CREDIT AND SECURITY AGREEMENT

         THIS  AGREEMENT is made as of September  28, 1999,  by and between U.S.
BANK NATIONAL  ASSOCIATION,  a national banking association (the "Lender"),  and
SIMON  TRANSPORTATION  SERVICES  INC., a Nevada  corporation  ("Simon") and DICK
SIMON TRUCKING, INC., a Utah corporation ("Trucking")(together,  the "Borrowers"
and each a "Borrower").

         In consideration of the mutual agreements herein contained, the parties
hereto agree as follows:


                   ARTICLE I DEFINITIONS AND ACCOUNTING TERMS

         1.1  Definitions.  In  addition  to  terms  defined  elsewhere  in this
Agreement or any  Supplement,  Exhibit or Schedule  hereto,  the following terms
shall have the following respective meanings (and such meanings shall be equally
applicable  to both the singular and plural forms of the terms  defined,  as the
context may require):

         "Account  Debtor": Any Person who is or who may become obligated to any
Borrower under, with respect to, or on account of an Account Receivable, General
Intangible or other Collateral.

         "Account  Receivable":  Any  account of a Borrower  and any other right
of a  Borrower to  payment for  goods  sold or leased or for services  rendered,
whether or not  evidenced by an  instrument or chattel paper and whether  or not
yet earned by performance.

         "Accounts  Receivable  Availability":  The  term  "Accounts  Receivable
Availability" shall have the meaning given such term in Supplement A.

         "Advance":  The portion of the outstanding Loans bearing interest at an
identical  rate for an identical  Interest  Period,  provided that all Reference
Rate  Advances  which  constitute  Loans  shall be deemed a single  Advance.  An
Advance may be a "Eurodollar  Advance" or a "Reference  Rate Advance"  (each,  a
"type" of Advance).

         "Adverse Event": The occurrence of any event that could have a material
adverse  effect on the  business,  operations,  property,  assets  or  condition
(financial or otherwise) of any Borrower or any Borrower and its Subsidiaries as
a consolidated enterprise or on the ability of any Borrower or any other Obligor
to perform its obligations under the Loan Documents.

         "Affiliate":  Any Person which  directly or  indirectly  through one or
more  intermediaries  controls,  or is controlled by, or is under common control
with,  the  Lender.  The  term  "control"  means  the  possession,  directly  or
indirectly,  of the power to direct or cause the direction of the management and
policies  of a Person,  whether  through  ownership  of stock,  by  contract  or
otherwise.



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         "Agreement":  This Credit and Security Agreement, as it may be amended,
modified,  supplemented,  restated or replaced from time to time.


         "Applicable Margin":  The  percentage  set  forth  in Section 3.1(c) of
Supplement A.

         "Attorneys'  Fees":  The value of the services (and costs,  charges and
expenses  related thereto) of the attorneys  employed by the Lender  (including,
without limitation,  attorneys and paralegals who are employees of the Lender or
any  Affiliate)  from  time to time  (a) in  connection  with  the  negotiation,
preparation,  execution,  delivery,  administration  and enforcement of the Loan
Documents,  (b)  to  prepare  documentation  related  to  the  Loans  and  other
Obligations,  (c) to represent the Lender in any litigation,  contest,  dispute,
suit or  proceeding  or to  commence,  defend  or  intervene  in any  litigation
contest, dispute, suit or proceeding or to file a petition,  complaint,  answer,
motion or other pleading, or to take any other action in or with respect to, any
litigation,  contest,  dispute,  suit or proceeding  (whether  instituted by the
Lender, any Borrower or any other Person and whether in bankruptcy or otherwise)
in any way or respect  relating to the Collateral,  any Third Party  Collateral,
the Loan Documents, or any Borrower's or any other Obligor's or any Subsidiary's
affairs, (d) to protect,  collect, lease, sell, take possession of, or liquidate
any of the Collateral or any Third Party  Collateral,  (e) to attempt to enforce
any security  interest in any of the Collateral or any Third Party Collateral or
to give any advice with respect to such  enforcement,  and (f) to enforce any of
the Lender's rights to collect any of the Obligations.

         "Borrowing  Base":  The  term  "Borrowing Base"  shall have the meaning
given such term in Supplement A.

         "Borrowing Base  Certificate":  The term "Borrowing  Base  Certificate"
shall have the meaning given such
term in Section 2.5(c).

