Document:

TITN-2014.7.31 10Q EX 10.3

	
		
	
	644 East Beaton Drive      
West Fargo, North Dakota 58078
Phone: (701) 356-0130
Fax: (701) 356-0139

	 

Mark Kalvoda 
c/o Titan Machinery Inc.
644 East Beaton Drive
West Fargo, ND 58078-2648

Dear Mark: 

This letter agreement confirms our discussions regarding your continuing as the Chief Financial  Officer of Titan Machinery Inc. (the “Company”), and sets out the terms and conditions of your employment with the Company, as follows: 
	
			
	 
	 
	 

	Title:
	 
	You will serve as the Company’s Chief Financial Officer (“CFO”).

	 
	 
	 

	Term:
	 
	Unless terminated by either party as provided in this letter agreement, the term of your employment as CFO of the Company under this letter agreement shall be for a rolling three-year period (the “Term”) as follows:  the initial term shall commence on February 1, 2014 (“Effective Date”) and end on January 31, 2017, which end date shall be automatically extended by one year on each anniversary of the Effective Date.  Thus, for example, on February 1, 2014, the end date shall be extended to January 31, 2017, and on February 1, 2015, the end date shall be extended to January 31, 2018.  Such automatic extensions shall continue unless either party provides the other with written notice terminating the automatic extensions prior to August 1 of any year.  

	 
	 
	 

	Responsibilities:
	 
	During your employment with the Company as CFO, you will report to the Chief Executive Officer of the Company (the “CEO”) and will be responsible for the overall operations and direction and financial matters of the Company. You agree to serve the Company faithfully and to the best of your ability, and to devote your full working time, attention and efforts to the business of the Company. You further agree to make yourself available as needed, in a timely manner, to address business issues that may arise.  You may, to a reasonable extent, participate in charitable activities, personal investment activities and outside businesses that are not competitive with the business of the Company and serve on boards of directors, so long as such activities and directorships do not interfere with the performance of your duties and responsibilities to the Company; provided, that you shall report on all such activities and directorships to the CEO at least annually.

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	Representations:
	 
	By signing below, you represent and confirm that you are under no contractual or legal commitments that would prevent you from fulfilling your duties and responsibilities to the Company as CFO.

	 
	 
	 

	Initial Base Salary:
	 
	You will be paid a base salary as established by the Compensation Committee for services performed, in accordance with the regular payroll practices of the Company with annual review by the Compensation Committee of the Board (the “Committee”). Your performance and base salary will be reviewed by the Committee annually and may be adjusted upward from time to time in the discretion of the Committee, but will not be reduced during the Term.

	 
	 
	 

	Incentive Bonus:
	 
	For each full fiscal year of the Company that you are employed during the Term, you will be eligible for an annual cash incentive award payable pursuant to the terms and conditions established by the Committee on an annual basis.  Any annual incentive bonus earned for a fiscal year will be paid to you within two and one-half (21⁄2) months after the end of such fiscal year.

	 
	 
	 

	Long-Term Equity Incentive:
	 
	On June 1, 2015 and on June 1 of each year thereafter, or such other date as determined by the Committee, that this letter agreement is in effect, you will be entitled to receive an equity award, as determined by the Committee.  Each award shall be granted in accordance with the terms of the Company’s Equity Grant Policy.  The award will be subject to such terms (including, without limitation, vesting, risk of forfeiture, or similar terms) as shall be determined by the Committee.

	 
	 
	 

	Benefits:
	 
	During your employment with the Company, you will be eligible to participate in the employee benefit plans and programs generally available to other executive officers of the Company, and in such other employee benefit plans and programs to the extent that you meet the eligibility requirements for each individual plan or program and subject to the provisions, rules and regulations applicable to each such plan or program as in effect from time to time. The plans and programs of the Company may be modified or terminated by the Company in its discretion.

	 
	 
	 

	Vacation:
	 
	During your employment with the Company, you will receive vacation time off in accordance with the policies and practices of the Company.  Vacation time shall be taken at such times so as not to unduly disrupt the operations of the Company.  While away from the office during vacation time or otherwise, you agree that business issues may arise that require your attention, whether remotely or in person.

	 
	 
	 

	Office Location:
	 
	Your employment will be based at the Company’s headquarters in West Fargo, North Dakota.  Of course, regular travel will be required in the course of performing your duties and responsibilities as CFO.

	 
	 
	 

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	Confidential Information:
	 
	You have had and will continue to have access to and familiarity with the confidential and proprietary information of the Company.  You agree that all Confidential Information, whether or not in writing, concerning the Company is and shall be the exclusive property of the Company. For purposes of this paragraph, the term “Confidential Information” means information that is not generally known and that is proprietary to the Company or that has been made available to the Company in a manner reasonably understood to require confidential treatment, including, without limitation, trade secret information about the Company and its products;  information relating to the business of the Company or anticipated to be conducted by the Company; any of the Company’s past, current or anticipated products; information about the Company’s research, development, manufacturing, purchasing, accounting, engineering, marketing, selling, leasing, servicing, discoveries, improvements, inventions, designs, graphs, drawings, methods, techniques, plans, strategies, customer lists, licensee lists, marketing plans, pricing and other policies, forecasts, budgets, customer information, financial data, personnel data; and any other material relating to Confidential Information, however documented.  All information that you have a reasonable basis to consider Confidential Information or that is treated by the Company as being Confidential Information shall be presumed to be Confidential Information, without regard to the manner in which you obtain access to such information.  

During the time you are employed with the Company and for a period of ten (10) years following the date your employment with the Company ends for any reason (except with respect to trade secrets, which you agree to keep confidential for so long as such information remains a trade secret), and except (i) in the ordinary course of performing your employment duties for the Company, (ii) as expressly authorized in writing by the Board, or (iii) as compelled to disclose Confidential Information by judicial or governmental authority, you agree not to disclose any Confidential Information to persons or entities outside the Company, or to use any Confidential Information for any other purpose, either during or after your employment, unless and until such Confidential Information has become public knowledge without fault by you. You also agree to deliver all written, electronic, magnetic, computer or other recorded or tangible material and copies thereof containing Confidential Information to the Company upon the earlier of a request by the Company or the date your employment with the Company ends. You further agree to treat all confidential information and know-how of any affiliate, employee, customer, contractor, vendor, or supplier of the Company, as applicable, in the same manner as the Confidential Information.

	 
	 
	 

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	Noncompetition:
	 
	In consideration of you and the Company entering into this letter agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and to protect the reasonable business interests of the Company, you agree that while you are an employee of the Company, and for a period of 24 months after termination of your employment for any reason, you will not directly or indirectly, whether on your own behalf or that of a third party (other than the Company), engage in the business (whether as an owner of, or as employee, director or officer of or consultant to any business, other than the Company, that is engaged in the business), of owning or operating agricultural or construction equipment stores in any state or Canadian province in which the Company or its subsidiaries owns or operates any agricultural or construction equipment stores during the term of your employment.  You agree that the Company will be entitled to equitable relief without the requirement of posting a bond to enforce the terms of such noncompetition restriction, in addition to any other rights or remedies that the Company may have.  In the event that any provision of this noncompetition clause (or any other provision contained in this letter agreement) shall be determined by any court of competent jurisdiction to be unenforceable, such provision shall be interpreted to extend only over the maximum period of time for which it may be enforceable and/or over the maximum geographical area as to which it may be enforceable and/or to the maximum extent in all other respects as to which they may be enforceable, all as determined by such court in such action so as to be enforceable to the extent consistent with then applicable law.  This noncompetition clause shall survive the termination of your employment, and shall apply whether the termination of your employment is voluntary or involuntary and regardless of the reason for such termination.

	 
	 
	 

	Non-Solicitation of Employees:
	 
	You agree that for a period of three (3) years following your employment with the Company, you will, not directly or indirectly, either for yourself or any other person or entity solicit, induce, or attempt to induce any employee of the Company to leave the employ of the Company.

	 
	 
	 

	Termination:
	 
	You may terminate the employment relationship during the Term with at least 60 days’ written notice. The Company may terminate the employment relationship during the Term for Cause at any time with written notice or without Cause with at least 60 days’ written notice.  Upon termination of your employment by either party for any reason, you will promptly resign any and all positions you then hold as officer or director of the Company or any of its affiliates.

