Exhibit
10.17


 


WHOLESALE FLOOR PLAN
CREDIT FACILITY

AND

SECURITY AGREEMENT


between


CNH CAPITAL AMERICA LLC,

as Lender


and


TITAN MACHINERY, INC.,


as Borrower


US $125,000,000


Dated as of February 21,
2006
















	
  RECITALS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
  DEFINITIONS

  	
  2

  
	
  1.01

  	
  Certain Definitions

  	
  2

  
	
  1.02

  	
  Other Definitional Provisions

  	
  7

  
	
  1.03

  	
  Accounting Terms and Determinations

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  THE WHOLESALE FLOOR PLAN CREDIT FACILITY

  	
  7

  
	
  2.01

  	
  Amendment and Restatement

  	
  7

  
	
  2.02

  	
  Credit Facility

  	
  8

  
	
  2.03

  	
  Security Agreement

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  PAYMENT PROVISIONS

  	
  10

  
	
  3.01

  	
  Interest and Principal

  	
  10

  
	
  3.02

  	
  Set-off

  	
  10

  
	
  3.03

  	
  Statement of Account

  	
  10

  
	
  3.04

  	
  Sale or Lease of Inventory Collateral

  	
  10

  
	
  3.05

  	
  Proceeds of Collateral

  	
  11

  
	
  3.06

  	
  Taxes

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  CONDITIONS PRECEDENT

  	
  12

  
	
  4.01

  	
  Conditions to Effectiveness

  	
  12

  
	
  4.02

  	
  Conditions Precedent to Each Advance

  	
  13

  
	
  4.03

  	
  Use of Funds; Rental Contracts

  	
  14

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  AFFIRMATIVE COVENANTS

  	
  15

  
	
  5.01

  	
  Financial Covenants

  	
  15

  
	
  5.02

  	
  Financial Statements and Other Information

  	
  15

  
	
  5.03

  	
  Insurance

  	
  16

  
	
  5.04

  	
  Locations

  	
  17

  
	
  5.05

  	
  Notice of Default and Litigation

  	
  17

  
	
  5.06

  	
  Maintenance of Governmental Approvals

  	
  17

  
	
  5.07

  	
  Payment of Taxes

  	
  17

  
	
  5.08

  	
  Compliance with Laws

  	
  18

  
	
  5.09

  	
  Conduct of Business and Maintenance of Existence

  	
  18

  
	
  5.10

  	
  Protection of Collateral

  	
  18

  
	
  5.11

  	
  Inspection of Collateral; Books and Records;
  Discussions

  	
  18

  
	
  5.12

  	
  Perfection of Security Interest

  	
  19

  
	
  5.13

  	
  Further Assurances

  	
  19

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  NEGATIVE COVENANTS

  	
  19

  
	
  6.01

  	
  Collateral

  	
  19

  
	
  6.02

  	
  Negative Pledge

  	
  19

  
	
  6.03

  	
  Mergers; Acquisitions

  	
  20

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  REPRESENTATIONS AND WARRANTIES

  	
  20

  
	
  7.01

  	
  Corporate Existence and Power

  	
  20

  



 



 i
 









 


	
  7.02

  	
  Corporate Authority, Enforceable Obligations

  	
  21

  
	
  7.03

  	
  Compliance with Law and Other Instruments

  	
  21

  
	
  7.04

  	
  Litigation

  	
  21

  
	
  7.05

  	
  Governmental Approvals

  	
  21

  
	
  7.06

  	
  Financial Information

  	
  21

  
	
  7.07

  	
  Absence of Default

  	
  22

  
	
  7.08

  	
  Taxes, Assessments and Fees

  	
  22

  
	
  7.09

  	
  Borrower Status

  	
  22

  
	
  7.10

  	
  First Priority Security Interest

  	
  22

  
	
  7.11

  	
  No Liens

  	
  22

  
	
  7.12

  	
  ERISA Compliance

  	
  22

  
	
  7.13

  	
  Environmental

  	
  22

  
	
  7.14

  	
  Insurance

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
  EVENTS OF DEFAULT

  	
  23

  
	
  8.01

  	
  Events of Default

  	
  23

  
	
  8.02

  	
  Remedies

  	
  25

  
	
  8.03

  	
  Delay and Waiver

  	
  26

  
	
  8.04

  	
  Expenses of Collection and Enforcement

  	
  26

  
	
  8.05

  	
  Right of Set-Off

  	
  26

  
	
  8.06

  	
  Authority to Perform

  	
  26

  
	
  8.07

  	
  Power of Attorney

  	
  27

  
	
  8.08

  	
  Subsequent Documentation

  	
  27

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
  MISCELLANEOUS

  	
  27

  
	
  9.01

  	
  Patriot Act

  	
  27

  
	
  9.02

  	
  Time of Essence

  	
  28

  
	
  9.03

  	
  Notices

  	
  28

  
	
  9.04

  	
  Amendments and Waivers

  	
  28

  
	
  9.05

  	
  Entire Agreement

  	
  29

  
	
  9.06

  	
  Counsel; Payment of Expenses

  	
  29

  
	
  9.07

  	
  Indemnification; Damages

  	
  29

  
	
  9.08

  	
  Successor and Assigns

  	
  30

  
	
  9.09

  	
  Governing Law

  	
  30

  
	
  9.10

  	
  Counterparts

  	
  30

  
	
  9.11

  	
  Severability

  	
  30

  
	
  9.12

  	
  Survival of Representations and Agreements

  	
  31

  
	
  9.13

  	
  No Agency

  	
  31

  
	
  9.14

  	
  Publicity

  	
  31

  
	
  9.15

  	
  Conflict; Construction of Documents

  	
  31

  



 


SCHEDULES


	
  Schedule 1

  	
  Existing Credit Agreements

  
	
  Schedule 5.04

  	
  Locations for Collateral

  
	
  Schedule 6.02(h)

  	
  Existing Liens

  




 ii
 









 


	
  Schedule 7.04

  	
  Litigation

  



 


EXHIBITS


	
  Exhibit A

  	
  Form of Guaranty

  
	
  Exhibit B

  	
  Form of Subordinated Note Purchase Agreement

  



 



 iii














WHOLESALE FLOOR PLAN CREDIT FACILITY

AND SECURITY AGREEMENT


THIS WHOLESALE FLOOR PLAN CREDIT FACILITY AND SECURITY
AGREEMENT, dated as of February 21, 2006, between CNH CAPITAL AMERICA LLC, a
limited liability company organized under the laws of the State of Delaware (“Lender”)
and TITAN MACHINERY, INC., a North Dakota corporation (“Borrower”).


RECITALS


WHEREAS, Borrower is engaged in the business of, among
other things, the sale, rental and lease of agricultural and/or construction
machinery and equipment, and related goods and services;


WHEREAS, Lender is engaged in the business of, among
other things, providing wholesale, retail and other financing arrangements to
equipment dealers and others;


WHEREAS, Borrower has existing senior credit
facilities with Lender in the amount of $58 Million pursuant to the agreements
identified on Schedule 1 (collectively, the “Existing Wholesale
Credit Agreements”), which Existing Wholesale Credit Agreements are
exclusive of Lender’s Subordinated Debt Facilities (as defined below);


WHEREAS, Borrower desires to amend and restate all the
Existing Wholesale Credit Agreements and to provide a wholesale floor plan
credit facility of up to an aggregate $125 Million, including such amounts
currently outstanding under the Existing Wholesale Credit Agreements, to
acquire new equipment, used equipment and parts, and has requested that Lender
provide such a credit facility;


WHEREAS, as part of the establishment of the wholesale
floor plan credit facility, effective as of January 31, 2006 (subject to
Section 4.01), Borrower issued a subordinated note to Lender of up to $7.5
Million pursuant to a subordinated note purchase facility (the “Subordinated
Note Purchase Facility”), and effective as of November 10, 2005, Borrower
issued a convertible subordinated note to Lender in the amount of $3 million
(together with the Subordinated Note Purchase Facility, the “Lender’s
Subordinated Debt Facilities”);


WHEREAS, Lender is willing to provide the wholesale
floor plan credit financing upon the terms and conditions set forth in this
Agreement, with the understanding that the Borrower will concurrently enter
into the Subordinated Note Purchase Facility and issue the subordinated note
attached to the Subordinated Note Purchase Agreement (as defined below).


NOW, THEREFORE, in consideration of the mutual
promises set forth herein and other good and valuable consideration, the
receipt of which is hereby acknowledged, Borrower and Lender hereby agree as
follows:












ARTICLE I

DEFINITIONS


1.01                           Certain
Definitions.  As used in this
Agreement, the following terms have the following meanings:


“Adjusted Net Worth” means the result of
Tangible Net Worth plus Lender’s Subordinated Debt Facilities.


“Advance” has the meaning specified in Section
2.02(a).


“Affiliate” means, with respect to any
specified Person, any other Person controlling or controlled by or under common
control with such specified Person.  For
the purposes of this definition, “control,” when used with respect to any
specified Person, means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms “controlling” and “controlled”
have meanings correlative to the foregoing.


“Aggregate Credit Limit” has the meaning
specified in Section 2.02(a).


“Agreement” means this Wholesale Floor Plan
Credit Facility and Security Agreement, as from time to time amended, restated,
supplemented or otherwise modified.


“Authorized Officer” shall mean with respect to
Borrower, the chief executive officer, the president, any vice president, the
treasurer or the chief financial officer of Borrower.


“Borrower” has the meaning specified in the
Preamble.


“Business Day” means any day other than a
Saturday or Sunday or any other day on which banking institutions in Wisconsin,
Illinois and North Dakota are authorized or required by law or executive order
to close.


“Change of Control” means a change in
ownership, directly or indirectly, of equity interests in Borrower, or the
voting power of Borrower, which results in the holding of at least fifty
percent (50%) of Borrower, or at least fifty percent (50%) of the voting power
of Borrower, by a Person or Persons other than David Meyer (or his family
members, or his or their Affiliates, or a trust for his or their benefit).


“Collateral” has the meaning specified in
Section 2.03.


“Credit Agreements” means this Agreement, the
Existing Wholesale Credit Agreements as amended and superseded herein, and any
other agreement (other than the Subordinated Note Purchase Agreement) pursuant
to which Lender extends credit to or provides financial accommodations to
Borrower (other than pursuant to Lender’s Subordinated Debt Facilities), all as
amended and supplemented.  For
clarification, Credit Agreements do not include the Subordinated Note Purchase
Agreement or any other agreements in connection with Lender’s Subordinated Debt
Facilities or any agreements related to Lender’s rights or obligations as an
equity holder or Lender’s rights to acquire equity of Borrower.



 2
 








“Debt” means the aggregate amount of Borrower’s
items properly shown as liabilities on its balance sheet, determined in
accordance with GAAP, less any non-interest bearing floor plan liabilities, and
less any liabilities that constitute Subordinated Debt.


