LOAN AND SECURITY AGREEMENT

This LOAN AND SECURITY AGREEMENT is entered into as of November ___, 2008 by and between Power Sports Factory, Inc., a Minnesota Corporation (“Borrower”), and Crossroads Debt LLC, a Florida limited liability company (“Lender”).

A. Borrower has requested that Lender provide financial accommodations to Borrower as more fully set forth herein and in the Loan Documents.

B. The Obligations will be guaranteed by Guarantors.

NOW, THEREFORE, in consideration of the premises, and intending to be legally bound hereby, the Parties hereby agree as follows:

1.2.1 “Advances” - see Section 2.1.1 hereof.

1.2.3 “Allowable Amount” - the lesser of (i) the Borrowing Base less Availability Reserves and (ii) the Maximum Amount.

1.2.4 “Availability Reserves” - as of any date of determination, such amounts as Lender may from time to time establish and revise reducing the amount of Advances which would otherwise be available to Borrower hereunder:

(a) To reflect events, conditions, contingencies or risks which, as determined by Lender, which may affect either (i) the Collateral or any other property which is security for the Obligations or its value, (ii) the assets, business or prospects of Borrower or any Obligor, or (iii) the security interest and other rights of Lender in the Collateral (including the enforceability, perfection and priority thereof);

(d) In respect of any state of facts that Lender determined constitutes an Event of Default or may, with notice or passage of time or both, constitute an Event of Default.

1.2.5 “Avoidance Claim” - any claim that any payment received by Lender from or for the account of Borrower or on account of any Collateral is avoidable under the United States Bankruptcy Code or any other state or federal debtor relief statute.

1.2.6 “Borrower” - see Preamble hereof.

1.2.7 “Borrowing Base” – the lower of the following, when applied to Eligible Inventory:

(a) 50% of Inventory Cost;

(b) 75% of Net Liquidation Value.

1.2.8 “Borrowing Base Certificate” - a request for an Advance, in a form acceptable to Lender.

1.2.10 “Chosen State” - Florida.

1.2.11 “Clearance Days” - Five (5) Business Days.

1.2.12 “Clearance Day Payments” - payments received by Lender, in whatever form and from whatever source, except wire transfers, in reduction of the Obligations.

1.2.13 “Collateral” – All Borrower’s present and future Accounts, Chattel Paper, Goods (including Inventory and Equipment), Instruments, Investment Property, Documents, and General Intangibles, Letter of Credit Rights, Commercial Tort Claims, Deposit Accounts, and the proceeds thereof.

1.2.14 “Collateral Management Fee” – [0.5%] per month of the Loan Account balance.

1.2.15 “Complete Termination” – Complete Termination occurs upon satisfaction of the following conditions:

(a) Payment in full of all Obligations;

(c) Borrower has executed and delivered to Lender a general release in the form of Exhibit 1.2.15 (c) attached hereto.

1.2.17 “Credit Accommodation” - any advance or other extension of credit by Lender to or on behalf of Borrower hereunder.

1.2.18 “Default Interest Rate Spread” – 10%. 1.2.19 “Default Waiver Fee” - $1,000.

1.2.20 “Early Termination Date” – the date on which an Early Termination Event occurs.

1.2.21 “Early Termination Event” – the occurrence of any of the

(a) Termination of this Agreement by Borrower;

(b) Borrower becomes a debtor in a case filed under the United States Bankruptcy Code or any similar state proceeding;

(c) Borrower repays the Obligations (whether by acceleration or otherwise, except if such repayment is due to termination of this Agreement by Lender) prior to the next Contractual Termination Date.

1.2.22 “Early Termination Fee” - $7,500 per month for each month, or portion thereof, between the Early Termination Date and the next anniversary date of this Agreement.

1.2.23 “Eligible Inventory” – Finished goods Inventory of Borrower

(a) Subject to Lender’s first priority, perfected security interest; (b) Not owned by Borrower for more than 120 days, and (c) Otherwise acceptable to Lender in its sole discretion.

