**Exhibit 10.4**

 

**AMENDED AND RESTATED GENERALCREDITAND SECURITY AGREEMENT(1)**

 

THIS AMENDED AND RESTATED GENERAL CREDIT AND SECURITYAGREEMENT, dated as of the 20th day of April, 2000, between BremerBank, National Association, a national banking association, having its mailingaddress and principal place of business at 633 South Concord Street, South St.Paul, MN 55075 (herein called “Lender”), and Canterbury Park HoldingCorporation, a Minnesota corporation, having offices at 1100 Canterbury Road,Shakopee, Minnesota 55379, (herein called “Borrower”).

 

**RECITALS**

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A.            Borrowerand Lender are the parties to that certain General Credit and SecurityAgreement dated as of June 3, 1998 as amended to date (as so amended, the “OriginalAgreement”).

 

B.            Borrowerhas requested that Lender make certain Term Loans to Borrower and Lender hasagreed to do so subject to the terms and conditions of this Agreement amendingand restating the Original Agreement.

 

NOW THEREFORE, Borrower andLender agree to amend and restate the Original Agreement in its entirety toread as follows:

 

# **1.****            ****Agreement. **This Agreement states the terms andconditions under which Borrower may obtain certain loans from Lender.

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

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

 

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

 

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

 

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

 

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(1)   As amended subsequent to April 20, 2000by amendments dated April 30, 2001, May 23, 2002, April 30,2003, May 10, 2005, April 30, 2007, April 30, 2008, and October 30,2008.

 

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

 

“Cash ManagementAgreement” shall have the meaning provided in Paragraph 4A(b).

 

“Change of Control”shall mean the occurrence after the date of this Agreement of any event where: (a) CurtisA. Sampson, Randall D. Sampson and Dale Schenian shall cease to respectivelyown 35%, 5% and 15% of the aggregate voting power of all classes of Borrower’sstock entitled to vote generally in the election of Borrower’s directors; or (b) CurtisA. Sampson, Randall D. Sampson and Dale Schenian, acting individually or inconcert, shall cease to control the election of a majority of Borrower’s boardof directors or the direction of Borrower’s management policies.

 

“Chattel Paper” shallhave the meaning ascribed to such term in Article 9 of the CommercialCode.

 

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

 

“Collateral” shallhave the meaning provided in Paragraph 3.

 

“Commercial Code”shall mean the Uniform Commercial Code as enacted in the State of Minnesota, asamended from time to time, including, without limitation, on and after theeffective date of Minn. Laws 2000, Chapter 399, substantially adopting Revised Article 9of the Uniform Commercial Code as approved by the National Conference ofCommissioners on Uniform State Law Laws in July, 1998 (as so adopted beingsometimes hereinafter referred to as “Revised Article 9”) by Revised Article 9.

 

“Completion” shallmean that all Improvements are completed in accordance with the Plans and paidfor in full; a certificate of substantial completion for the Improvements hasbeen signed by Borrower, the Construction Manager and the General Contractorand delivered to Lender, and no punch-list items remain to be completed; anunconditional certificate of occupancy for all of the Improvements has beenissued by the appropriate governmental authority; and Borrower has delivered tothe Lender copies of all licenses and permits needed to operate the Project.

 

“Completion Deadline”shall mean August 1, 2000.

 

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

 

“Default” shall meanany event which, with the giving of notice or passage of time, or both, wouldconstitute an Event of Default.

 

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“Default Rate” shallmean with respect to any: (a) Note, a rate per annum equal to two percent(2%) per annum in excess of the interest rate which would otherwise be ineffect on such Note; or (b) other Obligation, a fluctuating rate per annumequal all times to the sum of the Reference Rate plus 1.50% per annum.

 

“Disbursing Agreement” shall mean that certainDisbursing Agreement dated as of even date herewith by and among Borrower, theLender and Commercial Partners Title, LLC (“CPT”).

 

“Equipment” shall have the meaning provided inParagraph 3(c).

 

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

 

“ERISA Affiliate” shall mean, with respect toany Person, any trade or business (whether or not incorporated) which is amember of a group of which such Person is a member and which is under commoncontrol within the meaning of Section 414 of the Code, as amended fromtime to time, and the regulations promulgated and rulings issued thereunder.

 

“ERISA Event” shall mean: (a) a ReportableEvent described in Section 4043 of ERISA and the regulations issuedthereunder (other than a Reportable Event not subject to the provision for30-day notice to the PBGC under such regulations); (b) the withdrawal ofBorrower or any ERISA Affiliate from a Plan during a plan year in which it was a “substantial employer” as defined inSection 4001 (a)(2) of ERISA; (c) the filing of a notice ofintent to terminate a Plan or the treatment of a Plan amendment as atermination under Section 4041 of ERISA; (d) the institution ofproceedings to terminate a Plan by the PBGC under Section 4042 of ERISA;or (e) any other event or condition that might reasonably be expected toconstitute grounds under Section 4042 of ERISA for the termination of, orthe appointment of a trustee to administer, any Plan.

 

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

 

“GAAP” shall mean generally accepted accountingprinciples consistently applied and maintained throughout the period indicatedand consistent with the audited financial statements delivered to Lenderpursuant to Paragraph l5(h).  Wheneverany accounting term is used herein which is not otherwise defined, it shall beinterpreted in accordance with GAAP.

 

“General Intangibles” shall have the meaningprovided in Paragraph 3(d).

 

“Improvements” shall mean the 15,828 squarefoot card club to be constructed within the existing buildings upon the Land.

 

“Independent Public Accountants” shall meanDeloitte & Toucheor any other firm of independent public accountants which is acceptable toLender.

 

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“Inventory” shall have the meaning provided inParagraph 3(b).

 

“Land” shall mean the land legally described onSchedule A attached hereto and incorporatedherein by reference.

 

“Letters of Credit” shall have the meaningprovided in Paragraph 4D(a) and shall be deemed to include the “Letters ofCredit” issued by Lender pursuant to the Original Agreement (the “ExistingLetters of Credit”).

 

“Letter of Credit Application(s)” shall havethe meaning provided in Paragraph 4D(b) and shall be deemed to include the“Letter of Credit Applications” (the “Existing Letters of Credit Applications”)delivered to Lender pursuant to the Original Agreement for the Existing Lettersof Credit.

 

“Letter of Credit Commission” shall have themeaning provided in Paragraph 4D(e).

 

“Letter of Credit Commitment” shall mean, atany date, the maximum amount of Letter of Credit Obligations which may fromtime to time be outstanding hereunder and under the Letter of CreditApplications, being initially $150,000.00 and, as the context may require, theagreement of Lender to issue the Letters of Credit for the account of Borrowersubject to the terms and conditions of this Agreement.

 

“Letter of Credit Obligations” on any dateshall mean the sum of: (a) the aggregate amount available to be drawn onthe Letters of Credit on such date; plus (b) the aggregate amountowed by Borrower to Lender on such date as a result of draws on the Letters ofCredit for which Borrower has not reimbursed Lender.

 

“Letter of Credit Commitment Termination Date”shall mean the Revolving Credit Termination Date.

 

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

 

“Loan(s)” shall mean the Revolving Credit Loan,Term Loan A and Term Loan B.

 

“Loan Document(s)” shall mean individually orcollectively, as the case may be, this Agreement, the Notes, the DisbursingAgreement, the Letter of Credit Applications and any and all other documentsexecuted, delivered or referred to herein or therein, as originally executedand as amended, modified or supplemented from time to time.

 

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

 

“Material Adverse Occurrence” shall mean anyoccurrence of whatsoever nature (including, without limitation, any adversedetermination in any litigation, arbitration or governmental investigation orproceeding) which Lender shall determine, in its sole discretion, couldadversely affect the present or prospective financial condition or 

 

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operations of Borrower orimpair the ability of Borrower to perform its obligations under this Agreementor any other Loan Document.

 

“Maturity Date” shall mean with respect to: (a) theRevolving Credit Loan, the earlier of: (i) June 30, 2009; or (ii) thedate upon which the Obligations are declared to be due and payable (orautomatically become due and payable) upon the occurrence of an Event ofDefault as provided in Paragraph 20; (b) Term Loan A, the earlier of: (i) August 1,2005; or (ii) the date upon which the Obligations are declared to be dueand payable (or automatically become due and payable) upon the occurrence of anEvent of Default as provided in Paragraph 20; or (c) Term Loan B, theearlier of: (i) August 1, 2003; or (ii) the date upon which theobligations are declared to be due and payable (or automatically become due andpayable) upon the occurrence of an Event of Default as provided in Paragraph20.

 

“Maximum Term Loan A Amount” shall mean anamount up to 75% of the Project Costs as set forth in the Sworn ConstructionCost Statement.

 

“Maximum Term Loan B Amount” shall mean anamount up to 50% of the card club supply costs (the “Card Club Supply Costs”)as set forth in the budget (the “Approved Card Club Supply Budget”) approved byLender and as amended to allow for changes under Paragraph 17(n) hereof.

 

“Monthly Payment Date” shall mean the first dayof each month.

 

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

 

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

 

“Note(s)” shall mean the Revolving Credit Noteand the Term Notes.

 

“Obligations” shall have the meaning providedin Paragraph 3.

 

“Original Agreement” shall have the meaningprovided in the recitals hereto.

 

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

 

“Participant” shallmean each Person who purchases a participation interest from Lender in theobligations.

 

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“Permitted Encumbrances”shall mean the Security Interests and other matters affecting Borrower’s titleto the Land listed on Schedule B attached heretoand incorporated herein by reference.

 

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

 

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

 

“Plans” shall meanthe final working plans for the Improvements, including drawings,specifications, details and manuals as approved by the Lender and as amended toallow for changes under Paragraph 17(n) hereof.

 

“Quarterly Payment Date”shall mean the last day of each March, June, September and December.

 

“Receivables” shallhave the meaning provided in Paragraph 3(a).

