EXHIBIT 10.8
NORWEST BANK MINNESOTA NORTH, NATIONAL ASSOCIATION
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (the "Agreement") dated as of May 22, 1997 (the
"Effective Date") is between Norwest Bank Minnesota North, National Association
(the "Bank") and A.S.V., Inc. (the "Borrower").
BACKGROUND
The Borrower has asked the Bank to provide a Two Million and 00/100 Dollars
($2,000,000.00) line of credit to be used for working capital. The Bank is
agreeable to meeting the Borrower's request provided that the Borrower agrees to
the term and conditions of this Agreement. For the purposes of this Agreement,
all promissory notes that evidence indebtedness of the Borrower to the Bank and
which are documented under this Agreement and defined below shall collectively
be referred to as the Notes.
The Notes, this Agreement and all "Security Documents" described in Exhibit A-1
shall be referred to collectively as the "Documents".
In consideration of the above premises, the Bank and the Borrower agree as
follows:
1. LINE OF CREDIT
1.1 LINE OF CREDIT AMOUNT. During the Line Availability Period defined below,
the Bank agrees to provide a revolving line of credit (the "Line") to the
Borrower. Outstanding amounts under the Line shall not, at any one time,
exceed the lesser of the Borrowing Base or Two Million Dollars
($2,000,000.00) The Borrowing Base is defined in Exhibit A-2 to this
Agreement.
1.2 LINE AVAILABILITY PERIOD. The "Line Availability Period" shall mean the
period of time from the Effective Date or the date on which all conditions
precedent described in this Agreement have been met, whichever is later, to
the Line Expiration Date of June 1, 1998.
1.3 MANDATORY PREPAYMENT. If at any time the principal outstanding under the
Revolving Note exceeds the Borrowing Base, the Borrower must immediately
prepay the Revolving Note in an amount sufficient to eliminate the excess.
FEE AND EXPENSES
COMMITMENT FEE. During the Line Availability Period the Borrower shall pay
the Bank a commitment fee of .125% per annum on the daily unused amount of
the Line. This fee shall be calculated on the basis of actual days elapsed
in a 360 day year and paid quarterly beginning July 1, 1997.
1.
DOCUMENTATION EXPENSE. The Borrower agrees to reimburse the Bank for its
reasonable expenses relating to the preparation of the Documents and any
possible future amendments to the Documents, which reimbursement may
include, but shall not be limited to, reimbursement of reasonable
attorneys' fees including the costs of the Bank in-house counsel, which
shall not be in the excess of $500.00.
Despite such reimbursement the Borrower acknowledges that the Bank's
counsel is engaged solely to represent the Bank and does not represent the
Borrower.
COLLECTION EXPENSE. In the event the Borrower fails to pay the Bank any
amounts due under this Agreement or under the Documents, the Borrower shall
pay all costs of collection. including reasonable attorney's fees and legal
expenses incurred by the Bank.
MISCELLANEOUS EXPENSE. The Borrower agrees to reimburse the Bank for its
expenses incurred in perfecting any security interest in property granted
by the Borrower to the Bank.
ADVANCES AND PAYMENTS
REQUEST FOR ADVANCES, DISBURSEMENTS AND PAYMENTS.
Any line advance requested under the terms of this Agreement shall be
requested by telephone or in a writing delivered to the Bank (or
transmitted via facsimile) by any person reasonably believed by the Bank to
be authorized by the Borrower to do so. The Bank will not consider any such
request following an event which is, or with notice or the lapse of time
would be, an event of default under this Agreement. Proceeds shall be
deposited into the Borrower's account at the Bank or disbursed in such
other manner as the parties may agree.
PAYMENTS. All principal, interest and fees due under the Documents shall be
paid by the direct debit of available funds deposited in the Borrower's
account with the Bank. The Bank shall debit the account on the date the
payments become due. If a due date does not fall on a day on which the Bank
is open for substantially all of its business (a "Banking Day"), the Bank
shall debit the account on the next Banking Day and interest shall continue
to accrue during the extended period. If there are insufficient funds in
the account on the day the Bank enters any debit authorized by this
Agreement, the debit will be reversed and the payment shall be due
immediately without necessity of demand by direct payment of immediately
available funds.
2.