“Debt to Adjusted Net Worth Ratio” means the
ratio of Debt to Adjusted Net Worth.


“Default” means any condition, event or
circumstance which, with the giving of notice or lapse of time or both, would,
unless cured or waived, become an Event of Default.


“End User” has the meaning specified in Section
3.04.


“ESS” has the meaning specified in Section
3.03.


“Environmental Laws” means all federal,
national, state, provincial, municipal, local and foreign laws, principles of
common law, regulations and codes, as well as orders, decrees, judgments or
injunctions issued, promulgated, approved or entered thereunder relating to
pollution, protection of the environment or public health and safety.


“Events of Default” has the meaning specified
in Section 8.01.


“Excluded Taxes” has the meaning set forth in
the definition of the term “Taxes”.


“Existing Wholesale Credit Agreements” has the
meaning set forth in the Recitals.


“Financial Statements” means balance sheets,
statements of income, changes in cash flow, sources and applications of funds,
related profit and loss accounts, operating statements and any other statement,
however called, and the notes thereto.


“GAAP” means generally accepted accounting
principles set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board that
are applicable to the circumstances as of the date of determination.


“Guarantor” means David Meyer.


“Government Lists” has the meaning specified in
Section 9.01(b).


“Guaranty” means the guaranty in the form of Exhibit
A attached to, and executed by Guarantor concurrently with, this Agreement.


“Indebtedness” of any Person means, without
duplication:


(a)                                  all obligations for
borrowed money and debit balances at banks;


(b)                                 all obligations
evidenced by debentures, bonds, notes or other similar debt instruments;


(c)                                  all indebtedness for
the deferred purchase price of property or services;



 3
 








(d)                                 all obligations in
respect of letters of credit (in the case of standby letters of credit, to the
extent obligations supported thereby have been issued and are, at the time,
outstanding), acceptance facilities (to the extent drafts have been accepted
thereunder) or drafts or similar instruments issued or accepted by banks or
other financial institutions for the account of such Person, (and, in the case
of clause (c) above and this clause (d), excluding any indebtedness or
obligations consisting of trade accounts payable or other current liabilities
arising in the ordinary course of business and on terms requiring payment in
full within no more than 180 days);


(e)                                  any direct or
indirect guaranty, indemnity or similar assurance against financial loss of any
Person with respect to Indebtedness of or guaranteed by such Person; or


(f)                                    any indebtedness or
obligations referred to in clauses (a) through (e) above secured
by (or for which the holder of such indebtedness has an existing right, contingent
or otherwise, to be secured by) any lien upon or in any Property (including
accounts and contract rights) owned by such Person, whether or not such Person
has assumed or become liable for the payment of such indebtedness.


“Indemnified Party” has the meaning specified
in Section 9.07(a).


“Interest Rate” means the Prime Rate plus 1.6%.


“Lender” has the meaning specified in the
Preamble.


“Lender’s Subordinated Debt Facilities” has the
meaning set forth in the Recitals.


“Material Adverse Effect” means a material and
adverse effect, whether individually or in the aggregate, on or change in (a)
Borrower’s assets, business, operations, properties or condition (financial or
otherwise) of Borrower or (b) the ability of Borrower to perform its
obligations under any Transaction Document to which it is a party in accordance
with the terms thereof and to make payment as and when due of all or any part
of the Obligations or (c) the value of the Collateral taken as a whole.


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


“Obligations” means all of the Indebtedness
whether for principal, interest (including any interest payable subsequent to
an Event of Default), fees, expenses, indemnities or otherwise), obligations
and liabilities of Borrower to Lender, now or in the future existing under or
in connection with the Credit Agreements, whether direct or indirect, absolute
or contingent, due or to become due.  For
clarification, Obligations in this Agreement do not include any of the
obligations now or in the future owing under any of Lender’s Subordinated Debt
Facilities or in connection with Lender’s status as an equity holder of
Borrower or Lender’s rights to acquire equity of Borrower.


“OFAC” means the Office of Foreign Assets
Control.



 4
 








“Other Taxes” means any present or future stamp
or documentary taxes; charges or similar levies of the United States or any
applicable foreign jurisdiction which are imposed on any payment made hereunder
or arise from the execution, delivery, registration or enforcement of, or
otherwise with respect to, this Agreement or any other Transaction Document.


“Participant” has the meaning specified in
Section 9.08(b).


“Patriot Act”
means the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, as
the same may be amended from time to time, and corresponding provisions of
future laws.


Patriot Act
Offense” has the meaning specified in Section 9.01(b).


“Payment Documents” has the meaning specified
in Section 3.05.


“PBGC” means the Pension Benefit Guaranty
Corporation or any entity succeeding to any or all of its functions under
ERISA.


“Permitted Liens” has the meaning set forth in
Section 6.02.


“Person” means an individual, partnership,
corporation, business trust, joint stock company, limited liability company,
trust, unincorporated association, joint venture or other business entity or
Governmental Authority, whether or not having a separate legal personality.


“Plan” means an employee pension benefit plan
(including a multiemployer plan) which is covered by Title IV of ERISA or subject
to the minimum funding standards under Section 412 of the Code and is
maintained by Borrower.


“Prime Rate” means, commencing Monday of each
week, the interest rate publicly announced from time to time by Bank of America
as its ‘prime rate’ as of Friday of the preceding week.


“Property” of any Person means any asset,
revenue or other property, whether tangible or intangible, real or personal of
such Person.


“Related Interests” means, with respect to any
specified Person, such Person’s Affiliates, successors, and assigns, and
Representatives of such Person or its Affiliates


“Rental Contract” has the meaning specified in
Section 4.03(b).


“Representatives” means, with respect to any
specified Person, such Person’s shareholders, equity owners, employees, officers,
directors, agents, or other agents or representatives.


“Requirements of Law” means, as to any Person,
any law, treaty, act, rule or regulation or determination of an arbitrator or a
court or other governmental authority, in each case applicable to or binding
upon such Person or any of its Properties or to which such Person or any of its
Property is subject.



 5
 








“Security Interest” has the meaning specified
in Section 2.03.


“Subordinated Debt” means all of Borrower’s
liabilities that are subordinated to the payment of Borrower’s Obligations to
Lender.  Subordinated Debt includes,
without limitation, Lender’s Subordinated Debt Facilities.


“Subordinated Note” means the note issued
pursuant to the Subordinated Note Purchase Agreement, a form of which is attached
thereto.


“Subordinated Note Purchase Agreement” means
the agreement in the form of Exhibit B attached to, and executed
concurrently with, this Agreement.


“Subordinated Note Purchase Facility” has the
meaning set forth in the Recitals.


“Supplier” means a manufacturer, distributor or
other party with whom Borrower does business or from whom Borrower purchases
equipment or other goods.


“Tangible Net Worth” means Net Worth minus the
aggregate amount of Borrower’s items properly shown as the following types of
assets on its balance sheet determined in accordance with GAAP:  intangible assets, leasehold improvements,
receivables plus loans and other amounts due from any shareholder, director,
officer, employee and any other Affiliate.


“Taxes” means any and all present or future
taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding such taxes (including income
taxes or franchise taxes) as are imposed on or measured by Lender’s net income
by the jurisdiction (or any political subdivision or taxing authority thereof)
under the laws of which Lender is organized or maintains any office (such
excluded taxes being called “Excluded Taxes”).


“Transaction Documents” means the Credit
Agreements, the Subordinated Note Purchase Agreement, the Guaranty, all
exhibits or schedules to the foregoing and all related documents executed or
contemplated in connection with any of the foregoing.


“UCC” has the meaning specified in Section
2.03.


“Wholesale Facility Minimum Debt Service Coverage
Ratio” means the ratio computed when the sum of (i) net income, plus (ii)
depreciation and amortization expense, plus (iii) interest expense is divided
by the sum of (x) current maturities of long-term debt (including Subordinated
Debt), plus (y) interest expense, plus (z) capital expenditures not financed by
long-term debt.


“Wholesale Finance Plans” means, collectively,
all terms and conditions, whether set forth in documents called “Wholesale
Finance Plans,” “Schedule of Terms,” “Schedules of Discounts and Terms,” “Dealer
Handbook,” “Dealer Policy Manual,” “Dealer Operating Guide,” or otherwise,
under which Lender is willing to provide financing for a dealer for the purpose
of acquiring and maintaining new and used inventory, parts, equipment and other
goods held for sale, lease or rental to its customers, and other financing
accommodations identifying such inventory, parts, equipment and other goods
eligible for such financing and will include



 6
 








maximum loan amounts for
each item, repayment and curtailment terms, interest rates, default interest
rates, late payment and other service charges and fees, maximum annual hour
usage limits, excess hourly usage rates and other terms, conditions and
limitations of the financing, together with any policy or operating manuals or
guides and “dealer bulletins” and other publication from time to time delivered
by Lender to Borrower (which may be through Lender’s website) and which relate
to the foregoing; and any supplemental publications or agreements specifically
applicable to Borrower as a dealer, all as in effect and amended and
supplemented from time to time.  The
Wholesale Finance Plans are incorporated herein by reference.


“Wholesale Obligations” means Indebtedness
arising under this Agreement and Wholesale Finance Plans.  For clarification, Wholesale Obligations do
not include any obligations under Lender’s Subordinated Debt Facilities or any
obligations in connection with Lender’s status as an equity holder of Borrower
or Lender’s rights to acquire equity of Borrower.


1.02                           Other
Definitional Provisions.


(a)                                  The
terms “including” and “include” are not limiting and mean “including but not
limited to” and “include but are not limited to”.


(b)                                 The words “hereof’, “herein”
and “hereunder” and words of similar import when used in this Agreement refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and Article, Section, paragraph, Schedule and Exhibit references are
to this Agreement unless otherwise specified.


(c)                                  The meanings given to
terms defined herein are equally applicable to both the singular and plural
forms of such terms.


(d)                                 In this Agreement, in
the computation of periods of time from a specified date to a later specified
date, the word “from” means “from and including” and the words “to” and “until”
each means “to but excluding.”  Periods
of days referred to in this Agreement shall be counted in calendar days unless
otherwise stated.


(e)                                  The captions and
headings of this Agreement are for convenience of reference only and shall not
affect the interpretation of this Agreement.


1.03                           Accounting
Terms and Determinations.  All
accounting and financing terms not specifically defined herein shall be
construed in accordance with GAAP.


