AG BAG INTERNATIONAL LTD
<DOCUMENT>
<TYPE>EX-10.7
<SEQUENCE>4
<FILENAME>ab_k31231x107.txt
<TEXT>
                                                                    EXHIBIT 10.7

                FIRST AMENDMENT TO CREDIT AND SECURITY AGREEMENT


                  This First Amendment to Credit and Security Agreement, dated
as of June 10, 2003, is made by and between AG-BAG INTERNATIONAL LIMITED, a
Delaware corporation (the "BORROWER"), and WELLS FARGO CREDIT, INC., a Minnesota
corporation (the "LENDER").

                                    RECITALS

                  The Borrower and the Lender are parties to that certain Credit
and Security Agreement dated as of May 14, 2003, as it has previously been
amended (the "Credit Agreement").

                  The Borrower and the Lender wish to make certain additional
amendments to the Credit Agreement pursuant to the terms and conditions set
forth herein.

                  Capitalized terms used in this Amendment which are defined in
the Credit Agreement shall have the same meanings as defined therein, unless
otherwise defined herein.

                  NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, it is agreed as follows:

         1.       Amendment. Subpart (b)(ii) of the definition of "Borrowing
Base" in Section 1.1 of the Credit Agreement is amended in its entirety to read
as follows:

                  "(ii)    the lesser of (A) 40% of Eligible Inventory or (B)
                  $2,000,000, minus"

         2.       Fees. The Borrower shall pay all fees and expenses, including
attorney fees, incurred by the Lender in connection with this Amendment.

         3.       No Other Changes. Except as explicitly amended by this
Amendment, all of the terms and conditions of the Credit Agreement shall remain
in full force and effect and shall apply to any advance thereunder.

         4.       Conditions Precedent. This Amendment shall be effective when
the Lender shall have received an executed original hereof.

         5.       Representations and Warranties. The Borrower hereby represents
and warrants to the Lender as follows:

                  (a) The Borrower has all requisite power and authority to
execute this Amendment and to perform all of its obligations hereunder, and this
Amendment has been duly
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executed and delivered by the Borrower and constitutes the legal, valid and
binding obligation of the Borrower, enforceable in accordance with its terms.

                  (b) All of the Borrower's representations and warranties
contained in the Credit Agreement are true and correct on and as of the date
hereof as though made on and as of such date, except to the extent that such
representations and warranties relate solely to an earlier date.

         6.       References. All references in the Credit Agreement to "this
Agreement" shall be deemed to refer to the Credit Agreement as previously
amended and as amended hereby, and any and all references in the Security
Documents to the Credit Agreement shall be deemed to refer to the Credit
Agreement as so amended.

         7.       No Waiver. The execution of this Amendment and acceptance of
any documents related hereto shall not be deemed to be a waiver by the Lender of
any breach or default under the Credit Agreement or breach, default or event of
default under any Security Document or other document held by the Lender,
whether or not known to the Lender and whether or not existing on the date of
this Amendment.

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

                                     AG-BAG INTERNATIONAL LIMITED


                                     By:/s/Mike Wallis     /s/Larry Inman
                                       ------------------  -------------------
                                     Title:   CFO          Chairman/President



                                     WELLS FARGO CREDIT, INC.


                                     By: /s/ Norm Chin
                                        -----------------
                                     Title:   Assistant Vice President




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