SECURITY
During the time period that credit is available under this Agreement, and
afterward until all amounts due under the Documents are paid in full,
unless the Bank shall otherwise agree in writing, all amounts due under
this Agreement and the Documents shall be secured at all times as provided
in Exhibit A-1. The Borrower hereby grants the Bank a security interest
(independent of the Bank's right of set-off) in its deposit accounts at the
Bank and in any other debt obligations of the Bank to the Borrower.
CONDITIONS PRECEDENT
The Borrower must deliver to the Bank the Documents described in Exhibit
A-2 properly executed in form and content acceptable to the Bank, prior to
the Bank's initial advance or disbursement under this Agreement.
REPRESENTATIONS AND WARRANTIES
To induce the Bank to enter into this Agreement, the Borrower, to the best
of its knowledge and upon due inquiry, makes the representations and
warranties contained in the Company's financial information provided
through March 31, 1997.
Each request for an advance or a disbursement under this Agreement
following the Effecitive Date constitutes a reaffirmation of these
representations and warranties.
Organiational Status. The Borrower is a corporation duly formed and in good
standing under the Laws of the State of Minnesota.
Authorization. This Agreement, and the execution and delivery of the
Documents required hereunder, is within the Borrowers powers, and has been
duly authorized and does not conflict with any of its organizational papers
or any other agreement by which the Borrower is bound.
Financial Reports. The Borrower has provided the Bank with its annual
audited financial statement dated December 31, 1996, and this statement
fairly represents the financial condition of the Borrower as of its dated
and was prepared in accordance with GAAP.
Financial Projections. The Borrower has provided the Bank with its four (4)
year projections dated December 6, 1996 and these projections fairly
represent the Borrowers projections for these periods
Litigation. There is no litigation or governmental proceeding pending or
threatened against the Borrower which could have a material adverse effect
on the Borrower's financial condition or business.
Taxes. The Borrower has paid when due, all federal, state and local taxes.
No default. There is no event which is, or with notice or the lapse of time
would be, an event of default under this Agreement.
3.
Erisa. The borrower is in compliance in all material respects with ERISA
and has
received no notice contrary from the PBGC or other governmental area.
Environmental Matters. To the best of the Borrower's knowledge following
diligent inquiry: 1) the Borrower is in compliance in all material respects
with all applicable environmental, health, and safety statutes and
regulations, 2) the Borrower is not the subject of any "Superfund"
evaluations, and 3) the Borrower has not incurred, directly or indirectly,
any material contingent liability in connection with the release of any
toxic or hazardous waste or substance into the environment.
COVENANTS
1. FINANCIAL INFORMATION AND REPORTING
Except as otherwise stated in this Agreement, all financial information
provided to the Bank shall be compiled using generally accepted accounting
principles consistently applied.
During the time period that credit is available under this Agreement, and
afterward until all amounts due under the Documents are paid in full,
unless the Bank shall otherwise agree in writing, the Borrower agrees to:
Annual Financial Statements. Provide the Bank within 90 days of the
Borrower's fiscal year end, the Borrower's annual statements for the fiscal
year then ending, in form acceptable to the Bank. The statements must be
audited with an unqualified opinion by a certified public accountant
acceptable to the Bank.
Interim Financial Statements. Provide the Bank within 20 days of each month
end, the Borrower's interim financial statements for the interim period
then ending. The statements must be current through the end of that period
and must be prepared on a consolidated basis and be certified as correct by
an officer of the Borrower in form acceptable to the Bank
Borrowing Base Certificate. Provide the Bank within 20 days of each month
end, a Borrowing Base Certificate in the form of Exhibit A-3, current
through the end of that period and certified as correct by an officer of
the Borrower acceptable to the Bank.
Accounts Receivable Aging. Provide the Bank within 20 days of each month
end, an accounts receivable aging report in form acceptable to the Bank,
current through the end of that period and certified as correct by an
officer of the Borrower acceptable to the Bank.
Accounts Payable Aging. Provide the Bank within 20 days of each month end,
an accounts payable aging report in form acceptable to the Bank, current
through the end of that period and certified as correct by an office of the
Borrower acceptable to the Bank.
Inventory List. Provide the Bank within 20 days of each month end an
inventory reconciliation in form acceptable to the Bank, current through
the end of that period and certified as correct by an of officer of the
Borrower acceptable to the Bank. On a semi-annual basis, borrower to
provide complete copy of the detail list on January 20 and July 20.
