Exhibit 10.10

 

GENERAL CREDIT AND SECURITY AGREEMENT

 

THIS GENERAL CREDIT AND SECURITY AGREEMENT, dated as of the 14th day of
November, 2016, between Bremer Bank, National Association, a national banking
association, having its mailing address and principal place of business at 1995
Rahncliff Court, Eagan, Minnesota 55122 (herein called “Lender”), and Canterbury
Park Entertainment LLC, a Minnesota limited liability company, having offices at
1100 Canterbury Road, Shakopee, Minnesota 55379, (herein called “Borrower”).

 

RECITALS

 

A.           Borrower has requested Lender to extend to Borrower a revolving
loan (the “Revolving Credit Loan”) in the original principal amount of Six
Million and 00/100 Dollars ($6,000,000.00), for business purposes; and

 

B.           Lender is willing and prepared to extend the Revolving Credit Loan
to Borrower upon the terms and subject to the conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

 

1.            Agreement. This Agreement states the terms and conditions under
which Borrower may obtain the Revolving Credit Loan from Lender.

 

2.           Certain Definitions. For purposes of this Agreement, the following
terms shall have the following meanings:

 

“Accounts” shall mean accounts as defined in the Commercial Code.

 

“Advance(s)” shall have the meaning provided in Paragraph 4A(a).

 

“Affiliate” shall include, with respect to any party, any Person which directly
or indirectly controls, is controlled by, or is under common control with such
party and, in addition, in the case of Borrower, each officer, director or
shareholder of Borrower, and each joint venturer and partner of Borrower.

 

“Agreement” shall mean this Agreement as originally executed and as it may be
amended, modified, supplemented or restated from time to time.

 

“Benefit Plan” means any employee benefit plan as defined in Section 3(3) of
ERISA to which Borrower incurs or otherwise has any obligation or liability,
contingent or otherwise.

 

“Borrower” shall have the meaning provided in the preamble hereto.

 

 

 

“Business Day” shall mean any day on which commercial banks in Minneapolis,
Minnesota are open for the transaction of business of the kind contemplated by
this Agreement.

 

“Canterbury Concessions” shall mean Canterbury Park Concessions, Inc., a
Minnesota corporation.

 

“Cash Available for Debt Service” shall mean Borrower’s Net Income plus the sum
of (i) interest expense, (ii) depreciation, amortization and other non-cash
expenses, minus (iii) all dividends and distributions, all determined in
accordance with GAAP.

 

“Chattel Paper” shall mean chattel paper as defined in the Commercial Code.

 

“Closing Date” shall mean the day specified by Borrower on which all of the
conditions precedent specified in Paragraphs 21 and 23 shall have been
satisfied.

 

“Collateral” shall have the meaning provided in Paragraph 3.

 

“Commercial Code” shall mean the Minnesota Uniform Commercial Code, as amended
from time to time, and any successor statute, and any regulations promulgated
thereunder from time to time.

 

“Contingent Obligations” shall mean, with respect to any Person, all of such
Person’s liabilities and obligations which are contingent upon and will not
mature unless and until the occurrence of some event or circumstance and which
are not included within the definition of Liabilities of such Person.

 

“Debt Service” shall mean the sum of (i) all obligations of Borrower for
interest of its indebtedness, plus (ii) all obligations for payment of principal
on its indebtedness within such fiscal year, all determined in accordance GAAP.

 

“Debt Service Coverage Ratio” shall mean the ratio of Borrower’s Cash Available
for Debt Service to Debt Service.

 

“Default” shall mean any event which, with the giving of notice or passage of
time, or both, would constitute an Event of Default.

 

“Equipment” shall mean equipment as defined in the Commercial Code.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as the
same may from time to time be amended, and the rules and regulations promulgated
thereunder by any governmental agency or authority, as from time to time in
effect.

 

“ERISA Affiliate shall mean, with respect to any Person, any trade or business
(whether or not incorporated) which is a member of a group of which such Person
is a member and which is under common control or treated as a single employer
within the meaning of Section 414(b), (c), (m) or (o) of the Code, as amended
from time to time, and the regulations promulgated and rulings issued
thereunder.

 

2

 

 

“ERISA Event” shall mean any of the following: (a) a reportable event described
in Section 4043(b) of ERISA (or, unless the 30-day notice requirement has been
duly waived under the applicable regulations, Section 4043(c) of ERISA) with
respect to a Title IV Plan; (b) the withdrawal of any ERISA Affiliate from a
Title IV Plan subject to Section 4063 of ERISA during a plan year in which it
was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (c) the
complete or partial withdrawal of any ERISA Affiliate from any Multiemployer
Plan; (d) with respect to any Multiemployer Plan, the filing of a notice of
reorganization, insolvency or termination (or treatment of a plan amendment as
termination) under Section 4041A of ERISA; (e) the filing of a notice of intent
to terminate a Title IV Plan (or treatment of a plan amendment as termination)
under Section 4041 of ERISA; (f) the institution of proceedings to terminate a
Title IV Plan or Multiemployer Plan by the PBGC; (g) the failure to make any
required contribution to any Title IV Plan or Multiemployer Plan when due; (h)
the imposition of a lien under Section 412 or 430(k) of the Code or Section 303
or 4068 of ERISA on any property (or rights to property, whether real or
personal) of any ERISA Affiliate; (i) the failure of a Benefit Plan or any trust
thereunder intended to qualify for tax exempt status under Section 401 or 501 of
the Code or other requirements of law to qualify thereunder; (j) a Title IV plan
is in “at risk” status within the meaning of Section 430(i) of the Code; (k) a
Multiemployer Plan is in “endangered status” or “critical status” within the
meaning of Section 432(b) of the Code; and (l) any other event or condition that
might reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any Title
IV Plan or Multiemployer Plan or for the imposition of any material liability
upon any ERISA Affiliate under Title IV of ERISA other than for PBGC premiums
due but not delinquent.

 

“Event of Default” shall have the meaning provided in Paragraph 20.

 

“GAAP” shall mean generally accepted accounting principles consistently applied
and maintained throughout the period indicated and consistent with the audited
financial statements delivered to Lender pursuant to Paragraph 17(a)(i).
Whenever any accounting term is used herein which is not otherwise defined, it
shall be interpreted in accordance with GAAP.

 

“General Intangibles” shall mean general intangibles as defined in the
Commercial Code.

 

“Guarantor” shall mean Canterbury Park Holding Corporation, a Minnesota
corporation.

 

“Guaranty” shall mean the Corporate Guaranty of even date herewith made by
Guarantor in favor of Lender and shall include any renewal, replacement or
amendment thereto.

 

“Independent Public Accountants” shall mean Wipfli LLP, or any other firm of
independent public accountants which is acceptable to Lender.

 

“Instruments” shall mean instruments as defined in the Commercial Code.

 

3

 

 

“Inventory” shall mean inventory as defined in the Commercial Code.

 

“Liabilities” of any Person shall mean those items which, in accordance with
GAAP, appear as liabilities on a balance sheet.

 

“Loan Document(s)” shall mean individually or collectively, as the case may be,
this Agreement, the Revolving Credit Note, the Guaranty, the Security Agreement,
and any and all other documents executed, delivered or referred to herein or
therein, as originally executed and as amended, modified or supplemented from
time to time.

 

“Loan Year” shall mean the period from the date of this Agreement (or its
anniversary date in a succeeding calendar year) through the day preceding the
anniversary date of this Agreement in the immediately following calendar year.

 

“Material Adverse Occurrence” shall mean any occurrence of whatsoever nature
(including, without limitation, any adverse determination in any litigation,
arbitration or governmental investigation or proceeding) which Lender shall
determine, in its sole discretion, could adversely affect the present or
prospective financial condition or operations of Borrower or Guarantor or impair
the ability of Borrower or Guarantor to perform its respective obligations under
this Agreement or any other Loan Document.

 

“Maturity Date” shall mean the earlier of: (a) September 30, 2017; or (b) the
date upon which the Obligations are declared to be due and payable (or
automatically become due and payable) upon the occurrence of an Event of Default
as provided in Paragraph 20.

 

“Multiemployer Plan” shall mean a “multiemployer plan” as defined in Section
4001(a)(3) of ERISA to which Borrower is making or accruing an obligation to
make contributions, or has within any of the preceding three plan years made or
accrued an obligation to make contributions.

 

“Net Income” for any period shall mean net income for such period, determined in
accordance with GAAP excluding, however, (i) extraordinary gains, and (ii) gains
(whether or not extraordinary) from sales or other dispositions of assets other
than the sale of Inventory in the ordinary course of Borrower’s business.

