FOURTH AMENDMENT TO CREDIT AND
                               SECURITY AGREEMENT


     This Fourth Amendment,  dated as of December 20, 1996, is made by and among
LaCANASTA OF MINNESOTA,  INC., a Minnesota corporation (the "Borrower"),  SPARTA
FOODS,  INC., a Minnesota  corporation  ("Sparta")  and NORWEST BANK  MINNESOTA,
NATIONAL ASSOCIATION, a national banking association (the "Lender").

                                    Recitals

     The Borrower,  Sparta and the Lender are parties to the Credit and Security
Agreement dated as of December 9, 1994, as supplemented by the First  Supplement
to Credit  Agreement  dated as of  December  13,  1994,  as  amended  by a First
Amendment to Credit  Agreement dated as of April 14, 1995, a Second Amendment to
Credit Agreement dated as of September 21, 1995, and a Third Amendment to Credit
Agreement dated as of April 23, 1996 (the "Credit  Agreement").  All capitalized
terms used in these Recitals shall have the meanings given to them in the Credit
Agreement.

     Pursuant to the Credit Agreement, the Lender has made Advances, a Term Loan
and a Capital  Expenditure Loan to the Borrower.  The Borrower's  obligations to
pay the Advances is presently  evidenced by the  Revolving  Note of the Borrower
dated  December  9, 1994,  payable  to the order of the  Lender in the  original
principal amount of $1,200,000.  The Borrower's obligations to pay the Term Loan
is presently  evidenced by the Term Note of the Borrower dated December 9, 1994,
payable  to the  order  of  the  Lender  in the  original  principal  amount  of
$1,784,800.  The Borrower's  obligations to pay the Capital  Expenditure Loan is
presently  evidenced  by the  Capital  Expenditure  Note of the  Borrower  dated
December 9, 1994,  payable to the order of the Lender in the original  principal
amount of $400,000.  The current outstanding  principal balance of the Term Note
is  $1,265,332.94.  The  current  outstanding  principal  balance of the Capital
Expenditure  Note is  $273,333.  The  Advances,  the Term  Loan and the  Capital
Expenditure  Loan and all other  obligations of the Borrower owing to the Lender
are secured,  among other things,  pursuant to the Credit and Security Agreement
of the Borrower dated as of December 9, 1994.

     The Notes are due and payable in full on December 9, 1997. The Borrower has
requested  that  the  Lender  extend  the  Termination  Date of the  Notes by an
additional  two years,  extend a new capital  expenditure  loan in the amount of
$200,000,  change  the  interest  rate on the Notes  and  modify  the  financial
covenants.  The Lender is willing to grant the Borrower's request subject to the
terms of this Fourth Amendment.

     Accordingly, the Borrower and the Lender hereby agree as follows:

     1. Defined Terms.  Terms used in this Fourth Amendment which are defined in
the Credit  Agreement  shall have the same meanings as defined  therein,  unless
otherwise defined herein.  In addition,  Section 1.01 of the Credit Agreement is
amended  by  adding  or  amending,  as  the  case  may  be,  the  following  new
definitions:
<PAGE>

     "'Availability' means the difference of (i) the Borrowing Base and (ii) the
outstanding principal balance of the Revolving Note."

     "'Fourth  Amendment'  means the Fourth  Amendment  to Credit  and  Security
Agreement dated as of December 20, 1996, between the Borrower and the Lender."

     "'Leverage  Ratio' means the ratio of Debt excluding  Subordinated  Debt to
Tangible Net Worth plus Subordinated Debt."