4.
Financial Projections. Provide the Bank no later than 30 days prior to each
fiscal year end, financial projections for the Borrowers operations in the
next fiscal year in for acceptable to the Bank.
SEC Reporting. Provide the Bank within 15 days of filing with the
Securities and Exchange Commission, copies of its Form 10-K Annual Report
Form 10-Q Quarterly Report and 8-K Current Report.
Notices of Default. Provide the Bank prompt written notice of: 1) any event
which has or might after the passage of time or the giving of notice, or
both, constitute an event of default under any of the Documents; 2) any
future event that would cause the representations andwarranties contained
in this Agreement to be untrue when applied to the Borrowerscircumstances
as of the date of such event. 3) its discovery of any unpermitted release,
emission, discharge or disposal of any material of environmental concern.
or 4) its receipt of a claim from any governmental entity or third party
alleging noncompliance with environmental laws applicable to its operations
or properties.
Additional Information. Provide the Bank with such other information as it
may reasonably request, and permit the Bank to visit and inspect its
properties and examine its books and records.
2. FINANCIAL COVENANTS
During the time period that credit is available under this Agreement, and
afterward until all amounts due under the Documents are paid in full,
unless the Bank shall otherwise agree in writing, the Borrower agrees to
comply with the financial covenants described below, which shall be
calculated using generally accepted accounting principles consistently
applied, except as that may be otherwise modified by the following
capitalized definitions:
"Current Assets" means current assets less receivables and investments in
or other amounts due from any shareholder, director, officer, employee or
any person or entity related to or affiliated with the Borrower.
"Current Liabilities" means current liabilities less any portion of such
current liabilities that constitute Subordinated Debt.
"Current Maturities Long Term Debt" means that principal portion of the
Borrower's long term debt and capital leases payable within 12 months of
the determination date.
"Financing Costs" means dividends paid (except stock dividends) plus
interest.
"Net Cash After Operations" means net cash from operating activities under
the indirect method described in FASB 95, plus interest paid net of amounts
capitalized under FASB 95.
"Net Working Capital" means Current Assets less Current Liabilities.
"Subordinated Debt" means debt that is expressly subordinated to the Bank
in a writing acceptable to the Bank.
5.
"Tangible Net Worth" means total assets less liabilities and less the
following types of assets; (1) leasehold improvements capped at net value
not to exceed $750M; (2) receivables and other investments in or amounts
due from any shareholder, director, officer, employee or other person or
entity related to or affiliated with the Borrower; (3) goodwill, patents,
copyrights, mailing lists, trade names, trademarks, servicing rights,
organizational and franchise costs, bond underwriting costs and other like
assets properly classified as intangible.
"Traditional Cash Flow" means the aggregate amount of the following: (1)
net income after taxes; (2) amortization expense; (3) depreciation and
depletion expense; (4) deferred tax expense and (5) similar non-cash
charges against income which the Bank determines in its discretion to be
appropriate "add-backs".
Cash Flow Coverage Ratio. Maintain a ratio of after tax net profit plus
depreciation and amortization to Current Maturities of Long Term Debt of at
least 1.25 to 1.0 as of the end of each fiscal year.
Tangible Net Worth. Maintain a minimum Tangible Net Worth of at least
$5,900,000 as of the end of each fiscal year.
Current Ratio. Maintain a ratio of Current Assets to Current Liabilities of
at least 3.0 to 1.0 as of the end of each fiscal year.
Quick Ratio. Maintain a ratio of cash plus marketable securities plus net
accounts receivable to Current Liabilities of at least 1.5 to 1.0 as of the
end of each fiscal year.
Total Liabilities to Net Worth Ratio. Maintain a ratio of total liabilities
to total assets less total liabilities equal to or less than 2.0 to 1.0 as
of the end of each fiscal year.
OTHER COVENANTS
During the time period that credit is available under this Agreement, and
afterward until all amounts due under the Documents are paid in full,
unless the Bank shall otherwise agree in writing, the Borrower agrees to:
Insurance. Cause its properties to be adequately insured by a reputable
insurance company against loss or damage and to carry such other insurance
(including business interruption, flood, or environmental risk insurance)
as is required of or usually carried by persons engaged in the same or
similar business. Such insurance must, with respect to the Bank's
collateral security, include a lender's loss payable endorsement in favor
of the Bank in form acceptable to the Bank.