1.2.24 “Event of Default” - see Section 12 hereof.

1.2.25 “Factor” - LSQ Funding Group or any other entity that agrees, pursuant to a factoring agreement or otherwise, to purchase the Accounts of Borrower.

1.2.26 “Factoring Documents” – That certain Collection Agreement between Factor and Borrower dated , and all documents executed in connection therewith, or any other factoring or accounts receivable financing agreement or related documents executed by Borrower and Factor.

1.2.28 “Guarantors” - all individuals and entities now or hereafter guaranteeing the Obligations, including a prepayment penalty of $7,500.

1.2.29 “Initial Term” – 1(12) year [months] from the date hereof.

1.2.30 “Interest Rate” – 1.75% per month.

1.2.31 “Inventory Cost” – As determined by Lender, the lesser of (a) cost of Eligible Inventory, computed on a first-in-first-out basis in accordance with GAAP, or (b) market value of Eligible Inventory.

1.2.32 “Key Employees” – Stanislav Rubakh (President), Shawn Landgraf (CEO), Tommy Pannone (VP of Customer Relations and Warehouse).

1.2.33 “Loan Account” – that portion of the Obligations which accrue interest hereunder, including the sum of the unpaid balances of:

(a) Advances;

(b) Other payments made by Lender arising hereunder for which Borrower is liable to Lender.

1.2.34 “Loan Documents” - this Agreement, together with any documents, instruments and agreements, executed and/or delivered in connection herewith, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

1.2.35 “Loan Fee” – the Loan Fee Percent multiplied by the Maximum Amount at the time this fee accrues.

1.2.36 “Loan Fee Percent” – 1.5%.

1.2.37 “Maximum Amount” - $1,000,000.

1.2.38 “Minimum Monthly Line Fee” – the greater of interest on $250,000 or the actual loan balance outstanding, calculated on a monthly basis.

1.2.39 “Net Liquidation Value” – The value of Eligible Inventory, as determined by Lender in the exercise of its reasonable sole discretion, which could be obtained upon liquidation under distress conditions.

1.2.40 “Obligor” – the Borrower or any Guarantor.

1.2.41 “Obligations” - all present and future obligations owing by Borrower to Lender whether arising hereunder or otherwise, and whether arising before, during or after the commencement of any bankruptcy case in which Borrower is a Debtor.

1.2.42 “Renewal Term” - one year.

1.2.43 “Subordinating Creditor” – any creditor of the Borrower which has executed a Subordination Agreement.

1.2.45 “Termination Date” - the earlier of (i) the Contractual Termination Date or (ii) the date on which Lender elects to terminate this Agreement pursuant to the terms herein.

1.2.46 “Third Party Claim” – claims asserted against Lender by any person or entity relating in any way to the Lender’s relationship with Borrower.

1.2.47 “UCC” - The Uniform Commercial Code in effect in the Chosen State at the date on which a determination thereunder is to be made.

2.1 Advances. Subject to the terms and conditions of this Agreement, from the date on which this Agreement becomes effective until the Termination Date:

2.1.2 Lender may, in its discretion, from time to time, upon not less then five (5) days prior notice to Borrower, reduce the amount available under the Borrowing Base to the extent that Lender determines that the number of days of the turnover of the Inventory for any period has changed in any material respect, or (a) the liquidation value of the Eligible Inventory, or any category thereof, has decreased, or (b) the nature and quality of the Inventory has deteriorated.

2.2 General Provisions.

2.2.1 Borrowing Base Certificate. Each request from Borrower for a Credit Accommodation shall be accompanied by a Borrowing Base Certificate, completed and signed by Borrower.

2.2.2 Crediting Borrower's Account. All Credit Accommodations by Lender may be made by deposits or transfers to any demand deposit account of Borrower.

