; Jurisdiction, Venue; Waiver of Jury Trial. The Loan Documents shall be
governed by and construed in accordance with the substantive laws (other than
conflict laws) of the State of Wisconsin. The parties hereto hereby (i) consent
to the personal jurisdiction of the state and federal courts located in the
State of Wisconsin in connection with any controversy related to this
Agreement; (ii) waive any argument that venue in any such forum is not
convenient; (iii) agree that any litigation initiated by the Lender or the
Borrower in connection with this Agreement or the other Loan Documents may be
venued in either the state or federal courts located in the County of
Milwaukee, Wisconsin; and (iv) agree that a final judgment in any such suit,
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.

Section 8.14 Servicing
of Credit Facility. Intentionally Deleted.

THE
BORROWER AND THE LENDER WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION AT LAW
OR IN EQUITY OR IN ANY OTHER PROCEEDING BASED ON OR PERTAINING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT.

 

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

 

	
  Wells Gardner Electronics
  Corporation

  9500 West 55th Street, Suite A

  McCook, Illinois 60525

  Telecopier: 708-290-2200

  	
  WELLS
  GARDNER ELECTRONICS

  CORPORATION

  
	
   

  	
   

  
	
  Attention:   

  	
  James F. Brace

  	
   

  	
  By:

  	
  /s/ James F. Brace

  
	
  e-mail:   

  	
  jbrace@wellsgardner.com

  	
   

  	
  James F. Brace

  
	
   

  	
  Its

  	
  VP, Secretary, Treasurer & CFO

  

 

	
  American Gaming &
  Electronics, Inc.

  9500 West 55th Street, Suite A

  McCook, Illinois 60525

  Telecopier: 702-798-5762

  	
  AMERICAN
  GAMING &

  ELECTRONICS, INC.

  
	
   

  	
   

  
	
  Attention:   

  	
  James F. Brace

  	
   

  	
  By:

  	
  /s/ James F. Brace

  
	
  e-mail:   

  	
  jbrace@wellsgardner.com

  	
   

  	
  James F. Brace

  
	
   

  	
  Its

  	
  VP and CFO

  

 

 54
 

 

 

	
  

  	
   

  	
   

  
	
  Wells Fargo Bank, National
  Association acting

  through its Wells Fargo Business Credit 

  operating division

  100 East Wisconsin Avenue, Suite 1400

  Milwaukee, Wisconsin 53202

  Telecopier: 414-224-7439

  Attention:  Brian T. Sprink

  e-mail: Brian.T.Sprink@wellsfargo.com

  	
   

  	
  WELLS FARGO BANK,

  NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian T. Sprink

  
	
   

  	
   

  	
  Brian T. Sprink

  Its Vice President

  
	
   

  	
   

  

 

 55

 

 

Table of
Exhibits and Schedules

	
  Exhibit A

  	
  Form of Revolving Note

  
	
  Exhibit B

  	
  Compliance Certificate

  
	
  Exhibit C

  	
  Premises

  
	
  Schedule 5.1

  	
  Trade Names, Chief Executive
  Office, Principal Place of Business, and Locations of Collateral

  
	
  Schedule 5.2

  	
  Capitalization and Organizational Chart

  
	
  Schedule 5.5

  	
  Subsidiaries

  
	
  Schedule 5.7

  	
  Litigation Matters

  
	
  Schedule 5.11

  	
  Intellectual Property Disclosures

  
	
  Schedule 5.14

  	
  Environmental Matters

  
	
  Schedule 6.3

  	
  Permitted Liens

  
	
  Schedule 6.4

  	
  Permitted Indebtedness and Guaranties

  

 

 

 

Exhibit A to Credit and Security Agreement

REVOLVING
NOTE

	
  $15,000,000.00

  	
   

  	
  August 17, 2006

  

 

