Exhibit 10.1


 


LOAN AGREEMENT


 


THIS LOAN AGREEMENT is made as of July 15,
2009, between TITAN MACHINERY INC.,
a Delaware corporation with its principal offices located in Fargo, North
Dakota, and BREMER BANK, N.A., a
national banking association with offices located in Lisbon, North Dakota.


 


NOW, THEREFORE, in consideration of the
mutual promises and covenants set forth below, the Bank and the Borrower agree
as follows:


 


ARTICLE I - DEFINITIONS


 


Section 1.1  Definitions.  For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:


 


(a)                                  The terms
defined in this Article have the meanings assigned to them in this
Article, and include the plural as well as the singular.


 


(b)                                 All accounting
terms not otherwise defined herein have the meanings assigned to them in
accordance with GAAP.


 


“Advance” means an advance by the Bank to the
Borrower pursuant to Section 2.1, 2.2. or 2.3.


 


“Agreement” means this Loan Agreement
together with all amendments, modifications and restatements thereof.


 


“Bank” means Bremer Bank, N.A., it successors
or assigns.


 


“Borrower” means Titan Machinery Inc.


 


“Borrowing Base Certificate” means a writing,
in the form of Exhibit “A” attached hereto, completed and signed by
the Borrower as contemplated by this Agreement.


 


“Collateral Documents” means the security
agreement, financing statement, pledges, intercreditor agreements, landlord
disclaimer and consent agreements and all other collateral documents referred
to in Section 3.1 and Section 8.20.


 


“Cost of Goods Sold” shall have the meaning
assigned to it in accordance with GAAP.


 


“Current Assets” shall mean the aggregate
amount of the Borrower’s assets properly shown as current assets on its balance
sheet, determined in accordance with GAAP, minus the following: receivables and
other amounts due from any shareholder, director, officer or employee of the


 


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Borrower, and receivables and other amounts due from any other related
or affiliated Person of the Borrower.


 


“Current Liabilities” shall mean the
aggregate amount of the Borrower’s liabilities properly shown as current
liabilities on its balance sheet, determined in accordance with GAAP.


 


“Debt” shall mean the aggregate amount of the
Borrower’s items properly shown as liabilities on its balance sheet, determined
in accordance with GAAP, less any liabilities that constitute Subordinated
Debt.


 


“Eligible Equipment” means the dollar value
of all equipment (including vehicles) of the Borrower accounted for at the
lower of net book value as determined in accordance with GAAP or the appraised
value of such equipment as determined by Steffes Auction Company or such other
auction company selected by the Bank pursuant to an appraisal on terms and conditions
satisfactory to the Bank.  Without
limiting the discretion of the Bank to consider any item of equipment not to be
Eligible Equipment, and by way of example only of types of equipment that the
Bank will consider not to be Eligible Equipment, notwithstanding any earlier
classification of eligibility, the following shall not be considered Eligible
Equipment (i) any equipment which is not located on the Premises of the
Borrower; (ii) any equipment which is obsolete or not useable in the
normal course of the Borrower’s operations; (iii) any equipment in which
the Bank does not have a perfected security interest constituting a first lien;
and (iv) any equipment inventory in Borrower’s rental fleet held for rent
by the Borrower.


 


“Eligible Equipment Inventory” means the
dollar value of New Equipment Inventory and Used Equipment Inventory of the
Borrower in which the Bank holds a first perfected security interest accounted
for at the lower of cost or fair market value computed on a first-in-first-out
basis in accordance with GAAP, which New Equipment Inventory and Used Equipment
Inventory has been paid for by the Borrower in full and provided, further, that
Eligible Equipment Inventory, shall not, in any event, include:


 


(a)                                  inventory which
is (i) in-transit; or (ii) not located on the Borrower’s Premises or
in another location approved by the Bank in writing; or (iii) not subject
to an effective financing statement filed by the Bank to perfect a first
security interest in such inventory; or (iv) on consignment to or from any
other Person or subject to any bailment; or (v) subject to any lien in
favor of any Person other than the Bank;


 


(b)                                 raw materials
and work in process;


 


(c)                                  supplies,
packaging and parts inventory;


 


(d)                                 inventory that
is damaged, obsolete or not currently saleable in the normal course of the
Borrower’s operations;


 


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(e)                                  inventory that
the Borrower has returned, has attempted to return, is in the process of
returning or intends to return to the vendor thereof; and


 


(f)                                    inventory
otherwise deemed ineligible by the Bank in its sole discretion.


 


“Eligible Parts Inventory” means the dollar
value of the parts inventory of the Borrower in which the Bank holds a
perfected first security interest accounted for at the lower of cost or fair
market value computed on a first-in-first—out basis in accordance with
GAAP.  Without limiting the discretion of
the Bank to consider any parts not to be Eligible Parts Inventory, and by way
of example only, Eligible Parts Inventory shall not, in any event, include:


 


(a)                                  parts inventory
which is (i) in-transit; or (ii) not located on the Borrower’s
Premises or in another location approved by the Bank in writing; or (iii) not
subject to an effective financing statement filed by the Bank to perfect a
security interest in such inventory; or (iv) on consignment to or from any
other Person or subject to any bailment.


 


(b)                                 parts inventory
that is damaged, obsolete or not currently saleable in the normal course of the
Borrower’s operations;


 


(c)                                  parts inventory
that the Borrower has returned, has attempted to return, is in the process of
returning or intends to return to the vendor thereof; and


 


(d)                                 parts inventory
otherwise deemed ineligible by the Bank in its sole discretion.


 


“Eligible Receivables”  means only such accounts receivable of the
Borrower as the Bank, in its sole discretion, shall deem eligible.  Without limiting the discretion of the Bank
to consider any account receivable not to be an Eligible Receivable, and by way
of example only of types of accounts receivable that the Bank will consider not
to be Eligible Receivables, notwithstanding any earlier classification of
eligibility, the following accounts receivable shall not be considered Eligible
Receivables: (i) any account receivable which is not paid in full within
90 days after it is created; (ii) any account receivable as to which any
warranty is breached; (iii) any account receivable as to which the account
debtor or other obligor disputes liability or makes any claim; (iv) any
account receivable owed by any officer, director or shareholder of the Borrower
or any of their relatives or any Person wholly or partly owned or controlled
directly or indirectly by any of them or any of their relatives; (v) any
account receivable owed by any Person as to whom a petition in bankruptcy or
other application for relief is filed under any bankruptcy, reorganization,
receivership, moratorium, insolvency or similar law; (vi) any account
receivable owed by any Person who makes an assignment for the benefit of
creditors, becomes insolvent, fails, suspends business, or goes out of
business; (vii) any account receivable owed by the United States
government or any agency of the United States government or any account owned
by a Native American Sovereign Nation; (viii) any account receivable owed
by any Person if 10% or more in amount of accounts receivable owed by such
Person to the Borrower are considered ineligible; (ix) consignment
receivables; (x) bonded receivables; (xi) any account receivable
constituting a retainage; (xii) any account receivable for


 


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goods which have not been shipped or work which has not been fully
performed; (xiii) any account receivable owed by any Person outside the United
States of America; (xiv) any account receivable owed by any Person with whose
creditworthiness the Bank becomes dissatisfied; (xv) any intercompany account
receivable; and (xvi) any account receivable in which the Bank does not have a
perfected security interest constituting a first lien.


 


In the event the Borrower owes any amount to
any Person that owes an account receivable to the Borrower, such amount owed by
the Borrower shall be deducted from that portion of the account receivable which
would otherwise qualify as an Eligible Receivable and only the difference
thereof shall be considered an Eligible Receivable.  No account receivable which does not qualify
as an Eligible Receivable shall be considered an Eligible Receivable unless the
Bank, upon the written request of the Borrower, states in writing that such
account receivable is to be considered an Eligible Receivable.


 


“Environmental Laws” means all federal,
state, local and foreign laws, statutes, codes, ordinances, regulations, requirements,
rules and common law relating in any way to any hazardous or toxic
materials or the protection of the environment.


 


“Event of Default” has the meaning specified
in Section 7.1.


 


“GAAP” means the generally accepted
accounting principles in the United States in effect from time to time
including, but not limited to, Financial Accounting Standards Board (FASB)
Standards and Interpretations, Accounting Principals Board (APB) Opinions and
Interpretations, and certain other accounting principles which have substantial
authoritative support.


 


“Letter of Credit” means any one or more
irrevocable letters of credit which may be issued by the Bank for the account
of the Borrower.  (Nothing in this
Agreement shall be construed as a commitment by the Bank to issue any letters
of credit for the account of the Borrower.)


 


“Letter of Credit Amount” means the sum of (i) the
aggregate amount available for drawing under any issued and outstanding Letter
of Credit, and (ii) amounts drawn under any Letter of Credit for which the
Bank has not been reimbursed.