	 
	 
	 

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	Severance:
	 
	In case of involuntary termination of your employment by the Company without Cause prior to the expiration of the Term or in the case of voluntary resignation of your employment for Good Reason prior to the expiration of the Term (each a “Qualifying Termination”), the Company will pay you as severance pay an amount equal to the sum of (a) your annual base salary at the rate in effect on your last day of employment plus (b) the annual incentive bonus last paid to you preceding the Qualifying Termination.  In addition, upon a Qualifying Termination the Company will, for a period of 12 months following the effective date of termination of your employment, allow you to continue to participate in the Company’s group medical and dental plans at the Company’s expense (with premiums payable on a monthly basis), to the extent you were a participant as of your last day of employment; however, if your participation in any such plan is barred or not permitted under the terms thereof, the Company will arrange to provide you with substantially similar coverage at its expense up to the expense. Benefits provided by the Company may be reduced if you become eligible for comparable benefits from another employer or third party.

	 
	 
	 

	 
	 
	Payment by the Company of any severance pay or premium reimbursements under this paragraph will be conditioned upon you (1) signing and not revoking a full release of all claims against the Company, its affiliates, officers, directors, employees, agents and assigns, substantially in the form attached to this letter agreement as Exhibit A, within 30 days of the Qualifying Termination, (2) complying with your obligations under this letter agreement, including the noncompetition covenant herein, or any other agreement continuing between you and the Company then in effect, (3) cooperating with the Company in the transition of your duties, and (4) agreeing not to disparage or defame the Company, its affiliates, officers, directors, employees, agents, assigns, products or services.

	 
	 
	 

	 
	 
	Any severance pay will be paid to you over 12 months in accordance with the Company’s normal payroll practices commencing on the first day of the month coincident with or following the 40th day after the Qualifying Termination,.  All payments under this severance clause are subject to applicable withholding for income and FICA taxes and any other proper deductions.  Notwithstanding the foregoing, if any of the amounts described in this severance clause are treated as deferred compensation subject to the requirements of Section 409A of the Internal Revenue Code, as amended (the “Code”), and the Company determines that you are a “specified employee” as defined in Section 409A of the Code, then such amounts which are payable within the first six months following your “separation from service” as determined under Section 409A of the Code will be accumulated and will be paid on the first day of the seventh month following your separation from service.

	 
	 
	 

	 
	 
	For purposes of this letter agreement, “Cause” and “Good Reason” have the following definitions:

	 
	 
	 

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	“Cause” means a determination in good faith by the Company  of the existence of one or more of the following: (i) commission by you of any act constituting a felony; (ii) any intentional and/or willful act of fraud or material dishonesty by you related to, connected with or otherwise affecting your employment with the Company, or otherwise likely to cause material harm to the Company or its reputation; (iii) the willful and/or continued failure, neglect, or refusal by you to perform in all material respects your duties with the Company as an employee, officer or director, or to fulfill your fiduciary responsibilities to the Company, which failure, neglect or refusal has not been cured within fifteen (15) days after written notice thereof to you from the Company; or (iv) a material breach by you of the Company’s policies or codes of conduct or of your material obligations under this letter agreement or any other agreement between you and the Company.

	 
	 
	 

	 
	 
	“Good Reason” means any one or more of the following occur without your consent: (i) the assignment to you of material duties inconsistent with your status or position as CFO, or other action that results in a substantial diminution in your status or position, which has not been cured by the Company within fifteen (15) days after written notice thereof to the Company from you; (ii) the relocation of your principal office for Company business to a location more than forty (40) miles from the Company’s current headquarters; (iii) a material reduction in the sum of your base salary and your target cash incentive compensation, other than a general reduction in base salary and/or the target cash incentive compensation that affects all similarly situated executives in substantially the same proportions; or (iv) a material breach by the Company of any terms or conditions of this letter agreement. A condition will not be considered “Good Reason” unless you give the Company written notice of the condition within 30 days after the condition comes into existence and the Company fails to substantially remedy the condition within 30 days after receiving your written notice.

	 
	 
	 

	 
	 
	In the event of termination of your employment by the Company for Cause, resignation by you other than for Good Reason, or termination due to your death or any disability for which you are qualified for benefits under the Company’s group long-term disability program, the Company’s only obligation hereunder shall be to pay such compensation and provide such benefits as are earned by you through the date of termination of employment.

	 
	 
	 

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	Non-Vested Stock Options and Restricted Stock:
	 
	In the event of a Qualifying Termination, the Company agrees that, your non-vested stock options and restricted equity awards that vest with the passage of time will not be forfeited due to your separation of employment and will be earned by you under the normal vesting schedule, conditioned upon you:  

(a)    signing and not revoking a full release of all claims against the Company, its affiliates, officers, directors, employees, agents and assigns, substantially in the form attached to this letter agreement as Exhibit A, within 30 days of the Qualifying Termination,

(b)    cooperating with the Company in the transition of your duties, 

(c)    agreeing not to disparage or defame the Company, its affiliates, officers, directors, employees, agents, assigns, products or services, 

(d)    not directly or indirectly, whether on your own behalf or that of a third party (other than the Company), engaging in the business (whether as an owner of, or as employee, director or officer of or consultant to any business, other than the Company, that is engaged in the business), of owning or operating agricultural or construction equipment stores in any state in which the Company or its subsidiaries owns or operates any agricultural or construction equipment stores during the term of your employment; and
 
(e)    not directly or indirectly, either for yourself or any other person or entity solicit, inducing, or attempting to induce any employee of the Company to leave the employ of the Company.

In the event of any non-compliance with the obligations set forth above, your then non-vested restricted equity awards will immediately be forfeited.  

	 
	 
	 

	Indemnification:
	 
	The Company will indemnify you in connection with your duties and responsibilities for the Company in accordance with the Company’s bylaws and as set forth in any indemnification agreement between you and the Company from time to time.

	 
	 
	 

	Taxes:
	 
	The Company may withhold from any compensation payable to you in connection with your employment such federal, state and local income and employment taxes as the Company shall determine are required to be withheld pursuant to any applicable law or regulation.

	 
	 
	 

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	Remedies:
	 
	You acknowledge that your covenants and obligations hereunder are of special, unique, and intellectual character, which gives them a peculiar value, the actual or threatened breach of which may result in substantial injuries and damages, for which monetary relief may fail to provide an adequate remedy at law.  Accordingly, if the Company institutes any action or proceeding to enforce the provisions hereof, seeking injunctive relief or specific performance, you hereby waive the claim or defense that the Company has an adequate remedy at law, and you will not urge in any such action or proceeding the claim or defense that the Company has an adequate remedy at law.  Nothing in this provision limits the parties’ rights to seek any and all remedies available under applicable law, including equitable and legal relief, either separately or cumulatively, for breach or threatened breach of contract.

	 
	 
	 

	Section 409A:

	 
	Notwithstanding anything to the contrary in this letter agreement, and to the maximum extent permitted by law, this letter agreement shall be interpreted in such a manner that all payments to you are either exempt from, or comply with, Section 409A of the Code and the regulations and other interpretive guidance issued thereunder (collectively, “Section 409A”), including without limitation any such regulations or other guidance that may be issued in the future.  It is intended that payments under this Agreement will be exempt from Section 409A, including the exceptions for short-term deferrals, separation pay arrangements, reimbursements, and in-kind distributions, so as not to subject you to payment of interest or any additional tax under Section 409A.  To the extent any reimbursements or in-kind benefit payments under this Agreement are subject to Section 409A, such reimbursements and in-kind benefit payments shall be made in accordance with Treasury Regulation §1.409A-3(i)(1)(iv) (or any similar or successor provisions).  In furtherance thereof, if the provision of any reimbursement or in-kind benefit payment hereunder that is subject to Section 409A at the time specified herein would subject such amount to any additional tax under Section 409A, the provision of such reimbursement or in-kind benefit payment shall be postponed to the earliest commencement date on which the provision of such amount could be made without incurring such additional tax.  In addition, to the extent that any regulations or other guidance issued under Section 409A (after application of the previous provisions of this paragraph) would result in you being subject to the payment of interest or any additional tax under Section 409A, the parties agree, to the extent reasonably possible, to amend this letter agreement to the extent necessary (including retroactively) in order to avoid the imposition of any such interest or additional tax under Section 409A, which amendment shall have the minimum economic effect necessary and be reasonably determined in good faith by the Company and you.  You acknowledge and agree that the Company has made no representation to you as to the tax treatment of the compensation and benefits provided pursuant to this letter agreement and that you are solely responsible for all taxes due with respect to such compensation and benefits.