Change of Ownership. Refrain from permitting or suffering any change,
direct or indirect, in its capital ownership.
Collateral Audits. Permit the Bank to conduct audits of all collateral
pledged to the Bank by the Borrower at such intervals as the Bank may
reasonably require, but not in excess of two times each calendar year. The
audits may be performed by employees of the Bank or independent contractors
retained by the Bank.
6.
Nature of Business. Refrain from engaging in any line of business
materially different from that presently engaged in by the Borrower.
Loans to Officers. Refrain from making any loans or advances to any of its
executives, officers, directors or shareholders.
Sale of Assets. Refrain from selling or leasing during any fiscal year
assets with a cumulative value in excess of $50,000, other than sales of
inventory in the ordinary course of business.
Deposit Accounts. Maintain its principal deposit accounts with the Bank
Form of Organization and Mergers. Refrain from changing its legal form of
organization, or consolidating, merging, pooling, syndicating or otherwise
combining with any other entity.
Maintenance of Properties. Make all repairs, renewals or replacements
necessary to keep its plant, properties and equipment in good working
condition.
Books and Records. Maintain adequate books and records, refrain from making
any material changes in its accounting procedures for tax or other
purposes, and permit the Bank to inspect same upon reasonable notice.
Compliance with Laws. Comply in all material respects with all laws
applicable to its form of organization, business, and the ownership of its
property.
Preservation of Rights. Maintain and preserve all permits, licenses,
rights, privileges, charters and franchises that it now owns.
These covenants were negotiated by the Bank and Borrower based on
information provided to the Bank by the Borrower. A breach of a covenant is
an indication that the risk of the transaction has increased. As
consideration for any waiver or modification of these covenants, the Bank
may require: additional collateral, guaranties or other credit support;
higher fees or interest rates; and possible modifications to the Documents
and the monitoring of the Agreement. The waiver or modification of any
covenant that has been violated by the Borrower shall be made at the sole
discretion of the Bank. These options do not limit the Bank's right to
exercise its rights under any other Section of this Agreement.
EVENTS OR DEFAULT AND REMEDIES
.1 DEFAULT
Upon the occurrence of any one or more of the following events of default,
or at any time afterward unless the default has been cured, the Bank may
declare each revolving facility documented in this Agreement to be
terminated and in its discretion accelerate and declare the unpaid
principal, accrued interest and all other amounts payable under the
Revolving Note and the Documents to be immediately due and payable:
(a) Failure by the Borrower to make any payment of principal or interest due
under the Revolving Note which continues for 15 days after its due date.
7.
(b) Default by the Borrower in the observance or performance of any covenant or
agreement contained in this Agreement, and continuance for more than 15
days.
(c) Any representation or warranty made by the Borrower to the Bank is untrue
in any material respect.
(d) Any litigation or governmental proceeding against the Borrower seeking an
amount in excess of $100,000 which is not insured or subject to indemnity
by a solvent third party either 1) results in a judgment equal to or in
excess of that amount against the Borrower, or 2) remains unresolved on the
270th day following the date of service on the Borrower, unless as of that
date no judgment has been rendered and the contingent liability arising as
a result is classified as "remote" by Borrower's counsel as defined in FASB
5 in a signed opinion addressed to the Bank.
(e) A garnishment, levy or writ of attachment, or any local, state, or federal
notice of tax lien or levy is made or issues against the Borrower, or any
post judgment process or procedure is commenced or any supplementary remedy
for the enforcement of a judgment is employed against the Borrower or the
Borrower's property.
(f) A material adverse change occurs in the Borrower's financial condition or
ability to repay its obligations to the Bank.
.2 IMMEDIATE DEFAULT
If, with or without the Borrower's consent, a custodian, trustee or
receiver is appointed for any of the Borrower's properties, or if a
petition is filed by or against the Borrower under the United States
Bankruptcy Code, or the Borrower is dissolved, liquidated, or winds up its
business, then the unpaid principal, accrued interest, and all other
amounts payable under the Revolving Note and the Documents shall become
immediately due and payable without notice or demand.