 

“Obligations” shall have the meaning provided in Paragraph 3.

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation or any successor
board, authority, agency, officer or official of the United States administering
the principal functions assigned on the date hereof to the Pension Benefit
Guaranty Corporation under ERISA.

 

“Participant” shall mean each Person who purchases a participation interest from
Lender in the obligations.

 

“Person” shall mean any natural person, corporation, firm, partnership,
association, government, governmental agency or any other entity, whether acting
in an individual, fiduciary or other capacity.

 

4

 

 

“Plan” shall mean each employee benefit plan or other class of benefits covered
by Title IV of ERISA, in either case whether now in existence or hereafter
instituted, of Borrower or any of its Subsidiaries.

 

“Prime Rate” shall mean the WALL STREET JOURNAL PRIME RATE OF INTEREST, which is
defined as the rate published in the Money Rate Section of the WALL STREET
JOURNAL as the Prime Rate, with the understanding that the Lender may lend to
its customers at rates that are above or below the Prime Rate. If the Prime Rate
is no longer published, then in such event, the Lender may use a similar rate of
interest which is publicly announced by a major commercial banking institution
located in Minneapolis, Minnesota.

 

“Receivables” shall mean all rights of Borrower to the payment of money, whether
or not earned and howsoever evidenced or arising, including, without limitation,
all present and future Accounts, Chattel Paper, Instruments, and rights to
payment which are General Intangibles, all security therefor and all of
Borrower’s rights as an unpaid seller of goods (including rescission, replevin,
reclamation and stopping in transit) and all of Borrower’s rights to any goods
represented by any of the foregoing including returned or repossessed goods.

 

“Reportable Event” shall have the meaning given to that term in Title IV of
ERISA.

 

“Revolving Credit Commitment” shall mean $6,000,000.00 and, as the context may
require, the agreement of the Lender to make Advances to Borrower up to the
Revolving Credit Commitment subject to the terms and conditions of this
Agreement.

 

“Revolving Credit Loan” as defined in the first Recital of this Agreement.

 

“Revolving Credit Note” shall mean the promissory note in the form of Exhibit A
attached hereto and made a part hereof made by Borrower payable to the order of
Lender to evidence the Advances and each renewal, replacement or substitute note
therefor.

 

“Revolving Credit Termination Date” shall mean the Maturity Date of the
Revolving Credit Loan.

 

“Security Agreement” shall mean that certain Third-Party Security Agreement of
even date herewith, executed and delivered by Canterbury Concessions, in favor
of Lender as additional security for the Revolving Credit Note.

 

“Security Interest” shall mean any lien, pledge, mortgage, encumbrance, charge
or security interest of any kind whatsoever (including, without limitation, the
lien or retained security title of a conditional vendor) whether arising under a
security instrument or as a matter of law, judicial process or otherwise or the
agreement by Borrower to grant any lien, security interest or pledge, mortgage
or encumber any asset.

 

“Subordinated Debt” shall mean indebtedness of Borrower for borrowed money which
is subordinated to the Obligations on terms satisfactory to Lender in its sole
discretion.

 

5

 

 

“Tangible Net Worth” shall mean, at any date of determination, the difference
between: (a) the total assets appearing on Borrower’s balance sheet at such date
prepared in accordance with GAAP after deducting adequate reserves in each case
where, in accordance with GAAP, a reserve is proper; and (b) the total
liabilities appearing on such balance sheet (the “Total Liabilities”);
excluding, however, from the determination of total assets: (i) goodwill,
organizational expenses, research and development expenses, trademarks, trade
names, copyrights, patents, patent applications, licenses and rights in any
thereof, covenants not to compete, training costs and other similar intangibles;
(ii) all deferred charges or unamortized debt discount and expense other than
deferred income taxes; (iii) securities which are not readily marketable; (iv)
any write-up in the book value of any assets resulting from a re-evaluation
thereof subsequent to the date of Borrower’s annual financial statement
described in Paragraph 16(h); (v) amounts due from officers or Affiliates; and
(vi) any asset acquired subsequent to the date of this Agreement which the
Lender, in its reasonable business judgment, determines to be an intangible
asset.

 

“Title IV Plan” means a pension plan subject to Title IV of ERISA, other than a
Multiemployer Plan, to which any ERISA Affiliate incurs or otherwise has any
obligation or liability, contingent or otherwise.

 

3.           Security. As security for all present and future sums loaned or
advanced by Lender to Borrower and for all other obligations now or hereafter
chargeable to Borrower’s loan account hereunder, and all other obligations and
liabilities of any and every kind of Borrower to Lender, due or to become due,
direct or indirect, absolute or contingent, joint or several, howsoever created,
arising or evidenced, now existing or hereafter at any time created, arising or
incurred including, without limitation, the Revolving Credit Loan (herein called
“Obligations”), Borrower hereby grants to Lender a security interest in and to
the following property (collectively referred to as the “Collateral”) (any
quoted term used in this Paragraph which is a defined term under the Commercial
Code is being used as defined in the Commercial Code except as otherwise defined
herein):

 

(a)       all of Borrower’s Accounts, chattel paper, deposit accounts,
documents, Equipment, fixtures, instruments, Inventory, investment property,
general intangibles, goods, and letter-of-credit rights;

 

(b)       all of Borrower’s rights, titles and interests in and to any
commercial tort claims;

 

(c)       without limiting the description of the property or any rights or
interests in the property described above in this definition of Collateral, all
of Borrower’s rights, titles and interests in and to (i) all of Borrower’s
money, cash, and other funds; (ii) all attachments, accessions, parts and
appurtenances to, all substitutions for, and all replacements of any and all of
Borrower’s Equipment, fixtures and other goods; (iii) all of Borrower’s
agreements, as-extracted collateral, tangible chattel paper, electronic chattel
paper, health-care-insurance receivables, leases, lease contracts, lease
agreements, payment intangibles, proceeds of letters of credit, promissory
notes, records, and software; and (iv) all of Borrower’s franchises, customer
lists, insurance refunds, insurance refund claims, tax refunds, tax refund
claims, pension plan refunds, and pension plan reversions,

 

6

 

 

patents, patent applications, service marks, service mark applications,
trademarks, trademark applications, trade names, domain names, trade secrets,
goodwill, copyrights, copyright applications, and licenses;

 

(d)       all supporting obligations;

 

(e)       all of the products and proceeds of all of the foregoing described
property and interests in property, including cash proceeds and noncash
proceeds, and including proceeds of any insurance, whether in the form of
original collateral or any of the property or rights or interests in property
described above in this definition of Collateral; and

 

(f)       all of the foregoing, whether now owned or existing or hereafter
acquired or arising, or in which Borrower now has or hereafter acquires any
rights, titles or interests.

 

4.           Terms of Lending; etc.

 

4A         Revolving Credit Loan Advances.

 

(a)       At the request of Borrower, Lender agrees, subject to the terms and
conditions of this Agreement, to make loans (each such loan being herein
sometimes called individually an “Advance” and collectively the “Advances”) to
Borrower from time to time on any Business Day during the period from the date
hereof and ending on the Revolving Credit Termination Date; provided, however,
that Lender shall not be required to make any Advance if, after giving effect to
such Advance, the total outstanding Advances would exceed the Revolving Credit
Commitment. The amount of each such Advance shall be charged to Borrower’s loan
account.

 

(b)       In order to obtain an Advance, Borrower shall give written, telephonic
or electronic notice to Lender, by not later than 1:00 p.m. (Minneapolis time)
on the date the requested Advance is to be made Lender, shall make such Advance
by transferring the amount thereof in immediately available funds for credit to
an account (other than a payroll account) of Borrower at Lender, as specified in
such notice. At the request of Lender, Borrower shall confirm in writing any
telephonic notice.

 

(c)       The obligation of Lender to make Advances shall terminate on the
Revolving Credit Termination Date.

 

(d)       Borrower agrees that, on the Maturity Date of the Revolving Credit
Loan, it will repay the entire outstanding principal balance of the Revolving
Credit Loan together with accrued interest thereon and all accrued fees without
presentment or demand for payment, notice of dishonor, protest or notice of
protest, all of which are hereby waived.