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	Applicable Law:
	 
	This letter agreement shall be interpreted and construed in accordance with the laws of the State of Delaware.

	 
	 
	 

	Construction:
	 
	Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of this Agreement.

	 
	 
	 

	Entire Agreement:
	 
	This letter agreement and the documents referenced herein constitute the entire agreement between the parties, and supersedes all prior discussions, agreements, and negotiations between us. No amendment or modification of this letter agreement will be effective unless made in writing and signed by you and an authorized officer or director of the Company.

[signature page follows] 

9

 
Sincerely, 

TITAN MACHINERY INC.

By:  /s/ Stanley Dardis                                    
Stanley Dardis
Chair of the Compensation Committee

I accept and agree to the terms and conditions of employment with Titan Machinery Inc. as set forth above. 
	
			
	 
	 
	 

	 
	 
	 

	/s/ Mark Kalvoda            
Mark Kalvoda
	 
	September 5, 2014          
Dated

10

Exhibit A
FORM OF RELEASE BY MARK KALVODA 

Definitions. I intend all words used in this Release to have their plain meanings in ordinary English. Specific terms that I use in this Release have the following meanings: 

	
						
	 
	A.
	 
	I, me, and my include both me (Mark Kalvoda) and anyone who has or obtains any legal rights or claims through me.

	 
	 
	 
	 

	 
	B.
	 
	Titan means Titan Machinery Inc., any company related to Titan Machinery Inc. in the present or past (including without limitation, its predecessors, parents, subsidiaries, affiliates, joint venture partners, and divisions), and any successors of Titan Machinery Inc.

	 
	 
	 
	 

	 
	C.
	 
	Company means Titan; the present and past officers, directors, committees, shareholders, and employees of Titan; any company providing insurance to Titan in the present or past; the present and past fiduciaries of any employee benefit plan sponsored or maintained by Titan (other than multiemployer plans); the attorneys for Titan; and anyone who acted on behalf of Titan or on instructions from Titan.

	 
	 
	 
	 

	 
	D.
	 
	Agreement means the letter agreement between me and Titan with an Effective Date of February 1, 2014, including all of the documents attached to such agreement.

	 
	 
	 
	 

	 
	E.
	 
	My Claims mean all of my rights that I now have to any relief of any kind from the Company, whether I now know about such rights or not, including without limitation:

	 
	1.
	 
	all claims arising out of or relating to my employment with Titan or the termination of that employment;

	 
	 
	 
	 

	 
	2.
	 
	all claims arising out of or relating to the statements, actions, or omissions of the Company;

	 
	 
	 
	 

	 
	3.
	 
	all claims for any alleged unlawful discrimination, harassment, retaliation or reprisal, or other alleged unlawful practices arising under any federal, state, or local statute, ordinance, or regulation, including without limitation, claims under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, 42 U.S.C. § 1981, the Employee Retirement Income Security Act, the Equal Pay Act, the Worker Adjustment and Retraining Notification Act, the Sarbanes-Oxley Act, the Family and Medical Leave Act, the Fair Credit Reporting Act, the North Dakota Human Rights Act, N.D. Stat. § 14.02-4-01 et seq., the North Dakota Equal Pay Act, N.D. Stat. § 34-06.1-01 et seq., the North Dakota Age Discrimination Act, N.D. Stat. § 34-01-17, and workers’ compensation non-interference or non-retaliation statutes;

	 
	4.
	 
	all claims for alleged wrongful discharge; breach of contract; breach of implied contract; failure to keep any promise; breach of a covenant of good faith and fair dealing; breach of fiduciary duty; estoppel; my activities, if any, as a “whistleblower”; defamation; infliction of emotional distress; fraud; misrepresentation; negligence; harassment; retaliation or reprisal; constructive discharge; assault; battery; false imprisonment; invasion of privacy; interference with contractual or business relationships; any other wrongful employment practices; and violation of any other principle of common law;

A-1

	
						
	 
	 
	 
	 

	 
	5.
	 
	all claims for compensation of any kind, including without limitation, bonuses, commissions, stock-based compensation or stock options, vacation pay and paid time off, perquisites, and expense reimbursements;

	 
	 
	 
	 

	 
	6.
	 
	all claims for back pay, front pay, reinstatement, other equitable relief, compensatory damages, damages for alleged personal injury, liquidated damages, and punitive damages; and

	 
	 
	 
	 

	 
	7.
	 
	all claims for attorneys’ fees, costs, and interest.

	 
	 
	 
	However, My Claims do not include any claims that the law does not allow to be waived; any claims that may arise after the date on which I sign this Release; any rights I may have to indemnification from Titan as a current or former officer, director or employee of Titan; any claims for payment of severance benefits under the Agreement; any rights I have to severance pay or benefits under the Agreement; or any claims I may have for earned and accrued benefits under any employee benefit plan sponsored by the Company in which I am a participant as of the date of termination of my employment with Titan.

Consideration. I am entering into this Release in consideration of Titan’s obligations to provide me certain severance benefits as specified in the Agreement. I will receive consideration from Titan as set forth in the Agreement if I sign and do not rescind this Release as provided below. I understand and acknowledge that I would not be entitled to the consideration under the Agreement if I did not sign this Release. The consideration is in addition to anything of value that I would be entitled to receive from Titan if I did not sign this Release or if I rescinded this Release. I acknowledge and represent that I have received all payments and benefits that I am entitled to receive (as of the date of this Release) by virtue of any employment by the Company. 

Agreement to Release My Claims. In exchange for the consideration described in the Agreement, I give up and release all of My Claims. I will not make any demands or claims against the Company for compensation or damages relating to My Claims. The consideration that I am receiving is a fair compromise for the release of My Claims. 

Cooperation. Upon the reasonable request of the Company, I agree that I will (i) timely execute and deliver such acknowledgements, instruments, certificates, and other ministerial documents (including without limitation, certification as to specific actions performed by me in my capacity as an officer of the Company) as may be necessary or appropriate to formalize and complete the applicable corporate records; (ii) reasonably consult with the Company regarding business matters that I was involved with while employed by the Company; and (iii) be reasonably available, with or without subpoena, to be interviewed, review documents or things, give depositions, testify, or engage in other reasonable activities in connection with any litigation or investigation, with respect to matters that I may have knowledge of by virtue of my employment by or service to the Company. In performing my obligations under this paragraph to testify or otherwise provide information, I will honestly, truthfully, forthrightly, and completely provide the information requested, volunteer pertinent information and turn over to the Company all relevant documents which are or may come into my possession. 

A-2

My Continuing Obligations. I understand and acknowledge that I must comply with all of my post-employment obligations under the Agreement. I will not defame or disparage the reputation, character, image, products, or services of Titan, or the reputation or character of Titan’s directors, officers, employees and agents, and I will refrain from making public comment about the Company except upon the express written consent of an officer of Titan. 

Additional Agreements and Understandings. Even though Titan will provide consideration for me to settle and release My Claims, the Company does not admit that it is responsible or legally obligated to me. In fact, the Company denies that it is responsible or legally obligated to me for My Claims, denies that it engaged in any unlawful or improper conduct toward me, and denies that it treated me unfairly. 

Advice to Consult with an Attorney. I understand and acknowledge that I am hereby being advised by the Company to consult with an attorney prior to signing this Release and I have done so. My decision whether to sign this Release is my own voluntary decision made with full knowledge that the Company has advised me to consult with an attorney. 

Period to Consider the Release. I understand that I have 21 days from the date I received this Release (or 21 days after the last day of my employment with Titan, if later) to consider whether I wish to sign this Release. If I sign this Release before the end of the 21-day period, it will be my voluntary decision to do so because I have decided that I do not need any additional time to decide whether to sign this Release. I understand and agree that if I sign this Release prior to my last day of employment with Titan it will not be valid and Titan will not be obligated to provide the consideration described in the Release. 

My Right to Rescind this Release. I understand that I may rescind this Release at any time within 7 days after I sign it, not counting the day upon which I sign it. This Release will not become effective or enforceable unless and until the 7-day rescission period has expired without my rescinding it. I understand that if I rescind this Release Titan will not be obligated to provide the consideration described in the Release. 