For value received, the
undersigned, WELLS GARDNER ELECTRONICS CORPORATION, an Illinois corporation (“Wells
Gardner”) and AMERICAN GAMING & ELECTRONICS, INC., a Nevada corporation (“American”),
Wells Gardner and American, each a
Borrower are hereinafter, unless referenced individually, collectively referred
to as (the “Borrower”), jointly and
severally, hereby promises to pay to the order of WELLS FARGO BANK, NATIONAL
ASSOCIATION (the “Lender”), acting through its Wells Fargo Business Credit operating division, on the Termination
Date referenced in the Credit and Security Agreement dated the same date as
this Revolving Note that was entered into by the Lender and the Borrower (as amended from time to time, the “Credit
Agreement”), at Lender’s office located at Milwaukee, Wisconsin, or at any other place designated at any time
by the holder hereof, in lawful money of the United States of America and in
immediately available funds, the principal sum of Fifteen Million Dollars
($15,000,000.00) or the aggregate unpaid principal amount of all Revolving Advances made by the Lender to the
Borrower under the Credit Agreement, together with interest on the principal amount hereunder remaining unpaid from
time to time, computed on the basis of the actual number of days elapsed and a
360-day year, from the date hereof until this Revolving Note is fully paid at
the rate from time to time in effect under the Credit Agreement.

This
Revolving Note is the Revolving Note referenced in the Credit Agreement, and is
subject to the terms of the Credit Agreement, which provides, among other
things, for acceleration hereof. Principal and interest due hereunder shall be
payable as provided in the Credit
Agreement, and this Revolving Note may be prepaid only in accordance with the
terms of the Credit Agreement. This
Revolving Note is secured, among other things, pursuant to the Credit Agreement and the Security Documents as
therein defined, and may now or hereafter be secured by one or more other security agreements, mortgages, deeds of
trust, assignments or other
instruments or agreements.

The
Borrower shall pay all costs of collection, including reasonable attorneys’ fees
and legal expenses if this Revolving
Note is not paid when due, whether or not legal proceedings are commenced.

Presentment
or other demand for payment, notice of dishonor and protest are expressly waived.

	
   

  	
   

  	
  WELLS GARDNER ELECTRONICS
  CORPORATION

  
	
  

  	
   

  	
  By:

  	
  /s/ Anthony Spier

  
	
   

  	
   

  	
  Name:

  	
  Anthony Spier

  
	
   

  	
   

  	
  Its:

  	
  President

  

 

 A-1

 

	
   

  	
   

  	
  AMERICAN GAMING &
  ELECTRONICS, INC.

  
	
   

  	
   

  	
  By:

  	
  /s/ Anthony Spier

  
	
   

  	
   

  	
  Name:

  	
  Anthony Spier

  
	
   

  	
   

  	
  Its:

  	
  President

  

 

 

 A-2

 

 

Exhibit
B to Credit and Security Agreement

COMPLIANCE
CERTIFICATE

To:                                                   Wells
Fargo Bank, National Association

Date:                                                             ,
200  

Subject:                          Financial
Statements

In
accordance with our Credit and Security Agreement dated as of August       ,
2006 (as amended from time to time, the “Credit Agreement”), attached are the
financial statements of Wells Gardner Electronics Corporation (“Wells Gardner”)
and American Gaming & Electronics, Inc.
(“American”), Wells Gardner and American, each a Borrower are hereinafter,
unless referenced individually,
collectively referred to as (the “Borrower”) as of and for       , 200   (the “Reporting Date”) and the year-to-date period then ended (the “Current
Financials”). All terms used in this certificate have the meanings given in the
Credit Agreement.

I
certify that the Current Financials have been prepared in accordance with GAAP,
subject to year-end audit
adjustments, and fairly present the Borrower’s financial condition as of the
date thereof.

I further hereby certify
as follows: Events of Default. (Check one):

o                      The
undersigned does not have knowledge of the occurrence of a Default or Event of Default under the Credit Agreement except as
previously reported in writing to the Lender.

o                      The
undersigned has knowledge of the occurrence of a Default or Event of Default
under the Credit Agreement not previously reported in writing to the Lender and
attached hereto is a statement of the facts with respect to thereto. The
Borrower acknowledges that pursuant to Section 2.5(c) of the Credit Agreement,
the Lender may impose the Default Rate at any time during the resulting Default
Period.

Material Adverse Change in Litigation Matters of the
Borrower. I further hereby certify as follows (check one):

o                      The undersigned has no knowledge of any material adverse change to the litigation exposure of the Borrower or any of its
Affiliates.

o                      The undersigned has knowledge of material adverse
changes to the litigation exposure of the Borrower or any of its Affiliates not
previously disclosed in Schedule 5.7. Attached to this Certificate is a
statement of the facts with respect thereto.