 

“Reference Rate”shall mean the publicly announced base rate (or other publicly announcedreference rate) charged by Bremer Financial Corporation; Borrower acknowledgesthat the Reference Rate may not be the lowest rate made available by Lender toits customers and that Lender may lend to its customers at rates that are at, aboveor below the Reference Rate.

 

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

 

“Revolving CreditCommitment” shall mean $5,000,000.00 and, as the context may require, theagreement of the Lender to make Advances to Borrower up to the Revolving CreditCommitment subject to the terms and conditions of this Agreement.

 

“Revolving Credit Loan”shall mean, at any date of determination, the aggregate outstanding principalamount of all Advances.

 

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

 

“Revolving CreditTermination Date” shall mean the Maturity Date of the Revolving CreditLoan.

 

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

 

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“Subordinated Debt” shall mean indebtedness ofBorrower for borrowed money which is subordinated to the Obligations on termssatisfactory to Lender in its sole discretion.

 

“Sworn Construction Cost Statement” shall meanone or more itemized, certified statements of actual and estimated costs (the “ProjectCosts”) for the build out and equipping of the Improvements (the “Project”),signed and sworn to by: (a) Borrower, Kraus-Anderson Construction Companyas the General Contractor (the “General Contractor”) and Christenson BuildingCorp., as the Construction Manager (the “Construction Manager”), in the case ofany Project Costs relating to work to be done under the construction contract(the “General Construction Contract”) between Borrower and the GeneralContractor; and (b) Borrower, in the case of any Project Costs relating towork separately contracted for by Borrower; and, in either case, as amended toallow for changes under Paragraph l7(n) hereof.

 

“Tangible Net Worth” shall mean, at any date ofdetermination, the difference between: (a) the total assets appearing onBorrower’s balance sheet at such date prepared in accordance with GAAP afterdeducting adequate reserves in each case where, in accordance with GAAP, areserve is proper; and (b) the total liabilities appearing on such balancesheet (the “Total Liabilities”); excluding, however, from thedetermination 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 notto compete, training costs and other similar intangibles; (ii) alldeferred charges or unamortized debt discount and expense other than deferredincome taxes; (iii) securities which are not readily marketable; (iv) anywrite-up in the book value of any assets resulting from a re-evaluation thereofsubsequent to the date of Borrower’ s annual financial statement described inParagraph 15(h); (v) amounts due from officers or Affiliates; and (vi) anyasset acquired subsequent to the date of this Agreement which the Lender, inits reasonable business judgment, determines to be an intangible asset.

 

“Term Loan(s)” shall mean Term Loan A and TermLoan B.

 

“Term Loan A” shall mean the loan described inParagraph 4B.

 

“Term Loan A Commitment” shall mean$1,586,750.00 and, as the context may require, the agreement of the Lender tomake Term Loan A subject to the terms and conditions of this Agreement.

 

“Term Loan A Commitment Termination Date” shallmean the earlier of: (a) August 1, 2000; or (b) the MaturityDate of Term Loan A.

 

“Term Loan B” shall mean the loan described inParagraph 4C.

 

“Term Loan B Commitment” shall mean $290,699.00and, as the context may require, the agreement of the Lender to make Term LoanB subject to the terms and conditions of this Agreement.

 

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“Term Loan B Commitment Termination Date” shallmean the earlier of: (a) August 1, 2000; or (b) the MaturityDate of Term Loan B.

 

“Term Note(s)” shall mean Term Note A and TermNote B.

 

“Term Note A” shall mean thepromissory note in the form of Exhibit B attached hereto and made apart hereof made by Borrower payable to the order of Lender to evidence TermLoan A and each renewal, replacement or substitute note therefor.

 

“Term Note B” shall mean the promissory note inthe form of Exhibit C attached hereto and made a part hereof madeby Borrower payable to the order of Lender to evidence Term Loan B and eachrenewal, replacement or substitute note therefor.

 

“Total Usage” shall mean, at any date ofdetermination, the sum of the Revolving Credit Loan and the Letter of CreditObligations.

 

# **3.****            ****Security****. **As security for all present andfuture sums loaned or advanced by Lender to Borrower and for all otherobligations now or hereafter chargeable to Borrower’s loan account hereunder,and all other obligations and liabilities of any and every kind of Borrower toLender, due or to become due, direct or indirect, absolute or contingent, jointor several, howsoever created, arising or evidenced, now existing or hereafterat any time created, arising or incurred including, without limitation, theLoans and the Letter of Credit Obligations (herein called “Obligations”),Borrower hereby grants to Lender a security interest in and to the followingproperty (any quoted term used in this Paragraph which is a defined term underthe Commercial Code is being used as defined in the Commercial Code except asotherwise defined herein):

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### (a)           AllReceivables of Borrower, whether now owned or existing, or owned, acquired orarising hereafter, together with all customer lists, original books andrecords, ledger and account cards, computer tapes, discs, printouts andrecords, whether now in existence or hereafter created.  ‘Receivables’ means all rights of Borrower tothe payment of money, whether or not earned and howsoever evidenced or arising,including (without limitation) all present and future ‘Accounts’, ‘ChattelPaper’ including, without limitation, all ‘Electronic Chattel Paper’ and ‘TangibleChattel Paper’, ‘Instruments’, and rights to payment which are ‘GeneralIntangibles’ including, without limitation, all ‘Payment Intangibles’, allsecurity therefore including, without limitation, all ‘Supporting Obligations’and all of Borrower’s rights as an unpaid seller of goods (includingrescission, replevin, reclamation and stopping in transit) and all of Borrower’srights to any goods represented by any of the foregoing including returned orrepossessed goods;

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### (b)           All‘Inventory’ of Borrower, whether now owned or existing, or owned, acquired orarising hereafter and wherever located including, without limitation, all ‘Goods’leased to Borrower as a lessor, all ‘Goods’ intended for sale or lease or to befurnished under contracts of service, all ‘Goods’ furnished by Borrower under acontract for service, all raw materials and work in process therefor, allfinished goods thereof, all materials and supplies of every nature used orusable or consumed or consumable in connection with the manufacture, packing,shipping, advertising, selling, leasing or furnishing of such ‘Goods’, and allaccessories thereto and all documents of title therefor evidencing the same;

 

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### (c)           All‘Equipment’ of Borrower, whether now owned or existing, or owned, acquired orarising hereafter and wherever located including, without limitation, all ofBorrower’s ‘Goods’ other than ‘Inventory’, all replacements and substitutionstherefor and all accessions thereto, and specifically includes, withoutlimitation, all present and future machinery, equipment, vehicles,manufacturing equipment, shop equipment, office and record keeping equipment,furniture, ‘Fixtures’, parts, tools and all other ‘Goods’ (except ‘Inventory’)used or acquired for use by Borrower for any business or enterprise;

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### (d)           All‘General Intangibles’ of Borrower, whether now owned or existing, or owned,acquired or arising hereafter, including without limitation, all present andfuture domestic and foreign patents, patent applications, trademarks, trademarkapplications, copyrights, trade names, trade secrets, patent and trademarklicenses (whether Borrower is licensor or licensee), shop drawings, engineeringdrawings, blueprints, specifications, parts lists, manuals, operatinginstructions, customer and supplier lists, licenses, permits, franchises, theright to use Borrower’s corporate name and the goodwill of Borrower’s business;

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### (e)           All‘Deposit Accounts’ of Borrower, whether now owned or existing, or owned,acquired or arising hereafter;

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### (f)            the‘Commercial Tort Claims’ of Borrower described on Schedule I attachedhereto;

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### (g)           All‘Investment Property’ of Borrower, whether now owned or existing, or owned,acquired or arising hereafter excluding, however, ‘Investment Property’ pledgedto secure Borrower’s bond in favor of the Bureau of Alcohol, Tobacco andFirearms;

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### (h)           All‘Letter of Credit Rights’ of Borrower, whether now owned or existing, or owned,acquired or arising hereafter; and

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### (i)            Allproducts and ‘Proceeds’ of any and all of the foregoing and all products and ‘Proceeds’of any other Collateral (as hereinafter defined) including the ‘Proceeds’ ofany insurance covering any of the Collateral.

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All suchReceivables, ‘Inventory’, ‘Equipment’, ‘General Intangibles’, ‘Deposit Accounts’,‘Commercial Tort Claims’, ‘Investment Property’, ‘Letter of Credit Rights’,products and ‘Proceeds’, together with all other assets and properties ofBorrower in or on which Lender is now or hereafter granted a security interest,mortgage, lien or encumbrance pursuant to this Agreement or otherwise, arehereinafter sometimes referred to as ‘Collateral’

 

# **4.****             Termsof Lending; etc.**

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## **4A****           RevolvingCredit Loan Advances**.

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### (a)           At the request of Borrower,Lender agrees, subject to the terms and conditions of this Agreement, to makeloans (each such loan being herein sometimes called individually an “Advance”and collectively the “Advances”) to Borrower from time to time on any BusinessDay during the period from the date hereof and ending on the Revolving 

 

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### Credit Termination Date; provided, however, that Lendershall not be required to make any Advance if, after giving effect to suchAdvance, the Total Usage would exceed the Revolving Credit Commitment. Theamount of each such Advance shall be charged to Borrower’s loan account.

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### (b)           Inorder to obtain an Advance, Borrower shall give written or telephonic notice toLender, by not later than 1:00 p.m. (Minneapolis time) on the date therequested Advance is to be made Lender, shall make such Advance by transferringthe amount thereof in immediately available funds for credit to an account(other than a payroll account) of Borrower at Lender, as specified in suchnotice; provided, however,that no request for an Advanceshall be required if such Advance is to be made under that certain Execusweep-Loan Sweep Agreement dated as of June 10,1998 (the “Cash Management Agreement”) between Borrower and Lender and eachsuch Advance shall deemed to have been requested by Borrower under thisAgreement. At the request of Lender, Borrower shall confirm in writing anytelephonic notice.