Procedure for Accepting or Rescinding the Release. To accept the terms of this Release, I must deliver the Release, after I have signed and dated it, to Titan by hand or by mail within the 21-day period that I have to consider this Release. To rescind my acceptance, I must deliver a written, signed statement that I rescind my acceptance to Titan by hand or by mail within the 7-day rescission period. All deliveries must be made to Titan at the following address: 

Chief Executive Officer 
_______________________
_______________________

If I choose to deliver my acceptance or the rescission by mail, it must be postmarked within the period stated above and properly addressed to Titan at the address stated above. 

A-3

Interpretation of the Release. This Release should be interpreted as broadly as possible to achieve my intention to resolve all of My Claims against the Company. If this Release is held by a court to be inadequate to release a particular claim encompassed within My Claims, this Release will remain in full force and effect with respect to all the rest of My Claims. I agree that the provisions of this Release may not be amended, waived, changed or modified except by an instrument in writing signed by an authorized representative of Titan and by me. 

My Representations. I am legally able and entitled to receive the consideration being provided to me in settlement of My Claims. I have not been involved in any personal bankruptcy or other insolvency proceedings at any time since I began my employment with Titan. No child support orders, garnishment orders, or other orders requiring that money owed to me by Titan be paid to any other person are now in effect. 

I have read this Release carefully. I understand all of its terms. In signing this Release, I have not relied on any statements or explanations made by the Company except as specifically set forth in the Agreement. I am voluntarily releasing My Claims against the Company. I intend this Release and the Agreement to be legally binding. 

	
					
	

 
	 
	 
	 
	 

	Dated:__________________
	 
	 
	 
	______________________________

	 
	 
	 
	 
	Mark Kalvoda

A-4EXHIBIT 10.25

 

 

 EXHIBIT 10.25
 

 Loan Nos. RX0583 and RX0584 
   
 SECOND AGREEMENT REGARDING AMENDMENTS TO LOAN DOCUMENTS 
  
 This SECOND AGREEMENT REGARDING AMENDMENTS TO LOAN DOCUMENTS (this “Amendment Agreement”), dated as of September 5, 2014, is between (i) NEW ULM TELECOM, INC. (the “New Ulm”), (ii) WESTERN TELEPHONE COMPANY (“WTC”), PEOPLES TELEPHONE COMPANY (“PTC”), NEW ULM PHONERY, INC. (“Phonery”), NEW ULM CELLULAR #9, INC. (“Cellular”), NEW ULM LONG DISTANCE, INC. (“Long Distance”), HUTCHINSON TELEPHONE COMPANY (“Hutchinson Telephone”), HUTCHINSON CELLULAR, INC. (“Hutchinson Cellular”), HUTCHINSON TELECOMMUNICATIONS, INC. (“Hutchinson Telecom”) and SLEEPY EYE TELEPHONE COMPANY (“Sleepy Eye” and, together with WTC, PTC, Phonery, Cellular, Long Distance, Hutchinson Cellular, and Hutchinson Telecom, each a “Subsidiary Guarantor” and, collectively, the “Subsidiary Guarantors”; the Subsidiary Guarantors, together with New Ulm and Hutchinson Telephone, each a “Loan Party” and, collectively, the “Loan Parties”), and (iii) COBANK, ACB (“CoBank”). 
  
 RECITALS
  
 WHEREAS, New Ulm and CoBank are parties to that certain Master Loan Agreement, dated as of January 4, 2008 (as amended by that certain letter agreement, dated March 27, 2009, that certain letter agreement, dated September 14, 2009, that certain letter agreement, dated March 25, 2011, that certain letter agreement, dated May 2, 2012, and as the same may further be amended, modified, supplemented, extended or restated from time to time, the “New Ulm MLA”), as supplemented by that certain First Supplement to the Master Loan Agreement, dated as of January 4, 2008, providing for a term loan in the amount of $15,000,000 (as amended, modified, supplemented, extended or restated from time to time, the “New Ulm First Supplement”), that certain Second Supplement to the Master Loan Agreement, dated as of January 4, 2008, providing for a revolving loan in an aggregate principal amount outstanding at any one time not to exceed $10,000,000 (as amended, modified, supplemented, extended or restated from time to time, the “New Ulm Second Supplement”), and that certain Third Supplement to the Master Loan Agreement, dated as of December 19, 2012, providing for a term loan in the amount of $4,500,000 (as amended, modified, supplemented, extended or restated from time to time, the “New Ulm Third Supplement”; the MLA, as supplemented by the First Supplement, the Second Supplement and the Third Supplement, collectively, the “New Ulm Loan Agreement”); 
 WHEREAS, CoBank and Hutchinson Telephone (as successor by merger to Hutchinson Acquisition Corp.) have entered into that certain Master Loan Agreement, dated as of January 4, 2008 (as amended by that certain letter agreement, dated June 9, 2009, that certain letter agreement, dated September 14, 2009, by that certain letter agreement, dated March 25, 2011, and as the same may further be amended, modified, supplemented, extended or restated from time to time, the “Hutchinson MLA”), that certain First Supplement to the Master Loan Agreement, dated as of January 4, 2008 (as the same may be amended, modified, supplemented, extended or restated from time to time, the “Hutchinson First Supplement”), providing for a term loan of up to $29,700,000 (the “Hutchinson Term Loan”), that certain Second Supplement to the Master Loan Agreement, dated as of January 4, 2008 (as the same may be amended, modified, supplemented, extended or restated from time to time, the “Hutchinson Second Supplement”), providing for a revolving loan in an aggregate principal amount outstanding at any one time not to exceed $2,000,000 (the “Hutchinson Revolver Loan”), and that certain Third Supplement to the Master Loan Agreement, dated as of January 4, 2008 (as the same may be amended, modified, supplemented, extended or restated from time to time, the “Hutchinson Third Supplement”; and, together with the Hutchinson MLA, the Hutchinson First Supplement and the Hutchinson Second Supplement, the “Hutchinson Loan Agreement”; the Hutchinson Loan Agreement and the New Ulm Loan Agreement, collectively, the “Loan Agreements”), providing for a term loan of up to $3,000,000; 
 

 

 

 
 

 

  
 WHEREAS, the Loan Parties have executed and delivered to CoBank that certain Continuing Guaranty, dated as of January 4, 2008 (as amended by that certain Agreement Regarding Amendments to Loan Documents, dated December 19, 2012, and by that certain Joinder to Continuing Guaranty regarding Sleepy Eye, dated as of December 31, 2012, and as the same may be further amended, modified, supplemented, extended or restated from time to time, the “Guaranty”), pursuant to which, among other things, the Loan Parties guaranteed all then existing or thereafter arising obligations of New Ulm and Hutchinson Telephone to CoBank under the Loan Agreements or otherwise;  
  
 WHEREAS, each Loan Party has executed and delivered to CoBank a separate Security Agreement, each dated as of January 4, 2008 or December 31, 2012, as applicable (as amended by that certain Agreement Regarding Amendments to Loan Documents, dated December 19, 2012, and by that certain Agreement Regarding Amendments to Stock Pledge Agreement and Security Agreements, dated December 31, 2012, and as the same may be further amended, modified, supplemented, extended or restated from time to time, each a “Security Agreement” and, collectively, the “Security Agreements”), pursuant to which each Loan Party has granted to CoBank as security for its obligations under Loan Agreements, Guaranty or otherwise a security interest in substantially all of its then owned or thereafter acquired tangible and intangible personal property;  
  
 WHEREAS, New Ulm has also executed and delivered to CoBank that certain Stock Pledge Agreement, dated as of January 4, 2008 (as amended by that certain Agreement Regarding Amendments to Loan Documents, dated December 19, 2012, and by that certain Agreement Regarding Amendments to Stock Pledge Agreement and Security Agreements, dated December 31, 2012, and as the same may be further amended, modified, supplemented, extended or restated from time to time, the “New Ulm Pledge Agreement”), pursuant to which New Ulm granted to CoBank a security interest in and lien on the equity interests described therein; 
 

 WHEREAS, Hutchinson Telephone has executed and delivered to CoBank that certain Stock Pledge Agreement, dated as of January 4, 2008 (as amended by that certain Agreement Regarding Amendments to Loan Documents, dated December 19, 2012, and as the same may be further amended, modified, supplemented, extended or restated from time to time, the “Hutchinson Telephone Pledge Agreement”), pursuant to which Hutchinson Telephone granted to CoBank as security for its obligations under the Hutchinson Loan Agreement, Guaranty or otherwise a security interest in and lien on the equity interests described therein, and Hutchinson Cellular has executed and delivered to CoBank that certain Stock Pledge Agreement, dated as of January 4, 2008 (as amended by that certain Agreement Regarding Amendments to Loan Documents, dated December 19, 2012, and as the same may be further amended, modified, supplemented, extended or restated from time to time, the “Hutchinson Cellular Pledge Agreement” and, together with the Hutchinson Telephone Pledge Agreement, collectively, the “Hutchinson Pledge Agreements”), pursuant to which Hutchinson Cellular granted to CoBank as security for its obligations under the Guaranty or otherwise a security interest in and lien on the equity interests described therein;  
  