 B-1
 

 

Financial Covenants. I further
hereby certify as follows (check and complete each of the following):

1. Minimum Book Net Worth.
Pursuant to Section 6.2(a) of the Credit Agreement, as of the Reporting Date,
the Borrower’s Book Net Worth was $           ,
which o satisfies o
does not satisfy the requirement that such amount be not less than/not more
than $           on the
Reporting Date.

2. Net Earnings. Pursuant
to Section 6.2(b) of the Credit Agreement, as of the Reporting Date, the
Borrower’s Net Earnings was $           ,
which o satisfies o
does not satisfy the requirement that such amount be not less than/not more
than $           on the
Reporting Date.

3. Capital Expenditures.
Pursuant to Section 6.2(c) of the Credit Agreement, for the year-to-date period
ending on the Reporting Date, the Borrower has expended or contracted to expend
during the fiscal year ended December       , 200  ,
for Capital Expenditures, $          
in the aggregate, with $          being
from working capital, which o
satisfies o does not satisfy the requirement that such
expenditures not exceed $          
in the aggregate during such year, with not more than $         
being from working capital.

4. Salaries. As of the
Reporting Date, the Borrower has not paid excessive or unreasonable salaries,
bonuses, commissions, consultant fees or other compensation, or increased the
salary, bonus, commissions, consultant fees or other compensation of any
Director, Officer or consultant, or any member of their families, by more than
twenty percent (20%) over the amount paid in the Borrower’s previous fiscal
year, either individually or for all such persons in the aggregate, and has not
paid any increase from any source other than profits earned in the year of
payment, and as a consequence o
is o is not in compliance with Section 6.8 of the
Credit Agreement.

Attached hereto are all
relevant facts in reasonable detail to evidence, and the computations of the
financial covenants referred to above. These computations were made in
accordance with GAAP.

 

	
  

  	
   

  	
  WELLS GARDNER ELECTRONICS

  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Its Chief Financial Officer

  

 

	
  

  	
   

  	
  AMERICAN GAMING & ELECTRONICS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Its Chief Financial Officer

  

 

 

 B-2

 

 

Exhibit
C to Credit and Security Agreement

PREMISES

 

The
Premises referred to in the Credit and Security Agreement are legally described
as follows:

·                                          9500
West 55th Street, McCook, County of Cook, Illinois 60525

·                                          202
W. Parkway Drive, Unit 1, Egg Harbor Township, County of Atlantic, New Jersey 08234

·                                          12640 Moore Street, Cerritos, County of Los
Angeles, California 90703

·                                          2545 West 80th Street,
Unit #6, Hialeah, County of Broward, Florida 33016

·                                          4630 South Arville, Suite E, Las Vegas, County of
Clark, Nevada 89103

 

SCHEDULE
4.1

(q)                                Insurance

See attached.

 

 

 

	
  

  	
   

  	
   

  
	
  1301
  EAST COLLINS BLVD.

  RICHARDSON TX

  	
  75081

  	
  LENDER’S CERTIFICATE OF

  INSURANCE — FORM A

  

 

	
  1.             CERTIFICATE
  HOLDER:

  	
  Policy Number: Y-630-307D856A-TIL-05

  

Wells Fargo Bank, NA

100 East Wisconsin Avenue 

Suite 1400

Milwaukee, WI  53202

2.             NAMED
INSURED:

WELLS GARDNER ELECTRONICS INC

9500 W. 55TH ST., SUITE A

MCCOOK                                                IL
60525-3605

3.                         CERTIFICATION - We certify that we have
issued the policy to the Named insured for the policy period as identified in
this Certificate. Notwithstanding any requirements, terms or conditions of any
contract or other document with respect to which, this Certificate may be
issued, the insurance is that which we customarily provide for the coverage
indicated in item 6. below. This Certificate is issued as a matter of
information only and does not amend, extend or alter the coverage afforded by
the policy.