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### (c)           Theobligation of Lender to make Advances shall terminate on the Revolving CreditTermination Date.

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### (d)           Borroweragrees that, on the Maturity Date of the Revolving Credit Loan, it will repaythe entire outstanding principal balance of the Revolving Credit Loan togetherwith accrued interest thereon and all accrued fees without presentment ordemand for payment, notice of dishonor, protest or notice of protest, all ofwhich are hereby waived.

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### (e)           TheAdvances shall be evidenced by the Revolving Credit Note made by Borrowerpayable to the order of Lender; subject, however, to the provisionsof such Note to the effect that the principal amount payable thereunder at anytime shall not exceed the then unpaid principal amount of the Revolving CreditLoan made by Lender.  Borrower herebyirrevocably authorizes Lender to make or cause to be made, at or about the timeof each Advance made by Lender, an appropriate notation on the records ofLender, reflecting the principal amount of such Advance, and Lender shall makeor cause to be made, on or about the time of receipt of payment of any principalof the Revolving Credit Note, an appropriate notation on its records reflectingsuch payment.  The aggregate amount ofall Advances set forth on the records of Lender shall be rebuttable presumptiveevidence of the principal amount owing and unpaid on the Revolving Credit Note.

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## **4B****           TermLoan A**

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### (a)           Atthe request of Borrower made prior to the Term Loan A Commitment TerminationDate, Lender agrees, subject to the terms and conditions of this Agreement, tomake a term loan (the “Term Loan A”) to Borrower in an amount up to the lesserof: (i) the Term Loan A Commitment; or (ii) the Maximum Term Loan AAmount.  Term Loan A proceeds shall bedisbursed by the Lender solely for the purpose of paying, or reimbursingBorrower for the payment of, Project Costs.

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### (b)           TermLoan A proceeds shall be advanced by the Lender in accordance with the termsand conditions of this Agreement and in accordance with the Disbursing 

 

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### Agreement.  All monies advancedby the Lender to CPT shall constitute Advances under this Agreement, and shallbear interest from the date of advance to CPT, whether such Term Loan Aproceeds are fully disbursed by CPT or are withheld in full or in part.

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### (c)           Theobligation of Lender to make Term Loan A shall terminate on the Term Loan A Commitment Termination Date.

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### (d)           TermLoan A shall be evidenced by, and payable in accordance with, the Term Note Amade by Borrower payable to the order of Lender; subject, however,to the provisions of such Note to the effect that the principal amount payablethereunder at any time shall not exceed the then unpaid principal amount ofTerm Loan A made by Lender.  Borrower hereby irrevocably authorizes Lenderto make or cause to be made, at or about the time on which the Term Loan Aproceeds are advanced to CPT, an appropriate notation on the records of Lender,reflecting the principal amount of Term Loan A, and Lender shall make or causeto be made, on or about the time of receipt of payment of any principal of theTerm Note A, an appropriate notation on its records reflecting suchpayment.  The outstanding principalamount of Term Loan A set forth on the records of Lender shall be rebuttablepresumptive evidence of the principal amount owing and unpaid on the Term NoteA.

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### (e)           Lender shall not be obligated to advance anyTerm Loan A proceeds unless and until Borrower has provided Lender withevidence that Borrower has paid sufficient Project Costs so that all remainingunpaid Project Costs do not exceed the amount of the Term Loan A proceeds notyet advanced by Lender.  If the Lender orBorrower determines that the unadvanced balance of Term Loan A proceeds isinsufficient to cover any Project Cost, or to complete the Project, it shallnotify the other party of such determination, and Borrower shall, within five (5) BusinessDays after such notice, deposit with the Lender funds equal to the amount ofthe deficiency, except that, with respect to any such deficiency with respectto the payment of Project Costs or estimated expenses of Completion arising atany time when no other Event of Default has occurred and is continuing, Lenderagrees that Borrower shall not be required to make any such deposit until five (5) BusinessDays after the deficiency is at least $250,000.00. Borrower hereby assigns andpledges to the Lender all funds so deposited as additional security for theObligations.  Borrower may not reallocateitems of costs or change the Sworn Construction Cost Statement without theconsent of the Lender.

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## **4C****          ****Term Loan B**

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### (a)           Atthe request of Borrower made prior to the Term Loan B Commitment TerminationDate, Lender agrees, subject to the terms and conditions of this Agreement, tomake a term loan (the “Term Loan B”) to Borrower in an amount up to the lesserof: (i) the Term Loan B Commitment; or (ii) the Maximum Term Loan BAmount.  Term Loan B proceeds shall bedisbursed by the Lender solely for the purpose of paying, or reimbursingBorrower for the payment of, Borrower’s Card Club Supply Costs.

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### (b)           Inorder to obtain Term Loan B proceeds, Borrower shall give written or telephonicnotice to Lender, by not later than close of Lender’s business at least one (1) 

 

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### Business Day prior to the date on which Borrower desires that Term LoanB proceeds be disbursed to Borrower. Each request for a disbursement of Term Loan B proceeds shall be in theform of Exhibit D attached hereto. On the requested date but subject to the terms and conditions of thisAgreement, Lender shall make Term Loan B proceeds available to Borrower bytransferring the amount thereof in immediately available funds for credit to anaccount (other than a payroll account) of Borrower at Lender.

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### (c)           Theobligation of Lender to make Term Loan B shall terminate on the Term Loan BCommitment Termination Date.

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### (d)           TermLoan B shall be evidenced by, and payable in accordance with, the Term Note Bmade by Borrower payable to the order of Lender; subject, however,to the provisions of such Note to the effect that the principal amount payablethereunder at any time shall not exceed the then unpaid principal amount ofTerm Loan B made by Lender.  Borrowerhereby irrevocably authorizes Lender to make or cause to be made, at or aboutthe time on which the Term Loan B proceeds are advanced to the Borrower, anappropriate notation on the records of Lender, reflecting the principal amountof Term Loan B, and Lender shall make or cause to be made, on or about the timeof receipt of payment of any principal of the Term Note B, an appropriatenotation on its records reflecting such payment.  The outstanding principal amount of Term LoanB set forth on the records of Lender shall be rebuttable presumptive evidenceof the principal amount owing and unpaid on the Term Note B.

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## **4D****           Lettersof Credit**

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### (a)           Subjectto the terms and conditions of this Agreement, Lender agrees to issue stand-byletters of credit (the “Letters of Credit”) from time to time on termsacceptable to Lender on any Business Day during the period from the date hereofand ending on the Letter of Credit Commitment Termination Date; provided,however, that Lender shall not be required to issue any Letter of Creditif, after giving effect to such issuance, either: (i) the Total Usagewould exceed the Revolving Credit Commitment; or (ii) the Letter of CreditObligations would exceed the Letter of Credit Commitment.

###  

### (b)           Inorder to obtain a Letter of Credit, Borrower shall appropriately complete, dulyexecute and deliver to Lender an application for a Letter of Credit in formacceptable to Lender (the “Letter of Credit Application(s)”) by no later thanthe close of Lender’s business at least five (5) Business Days prior tothe date on which Borrower desires that the Letter of Credit be issued.  Notwithstanding anything to the contrary setforth in this Agreement or any other Loan Document, no Letter of Credit shallhave an expiry date later than the Letter of Credit Commitment TerminationDate.

###  

### (c)           Theobligation of Lender to issue Letters of Credit shall terminate on the Letterof Credit Commitment Termination Date.

###  

### (d)           Borroweragrees to pay to Lender on demand: (i) the amount of each draft or otherrequest for payment drawn under any Letter of Credit (whether drawn before oron its stated expiry date) issued by Lender; and (ii) interest on allamounts referred to in clause (i) 

 

12

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### above from the date of such draw until payment in full at a fluctuatingrate per annum at all times equal to the Reference Rate plus 2.00% perannum.

###  

### (e)           Borroweragrees to pay to Lender a commission (the “Letter of Credit Commission”) of1.5% per annum upon the undrawn face amount of each Letter of Credit issued byLender outstanding from time to time. The Letter of Credit Commission for each Letter of Credit shall bepayable in advance: (1) on the date of issuance of such Letter of Creditfor the initial period from the date of issuance through, to and including theday preceding the immediately following Quarterly Payment Date; and (2) oneach Quarterly Payment Date following such issuance date for the followingquarter (or, any lesser period if the relevant Letter of Credit is scheduled toexpire prior to the end of such quarter). Borrower further agrees to pay to Lender all reasonable and customarycharges, fees and expenses which Lender may generally assess to its customersin connection with, and any and all expenses which Lender may payor incur inconnection with, the issuance, extension, amendment or payment of any Letter ofCredit.

###  

### (f)            The rights of Lender against Borrowerhereunder shall be in addition to all rights under (and shall control over anyconflict under) any Letter of Credit Application.

###  

# **5.****            ****Interest****. **Borrower agrees to pay interest onthe outstanding principal amount of each Loanat the rates and at the times specified in the Note evidencing such Loan.  Each change in the interest rates due to achange in the Reference Rate shall take effect simultaneously with thecorresponding change in the Reference Rate. Interest may be charged to Borrower’s loan account as an Advance atLender’s option, whether or not Borrower then has a right to obtain an Advancepursuant to the terms of this Agreement.

#  

# **6.****            ****Set-Off; etc.**** **Upon the occurrence of a Default or an Event of Default, Lender ishereby 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 anyand all deposits (general or special, time or demand, provisional or final) atany time held and other indebtedness at any time owing by Lender or anyParticipant to or for the credit or the account of Borrower, any amounts heldin any account maintained at Lender or any Participant, against any and allamounts which may be owed to Lender or any Participant by Borrower whether inconnection with this Agreement or otherwise and irrespective of whetherBorrower shall have made any requests under this Agreement.