 


“L/C Application” means an application and
agreement for letters of credit in the Bank’s then current standard form.


 


“Net Worth” shall mean the aggregate amount
of the Borrower’s items properly shown as assets on its balance sheet minus the
aggregate amount of the Borrower’s items properly shown as liabilities on its
balance sheet, determined in accordance with GAAP, plus Subordinated Debt. 


 


“New Equipment Inventory” means new whole
goods inventory held for sale by the Borrower in the ordinary course of the
Borrower’s business which new equipment inventory (i) is ready for sale to
customers of the Borrower; (ii) meets all standards imposed by any
governmental agency; (iii) is located on the Premises of the Borrower; (iv) is
not obsolete; (v) is not on


 


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consignment to or from any other Person or been sold or otherwise
delivered, transferred or conveyed to any other Person or is subject to any
bailment or lease; (vi) is subject to a perfected security interest
constituting a first lien in favor of the Bank; (vii) does not have more
than fifty (50) hours of use; and (viii) is not Used Equipment Inventory.


 


“Notes” means individually and collectively
the promissory notes described in Section 2.1 and 2.3 together with any
subsequent renewals, modifications, extensions and substitutions thereof.


 


“Obligations” means each and every debt,
liability and obligation of every type and description which the Borrower may
now or at any time hereafter owe to the Bank including, without limitation, the
indebtedness arising under this Agreement, the Notes and the L/C Applications.


 


“Person” means any individual, corporation,
partnership, joint venture, association, joint-stock company, limited liability
company, trust, cooperative or other business entity, unincorporated
organization, or government or any agency or political subdivision thereof.


 


“Premises” means the equipment dealerships
operated by the Borrower in Lisbon, Lidgerwood, Kulm, Wishek, Jamestown,
LaMoure, Wahpeton, Casselton, Bismarck, West Fargo,  Mandan, Grand Forks, Kintyre, Minot,
Mayville, Arthur and Fargo, North Dakota; Watertown, Aberdeen, Sioux Falls,
Rapid City, Huron, Pierre, Highmore, Miller and Redfield, South Dakota;
Pipestone, Graceville, Marshall, Fergus Falls, Elbow Lake, Roseau, Crookston,
Ada, Thief River Falls, Winger and Moorhead, Minnesota; Waverly, Kingsley, Le
Mars, Cherokee, Anthon, Dike, Des Moines, Blairstown, Cedar Rapids, Grundy
Center, Davenport, Avoca, Greenfield, Clear Lake and Sioux City, Iowa; Omaha
and Lincoln, Nebraska; Billings, Belgrade, Great Falls, Missoula and Kalispell,
Montana; and Cheyenne, Casper and Gillette Wyoming.


 


“Revolving Note” means the promissory note
referred to in Section 2.1 together with any subsequent renewals,
extensions, modifications and substitutions thereof.


 


“Subordinated Debt” shall mean Debt that is
expressly subordinated to the Bank in a writing acceptable to the Bank.


 


“Tangible Net Worth” shall mean Net Worth
minus the aggregate amount of the Borrower’s items properly shown as the
following types of assets on its balance sheet determined in accordance with
GAAP: (i) goodwill, patents, non-competes, copyrights, mailing lists,
trade names, trademarks, servicing rights, organizational and franchise costs,
bond underwriting costs, and other like assets properly classified as
intangible; (ii) leasehold improvements; (iii) receivables, loans and
other amount due from any shareholder, director, officer or employee of the
Borrower, and receivables, loans and other amounts due from any other related
or affiliated Person of the Borrower; and (iv) investments or other
interests in non-public companies, cooperatives, entities or  partnerships.


 


“Term Note” means the promissory note
referred to in Section 2.3 together with any subsequent renewals,
extensions, modifications and substitutions thereof.


 


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“Total Loan Value” means (i) seventy-five
percent (75%) of the Borrower’s Eligible Receivables; plus (ii) fifty
percent (50%) of the Borrower’s Eligible Equipment less an amount equal to the
unpaid balance of any obligations owing any Person supplying or financing the
purchase of or having a lien or security interest in any equipment, other than
the Bank; plus (iii) fifty percent (50%) of the Borrower’s Eligible
Equipment Inventory less an amount equal to the unpaid balance of any
obligations owing the person supplying or financing the purchase of any
equipment inventory or having a lien or security interest in any equipment
inventory, other than the Bank; plus (iv) fifty percent (50%) of the
Borrower’s Eligible Parts Inventory less an amount equal to the unpaid balance
of any obligations owing any Person supplying or financing the purchase of any
parts inventory or having a lien or security interest in any parts inventory,
other than the Bank; less (v) the Letter of Credit Amount less (vi) the
unpaid balance of the Term Note all as determined by the Borrower in accordance
with GAAP, consistently applied and as reflected by and determined in
accordance with the Borrowing Base Certificate.


 


“Used Equipment Inventory” means all used
whole goods inventory held for sale by the Borrower in the ordinary course of
the Borrower’s business which used equipment inventory (i) is ready for
sale to customers of the Borrower; (ii) meets all standards imposed by any
governmental agency; (iii) is located on the Premises of the Borrower; (iv) is
not obsolete; (v) is not on consignment to or from any other Person or
been sold or otherwise delivered, transferred or conveyed to any other Person
or is subject to any bailment or lease; (vi) is subject to a perfected
security interest constituting a first lien in favor of the Bank; and (vii) is
not New Equipment Inventory.


 


ARTICLE II - AMOUNT AND
TERMS OF LOANS


 


Section 2.1  Revolving Loan .  Subject to the terms and conditions of this
Agreement, the Bank may, in its discretion, make Advances to the Borrower under
this Section from time to time from the date hereof in the aggregate
amount not to exceed at any one time outstanding the sum of Twenty-five Million
Dollars ($25,000,000).  Within the limits
set forth in this Section, the Borrower may borrow, prepay and re-borrow under
this Section.  The obligation to repay
the Advances made pursuant to this Section shall be evidenced by a
promissory note payable to the Bank and containing the terms relating to the
repayment, interest rate and other matters as set forth in Schedule 2.1
attached to and made a part of this Agreement (“Revolving Note”).


 


Section 2.1.1 Purpose
of Advances.  The purpose for the
first Advance under Section 2.1 is to replace, but not satisfy, an
existing obligation of the Borrower to the Bank dated August 28, 2008, in
the original principal amount of $25,000,000. 
Subsequent Advances under Section 2.1 shall be used solely for the
short term working capital requirements of the Borrower.


 


Section 2.1.2  Making Advances. Advances pursuant to Section 2.1
shall be made in accordance with the terms and conditions of a cash management
agreement(s) among the Bank and the Borrower.


 


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In addition to Advances made
by the Bank to the Borrower pursuant to any cash management agreement(s), the
Borrower may also request Advances directly from the Bank under the Revolving
Note in accordance with this Section. 
Each such Advance under the Revolving Note shall be made on written,
oral, electronic or telephonic request from any Person purporting to be
authorized to request Advances on behalf of the Borrower, which notice or
request shall specify the date of the requested Advance and the amount
thereof.  Upon the Borrower’s fulfillment
of the applicable conditions set forth in Article III, the Bank may
disburse the amount of the requested Advance by crediting the same to the
Borrower’s demand deposit account maintained with the Bank or in such other
manner as the Bank and the Borrower may from time to time agree. Any Advance
pursuant to Section 2.1 not made in accordance with a cash management
agreement shall be made at least one bank business day prior to the date of the
desired Advance and such Advance request shall be made by Mark Kalvoda or Jon
Swanson or David J. Meyer or Ted Christianson or Peter Christianson on behalf
of the Borrower.  Notwithstanding the
immediately foregoing sentence, in the absence of bad faith on the part of the
Bank, regardless of how the Advance is made or requested, the Borrower shall be
obligated to repay all Advances notwithstanding the fact that the Person
requesting the same was not in fact authorized to do so.


 


Any request for an Advance,
whether written, oral, electronic, telephonic or by way of a cash management
agreement shall be deemed to be a representation by the Borrower that the
statements set forth in Section 3.2 are correct.


 


Section 2.1.3  Discretionary Advances.  The Borrower understands and agrees that
notwithstanding that conditions to Advances and various covenants and Events of
Default are set forth herein as would be common to a loan agreement in which
the lender made a commitment to lend, the Bank may, in its sole discretion and
for any reason whatsoever, refuse to make Advances pursuant to Section 2.1
even though the Borrower may be in perfect compliance with this Agreement.