 

(e)       The Advances shall be evidenced by the Revolving Credit Note made by
Borrower payable to the order of Lender; subject, however, to the provisions of
the Revolving Credit Note to the effect that the principal amount payable
thereunder at any time shall not exceed the then unpaid principal amount of the
Revolving Credit Loan made by Lender. Borrower hereby irrevocably authorizes
Lender to make or cause to be made, at or about the time of each Advance made by
Lender, an appropriate notation on the

 

7

 

 

records of Lender, reflecting the principal amount of such Advance, and Lender
shall make or cause to be made, on or about the time of receipt of payment of
any principal of the Revolving Credit Note, an appropriate notation on its
records reflecting such payment. The aggregate amount of all Advances set forth
on the records of Lender shall be rebuttable presumptive evidence of the
principal amount owing and unpaid on the Revolving Credit Note.

 

5.           Interest. Borrower agrees to pay interest on the outstanding
principal amount of the Revolving Credit Loan at the rate and at the time
specified in the Revolving Credit Note. Each change in the interest rates due to
a change in the Prime Rate shall take effect simultaneously with the
corresponding change in the Prime Rate. Interest may be charged to Borrower’s
loan account as an Advance at Lender’s option, whether or not Borrower then has
a right to obtain an Advance pursuant to the terms of this Agreement.

 

6.           Set-Off; etc. Upon the occurrence of a Default or an Event of
Default, Lender is hereby authorized at any time and from time to time, without
notice to Borrower (any such notice being expressly waived by Borrower), to set
off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by Lender or any Participant to or for the credit or the account of Borrower,
any amounts held in any account maintained at Lender or any Participant, against
any and all amounts which may be owed to Lender or any Participant by Borrower
whether in connection with this Agreement or otherwise and irrespective of
whether Borrower shall have made any requests under this Agreement.

 

7.           Collection.

 

(a)       At any time after the occurrence of an Event of Default, Lender may
notify account debtors on the Receivables (the “Customers”) at any time that
Receivables have been assigned to Lender and collect them directly in Lender’s
own name but unless and until Lender does so or gives Borrower other
instructions, Borrower shall make collection for Lender at Borrower’s sole cost
and expense. Following the occurrence of an Event of Default, Borrower shall
deliver to Lender all full and partial payments arising from the sale or other
disposition of Collateral received by Borrower their original form, except for
endorsement where necessary. Until such payments are so delivered to Lender,
such payments shall be held in trust by Borrower for and as Lender’s property
and shall not be commingled with any funds of Borrower. The net amount received
by Lender as proceeds arising from the sale or other disposition of Collateral
will be credited by Lender to Borrower’s loan account (subject to final
collection thereof) after allowing the number of days required by the applicable
bank for collection of checks and other instruments.

 

8.           Warranty as to Collateral. Borrower warrants that:

 

(a)       All Receivables listed in Borrower’s financial statements or schedules
will, when Borrower delivers such financial statements or the schedules to
Lender, be bona fide existing obligations created by the sale and actual
delivery of goods or the rendition of services to Customers in the ordinary
course of business, which Borrower then owns free of any Security Interest
except for the Security Interest in favor of Lender created by this

 

8

 

 

Agreement and which are then unconditionally owing to Borrower without defense,
offset or counterclaim; and

 

(b)       all Inventory and Equipment is and shall be owned by Borrower, free of
any Security Interest except for the Security Interest of Lender created by this
Agreement or Security Interests permitted by Paragraph 18(c).

 

Lender’s rights to and security interest in the Collateral will not be impaired
by the ineligibility of any such Collateral for Advances and will continue to be
effective until all Obligations chargeable to Borrower’s loan account have been
fully satisfied.

 

9.           Power of Attorney. Borrower appoints Lender, or any other person
whom Lender may from time to time designate, as Borrower’s attorney with power:
(a) to endorse Borrower’s name on any checks, notes, acceptances, drafts or
other forms of payment or security that may come into Lender’s possession; (b)
to sign Borrower’s name on any invoice or bill of lading relating to any
Receivables, on drafts against Customers, on schedules and confirmatory
assignments of Receivables, on notices of assignment, financing statements and
amendments under the Commercial Code and other public records, on verifications
of accounts and on notices to Customers; (c) to notify the post office
authorities to change the address for delivery of Borrower’s mail to an address
designated by Lender; (d) to receive, open and dispose of all mail addressed to
Borrower; (e) to send requests for verification of accounts to Customers; and
(f) to do all things necessary to carry out this Agreement; provided, however,
that the powers specified in clauses (c) and (d) above may be exercised only
after the occurrence of an Event of Default. Borrower ratifies and approves all
acts of the attorney taken within the scope of this power of attorney. Neither
Lender nor the attorney will be liable for any acts of commission or omission
nor for any error in judgment or mistake of fact or law. This power, being
coupled with an interest, is irrevocable so long as any Receivable in which
Lender has a security interest or any Obligation remains unpaid. Borrower waives
presentment and protest of all instruments and notice thereof, notice of default
and dishonor and all other notices to which Borrower may otherwise be entitled.

 

10.           Location of Collateral. Borrower warrants that its chief executive
office is at the address stated in the opening paragraph of this Agreement and
that its books and records concerning Receivables are located there. Borrower’s
Inventory, Equipment and other goods are at the location or locations as
designated on Schedule A annexed hereto. Borrower shall immediately notify
Lender if any additional locations for Collateral are subsequently established.
Borrower shall not change the location of its chief executive office, the place
where it keeps its books and records, or the location of any Collateral (except
for sales of Inventory or obsolete Equipment in the ordinary course of business)
until Borrower has obtained the written consent of Lender and all necessary
filings have been made and other actions taken to continue the perfection of
Lender’s Security Interest in such new location. Lender’s Security Interest
attaches to all the Collateral wherever located, and the failure of Borrower to
inform Lender of the location of any item or items of Collateral shall not
impair Lender’s Security Interest therein. Borrower’s state of organization is
the State of Minnesota, which has been its State of organization since the date
of Borrower’s organization. Borrower will not change its state of organization
from Minnesota without 30 days’ prior written notice to Lender, and after Lender
has acknowledged Borrower’s notice of such change in writing, and Borrower has
delivered to Lender acknowledgement copies

 

9

 

 

of financing statements filed where appropriate to continue the perfection of
Lender’s security interest as a first priority security interest in the
Collateral.

 

11.          Ownership and Protection of Collateral. Borrower warrants,
represents and covenants to Lender that the Collateral is now and, so long as
Borrower is obligated to Lender, will be, owned by Borrower free and clear of
all Security Interests except for the Security Interest in favor of Lender
created by this Agreement and except the Security Interests, if any, permitted
by Paragraph 18(c). Borrower will not sell, lease or otherwise dispose of the
Collateral, or attempt so to do (except for sales in the ordinary course of
business of Inventory or obsolete Equipment) without the prior written consent
of Lender and unless the proceeds of any such sale (including, without
limitation, sales in the ordinary course of business of Inventory or obsolete
Equipment) are deposited in Borrower’s “Main Operating Account” described in the
Cash Management Agreement. After the occurrence of a Default or an Event of
Default, Lender will at all times have the right to take physical possession of
any tangible Collateral and to maintain such possession on Borrower’s premises
or to remove the same or any part thereof to such other places as Lender may
wish. If Lender exercises Lender’s right to take possession of such Collateral,
Borrower shall on Lender’s demand, assemble the same and make it available to
Lender at a place reasonably convenient to Lender. Borrower shall at all times
keep the Equipment constituting Collateral in good condition and repair. All
expenses of protecting, storing, warehousing, insuring, handling and shipping of
the Collateral, all costs of keeping the Collateral free of any Security
Interests prohibited by this Agreement and of removing the same if they should
arise, and any and all excise, property, sales and use taxes imposed by any
state, federal or local authority on any of the Collateral or in respect of the
sale thereof, shall be borne and paid by Borrower and if Borrower fails to
promptly pay any thereof when due, Lender may, at its option, but shall not be
required to, pay the same and charge Borrower’s loan account therefor. Borrower
agrees to renew all insurance required by this Paragraph 11 or Paragraph 13 at
least 30 days prior to its expiration.

 

12.           Perfection of Security Interest. Borrower agrees to execute such
financing statements together with any and all other instruments or documents
and take such other action, including delivery, as may be required to create,
evidence, perfect and maintain Lender’s Security Interest in the Collateral and
Borrower shall not in any manner do any act or omit to do any act which would in
any manner impair or invalidate Lender’s Security Interest in the Collateral or
the perfection thereof. Borrower will cooperate with Lender in obtaining control
with respect to Collateral consisting of Deposit Accounts, Investment Property
and Electronic Chattel Paper (as such terms are defined in the Commercial Code).
Where Collateral is in possession of a third party, Borrower will join with
Lender in notifying such third party of Lender’s security interest and in
obtaining an acknowledgment from such third party that is holding such
Collateral for the benefit of Lender.