 WHEREAS, New Ulm has executed and delivered to CoBank that certain Real Estate Mortgage, Assignment of Rents and Profits, Security Agreement and Fixture Financing Statement, dated as of May 14, 2008 (as amended by that certain Agreement Regarding Amendments to Loan Documents, dated December 19, 2012, and as the same may be further amended, modified, supplemented, extended or restated from time to time, the “New Ulm Mortgage”), and recorded in the Office of County Recorder, Brown County, Minnesota on June 6, 2008, as document number 366501, the Office of the County Recorder, Nicollet County, Minnesota on June 17, 2008, as document number 279148, and in the Office of the County Recorder, Redwood Falls, Minnesota on June 18, 2008, as document number 327975; 
 

 

 

 
 

 

  
  
 WHEREAS, WTC has executed and delivered to CoBank that certain Real Estate Mortgage, Assignment of Rents and Profits, Security Agreement and Fixture Financing Statement, dated as of May 14, 2008 (as amended by that certain Agreement Regarding Amendments to Loan Documents, dated December 19, 2012, and as the same may be further amended, modified, supplemented, extended or restated from time to time, the “WTC Mortgage”), and recorded in the Office of County Recorder, Brown County, Minnesota on June 6, 2008, as document number 366500, and the Office of the County Recorder, Redwood Falls, Minnesota on June 18, 2008, as document number 327976; 
  
 WHEREAS, PTC has executed and delivered to CoBank that certain Real Estate Mortgage, Assignment of Rents and Profits, Security Agreement and Fixture Financing Statement, dated as of January 5, 2009 (as amended by that certain Agreement Regarding Amendments to Loan Documents, dated December 19, 2012, and as the same may be further amended, modified, supplemented, extended or restated from time to time, the “PTC Mortgage”), and recorded with the Recorder, Cherokee, Iowa on January 29, 2009, at Book 2009, Page 0160; 
  
 WHEREAS, Hutchinson Telephone has executed and delivered to CoBank that certain Real Estate Mortgage, Assignment of Rents and Profits, Security Agreement and Fixture Financing Statement, dated as of May 14, 2008 (as amended by that certain Agreement Regarding Amendments to Loan Documents, dated December 19, 2012, and as the same may be further amended, modified, supplemented, extended or restated from time to time, the “Hutchinson Telephone Mortgage”), and recorded in the Office of the County Recorder, McLeod County, Minnesota on June 6, 2008, as document number A-377660, and the Office of Registrar of Titles, McLeod County, Minnesota on June 6, 2008, as document number T-48118; 
  
 WHEREAS, Hutchinson Telecom has executed and delivered to CoBank that certain Real Estate Mortgage, Assignment of Rents and Profits, Security Agreement and Fixture Financing Statement, dated as of May 14, 2008 (as amended by that certain Agreement Regarding Amendments to Loan Documents, dated December 19, 2012, and as the same may be further amended, modified, supplemented, extended or restated from time to time, the “Hutchinson Telecom Mortgage”), and recorded in the Office of County Recorder, Meeker County, Minnesota on June 6, 2008, as document number 353708;  
  
 WHEREAS, Sleepy Eye has executed and delivered to CoBank that certain Real Estate Mortgage, Assignment of Rents and Profits, Security Agreement and Fixture Financing Statement, dated as of December 31, 2012 (as amended, modified, supplemented, extended or restated from time to time, the “Sleepy Eye Mortgage” and, together with the New Ulm Mortgage, the WTC Mortgage, the PTC Mortgage and the Hutchinson Telephone Mortgage, each a “Mortgage” and, collectively, the “Mortgages”), and recorded in the Office of County Recorder, Brown County, Minnesota on January 18, 2012, as document number 391383;  
  
 WHEREAS, New Ulm has requested an increase in the Commitment (as defined in the New Ulm Second Supplement) under the New Ulm Second Supplement (the “Second Supplement Increase”) in the amount of $2,000,000 such that the New Ulm Second Supplement shall provide for a revolving loan in an aggregate principal amount outstanding at any one time of up to $12,000,000; 
 

 

 

 
 

 

 WHEREAS, concurrent with the execution and delivery of this Amendment Agreement, the Borrower is executing and delivering an Amended and Restated Promissory Note, dated as of the date hereof (as the same may be amended, modified, supplemented, extended or restated from time to time, the “Second Supplement Note”) reflecting the Second Supplement Increase; 
  
 WHEREAS, in connection with the Second Supplement Increase, the Loan Parties and CoBank have agreed to certain amendments to the New Ulm Second Supplement, the New Ulm Pledge Agreement, the Guaranty, the Hutchinson Pledge Agreements, the Mortgages and the other Loan Documents, as set forth herein. 
  
 NOW, THEREFORE, in consideration of the foregoing and the agreements set forth in this Amendment Agreement, the Loan Parties and CoBank each hereby agrees as follows: 
  
 SECTION 1.  Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the New Ulm MLA. 
 

 SECTION 2.  Section 1 of the New Ulm Second Supplement is hereby amended by amending and restating such section in its entirety as follows: 
  
 Section 1.  Revolving Loan Commitment.  On the terms and conditions set forth in the MLA and this Second Supplement, CoBank agrees to make one or more advances (collectively, the “Loan”) to the Borrower during the Availability Period (as hereinafter defined in Section 3 of this Second Supplement) in an aggregate principal amount outstanding at any one time not to exceed $12,000,000 (the “Commitment”).  The Commitment shall be reduced from time to time as provided in Section 6 and Section 7 hereof and shall expire at 12:00 noon Central time on the Business Day immediately preceding December 31, 2014, or such later date as CoBank in its sole discretion shall provide in writing (the “Maturity Date”).  Under the Commitment, amounts borrowed and later repaid may be reborrowed. 
 SECTION 3.  The second WHEREAS clauses of the New Ulm Pledge Agreement are hereby amended by amending and restating such clauses to read in their entirety as follows: 
 WHEREAS, the Secured Party and the Pledgor have entered into that certain Master Loan Agreement, dated as of January 4, 2008 (as amended by that certain letter agreement, dated March 27, 2009, that certain letter agreement, dated September 14, 2009, that certain letter agreement, dated March 25, 2011, that certain letter agreement, dated May 2, 2012, and as the same may further be amended, modified, supplemented, extended or restated from time to time, the “New Ulm MLA”), that certain First Supplement to the Master Loan Agreement, dated as of January 4, 2008 (as the same may be amended, modified, supplemented, extended or restated from time to time, the “New Ulm First Supplement”), providing for a term loan of up to $15,000,000 (the “First New Ulm Term Loan”), that certain Second Supplement to the Master Loan Agreement, dated as of January 4, 2008 (as the same may be amended, modified, supplemented, extended or restated from time to time, the “New Ulm Second Supplement”), providing for a revolving loan in an aggregate principal amount outstanding at any one time not to exceed $12,000,000 (the “New Ulm Revolver Loan”), and that certain Third Supplement to the Master Loan Agreement, dated as of December 19, 2012 (as the same may be amended, modified, supplemented, extended or restated from time to time, the “New Ulm Third Supplement” and, together with the New Ulm MLA, the New Ulm First Supplement, and the New Ulm Second Supplement, the “New Ulm Loan Agreement”), providing for a term loan of up to $4,500,000 (the “Second New Ulm Term Loan”); and 
 

 

 

 
 

 

  
 SECTION 4.  The WHEREAS clauses of the New Ulm Pledge Agreement are hereby amended by inserting the following as a new eighth WHEREAS clause: 
 WHEREAS, as an inducement to CoBank to amend the New Ulm Second Supplement to increase the amount of the Commitment (as defined in the New Ulm Second Supplement) thereof, the Pledgor has agreed to amend this Pledge Agreement and certain other Loan Documents as described in that certain Second Agreement Regarding Amendments to Loan Documents, dated as of September 5, 2014; 
 SECTION 5.  The last paragraph of Section 2 of the New Ulm Pledge Agreement is hereby amended by amending and restating such paragraph to read in its entirety as follows: 
  