 


Section 2.1.4  Loan Advance Formula.  The Borrower’s ability to request Advances
pursuant to Section 2.1 shall be limited in the aggregate principal amount
at any one time outstanding, to the lesser of: (a) $25,000,000; or (b) the
Total Loan Value.  Notwithstanding
anything to the contrary in this Agreement or under the terms of the Notes, if
at any time the aggregate principal amount outstanding under the Revolving Note
exceeds the lesser of (a) $25,000,000 or (b) the Total Loan
Value, the Borrower shall immediately repay to the Bank the amount of the
excess which payment shall be applied to the Revolving Note.


 


Section 2.1.5 Clean
Up.  Notwithstanding anything to the
contrary contained in this Agreement or the Revolving Note, the Borrower agrees
that for a period of fifteen (15) consecutive days during the term of the
Revolving Note, there shall be no outstanding balance owing the Bank under the
Revolving Note.


 


Section 2.1.6 Non-Usage
Fee.  The Borrower shall pay the Bank
a non-usage fee (“Non-Usage Fee”) at an annual rate equal to .50% applied to
the average monthly unused


 


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amount of the Revolving Note, as determined
by the Bank in its reasonable discretion, payable monthly on the 1st day of each month, in arrears.  Any Non-Usage Fee remaining unpaid at the
time the Revolving Note is due and payable in full shall be due and payable on
that date.


 


Section 2.2 Letters of Credit.  The Bank may in its sole discretion, issue
for the Borrower’s account, from the date hereof to and including July 13,
2010, or until an Event of Default occurs, whichever occurs first, one or more
irrevocable standby letters of credit (each a “Letter of Credit”) to be used to
secure payment to supplier(s) of the Borrower in connection with the
Borrower’s purchase of inventory from such suppliers.  The Bank shall have no obligation to issue
any Letter of Credit to the extent its face amount would exceed, when combined
with the face amount of other issued Letters of Credit, the sum of $1,000,000
or, when combined with Advances made under Section 2.1 would exceed the
Total Loan Value.  Each Letter of Credit,
if any, shall be issued pursuant to a separate L/C Application entered into by
the Borrower and the Bank for the benefit of the issuer, completed in a manner
satisfactory to the Bank.  The terms and
conditions set forth in each such L/C Application shall supplement the terms
and conditions hereof, but if the terms of any such L/C Application and the
terms of this Agreement are inconsistent, the terms of this Agreement shall
control.  No Letter of Credit shall be
issued with an expiry date later than July 14, 2010.


 


Section 2.2.1 Payment of Amounts
drawn under Letters of Credit; Obligation of Reimbursement.  The Borrower shall reimburse the Bank for all
draws under any Letter of Credit in accordance with the applicable L/C
Application as follows:


 


(a)                                  The Borrower
hereby agrees to pay the Bank on the day a draft is honored under any Letter of
Credit a sum equal to all amounts drawn under such Letter of Credit plus any
and all reasonable charges and expenses that the Bank may pay or incur relative
to such draw and the applicable L/C Application, plus interest on all such
amounts, charges and expenses as set forth below (the Borrower’s obligation to
pay all such amounts is herein referred to as the “Obligation of Reimbursement”).


 


(b)                                 Whenever a
draft is submitted under a Letter of Credit, the Bank may make an Advance under
Section 2.1 in the amount of the Obligation of Reimbursement and shall
apply the proceeds of such Advance thereto. 
Such Advance shall be repayable in accordance with and be treated in all
other respects as an Advance under Section 2.1.


 


(c)                                  If a draft is
submitted under a Letter of Credit when the Borrower is unable, because an
Event of Default then exists or for any other reason, to obtain an Advance to
pay the Obligation of Reimbursement, the Borrower shall pay to the Bank on
demand and in immediately available funds, the amount of the Obligation of
Reimbursement together with interest, accrued from the date of the draft until
payment in full.  Notwithstanding the
Borrower’s inability to obtain an Advance for any reason, the Bank is
irrevocably authorized, in


 


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its sole discretion, to make
an Advance in an amount sufficient to discharge the Obligation of Reimbursement
and all accrued but unpaid interest thereon.


 


(d)                                 The Borrower’s
obligation to repay any Advance made under this Section 2.2, shall be
evidenced by the Revolving Note.


 


Section 2.2.2  Discretionary Advances.  The Bank may at any time and for any reason
refuse to make an Advance or to issue a Letter of Credit for the Borrower’s
account whether the Borrower is or is not in compliance with this
Agreement.  The Bank need not show that
an adverse change has occurred in the Borrower’s condition, financial or
otherwise, in order to refuse to issue any Letter of Credit.


 


Section 2.3 Term Loan.  Subject to and upon the terms, covenants and
conditions set forth in this Agreement, the Bank agrees to make a single
Advance to the Borrower under this Section in the amount of Fifteen
Million Dollars ($15,000,000.00).  The
obligation to repay the Advance made pursuant to this Section shall be
evidenced by a promissory note payable to the Bank, containing the terms
relating to the repayment, interest rate and other matters as set forth in Schedule
2.3 attached to and made a part of this Agreement (“Term Note”).  The Advance made pursuant to this Section shall
not be on a revolving credit basis and, accordingly, the Borrower shall not be
entitled to reborrow upon any repayment. 
The purpose for the Advance under this Section 2.3 is for the long
term working capital requirements of the Borrower.


 


Section 2.4  Payment.  All payments of principal and interest under
this Agreement or the Notes shall be made to the Bank in immediately available
funds.  The Borrower agrees that the
amount shown on the books and records of the Bank as being the aggregate amount
of Advances outstanding under the Notes shall be prima facie evidence of the
principal amount of the Notes then outstanding. 
The Borrower hereby authorizes the Bank, if and to the extent payment is
not promptly made pursuant hereto, to charge against the Borrower’s account with
the Bank an amount equal to the accrued interest and principle from time to
time due and payable to the Bank under the Notes.


 


Section 2.5  Payment on Non-Business Days.  Whenever any payment to be made hereunder or
under the Notes shall be stated to be due on a Saturday, Sunday or a holiday
for banks under the laws of the State of North Dakota, or the United States,
such payment may be made on the next succeeding bank business day, and such
extension of time shall in such case be included in the computation of payment
of interest on the Notes.


 


Section 2.6  Late Fees.  The Borrower agrees to pay to the Bank a late
payment service charge in an amount equal to five percent (5%) of any
installment of principal or interest (excluding any final installment) not
received by the Bank with respect to the Notes within ten (10) days of the
date due but in no event shall such late payment service charge exceed the
maximum amount allowed by law. 
Acceptance by the Bank of any late fee shall not constitute a waiver of any
Event of Default.


 


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Section 2.7 Prepayment Premium.  The Borrower shall be entitled to prepay the
Term Note in whole or in part from time to time, which prepayment shall be
applied to the last maturing installment or installments of the Term Note but
shall not change the amount of the required monthly payment or in any manner
modify the payment schedule of the Term Note. 
Any such prepayment shall be subject to a prepayment premium (which the
Borrower shall pay on demand to the Bank) equal to five percent (5%) of the
principal portion of the prepayment in the event the prepayment is made during
the first year of the Term Note; four percent (4%) of the principal portion of
the prepayment in the event the prepayment is made during the second year of
the Term Note; three percent (3%) of the principal portion of the prepayment in
the event the prepayment is made during the third year of the Term Note; two
percent (2%) of the principal portion of the prepayment in the event the
prepayment is made during the fourth year of the Term Note; and one percent
(1%) of the principal portion of the prepayment in the event the prepayment is
made during the fifth year of the Term Note.


 


ARTICLE III - CONDITIONS OF
LENDING


 


Section 3.1  Conditions Precedent to Initial Advance.  The willingness of the Bank to consider
making the Advances under Article II (including the initial Advance) is
subject to the condition precedent that the Bank shall have received on or
before the day of such Advance all of the following, each dated (unless
otherwise indicated) such day, in form and substance satisfactory to the Bank:


 


(a)                                  The Revolving
Note and Term Note duly executed.


 


(b)                                 A certified
copy of the resolutions of the Borrower authorizing the execution, delivery and
performance of this Agreement, the Notes, Collateral Documents and other
matters contemplated hereby.


 


(c)                                  Copies of the
articles of incorporation and bylaws of the Borrower certified by its secretary
as being true and correct.


 


(d)                                 Evidence that
the Borrower is in good standing with the office of the Delaware Secretary of
State, North Dakota Secretary of State, Minnesota Secretary of State, South
Dakota Secretary of State, Nebraska Secretary of State, Iowa Secretary of
State, Montana Secretary of State and Wyoming Secretary of State.


 


(e)                                  Intercreditor
agreements executed by Case LLC, Case Credit Corporation, New Holland Credit
Company, LLC, New Holland North America, Inc., GE Commercial Distribution
Finance Corporation and such other third party creditors of the Borrower as the
Bank deems necessary, in form and content satisfactory to the Bank.