ARTICLE
II

THE WHOLESALE FLOOR PLAN CREDIT FACILITY


2.01                           Amendment and Restatement.


(a)                                  This
Agreement is an amendment and restatement of the Existing Wholesale Credit
Agreements.  All provisions of the
Existing Wholesale Credit Agreements are hereby superseded, provided that the
provisions thereof that are necessary to preserve any of Lender’s first
priority security interest over any of Borrower’s assets shall survive.  All of the terms and conditions of other
existing agreements between Lender and Borrower (excluding



 7
 








those within
the definition of Existing Wholesale Credit Agreements) are hereby affirmed,
confirmed and ratified.  Lender
represents that Lender is the successor by conversion to Case Credit
Corporation, and is the assignee of the agreement with New Holland Credit
Company, LLC referenced on Schedule 1, and as such, is duly authorized
to so amend and restate all of the Existing Wholesale Credit Agreements on
behalf of the lender entities named therein.


(b)                                 The Aggregate Credit
Limit under this Agreement is a cumulative total for all of Borrower’s secured
indebtedness to the Lender (exclusive of Lender’s Subordinated Debt
Facilities), and not in addition to the credit limit under the Existing
Wholesale Credit Agreements.


2.02                           Credit
Facility.


(a)                                  Subject to the terms
of this Agreement, Lender may make loans or otherwise extend credit (each an “Advance”
and collectively, “Advances”) to Borrower from time to time to acquire
goods and to use for other lawful purposes in Borrower’s business of selling,
renting and leasing of agricultural and/or construction machinery and
equipment, and related goods, parts, attachments, and services, up to an
aggregate maximum principal balance outstanding of up to $125 Million inclusive
of amounts outstanding on the date hereof but exclusive of amounts under Lender’s
Subordinated Debt Facilities (the “Aggregate Credit Limit”).  Lender’s decision to make any Advance is
discretionary, and Lender will determine the amounts of such Advance in its
sole discretion.


(b)                                 Borrower hereby
authorizes and directs Lender to pay on Borrower’s behalf up to the full amount
of any invoices, or electronic remittance advices, presented to Lender from
time to time which evidence a sale of an item of goods by a Supplier to
Borrower or any other amount due to a Supplier. 
Payment when so made by Lender shall be deemed to be an Advance to
Borrower and shall become due and payable pursuant to this Agreement and the
Wholesale Finance Plans.  Lender shall
have no responsibility for the accuracy, validity or genuineness of any such
invoice or remittance advice.  Advances
by Lender, the proceeds of which are remitted to a Supplier pursuant to this
Agreement, shall be unconditionally due and payable by Borrower to Lender in
accordance with this Agreement and the Wholesale Finance Plans, notwithstanding
any claim, off-set or defense to payment Borrower may have against such
Supplier with respect to the related invoice or remittance advice or any other
transactions or relationships between Borrower and the Supplier.  In addition to any other indemnity, Borrower
agrees to indemnify and hold Lender harmless from and against any demand, claim
action, cost, liability, damage or expense of any kind, including attorneys’
fees, arising from or in connection with payment to Suppliers.


(c)                                  Within the foregoing
limits and subject to the terms and conditions set forth herein, upon receipt
of any invoices or electronic remittance advices submitted on Borrower’s behalf
by a Supplier, Lender will make Advances.


(d)                                 Lender’s agreement to
make Advances on the terms and conditions of this Agreement shall expire on May
31, 2008, unless such term is extended by Lender and Borrower in writing or
unless earlier terminated pursuant to ARTICLE VIII hereof.



 8
 








2.03                           Security
Agreement.


(a)                                  To secure payment and
performance of the Wholesale Obligations, Borrower hereby grants to Lender a
security interest (the “Security Interest”) in and to all of Borrower’s
right, title and interest in and to present and future Property in any form and
in any location including, but not limited to, the following (collectively, the
“Collateral”):


(i)                                     All of Borrower’s
now owned and hereafter acquired inventory, equipment, software and other goods
wherever located, of whatever kind, make, model, brand or nature, that have
been or hereafter are obtained from Lender (or any Affiliate of Lender) or that
are or were financed by Lender, together with all trade-ins, accessions and
rights relating to, and all proceeds of, any of the foregoing;


(ii)                                  All now owned or
hereafter arising or acquired accounts, general intangibles, chattel paper,
leases, instruments, certificated securities, checks, contracts for sale,
deposit accounts, documents (including those in electronic form), and
agreements arising from Borrower’s sale or lease of goods or provision of
services, or otherwise, that have been or hereafter are sold or assigned to
Lender, together with any goods that are the subject of any of the foregoing,
all support obligations relating to any of the foregoing, and all proceeds of
any of the foregoing;


(iii)                               Borrower’s present and
future accounts with Lender and all credits and other amounts due Borrower from
Lender (or any Affiliate of Lender), and all proceeds of any of the foregoing;
and


(iv)                              Such other or additional
assets of Borrower in which Borrower may have heretofore granted or may
hereafter grant Lender a security interest in writing, and all proceeds of the
foregoing.


(b)                                 The Security Interest
is a first priority security interest and is subject to no security interests
or other liens other than purchase money security interests and Permitted
Liens.


(c)                                  Borrower hereby
appoints Lender as Borrower’s agent and attorney in fact for the purposes of
executing on behalf of Borrower, and in Borrower’s name, if necessary, and
filing in such places, any and all financing statements, certificates of title
(or applications therefor) and other documents (and amendments thereto), all as
Lender deems necessary or advisable to evidence, perfect or maintain Lender’s
security interest in the Collateral.


(d)                                 Borrower agrees to
take any and all actions necessary to allow Lender to perfect its security
interest in the Collateral.


Terms used herein that are not otherwise specifically
defined herein shall have the meaning ascribed to them in the Uniform Commercial
Code as enacted in the State of Wisconsin (“UCC”).



 9
 








ARTICLE
III

PAYMENT PROVISIONS


3.01                           Interest
and Principal.


(a)                                  Except as otherwise
provided in the Wholesale Finance Plans, the cumulative and unpaid balance of
Advances under Section 2.02 shall accrue interest each month at an annual rate
equal to the Interest Rate and shall be due and payable monthly as provided in
the Wholesale Finance Plans.


(b)                                 Borrower agrees that
the cumulative and unpaid principal balance of Advances shall be due and
payable at the time or times set forth in the Wholesale Finance Plans (or if
not specified therein, then payable upon demand by Lender) except as payment of
such amounts are accelerated pursuant to the terms of this Agreement.


(c)                                  Borrower agrees to
pay Lender such reasonable fees and other charges, in such amounts and at such
times related to all of Borrower’s Wholesale Obligations, all as provided in
this Agreement and the Wholesale Finance Plans.


(d)                                 The Wholesale
Obligations may be prepaid in whole or in part at any time without premium or
penalty.


3.02                           Set-off.  Lender may, at any time and from time to
time, without prior notice to Borrower, withhold and deduct from amounts
otherwise due to Borrower from Lender under this Agreement or otherwise, the
amount of any Wholesale Obligations then due and payable and Lender may apply
any amounts so withheld or deducted in reduction of such Wholesale
Obligations.  Conversely, Lender may, at
any time and from time to time, without prior notice to Borrower, withhold or
deduct from any Advance hereunder the amount of any Obligations then due and
payable by Borrower to Lender pursuant to any other present or future agreement
between Borrower and Lender and Lender may apply amounts so withheld or
deducted to such Obligations or Indebtedness owed to Lender.


3.03                           Statement
of Account.  Borrower’s Obligations
shall, absent manifest error, be conclusively evidenced by Lender’s books and
records, Lender’s electronic settlement system (“ESS”), or any successor
system to ESS, any promissory note or other document specifically evidencing an
Advance, and the terms and conditions of the Wholesale Finance Plans.  Lender will deliver monthly statements to
Borrower which will include detail regarding Borrower’s Wholesale Obligations
and the Collateral.  Unless Borrower
objects in writing within thirty (30) days after Lender’s mailing or other
transmission of such monthly statements to Borrower, such monthly statements
shall be deemed an account stated, and Borrower shall be deemed to have accepted
as accurate all information regarding the Wholesale Obligations and Collateral
set forth in such monthly statements.


3.04                           Sale
or Lease of Inventory Collateral.  So
long as no Event of Default exists hereunder, and subject to the terms and
conditions of this Agreement and the Wholesale Finance Plans, Borrower may with
respect to Collateral consisting of inventory (a) sell inventory only to End
Users in the ordinary course of Borrower’s business or to other authorized
dealers if in accordance with Wholesale Finance Plans through ESS or (b) lease
or rent inventory to End



 10
 








Users or to other authorized dealers if in accordance
with Wholesale Finance Plans through ESS on terms approved by Lender hereunder
as set forth in Section 4.03 and under the Wholesale Finance Plans.  For purposes hereof, the term “sale” shall
include a cash sale, conditional sale, installment sale, finance lease or other
similar transaction.  For purposes hereof
an “End User” shall mean any customer which is not a Related Interest of Borrower,
who purchases inventory in an “arms length” transaction for its use, lease or
rental, but not for resale.  Sales to
Affiliates engaged in the equipment rental business may be permitted subject to
all of the terms and conditions provided in the Wholesale Finance Plans.  Upon the sale or lease by Borrower of any
item of inventory with respect to which there is a specific Advance outstanding
(other than short term rentals of inventory permitted hereunder and inventory
consisting of replacement parts), such Advance shall be immediately due and
payable.


3.05                           Proceeds
of Collateral.  All proceeds of
Collateral with respect to which there is a specific Advance outstanding shall
be remitted to Lender by Borrower in accordance with the terms of the Wholesale
Finance Plans.  In addition, Borrower
shall, upon demand by Lender and as Lender may direct, hold all proceeds of
Collateral in which Lender holds a first security interest in express trust for
Lender and deliver to Lender all proceeds of such Collateral which are in
Borrower’s possession and/or deposit all such proceeds of Collateral in a
separate account and not commingle such proceeds of Collateral with any other
funds of Borrower.  If any proceeds of
Collateral are evidenced by notes, leases, Rental Contracts or checks
(collectively “Payment Documents”), Borrower hereby assigns and, upon
demand, shall deliver and/or endorse such Payment Documents to Lender.  It is understood and agreed that the
foregoing assignment is for security purposes only and in accepting such
assignment Lender does not assume any of Borrower’s obligations with respect to
such Payment Documents.  If any proceeds
of Collateral are evidenced by customer accounts, Borrower shall, at any time
upon request, provide the necessary information to Lender to enable Lender to
collect such accounts directly from the customer.  All payments received by Lender that are
attributable to the sale or lease of an item of Collateral with respect to
which there is a specific Advance outstanding shall be applied first against
that Advance and then, if any surplus exists, to such other Obligations, or
returned to Borrower, as Lender in its sole discretion, shall determine.


3.06                           Taxes.


(a)                                  Any and all payments
by Borrower to Lender shall be made free and clear of, and without deduction or
withholding for, any Taxes.  In addition,
Borrower shall promptly pay all Other Taxes.


(b)                                 Borrower agrees to
indemnify and hold Lender harmless for the full amount of Taxes or Other Taxes
(including any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this section, other than Excluded Taxes) paid by Lender in
respect of any sum payable hereunder and any liability (including penalties,
interest, additions to tax and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted.  Payment under this
indemnification shall be made within 30 days after the date Lender makes
written demand therefor.