The lien and security interest granted hereunder shall secure the following obligations (collectively, the “Secured Obligations”):  (i) the payment and performance of all obligations of the Pledgor and Hutchinson under the Loan Agreements and any other Loan Document, including, without limitation, the payment of all principal, interest and other amounts becoming due and payable under that certain Promissory Note, dated as of even date herewith, made by the Pledgor to the Secured Party in the principal face amount of $15,000,000, as the same may be amended, modified, supplemented, extended, restated, renewed or replaced from time to time, that certain Amended and Restated Promissory Note, dated as of September 5, 2014, made by the Pledgor to the Secured Party in the principal face amount of $12,000,000, as the same may be amended, modified, supplemented, extended, restated, renewed or replaced from time to time, that certain Promissory Note, dated as of December 19, 2012, made by the Pledgor to the Secured Party in the principal face amount of $4,500,000, as the same may be amended, modified, supplemented, extended, restated, renewed or replaced from time to time, that certain Promissory Note, dated as of even date herewith, made by Hutchinson to the Secured Party in the principal face amount of $29,700,000, as the same may be amended, modified, supplemented, extended, restated, renewed or replaced from time to time, that certain Promissory Note, dated as of even date herewith, made by Hutchinson to the Secured Party in the principal face amount of $2,000,000, as the same may be amended, modified, supplemented, extended, restated, renewed or replaced from time to time, and that certain Promissory Note, dated as of even date herewith, made by Hutchinson to the Secured Party in the principal face amount of $3,000,000, as the same may be amended, modified, supplemented, extended, restated, renewed or replaced from time to time; (ii) all payments and performances to be made by the Pledgor under the Guaranty; (iii) all payments and performances to be made by the Pledgor or Hutchinson under all other Loan Documents; (iv) the payment of all other indebtedness and the performance of all other obligations of the Pledgor and Hutchinson to the Secured Party of every type and description, whether now existing or hereafter arising, fixed or contingent, as primary obligor or as guarantor or surety, acquired directly or by assignment or otherwise, liquidated or unliquidated, regardless of how they arise or by what agreement or instrument they may be evidenced, including, without limitation, all loans, advances, Interest Rate Agreements provided by the Secured Party and other extensions of credit and all covenants, agreements, and provisions contained in all loan and other agreements between the Pledgor or Hutchinson and the Secured Party; and (v) the payment of any and all additional advances made or costs or expenses incurred by the Secured Party to protect or preserve the Pledged Collateral or the security title, lien and security interest created hereby or for any other purpose provided herein (whether or not the Pledgor remains the owner of the Pledged Collateral at the time such advances are made or costs or expenses are incurred).  
 

 

 

 
 

 

  
 SECTION 6.  The first WHEREAS clauses of the Guaranty are hereby amended by amending and restating such clauses to read in their entirety as follows:  
  
  
WHEREAS, CoBank and New Ulm Telecom, Inc. (“New Ulm”) have entered into that certain Master Loan Agreement, dated as of January 4, 2008 (as amended by that certain letter agreement, dated March 27, 2009, that certain letter agreement, dated September 14, 2009, that certain letter agreement, dated March 25, 2011, that certain letter agreement, dated May 2, 2012, and as the same may further be amended, modified, supplemented, extended or restated from time to time, the “New Ulm MLA”), that certain First Supplement to the Master Loan Agreement, dated as of January 4, 2008 (as the same may be amended, modified, supplemented, extended or restated from time to time, the “New Ulm First Supplement”), providing for a term loan of up to $15,000,000, that certain Second Supplement to the Master Loan Agreement, dated as of January 4, 2008 (as the same may be amended, modified, supplemented, extended or restated from time to time, the “New Ulm Second Supplement”) providing for a revolving loan in an aggregate principal amount outstanding at any one time not to exceed $12,000,000, and that certain Third Supplement to the Master Loan Agreement, dated as of December 19, 2012 (as the same may be amended, modified, supplemented, extended or restated from time to time, the “New Ulm Third Supplement”; the New Ulm MLA, as supplemented by the New Ulm First Supplement, the New Ulm Second Supplement, and the New Ulm Third Supplement, the “New Ulm Loan Agreement”), providing for a term loan of up to $4,500,000; 
  
 SECTION 7.  The WHEREAS clauses of the Guaranty are hereby amended by inserting the following as a new ninth WHEREAS clause: 
 WHEREAS, as an inducement to CoBank to amend the New Ulm Second Supplement to increase the amount of the Commitment (as defined in the New Ulm Second Supplement) thereof, the Guarantors have agreed to amend this Guaranty and certain other Loan Documents as described in that certain Second Agreement Regarding Amendments to Loan Documents, dated as of September 5, 2014; 
 SECTION 8.  The fourth WHEREAS clause of the Hutchinson Pledge Agreements are hereby amended by amending and restating such clauses to read in their entirety as follows: 
 WHEREAS, the Secured Party and New Ulm have entered into that certain Master Loan Agreement, dated as of January 4, 2008 (as amended by that certain letter agreement, dated March 27, 2009, that certain letter agreement, dated September 14, 2009, that certain letter agreement, dated March 25, 2011, that certain letter agreement, dated May 2, 2012, and as the same may further be amended, modified, supplemented, extended or restated from time to time, the “New Ulm MLA”), that certain First Supplement to the Master Loan Agreement, dated as of January 4, 2008 (as the same may be amended, modified, supplemented, extended or restated from time to time, the “New Ulm First Supplement”), providing for a term loan of up to $15,000,000 (the “First New Ulm Term Loan”), that certain Second Supplement to the Master Loan Agreement, dated as of January 4, 2008 (as the same may be amended, modified, supplemented, extended or restated from time to time, the “New Ulm Second Supplement”), providing for a reducing revolving loan in an aggregate principal amount outstanding at any one time not to exceed $12,000,000 (the “New Ulm Revolver Loan”), and that certain Third Supplement to the Master Loan Agreement, dated as of December 19, 2012 (as the same may be amended, modified, supplemented, extended or restated from time to time, the “New Ulm Third Supplement” and, together with the New Ulm MLA, the New Ulm First Supplement and the New Ulm Second Supplement, the “New Ulm Loan Agreement”; the New Ulm Loan Agreement together with the Hutchinson Loan Agreement, each a “Loan Agreement” and, collectively, the “Loan Agreements”), providing for a term loan of up to $4,500,000 (the “Second New Ulm Term Loan” and, together with the Hutchinson Term Loan, the Hutchinson Revolver Loan, the Hutchinson Bridge Loan, the First New Ulm Term Loan and the New Ulm Revolver Loan, the “Loans”); and 
 

 

 

 
 

 

  
 SECTION 9.  The WHEREAS clauses of the Hutchinson Pledge Agreements are hereby amended by inserting the following as a new eighth WHEREAS clause: 
 WHEREAS, as an inducement to CoBank to amend the New Ulm Second Supplement to increase the amount of the Commitment (as defined in the New Ulm Second Supplement) thereof, the Pledgor has agreed to amend this Pledge Agreement and certain other Loan Documents as described in that certain Second Agreement Regarding Amendments to Loan Documents, dated as of September 5, 2014; 
 SECTION 10.  The last paragraph of Section 2 of the Hutchinson Pledge Agreements is hereby amended by amending and restating such paragraph to read in its entirety as follows: 
  