     "'Revolving  Loan Spread' means the percentage set forth below opposite the
range of Leverage Ratio in which the Borrower's Leverage Ratio falls. Reductions
and increases in the percentage will be determined quarterly upon receipt of the
Borrower's  financial  statements as required under Section 6.1(b) of the Credit
Agreement,  but such reductions and increases will be applied  retroactively  to
the  beginning  of the  quarter  in which the  determination  is made.  From the
beginning of each fiscal quarter until such  determination  is made with respect
to that  quarter,  the  Borrower  shall pay interest as if the  percentage  were
unchanged  from the  percentage  applicable at the end of the  preceding  fiscal
quarter.  If the percentage is determined to have increased and the Borrower has
thus underpaid interest since the beginning of that fiscal quarter, the Borrower
shall pay such  deficiency  on demand.  If the  percentage is determined to have
decreased  and the Borrower has thus  overpaid  interest  since the beginning of
that fiscal  quarter,  the Lender shall  credit such  overpayment,  first,  as a
prepayment  of accrued  but  unpaid  interest  on the Note,  and,  second,  as a
prepayment  of interest  thereafter  accruing on the Note.  Notwithstanding  the
foregoing,  no reduction in the percentage will be made if a Default or an Event
of Default has occurred and is continuing at the time that such reduction  would
otherwise be made.

              Leverage Ratio                      Percentage

              2.51 to 1.00 or more                   2.50%

              1.76 to 1.00 or more, but              2.00%
                less than 2.51 to 1.00

              1.26 to 1.00 or more, but              1.00%
                less than 1.76 to 1.00

              1.25 to 1.00 or below                  0.50%

     "'Revolving Note Rate' means Base Rate plus the Revolving Loan Spread."

     "'Term Loan Spread' means the percentage set forth below opposite the range
of Leverage Ratio in which the Borrower's  Leverage Ratio falls.  Reductions and
increases in the  percentage  will be determined  quarterly  upon receipt of the
Borrower's  financial  statements as required under Section 6.1(b) of the Credit
Agreement,  but such reductions and increases will be applied  retroactively  to
the  beginning  of the  quarter  in which the  determination  is made.  From the
beginning of each fiscal quarter until such  determination  is made with respect
to that  quarter,  the  Borrower  shall pay interest as if the  percentage  were
unchanged  from the  percentage  applicable at the end of the  preceding  fiscal
quarter.  If the percentage is determined to have increased and the Borrower has
thus underpaid interest since the beginning of that fiscal quarter, the Borrower
shall pay such  deficiency  on demand.  If the  percentage is determined to have
decreased  and the Borrower has thus  overpaid  interest  since the beginning of
that fiscal  quarter,  the Lender shall  credit such  overpayment,  first,  as a
prepayment  of accrued  but  unpaid  interest  on the Note,  and,  second,  as a
prepayment  of interest  thereafter  accruing on the Note.  Notwithstanding  the
foregoing,  no reduction in the percentage will be made if a Default or an Event
of Default has occurred and is continuing at the time that such reduction  would
otherwise be made.
<PAGE>

              Leverage Ratio                      Percentage

              2.51 to 1.00 or more                   3.00%

              1.76 to 1.00 or more, but              2.50%
                less than 2.51 to 1.00

              1.26 to 1.00 or more, but              1.50%
                less than 1.76 to 1.00

              1.25 to 1.00 or below                  1.00%

     "'Term Note Rate' means the Base Rate plus the Term Loan Spread."

     2.  Eligible  Inventory.  Section  1.01 is further  amended by deleting the
phrase "less a reserve of ten percent  (10%) of such  Eligible  Inventory" as it
appears in the third line of the definition of "Eligible Inventory".

     3. Termination  Date.  Section 1.01 is further amended by changing the date
"December 9, 1997" to "December  31,  1999" as it appears in the  definition  of
"Termination Date." The Revolving Note is amended by changing the date "December
9, 1997" to "December 31, 1999" as it appears in the second line thereof.

     4. Term Loan and  Capital  Expenditure  Loans.  Section  2.2 of the  Credit
Agreement is amended in its entirety to read as follows:

     "Section 2.2 Term Loan and Capital Expenditure Loans.

     (a) Term Loan.  The Lender has made a Term Loan to the Borrower  before the
date of the  Fourth  Amendment,  the  Borrower's  obligations  to pay  which are
evidenced by the Term Note of the Borrower  dated  December 9, 1994,  payable to
the order of the Lender in the  original  principal  amount of  $1,784,800  (the
"Term Note").  As of the date hereof,  the outstanding  principal balance of the
Term Note is  $1,265,332.94.  The  principal  amount  of the Term Loan  shall be
payable in  thirty-six  (36)  consecutive  monthly  installments  of  Twenty-One
Thousand Six Hundred  Fifty-Eight  Dollars  ($21,658),  commencing on January 1,
1997,  with a payment  of all  unpaid  principal  and other  Obligations  on the
earliest of termination of the Revolving Credit  Facility,  demand by the Lender
or the Termination Date.