#  

# **7.****             Collection.**

#  

### (a)           Atany time after the occurrence of an Event of Default, Lender may notify accountdebtors on the Receivables (the “Customers”) at any time that Receivables havebeen assigned to Lender and collect them directly in Lender’s own name butunless and until Lender does so or gives Borrower other instructions, Borrower shallmake collection for Lender at Borrower’s sale cost and expense.  Following the occurrence of an Event ofDefault, Borrower shall deliver to Lender all full and partial payments arisingfrom the sale or other disposition of Collateral received by Borrower theiroriginal form, except for endorsement where necessary.  Until such payments are so delivered toLender, such payments shall be held in trust by Borrower for and as Lender’sproperty and shall not be commingled with any funds of Borrower.  The net amount received by Lender as proceeds

###  

13

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### arising from the sale or other disposition of Collateral will becredited by Lender to Borrower’s loan account (subject to final collectionthereof) after allowing the number of days required by the applicable bank forcollection of checks and other instruments. On and after the effective date of Revised Article 9, Borrower, forpurposes of the security interest granted pursuant to this Agreement, hasgranted to the Lender a direct security interest in all Deposit Accountsconstituting part of the Collateral and such Deposit Accounts are not claimedmerely as Proceeds of other Collateral.

###  

# **8.****             Warrantyas to Collateral.**  Borrowerwarrants that:

#  

### (a)           AllReceivables listed in Borrower’s financial statements or schedules will, whenBorrower delivers such financial statements or the schedules to Lender, be bonafide existing obligations created by the sale and actual delivery of goods orthe rendition of services to Customers in the ordinary course of business,which Borrower then owns free of any Security Interest except for the SecurityInterest in favor of Lender created by this Agreement and which are thenunconditionally owing to Borrower without defense, offset or counterclaim; and

###  

### (b)           allInventory and Equipment is and shall be owned by Borrower, free of any SecurityInterest except for the Security Interest of Lender created by this Agreementor Security Interests permitted by Paragraph 18(c).

###  

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

 

# **9.****             Powerof Attorney.**  Borrower appointsLender, or any other person whom Lender may from time to time designate, asBorrower’s attorney with power: (a) to endorse Borrower’s name on anychecks, notes, acceptances, drafts or other forms of payment or security thatmay come into Lender’s possession; (b) to sign Borrower’s name on anyinvoice or bill of lading relating to any Receivables, on drafts againstCustomers, on schedules and confirmatory assignments of Receivables, on noticesof assignment, financing statements and amendments under the Commercial Codeand other public records, on verifications of accounts and on notices toCustomers; (c) to notify the post office authorities to change the addressfor delivery of Borrower’s mail to an address designated by Lender; (d) toreceive, open and dispose of all mail addressed to Borrower; (e) to sendrequests for verification of accounts to Customers; and (t) to do allthings necessary to carry out this Agreement; provided, however,that the powers specified in clauses (c) and (d) above may beexercised only after the occurrence of an Event of Default. Borrower ratifiesand approves all acts of the attorney taken within the scope of this power ofattorney.  Neither Lender nor theattorney will be liable for any acts of commission or omission nor for anyerror in judgment or mistake of fact or law. This power, being coupled with an interest, is irrevocable so long asany Receivable in which Lender has a security interest or any Obligationremains unpaid.  Borrower waives presentmentand protest of all instruments and notice thereof, notice of default anddishonor and all other notices to which Borrower may otherwise be entitled.

#  

# **10.****          Locationof Collateral.**  Borrower warrantsthat its chief executive office is at the address stated in the openingparagraph of this Agreement and that its books and records 

#  

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# concerning Receivables are located there.  Borrower’s Inventory, Equipment and othergoods are at the location or locations as designated on Schedule C annexed hereto.  Borrowershall immediately notify Lender if any additional locations for Collateral aresubsequently established.  Borrower shallnot change the location of its chief executive office, the place where it keepsits books and records, or the location of any Collateral (except for sales ofInventory or obsolete Equipment in the ordinary course of business) untilBorrower has obtained the written consent of Lender and all necessary filingshave been made and other actions taken to continue the perfection of Lender’sSecurity Interest in such new location. Lender’s Security Interest attaches to all the Collateral whereverlocated, and the failure of Borrower to inform Lender of the location of anyitem or items of Collateral shall not impair Lender’s Security Interesttherein.  Borrower’s State oforganization is the State set forth in the preamble hereto and such State hasbeen its State of organization since the date of Borrower’s organization.  Borrower will not change its State oforganization from such State without 30 days’ prior written notice to Lender,Lender has given its written consent to such change, and Borrower has deliveredto Lender acknowledgement copies of financing statements filed whereappropriate to continue the perfection of Lender’s security interest as a firstpriority security interest therein.

#  

# **11.****          Ownershipand Protection of Collateral.** Borrower warrants, represents and covenants to Lender that theCollateral 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 theSecurity Interest in favor of Lender created by this Agreement and except theSecurity Interests, if any, permitted by Paragraph 18(c).  Borrower will not sell, lease or otherwisedispose of the Collateral, or attempt so to do (except for sales in theordinary course of business of Inventory or obsolete Equipment) without theprior written consent of Lender and unless the proceeds of any such sale (including,without limitation, sales in the ordinary course of business of Inventory orobsolete 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 atall times have the right to take physical possession of any tangible Collateraland to maintain such possession on Borrower’s premises or to remove the same orany part thereof to such other places as Lender may wish. If Lender exercisesLender’s right to take possession of such Collateral, Borrower shall on Lender’sdemand, assemble the same and make it available to Lender at a place reasonablyconvenient to Lender.  Borrower shall atall times keep the Equipment constituting Collateral in good condition andrepair.  All expenses of protecting,storing, warehousing, insuring, handling and shipping of the Collateral, allcosts of keeping the Collateral free of any Security Interests prohibited by thisAgreement and of removing the same if they should arise, and any and allexcise, property, sales and use taxes imposed by any state, federal or localauthority on any of the Collateral or in respect of the sale thereof, shall beborne and paid by Borrower and if Borrower fails to promptly pay any thereofwhen due, Lender may, at its option, but shall not be required to, pay the sameand charge Borrower’s loan account therefor. Borrower agrees to renew allinsurance required by this Paragraph 11 or Paragraph 13 at least 30 days priorto its expiration.

#  

# **12.****          Perfectionof Security Interest. **Borroweragrees to execute such financing statements together with any and all otherinstruments or documents and take such other action, including delivery, as maybe required to create, evidence, perfect and maintain Lender’s SecurityInterest in the Collateral and Borrower shall not in any manner do any act oromit to do any act which would in any manner impair or invalidate Lender’sSecurity Interest in the Collateral or the perfection thereof.  Borrower will cooperate with Lender inobtaining control with respect to 

#  

15

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# Collateralconsisting of Deposit Accounts, Investment Property, Letter of Credit Rights,and Electronic Chattel Paper.  WhereCollateral is in the possession of a third party, Borrower will join withLender in notifying such third party of Lender’s security interest and inobtaining an acknowledgement from such third party that it is holding suchCollateral for the benefit of the Lender.

#  

# **13.****          Insurance.**  Borrower shall maintain insurance coverage onany Collateral including Receivables and other rights to payment with suchcompanies, against such hazards, and in such amounts as may from time to timebe acceptable to Lender and shall deliver such policies or copies thereof toLender with satisfactory lender’s loss payable endorsements naming Lender.  Each policy of insurance shall contain aclause requiring the insurer to give not less than 30 days prior written noticeto Lender in the event of any anticipated cancellation of the policy for anyreason and a clause that the interest of Lender shall not be impaired orinvalidated by any act or neglect of Borrower nor by the occupation of thepremises wherein such Collateral is located for purposes more hazardous thanare permitted by said policy.  Borrowerwill maintain, with financially sound and reputable insurers, insurance withrespect to its properties and business against such casualties and contingenciesof such types (which may include, without limitation, public and productliability, larceny, embezzlement, or other criminal misappropriation insurance)and in such amounts as may from time to time be required by Lender.

#  

# **14.****          Borrower’sLoan Account.**  Lender may chargeto Borrower’s loan account at any time the amounts of all Obligations (andinterest, if any, thereon) owing by Borrower to Lender, including (withoutlimitation) loans, Advances, the Term Loans, the Letters of Credit Obligations,debts, liabilities, obligations acquired by purchase, assignment orparticipation and all other obligations, whenever arising, whether absolute orcontingent and whether due or to become due; also the amount of all costs andexpenses and all attorneys’ fees and legal expenses incurred in connection withefforts made to enforce payment of such obligations, or to obtain payment ofany Receivables, or the foreclosure of any Collateral or in the prosecution ordefense of any actions or proceedings relating in any way to this Agreementwhether or not suit is commenced, including reasonable attorneys’ fees andlegal expenses incurred in connection with any appeal of a lower court’s orderor judgment; and also the amounts of all unpaid taxes and the like, owing byBorrower to any governmental authority or required to be deposited by Borrower,which Lender pays or deposits for Borrower’s account. All sums at any timestanding to Borrower’s credit on Lender’s books and all of Borrower’s propertyat any time in Lender’s possession or upon or in which Lender has a SecurityInterest, may be held by Lender as security for all obligations which arechargeable to Borrower’s loan account. Subject to the foregoing, Lender, at Borrower’s request, will remit toBorrower any net balance standing to Borrower’s credit on Lender’s books.  Lender will account to Borrower monthly andeach monthly accounting will be fully binding on Borrower, unless, within sixty(60) days thereafter, Borrower gives Lender specific written notice ofexceptions.  All debit balances inBorrower’s loan account will bear interest as provided in Paragraph 5 of thisAgreement.

#  

# **15.****          Participations.**  If any Person shall acquire a participationin any Loan or the Letter of Credit Obligations, Borrower hereby grants to anysuch Person holding a participation, and such Person shall have and is herebygiven a continuing Security Interest in any money, securities and otherproperty of Borrower in the custody or possession of such Participant,including the right of set-off as fully as if such Participant had lent directlyto Borrower the amount of such participation.