(c)                                  If Borrower shall be
required by law to deduct or withhold any Taxes or Other Taxes from or in
respect of any sum payable hereunder to Lender, then:



 11
 








(i)                                     the sum payable
shall be increased as necessary so that after making all required deductions
and withholdings (including deductions and withholdings applicable to
additional sums payable under this section), Lender receives an amount equal to
the sum it would have received had no such deductions or withholdings been
made;


(ii)                                  Borrower shall make
such deductions and withholdings; and


(iii)                               Borrower shall pay the
full amount deducted or withheld to the relevant taxing authority or other
authority in accordance with applicable law.


(d)                                 Upon request, Borrower
shall furnish to Lender the original or a copy of a receipt evidencing payment
of Taxes or Other Taxes, or other evidence of payment satisfactory to Lender.


(e)                                  Borrower shall do any
and all actions requested by Lender to establish any available exemption from,
or reduction in the amount of, otherwise applicable Taxes or Other Taxes.


ARTICLE
IV

CONDITIONS PRECEDENT


4.01                           Conditions
to Effectiveness.  The effectiveness
of this Agreement is subject to the delivery of the following documents and
satisfaction of the following conditions precedent:


(a)                                  Guaranty.  Guarantor shall execute the personal Guaranty
for all present and future Obligations of Borrower to Lender substantially in
the form attached hereto as Exhibit A.


(b)                                 Subordinated Note
Purchase Facility.  Borrower shall
execute a Subordinated Note Purchase Agreement substantially in the form attached
hereto as Exhibit B, and all other documents contemplated therein.


(c)                                  Intercreditor
Agreement.  Lender shall have entered
into an intercreditor agreement with Bremer Bank and any other existing
creditor to Borrower, upon terms satisfactory to Lender, as to the priority of
the Security Interest granted herein and the priority of repayment of Borrower’s
Obligations under this Agreement.


(d)                                 Financing
Statements.  Lender shall have
received copies of UCC financing statements as filed with the appropriate
governing jurisdiction evidencing the first priority and perfection of Lender’s
security interest in the Collateral.


(e)                                  Opinions of
Borrower’s Counsel.  Lender shall
have received the opinion of Borrower’s counsel, addressed to Lender, as to
certain corporate matters of Borrower, enforceability against Borrower of this
Agreement and the validity and perfection (but not priority) of Lender’s
security interest in the Collateral, and as to the enforceability of the
Subordinated Note Purchase Agreement, in form and substance satisfactory to
Lender.



 12
 








(f)                                    Opinion of
Guarantor’s Counsel.  Lender shall
have received the opinion of Guarantor’s counsel, addressed to Lender, as to
the enforceability of the Guaranty against Guarantor, in form and substance
satisfactory to Lender.


(g)                                 Supporting
Documents of Borrower.  Lender shall
have received the following documents:


(i)                                     a certificate of
Borrower’s President, attaching and certifying as to resolutions of Borrower’s
Board of Directors authorizing the execution, delivery and performance of this
Agreement and the other Transaction Documents (excluding the Guaranty) and
attaching a true and complete copy of Borrower’s certificate of incorporation
and by-laws; and


(ii)                                  a certificate of
Borrower’s President certifying as to the incumbency and signatures of Borrower’s
officers executing this Agreement and the other Transaction Documents
(excluding the Guaranty) and as to Borrower’s compliance with the financial
covenants herein as of the date of execution.


(h)                                 Financial Statements.  Borrower shall have delivered to Lender:  (i) Borrower’s audited Financial Statements
for the fiscal year ended January 31, 2005 prepared in accordance with GAAP,
consistently applied, and (ii) unaudited monthly Financial Statements for the
interim period from January 31, 2005 through the month immediately preceding
the date of execution of this Agreement. 
Guarantor shall have delivered to Lender the most recent federal income
tax return of Guarantor; provided, however, that Lender may allow a period of
seven (7) calendar days following the effective date hereof for Guarantor to
furnish to Lender the personal financial statements required hereunder and
under the Guaranty.


(i)                                     Insurance.  Borrower will provide Lender with written
evidence of such insurance coverage and lender’s loss-payee endorsement
required by Section 5.03.


(j)                                     Fees and
Expenses.  All fees and other amounts
payable by Lender hereunder on or prior to execution of this Agreement shall
have been paid.


(k)                                  Other Documents.  Lender shall have received such other
certificates and other documents and undertakings, as may be reasonably
requested by Lender.


4.02                           Conditions
Precedent to Each Advance.  Lender
may refuse, with or without cause, to make any Advance.  Nonetheless, Borrower’s ability to request a
Advance is subject to the satisfaction of the following conditions:


(a)                                  if Borrower’s
requested Advance is granted, the cumulative unpaid principal balance shall not
exceed the Aggregate Credit Limit; and


(b)                                 no Default or Event of
Default shall have occurred and be continuing and such Advance will not cause
or result in a Default or Event of Default.



 13
 








4.03                           Use
of Funds; Rental Contracts.


(a)                                  Borrower shall use
the proceeds of any loan under this Agreement only to acquire new equipment, used
equipment or parts, and for no other purpose.


(b)                                 Borrower may rent to
End Users the inventory with respect to which Lender has made an Advance,
pursuant to the terms of Borrower’s rental contracts including all amendments
and supplements thereto (individually, a “Rental Contract”).  Advances with respect to such inventory will
thereafter be subject to the rates and terms of Lender’s financing program in
effect for goods which are rented, as reflected in the Wholesale Finance Plans
and ESS.


(c)                                  All of Borrower’s
Rental Contracts must permit assignment to Lender, conform in all respects with
all applicable federal, state and local laws and otherwise be acceptable to
Lender.  Borrower will indemnify Lender
against any loss or damage which Lender suffers, whether direct or indirect,
resulting in any way from any Rental Contract including any noncompliance with
applicable laws and any claims by Borrower’s customers regarding Borrower’s
obligations under the Rental Contracts.


(d)                                 All Rental Contracts
are hereby assigned to Lender.  Borrower
will immediately, upon Lender’s request, deliver to Lender the executed
originals of all Rental Contracts and all related documents or mark such
original Rental Contracts as having been assigned to Lender.  This assignment is a transfer for security
only, and, until Lender has foreclosed its interest in the Rental Contracts,
will not be deemed to delegate any of Borrower’s duties under the Rental
Contracts to Lender or constitute an assumption by Lender of such duties, nor
is it intended to alter or impair performance by either party to the Rental
Contracts.


(e)                                  Lender may, from time
to time, verify with End Users the accuracy of the Rental Contracts and the
location of any inventory which is the subject of a Rental Contract.  Borrower will immediately, upon Lender’s
request, provide Lender with copies of all such Rental Contracts, together with
the following information regarding such Rental Contracts which are in effect
on the date of such request:  (i) name,
address and telephone number of each End User who has executed such a Rental
Contract; (ii) the location of the inventory; (iii) the date and all of the
terms of each such Rental Contract; (iv) the payment history with respect to
each such Rental Contract; (v) the date when the inventory is to be returned
under each such Rental Contract; and (vi) any other information which Lender
may reasonably request.


(f)                                    Other than to
Lender, Borrower will not assign, sell, pledge, convey or by any other means
transfer any Rental Contracts or chattel paper covering inventory financed by
Lender, without Lender’s prior written consent. 
Borrower will not enter into any Rental Contracts for inventory financed
by Lender or against which Lender has advanced funds pursuant to which:  (i) the original term of the Rental Contract
(including renewal options) is greater than one-hundred-eighty (180) days; (ii)
the original term of the Rental Contract is equal to or greater than the
remaining economic life of such inventory; (iii) the customer is bound to renew
the Rental Contract for the economic life of such inventory or is bound to
become the owner of such inventory; or (iv) the customer has an option to renew
the Rental Contract for the remaining economic life of such inventory, or to
become the owner of such inventory, for



 14
 








nominal consideration, or for consideration which is less than the
unpaid balance owed to Lender for such inventory.


(g)                                 Borrower will take any
action which Lender may reasonably require to perfect and/or protect Lender’s
security interest in Rental Contracts and/or the inventory subject thereto and
Borrower hereby authorizes Lender to take any such action in Borrower’s name.


ARTICLE V

AFFIRMATIVE COVENANTS


Borrower covenants and agrees that for so long as any
Obligation remains unpaid under this Agreement:


5.01                           Financial
Covenants.


(a)                                  Borrower’s Wholesale
Facility Minimum Debt Service Coverage Ratio shall not be less than 1.20 to
1.00 on a trailing twelve (12) months basis, measured at the end of each fiscal
quarter.


(b)                                 Borrower’s ratio of
Debt to Adjusted Net Worth shall not be greater than 5.00 to 1.00 as measured
at the end of each fiscal year.


(c)                                  Concurrently with the
delivery of the certificate required by Section 5.02(e), Borrower shall provide
Lender a certificate signed by Borrower’s Chief Financial Officer, in a form
acceptable to Lender, reflecting calculation of the foregoing ratio under
Section 5.01(a) on a trailing. 
12-month/4 quarters basis, and before the end of each quarter after
Borrower’s fiscal year end, a calculation of the ratio under Section 5.01(b).


5.02                           Financial
Statements and Other Information. 
Borrower shall deliver (including electronically if requested by
Lender), in a form satisfactory to Lender:


(a)                                  Borrower’s monthly
internally prepared Financial Statements, within 30 days following each
calendar month-end reflecting operations through the preceding month and
current reports of sales and inventory;


(b)                                 Borrower’s quarterly
internally prepared Financial Statements, within 30 days following each calendar
quarter reflecting operations through the preceding quarter and current reports
of sales and inventory;


(c)                                  Borrower’s annual
business and financial plan;


(d)                                 as soon as available
but in any event not later than 120 days after the end of each of its fiscal
year, copies of the Financial Statements for such fiscal year, setting forth in
comparative form the corresponding figures for the preceding year, audited and
accompanied by a report and unqualified opinion (which shall not be limited as
to the scope of the audit or qualified as to the status of Borrower as a going
concern) from an independent certified public accountant selected by Borrower
and approved by Lender, which approval shall not be



 15
 








unreasonably withheld, each such statement prepared in accordance with
GAAP, consistently applied (except to the extent disclosed therein), and
audited in accordance with GAAP;


(e)                                  concurrently with the
delivery of each of the Financial Statements referred to in this Section, a
certificate of the Chief Financial Officer of Borrower stating whether any
Default or Event of Default exists on the date of such certificate and, if any
Default or Event of Default then exists, setting forth the details thereof and
the action which Borrower is taldng or proposes to take with respect thereto;


(f)                                    written notice of
any change in Borrower’s name, form of business organization, majority
shareholder, principal executive office, business locations or Collateral
locations at least thirty (30) days prior to any such change;


(g)                                 promptly, copies of
all documents provided by Borrower to its shareholders, copies of all
amendments or supplements to Borrower’s certificate of incorporation and
by-laws, or any other governing document including a copy of documents as
filed, bearing indicia of filing, with appropriate governmental authority which
change Borrower’s name, place of formation, principal executive office,
directors, officers or agent for service of process;


(h)                                 immediately upon
Lender’s request, each Certificate of Title or Statement of Origin or similar
document (regardless of the document’s title) issued for any of the Collateral
which may be retained by Lender until the Advance with respect to such
Collateral has been fully repaid;


(i)                                     from time to time
such additional information readily available to Borrower regarding the
business, properties or the condition or operations of Borrower, financial or
otherwise, as Lender may reasonably request, including any auditor’s management
letters; and


(j)                                     from time to time
such other information readily available to Borrower relating to the business,
Property or condition or operation of Borrower, financial or otherwise, as
Lender may from time to time reasonably request.