     (b) Capital  Expenditure  Loan.  The Lender has made a Capital  Expenditure
Loan to the Borrower  before the date of the Fourth  Amendment,  the  Borrower's
obligations  to pay which are evidenced by the Capital  Expenditure  Note of the
Borrower  dated  December  9,  1994,  payable  to the order of the Lender in the
original principal amount of $400,000 (the "Existing Capital Expenditure Note").
As of the date hereof, the outstanding principal balance of the Existing Capital
Expenditure  Note is  $273,333.  The Lender  agrees to make  additional  Capital
Expenditure Loans to the Borrower in the amount of $200,000, which shall be used
to finance capital  expenditures  through  September 30, 1997 (the  indebtedness
evidenced  by the  Existing  Capital  Expenditure  Note,  together  with all new
advances made under this Section 2.2 may be referred to hereinafter collectively
as the "Capital Expenditure Loan"). The Borrower's obligation to pay the Capital
Expenditure  Loan shall be evidenced by the  Borrower's  promissory  note in the
original  principal  amount  of  $473,333  (the  "Capital   Expenditure  Note"),
substantially  in the form of  Exhibit A to the  Fourth  Amendment  and shall be
secured pursuant to the Credit  Agreement and the Security  Documents as therein
defined.  The principal amount of the Capital  Expenditure Loan shall be payable
in  thirty-six  (36)  consecutive  monthly  installments  of Six Thousand  Three
Hundred  Forty-Two  Dollars  ($6,342),  commencing  on January  1, 1997,  with a
payment  of all  unpaid  principal  and other  Obligations  on the  earliest  of
termination  of the  Revolving  Credit  Facility,  demand  by the  Lender or the
Termination Date. The Capital Expenditure Note is issued in substitution for and
replacement of, but not in payment of, the Existing Capital Expenditure Note.
<PAGE>

     (c) Procedures for Capital Expenditure Loan Advances.  At any time prior to
September  30, 1997,  and upon the terms and  conditions  set forth  below,  the
Lender  agrees to make  Advances to the Borrower  under the Capital  Expenditure
Loan to finance new  acquisitions  by the Borrower of equipment to be located at
the Leased Premises and used in the Borrower's business,  in an aggregate amount
not to exceed the lesser of (i) Two Hundred  Thousand  Dollars  ($200,000.00) or
(ii) the  lesser of (A) eighty  percent  (80%) of the net  invoice  hard cost to
Borrower  for  such  newly  purchased  equipment  (net  of  insurance,  freight,
delivery,  shipping interest, taxes, installation,  licenses or any similar cost
or expense,  and less any  discounts,  rebates,  refunds or other  reductions in
price),  or (B)  the  actual  value  of such  equipment,  in the  Lender's  sole
determination. Upon fulfillment of the applicable conditions set forth below for
which the Lender  shall  have a  reasonable  period of time to review,  and upon
Lender's  determination to make an Advance under the Capital  Expenditure  Loan,
the Lender shall disburse the amount of the Advance by crediting the same to the
Borrower's demand deposit account specified in Section 2.1(c) hereof, unless the
Borrower  and  the  Lender   shall  agree  in  writing  to  another   manner  of
disbursement.  The Capital  Expenditure Loan is not a revolving facility and any
voluntary or mandatory prepayment thereof may not be reborrowed  hereunder.  The
Borrower agrees to comply with the following  procedures in requesting  Advances
under this Section 2.2(b):

     (1) The Lender shall make, and the Borrower shall request, no more than two
(2) Advances under this Section 2.2(c),  with each of the requested  Advances to
be in an  amount  of at  least  Fifty  Thousand  Dollars  ($50,000.00),  and the
aggregate  of both  requested  Advances  shall not exceed Two  Hundred  Thousand
Dollars ($200,000.00).