MISCELLANEOUS
(a) No Waiver; Cumulative Remedies. No failure or delay by the Bank in
exercising any rights under this Agreement shall be deemed a waiver of
those rights. The remedies provided for in the Agreement are cumulative and
not exclusive of any remedies provided by law.
(b) Amendments or Modifications. Any amendment or modification of this
Agreement must be in writing and signed by the Bank and Borrower. Any
waiver of any provision in this Agreement must be in writing and signed by
the Bank.
(c) Binding Effect: Assignment. This Agreement and the Documents are binding
on the successors and assigns of the Borrower and Bank. The Borrower may
not assign its rights under this Agreement and the Documents without the
Bank's
8.
(d) Minnesota Law. This Agreement and the Documents shall be governed by the
substantive laws of the State of Minnesota.
(e) Severability of Provisions. If any part of this Agreement or the Documents
are unenforceable, the rest of this Agreement or the Documents may still be
enforced.
(f) Integration. This Agreement and the Documents describes the entire
understanding and agreement of the parties and supersedes all prior
agreements between the Bank and the Borrower relating to each credit
facility subject to this Agreement, whether verbal or in writing.
IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT SHOULD BE READ
CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE. NO OTHER TERMS
OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE LEGALLY ENFORCED.
YOU MAY CHANGE THE TERMS OF THIS AGREEMENT ONLY BY ANOTHER WRITTEN AGREEMENT.
THIS NOTICE ALSO APPLIES TO ANY OTHER CREDIT AGREEMENTS (EXCEPT CONSUMER LOANS
OR OTHER EXEMPT TRANSACTIONS) NOW IN EFFECT BETWEEN YOU AND THIS LENDER.
Address for notices to Bank: Address for notices to Borrower:
Norwest Bank Minnesota North, A.S.V., Inc.
National Association ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ PO Box 5160
Grand Rapids, MN 55744 ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
NORWEST BANK MINNESOTA NORTH, A.S.V., INC.
NATIONAL ASSOCIATION
BY: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ BY: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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ITS: VICE PRESIDENT ITS: C.F.O.
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EXHIBIT A-1
CONDITIONS PRECEDENT TO THE INITIAL ADVANCE
Promissory Note. The Revolving Note executed by the Borrower.
Security Agreement. A security agreement (the "Security Agreement") signed by
the Borrower granting the Bank a first lien security interest in the Borrower's
accounts, inventory, and general intangibles. The Borrower will also execute
financing statements sufficient to perfect the security interest granted to the
Bank.
Corporate Certificate of Authority. A certificate of the Borrower's corporate
secretary as to the incumbency and signatures of the officers of the Borrower
signing the Documents and containing a copy of resolutions of the Borrower's
board of directors authorizing execution of the Documents and performance in
accordance with the terms of the Agreement.
Articles of Incorporation and By-Laws. A certified copy of the Borrower's
Articles of Incorporation and By-laws and any amendments, if applicable.
Certificate of Good Standing. A copy of the Borrower's Certificate of Good
Standing, certified within 30 days of the Effective Date by the Minnesota
Secretary of State.
Arbitration Agreement. The Bank's standard form of arbitration agreement (the
"Arbitration Agreement") signed by the Bank and Borrower, subjecting to binding
arbitration potential controversies between the Bank and Borrower relating to
the Documents and the Agreement, as more fully described in the Arbitration
Agreement.
Evidence of Insurance. Evidence that the insurance required under the Covenant
Section of this Agreement is in force, including a binder showing the Bank as
loss payee with respect to the collateral subject to its security interest.
CONDITIONS PRECEDENT TO SUBSEQUENT ADVANCES
Borrowing Base Certificate. Concurrent with each request for credit under the
First Line and the Second Line, the Borrower will deliver a borrowing base
certificate to the Bank in form identical to the borrowing base certificate
attached as an exhibit to this Agreement, unless the Bank is in possession of a
borrowing base certificate current within 30 days of the requested advance.
EXHIBIT A-2
A.S.V., INC.
BORROWING BASE CERTIFICATE
TO: NORWEST BANK
▇▇▇ ▇.▇. ▇▇▇ ▇▇▇.
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
The Borrower certifies that the following computation of the Borrowing Base was
computed pursuant to the terms of the Agreement, and in accordance with the
definitions detailed above, as of _________________,19___.