 

13.           Insurance. Borrower shall maintain insurance coverage on any
Collateral including Receivables and other rights to payment with such
companies, against such hazards, and in such amounts as may from time to time be
acceptable to Lender and shall deliver such policies or copies thereof to Lender
with satisfactory lender’s loss payable endorsements naming Lender. Unless
otherwise approved by Lender, each policy of insurance shall contain a clause
requiring the insurer to give not less than 30 days prior written notice to
Lender in the event of any anticipated cancellation of the policy for any reason
and a clause that the interest of Lender shall not be impaired or invalidated by
any act or neglect of Borrower nor by the occupation of the

 

10

 

 

premises wherein such Collateral is located for purposes more hazardous than are
permitted by said policy. Borrower will maintain, with financially sound and
reputable insurers, insurance with respect to its properties and business
against such casualties and contingencies of such types (which may include,
without limitation, public and product liability, larceny, embezzlement, or
other criminal misappropriation insurance) and in such amounts as may from time
to time be required by Lender.

 

14.           Borrower’s Loan Account. Lender may charge to Borrower’s loan
account at any time the amounts of all Obligations (and interest, if any,
thereon) owing by Borrower to Lender, including (without limitation) loans,
Advances, debts, liabilities, obligations acquired by purchase, assignment or
participation and all other obligations, whenever arising, whether absolute or
contingent and whether due or to become due; also the amount of all costs and
expenses and all attorneys’ fees and legal expenses incurred in connection with
efforts made to enforce payment of such obligations, or to obtain payment of any
Receivables, or the foreclosure of any Collateral or in the prosecution or
defense of any actions or proceedings relating in any way to this Agreement
whether or not suit is commenced, including reasonable attorneys’ fees and legal
expenses incurred in connection with any appeal of a lower court’s order or
judgment; and also the amounts of all unpaid taxes and the like, owing by
Borrower to any governmental authority or required to be deposited by Borrower,
which Lender pays or deposits for Borrower’s account. All sums at any time
standing to Borrower’s credit on Lender’s books and all of Borrower’s property
at any time in Lender’s possession or upon or in which Lender has a Security
Interest, may be held by Lender as security for all obligations which are
chargeable to Borrower’s loan account. Subject to the foregoing, Lender, at
Borrower’s request, will remit to Borrower any net balance standing to
Borrower’s credit on Lender’s books. Lender will account to Borrower monthly and
each monthly accounting will be fully binding on Borrower, unless, within sixty
(60) days thereafter, Borrower gives Lender specific written notice of
exceptions. All debit balances in Borrower’s loan account will bear interest as
provided in Paragraph 5 of this Agreement.

 

15.           Participations. If any Person shall acquire a participation in the
Revolving Credit Loan, Borrower hereby grants to any such Person holding a
participation, and such Person shall have and is hereby given a continuing
Security Interest in any money, securities and other property of Borrower in the
custody or possession of such Participant, including the right of set-off as
fully as if such Participant had lent directly to Borrower the amount of such
participation.

 

16.          General Representations and Warranties. To induce Lender to make
Advances pursuant to the Revolving Credit Loan hereunder, Borrower makes the
following representations and warranties, all of which shall survive the
occurrence of the Closing Date, the making of the initial Advance:

 

(a)       Borrower is a limited liability company duly organized, existing, and
in good standing under the laws of the State of Minnesota, has power to own its
property and to carry on its business as now conducted, and is duly qualified to
do business in all states in which the nature of its business requires such
qualification.

 

(b)       The execution and delivery of this Agreement and the other Loan
Documents and the performance by Borrower of its obligations hereunder and
thereunder

 

11

 

 

do not and will not conflict with any provision of law, or of the charter or
bylaws of Borrower, or of any agreement binding upon Borrower.

 

(c)       The execution and delivery of this Agreement and the other Loan
Documents have been duly authorized by all necessary official action by the
Board of Governors and sole member of Borrower, and by the Board of Directors of
Guarantor; and this Agreement and the other Loan Documents to which Borrower is
a party have in fact been duly executed and delivered by Borrower and constitute
its lawful and binding obligations, legally enforceable against it in accordance
with their respective terms.

 

(d)       There is no action, suit or proceeding at law or equity, or before or
by any federal, state, local or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, pending or, to
the knowledge of Borrower, threatened against Borrower or Guarantor or the
property of Borrower or Guarantor which, if determined adversely, would be a
Material Adverse Occurrence or would affect the ability of Borrower or Guarantor
to perform its obligations under the Loan Documents; and neither Borrower nor
Guarantor is in default with respect to any final judgment, writ, injunction,
decree, rule or regulation of any court or federal, state, local or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, where the effect of such default would be a Material
Adverse Occurrence.

 

(e)       The authorization, execution and delivery of this Agreement, and the
payment of the Revolving Credit Loan and interest thereon, is not, and will not
be, subject to the jurisdiction, approval or consent of any federal, state or
local regulatory body or administrative agency.

 

(f)       Except as set forth on Schedule B attached hereto and except the
Security Interest granted to Lender pursuant to this Agreement, all of the
assets of Borrower are free and clear of Security Interests.

 

(g)       Borrower and Guarantor have filed all federal, state and local tax
returns which, to the knowledge of Borrower, are required to be filed, and
Borrower and Guarantor have paid all taxes shown on such returns and all
assessments which are due. Borrower and Guarantor have made all required
withholding deposits. Federal income tax returns of Borrower and Guarantor have
been examined and approved or adjusted by the applicable taxing authorities or
closed by applicable statutes for any fiscal years prior to and including the
fiscal year ended on December 31, 2015. Borrower does not have knowledge of any
objections to or claims for additional taxes by federal, state or local taxing
authorities for subsequent years which would be a Material Adverse Occurrence.

 

(h)       Borrower has furnished, or has caused Guarantor to furnish to Lender
the financial statements described on Schedule C attached hereto. These
statements were prepared in accordance with GAAP and present fairly the
financial condition of Guarantor and its consolidated Subsidiaries, including,
without limitation, Borrower. There has been no material adverse change in the
condition of Guarantor or Borrower, financial or otherwise, since the date of
the most recent of such financial statements.

 

12

 

 

(i)       The value of the assets and properties of Borrower at a fair valuation
and at their then present fair salable value is and, after giving effect to any
pending Advance and the application of the amount advanced, will be materially
greater than its total liabilities, including Contingent Obligations, and
Borrower has (and has no reason to believe that it will not have) capital
sufficient to pay its liabilities, including Contingent Obligations, as they
become due.

 

(j)       Borrower is in compliance with all requirements of law relating to
pollution control and environmental regulations in the respective jurisdictions
where Borrower is presently doing business or conducting operations.

 

(k)       All amounts obtained pursuant to Advances will be used for Borrower’s
(i) general working capital purposes, or (ii) to finance capital expenditures
permitted to make pursuant hereto, or (iii) to make intercompany loans permitted
to be made pursuant hereto. No part of the Revolving Credit Loan shall be used
at any time by Borrower to purchase or carry margin stock (within the meaning of
Regulation U promulgated by the Board of Governors of the Federal Reserve
System) or to extend credit to others for the purpose of purchasing or carrying
any margin stock. Borrower is not engaged principally, or as one of its
important activities, in the business of extending credit for the purposes of
purchasing or carrying any such margin stock. No part of the proceeds of the
Revolving Credit Loan will be used by Borrower for any purpose which violates,
or which is inconsistent with, any regulations promulgated by the Board of
Governors of the Federal Reserve System.

 

(l)       Except for the trademarks, patents, copyrights and franchise rights
listed on Schedule D attached hereto, Borrower is not the owner of any patent,
trademark, copyright or franchise rights. Borrower is not an “investment
company”, or an “affiliated person” of, or a “promoter” or “principal
underwriter” for, an “investment company”, as such terms are defined in the
Investment Company Act of 1940, as amended. The making of the Revolving Credit
Loan, the application of the proceeds and repayment thereof by Borrower and the
performance of the transactions contemplated by this Agreement will not violate
any provision of said Act, or any rule, regulation or order issued by the
Securities and Exchange Commission thereunder.