 


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(f)                                    A security agreement duly
executed and related financing statement, together with any such other
documentation required by the Bank, whereby to secure the Obligations of the
Borrower to the Bank, the Borrower grants the Bank a perfected security interest
in all of the Borrower’s inventory, equipment, fixtures, contract rights,
chattel paper, accounts and other rights to payment, deposit accounts and
general intangibles whether now owned or hereafter acquired and wherever
located and the products and proceeds thereof all as more specifically set
forth in the security agreement.


 


(g)                                 Evidence that
the security interest granted by the security agreement referred to in (f) above
is subject only to the prior liens, if any, contemplated by the intercreditor agreements
referred to in (e) above and the purchase money liens contemplated by Section 6.2
(f).


 


(h)                                 A certificate
of insurance evidencing a policy or policies of insurance covering the Borrower’s
operations and property as required by Section 5.7 of this Agreement, such
policy to insure against all risks and names the Bank as mortgagee/lender loss
payee on all property policies which insures the property of the Borrower
subject to the Collateral Documents.


 


(i)                                     A signed copy
of an opinion of counsel for the Borrower addressed to the Bank and its
participants in form and substance acceptable to the Bank.


 


(j)                                     A completed
Borrowing Base Certificate.


 


(k)                                  Copies of all
leases of real property under which the Borrower is a tenant, together with a
Landlord’s Disclaimer and Consent in favor of the Bank, in form and content
acceptable to the Bank, from the landlord of each such lease properly executed
on behalf of such landlord.


 


(l)                                     Any and all
other agreements, documents, instruments and powers as the Bank may require or
deem necessary, in its sole discretion, to carry into effect the purposes of
the documents described in this Section 3.1 and this Agreement.


 


Section 3.2  Conditions Precedent to Advance.  The willingness of the Bank to consider
making each Advance (including the initial Advance) under Article II is
subject to the further conditions precedent that on the date of such Advance.


 


(a)                                  The
representations and warranties contained in Article IV are correct on and
as of the date of such Advance as though made on and as of such date, except to
the extent that such representations and warranties relate solely to an earlier
date.


 


11

















 


(b)                                 No event has
occurred and is continuing, or would result from such Advance, which
constitutes an Event of Default or would constitute an Event of Default but for
the requirement that notice be given or time elapse or both.


 


ARTICLE IV - REPRESENTATIONS
AND WARRANTIES


 


In order to induce the Bank to consider
making the Advances described in this Agreement, the Borrower hereby
represents, warrants and certifies to the Bank as follows:


 


Section 4.1  Existence and Power.  The Borrower is a Delaware corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and is duly licensed or qualified to transact business in all
jurisdictions, where the character of the property owned or leased or the
nature of the business transacted by it makes such licensing or qualification
necessary.  The Borrower’s chief
executive office is located in Fargo, North Dakota.  The Borrower has all requisite power and
authority to conduct its business, to own its properties and to execute and
deliver, and to perform all of its obligations under this Agreement, the Notes,
L/C Applications and the Collateral Documents.


 


Section 4.2  Authorization of Borrowing; No Conflict as
to Law or Agreements.  The execution,
delivery and performance by the Borrower of this Agreement, the Notes, L/C
Applications and the Collateral Documents, has been duly authorized by all
necessary corporate action and does and will not (i) require any consent
or approval of the shareholders of the Borrower, or 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 of the articles of
incorporation or bylaws of the Borrower, (iii) result in a breach of or
constitute a default under any indenture or loan or credit agreement, lease or
instrument to which the Borrower is a party or by which its properties may be
bound or affected, or (iv) result in or require the creation or imposition
of any mortgage, deed of trust, pledge, lien, security interest, or other
charge or encumbrance of any nature (other than under the Collateral Documents)
upon or with respect to any of the properties now owned or hereafter acquired
by the Borrower.


 


Section 4.3  Financial Condition.  The Borrower has furnished the Bank with an
audited  financial statement as of January 31,
2009.  The financial statement fairly
represents the financial condition of the Borrower on the date thereof, and was
prepared in accordance with GAAP.  There
has been no material adverse change in the business, properties or condition
(financial or otherwise) of the Borrower since the date of the financial
statement.


 


Section 4.4  Litigation.  There are no actions, suits or proceedings
pending or, to the knowledge of the Borrower, threatened or affecting the
Borrower or the properties of the Borrower before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, which, if determined adversely, would have a material adverse affect
on the financial condition, properties or operations of the Borrower.


 


12

















 


Section 4.5  Taxes. 
The Borrower has filed all federal, state and local tax returns which
are required to be filed and has paid or caused to be paid to the respective
taxing authorities all taxes as shown on said returns or on any assessment
received by them to the extent such taxes have become due.


 


Section 4.6  Titles and Liens.  The Borrower has good title to each of the
properties and assets reflected in the latest financial statement referred to
in Section 4.3 free and clear of all mortgages, security interests, liens
and encumbrances except for mortgages, security interests and liens disclosed
on such financial statement.


 


Section 4.7  Legal Agreements.  This Agreement constitutes, and the Notes,
L/C Applications and the Collateral Documents, when executed and delivered
hereunder, will constitute the legal, valid and binding obligations of the
Borrower (or the maker thereof), enforceable against it in accordance with
their respective terms, except as enforcement may be limited by the application
of bankruptcy and other laws effecting creditors’ rights generally.


 


Section 4.8  Default.  The Borrower is not in default of a material
provision under any material agreement, instrument, decree or order to which it
is a party or by which its properties are bound or affected.


 


Section 4.9  Pension Plans.  The Borrower has not established or
maintained, or made any contributions to, any employee benefit plan which is
subject to Part 3 of Subtitle B of Title 1 of ERISA or, if such a plan has
been so established, maintained or contributed to, such plan did not have any “accumulated
funding deficiency” (as that term is defined in Section 302 of ERISA) as
of the date hereof, and, without limiting the generality of the foregoing, the
Borrower has not incurred any material liability to the Pension Benefit
Guaranty Corporation with respect to any such plan.


 


Section 4.10  Environmental Matters.


 


(a)                                  The Borrower is
not in violation of any Environmental Laws; and


 


(b)                                 No disposal or
release of any hazardous or toxic material has occurred on, from or under any
property owned, operated or controlled by the Borrower, except as may have
occurred in accordance with all applicable Environmental Laws; and


 


(c)                                  There has been
no treatment, manufacturing, refining, handling or storage of any hazardous or
toxic material at any property owned, operated or controlled by the Borrower,
except as may have occurred in accordance with all applicable Environmental
Laws; and


 


(d)                                 No litigation,
investigation or administrative action has been commenced or is pending or
threatened, nor has any settlement been reached with any public or private
party or parties, or any order issued, relating in any way to any


 


13

















 


alleged or actual presence,
disposal or release of any hazardous or toxic material or any violation of any
Environmental Laws with respect to any property owned, operated or controlled
by the Borrower; and


 


(e)                                  The Borrower
and all tenants of the Borrower have filed all notices and permit applications
required to be filed under the Environmental Laws with respect to their
businesses, property and operations; and


 


(f)                                    Except as set
forth in Schedule 4.10 (f), the Borrower has no known contingent
liability with respect to its business, property or operations as now or
previously owned, operated, controlled or conducted by the Borrower in
connection with any hazardous or toxic material or any Environmental Laws.


 


Section 4.11  Use of Loans.  The Borrower is not engaged, or as one or its
important activities, in the business of extending credit for the purpose of
purchasing or carry margin stock (within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System), and no part of the proceeds
of any Advance hereunder will be used to purchase or carry any such margin
stock or to extend credit to others for the purpose of purchasing any such
margin stock.


 


Section 4.12  Licenses, Franchises, Etc.  The Borrower possesses adequate licenses,
permits, franchises, patents, copyrights, trade marks and trade names, or
rights thereto, to conduct its business substantially as now conducted and as
presently proposed to be conducted.


 


Section 4.13  Consents.  No consent, approval, order or authorization
of, or registration, declaration or filing with, or notice to, any governmental
authority or any third party is required in connection with the execution and
delivery of this Agreement, the Notes, L/C Applications, Collateral Documents,
or any other agreements or instruments mentioned in this Agreement to which the
Borrower is a party, or in connection with the carrying out or performance of
any of the transactions required or contemplated hereby or thereby or, if
required, such consent, approval, order or authorization has been obtained or
such registration, declaration or filing has been accomplished or such notice
has been given prior to the date hereof.


 


Each of the representations and warranties made in this Article IV
shall be deemed to be repeated and reaffirmed on and as of the date any Advance
is made by the Bank to the Borrower pursuant to Article II hereof and as
of the date any Letter of Credit is issued pursuant to Article II hereof.