5.03                           Insurance.  Borrower shall at all times bear all risk of
loss of, damage to, or destruction of, the Collateral.  Borrower shall maintain public liability
insurance and shall keep all Collateral insured against risks covered by
standard “all risk” forms of fire, theft, and extended coverage insurance and
such other risks as may be required by Lender, in amounts and with such
deductibles, under policies issued by such insurance companies all as are
satisfactory to Lender.  Borrower agrees
to deliver promptly to Lender certificates, or if requested, policies of
insurance, satisfactory to Lender, each with an endorsement naming Lender or
its assigns as additional insured or lender loss payee as their interests may
appear, along with proof of payment of the premium therefor.  Each policy shall provide that Lender’s
interest therein will not be invalidated by the acts, omissions or neglect of
anyone other than Lender, and will contain the insurer’s agreement to give
thirty (30) days prior written notice to Lender before any cancellation, lapse,
expiration or other termination of, or any material change in, the policy will
be effective as to Lender, whether such termination or change is at the
direction of Borrower or insurer. 
Borrower assigns to Lender all policies and all proceeds of such
insurance, including returned and unearned premiums, not to exceed the sum of
all Obligations, as additional security.



 16
 








Borrower directs all insurers to pay such proceeds
directly to Lender, and Borrower shall hold in trust for Lender and promptly
remit to Lender, in the form received with all necessary endorsements, any
proceeds of such insurance which Borrower may receive.  Lender shall apply any proceeds of insurance
which may be received by it toward payment of the Obligations to which such
insurance proceeds relate, whether or not then due, such proceeds to be applied
first to interest and then to principal. 
Excess insurance proceeds, if any, shall be returned to Borrower or
applied to any other Obligations as Lender in its discretion may determine.  In the event any item of Collateral is
damaged and a claim submitted to the insurer is in dispute, Borrower will pay
the unpaid balance of all Advances attributable to the damaged Collateral, plus
all accrued interest thereon, within five (5) days of Lender’s request.  If, in the opinion of Lender, Borrower fails
to maintain insurance on the Collateral in an amount or manner satisfactory to
Lender, Lender may, but shall not be obligated to, purchase such insurance, and
Borrower agrees to immediately reimburse Lender, upon demand, for any payment
made or expense incurred by Lender in purchasing such insurance, plus interest
thereon at the post-maturity interest rate specified in the Wholesale Finance
Plans.


5.04                           Locations.  Borrower shall keep all Collateral at one of
the locations identified in Schedule 5.04 and shall give Lender at least
thirty (30) days written notice prior to moving any Collateral to another
location while an Advance with respect to such Collateral is outstanding.


5.05                           Notice
of Default and Litigation.  Borrower
shall furnish to Lender, promptly but in any event not later than three
Business Days after Borrower obtains knowledge thereof:


(a)                                  notice of any Default
or Event of Default, or the occurrence of any event or circumstance, including
any pending action, suit or proceeding, which may materially and adversely
affect Borrower’s ability to perform its Obligations under any Transaction
Document to which it is a party, signed by Borrower’s President or Chief
Financial Officer, describing such Default or Event of Default or event or
circumstance and the steps that Borrower proposes to take in connection
therewith;


(b)                                 notice of the
commencement of any litigation against Guarantor involving in the aggregate a
potential liability of $100,000 or more; and


(c)                                  notice of the appointment
of an inspector or auditor pursuant to any applicable Requirements of Law to
investigate any financial or criminal misconduct in respect of all or any part
of Borrower’s affairs or business.


5.06                           Maintenance
of Governmental Approvals.  Borrower
shall maintain in full force and effect all governmental approvals, consents,
licenses and authorizations which may be necessary or appropriate under any
applicable Requirements of Law (i) for the conduct of its business, (ii) for
the execution, delivery and performance of the Transaction Documents by
Borrower and (iii) for the validity or enforceability hereof and thereof.


5.07                           Payment
of Taxes.  Borrower shall pay and
discharge, before the same shall become delinquent, all taxes, assessments and
other governmental charges and levies imposed on it or any of its Properties or
in respect of its business or income, except for (a) those being contested in
good faith by proper proceedings diligently conducted and against which
adequate



 17
 








reserves, in accordance with GAAP consistently
applied, have been funded and are being maintained and (b) any tax, assessment,
charge or levy the failure to pay or discharge which would not materially
adversely affect the ability of Borrower to meet its Obligations under this
Agreement or the other Transaction Documents. 
If Borrower fails to pay any taxes, fees or other obligations which may
impair Lender’s interest in the Collateral, or fails to keep the Collateral
insured, Lender may, but shall not be required to, pay such amounts.  Such paid amounts will be deemed an
additional Advance under this Agreement and treated as principal which Borrower
owes to Lender, and shall be subject to interest as provided herein.


5.08                           Compliance
with Laws.  Borrower shall comply
with all applicable Requirements of Law, the non-compliance with which would,
singly or in the aggregate, have a Material Adverse Effect with respect to
Borrower, unless the same shall be contested by Borrower in good faith and by
appropriate proceedings and such contest shall operate to stay the Material
Adverse Effect of any such non-compliance.


5.09                           Conduct
of Business and Maintenance of Existence. 
Borrower shall continue to engage principally in the business of the
same general type as now conducted by Borrower and do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its
corporate existence and its rights, privileges and franchises.


5.10                           Protection
of Collateral.  Borrower shall take
all action necessary to ensure (i) that Borrower has good title to all
Collateral, (ii) that Lender’s security interest in the Collateral shall at all
times be a first priority security interest, senior to all interests of third
parties, except for Permitted Liens and except to the extent that Lender agrees
in writing to subordinate its interest to another party, and (iii) that the
Collateral is adequately protected and the inventory is maintained in good
working order and condition.


5.11                           Inspection
of Collateral; Books and Records; Discussions.


(a)                                  Borrower shall
install and maintain in good order an accounting system capable of generating
information in sufficient detail as is required to be reported to Lender under
this Agreement and the Wholesale Finance Plans, and shall keep proper books of
record and account in which                           true
and correct entries in conformity with GAAP consistently applied, and all
Requirements of Law shall be made of all dealings and transactions in relation
to its business and activities.


(b)                                 Borrower shall
maintain all such books of record and account at its principal executive
office.


(c)                                  Borrower’s Authorized
Officers shall be available for quarterly meetings with Lender and Lender’s
representatives, if and as requested by Lender.


(d)                                 Borrower shall permit
Lender’s representatives to visit and inspect any of the Collateral, and to
examine any and all of Borrower’s books and records, bank statements and
deposit records and all supporting data, and make copies of any of the
foregoing, at any reasonable time during Borrower’s normal business hours and
as often as may reasonably be desired, and to discuss the business, operations,
Collateral and financial and other condition of



 18
 








Borrower with officers and employees of Borrower and with its
independent certified public accountants.


5.12                           Perfection
of Security Interest.  Borrower shall
take any and all actions necessary to permit Lender to perfect its security
interest in the Collateral and to ensure that such interest is a first priority
lien except for purchase money security interests and Permitted Liens.


5.13                           Further
Assurances.  Borrower will, at its
own cost and expense, execute and deliver to Lender all such other documents,
instruments and agreements and do all such other acts and things as may be
reasonably required to enable Lender to exercise and enforce their rights under
this Agreement and under the other Transaction Documents, and to carry out the
intent of this Agreement and the other Transaction Documents.


ARTICLE
VI

NEGATIVE COVENANTS


Borrower covenants and agrees that for so long as any
Obligation under this Agreement remains unpaid:


6.01                           Collateral.  Borrower will not at any time without Lender’s
express prior written consent:


(a)                                  sell, rent, lease,
consign or otherwise dispose of or transfer any of the Collateral, other than
in the ordinary course of its business and as permitted under this Agreement
and the Wholesale Finance Plans; or


(b)                                 move any Collateral
out of the United States of America.


6.02                           Negative
Pledge.  Borrower shall not create,
incur, assume or suffer to exist any lien of any nature upon any substantial
part of its present or future assets to secure any indebtedness of Borrower
without Lender’s express prior written consent, except the following (“Permitted
Liens”):


(a)                                  Any liens securing
the Obligations in favor of Lender;


(b)                                 Liens for taxes or
assessments or other government charges or levies if not yet due and payable
or, if due and payable, if they are being contested in good faith by
appropriate proceedings and for which appropriate reserves are maintained;


(c)                                  Liens imposed by law,
such as mechanics’, materialmen’s, landlords’, warehousemen’s and carrier’s
liens, and other similar liens, securing obligations incurred in the ordinary
course of business that are not past due or that are being contested in good
faith by appropriate proceedings and for which appropriate reserves have been
established;


(d)                                 Liens to secure the
performance of surety, stay, appeal, indemnity, performance or other similar
bonds, or other similar obligations arising in the ordinary course of business;



 19
 








(e)                                  Liens on any property
of Borrower (or the contract for the acquisition of any such property) acquired
or constructed after the date of this Agreement which is existing or created at
the time of such acquisition or construction and secures payment of or money
borrowed or raised to finance payment of the acquisition or construction cost
of such property, provided, the indebtedness secured by such property
does not exceed the value of such property;


(f)                                    Liens arising in
favor of any government authority by operation of law;


(g)                                 Liens arising in the
ordinary course of the day-to-day operations of Borrower not related to
borrowing;


(h)                                 Existing Liens on the
assets of Borrower on and as of the date hereof and listed on Schedule
6.02(h) hereto provided, however, that Schedule 6.02(h) need not
list any purchase money security interests;


(i)                                     Purchase money
security interest (including security interests in the accounts receivable and
proceeds from the sale thereof of inventory items subject thereto; and


(j)                                     Liens granted in
favor of Bremer Bank and other lender to Borrower that provides an operating
line or working capital facility for Borrower if Borrower and Lender enter into
an intercreditor agreement with such other lenders (and in connection
therewith, Lender agrees to not unreasonably withhold its consent to entering
into any such intercreditor agreement which is in form and content usual and
customary for such agreements).