 

(m)       (i) Each Plan is in compliance in all material respects with all
applicable provisions of ERISA and the Code; (ii) the aggregate present value of
all accrued vested benefits under all Plans (calculated on the basis of the
actuarial assumptions specified in the most recent actuarial valuation for such
Plans) did not exceed as of the date of the most recent actuarial valuation for
such Plans the fair market value of the assets of such Plans allocable to such
benefits; (iii) Borrower is not aware of any information since the date of such
valuations which would materially affect the information contained therein; (iv)
no Plan which is subject to Part 3 of Subtitle B of Title I of ERISA or Section
412 of the Code has incurred an accumulated funding deficiency, as that term is
defined in Section 302 of ERISA or Section 412 of the Code (whether or not
waived); (v) no liability to the PBGC (other than required premiums which have
become due and payable, all of which have been paid) has been incurred with
respect to any Plan, and there has not been any Reportable Event which presents
a material risk of termination of any Plan by the PBGC; and

 

13

 

 

(vi) Borrower has not engaged in a transaction which would subject it to tax,
penalty or liability for prohibited transactions imposed by ERISA or the Code.
Borrower does not contribute to any Multiemployer Plan.

 

(n)       The Guarantor is the sole owner and member of Borrower. Borrower has
not: (i) issued any unregistered securities in violation of the registration
requirements of Section 5 of the Securities Act of 1933, as amended, or any
other law; or (ii) violated any rule, regulation or requirement under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, in either case where the effect of such violation would be a Material
Adverse Occurrence. No proceeds of the Advances will be used to acquire any
security in any transaction which is subject to Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended.

 

(o)       Except as set forth on Schedule E attached hereto, Borrower does not
have any Contingent Obligations.

 

(p)       All factual information heretofore or herewith furnished by or on
behalf of Borrower and/or Guarantor to Lender for purposes of or in connection
with this Agreement or any transaction contemplated hereby is, and all other
such factual information hereafter furnished by or on behalf of Borrower or
Guarantor to Lender will be, true and accurate in every material respect on the
date as of which such information is dated or certified and no such information
contains any material misstatement of fact or omits to state a material fact or
any fact necessary to make the statements contained therein not misleading.

 

(q)       Each representation and warranty shall be deemed to be restated and
reaffirmed to Lender on and as of the date of the making of each Advance under
this Agreement except that any reference to the financial statements referred to
in Paragraph 16(h) shall be deemed to refer to the financial statements then
most recently delivered to Lender pursuant to Paragraphs 17(a)(i) and (ii).

 

17.          Affirmative Covenants. Borrower agrees that it will do all of the
following:

 

(a)       Furnish to Lender in form satisfactory to Lender:

 

 (i)        Within 90 days after the end of each fiscal year of Borrower, a
complete audited financial report prepared and certified without qualification
or explanatory language by Independent Public Accountants on a Consolidated and
consolidating basis for Guarantor and any consolidated subsidiaries of
Guarantor, including, without limitation, Borrower; together with a copy of the
management letter or memorandum, if any, delivered by such Independent Public
Accountants to Guarantor and Guarantor’s response thereto. If Borrower shall
fail to cause Guarantor to supply the report within such time limit, Lender
shall have the right (but not the duty) to employ certified public accountants
acceptable to Lender to prepare such report at Borrower’s expense.

 

 (ii)       Within 45 days after the end of each fiscal quarter, a financial
statement of Guarantor, including a balance sheet and operating figures as to
that quarter and year-to date prepared in accordance with GAAP on a consolidated
and

 

14

 

 

consolidating basis for Guarantor and any consolidated subsidiaries of
Guarantor, including, without limitation, Borrower, and certified as correct by
the chief financial officer or treasurer of Guarantor but subject to adjustments
as to inventories or other items to which an officer of Guarantor directs
attention in writing.

 

(iii)      Within 45 days after the end of the first 3 fiscal quarters of each
year of Borrower, and within 90 days after the end of each fiscal year of
Borrower, a compliance certificate in the form attached as Exhibit B certified
as true and accurate by the chief financial officer or treasurer of Borrower,
or, as applicable, Guarantor.

 

(iv)     By no later than 45 days after the beginning of any of Borrower’s
fiscal years, projections for Borrower’s then current fiscal year consisting of
projected month-end balance sheets and month-end and year-to-date statements of
earnings and cash flows, all in a form acceptable to Lender and certified by
Borrower’s chief financial officer or treasurer as having been prepared in good
faith and representing the most probable course of Borrower’s business during
such fiscal year.

 

(v)       Immediately upon and in any event within five (5) days after any
officer of Borrower becomes aware of any Default or Event of Default, a notice
describing the nature thereof and what action Borrower proposes to take with
respect thereto

 

(vi)      As soon as available and in any event within ten (10) days after the
filing thereof, a copy of each report filed with the Securities and Exchange
Commission.

 

(vii)     Immediately upon becoming aware of the occurrence, with respect to any
Plan, of any Reportable Event or any “prohibited transaction” (as defined in
Section 4975 of the Code), a notice specifying the nature thereof and what
action Borrower proposes to take with respect thereto, and, when received,
copies of and notice from PBGC of intention to terminate or have a trustee
appointed for any Plan.

 

(viii)    From time to time, at Lender’s request, any and all other material,
reports, information, or figures reasonably required by Lender.

 

(b)          During regular business hours and after reasonable notice, permit
Lender and its representatives access to, and the right to make copies of, the
books, records, and properties of Borrower and Guarantor at all reasonable
times; and permit Lender and its representatives to discuss Borrower’s and
Guarantor’s financial matters with officers of Borrower and/or Guarantor and
with their independent certified public accountants (and, by this provision,
Borrower authorizes the independent certified public accountant of Borrower and
Guarantor to participate in such discussions).

 

15

 

 

(c)       Pay when due all taxes, assessments, and other liabilities against it
or its properties, except those which are being contested in good faith and for
which an adequate reserve has been established; Borrower shall make all
withholding payments when due.

 

(d)       Promptly notify Lender in writing of any substantial change in present
executive management of Borrower.

 

(e)       Pay when due all amounts necessary to fund in accordance with its
terms any Plan;

 

(f)       Comply in all material respects with all laws, acts, rules,
regulations and orders of any legislative, administrative or judicial body or
official applicable to Borrower’s business operation or Collateral or any part
thereof; provided, however, that Borrower may contest any such law, act, rule,
regulation or order in good faith by appropriate proceedings so long as (i)
Borrower first notifies Lender of such contest, and (ii) such contest does not,
in Lender’s sole discretion, adversely affect Lender’s right or priority in the
Collateral or impair Borrower’s ability to pay the Obligations when due.

 

(g)       Promptly notify Lender in writing of: (x) any litigation which: (i)
involves an amount in dispute in excess of $50,000.00 which is not covered by
insurance or, if covered by insurance, the insurer has failed to accept defense
of the litigation or has done so under a reservation of rights; (ii) relates to
the matters which are the subject of this Agreement; or (iii) if determined
adversely to Borrower would be a Material Adverse Occurrence; and (y) any
adverse development in any litigation described in clause (x) which could cause
a Material Adverse Occurrence.

 

(h)       Maintain all of Borrower’s primary operating accounts at Lender.

 

(i)       At all times, maintain the ratio of: (i) Borrower’s Liabilities; to
(ii) Tangible Net Worth at not greater than 1.0 to 1.0, measured quarterly.

 

(j)       Maintain Borrower’s Tangible Net Worth at not less than $26,000,000.00
at all times, measured quarterly.

 

(k)       Achieve and maintain a Debt Service Coverage Ratio of not less than
1.20 to 1.00 as of the end of each fiscal year of Borrower for the fiscal year
then ended, measured annually.

 

18.          Negative Covenants. Borrower agrees that it will not do any of the
following, without first obtaining Lender’s prior written consent:

 

(a)       Purchase or redeem any membership interests of Borrower; or declare or
pay any dividends or distribution to any member of Borrower except that so long
as no Default or Event of Default has occurred and is continuing at the time of
any of the following described payments or would result therefrom, Borrower may
pay dividends to Guarantor payable from Borrower’s Net Income.

 

16

 

 

(b)       Incur or permit to exist any interest-bearing indebtedness, secured or
unsecured, including without limitation, indebtedness for money borrowed or
capitalized leases, except (i) borrowings under this Agreement; or (ii) purchase
money indebtedness incurred in connection with capital expenditures permitted by
Paragraph 18(l) so long as the aggregate outstanding principal balance thereof
does not exceed $250,000.00 at any time.