 The lien and security interest granted hereunder shall secure the following obligations (collectively, the “Secured Obligations”):  (i) the payment and performance of all obligations of Hutchinson and New Ulm under the Loan Agreements and any other Loan Document, including, without limitation, the payment of all principal, interest and other amounts becoming due and payable under that certain Promissory Note, dated January 4, 2008, made by Hutchinson to the Secured Party in the principal face amount of $29,700,000, as the same may be amended, modified, supplemented, extended, restated, renewed or replaced from time to time; that certain Promissory Note, dated January 4, 2008, made by Hutchinson to the Secured Party in the principal face amount of $2,000,000, as the same may be amended, modified, supplemented, extended, restated, renewed or replaced from time to time; that certain Promissory Note, dated January 4, 2008, made by Hutchinson to the Secured Party in the principal face amount of $3,000,000, as the same may be amended, modified, supplemented, extended, restated, renewed or replaced from time to time; that certain Promissory Note, dated January 4, 2008, made by New Ulm to the Secured Party in the principal face amount of $15,000,000, as the same may be amended, modified, supplemented, extended, restated, renewed or replaced from time to time, that certain Amended and Restated Promissory Note, dated September 5, 2014, made by New Ulm to the Secured Party in the principal face amount of $12,000,000, as the same may be amended, modified, supplemented, extended, restated, renewed or replaced from time to time, and that certain Promissory Note, dated December 19, 2012, made by New Ulm to the Secured Party in the principal face amount of $4,500,000, as the same may be amended, modified, supplemented, extended, restated, renewed or replaced from time to time; (ii) all payments or performances to be made by the Pledgor under the Guaranty; (iii) all payments or performances to be made by the Pledgor, Hutchinson or New Ulm under all other Loan Documents; (iv) the payment of all other indebtedness and the performance of all other obligations of the Pledgor, Hutchinson and New Ulm to the Secured Party of every type and description, whether now existing or hereafter arising, fixed or contingent, as primary obligor or as guarantor or surety, acquired directly or by assignment or otherwise, liquidated or unliquidated, regardless of how they arise or by what agreement or instrument they may be evidenced, including, without limitation, all loans, advances, Interest Rate Agreements provided by the Secured Party and other extensions of credit and all covenants, agreements, and provisions contained in all loan and other agreements between the Pledgor, Hutchinson or New Ulm and the Secured Party parties; and (v) the payment of any and all additional advances made or costs or expenses incurred by the Secured Party to protect or preserve the Pledged Collateral or the security title, lien and security interest created hereby or for any other purpose provided herein (whether or not the Pledgor remains the owner of the Pledged Collateral at the time such advances are made or costs or expenses are incurred). 
 

 

 

 
 

 

  
 SECTION 11.  Appendix A of each Mortgage is hereby amended by amending and restating part 1 of such Appendix describing the “Credit Agreements” referred to in Section 1.01 of such Mortgage to read in its entirety as follows:  
 1. 
 The “Credit Agreements” referred to in Section 1.01 are as follows: 
  
 The Master Loan Agreement, dated as of January 4, 2008, between New Ulm Telecom, Inc., as the borrower (the “Borrower”), and CoBank, ACB, as the lender (the “Lender”), as amended by that certain letter agreement, dated March 27, 2009, that certain letter agreement, dated September 14, 2009, that certain letter agreement, dated March 25, 2011, that certain letter agreement, dated May 2, 2012, and as the same may further be amended, restated, supplemented or otherwise modified from time to time, and as supplemented by (i) the First Supplement to the Master Loan Agreement, dated as of January 4, 2008, between the Borrower and the Lender, as amended, restated, supplemented or otherwise modified from time to time, (ii) the Second Supplement to the Master Loan Agreement, dated as of January 4, 2008, between the Borrower and the Lender, as amended, restated, supplemented or otherwise modified from time to time, and (iii) the Third Supplement to the Master Loan Agreement, dated as of December 19, 2012, between the Borrower and the Lender, as amended, restated, supplemented or otherwise modified from time to time. 
  
 The Promissory Note, dated January 4, 2008, made by the Borrower to the Lender in the principal face amount of $15,000,000, as the same may be amended, modified, supplemented, extended, restated, renewed or replaced from time to time, the Amended and Restated Promissory Note, dated September 5, 2014, made by the Borrower to the Lender in the principal face amount of $12,000,000, as the same may be amended, modified, supplemented, extended, restated, renewed or replaced from time to time, and the Promissory Note, dated December 19, 2012, made by the Borrower to the Lender in the principal face amount of $4,500,000, as the same may be amended, modified, supplemented, extended, restated, renewed or replaced from time to time. 
   
 The Master Loan Agreement, dated as of January 4, 2008, between Hutchinson Telephone Company, as the borrower (as successor by merger to Hutchinson Acquisition Corporation, the “Subsidiary Borrower”), and the Lender, as amended by that certain letter agreement, dated June 9, 2009, that certain letter agreement, dated September 14, 2009, by that certain letter agreement, dated March 25, 2011, and as the same may further be amended, restated, supplemented or otherwise modified from time to time, and as supplemented by (i) that certain First Supplement to the Master Loan Agreement, dated as of January 4, 2008, between the Subsidiary Borrower and the Mortgagee, as amended, restated, supplemented or otherwise modified from time to time, (ii) that certain Second Supplement to the Master Loan Agreement, dated as of January 4, 2008, between the Subsidiary Borrower and the Mortgagee, as amended, restated, supplemented or otherwise modified from time to time, and (iii) that certain Third Supplement to the Master Loan Agreement, dated as of January 4, 2008, between the Subsidiary Borrower and the Mortgagee, as amended, restated, supplemented or otherwise modified from time to time. 
 

 

 

 
 

 

  
  
 The Promissory Note, dated January 4, 2008, made by the Subsidiary Borrower to the Lender in the principal face amount of $29,700,000, as the same may be amended, modified, supplemented, extended, restated, renewed or replaced from time to time, the Promissory Note, dated January 4, 2008, made by the Subsidiary Borrower to the Lender in the principal face amount of $2,000,000, as the same may be amended, modified, supplemented, extended, restated, renewed or replaced from time to time, and the Promissory Note, dated January 4, 2008, made by the Subsidiary Borrower to the Lender in the principal face amount of $3,000,000, as the same may be amended, modified, supplemented, extended, restated, renewed or replaced from time to time. 
  
 The Security Agreement, dated as of January 4, 2008, between the Borrower and the Lender, as amended by that certain Agreement Regarding Amendments to Loan Documents, dated as of December 19, 2012, and as the same may further be amended, modified, supplemented, extended, restated, renewed or replaced from time to time. 
  
 The Security Agreement, dated as of January 4, 2008, between the Subsidiary Borrower and the Lender, as amended by that certain Agreement Regarding Amendments to Loan Documents, dated as of December 19, 2012, and as the same may further be amended, modified, supplemented, extended, restated, renewed or replaced from time to time. 
  
 The Security Agreement, dated as of January 4, 2008, between Western Telephone Company and the Lender, as amended by that certain Agreement Regarding Amendments to Loan Documents, dated as of December 19, 2012, and as the same may further be amended, modified, supplemented, extended, restated, renewed or replaced from time to time. 
  
 The Security Agreement, dated as of January 4, 2008, between Peoples Telephone Company and the Lender, as amended by that certain Agreement Regarding Amendments to Loan Documents, dated as of December 19, 2012, and as the same may further be amended, modified, supplemented, extended, restated, renewed or replaced from time to time. 
  
 The Security Agreement, dated as of January 4, 2008, between New Ulm Phonery, Inc. and the Lender, as amended by that certain Agreement Regarding Amendments to Loan Documents, dated as of December 19, 2012, and as the same may further be amended, modified, supplemented, extended, restated, renewed or replaced from time to time. 
  
 The Security Agreement, dated as of January 4, 2008, between New Ulm Cellular #9 and the Lender, as amended by that certain Agreement Regarding Amendments to Loan Documents, dated as of December 19, 2012, and as the same may further be amended, modified, supplemented, extended, restated, renewed or replaced from time to time. 
 

 

 

 
 

 

  
 The Security Agreement, dated as of January 4, 2008, between New Ulm Long Distance, Inc. and the Lender, as amended by that certain Agreement Regarding Amendments to Loan Documents, dated as of December 19, 2012, and as the same may further be amended, modified, supplemented, extended, restated, renewed or replaced from time to time. 
  
 The Security Agreement, dated as of January 4, 2008, between Hutchinson Telephone Company and the Lender, as amended by that certain Agreement Regarding Amendments to Loan Documents, dated as of December 19, 2012, and as the same may further be amended, modified, supplemented, extended, restated, renewed or replaced from time to time. 
  
 The Security Agreement, dated as of January 4, 2008, between Hutchinson Cellular, Inc. and the Lender, as amended by that certain Agreement Regarding Amendments to Loan Documents, dated as of December 19, 2012, and as the same may further be amended, modified, supplemented, extended, restated, renewed or replaced from time to time. 
  
 The Security Agreement, dated as of January 4, 2008, between Hutchinson Telecommunications, Inc. and the Lender, as amended by that certain Agreement Regarding Amendments to Loan Documents, dated as of December 19, 2012, and as the same may further be amended, modified, supplemented, extended, restated, renewed or replaced from time to time. 
  