     (2) The request for an Advance  under this Section  2.2(c) shall be made in
writing,  specifying the date of the requested  Advance which shall not be prior
to the Lender's review of the documents described below, and the amount thereof,
and shall be by (i) any officer of the Borrower;  (ii) any Person  designated as
the  Borrower's  agent by any officer of the Borrower in a writing  delivered to
the  Lender;  or (iii) any  Person  reasonably  believed  by the Lender to be an
officer of the Borrower or such a designated  agent.  Any request for an Advance
under this Section 2.2(c) shall be deemed to be a representation by the Borrower
that (i) the  conditions  set forth in Section  2.2(c) hereof have been met, and
(ii) the conditions set forth in Section 4.2 hereof have been met as of the time
of the request. The Borrower shall be obligated to repay all Advances under this
Section 2.2(c)  notwithstanding the fact that the Person requesting the same was
not in fact authorized to do so.

     (3) Such  request  shall  be  accompanied  by (A) the  actual  invoice  and
purchase  order for the newly  acquired  equipment;  (B) a  description  of such
equipment;  (C) evidence of (i)  delivery of such  equipment to the Borrower and
the  acceptance  thereof by the  Borrower,  together with the dates and place of
acceptance  and delivery,  (ii) title to such equipment in the name of Borrower,
(iii)  payment  therefor or a letter from the Borrower  directing  the Lender to
disburse  the  Advance  proceeds  to the  equipment  vendor  directly,  (iv) the
Lender's first priority  security  interest in such equipment,  (v) insurance on
such  equipment in form and  substance  acceptable  to the Lender;  and (D) such
other documentation or information as the Lender may require."

     5. Prepayment  Penalty.  Section 2.6 of the Credit  Agreement is amended in
its entirety and replaced as follows:

     "Section  2.6  Voluntary  Prepayment;   Termination  of  Agreement  by  the
Borrower.  Except as  otherwise  provided  herein and  subject to payment of the
prepayment fees set forth below, the Borrower may, in its discretion, prepay the
Advances  in  whole at any time or from  time to time in part.  If the  Borrower
desires or decides to terminate  this Agreement as of any date prior to December
31, 1999,  or to prepay any  Obligations  with funds not  generated  solely from
Borrower's operations in the ordinary course of business, the Borrower shall (a)
provide the Lender with thirty (30) days' prior written notice of the Borrower's
intention to do so, and (b) unless the Borrower pays the Obligations (i) in full
with funds from the Lender or an affiliate of Lender, (ii) upon Lender's written
consent  thereto with cash  received  from a stock  offering of Sparta's  common
stock or (iii) upon the Lender's written consent thereto with cash received from
the sale of the Owned  Premises,  pay the Lender a prepayment fee of one percent
(1%)  of  the  Revolving   Credit  Facility  Maximum  Amount  plus  the  average
outstanding  principal balance of the Term Loan and the Capital Expenditure Loan
over the  previous  three (3) month  period.  Failure to provide  the  aforesaid
notice or to prepay the  Obligations  in full,  will not relieve the Borrower of
its obligation to pay the  prepayment  fee. Upon  compliance  with the foregoing
requirements  and  subject  to payment  and  performance  of all the  Borrower's
Obligations to the Lender, the Borrower may obtain any release or termination of
the Security Interest to which the Borrower is otherwise entitled by law."
<PAGE>

     6. Fees.  Subsection 2.13(c) of the Credit Agreement is amended by changing
the commitment fee rate from "one-half percent (0.5%) per annum" to "one-quarter
percent (0.25%) per annum" as it appears in the second line thereof and changing
the date  "January 1, 1995" to "October 1, 1996" as it appears in the fifth line
thereof. Subsection 2.13(b) is amended in its entirety to read as follows:

     "(b) The Borrower hereby agrees to pay the Lender, on demand, fees incurred
in connection  with any audits or inspections by the Lender of any collateral or
the operations or business of the Borrower,  whether conducted at the Borrower's
premises or at the Lender,  which the Lender  expects to conduct on a tri-annual
basis,  unless a Default or an Event of Default occurs, in which case the Lender
expects to conduct such audits or inspections more  frequently,  at the rates of
$50 per hour  per  analyst,  together  with all  actual  out-of-pocket  expenses
incurred in conducting any such audit or  inspection;  provided,  however,  that
beginning in  fiscal-year  1998, if the  Borrower's  average daily  Availability
during the most  recently  completed  month is greater than  $300,000,  then the
frequency  of such  audits and  inspections  will be  reduced to  semi-annually;
further,  provided,  however, that so long as no Default or Event of Default has
occurred,  the Borrower  shall not have to  reimburse  the Lender for such fees,
costs and expenses to the extent they exceed $2,500 per audit."