4.             POLICY
PERIOD: 10-01-05               to            10-01-06

5.             INSURING
COMPANY:    TRAVELERS PROPERTY
CASUALTY COMPANY OF AMERICA

6.             INSURANCE

Buildings
or Personal Property - The policy names the Certificate
Holder as a Loss Payee, according to its Loss Payable Provisions (copy
attached), for the property described below:

	
  Loc.

  No.

  	
   

  	
  Bldg.

  No.

  	
   

  	
  Description of Property

  	
   

  	
  Limit of Insurance

  	
   

  	
  Ded.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Business Personal
  Property

  	
   

  	
  $

  	
  20,000,000

  	
   

  	
  $

  	
  10,000

  	
   

  
												

 

Coverage - Covered Causes of Loss:                   Basic
Form            Broad
Form     X  Special
Form

        Deluxe Property Form

7.             SPECIAL
PROVISIONS (if any):

 Page 1 of 2

 

	
  ACORDTM    CERTIFICATE
  OF LIABILITY INSURANCE

  	
  DATE (MM/DD/YYYY)

  08/14/2006

  
	
  PRODUCER (312) 642-1000

  	
  FAX (312) 944-7000

  	
  THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION
  ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES
  NOT AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW.

  
	
  Alper Services LLC

  	
   

  
	
  60 West Superior Street

  	
   

  
	
  Chicago, IL 60610

  	
   

  
	
  Jacob Essak

  	
   

  	
  INSURERS AFFORDING COVERAGE

  	
  NAIC #

  
	
  INSURED 

  	
  Wells-Gardner Electronics, Inc.

  	
  INSURER A: St Paul Travelers

  	
  0168

  
	
   

  	
  American Gaming & Electronics, Inc.

  	
  INSURER B:

  	
   

  
	
   

  	
  9500 W. 55th St Suite A

  	
  INSURER C:

  	
   

  
	
   

  	
  McCook, IL 60525-3605

  	
  INSURER D:

  	
   

  
	
   

  	
   

  	
  INSURER E:

  	
   

  
					

 

COVERAGES

	
  THE POLICIES OF INSURANCE LISTED BELOW
  HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED.
  NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER
  DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN,
  THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE
  TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. AGGREGATE LIMITS SHOWN MAY
  HAVE BEEN REDUCED BY PAID CLAIMS.

  
	
  INSR

  LTR

  	
  ADD’L

  NSRC:

  	
  TYPE OF INSURANCE

  	
  POLICY NUMBER

  	
  POLICY EFFECTIVE

  DATE (MM/DD/YY)

  	
  POLICY EXPIRATION

  DATE (MM/DD/YY)

  	
  LIMITS

  
	
  A

  	
     

  	
  GENERAL LIABILITY 

  	
  630-307D856A

  	
  10/01/2005

  	
  10/01/2006

  	
  EACH OCCURRENCE

  	
  $1,000,000

  
	
   

  	
   

  	
  x

  	
  COMMERCIAL GENERAL LIABILITY 

  	
   

  	
   

  	
   

  	
  DAMAGE TO RENTED

  PREMISES (Ea occurence)

  	
  $1,000,000

  
	
   

  	
   

  	
  o

  	
  o CLAIMS MADE   x OCCUR

  	
   

  	
   

  	
   

  	
  MED EXP (Any one person)

  	
  $10,000

  
	
   

  	
   

  	
  o

  	
   

  	
   

  	
   

  	
   

  	
  PERSONAL & ADV INJURY

  	
  $1,000,000

  
	
   

  	
   

  	
  o

  	
   

  	
   

  	
   

  	
   

  	
  GENERAL AGGREGATE

  	
  $2,000,000

  
	
   

  	
   

  	
  GEN’L AGGREGATE LIMIT APPLIES PER: 

  	
   

  	
   

  	
   

  	
  PRODUCTS - COMP/OP AGG

  	
  $2,000,000

  
	
   

  	
   

  	
  o

  	
  POLICY   o PROJECT   x LCC

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A

  	
   

  	
  AUTOMOBILE LIABILITY

  	
  810-307D856A

  	
  10/01/2005

  	
  10/01/2006

  	
  COMBINED SINGLE LIMIT 

  	
   

  
	
   

  	
   

  	
  x

  	
  ANY AUTO 

  	
   