 

16

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#  

# **16.****          GeneralRepresentations and Warranties.** To induce Lender to make Advances and the Term Loans hereunder, Borrowermakes the following representations and warranties, all of which shall survivethe occurrence of the Closing Date, the making of the initial Advance and theTerm Loans and the issuing of the Letters of Credit:

#  

### (a)           Borroweris a corporation duly organized, existing, and in good standing under the lawsof the State of Minnesota, has power to own its property and to carry on itsbusiness as now conducted, and is duly qualified to do business in all statesin which the nature of its business requires such qualification.

###  

### (b)           Theexecution and delivery of this Agreement and the other Loan Documents and theperformance by Borrower of fitsobligations hereunder and thereunder do not and will not conflict with anyprovision of law, or of the charter or bylaws of Borrower, or of any agreementbinding upon Borrower.

###  

### (c)           Theexecution and delivery of this Agreement and the other Loan Documents have beenduly authorized by all necessary official action by the Board of Directors andshareholders of Borrower; and this Agreement and the other Loan Documents havein fact been duly executed and delivered by Borrower and constitute its lawfuland binding obligations, legally enforceable against it in accordance withtheir respective terms.

###  

### (d)           Thereis 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 ofBorrower, threatened against Borrower or the property of Borrower which, ifdetermined adversely, would be a Material Adverse Occurrence or would affectthe ability of Borrower to perform its obligations under the Loan Documents;and Borrower is not 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 orinstrumentality, domestic or foreign, where the effect of such default would bea Material Adverse Occurrence.

###  

### (e)           Theauthorization, execution and delivery of this Agreement, and the payment of theLoans and interest thereon, is not, and will not be, subject to thejurisdiction, approval or consent of any federal, state or local regulatorybody or administrative agency.

###  

### (f)            Exceptas set forth on Schedule D attached hereto, all of the assets ofBorrower are free and clear of Security Interests.

###  

### (g)           Borrowerhas filed all federal, state and local tax returns which, to the knowledge ofBorrower, are required to be filed, and Borrower has paid all taxes shown onsuch returns and all assessments which are due. Borrower has made all required withholding deposits.  Federal income tax returns of Borrower havebeen examined and approved or adjusted by the applicable taxing authorities orclosed by applicable statutes for any fiscal years prior to and including thefiscal year ended on December 31, 1991. Borrower does not have knowledge of any objections to or claims foradditional taxes by 

 

17

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### federal, state or local taxing authorities for subsequent years whichwould be a Material Adverse Occurrence.

###  

### (h)           Borrowerhas furnished to Lender the financial statements described on Schedule E****attached hereto.  These statements were prepared in accordancewith GAAP and present fairly the financial condition of Borrower and itsconsolidated Subsidiaries.  There hasbeen no material adverse change in the condition of Borrower, financial orotherwise, since the date of the most recent of such financial statements.

###  

### (i)            Thevalue of the assets and properties of Borrower at a fair valuation and at theirthen present fair salable value is and, after giving effect to any pendingAdvance and the application of the amount advanced, will be materially greaterthan its total liabilities, including Contingent Obligations, and Borrower has(and has no reason to believe that it will not have) capital sufficient to payits liabilities, including Contingent Obligations, as they become due.

###  

### (j)            Borroweris in compliance with all requirements of law relating to pollution control andenvironmental regulations in the respective jurisdictions where Borrower ispresently doing business or conducting operations.

###  

### (k)           Allamounts obtained pursuant to Advances will be used for Borrower’s workingcapital purposes and to finance capital expenditures permitted to made pursuanthereto.  The Term Loan A proceeds will beused solely to partially finance the Project Costs and the Term Loan B proceedswill be used solely to partially finance the Card Club Supply Costs.  No part of any Loan shall be used at any timeby Borrower to purchase or carry margin stock (within the meaning of RegulationU promulgated by the Board of Governors of the Federal Reserve System) or toextend credit to others for the purpose of purchasing or carrying any marginstock.  Borrower is not engagedprincipally, or as one of its important activities, in the business ofextending credit for the purposes of purchasing or carrying any such marginstock.  No part of the proceeds of anyLoan will be used by Borrower for any purpose which violates, or which isinconsistent with, any regulations promulgated by the Board of Governors of theFederal Reserve System.

###  

### (l)            Exceptfor the trademarks, patents, copyrights and franchise rights listed on Schedule F****attached hereto, Borrower is not the owner ofany patent, trademark, copyright or franchise rights.  Borrower is not an “investment company”, oran “affiliated person” of, or a “promoter” or “principal underwriter” for, an “investment company”, as such terms aredefined in the Investment Company Act of 1940, as amended.  The making of the Loans, the application ofthe proceeds and repayment thereof by Borrower and the performance of thetransactions contemplated by this Agreement will not violate any provision ofsaid Act, or any rule, regulation or order issued by the Securities andExchange Commission thereunder.

###  

### (m)          (i) EachPlan is in compliance in all material respects with all applicable provisionsof ERISA and the Code; (ii) the aggregate present value of all accruedvested benefits under all Plans (calculated on the basis of the actuarialassumptions specified in the most recent actuarial valuation for such Plans)did not exceed as of the date of the most 

###  

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### recent actuarial valuation for such Plans the fair market value of theassets of such Plans allocable to such benefits; (iii) Borrower is notaware of any information since the date of such valuations which wouldmaterially affect the information contained therein; (iv) no Plan which issubject to Part 3 of Subtitle B of Title I of ERISA or Section 412 of the Code has incurred anaccumulated funding deficiency, as that term is defined in Section 302 ofERISA or Section 412 of the Code (whether or not waived); (v) noliability to the PBGC (other than required premiums which have become due andpayable, all of which have been paid) has been incurred with respect to anyPlan, and there has not been any Reportable Event which presents a materialrisk of termination of any Plan by the PBGC; and (vi) Borrower has notengaged in a transaction which would subject it to tax, penalty or liabilityfor prohibited transactions imposed by ERISA or the Code. Borrower does notcontribute to any Multiemployer Plan.

###  

### (n)           Thenumber of shares and classes of the capital stock of Borrower and the ownershipthereof are accurately set forth on Schedule G attached hereto. Borrower has not: (i) issued any unregistered securities inviolation of the registration requirements of Section 5 of the SecuritiesAct 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 theSecurities Exchange Act of 1934, as amended, in either case where the effect ofsuch violation would be a Material Adverse Occurrence.  No proceeds of the Advances will be used toacquire any security in any transaction which is subject to Section 13(d) or14(d) of the Securities Exchange Act of 1934, as amended.

###  

### (o)           Exceptas set forth on Schedule H attached hereto, Borrower does nothave any Contingent Obligations.

###  

### (p)           Borrowerhas conducted a comprehensive review and assessment of its computerapplications and has made inquiry of Borrower’s material suppliers, vendors andcustomers with respect to the Year 2000 Problem and, based upon such review,Borrower reasonably believes that the Year 2000 Problem has not resulted in andwill not result in a material adverse change in Borrower’s business, condition(financial or otherwise), operations, properties or prospects, or ability torepay the Obligations.  Year 2000 Problemmeans the risk that computer applications used by any Person may be unable torecognize the perform properly date-sensitive functions involving certain datesprior to and any date after December 31, 1999.

###  

### (q)           Allfactual information heretofore or herewith furnished by or on behalf ofBorrower to Lender for purposes of or in connection with this Agreement or anytransaction contemplated hereby is, and all other such factual informationhereafter furnished by or on behalf of Borrower to Lender will be, true andaccurate in every material respect on the date as of which such information isdated or certified and no such information contains any material misstatementof fact or omits to state a material fact or any fact necessary to make thestatements contained therein not misleading.

###  

### (r)            Eachrepresentation and warranty shall be deemed to be restated and reaffirmed toLender on and as of the date of the making of each Advance and eachdisbursement of any Term Loan proceeds and of the issuing of each Letter ofCredit, as the 

###  

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### case may be, under this Agreement except that any reference to thefinancial statements referred to in Paragraph 16(h) shall be deemed torefer to the financial statements then most recently delivered to Lenderpursuant to Paragraphs 17(a)(i) and (ii).

###  

### (s)           Borroweris the owner, in fee simple, of the Land subject to no Security Interest exceptPermitted Encumbrances.

###  

### (t)            Theunadvanced portion of: (i) the Maximum Term Loan A Amount equals orexceeds the sum of: (A) the total of all remaining unpaid Project Costs plus(B) $250,000.00; and the Maximum Term Loan B Amount equals or exceeds thetotal of all remaining unpaid Card Club Supply Costs.

###  

# **17.****          AffirmativeCovenants.**  Borrower agrees thatit will do all of the following:

#  

### (a)           Furnishto Lender in form satisfactory to Lender:

###  

#### (i)            Within90 days after the end of each fiscal year of Borrower, a complete auditedfinancial report prepared and certified without qualification or explanatorylanguage by Independent Public Accountants on a Consolidated and consolidatingbasis for Borrower and any Consolidated Subsidiaries of Borrower; together witha copy of the management letter or memorandum, if any, delivered by such IndependentPublic Accountants to Borrower and Borrower’s response thereto.  If Borrower shall fail to supply the reportwithin such time limit, Lender shall have the right (but not the duty) toemploy certified public accountants acceptable to Lender to prepare such reportat Borrower’s expense.

####  

#### (ii)           Within45 days after the end of each fiscal quarter, a balance sheet and operatingfigures as to that quarter and year to date prepared in accordance with GAAP ona Consolidated and consolidating basis for Borrower and any ConsolidatedSubsidiaries of Borrower and certified as correct by the chief financialofficer or treasurer of Borrower but subject to adjustments as to inventoriesor other items to which an officer of Borrower directs attention in writing.