     7. Financial  Covenants.  Sections 6.12,  6.13, 6.14 and 6.15 of the Credit
Agreement are deleted in their entirety and replaced, as follows:

     "Section 6.12 Tangible Net Worth.  The Borrower,  on a  consolidated  basis
with Sparta shall  maintain at all times during each fiscal month in each period
set forth below  (calculated  at the end of each fiscal month during each period
set forth  below) its  Tangible  Net Worth at or above the level set forth below
opposite each such period:

         October 1, 1996, through
           August 31, 1997                           $1,500,000

         September 1, 1997, through
           August 31, 1998                           $1,800,000

         September 1, 1998, through
           August 31, 1999                           $2,100,000

         September 1, 1999, through
           December 31, 1999                         $2,400,000

                                              
     "Section 6.13 Maximum Leverage Ratio. The Borrower, on a consolidated basis
with Sparta, shall maintain at all times during each fiscal month in each period
set forth below  (calculated  at the end of each fiscal month during each period
set forth  below)  its  Leverage  Ratio at or below  the  level set forth  below
opposite each such period:

         October 1, 1996, through
           August 31, 1997                           1.65 to 1.00

         September 1, 1997, through
           August 31, 1998                           1.25 to 1.00

         September 1, 1998, through
           August 31, 1999                           1.20 to 1.00

         September 1, 1999, through
           December 31, 1999                         1.15 to 1.00

     8.  Expenditures for Fixed Assets.  Section 7.10 of the Credit Agreement is
amended in its entirety to read as follows:

     "Section  7.10  Capital  Expenditures.  Sparta  will not  make any  Capital
Expenditures.  The  Borrower  will not expend or  contract to expend for Capital
Expenditures more than $500,000 in any one fiscal year."

     9.  Amendment  Fee. The Borrower  agrees to pay the Lender a fully  earned,
non-refundable  fee in the amount of $1,000, or 0.5% of the capital  expenditure
loan commitment  increase,  in  consideration  of the execution by the Lender of
this Fourth Amendment, payable upon the execution of this Amendment.

     10.  No  Other  Changes.  Except  as  explicitly  amended  by  this  Fourth
Amendment, all of the terms and conditions of the Credit Agreement and Revolving
Note  shall  remain in full  force and  effect  and shall  apply to any  Advance
thereunder.
<PAGE>

     11.  Conditions  Precedent.  This Fourth  Amendment shall be effective upon
receipt by the Lender of an executed original hereof,  together with each of the
following,  each in  substance  and form  acceptable  to the  Lender in its sole
discretion:

     (a) The new Capital Expenditure Note duly executed by the Borrower.

     (b) A Certificate of the Secretary of the Borrower certifying as to (i) the
resolutions  of the board of directors of the Borrower  approving  the execution
and delivery of this Fourth Amendment and the Capital Expenditure Note, (ii) the
fact that the Articles of Incorporation  and Bylaws of the Borrower,  which were
previously  delivered  to the Lender  continue in full force and effect and have
not been amended or otherwise modified except as set forth in the Certificate to
be  delivered,  and (iii)  the  incumbency  of the  officers  and  agents of the
Borrower  authorized  to sign and to act on behalf of the  Borrower  and setting
forth the sample  signatures  of each of the officers and agents of the Borrower
authorized  to  execute  and  deliver  this  Fourth  Amendment  and the  Capital
Expenditure Note and all other documents,  agreements and certificates on behalf
of the Borrower.

     (c) Payment of the amendment  fee of $1,000,  which is 0.5% of the increase
in the capital expenditure loan commitment.

     (d) Such other matters as the Lender may require.