 

(c)       Create or permit to exist any Security Interest on any of Borrower’s
assets now owned or hereafter acquired except: (i) those created in Lender’s
favor and held by Lender; (ii) liens of current taxes not delinquent or taxes
which are being contested in good faith for which an adequate reserve has been
established; or (iii) security interests created in connection with purchase
money indebtedness incurred in connection with the capital expenditures
permitted by Paragraph 18(l), but only to the extent that: (A) such security
interest attaches only to the equipment then being acquired by Borrower, did not
and does not attach to Borrower’s current assets and does not secure any other
indebtedness; (B) no Default or Event of Default has occurred and is continuing
at the time of the proposed creation of such security interest or would result
therefrom; and/or (C) no portion of the purchase price of the relevant equipment
has been funded by the trade-in or available proceeds arising from the sale or
other disposition of any of Borrower’s then, or previously, owned equipment.

 

(d)       Effect any recapitalization; or be a party to any merger or
consolidation; or sell, transfer, convey or lease all, or any of its real or
personal property that is used for its card casino or racetrack operations.

 

(e)       Enter into a new business or purchase or otherwise acquire any
business enterprise or any substantial assets of any person or entity; or make
any loans to any person or entity except for (i) loans and advances to officers
for expenses to be incurred in the ordinary course of business so long as the
aggregate outstanding principal amount thereof does not exceed $10,000.00 at any
time; or (ii) purchase any shares of stock of, or similar investment in, any
entity; or (iii) loans to Borrower’s subsidiaries or entities under common
control with Borrower in an aggregate amount of not greater than $5,000,000 in
the calendar year of 2017.

 

(f)       Become a guarantor or surety or pledge its credit or its assets on any
undertaking of another.

 

(g)       Make any substantial change in present executive management or policy
or in its present business or enter into a new business.

 

(h)       [Reserved.]

 

(i)       Change its fiscal year.

 

(j)       (i) Permit or suffer any Plan maintained for employees of Borrower or
any commonly controlled entity to engage in any transaction which results in a
liability of Borrower under Section 409 or 502(i) of ERISA or Section 4975 of
the Code; (ii) permit or suffer any such Plan to incur any “accumulated funding
deficiency” (within the meaning

 

17

 

 

of Section 302 of ERISA and Section 412 of the Code), whether or not waived;
(iii) terminate, or suffer to be terminated, any Plan covered by Title IV of
ERISA maintained by Borrower or any commonly controlled entity or permit or
suffer to exist a condition under which PBGC may terminate any such Plan; or
(iv) permit to exist the occurrence of any Reportable Event (as defined in Title
IV of ERISA) which represents termination by the PBGC of any Plan.

 

(k)       Enter into any agreement containing any provision which would be
violated or breached by Borrower under any Loan Document or by the performance
by Borrower of its obligations under any Loan Document or, except for this
Agreement or any other Loan Document, which would prohibit Borrower from
granting, or otherwise limit the ability of Borrower to grant to Lender any
Security Interest on any assets or properties of Borrower.

 

(l)       Make capital expenditures (including without limitation by way of
capitalized leases) except for the replacement and repair of Borrower’s existing
Equipment or for acquisition of new Equipment consistent with Borrower’s present
business practices.

 

19.          Availability of Collateral. Intentionally Deleted.

 

20.          Default and Remedies. It shall be an Event of Default under this
Agreement if:

 

(a)       Borrower or Guarantor fails to make any payment required under this
Agreement or any present or future supplements hereto or under any other
agreement between Borrower and Lender when due, or if payable upon demand, upon
demand and such failure shall remain unremedied for five (5) days; or

 

(b)       Borrower or Guarantor fails to perform or observe any covenant,
condition or agreement contained in this Agreement or any Loan Document on its
part to be performed (other than those failures covered by other subparagraphs
of this Paragraph) and such default shall continue for a period of 30 days after
written notice thereof from Lender to Borrower or Guarantor; or

 

(c)       Any warranty, representation or statement made or furnished to Lender
by or on behalf of Borrower or Guarantor proves to have been false in a material
respect when made; or

 

(d)       A proceeding seeking an order for relief under the Bankruptcy Code is
commenced by or against Borrower or Guarantor and, if commenced against Borrower
or Guarantor, remains undismissed for 60 days; or

 

(e)       Borrower or Guarantor becomes insolvent or generally fails to pay, or
admit in writing its inability to pay, its debts as they become due; or

 

(f)       Borrower or Guarantor applies for, consents to, or acquiesces in, the
appointment of a trustee, receiver or other custodian for it or him or for any
of its or his property, or makes a general assignment for the benefit of
creditors; or, in the absence of such application, consent or acquiescence, a
trustee, receiver or other custodian is

 

18

 

 

appointed for Borrower or Guarantor, or for a substantial part of Borrower’s or
Guarantor’s property; or

 

(g)       Any other reorganization, debt arrangement, or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution or
liquidation proceeding is commenced in respect of Borrower or Guarantor; or

 

(h)       Borrower or Guarantor takes any action to authorize, or in furtherance
of, any of the events described in the foregoing clauses (d) through (g); or

 

(i)       Any judgments, writs, warrants of attachment, executions or similar
process (not covered by insurance) is issued or levied against Borrower or any
of its assets in excess of an aggregate amount of $100,000.00 for any or all of
such judgments, writs, warrants, executions or similar process and is not
released, vacated or fully bonded prior to any sale and in any event within 90
days after its issue or levy; or

 

(j)       Borrower shall fail to comply with Paragraph 13, or any of Paragraphs
17 (a), (c), (i), (j) or (k); or

 

(k)       Borrower shall fail to comply with Paragraphs 18(a) through (1)
(inclusive), and such failure shall continue for a period of 30 days; or

 

(l)       The maturity of any Indebtedness of Borrower (other than Indebtedness
under this Agreement or the other Loan Documents) in the aggregate amount of
more than $500,000.00 for Borrower shall be accelerated, or Borrower shall fail
to pay any such Indebtedness when due or, in the case of such Indebtedness
payable on demand; or

 

(m)      The Guarantor repudiates or purports to revoke the Guaranty, or fails
to perform any obligation under the Guaranty; or

 

(n)       An Event of Default occurs under the Security Agreement; or

 

(o)       Any of the Loan Documents shall at any time cease to be in full force
and effect or shall be judicially declared null and void, or the validity or
enforceability thereof shall be contested by the Borrower or the Guarantor, or
the Lender shall cease to have a valid and perfected security interest having
the priority contemplated thereunder in the collateral described herein or in
the Security Agreement, other than by action or inaction of the Lender, if any
of the foregoing shall remain unremedied for ten (10) days or more after receipt
of notice thereof to the Borrower from the Lender.

 

Upon the occurrence of any Event of Default described in Paragraphs 20(d), (e),
(f), (g) or (h), all Obligations shall be and become immediately due and payable
without any declaration, notice, presentment, protest, demand or dishonor of any
kind (all of which are hereby waived) and Borrower’s ability to obtain any
additional Advance under this Agreement shall be immediately and automatically
terminated. Upon the occurrence of any other Event of Default, Lender, without
notice to Borrower, may terminate Borrower’s ability to obtain any additional
Advance under this Agreement and may declare all or any portion of the
Obligations to be due and payable, without notice, presentment, protest or
demand or dishonor of any kind (all of which are hereby waived),

 

19

 

 

whereupon the full unpaid amount of the obligations which shall be so declared
due and payable shall be and become immediately due and payable. Upon the
occurrence of an Event of Default, Lender shall have all the rights and remedies
of a secured party under the Commercial Code and may have a receiver appointed
over the Collateral and/or may require Borrower to assemble the Collateral and
make it available to Lender at a place designated by Lender, and Lender shall
have the right to take immediate possession of the Collateral and may enter any
of the premises of Borrower or wherever the Collateral is located with or
without process of law and to keep and store the same on said premises until
sold (and if said premises be the property of Borrower, Borrower agrees not to
charge Lender or a purchaser from Lender for storage thereof for a period of at
least 90 days). Upon the occurrence of an Event of Default, Lender, without
further demand, at any time or times, may sell and deliver any or all of the
Collateral at public or private sale, for cash, upon credit or otherwise, at
such prices and upon such terms as Lender deems advisable, at its sole
discretion. Any requirement under the Commercial Code or other applicable law of
reasonable notice will be met if such notice is mailed to Borrower at its
address set forth in the opening paragraph of this Agreement at least ten (10)
days before the date of sale. Lender may be the purchaser at any such sale, if
it is public. The proceeds of sale will be applied first to all expenses of
retaking, holding, preparing for sale, selling and the like, including
attorneys’ fees and legal expenses (whether or not suit is commenced) including,
without limitation, reasonable attorneys’ fees and legal expenses incurred in
connection with any appeal of a lower court’s order or judgment and second to
the payment (in whatever order Lender elects) of all other obligations
chargeable to Borrower’s loan account hereunder. Subject to the provisions of
the Commercial Code, Lender will return any excess to Borrower and Borrower
shall remain liable to Lender for any deficiency. Borrower agrees to give Lender
immediate notice of the existence of any Default or Event of Default.