6.03                           Mergers;
Acquisitions.  Without Lender’s
express prior written consent, Borrower shall not engage in (i) any
dissolution, liquidation, or any action for the purpose of winding up its
business.  (ii) any acquisition of,
consolidation or merger with or into any other business entity in which
Borrower is not the surviving entity, (iii) any business activity that would
result in Borrower violating Section 5.09, or (iv) the transfer, lease or sale,
in one transaction or any combination of transactions, of all or substantially
all of the property or assets of Borrower.


ARTICLE
VII

REPRESENTATIONS AND WARRANTIES


Borrower represents and warrants that as of the date
of this Agreement and shall be deemed to represent and warrant as of each
Advance:


7.01                           Corporate
Existence and Power.


(a)                                  Borrower is a
corporation duly incorporated and validly existing under the laws of the State
of North Dakota and has all requisite corporate power and authority and legal
right to conduct its business, to own its properties and to execute and
deliver, and to perform all of its obligations under, this Agreement and the
other Transaction Documents to which it is a party.


(b)                                 Borrower has provided
Lender with a copy of Borrower’s Articles of Incorporation and will provide any
subsequent amendments thereto bearing indicia of filing from



 20
 








the appropriate governmental authority, or such other documents
verifying Borrower’s true and correct legal name.


(c)                                  Borrower is qualified
to do business as a foreign corporation under the laws of each jurisdiction in
which the failure to be so qualified could be reasonably be expected to have a
Material Adverse Effect.


7.02                           Corporate
Authority, Enforceable Obligations.


(a)                                  The execution,
delivery and performance by Borrower of this Agreement and the other
Transaction Documents to which Borrower is a party have been duly authorized by
all necessary corporate action.


(b)                                 This Agreement and the
other Transaction Documents to which Borrower is a party constitute legal,
valid and binding obligations of Borrower enforceable against Borrower in
accordance with their respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors’ rights generally or general equity principles.


7.03                           Compliance
with Law and Other Instruments. 
Neither the execution, delivery or performance of this Agreement or any
of the other Transaction Documents to which Borrower is a party nor the
consummation of the transactions herein or therein contemplated, nor compliance
with the terms and provisions hereof or thereof, will (i) contravene any
Requirements of Law to which Borrower is subject, or any judgment, decree,
franchise, order or permit applicable to Borrower, (ii) conflict or be
inconsistent with or result in any breach of, any of the terms, covenants, conditions
or provisions of, or constitute a default under, any material contractual
obligation to which Borrower is a party or by which Borrower or any of its
material Properties is bound or to which it may be subject, (iii) violate any
provision of the articles of incorporation or by-laws of Borrower or (iv)
result in the creation or imposition of (or the obligation to create or impose)
any lien upon any material Property of Borrower.


7.04                           Litigation.  Except as disclosed on Schedule 7.04,
there are no actions, suits, attachments or proceedings pending or, to Borrower’s
knowledge, threatened against Borrower or its Properties before any court,
tribunal or other governmental authority (including the Securities and Exchange
Commission of the United States and any regulatory commission of any
jurisdiction):  (a) with respect to this
Agreement, any other Transaction Document or the transactions contemplated
hereby or thereby or (b) which, if determined adversely to the interest of
Borrower, could be reasonably expected to have a Material Adverse Effect.


7.05                           Governmental
Approvals.  All regulatory consents,
authorizations, approvals, exemptions and filings required to be obtained or
made by Borrower under the federal and state laws of the United States for the
valid execution, delivery and performance of this Agreement and the Transaction
Documents have been obtained or made and are in full force and effect.


7.06                           Financial
Information.  Borrower’s Financial
Statements have been prepared in accordance with GAAP consistently applied, and
fairly present the financial situation of Borrower on the date of such
Financial Statement, and since January 31, 2005, no development



 21
 








or event has occurred which has had or could
reasonably be expected to have a Material Adverse Effect with respect to
Borrower.


7.07                           Absence
of Default.  No circumstance or event
has occurred and is continuing which would constitute a Default or an Event of
Default under this Agreement.


7.08                           Taxes,
Assessments and Fees.  Borrower has
timely filed all tax returns, reports or statements that are required to be
filed by it and has paid all taxes due pursuant such returns, reports or
statements except for (i) such taxes as are being contested in good faith by
proper proceedings, diligently conducted and against which adequate reserves in
accordance with GAAP, consistently applied, are maintained; and (ii) any
failure to effect or pay which would not materially adversely affect the
ability of Borrower to meet its obligations under this Agreement or the other Transaction
Documents to which Borrower is a party.


7.09                           Borrower
Status.  Borrower is not required to
be registered as an ‘investment company” within the meaning of the Investment
Company Act of 1940, as amended and Borrower is not a “holding company” or a “subsidiary
company” of a “holding company” as defined in the Public Utility Holding
Company Act of 1935, as amended.


7.10                           First
Priority Security Interest.  Borrower
represents and warrants that the Security Interest is a first priority security
interest, subject to no other security interests or liens other than purchase
money security interests and Permitted Liens.


7.11                           No
Liens.  Except for purchase money
security interests and Permitted Liens, there are no Liens on any material
Property of Borrower except such liens as have been or may be created under
this Agreement and the other Transaction Documents to which it is a party.


7.12                           ERISA
Compliance.  The consummation of the
transactions contemplated by this Agreement will not constitute a prohibited transaction
for which there is no available exemption within the meaning of Section 406 of
ERISA or Section 4975 of the Code. 
Borrower has not incurred nor is reasonably expected to incur any
liability under Title IV of ERISA to the PBGC (other than for the payment of
premiums to the PBGC).  Each Plan is in
compliance in all material respects with the applicable provisions of ERISA,
the Code and all other applicable federal and state laws and regulations
thereunder.  No Plan has incurred any
material accumulated funding deficiency (as defined in Section 412(a) of the
Internal Revenue Code of 1986, as amended), whether or not waived.  No event for which notice to the PBGC is
required has occurred and is continuing with respect to any Plan.  Borrower has (i) no material liability under
any multiple employer plan (within the meaning of Section 413(c) of the Code),
(ii) no liability under any Plan which provides for post-retirement welfare
benefits except as noted in Borrower’s financial statements, and (iii) no Plan
which provides for “parachute payments” (within the meaning of Section 280G(b)
of the Code).


7.13                           Environmental.  Borrower (i) is and has been in compliance
with all applicable Environmental Laws; (ii) represents that there is no civil,
criminal or administrative judgment, action, suit, demand, claim, hearing,
notice of violation, investigation, proceeding, notice or demand letter pending
or, to its knowledge, threatened against Borrower pursuant to Environmental
Laws which would reasonably be expected to result in a fine, penalty or other



 22















obligation, cost or expense which would result in a
Material Adverse Effect; and (iii) represents that there are no past or present
events, conditions, circumstances, activities, practices, incidents,
agreements, actions or plans which may prevent compliance with, or which have
given rise to or will give rise to any material liability under, such
Environmental Laws.


7.14                           Insurance.  All binders for policies of insurance of any
kind or nature owned by or issued to Borrower, including policies or bonds of
fire, theft, product liability, general liability, property, casualty, employee
fidelity, worker’s compensation, employee health and welfare insurance, are in
full force and effect and all such policies are of a nature and provide such
coverage as is required by any governmental authority and are on such basis and
have such limits per occurrence and in the aggregate as are sufficient and are
subject to such deductibles as are appropriate, given the size, character and
financial strength of Borrower and the customary practices of similar
companies.  Borrower is in compliance
with all terms and conditions of such policies, has paid all premiums when due
and has received no notice of termination of any such policies.


ARTICLE
VIII

EVENTS OF DEFAULT


8.01                           Events
of Default.  Any of the following
specified events shall constitute “Events of Default” for the purposes
of this Agreement:


(a)                                  Payment
Defaults.  Borrower fails to pay any
principal or interest of any Advance when due in accordance with the terms
hereof and the Wholesale Finance Plans.


(b)                                 Representations
and Warranties.  Any representation
or warranty made by Borrower or Guarantor herein or in any other Transaction
Document or which is contained in any certificate, document or financial or
other statement furnished at any time under or in connection with this
Agreement or any other Transaction Document shall prove to have been incorrect
in any material respect on or as of the date made or deemed made.


(c)                                  Other
Borrower Defaults.  Borrower fails to
perform or observe any term, covenant or agreement contained in this Agreement
or any other Transaction Document or any other agreement between Lender and
Borrower and, if such failure is capable of being remedied, such failure shall
continue unremedied for the lesser of (i) the period specified in the Wholesale
Finance Plans and (ii) a period of five (5) days after written notice thereof
has been given to Borrower by Lender, it being understood that no cure period
will be available for a breach of Borrower’s financial covenants set forth in
this Agreement


(d)                                 Default
Under Other Agreements.  Borrower
fails to pay any Obligations owed to Lender when due under any other agreement
with Lender, or breaches or defaults under any agreement for Indebtedness
(other than under a Transaction Document) or any agreement with a third party
and such failure, breach or default shall (i) consist of the failure to make
any payment in respect of any Indebtedness when due (whether at scheduled
maturity, by required prepayment, acceleration, demand or otherwise) after
giving effect to any applicable grace or notice period, or (ii) result in, or
continue unremedied for a period of time sufficient to permit, the acceleration
of the obligations owed by Borrower thereunder.



 23
 









(e)                                  Guarantor.  Guarantor dies or becomes incapacitated, or
notifies Lender of its intent to terminate, or terminates, the Guaranty, or
otherwise breaches any terms contained in any other agreement between Guarantor
and Lender.  Guarantor fails to perform
or observe any term, covenant or agreement contained in any Transaction
Document to which he is a party or any other agreement between Lender and
Guarantor after giving effect to any applicable grace or notice period.


(f)                                    Collateral
and Proceeds.  Borrower abandons the
Collateral or fails to deliver proceeds of Collateral to Lender as required by
this Agreement or the Wholesale Finance Plans.


(g)                                 Insolvency
of Borrower or Guarantor.  Borrower
or Guarantor shall admit in writing its (or his) inability to pay its or his
debts generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its (or his) creditors, or voluntarily suspend payment of its (or
his) obligations, consent to the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings of or relating to Borrower or Guarantor, as
applicable, or of or relating to all or substantially all of its (or his)
property; or a decree or order of a court or agency or supervisory authority
having jurisdiction over Borrower or Guarantor, as applicable, in an
involuntary case under any present or future federal or state bankruptcy,
insolvency or similar law or the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceeding, or for the winding-up or liquidation of its
affairs, shall have been entered against Borrower or Guarantor and if such
proceeding is being contested by Borrower or Guarantor, as applicable, in good
faith, such decree or order shall have remained in force undischarged or
unstayed for a period of 60 days or results in the entry of an order for relief
or any such adjudication or appointment.