 


ARTICLE V - AFFIRMATIVE
COVENANTS


 


So long as Obligations to the Bank shall
remain unpaid, the Borrower will comply with the following requirements unless
the Bank shall otherwise consent in writing, all in form and substance
acceptable to the Bank:


 


14

















 


Section 5.1  Financial Statements, Litigation, Etc.


 


(a)                                  The Borrower
will deliver to the Bank, as soon as available and in any event within 120 days
after the end of each fiscal year of the Borrower, a copy of the audit report
of the Borrower with the unqualified opinion of independent certified public
accountants selected by the Borrower and acceptable to the Bank, all in
reasonable detail and all prepared in accordance with GAAP.


 


(b)                                 The Borrower
will deliver to the Bank within 30 days after the end of each calendar month, a
balance sheet of the Borrower as of the end of such month, a related statement of
earnings and retained earnings for such period and for the year to date, and an
accounts receivable aging report and accounts payable report, in reasonable
detail and stating in comparative form the figures for the corresponding date
and period of the previous year, all prepared in accordance with GAAP.


 


(c)                                  As soon as
available and in any event within 120 days after the end of each fiscal year of
the Borrower, the Borrower shall deliver to the Bank copies of the federal and
state tax returns (including all forms and supporting schedules) filed by the
Borrower for such year.


 


(d)                                 Immediately
after the commencement thereof, the Borrower shall provide the Bank with notice
in writing of all litigation affecting the Borrower of the type described in Section 4.4
or which seek a monetary recovery against the Borrower in excess of $50,000.


 


(e)                                  Immediately
upon the occurrence thereof, the Borrower shall give the Bank notice of the
occurrence of any Event of Default under this Agreement or any event of which
the Borrower has knowledge and which, with the passage of time, or giving of
notice or both, would constitute an Event of Default under this Agreement.


 


(f)                                    Immediately
upon the occurrence thereof, the Borrower shall give the Bank notice of any
material adverse change in the operations, business, properties, assets or
conditions, financial or otherwise, of the Borrower, which could adversely and
materially affect the Borrower’s ability to perform its obligations under this
Agreement, the Notes, L/C Applications or the Collateral Documents.


 


(g)                                 The Borrower
will deliver to the Bank within 30 days after the end of each calendar month,
and as often as the Bank may request, a completed Borrowing Base Certificate.


 


(h)                                 The Borrower
will deliver to the Bank at such times as the Bank may request, the most
current Dealer Statement from Case and New Holland detailing which items of the
Borrower’s inventory are subject to floor plan financing 


 


15

















 


from Case and New Holland as
well as comparable documentation from GE Commercial Distribution Finance
Corporation.


 


(i)                                     The Borrower
will deliver to the Bank at such times as the Bank may request, a monthly
inventory report and new inventory orders report of the Borrower.


 


(j)                                     Concurrently
with the delivery of the audit report referred to in (a) above, the
Borrower will deliver to the Bank a certificate by the CEO of the Borrower (i) certifying
as to whether there exists an Event of Default on the date of such certificate
or if an Event of Default then exists specifying the details thereof and the
action which the Borrower has taken or proposes to take with respect thereto, (ii) setting
forth in reasonable detail calculations demonstrating compliance with the
financial covenants set forth in this Agreement, and (iii) stating whether
any change in GAAP or the application thereof has occurred since the date of
the Borrower’s most recent previously delivered audited financial statements
and, if any changes occurred, specifying the effect of such change on the
financial statements accompanying such certificate.


 


(k)                                  Concurrently
with the delivery of the audit report referred to in (a) above, the
Borrower will deliver to the Bank a certificate of the accounting firm reported
on such financial statements stating whether it obtained any knowledge during
the course of its examination of such financial statements of the occurrence of
an Event of Default, (which certificate may be limited to the extent required
by accounting rules and guidelines).


 


(l)                                     The Borrower
shall deliver such other information respecting the financial condition and
results of operations of the Borrower as the Bank may from time to time
request.


 


Section 5.2  Books and Records; Inspection and
Examination.  The Borrower will keep
accurate books of record and account in which true and complete entries will be
made in accordance with GAAP consistently applied and, upon request of the
Bank, will give any representative of the Bank access to, and permit such
representative to examine, copy or make extracts from, any and all books,
records and documents in its possession, to inspect any of its properties and
to discuss its affairs, finances and accounts with any of its principal
officers, all at such times during normal business hours and as often as the
Bank may reasonably request.  In
addition, the Borrower agrees to permit the Bank or its agents or
representatives, at the Borrower’s expense, to conduct periodic collateral
audits of the Borrower’s business and inventories, such audits to be conducted
not less often than once each calendar quarter should the Bank so desire.


 


Section 5.3  Compliance with Laws.  The Borrower will comply with the
requirements of applicable laws and regulations, the noncompliance with which
would materially and adversely affect its business or its financial condition.


 


16

















 


Section 5.4  Payment of Taxes and Other Claims.  The Borrower will pay or discharge all taxes,
assessments and governmental charges levied or imposed upon it or upon its
income or profits, or upon any properties belonging to it, prior to the date on
which penalties attach thereto and all lawful claims for labor, materials and
supplies which, if unpaid, might by law become a lien or charge upon any
properties of the Borrower provided, that the Borrower shall not be required to
pay any such tax, assessment, charge or claim whose amount, applicability or
validity is being contested in good faith by appropriate proceedings.


 


Section 5.5  Maintenance of Properties.  The Borrower will keep and maintain all of
its properties necessary or useful in its business in good condition, repair
and working order; provided, however, that nothing in this Section shall
prevent the Borrower from discontinuing the operation and maintenance of any of
its properties if such discontinuance is, in its judgment, desirable in the
conduct of its business and not disadvantageous in any material respect to the
Bank as holder of the Notes.


 


Section 5.6  Preservation of Existence.  The Borrower will preserve and maintain its
corporate existence and all of its rights, privileges and franchises; provided,
however, that the Borrower shall not be required to preserve any of its rights,
privileges and franchises if the Borrower shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Borrower
and that the loss thereof is not disadvantageous in any material respect to the
Bank as the holder of the Notes.


 


Section 5.7  Insurance.  The Borrower shall (i) keep all of its
properties adequately insured at all times with responsible insurance carriers
against loss or damage by fire and other hazards, (ii) maintain adequate
insurance at all times with responsible insurance carriers against liability on
account of damage to persons or property, and (iii) maintain adequate
insurance covering such other risks as the Bank may reasonably request.  For purposes of this Section, insurance shall
be deemed adequate if the same is not less extensive in coverage and amount as
is customarily maintained by other entities engaged in the same or similar
business.  All insurance policies shall
name the Bank as loss payee or beneficiary and shall otherwise be acceptable to
the Bank.  The Borrower shall provide the
Bank with a detailed list of the insurance in effect, setting forth the names
of the insurance companies, the amounts and rights of insurance, the dates of
expiration, and the properties and risks covered thereby.  Acceptance of the insurance policies referred
to above shall not bar the Bank from requiring additional insurance which it
deems reasonably necessary.  The policies
of insurance referred to herein shall contain an agreement of the insurer to
give not less than thirty (30) days advance written notice to the Bank in the
event of cancellation of such policy or change affecting the coverage
thereunder.  All such insurance companies
shall be licensed to transact business in the State where the insured property
is located.  In the event the Borrower
fails to pay any premium on any such insurance, the Bank may do so, and the
Borrower shall reimburse the Bank for any such payment on demand.


 


Section 5.8  Environment.  The Borrower shall remain in compliance with
the provisions of all Environmental Laws and shall notify the Bank immediately
of any notice of any hazardous discharge or other environmental complaint
received from any governmental agency or any other


 


17

















 


Person and shall immediately contain or remove the same in compliance
with all applicable laws and promptly pay any fine or penalty assessed in
connection therewith.  The Borrower
hereby agrees to defend, indemnify, and hold the Bank harmless from and against
any and all claims, damages, judgments, penalties, costs, and expenses
(including attorney fees and court costs now or hereafter arising from the
enforcement of this Section) arising directly or indirectly from the activities
of the Borrower, its predecessors in interest, or third parties arising
directly or indirectly from any violation of any Environmental Laws.  This indemnity shall survive termination of
this Agreement.


 


ARTICLE VI -
NEGATIVE COVENANTS


 


So long as the Obligations of the Borrower to
the Bank remain unpaid, the Borrower agrees that, without the prior written
consent of the Bank:


 


Section 6.1  Indebtedness.  The Borrower will not incur, create, assume
or permit to exist any indebtedness or liability on account of deposits or
advances or any indebtedness for borrowed money, or any other indebtedness or
liability evidenced by notes, bonds, debentures, installment sale contracts or
similar obligations except the following:


 


(a)           Pledges or deposits held by the Borrower under federal and
state laws relating to the payroll of the Borrower.


 


(b)           The obligations to the Bank under the Notes.