 

21.          Conditions Precedent to Closing Date; etc. The occurrence of the
Closing Date and the obligation of Lender to make the any Advances (including
the initial Advance) are subject to the condition precedent that Lender shall
have received on or before the Closing Date or the date of the initial Advance,
copies of all of the following, unless waived by Lender:

 

(a)       A favorable opinion of counsel to Borrower in form and substance
satisfactory to Lender;

 

(b)       UCC-1 Financing Statements in a form acceptable to Lender
appropriately completed;

 

(c)       Recent UCC searches from the filing offices in all states required by
Lender which reflect that no other Person holds a Security Interest in any
Collateral of Borrower, except for Security Interests permitted by Paragraph
18(c);

 

(d)       The Revolving Credit Note, in form and substance satisfactory to
Lender, appropriately completed and duly executed by Borrower;

 

(e)       The Guaranty, duly executed by the Guarantor;

 

(f)       The Security Agreement, duly executed by Canterbury Concessions;

 

20

 

 

(g)       A certified copy of all documents evidencing any necessary consent or
governmental approvals (if any) with respect to the Loan Documents or any other
documents provided for in this Agreement;

 

(h)       A certificate by the Secretary or any Assistant Secretary of Borrower
certifying as to: (i) attached resolutions of Borrower’s Board of Governors
authorizing or ratifying the execution, delivery and performance of the Loan
Documents to which Borrower is a party and any other documents provided for by
this Agreement, (ii) the names of each Person authorized to sign the Loan
Documents together with a sample of the true signature of such Person(s), and
(iii) attached operating agreement of Borrower;

 

(i)       A copy of Borrower’s articles of organization certified by the
Secretary of State;

 

(j)       A Certificate of Good Standing for Borrower issued by its state of
organization and by those states requested by Lender;

 

(k)       Evidence of insurance for all insurance required by the Loan
Documents;

 

(l)       An officer certificate, in form and substance satisfactory to Lender,
executed by the President/Chief Manager of Borrower; and

 

(m)       Such other approvals, opinions or documents as Lender may require.

 

22.          Conditions Precedent to All Advances; Etc. The occurrence of the
Closing Date and the obligation of Lender to make any Advance (including the
initial Advance) shall be subject to the satisfaction of each of the following
conditions, unless waived in writing by Lender:

 

(a)       the representations and warranties of Borrower set forth in this
Agreement are true and correct on the date of such credit extension (and after
giving effect to these then being made);

 

(b)       No Default, no Event of Default and no Material Adverse Occurrence
shall then have occurred and be continuing on the date of such credit extension
or result therefrom;

 

23.          Grant of License to Use Patents and Trademarks Collateral. For the
purpose of enabling Lender to exercise rights and remedies under this Agreement,
Borrower hereby grants to Lender and irrevocable, non-exclusive license
(exercisable without payment of royalty or other compensation to Borrower) to
use, license or sublicense any patent or trademark now owned or hereafter
acquired by Borrower and wherever the same may be located, and including in such
license reasonable access to all media in which any of the licensed items may be
recorded or stored and to all computer and automatic machinery software and
programs used for the compilation or printout thereof.

 

24.          Miscellaneous.

 

21

 

 

(a)       The performance or observance of any affirmative or negative covenant
or other provision of this Agreement and any supplement hereto may be waived by
Lender in a writing signed by Lender but not otherwise. No delay on the part of
Lender in the exercise of any remedy, power or right shall operate as a waiver
thereof, nor shall any single or partial exercise of any remedy, power or right
preclude other or further exercise thereof or the exercise of any other remedy,
power or right. Each of the rights and remedies of Lender under this Agreement
will be cumulative and not exclusive of any other right or remedy which Lender
may have hereunder or as allowed by law.

 

(b)       Any notice, demand or consent authorized by this Agreement to be given
to Borrower shall be deemed to be given when transmitted by electronic mail or
personally delivered, or three days after being deposited in the U.S. mail,
postage prepaid, or one day after delivery to Federal Express or other overnight
courier service, in each case addressed to Borrower at its address shown in the
opening paragraph of this Agreement, or at such other address as Borrower may,
by written notice received by Lender, designate as Borrower’s address for
purposes of notice hereunder. Any notice or request authorized by this Agreement
to be given to Lender shall be deemed to be given when transmitted by electronic
mail or personally delivered, or three days after being deposited in the U.S.
mail, postage prepaid, or one day after delivery to Federal Express or other
overnight courier, in each case addressed to Lender at its address shown in the
opening paragraph of this Agreement, or at such other address as Lender may, by
written notice received by Borrower, designate as Lender’s address for purposes
of notice hereunder; provided, however, that any notice or request for Advance
to Lender given pursuant to Paragraph 4A(b) shall not be deemed given until
received.

 

(c)       This Agreement, including exhibits and schedules and other agreements
referred to herein, is the entire agreement between the parties supersedes and
rescinds all prior agreements relating to the subject matter herein, cannot be
changed, terminated or amended orally, and shall be deemed effective as of the
date it is accepted by Lender.

 

(d)       Borrower agrees to pay and will reimburse Lender on demand for all
out-of-pocket expenses incurred by Lender arising out of this transaction
including without limitation, the preparation of this Agreement and the other
Loan Documents, filing and recording fees and reasonable attorneys’ fees and
legal expenses (whether or not suit is commenced) incurred in the protection and
perfection of Lender’s security interest in the Collateral, in the enforcement
of any of the provisions of this Agreement or of Lender’s rights and remedies
hereunder and against the Collateral, in the defense of any claim or claims made
or threatened against Lender arising out of this transaction or otherwise,
including, without limitation, in each instance, all reasonable attorneys’ fees
and legal expenses incurred in connection with any appeal of a lower court’s
order or judgment.

 

(e)       Borrower hereby agrees to indemnify, exonerate and hold Lender and its
officers, directors, employees and agents (the “Indemnified Parties”) free and
harmless from and against any and all actions, causes of action, suits, losses,
liabilities and damages, and expenses in connection therewith including, without
limitation, reasonable attorneys’ fees and disbursements (the ‘Indemnified
Liabilities”), incurred by the Indemnified Parties or any of them as a result
of, or arising out of, or relating to:

 

22

 

 

(1)any transaction financed or to be financed in whole or in part directly or
indirectly with proceeds of any Credit extension hereunder, or

 

(2)the execution, delivery, performance or enforcement of this Agreement or any
document executed pursuant hereto by any of the Indemnified Parties

 

except for any such Indemnified Liabilities arising on account of any
Indemnified Party’s gross negligence or willful misconduct.

 

If and to the extent that the foregoing undertaking may be unenforceable for any
reason, Borrower hereby agrees to make the maximum contribution to the payment
and satisfaction of each of the Indemnified Liabilities which is permissible
under applicable law. The provisions of this Paragraph shall survive termination
of this Agreement.

 

(f)       This Agreement is made under and shall be governed by and interpreted
in accordance with the internal laws of the State of Minnesota, except to the
extent that the perfection of the Security Interest hereunder, or the
enforcement of any remedies hereunder with respect to any particular Collateral,
shall be governed by the laws of a jurisdiction other than the State of
Minnesota. Captions herein are for convenience only and shall not be deemed part
of this Agreement.

 

(g)       This Agreement shall be binding upon Borrower and Lender and their
respective successors, assigns, heirs, and personal representatives and shall
inure to the benefit of Borrower, Lender and the successors and assigns of
Lender, except that Borrower may not assign or transfer its rights hereunder
without the prior written consent of Lender, and any assignment or transfer in
violation of this provision shall be null and void. In connection with the
actual or prospective sale by Lender of any interest or participation in the
obligations, Borrower authorizes Lender to furnish any information in its
possession, however acquired, concerning Borrower or any of its Affiliates to
any person or entity.