     12.  Representations  and Warranties.  The Borrower  hereby  represents and
warrants to the Lender as follows:

     (a) The  Borrower  has all  requisite  power and  authority to execute this
Fourth  Amendment  and the  Capital  Expenditure  Note and to perform all of its
obligations  thereunder,  and this Fourth  Amendment  has been duly executed and
delivered  by  the  Borrower  and  constitutes  the  legal,  valid  and  binding
obligation of the Borrower, enforceable in accordance with its terms.

     (b) The execution,  delivery and performance by the Borrower of this Fourth
Amendment  and the Capital  Expenditure  Note have been duly  authorized  by all
necessary corporate action and do not (i) require any authorization,  consent or
approval by any governmental  department,  commission,  board, bureau, agency or
instrumentality,  domestic or foreign,  (ii)  violate any  provision of any law,
rule or regulation  or of any order,  writ,  injunction  or decree  presently in
effect,  having applicability to the Borrower,  or the articles of incorporation
or by-laws  of the  Borrower,  or (iii)  result in a breach of or  constitute  a
default under any indenture or loan or credit  agreement or any other agreement,
lease or  instrument  to  which  the  Borrower  is a party or by which it or its
properties may be bound or affected.

     (c) All of the  representations  and warranties  contained in Article IV of
the Credit  Agreement are correct on and as of the date hereof as though made on
and as of  such  date,  except  to the  extent  that  such  representations  and
warranties relate solely to an earlier date.

     (d) The recitals set forth on the first page hereof are true and correct.

     13. References.  All references in the Credit Agreement to "this Agreement"
shall be deemed to refer to the Credit Agreement as amended hereby;  and any and
all references in the Mortgage or any Guaranty to the Credit  Agreement shall be
deemed to refer to the Credit Agreement as amended hereby.

     14. Release.  The Borrower hereby absolutely and  unconditionally  releases
and  forever  discharges  the  Lender,  and  any and  all  participants,  parent
corporations,   subsidiary  corporations,   affiliated  corporations,  insurers,
indemnitors,  successors and assigns  thereof,  together with all of the present
and former  directors,  officers,  agents and employees of any of the foregoing,
from any and all  claims,  demands  or causes  of action of any kind,  nature or
description,  whether arising in law or equity or upon contract or tort or under
any state or federal law or  otherwise,  which the  Borrower has had, now has or
has made  claim to have  against  any such  person  for or by reason of any act,
omission,  matter,  cause or thing whatsoever arising from the beginning of time
to and including the date of this Fourth Amendment, whether such claims, demands
and causes of action are matured or unmatured or known or unknown.
<PAGE>

     15. Costs and Expenses.  The Borrower hereby  reaffirms its agreement under
the Credit  Agreement to pay or reimburse the Lender on demand for all costs and
expenses  incurred by the Lender in connection with the Credit Agreement and all
other  documents   contemplated   thereby,   including  without  limitation  all
reasonable  fees  and  disbursements  of legal  counsel.  Without  limiting  the
generality of the foregoing,  the Borrower  specifically  agrees to pay all fees
and  disbursements  of counsel to the Lender for the services  performed by such
counsel in  connection  with the  preparation  of this Fourth  Amendment and the
documents and instruments incidental hereto. The Borrower hereby agrees that the
Lender may, at any time or from time to time in its sole  discretion and without
further  authorization  by the Borrower,  make a loan to the Borrower  under the
Credit  Agreement,  or apply the proceeds of any loan, for the purpose of paying
any such fees, disbursements, costs and expenses.

     16.  Miscellaneous.  This Fourth Amendment may be executed in any number of
counterparts,  each of which when so executed and  delivered  shall be deemed an
original and all of which counterparts, taken together, shall constitute one and
the same instrument.

     IN WITNESS WHEREOF, the parties hereto have caused this Fourth Amendment to
be duly executed as of the day and year first above written.


LaCANASTA OF MINNESOTA, INC.                      NORWEST BANK MINNESOTA,
                                                  NATIONAL ASSOCIATION


By ________________________                       By ________________________
   A. Merrill Ayers
   Its Chief Financial Officer                    ___________________________
                                                  Its _______________________


SPARTA FOODS, INC.