 


(c)           The indebtedness and obligations described in the
financial statement referred to in Section 4.3 of this Agreement.


 


(d)           Purchase money obligations incurred by the Borrower for
new inventory purchased by the Borrower in the ordinary course of the operation
of the business of the Borrower.


 


Section 6.2  Liens. 
The Borrower will not create, incur, assume or suffer to exist any
mortgage, deed of trust, pledge, lien, security interest, or other charge or
encumbrance of any nature on any of its assets, now owned or hereafter acquired
or assign or otherwise convey any right to receive income excluding, however,
from the operation of the foregoing:


 


(a)           Liens for taxes or assessments or other governmental
charges to the extent not required to be paid by Section 5.4.


 


(b)           Materialmen’s, merchants’, carriers’, workmen’s, repairmen’s
or other like liens arising in the ordinary course of business to the extent
not required to be paid by Section 5.4.


 


(c)           Pledges or deposits to secure obligations under workmen’s
compensation laws, unemployment insurance and social security laws, or to
secure the performance of bids, tenders, contracts (other than for the
repayment of borrowed money) or leases or to secure


 


18

















 


statutory obligations or surety or appeal
bonds, or to secure indemnity, performance or other similar bonds in the
ordinary course of business.


 


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


 


(e)           Security interest and liens granted to the Bank under the
Collateral Documents.


 


(f)            Purchase money security interests for new inventory
purchased by the Borrower from its suppliers in the ordinary course of the
operation of the business of the Borrower.


 


(g)           The security interests, mortgages and liens that are
reflected on the financial statement of the Borrower referred to in Section 4.3
of this Agreement.


 


Section 6.3  Conduct of Business.  The Borrower will not enter into or engage in
any business which is not presently conducted by the Borrower.


 


Section 6.4  Sale of Assets.  The Borrower will not sell, lease, assign,
transfer or otherwise dispose of any of its assets (whether in one transaction
or in a series of transactions) to any Person other than in the ordinary course
of business.


 


Section 6.5  Sale and Leaseback.  The Borrower will not enter into any
arrangement, directly or indirectly, with any other Person whereby it shall
sell or transfer any real or personal property, whether now owned or hereafter
acquired, and then or thereafter rent or lease as lessee such property or any
part thereof or any other property which it intends to use for substantially
the same purpose or purposes as the property being sold or transferred.


 


Section 6.6  Consolidation/Merger.  The Borrower will not consolidate with or
merge into any Person or permit any other Person to merge into it, or acquire
(in a transaction analogous in purpose or effect to a consolidation or merger),
any assets of any Person.


 


Section 6.7  Guaranties. The Borrower will not
assume, guarantee, endorse or otherwise become liable for the obligation of any
Person except by endorsement of negotiable instruments for deposit or
collection in the ordinary course of business, nor sell any notes or accounts
receivable with recourse.


 


Section 6.8 Current Ratio.  As measured at the end of each fiscal quarter
of the Borrower, the Borrower shall not allow its ratio of Current Assets to
Current Liabilities to be less than 1.20 to 1.00.


 


19

















 


Section 6.9  Debt to Tangible Net Worth.  As measured at the end of each fiscal year of
the Borrower, the Debt of the Borrower shall not exceed the Tangible Net Worth
of the Borrower by a ratio greater than 3.50 to 1.00.


 


Section 6.10 Debt Service Coverage
Ratio.  As measured at the end of
each fiscal quarter of the Borrower, the Borrower shall not allow its debt
service coverage ratio to be less than 1.20 to 1.00 on a rolling twelve month
basis.  Debt service coverage ratio shall
be defined as the ratio computed when the sum of (i) net operating
income;  plus (ii) depreciation and
amortization expense; plus (iii) interest expense is divided by the sum of
(i) current maturities of long term debt; plus (ii) interest expense
for interest actually paid.


 


Section 6.11  Distributions.  Upon the occurrence of an Event of Default,
the Borrower shall not make any distributions to the shareholders of the
Borrower whether in cash, assets or in obligations of the Borrower; or pay or
remit any salary, loan, rent, bonus, consultant fee or other form of
compensation to the shareholders of the Borrower or allocate or otherwise set
apart any sum for the payment of any dividend or distribution on, or for the
purchase or redemption of any shareholder interests; or make any other
distribution to the shareholders of the Borrower.


 


Section 6.12  Subsidiaries.  Except for Transportation Solutions LLC which
is a wholly owned subsidiary of the Borrower, the Borrower has no subsidiaries
[Persons in which the Borrower owns or controls, directly or indirectly, 50% or
more of the voting ownership interest of such Person (“Subsidiaries”)] or
affiliates and shall not create or permit to exist any Subsidiaries of the
Borrower.


 


Section 6.13  Fiscal Year.  The Borrower shall not change its fiscal
year.


 


Section 6.14 Organizational Documents
..  The Borrower shall not amend, modify,
replace or restate its articles of incorporation or bylaws.


 


Section 6.15 Acquisitions.  The Borrower shall not acquire, in whole or
in part, any stock or other ownership interest in any Person nor shall it
acquire in any transaction or series of transactions all or a substantial part
of any of the assets of any Person.


 


Section 6.16 New Equipment Inventory
Turnover.  As measured at the end of
each fiscal quarter of the Borrower, the Borrower shall not allow its ratio of (i) the
cost of goods sold of New Equipment Inventory to (ii) the dollar value of
the Borrower’s new equipment inventory, accounted for at the lower of cost or
fair market value computed on a first-in first-out basis to be less than 1.75
to 1.00 on a rolling twelve month basis.


 


Section 6.17 Used Equipment Inventory
Turnover.  As measured at the end of
each fiscal quarter of the Borrower, the Borrower shall not allow its ratio of (i) the
cost of goods sold of Used Equipment Inventory to (ii) the dollar value of
the Borrower’s Used Equipment Inventory, accounted for at the lower of cost or
fair market value computed on a first-in first-out basis to be less than 1.75
to 1.00 on a rolling twelve month basis.


 


20

















 


Section 6.18 Parts Inventory Turnover.  As measured at the end of each fiscal quarter
of the Borrower, the Borrower shall not allow its ratio of (i) the cost of
goods sold of parts inventory to (ii) the dollar value of the Borrower’s
parts inventory, accounted for at the lower of cost or fair market value
computed on a first-in first-out basis to be less than 1.50 to 1.00 on a
rolling twelve month basis.


 


ARTICLE VII - EVENTS OF
DEFAULT, RIGHTS AND REMEDIES


 


Section 7.1   Event of Default.  “Event of Default,” wherever used herein,
means any one of the following events:


 


(a)                                  Failure to make
any payment, when due, of the principal or interest of any of the Notes.


 


(b)                                 Any
representation or warranty made by the Borrower in this Agreement or by the
Borrower in any certificate, instrument or statement contemplated by or made or
delivered pursuant to or in connection with this Agreement, shall prove to have
been incorrect in any material respect when made.


 


(c)                                  Default in the
performance, or breach, of any covenant or agreement of the Borrower in this
Agreement or by the Borrower or any maker of any covenant or agreement in the
Collateral Documents, Notes, L/C Applications or any other agreement with the
Bank (other than a covenant or agreement a default in whose performance or
whose breach is elsewhere in this Section specifically dealt with).


 


(d)                                 The Borrower
shall voluntarily file, or have filed against them involuntarily, a petition
for liquidation, reorganization, adjustment of debt or similar relief under the
federal Bankruptcy Code or any present or future state or other federal
bankruptcy or insolvency law, or a receiver, trustee, or similar officer shall
be appointed for it or for all or a substantial part of their property.


 


(e)                                  The rendering
against the Borrower of a final judgment, decree or order for the payment of
money and the continuance of such judgment, decree or order unsatisfied and in
effect for any period of 30 consecutive days without a stay of execution.


 


(f)                                    A default under
any bond, debenture, note or other evidence of indebtedness of the Borrower
(including to the Bank) or under any indenture or other instrument under which
any such evidence of indebtedness has been issued or by which it is governed
and the expiration of the applicable period of grace, if any, specified in such
evidence of indebtedness, indenture or other instrument.


 


21
















 


(g)                                 The Collateral
Documents shall, at any time after their execution and delivery and for any
reason, cease (i) to create a valid and perfected first priority
lien/security interest (unless otherwise provided for in this Agreement) in and
to the property purported to be subject to such Collateral Documents; or (ii) to
be in full force and effect or shall be declared null and void, or the validity
or enforceability thereof shall be contested by the maker of such Collateral
Documents, or the maker shall deny it has any further liability or obligation
under the Collateral Documents.


 


(h)                                 If the Borrower
shall dissolve or cease to be a validly existing corporation under the laws of
the State of Delaware or cease to be authorized to do business in the State(s) of
North Dakota, South Dakota, Nebraska, Iowa, Montana, Wyoming and Minnesota or
any other jurisdiction in which it is required to be authorized to do business.