  	
   

  	
   

  	
  (Ea accident)

  	
  $1,000,000

  
	
   

  	
   

  	
  o

  	
  ALL OWNED AUTOS 

  	
   

  	
   

  	
   

  	
  BODILY INJURY 

  	
  $

  
	
   

  	
   

  	
  o

  	
  SCHEDULED AUTOS

  	
   

  	
   

  	
   

  	
  (Per person)

  	
   

  
	
   

  	
   

  	
  o

  	
  HIRED AUTOS

  	
   

  	
   

  	
   

  	
  BODILY INJURY 

  	
  $

  
	
   

  	
   

  	
  o

  	
  NON-OWNED AUTOS

  	
   

  	
   

  	
   

  	
  (Per accident)

  	
   

  
	
   

  	
   

  	
  o

  	
   

  	
   

  	
   

  	
   

  	
  PROPERTY DAMAGE 

  	
  $

  
	
   

  	
   

  	
  o

  	
   

  	
   

  	
   

  	
   

  	
  (Per accident)

  	
   

  
	
   

  	
   

  	
  GARAGE LIABILITY 

  	
   

  	
   

  	
   

  	
  AUTO ONLY — EA ACCIDENT

  	
  $

  
	
   

  	
   

  	
  o

  	
  ANY AUTO 

  	
   

  	
   

  	
   

  	
  OTHER THAN :

  	
  EA ACC

  	
  $

  
	
   

  	
   

  	
  o

  	
   

  	
   

  	
   

  	
   

  	
  AUTO ONLY

  	
  AGG

  	
  $

  
	
   

  	
   

  	
  EXCESS/UMBRELLA LIABILITY 

  	
  CUP-07D856A

  	
  10/01/2005

  	
  10/01/2006

  	
  EACH OCCURRENCE

  	
  $25,000,000

  
	
   

  	
   

  	
  o

  	
  OCCUR o CLAIMS MADE

  	
   

  	
   

  	
   

  	
  AGGREGATE

  	
  $

  
	
  A

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  
	
   

  	
   

  	
  o

  	
  DEDUCTIBLE 

  	
   

  	
   

  	
   

  	
   

  	
  $

  
	
   

  	
   

  	
  o

  	
  RETENTION

  	
   

  	
   

  	
   

  	
   

  	
  $

  
	
   

  	
  WORKERS COMPENSATION AND

  EMPLOYERS’ LIABILITY

  	
  UB-307D856

  	
  10/01/2005

  	
  10/01/2006

  	
  x WC STATUTORY

  LIMITS

  	
  o OTHER

  	
   

  
	
  A

  	
  ANY PROPRIETOR/PARTNER/ EXECUTIVE 

  	
   

  	
   

  	
   

  	
  E.L. EACH ACCIDENT

  	
  $1,000,000

  
	
   

  	
  OFFICER/MEMBER EXCLUDED?

  	
   

  	
   

  	
   

  	
  E.L. DISEASE - EA EMPLOYEE

  	
  $1,000,000

  
	
   

  	
  If yes, describe under

  SPECIAL DIVISIONS below

  	
   

  	
   

  	
   

  	
  E.L. DISEASE - POLICY LIMIT

  	
  $1,000,000

  
	
   

  	
  OTHER

  Property/RC

  	
  630-307D856A

  	
  10/01/2005

  	
  10/01/2006

  	
  BPP Limit:
  $20,000,000

  Ded: $10,000

  
	
  DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES/EXCLUSIONS
  ADDED BY ENDORSEMENT/SPECIAL PROVISIONS

  
	
  Additional Insured/Lender Loss Payee/Mortgagee:

  
	
  Wells Fargo Bank, N.A. — Business Credit Operating
  Division

  

 

	
  CERTIFICATE HOLDER

  	
  CANCELLATION

  
	
  Wells Fargo Bank, NA

  Business Credit Operating Division

  100 East Wisconsin Avenue

  Suite 1400

  Milwaukee, WI 53202

  	
  SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE
  CANCELLED BEFORE THE EXPIRATION DATE THEREOF, THE ISSUING INSURER WILL
  ENDEAVOR TO MAIL 30 DAYS WRITTEN NOTICE TO THE CERTIFICATE HOLDER
  NAMED TO THE LEFT, BUT FAILURE TO MAIL SUCH NOTICE SHALL IMPOSE NO OBLIGATION
  OR LIABILITY OF ANY KIND UPON THE INSURER, ITS AGENTS OR REPRESENTATIVES.