By __________________________
   A. Merrill Ayers
   Its Chief Financial Officer


<PAGE>

                            CAPITAL EXPENDITURE NOTE
$473,333
                                                        Minneapolis, Minnesota
                                                             December 20, 1996

     For value  received,  the  undersigned,  LaCANASTA  OF  MINNESOTA,  INC., a
Minnesota  corporation (the "Borrower"),  hereby promises to pay to the order of
NORWEST BANK MINNESOTA,  NATIONAL  ASSOCIATION,  a national banking  association
(the "Lender"),  at its main office in Minneapolis,  Minnesota,  or at any other
place designated at any time by the holder hereof, in lawful money of the United
States of America and in immediately  available funds, the principal sum of Four
Hundred Seventy-Three Thousand Three Hundred Thirty-Three Dollars ($473,333) or,
if less,  the  aggregate  unpaid  principal  amount of all Advances  made by the
Lender to the Borrower  under the Capital  Expenditure  Loan,  as defined in and
pursuant to that certain Credit and Security  Agreement  dated as of December 9,
1994, by and between the Borrower and Lender (the "Principal  Amount")  together
with  interest  on the  Principal  Amount  remaining  unpaid  from  time to time
computed on the basis of the actual  number of days elapsed and a 360-day  year,
from the date  hereof  until  this  Note is fully  paid at the rate set forth in
Section 2.4 of that Credit and Security Agreement,  as supplemented by a certain
First  Supplement  to Credit  Agreement  dated as of December 13,  1994,  and as
amended by a First  Amendment to Credit  Agreement dated as of April 14, 1995, a
Second  Amendment to Credit  Agreement  dated as of September  21, 1995, a Third
Amendment to Credit Agreement dated as of April 23, 1996, and a Fourth Amendment
to Credit and Security Agreement of even date herewith (as amended,  the "Credit
Agreement").

     Interest  accruing on the Principal  Balance each month shall be payable on
the first day of the next succeeding month and at maturity or earlier prepayment
in full. The Principal  Balance shall be payable in thirty-six (36)  consecutive
monthly  installments of $6,342 commencing on January 1, 1997, with a payment of
all unpaid principal and other Obligations on the earliest of termination of the
Revolving Credit Facility, demand by the Lender or the Termination Date.

     This Note may be  prepaid in whole at any time or from time to time in part
in  accordance  with  the  terms  of the  Credit  Agreement,  provided  that any
prepayment in whole of this Note shall include accrued interest thereon.

     This Note is issued  pursuant  to, and is subject to the Credit  Agreement.
This Note is the Capital Expenditure Note referred to in the Credit Agreement.

     This Note is secured,  among other things,  by the Credit Agreement and the
Security  Documents as therein  defined,  and may now or hereafter be secured by
one or more other security agreements,  mortgages,  deeds of trust, assignments,
or other instruments or agreements.

     The  Borrower  hereby  agrees  to pay all  costs of  collection,  including
reasonable  attorneys'  fees and legal  expenses,  in the event this Note is not
paid when due, whether or not legal proceedings are commenced.

     If any payment of interest or principal is not made when due in  accordance
with the terms and  conditions  of this Note, or an Event of Default shall occur
under the Credit Agreement or any instrument or document  securing this Note and
shall be  continuing,  then the holder  hereof may, at its option,  by notice in
writing  to the  Borrower,  declare  immediately  due  and  payable  the  entire
Principal  Balance  hereof and all interest  accrued  thereon and the same shall
thereupon be immediately due and payable without further notice or demand.

     This Note shall also become  immediately due and payable  (including unpaid
interest  accrued  hereon)  without  demand or notice  thereof  upon filing of a
petition by or against the undersigned under the United States Bankruptcy Code.

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

     This Note is issued in  substitution  for and  replacement  of,  but not in
payment of, the Capital Expenditure Note of the Borrower dated December 9, 1994,
payable to the order of the Lender in the original principal amount of $400,000.

                                    LaCANASTA OF MINNESOTA, INC.


                                    By _________________________
                                       A. Merrill Ayers
                                   Its Chief Financial Officer