 


(i)                                     In the event
the Borrower is in default of its Master Dealer Agreements with Case or New Holland.


 


(j)                                     In the event
the Master Dealer Agreements of the Borrower with Case or New Holland are
cancelled or terminated for any reason.


 


(k)                                  In the event
the Borrower is no longer authorized, for any reason, to be a Case or New
Holland dealer for any of its dealerships located at the Premises  (or any dealership locations subsequently
acquired) provided that the combined gross revenue from the dealerships that
are no longer authorized to be Case or New Holland dealers equals or exceeds,
in the aggregate, twenty-five percent (25%) or more of the gross revenue of the
Borrower as set forth in the audited financial statement referred to in Section 4.3.


 


Section 7.2  Rights and Remedies.  Immediately upon the occurrence of an Event
of Default or at any time thereafter until such Event of Default is cured to
the written satisfaction of the Bank, the Bank may exercise any one or more of
the following rights and remedies:


 


(a)                                  The Bank may,
without notice to the Borrower, declare all Obligations then outstanding, all
interest accrued and unpaid thereon, and all other amounts payable under this
Agreement to be forthwith due and payable, whereupon such Obligations, all such
accrued but unpaid interest and all such amounts shall become and be forthwith
due and payable, without presentment, demand, protest or further notice of any
kind, all of which are hereby expressly waived by the Borrower.


 


(b)                                 The Bank may,
without notice to the Borrower, and without further action, set-off and apply
any and all money owing by the Bank to the Borrower to


 


22

















 


the payment of the
Obligations, then outstanding, including interest accrued thereon, and of all
other sums then owing by the Borrower.


 


(c)                                  The Bank may
exercise and enforce the rights and remedies available to it under the Notes,
Collateral Documents, or any other agreement or by law.


 


ARTICLE VIII - MISCELLANEOUS


 


Section 8.1  No Obligation To Renew.  The Borrower understands and expressly agrees
that the Bank is under no obligation to renew or extend this Agreement, the
Notes or Letters of Credit or provide any other or additional financing.  The Bank’s decision with respect to any
renewals, extensions or additional financing will be a separate, independent
decision and may involve factors other than, or in addition to, the Borrower’s
creditworthiness or prior relationship with the Bank.


 


Section 8.2  No Waiver; Cumulative Remedies.  No failure or delay on the part of the Bank
in exercising any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy hereunder. 
The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.


 


Section 8.3  Amendments.  No amendment, modification, termination or
waiver of any provision of this Agreement, the Collateral Documents, the Notes,
or any other document contemplated by this Agreement, or consent by the Bank to
any departure therefrom shall be effective unless the same shall be in writing
and signed by the Bank and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose which given.  No notice to or demand on the Borrower in any
case shall entitle the Borrower to any other or further notice or demand in
similar or other circumstances.


 


Section 8.4  Addresses for Notices.  Except as otherwise expressly provided
herein, all notices, requests, demands and other communications provided for
hereunder shall be in writing and mailed or delivered to the applicable party
at its address indicated below:


 


If to the Borrower:


 


Titan Machinery Inc.


ATTN: 
David J. Meyer


PO Box 10818


Fargo, ND 58106-0818


 


If to the Bank:


 


Bremer Bank, N.A.


ATTN: 
Wes Well


PO Box 273


Lisbon, ND 
58054-0273


 


23

















 


or, as to each party, at such other address as shall be designated by
such party in a written notice to the other party complying as to delivery with
the terms of this section.  All such
notices, requests, demands and other communications shall, when mailed, be
effective when deposited in the mails, addressed as aforesaid, except that
notices or requests to the Bank pursuant to any of the provisions of Article II
shall not be effective until received by the Bank.


 


Section 8.5  Execution in Counterparts.  This Agreement may be executed in any number
of counterparts, each of which when so executed and delivered shall be deemed
to be an original and all of which counterparts, when taken together, shall
constitute but one and the same instrument.


 


Section 8.6  Binding Effect, Assignment.  This Agreement shall be binding upon and
inure to the benefit of the Borrower, and the Bank, and its respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Bank.


 


Section 8.7  Governing Law.  The loan to the Borrower as evidenced by this
Agreement was negotiated and made within the State of North Dakota and,
accordingly, shall be governed by, and construed in accordance with, the laws
of the State of North Dakota.


 


Section 8.8  Severability of Provisions.  Any provision of this Agreement which is
prohibited or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof.


 


Section 8.9  Further Assurances.  The Borrower agrees to do such further acts
and things and execute and deliver such agreements, powers and instruments as
the Bank may reasonably require or deem necessary to carry into effect the
purposes of this Agreement.


 


Section 8.10  Conflicting Provisions.  This Agreement shall control with respect to
any of its provisions that conflict or are inconsistent with the Notes,
Collateral Documents, and any other such documents executed in connection with
this Agreement, but to the extent not conflicting or inconsistent, the Notes,
Collateral Documents, and any other such documents executed in connection with
this Agreement, shall be in full force and effect.


 


Section 8.11  Relationship.  The Bank is acting in its sole capacity as a
lending institution with respect to the Borrower and there is no partnership or
agency relationship created.  The Bank
assumes no fiduciary duty and no conditions or suggestions of action or
inaction shall be deemed to constitute participation by the Bank in the business
of the Borrower.


 


Section 8.12  Ramification of Provisions.  The Borrower has reviewed this Agreement, the
Notes, Collateral Documents, and any other such documents executed in
connection with this Agreement, and has had the opportunity to consult with its
attorneys regarding the ramifications and


 


24

















 


effect of this Agreement, the Notes, Collateral Documents, and other
such documents executed in connection with this Agreement.


 


Section 8.13  Entire Agreement.  This Agreement constitutes the entire
agreement between the parties and shall not in any way be modified, varied or
amended unless in writing signed by the parties.


 


Section 8.14  Headings.  Such headings used in this Agreement are for
the convenience of reference only and shall not affect the construction of this
Agreement.


 


Section 8.15  Jurisdiction/Venue.  The Borrower consents to jurisdiction as to
all issues concerning or relating to this Agreement, the Notes and the
Collateral Documents with the federal or state district courts designated for
Ransom County, North Dakota.


 


Section 8.16  Expenses.  The Borrower shall, on demand by the Bank,
reimburse the Bank for any and all costs and expenses, including without
limitation reasonable attorneys’ fees, paid or incurred by either the Bank in
connection with (i) the preparation of this Agreement, the Notes, the
Collateral Documents, and any other document or agreement related hereto or
thereto, and the transactions contemplated hereby, which amount shall be paid
prior to the making of any Advance hereunder; (ii) the negotiation of any
amendments, modifications or extensions to or any of the foregoing documents,
instruments or agreements and the preparation of any and all documents
necessary or desirable to effect such amendments, modifications or extensions;
and (iii) the enforcement by the Bank during the term hereof or thereafter
of any of the rights or remedies of the Bank under any of the foregoing
documents, instruments or agreements or under applicable law, whether or not
suit is filed with respect thereto.


 


Section 8.17  Adequate Financing.  The Borrower warrants and represents that the
extensions of credit provided for under the terms and conditions of this
Agreement constitute adequate and sufficient financing by the Bank.


 


Section 8.18  Participation/Assignments.  The Bank shall have the right, but not the
obligation, to assign all or a portion of the indebtedness evidenced by the
Notes or grant participation in all or a portion of the indebtedness evidenced
by the Notes to other Persons and shall have the right to disclose any and all
information, financial or otherwise, regarding the Borrower to such potential
participants and assignees.


 


Section 8.19  Interest Limitation.  All agreements between the Bank and the
Borrower are expressly limited so that in no contingency or event whatsoever,
whether by reason of acceleration of maturity or prepayment of the obligations
of the Borrower owing the Bank, shall the amount of interest paid or agreed to
be paid to Bank for the use, forbearance, loaning or retention of the
obligations of the Borrower owing the Bank exceed the maximum permissible
interest rate under applicable law.  If,
from any circumstances whatsoever, fulfillment of any provisions of any of the
Notes or Collateral Documents shall involve transcending the limit of validity
prescribed by law, then the obligation to be fulfilled shall automatically be
reduced to the limit of such validity. 
If,


 


25

















 


from any circumstances, the Bank should ever receive as interest an
amount which would exceed the highest lawful interest rate, such amount which
would be in excess of such highest lawful interest rate shall be applied to
reduction of the principal balance evidenced by the Notes and not to the
payment of interest.  This provision
shall control every other provision of the Notes and Collateral Documents
between the Bank and the Borrower and shall be binding upon and available to
any subsequent holder of the Notes.