####  

#### (iii)          With the financial statements described inParagraph 17(a)(i) and (ii), a compliance certificate in the form attachedas Exhibit E certified as true and accurate by the chief financialofficer or treasurer of Borrower.

####  

#### (iv)          Byno later than 45 days after the beginning of any of Borrower’s fiscal years,projections for Borrower’s then current fiscal year consisting of projectedmonth end balance sheets and month end and year to date statements of earningsand cash flows, all in a form acceptable to Lender and certified by Borrower’schief financial officer or treasurer as having been prepared in good faith andrepresenting the most probable course of Borrower’s business during such fiscalyear.

####  

#### (v)           Immediatelyupon and in any event within five (5) days after any officer of Borrowerbecomes aware of any Default or Event of Default, a notice 

####  

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#### describing the nature thereof and what action Borrower proposes to takewith respect thereto.

####  

#### (vi)          Assoon as available and in event within ten (10) days after the filingthereof, a copy of each report filed with the Securities and ExchangeCommission.

####  

#### (vii)         Immediately upon becoming aware of theoccurrence, with respect to any Plan, of any Reportable Event or any “prohibitedtransaction” (as defined in Section 4975 of the Code), a notice specifyingthe nature thereof and what action Borrower proposes to take with respectthereto, and, when received, copies of and notice from PBGC of intention toterminate or have a trustee appointed for any Plan.

####  

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

####  

### (b)           PermitLender and its representatives access to, and the right to make copies of, the books,records, and properties of Borrower at all reasonable times, including, withoutlimitation, those pertaining to the Project; and permit Lender and itsrepresentatives to discuss Borrower’s financial matters with officers ofBorrower and with its independent certified public accountant (and, by thisprovision, Borrower authorizes its independent certified public accountant toparticipate in such discussions).

###  

### (c)           Paywhen due all taxes, assessments, and other liabilities against it or itsproperties including, without limitation, an Project Costs and Card Club SupplyCosts except those which are being contested in good faith and for which anadequate reserve has been established; Borrower shall make all withholdingpayments when due.

###  

### (d)           Promptlynotify Lender in writing of any substantial change in present management ofBorrower.

###  

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

###  

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

###  

### (g)           Promptlynotify Lender in writing of: (x) any litigation which: (i) involvesan amount in dispute in excess of $50,000.00 which is not covered by insuranceor, if covered by insurance, the insurer has failed to accept defense of thelitigation or has done so under a reservation of rights; (ii) relates tothe matters which are the subject of this Agreement; or (iii) ifdetermined adversely to Borrower would be a Material Adverse Occurrence; and (y) anyadverse development in any litigation described in clause (x) which couldcause a Material Adverse Occurrence.

###  

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### (h)           Maintainall of Borrower’s primary operating accounts at Lender.

###  

### (i)            Atall times, maintain the ratio of: (i) Borrower’s Liabilities; to (ii) TangibleNet Worth at not greater than: (i) 1.15 to 1.00 at any time prior to October 1,2008; or (ii) 0.75 to 1.00 at any time thereafter.

###  

### (j)            MaintainBorrower’s Tangible Net Worth at not less than: $24,000,000.00 at all times.

###  

### (k)           Atall times, keep Lender advised of the name of each contractor for the Projectand of the type of work, material or services and the dollar amount covered bytheir respective contracts with Borrower or the General Contractor.  If requested by Lender, Borrower shall alsofurnish to the Lender a copy of each contract with each of the contractors orsub-contractors.

###  

### (l)            IntentionallyOmitted.

###  

### (m)          Expeditiouslycomplete and fully pay for the development and construction of the Project in agood and workmanlike manner and in accordance with the contracts, subcontractsand the Plans, and in compliance with all applicable governmental requirements,and any applicable covenants, conditions, restrictions and reservations, sothat Completion of the Improvements occurs on or before the CompletionDeadline.  Borrower shall correct orcause to be corrected: (i) any defect in the Improvements; (ii) anydeparture in the construction of the Improvements from the Plans orgovernmental requirements, and (iii) any encroachment by any part 0 f the Improvements or any otherstructure located on the Land on any building line, easement, property line orrestricted area.

###  

### (n)           Deliverto Lender revised, sworn statements of estimated Project Costs or Card ClubSupply Costs, as the case may be, showing changes in or variations from theoriginal Sworn Construction Cost Statement or the Approved Card Club SupplyBudget, as soon as such changes are known to Borrower: Borrower shall furnishLender with copies of all changes or modifications in the Plans, contracts orsubcontracts for the Project, prior to incorporation of any such change ormodification into the Project, whether or not Lender’s consent to such changeor modification is required. Borrower shall not make or consent to any changeor modification in such Plans, contracts or subcontracts, and no work shall beperformed with respect to any such change or modification, without the priorwritten consent of Lender, if such change or modification would in any materialway alter the design or structure of the Project, or increase or decrease theProject Costs by $100,000.00 or more for any single change or modification, orif the aggregate amount of all changes and modifications exceeds $250,000.00.

###  

### (o)           Upon Completion of the Improvements, andprior to the final disbursement of Term Loan A proceeds to pay for ProjectCosts shown on the Sworn Construction Cost Statement, and as a condition of thesame, furnish the Lender with all items required to evidence Completion,including unconditional occupancy permits; certification from the ConstructionManager that the Project has been completed in accordance with the approvedPlans; and copies of all licenses and permits required for operation of theProject.

#  

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# **18.****          NegativeCovenants.**  Borrower agrees thatit will not do any of the following, without first obtaining Lender’s priorwritten consent:

#  

### (a)           Purchaseor redeem any shares of Borrower’s capital stock; or declare or pay anydividends (other than dividends payable in capital stock); or make anydistribution to stockholders of any assets of Borrower except that so long asno Default or Event of Default has occurred and is continuing at the time ofany of the following described payments or would result therefrom, Borrower maypay dividends payable from Borrower’s net income.

###  

### (b)           Incuror permit to exist any interest-bearing indebtedness, secured or unsecured,including without limitation, indebtedness for money borrowed or capitalizedleases, except (i) borrowings under this Agreement; (ii) borrowings,if any, which are existing on the date of this Agreement and which aredisclosed on Schedule Iattached hereto; (iii) borrowing from the Minnesota Horesman’s Benevolent &Protective Association, Inc. so long as the aggregate outstandingprincipal amount of such borrowings does not exceed $750,000.00 at any time andsuch borrowings are unsecured and do not have any priority of payment over theObligations upon the occurrence of any Default or Event of Default described inParagraph 20(d), (e), (f), (g) or (h); (iv) capital leases permittedby Paragraph 18(1) and then only so long as the aggregate balance sheetamount, as determined in accordance with GAAP, does not exceed $250,000.00 atany time; or (v) purchase money indebtedness incurred in connection withcapital expenditures permitted by Paragraph 18(1)(ii) so long as theaggregate outstanding principal balance thereof does not exceed $250,000.00 atany time.

###  

### (c)           Createor permit to exist any Security Interest on any of Borrower’s assets now ownedor hereafter acquired except: (i) those created in Lender’s favor and heldby Lender; (ii) liens of current taxes not delinquent or taxes which arebeing contested in good faith for which an adequate reserve has beenestablished; (iii) Security Interests disclosed on Schedule D attached hereto and in the case of Security Interests disclosed in Part IIof Schedule D, securing only debt outstanding on the date of thisAgreement and disclosed on Schedule I; provided, however,that Security Interests disclosed in Part I of Schedule D arepermitted only so long as: (A) Borrower’s title to its property is notmaterially adversely affected; (B) its use of such property in theordinary course of its business is not materially interfered with; (C) adequatereserves with respect thereto have been set aside on Borrower’s books inaccordance with GAAP; and (D) in all events, Borrower shall payor cause tobe paid all such secured amounts forthwith upon the commencement of foreclosureof any such Security Interest; or (iv) security interests created inconnection with purchase money indebtedness incurred in connection with thecapital expenditures permitted by Paragraph 18(1)(ii), but *only*to theextent that: (A) such security interest attaches only to the equipmentthen being acquired by Borrower, did not and does not attach to Borrower’scurrent assets and does not secure any other indebtedness; (B) no Defaultor Event of Default has occurred and is continuing at the time of the proposedcreation of such security interest or would result therefrom; and/or (C) noportion of the purchase price of the relevant equipment has been funded by thetrade-in or available proceeds arising from the sale or other disposition ofany of Borrower’s then, or previously, owned equipment.

###  

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### (d)           Effectany recapitalization; or be a party to any merger or consolidation; or sell,transfer, conveyor lease all, or any substantial part, of its property where “substantial”means any of the Land (including, without limitation, leasehold improvementsthereon) or any portion of Borrower’s personal property having an aggregatebook value (as measured by Borrower’ s then most recent audited financial statementsdelivered to Lender) of at least $100,00.00 for any single personal propertytransaction (or related series of transactions) or aggregate book value of atleast $500,000.00 for all personal property transactions in any fiscal year; orsell or assign (except to Lender), with or without recourse, any Receivables orGeneral Intangibles.

###  

### (e)           Enterinto a new business or purchase or otherwise acquire any business enterprise orany substantial assets of any person or entity; or make any loans to any personor entity except for loans and advances to officers for expenses to be incurredin the ordinary course of business so long as the aggregate outstandingprincipal amount thereof does not exceed $10,000.00 at any time; or purchaseany shares of stock of, or similar investment in, any entity.

###  

### (f)            Becomea guarantor or surety or pledge its credit or its assets on any undertaking ofanother.

###  

### (g)           Makeany substantial change in present management or policy or in its presentbusiness or enter into a new business.

###  

### (h)           Enterinto any agreement providing for the leasing by Borrower of property which hasbeen or is to be sold or transferred by Borrower to the lessor thereof, orwhich is substantially similar in purpose to the property so sold ortransferred.