  
	
   

  	
  AUTHORIZED REPRESENTATIVE

  	
  /s/ Howard Alper/JWE

  
	
   

  	
  Howard Alper/JWE

  	
   

  
	
  ACORD 25 (2001/08)

  	
  ©ACORD CORPORATION 1988

  

 

 

IMPORTANT

If the certificate holder is an ADDITIONAL INSURED,
the policy(ies) must be endorsed. A statement on this certificate does not
confer rights to the certificate holder in lieu of such endorsement(s).

If SUBROGATION IS WAIVED,
subject to the terms and conditions of the policy, certain policies may require
an endorsement. A statement on this certificate does not confer rights to the
certificate holder in lieu of such
endorsement(s).

DISCLAIMER

The Certificate of Insurance on the reverse side of
this form does not constitute a contract between the issuing Insurer(s),
authorized representative or producer, and the certificate holder, nor does it affirmatively or negatively amend, extend or
alter the coverage afforded by the policies listed thereon.

 

SCHEDULE 5.1

Names Under Which Company Has Done Business

1.       Wells-Gardner Electronics
Corporation

2.       Wells-Gardner &
Company

3.       American Gaming &
Electronics, Inc.

4.    American Gaming &
Electronics of New Jersey

5.       American Gaming &
Electronics of Nevada

6.    American Gaming &
Electronics of Florida

7.       AG&E

Executive Office and Principal Place of Business

9500
West 55th Street

Suite A

McCook, Illinois 60525

Inventory and Equipment Locations

9500
West 55th Street

McCook, Illinois 60525

202 W. Parkway Drive

Unit 1

Egg Harbor
Township, New Jersey 08234

EXCEL, Inc.

12640
Moore Street

Cerritos, California 90703

2545 West 80th Street

Unit #6

Hialeah, Florida 33016

4630 South Arville

Suite
E

Las Vegas,
Nevada 89103

 

SCHEDULE 5.2

Capitalization

Wells Gardner Electronics Corp. has 9,200,000 shares
registered on the American Stock Exchange under the symbol WGA. As of August 8,
2006, there are no known 5% or greater shareholders. Please see the Company’s most current
proxy dated March 24, 2006 filed with the Securities and Exchange Commission
for the ownership by Officers and Directors.

American Gaming & Electronics, Inc. is wholly-owned by
Wells-Gardner.

 

SCHEDULE 5.5

Subsidiaries

American Gaming &
Electronics Inc. is the sole wholly-owned subsidiary of Wells-Gardner Electronics Corporation.

 

SCHEDULE 5.7

Litigation

1.    Wells-Gardner Electronics, Corp. vs. Tovis Co., Ltd. and Tovis
USA (United States District Court for the District of Nevada)

2.    Patent Rights Protection Group, LLC vs. Wells Gardner
Electronics Corp., American Gaming & Electronics, and Anthony Spier
(United States District Court for the District of Nevada)

 

 

SCHEDULE 5.11

(a)             Owned
Intellectual Property

1.                 No
Patents

2.                 Trademarks:

	
  Registered Trademark

  	
   

  	
  U.S. Serial/Registration No.

  	
   

  	
  Date Registered

  	
   

  
	
  K7000 Prismatic
  (Words Only)

  	
   

  	
  73-596057/1479363

  	
   

  	
  04/30/1986

  	
   

  
	
  Wells-Gardner
  (Words Only)

  	
   

  	
  75-200178/2119629

  	
   

  	
  11/19/1996

  	
   

  
	
  AG&E (Words
  and Design)

  	
   

  	
  76-499561/2880871

  	
   

  	
  09/07/2004

  	
   

  

 

	
  Trademark Application

  	
   

  	
  U.S. Application No.

  	
   

  	
  Date Applied

  	
   

  
	
  Safety Sensor
  (Words Only)

  	
   

  	
  78/603771

  	
   

  	
  04/07/2005

  	
   

  

 

3.                 Copyrights:

	
  Registered Copyright

  	
   

  	
  Registration No.