Total Accounts Receivable $_____________
Less: 1) Greater than 90 days in age $_____________
2) Other ineligibles $_____________
Eligible Accounts Receivable $_____________
INVENTORY:
Total production parts & materials $_____________
Total Finished Goods & service parts $_____________
Used equipment $_____________
Less: Ineligible Inventory $_____________
Eligible Inventory $_____________
75% of Eligible Accounts Receivable $_____________
50% of Eligible Inventory $_____________
Total Borrowing Base $_____________
Total Line Outstandings $_____________
Excess (Deficit) $_____________
A.S.V., INC.
BY:_______________________
ITS:______________________
A-2 Continued
BORROWING BASE DEFINITION
Borrowing Base means the sum of 75% of Eligible Accounts Receivable (as defined
below) plus 50% of Eligible Inventory (as defined below).
Eligible Accounts Receivable means all accounts receivable except those which
are:
1) Greater than 90 days past the invoice date.
2) Due from an account debtor, 10% or more of whose accounts owed to the
Borrower are more than 90 days past the Invoice date.
3) Subject to offset or dispute.
4) Due from an account debtor who is subject to bankruptcy proceeding.
5) Owed by a shareholder of 10% or more, subsidiary, affiliate, officer
or employee of the Borrower.
6) Not subject to a perfected security interest in favor of the Bank.
7) Due from an account debtor located outside the United States and not
supported by a standby letter of credit acceptable to the Bank.
8) Due from a unit of foreign government.
Eligible Inventory means all inventory of the Borrower, at the lower of cost or
market as determined by generally accepted accounting principles, except
inventory which is:
1) In transit; or located at any warehouse not approved by the Bank.
2) Covered by a warehouse receipt, ▇▇▇▇ of lading or other document of
title.
3) On consignment to or from any other person or subject to any bailment.
4) Damaged, obsolete or not salable in the Borrower's ordinary course of
business.
5) Subject to a security interest in favor of any third party.
6) In the process of being returned.
7) Otherwise deemed ineligible by the Bank in its reasonable discretion.
NORWEST BANK MINNESOTA NORTH, NATIONAL ASSOCIATION
REVOLVING NOTE
===============================================================================
$2,000,000.00
FOR VALUE RECEIVED, A.S.V., Inc. (the "Borrower") promises to pay to the order
of Norwest Bank Minnesota North, National Association (the "Bank"), at its
principal office or such other address as the Bank or holder may designate from
time to time, the principal sum of Two Million Dollars. ($2,000,000.00), or the
amount shown on the Bank's records to be outstanding, plus interest (calculated
on the basis of actual days elapsed in a 360-day year) accruing each day on the
unpaid principal balance at the annual interest rate defined below. Absent
manifest error, the Bank's records shall be conclusive evidence of the principal
and accrued interest owing hereafter.
INTEREST RATE. The principal outstanding under this Revolving Note shall bear
interest at an annual rate equal to the Base Rate. Base rate means the rate of
interest established by the Bank from time to time as its "base" rate or "prime"
rate of interest at its principal office of Norwest Bank Minnesota, National
Association.
INTEREST. Interest shall be payable on the 1st day of each month beginning June
1, 1997. Principal shall be due on the earlier of DEMAND or June 1, 1998.
ADDITIONAL TERMS AND CONDITIONS. This revolving note is issued pursuant to a
Credit Agreement of even date between the Bank and the Borrower (the
"Agreement"). The Agreement, and any amendments or substitutions, contains
additional terms and conditions, including default and acceleration provisions,
which are incorporated into this Revolving Note by reference. Capitalized terms
not expressly defined herein shall have the meanings given them in the
Agreement. The Borrower agrees to pay all costs of collection, including
reasonable attorneys' fee and legal expenses incurred by the Bank if this
Revolving Note is not paid as provided above. This Revolving Note shall be
governed by the substantive laws of the State of Minnesota.
WAIVER AND PRESENTMENT AND NOTICE OF DISHONOR. Borrower and any other person
who signs, guarantees or endorses this Revolving Note, to the extent allowed by
law, hereby waives presentment, demand for payment, notice of dishonor, protest,
and any notice relating to the acceleration of the maturity of this Revolving
Note.
A.S.V., Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Its, C.F.O. May 22, 1997
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Disputes arising from obligations evidenced by this note are subject to
arbitration per the terms of a signed Arbitration Agreement.