(h)                                 Cessation
of Business.  Borrower shall cease to
carry on its business as currently operated.


(i)                                     Monetary
Judgments.  One or more judgments,
orders or decrees involving in the aggregate a liability of $100,000 or more
shall be rendered against Borrower or Guarantor, and either (i) enforcement
proceedings shall have been initiated by any creditor upon such judgment or
order or (ii) such judgment or order shall not have been vacated, discharged,
stayed or bonded pending appeal within 30 days from the entry thereof.


(j)                                     Validity
of Documents.  This Agreement, or any
other Transaction Document shall for any reason, cease to be in full force and
effect in any material respect or shall be declared by a court of competent
jurisdiction to be null and void in whole or in part, or the validity or
enforceability thereof shall be contested by Borrower or Guarantor or any
governmental authority, or Guarantor shall deny he has any or further liability
or obligation under the Guaranty; or it shall become unlawful for Borrower or
Guarantor to perform any of its (or his) obligations under this Agreement or
any other Transaction Document to which it (or he) is a party.



 24
 









(k)                                  Material
Adverse Effect.  Any Material Adverse
Effect with respect to the financial condition or results of operations of
Borrower or Guarantor which in the reasonable opinion of Lender creates the
likelihood of the occurrence of any other Event of Default.


(l)                                     Change
of Control.  Any Change of Control with
respect to Borrower.


8.02                           Remedies.  If any Event of Default has occurred and is
continuing:


(a)                                  Lender
may at any time, without notice or demand to Borrower, do any one or more of
the following:  terminate this Agreement
or any other agreement between the Lender and the Borrower, declare all or any
part of the debt Borrower owes Lender immediately due and payable, together
with all costs and expenses of Lender’s collection activity, including all
reasonable attorneys’ fees; exercise any rights under applicable law; and/or
cease extending any additional credit to Borrower which shall not be construed
to limit the discretionary nature of this credit facility.


(b)                                 Borrower
will segregate and keep the Collateral in trust for Lender, and will not
dispose of or use any Collateral, nor further encumber any Collateral.


(c)                                  Upon
Lender’s demand, Borrower will immediately deliver the Collateral to Lender at
a place specified by Lender, together with all related documents; or Lender
may, without notice or demand to Borrower, take immediate possession of the
Collateral together with all related documents, including the original Rental
Contacts assigned hereunder and Lender may collect in Lender’s name all amounts
owed to Borrower under such Rental Contracts.


(d)                                 Lender
may, without notice, apply a default finance charge to Borrower’s outstanding
principal indebtedness equal to the default rate specified in the Wholesale
Finance Plans, but not in excess of the highest lawful contract rate of
interest permitted under applicable law.


(e)                                  Lender
may exercise its rights under the Guaranty.


(f)                                    All
or any one or more of the rights, powers, privileges and other remedies
available to Lender against Borrower under the Transaction Documents or at law
or in equity may be exercised by Lender at any time and from time to time,
whether or not all or any of the Obligations owed to Lender shall be declared,
or be automatically, due and payable, and whether or not Lender shall have
commenced any foreclosure proceeding or other action for the enforcement of its
rights and remedies under any of the Transaction Documents.  Any such actions taken by Lender shall be
cumulative and concurrent and may be pursued independently, singly,
successively, together or otherwise, at such time and in such order as Lender
may determine in its discretion, to the fullest extent permitted by law,
without impairing or otherwise affecting the other rights and remedies of
Lender permitted by law, equity or contract or as set forth in the Transaction
Documents.


(g)                                 Borrower
grants Lender an irrevocable power of attorney to:  execute or endorse on Borrower’s behalf any
checks, drafts or other forms of exchange received as payment on any Collateral
for deposit in Lender’s account; execute financing statements, instruments,
Certificates of Title and Statements of Origin pertaining to the Collateral;
sell, assign, transfer,



 25
 









negotiate, demand, collect, receive, settle,
extend, or renew any amounts due on any of the Collateral; do anything Borrower
is obligated to do hereunder; initiate and settle any insurance claim
pertaining to the Collateral; and do anything to preserve and protect the
Collateral and Lender’s rights and interests therein.


8.03                           Delay
and Waiver.  No delay or omission to
exercise any remedy, right or power accruing upon an Event of Default, or the
granting of any indulgence or compromise by Lender shall impair any such
remedy, right or power hereunder or be construed as a waiver thereof, but any
such remedy, right or power may be exercised from time to time and as often as
may be deemed expedient.  A waiver of one
Default or Event of Default shall not be construed to be a waiver of any
subsequent Default or Event of Default or to impair any remedy, right or power
consequent thereon.


8.04                           Expenses
of Collection and Enforcement. 
Borrower shall be liable to Lender for all expenses of retaking,
holding, preparing for sale and selling the inventory and other Collateral, all
collection costs, court costs, legal expenses and reasonable attorneys’ fees
and any other expenses incurred by Lender in enforcing this Agreement
(including, without limitation, any such expenses and fees incurred by Lender
in connection with any refinancing or restructuring of the Obligations), in
collecting any Obligation owed by Borrower to Lender or in proceeding against
the Collateral.  The foregoing costs,
fees and expenses shall constitute a part of the Obligations and shall bear
interest at the default rate as specified in the Wholesale Finance Plans.  Borrower shall be liable for any deficiency
remaining due on the Obligations after disposition of the Collateral.  If any, Lender shall pay to Borrower any
surplus funds remaining after the Obligations are fully satisfied.


8.05                           Right
of Set-Off.  Notwithstanding any
other provision of this Agreement, upon the occurrence and during the
continuance of any Event of Default, Lender is hereby authorized at any time
and from time to time, without prior notice to Borrower and to the fullest
extent permitted by applicable law, to set-off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by Lender to or for the credit or the
account of Borrower against any and all of the Obligations of Borrower now or
hereafter existing under this Agreement, whether or not Lender shall have made
any demand hereunder and although such Obligations may be unmanned.  For clarity, the right of set-off herein
shall not limit the right of set-off under Section 3.02.


8.06                           Authority
to Perform.  If Borrower fails to
perform any covenant or obligation contained herein and such failure shall
continue for a period of five (5) Business Days after Borrower’s receipt of
written notice thereof from Lender, without in any way limiting Lender’s right
to exercise any of its rights, powers or remedies as provided hereunder, or
under any of the other Transaction Documents, Lender may, but shall have no
obligation to, perform, or cause performance of, such covenant or obligation,
and all costs, expenses, liabilities, penalties and fines of Lender incurred or
paid in connection therewith shall be payable by Borrower to Lender upon demand
and if not paid shall be added to the Obligations (and to the extent permitted
under applicable laws, secured by the Collateral) and shall bear interest
thereafter at the default rate as specified in the Wholesale Finance
Plans.  Notwithstanding the foregoing,
Lender shall have no obligation to send notice to Borrower of any such failure
other than as may be required by the Wholesale Finance Plans.



 26
 









8.07                           Power
of Attorney.  For so long as any
Obligations remain unpaid, Borrower hereby grants Lender an irrevocable power
of attorney, exercisable at any time, to (i) execute or endorse on Borrower’s
behalf any checks, drafts or other forms of exchange received as payment on any
Collateral for deposit in Lender’s account (ii) execute financing statements,
instruments, Certificates of Title and Statements of Origin pertaining to the
Collateral; (iii) sell, assign, transfer, negotiate, demand, collect, receive,
settle, extend, or renew any amounts due on any of the Collateral; (iv) take
any action that Borrower is obligated to do hereunder; (v) initiate and settle
any insurance claim pertaining to the Collateral; and (vi) do anything to
preserve and protect the Collateral and Lender’s rights and interests
therein.  Lender may provide to any third
party any standard credit information on Borrower that Lender may from time to
time possess in response to a request for a credit rating, and any other
information on Borrower that Lender may from time to time possess if required
by law.  Lender may obtain from any
Supplier, manufacturer or distributor, any credit, financial or other information
regarding Borrower that such Supplier, manufacturer or distributor may from
time to time possess.


8.08                           Subsequent
Documentation.  Borrower agrees that,
from time to time, upon the reasonable request of Lender, it will execute such
documents and instruments containing terms and conditions mutually satisfactory
to Borrower and Lender to further effectuate the terms hereof including,
without limitation, to provide any omitted information and to correct errors in
any documents or agreements between Borrower and Lender.


ARTICLE
IX

MISCELLANEOUS


9.01                           Patriot Act.


(a)                                  Borrower
will use its good faith and commercially reasonable efforts to comply with the
Patriot Act and all applicable requirements of governmental authorities having
jurisdiction over Borrower, including those relating to money laundering and
terrorism.  Lender shall have the right
to audit Borrower’s compliance with the Patriot Act and all applicable
requirements of governmental authorities, including those relating to money
laundering and terrorism, and Borrower shall, upon Lender’s request, obtain for
Lender the right to audit such compliance on the part of Guarantor.  In the event that Borrower fails to comply
(or cause such compliance) with the Patriot Act or any such requirements of
governmental authorities, then Lender may, at its option, cause Borrower to
comply or Lender may compel compliance by Guarantor therewith and any and all
reasonable costs and expenses incurred by Lender in connection therewith shall
be secured by the Collateral and shall be immediately due and payable.


(b)                                 Neither
Borrower nor any owner of a direct or indirect interest in Borrower (a) is
listed on any Government Lists (as defined below), (b) is a person who has been
determined by competent authority to be subject to the prohibitions contained
in Presidential Executive Order No. 13224 (Sept. 23, 2001) or any other similar
prohibitions contained in the rules and regulations of OFAC or in any enabling
legislation or other Presidential Executive Orders in respect thereof, (c) has
been previously indicted for or convicted of any felony involving a crime or
crimes of moral turpitude or for any Patriot Act Offense (as defined below), or
(d) is currently under investigation by any governmental authority for alleged
criminal



 27
 









activity. 
For purposes hereof, the term “Patriot Act Offense” means any
violation of the criminal laws of the United States of America or of any of the
several states, or that would be a criminal violation if committed within the
jurisdiction of the United States of America or any of the several states,
relating to terrorism or the laundering of monetary instruments, including any
offense under (a) the criminal laws against terrorism; (b) the criminal laws
against money laundering, (c) the Bank Secrecy Act, as amended, (d) the Money
Laundering Control Act of 1986, as amended, or the (e) Patriot Act.  Patriot Act Offense also includes the crimes
of conspiracy to commit, or aiding and abetting another to commit, a Patriot
Act Offense.  For purposes hereof, the
term “Government Lists” means (i) the Specially Designated Nationals and
Blocked Persons Lists maintained by OFAC (ii) any other list of terrorists,
terrorist organizations or narcotics traffickers maintained pursuant to any of
the Rules and Regulations of OFAC, or (iii) any similar lists maintained by the
United States Department of State, the United States Department of Commerce or
any other government authority or pursuant to any Executive Order of the
President of the United States of America.