 


Section 8.20  Prior Documentation.  The Borrower shall be bound by and shall
continue to comply with all documents previously executed and delivered to the
Bank including, but not limited to, security agreements, financing statements
and subordination agreements except to the extent that this Agreement is
inconsistent or conflicting with any such previous agreements or
documents.  This Agreement shall replace
that certain loan agreement among the Bank and the Borrower dated August 28,
2008.


 


Section 8.21  Waiver of Jury.  In the interest of expediting any disputes
that might arise between the parties to this Agreement, the parties hereby
waive their respective rights to a trial by jury of any dispute or claim
concerning this Agreement, the Notes, the Collateral Documents and any other
documents or agreements contemplated by or executed in connection with this
Agreement.


 


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


 


 


	
   

  	
  BREMER BANK, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Wes Well

  
	
   

  	
   

  	
  Wes Well

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TITAN MACHINERY INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ David J. Meyer

  
	
   

  	
   

  	
  David J. Meyer

  
	
   

  	
   

  	
  Its CEO and Chairman

  



 


26

















 


DISCRETIONARY
REVOLVING


PROMISSORY
NOTE


(Note)


 


	
  $25,000,000

  	
   

  	
  Lisbon,
  North Dakota

  
	
   

  	
   

  	
  July 15, 2009

  



 


For value received, the undersigned, TITAN MACHINERY INC., a Delaware
corporation (“Borrower”), promises to pay to the order of BREMER BANK, NATIONAL ASSOCIATION, a
national banking association, (“Bank”) at its office in Lisbon, North Dakota or
such other place as the holder hereof may from time to time in writing
designate, in lawful money of the United States of America, the principal sum
of Twenty-five Million Dollars ($25,000,000), or, if less, the aggregate unpaid
principal amount of all Advances made by the Bank to the undersigned pursuant
to Section 2.1 of that certain Loan Agreement between the Borrower and the
Bank dated July 15, 2009, (together with all amendments, modifications and
restatements thereof the “Agreement”), and remaining unpaid at maturity,
together with interest on all principal amounts hereunder remaining unpaid from
time to time from the date of the initial Advance hereunder at an annual rate
(computed on a 365/360 basis; that is by applying the ratio of the annual
interest rate over a year of 360 days, multiplied by the outstanding principal
balance, multiplied by the actual number of days the principal balance is
outstanding) equal to the Index Rate less .25 percentage points.  Notwithstanding the foregoing, at no time
shall the interest rate be less than four and one-half percent (4.5%).  As used herein, the Index Rate means the rate
of interest announced as the Bremer Financial Reference Rate which rate is
subject to change from time to time.  The
Index Rate is not necessarily the lowest rate charged by the Bank on its loans
and is set by the Bank in its sole discretion. 
The Borrower understands that the Bank may make loans based on other
rates as well.  If the Index Rate becomes
unavailable during the term of this Revolving Note, the Bank may designate a
substitute Index Rate.  The Bank will
advise the Borrower of the current Index Rate upon the Borrower’s written
request.  The Index Rate change will not
occur more than once daily.  The Index
Rate as of the date of this Revolving Note is equal to three and one-quarter
percent (3.25%) resulting in an initial rate of interest under this Revolving
Note of three percent (3%) subject to the floor of four and one-half percent
(4.50%) as set forth above.  Under no
circumstances will the interest rate on this Revolving Note be more than the
maximum rate allowed by applicable law.


 


The entire principal balance, and any unpaid
accrued interest, of this Revolving Note shall be due on July 14, 2010,
unless payment in full is demanded earlier under the Agreement.  Accrued interest on this Revolving Note shall
be paid monthly commencing August 1, 2009, and continuing on the same day
of each month thereafter until this Revolving Note is paid in full.


 


This Revolving Note is the Revolving Note
referred to in the Agreement and the holders hereof are entitled to all of the
benefits provided for in the Agreement, to which Agreement reference is hereby
made for a statement of the terms and conditions under which this indebtedness
was incurred and is to be repaid and under which provisions of the due date of
this Revolving Note may


 


Schedule 2.1


 

















 


be accelerated.  Payment of this
Revolving Note is secured by the Collateral Documents referred to in the
Agreement.  The provisions of the
Agreement are incorporated by reference herein with the same force and effect
as though fully set forth herein.  The
terms used in this Revolving Note shall have the same definitions as provided
for in the Agreement.


 


This Revolving Note shall be subject to a
late payment service charge as set forth in the Agreement.


 


This Revolving Note shall be subject to the
Non-Usage Fee as set forth in the Agreement.


 


All payments on this Revolving Note shall be
first applied to the payment of any costs of collection and attorneys’ fees
that may be due hereon (as allowed by law), then to the payment of accrued
interest and finally to the payment of principal.


 


This Revolving Note is issued and shall be
governed by the laws of the State of North Dakota.  All makers, endorsers, sureties, guarantors,
and other accommodation parties hereby waive presentment for payment, protest
and notice of non-payment; and a consent without affecting their liability
hereunder, to any and all extensions, renewals, substitutions, and alterations
of any of the terms of this Note and to release of, or failure by the Bank to
exercise any rights against, any party liable for or any property securing
payment thereof.


 


The Borrower hereby waives the right to any
jury trial in any action, proceeding or counterclaim brought by either the Bank
or the Borrower against the other.


 


 


	
   

  	
  TITAN MACHINERY INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ David J. Meyer

  
	
   

  	
   

  	
  David J. Meyer

  
	
   

  	
   

  	
  Its CEO and Chairman

  



 

















 


PROMISSORY
NOTE


(Term Note)


 


	
  $15,000,000

  	
   

  	
  Lisbon, North Dakota

  
	
   

  	
   

  	
  July 15, 2009

  



 


For value received, the undersigned, TITAN MACHINERY INC., a Delaware
corporation (“Borrower”), promises to pay to the order of BREMER BANK, NATIONAL ASSOCIATION, a
national banking association, (“Bank”) at its office in Lisbon, North Dakota or
such other place as the holder hereof may from time to time in writing
designate, in lawful money of the United States of America, the principal sum
of Fifteen Million Dollars ($15,000,000) together with interest on the unpaid
principal balance from the date of this Term Note at an annual rate (computed
on a 365/360 basis; that is by applying the ratio of the annual interest rate
over a year of 360 days, multiplied by the outstanding principal balance,
multiplied by the actual number of days the principal balance is outstanding)
equal to 5.90 %.  Under no circumstances
will the interest rate on this Term Note be more than the maximum rate allowed
by applicable law.


 


The Advance made pursuant to this Term Note
shall not be on a revolving credit basis and, accordingly, the Borrower shall
not be entitled to reborrow upon any prepayment.


 


Principal and interest due under this Term
Note shall be payable in consecutive monthly installments of $289,300,
commencing on August 1, 2009 and continuing on the 1st day of each month
thereafter until July 1, 2014 when the balance of all unpaid principal and
accrued interest of this Term Note shall be due and payable in full unless
payment in full is demanded earlier under the Agreement.


 


This Term Note is the Term Note referred to
in that certain Loan Agreement between the Bank and the Borrower dated July 15,
2009 (together with all amendments, modifications and restatements thereof the
(“Agreement”) and the holders hereof are entitled to all of the benefits
provided for in the Agreement, to which Agreement reference is hereby made for
a statement of the terms and conditions under which this indebtedness was
incurred and is to be repaid and under which provisions of the due date of this
Term Note may be accelerated.  Payment of
this Term Note is secured by the Collateral Documents referred to in the
Agreement.  The provisions of the
Agreement are incorporated by reference herein with the same force and effect
as though fully set forth herein.  The
terms used in this Term Note shall have the same definitions as provided for in
the Agreement.


 


This Term Note shall be subject to a late
payment service charge as set forth in the Agreement.  This Term Note is also subject to the
prepayment premium contemplated by the Agreement.


 


Schedule
2.3


 


All payments on this Term Note shall be first
applied to the payment of any costs of collection and attorneys’ fees that may
be due hereon (as allowed by law), then to the payment of accrued interest and
finally to the payment of principal.


 

















 


This Term Note is issued and shall be
governed by the laws of the State of North Dakota.  All makers, endorsers, sureties, guarantors,
and other accommodation parties hereby waive presentment for payment, protest
and notice of non-payment; and a consent without affecting their liability
hereunder, to any and all extensions, renewals, substitutions, and alterations
of any of the terms of this Term Note and to release of, or failure by the Bank
to exercise any rights against, any party liable for or any property securing
payment thereof.


 


The Borrower hereby waives the right to any
jury trial in any action, proceeding or counterclaim brought by either the Bank
or the Borrower against the other.


 


 


	
   

  	
  TITAN MACHINERY INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ David J. Meyer

  
	
   

  	
   

  	
  David J. Meyer

  
	
   

  	
   

  	
  Its President