  	
   

  	
   

  	
   

  
	
  C: part no. 85X0221-001

  (technical drawing)

  	
   

  	
  VA242487

  	
   

  	
   

  	
   

  
	
  D: part no. 87X0821-001

  (technical drawing)

  	
   

  	
  VA242488

  	
   

  	
   

  	
   

  
	
  Nomenclature,
  top side: no. 87X0844-001 (technical drawing: circuit board)

  	
   

  	
  VA242257

  	
   

  	
   

  	
   

  
	
  P.C. board, 13”/19”,
  raster deflection:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C
  part no. 85X0216-001 (technical drawing: circuit board)

  	
   

  	
  VA242258

  	
   

  	
   

  	
   

  
	
  Service Manual for
  K7000

  	
   

  	
  TX3097783

  	
   

  	
   

  	
   

  
	
  Service Manual for
  K7000

  	
   

  	
  TX2201818

  	
   

  	
   

  	
   

  
	
  Service Manual for
  Optimiser

  	
   

  	
  TX1440900

  	
   

  	
   

  	
   

  
	
  Service Manual for
  Customiser II

  	
   

  	
  TX1440901

  	
   

  	
   

  	
   

  
	
  Service Bulletin for K7000

  	
   

  	
  TX1483870

  	
   

  	
   

  	
   

  

 

(c)             Intellectual
Property Rights Licensed from Others

Patent Rights
Protection Group, LLC vs. Wells Gardner Electronics Corp., American Gaming
& Electronics, and Anthony Spier (United States District
Court for the District of Nevada)

 

(d)            Other
Intellectual Property Needed for Business

None.

(e)             Infringement

Patent Rights Protection Group, LLC vs. Wells Gardner
Electronics Corp., American Gaming & Electronics, and Anthony Spier
(United States District Court for the District of Nevada

 

SCHEDULE 5.14

Environmental
Matters

None.

 

SCHEDULE 6.3

Permitted liens, Financing Statements

	
  Secured Party:

  	
   

  	
  De Lage Landen
  Financial Services, Inc.

  	
   

  
	
  Debtor:

  	
   

  	
  Wells-Gardner
  Electronics Corporation

  	
   

  
	
  Secured
  Property:

  	
   

  	
  Seven forklift trucks

  	
   

  
	
  Date
  Filed:

  	
   

  	
  August 9, 2001

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Secured
  Party:

  	
   

  	
  Citicapital Technology
  Finance, Inc.

  	
   

  
	
  Debtor:

  	
   

  	
  Wells-Gardner
  Electronics Corporation

  	
   

  
	
  Secured
  Property:

  	
   

  	
  Servers and network
  communications equipment

  	
   

  
	
  Date
  Filed:

  	
   

  	
  November 4, 2004

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Secured
  Party:

  	
   

  	
  Citicapital Technology
  Finance, Inc.

  	
   

  
	
  Debtor:

  	
   

  	
  Wells-Gardner
  Electronics Corporation

  	
   

  
	
  Secured
  Property:

  	
   

  	
  Telephone equipment

  	
   

  
	
  Date
  Filed:

  	
   

  	
  November 4, 2004

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Secured
  Party:

  	
   

  	
  Citicapital Technology
  Finance, Inc.

  	
   

  
	
  Debtor:

  	
   

  	
  Wells-Gardner
  Electronics Corporation

  	
   

  
	
  Secured
  Property:

  	
   

  	
  Desktop personal
  computers

  	
   

  
	
  Date
  Filed:

  	
   

  	
  May 23, 2005

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Secured
  Party:

  	
   

  	
  Citicapital Technology
  Finance, Inc.

  	
   

  
	
  Debtor:

  	
   

  	
  Wells-Gardner Electronics
  Corporation

  	
   

  
	
  Secured
  Property:

  	
   

  	
  Engineering wide-format
  copier

  	
   

  
	
  Date Filed:

  	
   

  	
  July 9, 2006

  	
   

  

 

 

SCHEDULE 6.4

Indebtedness

LaSalle Bank, N.A. —
Revolving Credit Facility

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