9.02                           Time
of Essence.  Time is of the essence regarding
Borrower’s performance of its obligations to Lender.


9.03                           Notices.


(a)                                  Except
as otherwise expressly provided herein, all notices, requests, demands or other
communications to or upon any party hereunder shall be in writing (including
facsimile transmission) and shall be sent by overnight courier service,
transmitted by facsimile or delivered by hand to such party at its address or
facsimile number set forth on the signature pages hereof or at such other
address or facsimile number as such party may designate by notice to the other
parties hereto.


(b)                                 Unless
otherwise expressly provided for herein, each such notice, request, demand or
other communication shall be effective (i) if sent by overnight courier service
or delivered by hand, upon delivery, (ii) if given by facsimile, when
transmitted to the facsimile number specified pursuant to paragraph (a)
above and confirmation of receipt of a legible copy is received, or (iii) if
given by any other means, when delivered at the address specified pursuant to paragraph
(a) above.


9.04                           Amendments
and Waivers.  Except for the
Wholesale Finance Plans, no amendment or waiver of any provision of this
Agreement, and no consent to any departure by Borrower from the terms of this
Agreement, shall in any event be effective unless the same shall be in writing
signed by Borrower and Lender, and then such amendment, waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given.  All of the terms and
conditions of the Wholesale Finance Plans shall be established at Lender’s sole
discretion and are subject to change without prior notice at any time, and from
time to time, by Lender, also at its sole discretion.  Lender may terminate the Wholesale Finance
Plans without prior notice at any time at its sole discretion.  Changes in the Wholesale Finance Plans
instituted by Lender that would have the effect of increasing the interest
rates or fees payable by Borrower under the Wholesale Finance Plans, or
amending the timing, or increasing the amount, of future periodic payments to
Lender under the Wholesale Finance Plans, shall only be applied prospectively
from the effective date of such changes as established by Lender.



 28
 









9.05                           Entire
Agreement.  This Agreement, together
with the Wholesale Finance Plans, the other Transaction Documents (excluding
the Subordinated Note Purchase Agreement) and all documents and certificates
contemplated herein shall be deemed the complete and final expression of the
agreement between Lender and Borrower as to matters herein contained and
relative thereto, and supersede all previous agreements between them pertaining
to such matters.  It is clearly
understood that no promise or representation not contained herein was an
inducement to either Borrower or Lender or was relied on by either of them in
entering into this Agreement.


9.06                           Counsel; Payment of
Expenses.


(a)                                  Lender
reserves the right to retain counsel to prepare, negotiate, review and approve,
as to form and content, all of the Transaction Documents.  Borrower agrees, whether or not the
transactions contemplated hereby shall be consummated, upon demand to reimburse
and hold Lender harmless from liability for the payment of all reasonable
out-of-pocket costs and expenses incurred in connection with the preparation,
execution and delivery of this Agreement and any other documents relating to
the transactions contemplated hereby, including (i) the reasonable fees, travel
expenses, courier charges, communication expenses, expenses associated with the
execution of this Agreement and all other out-of-pocket expenses and (ii) all
fees and disbursements of counsel provided, however, Lender’s counsel fees
payable by Borrower shall be limited to an amount not to exceed $50,000
(without duplication of expense reimbursement under the Subordinated Note
Purchase Agreement).


(b)                                 Borrower
further agrees, upon demand communicated through Lender for the payment of all
reasonable out-of-pocket costs and expenses incurred by any of them in
connection with the enforcement of, or the amendment, modification, waiver
and/or preservation of any rights under, this Agreement or any other
Transaction Document or otherwise in connection with the transactions
contemplated hereby, including all fees and disbursements of counsel, and all
stamp taxes (including interest and penalties, if any), recording taxes and
fees and filing taxes and fees which may be payable in respect thereof.


9.07                           Indemnification; Damages.


(a)                                  Borrower
agrees to indemnify Lender and their respective directors, officers, agents and
employees (each an “Indemnified Party”) and hold each Indemnified Party
harmless from and against any and all liabilities, losses, claims, damages,
penalties, actions, suits, costs and expenses (including reasonable attorneys’
fees and expenses), whether incurred in respect of claims by third parties or
otherwise) or judgments of any nature arising from (i) product liability and/or
personal injury arising out of the use of the Collateral by any Person; (ii)
breach by Borrower of any warranty to a third party with respect to any
Collateral (including but not limited to a claim of latent or patent defect);
(iii) breach by Borrower of any representations, warranties, covenants or other
obligations or agreements contained in this Agreement or any other Transaction
Document; (iv) Borrower’s performance of any reconditioning or remarketing
services provided by Borrower; (v) failure of Borrower to perform its
obligations with respect to any warranty, maintenance, service or other similar
agreements with any Person; (vi) any governmental fees, charges, taxes or
penalties levied or imposed with respect to any of the Collateral; and (vii)
failure of Borrower to comply with any applicable federal, state or local law
or regulation.



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(b)                                 If
any action, suit or proceeding is brought against the Indemnified Party,
Borrower may, and, if within a reasonable time is requested in writing to do
so, shall, and at its expense, resist and defend such action, suit or
proceeding or cause the same to be resisted and defended by counsel designated
by Borrower (which counsel shall be reasonably satisfactory to such Indemnified
Party), and Borrower shall furnish Lender with such information relating to the
conduct or status of such defense as Lender or its counsel may from time to
time reasonably request.  If Borrower
does not resist or defend such action, suit or proceeding as provided in the
immediately preceding sentence, the Indemnified Party may elect to resist or
defend such action, suit or proceeding with counsel designated by it at
Borrower’s expense.


(c)                                  No
party hereto shall be liable to the other party for any punitive,
consequential, incidental, special or similar damages in connection with this
Agreement or the Wholesale Finance Plans, except to the extent that such
damages are the result of or arise from a third party action for which Lender
is entitled to indemnification under subsection (a) above.


9.08                           Successor and Assigns.


(a)                                  The
provisions of this Agreement shall be binding upon Borrower and its successors
and assigns and shall inure to the benefit of Lender and their respective
successors and assigns, except that Borrower may not assign or otherwise
transfer any of its rights or obligations under this Agreement without the
prior written consent of Lender.


(b)                                 Lender
may assign its rights hereunder, in whole or in part, at any time without
notice to Borrower and without Borrower’s consent.  Lender may grant to one or more third parties
(each a “Participant”) participating interests in Lender’s Advances.  In the event of any such grant by Lender of a
participating interest to a Participant whether or not upon notice to Borrower,
Lender’s obligations under this Agreement to the other parties hereto shall
remain unchanged and Lender shall remain solely responsible for the performance
of its obligations hereunder, and Borrower shall continue to deal solely and
directly with Lender in connection with its rights and obligations under this
Agreement.


9.09                           Governing
Law.  This Agreement shall be
governed by and construed in accordance with the laws of the State of Wisconsin
without regard to its conflict of laws rules.


9.10                           Counterparts.  This Agreement may be executed in any number
of counterparts and by the different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.


9.11                           Severability.  Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction, and the remaining
portion of such provision and all other remaining provisions hereof will be
construed to render them enforceable to the fullest extent permitted by law.



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9.12                           Survival
of Representations and Agreements. 
All representations and warranties made herein or in any other
Transaction Document shall survive the execution and delivery of this Agreement
and the Transaction Documents, and the making of the Advances hereunder.


9.13                           No
Agency.  Nothing in this Agreement
shall be construed as constituting Borrower an agent or legal representative of
Lender or any of its Affiliates for any purpose whatsoever.  Borrower has no right or authority to assume
or create any obligation or responsibility, express or implied, on behalf of or
in the name of Lender, or to bind Lender in any manner whatsoever.  This Agreement does not constitute a joint
venture, partnership, association or agency between Lender and Borrower.


9.14                           Publicity.  All news releases, publicity or advertising
by Borrower or its Affiliates through any media intended to reach the general
public, which refers to any of the Transaction Documents, the Advances, Lender
or a Participant shall be subject to the prior written approval of Lender.  Lender shall have the right to issue any of
the foregoing without Borrower’s approval.


9.15                           Conflict;
Construction of Documents.  In the
event of any conflict between the provisions of this Agreement and any of the
other Transaction Documents, the provisions of this Agreement shall
control.  In the event of any conflict
between the provisions of this Agreement and the Wholesale Finance Plans, the
provisions of the Wholesale Finance Plans shall control.  The parties hereto acknowledge that each is
represented by separate counsel in connection with the negotiation and drafting
of the Transaction Documents and that the Transaction Documents shall not be
subject to the principle of construing their meaning against the party that
drafted them.


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


	
  

  	
  CNH CAPITAL AMERICA LLC,

  
	
   

  	
  as Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
    Name:

  
	
   

  	
    Title: President

  
	
   

  	
   

  
	
   

  	
  Address for
  Notices

  
	
   

  	
   

  
	
   

  	
  CNH Capital
  America LLC

  
	
   

  	
  233 Lake Avenue

  
	
   

  	
  Racine, WI 53403

  
	
   

  	
  Attention:
  Senior Director Commercial Finance

  
	
   

  	
  Telephone.
  262-636-5257

  
	
   

  	
  Facsimile:
  262-636-6284

  



 



 31
 









This page is a signature page for the WHOLESALE FLOOR
PLAN CREDIT FACILITY AND SECURITY AGREEMENT dated as of February 21, 2006
between CNH CAPITAL AMERICA LLC and TITAN MACHINERY, INC.


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


	
  

  	
  TITAN MACHINERY,
  INC.,

  
	
   

  	
  as Borrower

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ted O.
  Christianson

  
	
   

  	
    Name:  Ted O.
  Christianson

  
	
   

  	
    Title: 
  CFO and Secretary

  
	
   

  	
   

  
	
   

  	
  Address for
  Notices

  
	
   

  	
   

  
	
   

  	
  Titan Machinery,
  Inc.

  
	
   

  	
  Rocking Horse
  Circle

  
	
   

  	
  4645 8th Avenue
  Southwest, Suite 1

  
	
   

  	
  Fargo, North
  Dakota 58103-7256

  
	
   

  	
  Attention:  David Meyer, CEO and Chairman

  
	
   

  	
  Telephone:

  
	
   

  	
  Facsimile:

  



 



 32
 









This page is a signature page for the WHOLESALE FLOOR
PLAN CREDIT FACILITY AND SECURITY AGREEMENT dated as of February 21, 2006
between CNH CAPITAL AMERICA LLC and TITAN MACHINERY, INC.


Solely for purposes of Section 2.01(a):


	
  CNH AMERICA LLC,

  
	
  as
  successor-in-interest to Case, LLC

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
    Name:

  
	
    Title: V.P., Associate General Counsel

  



 



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