 

(h)       Borrower hereby irrevocably submits to the jurisdiction of any
Minnesota state court or federal court sitting in Minneapolis or St. Paul,
Minnesota, over any action or proceeding arising out of or relating to the
Agreement, and Borrower hereby irrevocably agrees that all claims in respect of
such action or proceeding may be heard and determined in such Minnesota State or
Federal court. Borrower hereby irrevocably waives, to the fullest extent it may
effectively do so, the defense of an inconvenient forum to the maintenance of
such action or proceeding. Borrower irrevocably consents to the service of
copies of the summons and complaint and any other process which may be served in
any such action or proceeding by the mailing by United States certified mail,
return receipt requested, of copies of such process to Borrower’s address stated
in the preamble hereto and addressed to Borrower’s President by title. Borrower
agrees that judgment final by appeal, or expiration of time to appeal without an
appeal being taken, in any such action or proceeding shall be conclusive and may
be enforced in any other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Paragraph shall affect the right of
Lender to serve legal process in any other manner permitted by law or

 

23

 

 

affect the right of Lender to bring any action or proceeding against Borrower or
its property in the courts of any other jurisdiction. Borrower agrees that, if
it brings any action or proceeding arising out of or relating to this Agreement,
it shall bring such action or proceeding in Hennepin County or Ramsey County,
Minnesota.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

24

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

 

  LENDER:       BREMER BANK, NATIONAL ASSOCIATION       By: [a170927001_v2.jpg] 
  Name: Laura Helmueller
Its: Senior Vice President

 

  BORROWER:       CANTERBURY PARK ENTERTAINMENT LLC       By:
 [a170927002_v2.jpg]   Name: Randall D. Sampson
Its: President and CEO

 

25

 

 

List of Exhibits

 

Exhibit A  Form of Revolving Credit Note

 

Exhibit B  Form of Compliance Certificate

 

List of Schedules

 

Schedule A Locations

 

Schedule B  Existing Security Interests

 

Schedule C Financial Statements

 

Schedule D  Intellectual Property

 

Schedule E  Contingent Obligations

 

Schedule F  Existing Indebtedness

 

 

exhibit a

 

revolving credit note

 

$6,000,000.00  Eagan, Minnesota
November 14, 2016

 

FOR VALUE RECEIVED, the undersigned, CANTERBURY PARK ENTERTAINMENT LLC, a
Minnesota limited liability company (the “Borrower”), promises to pay to the
order of BREMER BANK, NATIONAL ASSOCIATION, a national banking association (the
“Lender”), on the Revolving Credit Termination Date, the principal sum of Six
Million and No/100ths Dollars ($6,000,000.00) or, if less, the then aggregate
unpaid principal amount of the Advances as may be borrowed by the Borrower under
the Credit Agreement (as defined herein) and are outstanding on the Revolving
Credit Termination Date. All Advances and all payments of principal shall be
recorded by the Lender in its records which records shall be conclusive evidence
of the subject matter thereof, absent manifest error.

 

The Borrower further promises to pay to the order of the Lender interest on each
Advance from time to time outstanding from the date hereof until paid in full at
a fluctuating annual rate equal to the greater of: (a) the Prime Rate, or (b)
3.0%; provided, however, that, notwithstanding anything to the contrary
contained herein, upon the occurrence and during the continuance of any Event of
Default, the rate of interest hereunder shall be 2.0% per annum above the
current rate of interest. Interest shall be due and payable on the first day of
each calendar month, commencing on November 1, 2016, and at maturity. Interest
payment after maturity shall be payable on demand. Each change in the
fluctuating interest rate shall take effect simultaneously with the
corresponding change in the Prime Rate.

 

All payments of principal and interest under this Note shall be made in lawful
money of the United States of America in immediately available funds to the
Lender at the Lender’s office at 1995 Rahncliff Court, Eagan, Minnesota 55122,
or at such other place as may be designated by the Lender to the Borrower in
writing.

 

This Note is the Revolving Credit Note referred to in, and evidences
indebtedness incurred under that certain General Credit and Security Agreement
dated as of even date herewith (herein, as it may be amended, modified or
supplemented from time to time, called the “Credit Agreement”; capitalized terms
not otherwise defined herein being used herein as therein defined) between the
Borrower and the Lender, to which Credit Agreement reference is made for a
statement of the terms and provisions thereof, including those under which the
Borrower is permitted and required to make prepayments and repayments of
principal of such indebtedness and under which such indebtedness may be declared
to be immediately due and payable.

 

All parties hereof, whether as makers, endorsers or otherwise, severally waive
presentment, demand, protest and notice of dishonor in connection with this
Note.

 

This Note is made under and governed by the internal laws of the State of
Minnesota.

 

 

 

REVOLVING CREDIT NOTE
PAGE 2

 

$6,000,000.00 Eagan, Minnesota
November 14, 2016

 

  CANTERBURY PARK ENTERTAINMENT LLC       By:     Name: Randall D. Sampson
Its: President and CEO

 

 

 

exhibit b

 

compliance certificate

 

Pursuant to Paragraph 17(a)(iii) of the General Credit and Security Agreement
dated as of November 14, 2016 (the General Credit and Security Agreement as it
may be amended, modified, supplemented or restated from time to time being the
“Credit Agreement”; the terms defined therein being used herein as therein
defined) by and between the undersigned and BREMER BANK, NATIONAL ASSOCIATION
(the “Lender”), the undersigned certifies to the Lender as follows:

 

1.       The financial statements of the Borrower attached hereto for the period
ending ___________________, 20__ (the “Financial Statements”) have been prepared
in accordance with GAAP applied on a consistent basis subject only to
non-accrual of bonuses, other variations from GAAP which in the aggregate are
not material, year-end adjustments which in the aggregate are not expected to be
materially adverse and the omission of footnotes.

 

2.       The representations and warranties contained in Paragraph 16 of the
Credit Agreement are true and correct as of the date hereof as though made on
that date except that the representations and warranties set forth in Paragraph
l6(h) to the financial statements of the Borrower shall be deemed a reference to
the audited and unaudited financial statements of the Borrower, as the case
maybe, then most recently delivered to the Lender pursuant to Paragraph 17(a)(i)
or (ii), as the case maybe.

 

3.       As of ___________________, 20__ (the “Measurement Date”), no Default or
Event of Default has occurred and is continuing [except (describe here any
Default or Event of Default and the action which the undersigned proposes to
take with respect thereto.)].

 

4.       Paragraph 17(i). The undersigned’s minimum required ratio of
Liabilities to Tangible Net Worth was not less than 1.00 to 1.00 and the
undersigned’s actual ratio at such Measurement Date was _____ to 1.00 and was
computed in accordance with the Credit Agreement.

 

5.       Paragraph 17(j). The undersigned’s minimum required Tangible Net Worth
was not less than $__________ and the undersigned’s actual Tangible Net Worth at
such Measurement Date was $__________ and was computed in accordance with the
Credit Agreement.

 

6.       Paragraph 17(k). The undersigned’s minimum required Debt Service
Coverage Ratio was not less than 1.20 to 1.00, and the undersigned’s actual
ratio at such Measurement Date was _____ to 1.00, and was computed in accordance
with the Credit Agreement.

  

Dated _______________, 20__. CANTERBURY PARK ENTERTAINMENT LLC         By:  

    Name:  

  Its:  

 

 

 

schedule A

 

locations

 

1100 Canterbury Road
Shakopee, MN 55379

 

 

 

schedule B

 

existing security interests

 

Part I: General Security Interests.

 

The following Security Interests are permitted:

 

(a)Deposits or pledges to secure payment of workers’ compensation, unemployment
insurance, old age pensions or other social security obligations, in the
ordinary course of business of the Borrower;

 

(b)Security Interests for taxes, fees, assessments and governmental charges not
delinquent or to the extent that payments therefor shall not at the time be
required to be made in accordance with the provisions of Paragraph 17(c);

 

(c)Security Interests of carriers, warehousemen, mechanics and materialmen, and
other like Security Interests arising in the ordinary course of business, for
sums not due or to the extent that the secured amounts are being contested in
good faith by appropriate proceedings;

 

(d)Deposits to secure the performance of bids, trade contracts, leases,
statutory obligations and other obligations of a like nature incurred in the
ordinary course of business; and

 

(e)Zoning restrictions, easements, licenses, restrictions on the use of real
property or irregularities in title thereto, which do not materially impair the
use of such property in the operation of Borrower’s business or the value of
such property for the purpose of such business.

 

Part II: Specific Security Interests.

 

None.

 

 

 

schedule C

 

financial statements

 

Financial statements for the fiscal month ended June 30, 2016 (Unaudited).

 

 

 

SCHEDULE D

 

INTELLECTUAL PROPERTY

 

None.

 

 

 

schedule E

 

contingent obligations

 [a170927003_v2.jpg]