Accommodation if, before or as a result thereof, the Obligations shall exceed the Allowable Amount.

3. Payments by Borrower.

3.1 In General.

3.1.1 Place of Payments. All payments hereunder shall be made by Borrower to Lender at Lender’s address set forth herein or at such other place as Lender may designate in writing.

3.3 Interest and Fees.

3.3.2 Interest.

(a) Subject to Section 3.3.2 (b) hereof, interest on the Loan Account balance shall be payable monthly, in arrears, shall be computed at the Interest Rate computed on the basis of a 360 day year, and shall be due on the first day of each month following the accrual thereof.

3.3.3 Fees.

(a) Audit Fee. Borrower shall immediately pay to Lender Lender’s out-of-pocket expenses in connection with each audit Lender performs or causes to be performed hereunder.

(c) Default Waiver Fee. Borrower shall pay the Default Waiver Fee to Lender, immediately upon the waiver by Lender of any Event of Default hereunder, so long as the waiver was done at the Borrower’s request.

(d) Early Termination Fee. Borrower shall pay to Lender the Early Termination Fee immediately upon the occurrence of an Early Termination Event.

(e) Loan Fee. Borrower shall pay the Loan Fee to Lender on the date hereof, and shall pay an additional Loan Fee on the first day of each Renewal Term.

(f) Immediately upon any increase in the Maximum Amount, Borrower shall pay to Lender a fee computed as the product of the Loan Fee Percent and the amount of the increase in the Maximum Amount.

(g) Attorney Fees. Borrower shall pay to Lender all attorneys fees and costs incurred in preparation of this Agreement and related documents.

(h) Standard Fees. Borrower shall pay to Lender fees for such services as Lender customarily charges. Lender shall have the right to change all or any of such fees upon ten days notice to Borrower.

payment, then Borrower shall be deemed not to have made such payment, and interest shall be recalculated accordingly.

4.2 For the purposes hereof, “Assurances” shall mean collateral, a guaranty or a letter of credit from an entity so that Lender reasonably believes in good faith that the likelihood of loss resulting from the Third Party Claim is remote.

6.1 The Borrower irrevocably authorizes the Lender to file in any Uniform Commercial Code jurisdiction any initial financing statements and amendments thereto that:

6.1.1 Indicate the Collateral as all assets of the Borrower or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the UCC, or as being of an equal or lesser scope or with greater detail;

6.1.2 Contain any other information required by part 5 of Article 9 of the UCC for the sufficiency or filing office acceptance of any financing statement or amendment, including (i) whether the Borrower is an organization, the type of organization, and any organization identification number issued to the Borrower and, (ii) in the case of a financing statement filed as a fixture filing or indicating Collateral to be as-extracted collateral or timber to be cut, a sufficient description of real property to which the Collateral relates;

6.1.3 Contain a notification that the Borrower has granted a negative pledge to the Lender, and that any subsequent lienor may be tortuously interfering with Lender’s rights;

6.2 The Borrower agrees to furnish any of the foregoing information to the Lender promptly upon request;

6.3 The Borrower ratifies its authorization for the Lender to have filed any like initial financing statements or amendments thereto if filed prior to the date hereof; and

6.4 The Lender may add any supplemental language to any such financing statement as Lender may determine to be necessary or helpful in acquiring or preserving rights against third parties.

7.1 There are no actions or proceedings pending by or against Borrower before any court or administrative agency and Borrower does not have knowledge or belief of any pending, threatened, or imminent litigation, governmental investigations, or claims, complaints, actions, or prosecutions involving Borrower or any Guarantor of the Obligations, except for ongoing collection matters in which Borrower is the plaintiff.

regulation related to money laundering similar activities, Lender may undertake appropriate actions to ensure compliance with applicable law or regulation, including but not limited to segregation and/or redemption of Lender’ investment in Borrower. Borrower further understands that Lender may release confidential information abou