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:
"'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.
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.
(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."
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.
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.
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. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Its Chief Financial Officer ___________________________
Its _______________________
SPARTA FOODS, INC.
By __________________________
A. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Its Chief Financial Officer
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. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Its Chief Financial Officer