###  

### (i)            Changeits fiscal year.

###  

### (j)            (i) Permitor suffer any Plan maintained for employees of Borrower or any commonlycontrolled entity to engage in any transaction which results in a liability ofBorrower under Section 409 or 502(i) of ERISA or Section 4975 ofthe Code; (ii) permit or suffer any such Plan to incur any “accumulatedfunding deficiency” (within the meaning of Section 302 of ERISA and Section 412of the Code), whether or not waived; (iii) terminate, or suffer to beterminated, any Plan covered by Title IV of ERISA maintained by Borrower or anycommonly controlled entity or permit or suffer to exist a condition under whichPBGC may terminate any such Plan; or (iv) permit to exist the occurrenceof any Reportable Event (as defined in Title IV of ERISA) which represents termination by the PBGC of any Plan.

###  

### (k)           Enterinto any agreement containing any provision which would be violated or breachedby Borrower under any Loan Document or by the performance by Borrower of itsobligations under any Loan Document or, except for this Agreement or any otherLoan Document, which would prohibit Borrower from granting, or otherwise limitthe ability of Borrower to grant to Lender any Security Interest on any assetsor properties of Borrower.

###  

### (l)            Makecapital expenditures (including without limitation by way of capitalizedleases) except for the replacement and repair of Borrower’s existing Equipment 

###  

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### or for acquisition of new Equipment consistent with Borrower’s presentbusiness practices and then, only so long as the aggregate amount of all suchcapital expenditures made during any of Borrower’s fiscal years does not exceedthe sum of: (i) the amount of capital leases permitted by Paragraph 18(b);plus (ii) an aggregate amount of $1,500,000.00 for other capitalexpenditures.

###  

# **19.****          Availability ofCollateral.**  Intentionally Deleted.

#  

# **20.****         ****Default and Remedies****. **It shall be an Event of Defaultunder this Agreement if:

#  

### (a)           Borrowerfails to make any payment required under this Agreement or any present orfuture supplements hereto or under any other agreement between Borrower andLender when due, or if payable upon demand, upon demand and such failure shallremain unremedied for five (5) days; or

###  

### (b)           Borrowerfails to perform or observe any covenant, condition or agreement contained inthis Agreement or any Loan Document on its part to be performed (other thanthose failures covered by other subparagraphs of this Paragraph) and suchdefault shall continue for a period of 30 days after written notice thereoffrom Lender to Borrower; or

###  

### (c)           Anywarranty, representation or statement made or furnished to Lender by or onbehalf of Borrower proves to have been false in a material respect when made;or

###  

### (d)           Aproceeding seeking an order for relief under the Bankruptcy Code is commencedby or against Borrower and, if commenced against Borrower, remains undismissedfor 60 days; or

###  

### (e)           Borrowerbecomes insolvent or generally fails to pay, or admit in writing its or hisinability to pay, its or his debts as they become due; or

###  

### (f)            Borrowerapplies 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, ormakes a general assignment for the benefit of creditors; or, in the absence ofsuch application, consent or acquiescence, a trustee, receiver or othercustodian is appointed for Borrower or for a substantial part of Borrower’sproperty; or

###  

### (g)           Anyother reorganization, debt arrangement, or other case or proceeding under anybankruptcy or insolvency law, or any dissolution or liquidation proceeding iscommenced in respect of Borrower; or

###  

### (h)           Borrowertakes any action to authorize, or in furtherance of, any of the eventsdescribed in the foregoing clauses (d) through (g); or

###  

### (i)            Anyjudgments, writs, warrants of attachment, executions or similar process (notcovered by insurance) is issued or levied against Borrower or any of its assetsin excess of an aggregate amount of $100,000.00 for any or all of suchjudgments, 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 afterits issue or levy; or

###  

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### (j)            Borrowershall fail to comply with Paragraph 13, any of Paragraphs 17 (a), (i) or CD or any of Paragraphs 18(a) through(1) (both inclusive); or

###  

### (k)           Thematurity of any Indebtedness of Borrower (other than Indebtedness under thisAgreement or the other Loan Documents) in the aggregate amount of more than $500,000.00 for Borrower shall beaccelerated, or Borrower shall fail topay any such Indebtedness when due or, in the case of such Indebtedness payableon demand; or

###  

### (l)            AnyChange of Control shall occur; or

###  

### (m)          Workon the Project shall be substantially abandoned, or shall by reason of Borrower’sfault, be unreasonably delayed or discontinued for a period of ten (10) days,or construction shall be delayed for any reason whatsoever to the extent that aCertificate of Occupancy for the Project cannot, in the reasonable judgment ofthe Lender, be accomplished prior to the Completion Deadline; or

###  

### (n)           Lenderdetermines that the remaining undisbursed portion of the Maximum Term Loan AAmount is insufficient to fully pay all of the then unpaid Project Costs andestimated expenses of Completion or that the remaining undisbursed portion ofthe Maximum Term Loan B Amount is insufficient to fully pay all of the thenunpaid Card Club Supply Costs and Borrower: (i) fails to deposit with theLender, within five (5) Business Days after demand, sufficient funds topermit the Lender to pay said excess costs as the same become payable; or (ii) doesnot pay said excess costs directly and, with respect to the Project Costs, delivers to the Lenderunconditional mechanics’ lien waivers therefor (or paid receipts fornon-lienable items), at the Lender’s option, except that, with respect to anysuch deficiency with respect to the payment of Project Costs or estimatedexpenses of Completion arising at any time when no other Event of Default hasoccurred and is continuing, Lender agrees that Borrower shall not be requiredto make any such deposit until five (5) Business Days after the deficiencyis at least $250,000.00.

###  

Upon the occurrenceof any Event of Default described in Paragraphs 20(d), (e), (f), (g) or(h), all Obligations shall be and become immediately due and payable withoutany declaration, notice, presentment, protest, demand or dishonor of any kind(all of which are hereby waived) and Borrower’s ability to obtain anyadditional Advance, the Term Loan or any additional Letter of Credit under thisAgreement shall be immediately and automatically terminated.  Upon the occurrence of any other Event ofDefault, Lender, without notice to Borrower, may terminate Borrower’s abilityto obtain any additional Advance, the Term Loan or any additional Letter ofCredit under this Agreement and may declare all or any portion of theObligations to be due and payable, without notice, presentment, protest ordemand or dishonor of any kind (all of which are hereby waived), whereupon thefull unpaid amount of the obligations which shall be so declared due andpayable shall be and become immediately due and payable. Upon the occurrence ofan Event of Default, Lender shall have all the rights and remedies of a securedparty under the Commercial Code and may require Borrower to assemble theCollateral and make it available to Lender at a place designated by Lender, andLender shall have the right to take immediate possession of the Collateral andmay enter any of the premises of Borrower or wherever the Collateral is locatedwith or without process of law and to keep and store the same on said premisesuntil sold (and if said premises be the property of Borrower, Borrower agreesnot to charge Lender 

 

26

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or a purchaserfrom Lender for storage thereof for a period of at least 90 days). Upon theoccurrence of an Event of Default, Lender, without further demand, at any timeor times, may sell and deliver any or all of the Collateral at public orprivate sale, for cash, upon credit or otherwise, at such prices and upon suchterms as Lender deems advisable, at its sole discretion.  Any requirement under the Commercial Code orother applicable law of reasonable notice will be met if such notice is mailedto Borrower at its address set forth in the opening paragraph of this Agreementat 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 salewill be applied first to all expenses of retaking, holding, preparing for sale,selling and the like, including attorneys’ fees and legal expenses (whether ornot suit is commenced) including, without limitation, reasonable attorneys’fees and legal expenses incurred in connection with any appeal of a lower court’sorder 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 CommercialCode, Lender will return any excess to Borrower and Borrower shall remainliable to Lender for any deficiency. Borrower agrees to give Lender immediate notice of the existence of anyDefault or Event of Default.  Lender maycomply with any applicable state or federal law requirements in connection witha disposition of the Collateral and compliance will not be considered adverselyto affect the commercial reasonableness of any sale of the Collateral.  Lender may sell the Collateral without givingany warranties as to the Collateral. Lender may specifically disclaim any warranties of title or thelike.  This procedure will not beconsidered adversely to affect the commercial reasonableness of any sale of theCollateral.  Lender has no obligation toattempt to satisfy the Obligations by collecting them from any other personliable for them and Lender may release, modify or waive any Collateral providedby any other person to secure any of the Obligations, all without affectingLender’s rights against Borrower. Borrower waives any right it may have to require Lender to pursue anythird person for any of the Obligations.

 

Borrower agreesthat if the Obligations become immediately due and payable in full at a timewhen one or more Letters of Credit are outstanding, Borrower shall thereuponautomatically be obligated to pay to Lender, in addition to all other amountsowing under this Agreement, the aggregate face amount of all Letters of Creditthen outstanding.  The foregoingobligation to pay in advance for amounts which Lender may later have to paypursuant to the Letters of Credit is and shall at all times constitute a partof the “Obligations”.  Amounts paid byBorrower pursuant to this paragraph shall be made directly to aninterest-bearing collateral account maintained at Lender for application toBorrower’s reimbursement obligations under Paragraph 4D(d) as payments aremade on the Letters of Credit, with the balance, if any, to be applied to theother Obligations.