 The Continuing Guaranty, dated as of January 4, 2008, by the Borrower, the Subsidiary Borrower, Western Telephone Company, Peoples Telephone Company, New Ulm Phonery, Inc., New Ulm Cellular #9, Inc., New Ulm Long Distance, Inc., Hutchinson Cellular, Inc. and Hutchinson Telecommunications, Inc. in favor of the Lender, as amended by that certain Agreement Regarding Amendments to Loan Documents, dated as of December 19, 2012, that certain Joinder to Continuing Guaranty regarding Sleepy Eye Telephone Company, dated as of December 31, 2012, and as the same may further be amended, modified, supplemented, extended, restated, renewed or replaced from time to time. 
  
 The Stock Pledge Agreement, dated as of January 4, 2008, by the Borrower in favor of the Lender, as amended by that certain Agreement Regarding Amendments to Loan Documents, dated as of December 19, 2012, and as the same may further be amended, modified, supplemented, extended, restated, renewed or replaced from time to time. 
  
 The Stock Pledge Agreement, dated as of January 4, 2008, by the Subsidiary Borrower in favor of the Lender, as amended by that certain Agreement Regarding Amendments to Loan Documents, dated as of December 19, 2012, and as the same may further be amended, modified, supplemented, extended, restated, renewed or replaced from time to time. 
  
 The Stock Pledge Agreement, dated as of January 4, 2008, by Hutchinson Cellular, Inc. in favor of the Lender, as amended by that certain Agreement Regarding Amendments to Loan Documents, dated as of December 19, 2012, and as the same may further be amended, modified, supplemented, extended, restated, renewed or replaced from time to time. 
  
 

 

 

 
 

 

 The Security Agreement, dated as of December 31, 2012, between Sleepy Eye Telephone Company and the Lender, as the same may further be amended, modified, supplemented, extended, restated, renewed or replaced from time to time. 
  
 All other Loan Documents to which the Borrower or the Subsidiary Borrower is a party. 
 SECTION 12.  WAIVER.  Section 9(D) of the Loan Agreements prohibits the Loan Parties from forming or creating any Subsidiary.  The Loan Parties have advised CoBank that on November 3, 2008, one of the Loan Parties formed Tech Trends, Inc. (“Tech Trends”), a Minnesota corporation, as a direct-wholly owned Subsidiary (the “Tech Trends Formation Default”).  In reliance on the representations, warranties and agreements provided and made by the Loan Parties to CoBank herein and in connection with such waiver, CoBank hereby waives the Tech Trends Formation Default; provided that, (1) no Loan Party directory or indirectly enters into any transaction with Tech Trends or any Affiliate of Tech Trends unless the transaction is in the ordinary course of business and pursuant to the reasonable requirements of the business of such Loan Party and upon fair and reasonable terms which are fully disclosed to CoBank and are no less favorable to such Loan Party than would be obtained in a comparable arm’s length transaction with a person or entity that is not an Affiliate; and (2) on or before December 31, 2014, Tech Trends executes and delivers to CoBank a joinder to the Guaranty, a security agreement substantially in the form of the Security Agreements, an acknowledgment of the pledge of the equity interests of Tech Trends by the applicable Loan Party and any other Loan Documents as CoBank may request in its reasonable discretion, each in form and substance acceptable to CoBank in its reasonable discretion.   
 SECTION 13.  Neither this Amendment Agreement nor any prior amendment to the Loan Agreement or other Loan Documents shall constitute a novation of the Loan Agreement or the other Loan Documents.  The Loan Parties acknowledge and expressly agree that this Amendment Agreement is limited to the extent expressly set forth herein and shall not constitute a modification of the Loan Agreement or any other Loan Documents or a course of dealing at variance with the terms of the Loan Agreement or any other Loan Documents (other than as expressly set forth above) so as to require further notice by CoBank, of its intent to require strict adherence to the terms of the Loan Agreement and the other Loan Documents in the future.  All of the terms, conditions, provisions and covenants of the Loan Agreement and the other Loan Documents shall remain unaltered and in full force and effect except as expressly modified by this Amendment Agreement.  The Loan Agreement and each other Loan Document shall be deemed modified hereby solely to the extent necessary to effect the amendments contemplated hereby. 
 

 SECTION 14.  All references to the New Ulm Second Supplement, New Ulm Pledge Agreement, the Guaranty, the Hutchinson Telephone Pledge Agreement, the Mortgages and the Note evidencing the Loan provided for by the New Ulm Second Supplement Note (collectively, the “Amended Documents”) in any of the Amended Documents, in any other documents, instruments or agreements executed or delivered in connection therewith or in any Loan Document, shall be deemed a reference to such Amended Document as amended by this Amendment Agreement or the Second Supplement Note (this Amendment Agreement and the Second Supplement, collectively, the “Modifying Documents”).  Except as expressly provided in this Amendment Agreement, the execution and delivery of this Amendment Agreement does not and will not amend, modify or supplement any provision of, or constitute a consent to or a waiver of any noncompliance with the provisions of, the Loan Agreement or the other Loan Documents, and, except as specifically provided in this Amendment Agreement, the Loan Agreement and the other Loan Documents shall remain in full force and effect. 
 

 

 

 

 
 

 

 SECTION 15.  Each of the Loan Parties hereby represents and warrants to CoBank as follows:  
 (a)
 such entity has the right and power, and has taken all necessary action to authorize it, to execute, deliver and perform each of the Modifying Documents to which it is a party, in accordance with its terms.  Each Modifying Document has been duly executed and delivered by each entity party thereto and is a legal, valid and binding obligation of it, enforceable against it in accordance with its terms; 
 (b)
 the execution, delivery and performance of the Modifying Documents in accordance with their terms do not and will not, by the passage of time, the giving of notice or otherwise, 
 (i)
 require any governmental approval or violate any applicable Law relating to such entity; 
 (ii)
 conflict with, result in a breach of or constitute a default under the organizational documents of such entity, any material provision of any indenture, agreement or other instrument to which it is a party or by which it or any of its properties may be bound or any governmental approval relating to it; or 
 (iii)
 result in or require the creation or imposition of any lien (except as permitted by the Loan Agreement and the other Loan Documents) upon or with respect to any property now owned or hereafter acquired by such entity; 
  
 (c)
 that, after giving effect to the amendments set forth in the Modifying Documents the representations and warranties of such entity set forth in the Loan Agreement and the other Loan Documents are true and correct as of the date hereof as if made on the date hereof; and 
  
 (d)
 after giving effect to this Amendment Agreement, no Potential Default or Event of Default under any Loan Agreement or any other Loan Documents has occurred and is continuing as of this date.  
 SECTION 16.  New Ulm, as the maker of its Security Agreement, the New Ulm Pledge Agreement, the Guaranty and certain other Loan Documents, Hutchinson Telephone, as the maker of its Security Agreement, the Hutchinson Telephone Pledge Agreement, the Guaranty and certain other Loan Document, and each Subsidiary Guarantor, as the maker of the Guaranty, its respective Security Agreement and certain other Loan Documents, hereby confirms and agrees that (a) each such document, as amended hereby, as applicable, is and shall continue to be in full force and effect, and (b) the obligations secured by each such document include any and all obligations of New Ulm, Hutchinson Telephone and the other Loan Parties to CoBank under the Loan Agreements and the other Loan Documents.   
 SECTION 17.  This Amendment Agreement shall become effective as of its date.  All obligations and rights of the Loan Parties and CoBank arising out of or relating to the period commencing on the effective date hereof shall be governed by the terms and provisions of the Loan Agreement as amended by this Amendment Agreement; the obligations of and rights of the Loan Parties and CoBank arising out of or relating to the period prior to the date hereof shall continue to be governed by the Loan Agreement without giving effect to the amendments provided for herein.   
 

 

 

 

 
 

 

 SECTION 18.  New Ulm and Hutchinson Telephone, jointly and severally, 
 agrees to pay CoBank, on demand, all out-of-pocket costs and expenses incurred by CoBank, including, without limitation, the reasonable fees and expenses of counsel retained by CoBank, in connection with the negotiation, preparation, execution and delivery of this Amendment Agreement, the Second Supplement Note and all other instruments and documents contemplated hereby.   
 SECTION 19.  This Amendment Agreement may be executed in any number of 
 counterparts and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original and shall be binding upon all parties and their respective permitted successors and assigns, and all of which taken together shall constitute one and the same agreement. 
 SECTION 20.  Except to the extent governed by applicable federal law, this Amendment Agreement shall be governed by and construed in accordance with the laws of the Colorado, without reference to choice of law doctrine. 
 [Signatures comment on following page.]

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