 

# **21.****          ConditionsPrecedent to Closing Date; etc.** The occurrence of the Closing Date and the obligation of Lender to makethe initial Advance or any Term Loan or to issue any Letter of Credit aresubject to the condition precedent that Lender shall have received on or beforethe Closing Date or the date of the initial Advance, any Term Loan or anyLetter of Credit, copies of all of the following, unless waived by Lender:

#  

### (a)           Afavorable opinion of counsel to Borrower m form and substance satisfactory toLender;

###  

### (b)           UCC-1Financing Statements in a form acceptable to Lender appropriately completed andduly executed by Borrower;

###  

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### (c)           RecentUCC searches from the filing offices in all states required by Lender whichreflect that no other Person holds a Security Interest in any Collateral ofBorrower, except for Security Interests permitted by Paragraph 18(c);

###  

### (d)           TheNotes, in form and substance satisfactory to Lender, appropriately completedand duly executed by Borrower;

###  

### (e)           Acertified copy of all documents evidencing any necessary consent orgovernmental approvals (if any) with respect to the Loan Documents or any otherdocuments provided for in this Agreement;

###  

### (f)            Acertificate by the Secretary or any Assistant Secretary of Borrower certifyingas to: (i) attached resolutions of Borrower’s Board of Directorsauthorizing or ratifying the execution, delivery and performance of the LoanDocuments to which Borrower is a party and any other documents provided for bythis Agreement, (ii) the names of the officers of Borrower authorized tosign the Loan Documents together with a sample of the true signature of suchofficers, and (Hi) attached bylaws of Borrower;

###  

### (g)           Acopy of Borrower’s articles of incorporation certified by the Secretary ofState;

###  

### (h)           Certificatesof Good Standing for Borrower issued by its state of incorporation and by thosestates requested by Lender,

###  

### (i)            Evidenceof insurance for all insurance required by the Loan Documents;

###  

### (j)            Anofficer certificate, in form and substance satisfactory to Lender, executed bythe President of Borrower;

###  

### (k)           ATitle Commitment for the Land prepared by CPT;

###  

### (l)            ThePlans;

###  

### (m)          TheGeneral Construction Contract, the agreement with the architect for the Project(the “Project Architect”) and a schedule listing all subcontracts relating tothe Project;

###  

### (n)           TheSworn Construction Cost Statement, and a disbursement schedule showing theanticipated time and amount of disbursements for construction of the Improvements;

###  

### (o)           Copiesof all building permits required to complete construction of the Improvements,or evidence satisfactory to Lender that such permits will be obtained;

###  

### (p)           Aletter addressed to Lender from an appropriate municipal officer regardingcompliance of the Project with existing zoning and building codes andordinances;

###  

### (q)           TheApproved Card Club Supply Budget;

 

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###  

### (r)            Anorigination fee of$ 15,000.00 with respect to Term Loan A in immediatelyavailable funds; and

###  

### (s)           Such other approvals, opinions or documentsas Lender may require.

###  

# **22.****          ConditionsPrecedent to Term Loan.** Intentionally Deleted.

#  

# **23.****          ConditionsPrecedent to All Advances; Etc.** The occurrence of the Closing Date and the obligation of Lender to makeany Advance (including the initial Advance) or any Term Loan or to issue anyLetters of Credit (including the initial Letter of Credit) shall be subject tothe satisfaction of each of the following conditions, unless waived in writingby Lender:

#  

### (a)           therepresentations and warranties of Borrower set forth in this Agreement are trueand correct on the date of such credit extension (and after giving effect tothese then being made);

###  

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

###  

# **24.****          Termination.**  Intentionally Deleted.

#  

# **25.****          Grantof License to Use Patents and Trademarks Collateral.**  For the purpose of enabling Lender toexercise rights and remedies under this Agreement, Borrower hereby grants toLender and irrevocable, non-exclusive license (exercisable without payment ofroyalty or other compensation to Borrower) to use, license or sublicense anypatent or trademark now owned or hereafter acquired by Borrower and whereverthe same may be located, and including in such license reasonable access to allmedia in which any of the licensed items may be recorded or stored and to allcomputer and automatic machinery software and programs used for the compilationor printout thereof.

#  

# **26.****          Miscellaneous.**

#  

### (a)           Theperformance or observance of any affirmative or negative covenant or otherprovision of this Agreement and any supplement hereto may be waived by Lenderin a writing signed by Lender but not otherwise.  No delay on the part of Lender in theexercise of any remedy, power or right shall operate as a waiver thereof, norshall any single or partial exercise of any remedy, power or right precludeother or further exercise thereof or the exercise of any other remedy, power orright.  Each of the rights and remediesof Lender under this Agreement will be cumulative and not exclusive of any otherright or remedy which Lender may have hereunder or as allowed by law.

###  

### (b)           Anynotice, demand or consent authorized by this Agreement to be given to Borrowershall be deemed to be given when transmitted by telex or telecopier orpersonally delivered, or three days after being deposited in the U.S. mail,postage prepaid, or one day after delivery to Federal Express or otherovernight courier service, in each case addressed to Borrower at its addressshown in the opening paragraph of this Agreement, or at such other address asBorrower may, by written notice received by Lender, designate as 

 

29

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### Borrower’s address for purposes of notice hereunder. Any notice orrequest authorized by this Agreement to be given to Lender shall be deemed tobe given when transmitted by telex or telecopier or personally delivered, orthree days after being deposited in the U.S. mail, postage prepaid, or one dayafter delivery to Federal Express or other overnight courier, in each caseaddressed to Lender at its address shown in the opening paragraph of thisAgreement, or at such other address as Lender may, by written notice receivedby Borrower, designate as Lender’s address for purposes of notice hereunder; provided,however, that any notice to Lender given pursuant to Paragraph 4A(b), 4B(b) 4C(b) or4D(b) shall not be deemed given until received.

###  

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

###  

### (d)           Borroweragrees to pay and will reimburse Lender on demand for all out-of-pocketexpenses incurred by Lender arising out of this transaction including withoutlimitation filing and recording fees and reasonable attorneys’ fees and legalexpenses (whether or not suit is commenced) incurred in the protection andperfection of Lender’s security interest in the Collateral, in the enforcementof any of the provisions of this Agreement or of Lender’s rights and remedieshereunder and against the Collateral, in the defense of any claim or claimsmade or threatened against Lender arising out of this transaction or otherwise,including, without limitation, in each instance, all reasonable attorneys’ feesand legal expenses incurred in connection with any appeal of a lower court’sorder or judgment; provided, however, that Lender agrees thatBorrower’s obligations to reimburse Lender for its attorneys’ fees and legalexpenses incurred in connection with the preparation of this Agreement and theother Loan Documents shall be limited to the sum of $4,000.00 plus itsout-of-pocket expenses.

###  

### (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 allactions, causes of action, suits, losses, liabilities and damages, and expensesin connection therewith including, without limitation, reasonable attorneys’fees and disbursements (the “Indemnified Liabilities”), incurred by theIndemnified Parties or any of them as a result of, or arising out of, orrelating to:

###  

##### (1)           anytransaction financed or to be financed in who le or in part directly orindirectly with proceeds of any Credit extension hereunder, or

#####  

##### (2)           theexecution, delivery, performance or enforcement of this Agreement or any documentexecuted pursuant hereto by any of the Indemnified Parties.

#####  

except for anysuch Indemnified Liabilities arising on account of any Indemnified Party’sgross negligence or willful misconduct.

 

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

 

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

###  

### (g)           ThisAgreement shall be binding upon Borrower and Lender and their respectivesuccessors, assigns, heirs, and personal representatives and shall inure to thebenefit of Borrower, Lender and the successors and assigns of Lender, exceptthat Borrower may not assign or transfer its rights hereunder without the priorwritten consent of Lender, and any assignment or transfer in violation of thisprovision shall be null and void.  Inconnection with the actual or prospective sale by Lender of any interest orparticipation in the obligations, Borrower authorizes Lender to furnish anyinformation in its possession, however acquired, concerning Borrower or any ofits Affiliates to any person or entity.

###  

### (h)           Borrower hereby irrevocably submits to thejurisdiction of any Minnesota state court or federal court sitting inMinneapolis or St. Paul, Minnesota, over any action or proceeding arising outof or relating to the Agreement, and Borrower hereby irrevocably agrees that allclaims in respect of such action or proceeding may be heard and determined insuch Minnesota State or Federal court. Borrower hereby irrevocably waives, to the fullest extent it mayeffectively do so, the defense of an inconvenient forum to the maintenance ofsuch action or proceeding.  Borrowerirrevocably consents to the service of copies of the summons and complaint andany other process which may be served in any such action or proceeding by themailing by United States certified mail, return receipt requested, of copies ofsuch process to Borrower’s address stated in the preamble hereto and addressedto Borrower’s President by title. Borrower agrees that judgment final by appeal, or expiration of time toappeal without an appeal being taken, in any such action or proceeding shall beconclusive and may be enforced in any other jurisdictions by suit on thejudgment or in any other manner provided by law.  Nothing in this Paragraph shall affect theright of Lender to serve legal process in any other manner permitted by law oraffect the right of Lender to bring any action or proceeding against Borroweror its property in the courts of any other jurisdiction.  Borrower agrees that, if it brings any actionor proceeding arising out of or relating to this Agreement, it shall bring suchaction or proceeding in Hennepin County or Ramsey County, Minnesota.

###  

# **27.****          Effecton Original Agreement.**  On the Closing Date, the Original Agreementshall be completely amended and restated by this Agreement, and each referenceto the “Credit Agreement,” “Loan Agreement,” “therein,” “thereof,” “thereby,”or words of like import referring to the Original Agreement in any LoanDocument shall mean and be reference to the Original Agreement as amended andrestated by this Agreement and the $ -0 - aggregate principal balance of the “Advances” made thereunder whichare outstanding on the Effective Date shall be deemed to 

#  

31

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# be Advances madehereunder and the Existing Letters of Credit shall be deemed to have beenissued pursuant hereto.

#  

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

 
|   | LENDER:                             |
|--------|-------------------------------------|
|   |                                |
|   | BREMER BANK, NATIONAL ASSOCIATION   |
|   |                                |
|   | By /s/ Laura Helmueller             |
|   |                                |
|   | Its Vice President                  |
|   |                                |
|   | BORROWER:                           |
|   |                                |
|   | CANTERBURY PARK HOLDING CORPORATION |
|   |                                |
|   | By /s/ Randall D. Sampson           |
|   |                                |
|   | Its President                       |

 

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