         "Business Day": Any day (other than a Saturday, Sunday or legal holiday
in the State of  Minnesota)  on which  Lender is open and  carrying  on business
transactions  of the type  contemplated  by this  Agreement and, with respect to
Eurodollar  Advances,  a day on which  dealings in United States  Dollars may be
carried on by the Lender in the interbank eurodollar market.

         "Capital Expenditure": Any amount debited to the fixed asset account on
the  consolidated  balance sheet of a Borrower in respect of (a) the acquisition
(including, without limitation,  acquisition by entry into a Capitalized Lease),
construction,   improvement,  replacement  or  betterment  of  land,  buildings,
machinery,  equipment or of any other fixed assets or leaseholds, and (b) to the
extent related to and not included in clause (a), materials,  contract labor and
direct  labor  (excluding   expenditures   properly  chargeable  to  repairs  or
maintenance in accordance with GAAP).

         "Capitalized  Lease":  Any  lease  which  is or should  be  capitalized
on the  books of the  lessee  in accordance with GAAP.

         "Code": The Internal Revenue Code of 1986, as amended, or any successor
statute,  together  with the regulations thereunder.

         "Collateral":  The  term "Collateral" shall have the meaning given such
term in Section 3.1.

<PAGE>

         "Collateral  Account":  The  term  "Collateral  Account" shall have the
meaning given such term in Section 3.2(b).

         "Controlled  Disbursement Account":  The term "Controlled  Disbursement
Account" shall have the meaning given such term in Section 2.3(c).

         "Credit":  The facility  established under  this Agreement  pursuant to
which  the  Lender  will  make  Loans  to  the  Borrowers or issue, or cause any
Affiliate to issue, Letters of Credit for the account of either Borrower.

         "Credit Amount":  The term "Credit Amount" shall have the meaning given
such term in Supplement A.

         "Daily Unused Credit Amount": For any date of determination, the amount
obtained by  subtracting  from the Credit Amount  (determined as of (i) the last
day of the  month in which  such  date  falls,  or (ii) the date the  Credit  is
terminated if the Credit terminates on a day other than the last day of a month)
the sum of (a) the outstanding  principal balance of Loans on such date plus (b)
the Letter of Credit Obligations on such date.

         "Default Rate":  The  term "Default Rate" shall  have the meaning given
such term in Supplement A.

         "Determination  Date" The earlier of (a) the date of  commencement of a
case under Title 11 of the United States Code in which any Borrower is a debtor,
or (b) the date enforcement hereunder is sought with respect to any Borrower.

         "Disbursement  Account":  The term "Disbursement  Account"  shall  have
the  meaning  given  such term in Section 2.3(b).

         "Eligible   Account  Receivable":  An  Account  Receivable  owing  to a
Borrower  which  meets the  following requirements:

                  (a) it is genuine and in all respects what it purports to be;

                  (b) it arises from either (i) the  performance  of services by
         such  Borrower,  which  services  have been  fully  performed  and,  if
         applicable,  acknowledged  and/or  accepted by the Account  Debtor with
         respect  thereto;  or (ii) the sale or lease of goods by such  Borrower
         and (A) such goods comply with such Account Debtor's specifications (if
         any) and have been  shipped to, or  delivered  to and accepted by, such
         Account  Debtor,  (B) such Borrower has possession of, or has delivered
         to the Lender, at the Lender's request,  shipping and delivery receipts
         evidencing such shipment,  delivery and acceptance,  and (C) such goods
         have not been returned to such Borrower;



<PAGE>


                  (c) it (i) is evidenced by an invoice  rendered to the Account
         Debtor with  respect  thereto  which (A) is dated not earlier  than the
         date  of  shipment  or  performance  and  (B)  has  payment  terms  not
         unacceptable  to the  Lender;  and  (ii)  meets  the  Eligible  Account
         Receivable requirements set forth in Supplement A;


                  (d) it is not subject to any  assignment,  claim or Lien other
         than (i) a first  priority  Lien in favor of the  Lender and (ii) Liens
         consented to by the Lender in writing;

                  (e)  it is a  valid,  legally  enforceable  and  unconditional
         obligation  of the  Account  Debtor  with  respect  thereto  and is not
         subject to setoff, counterclaim, credit or allowance (except any credit
         or allowance which has been deducted in computing the net amount of the
         applicable  invoice as shown in the original schedule or Borrowing Base
         Certificate  furnished  to the Lender  identifying  or  including  such
         Account  Receivable)  or adjustment by the Account  Debtor with respect
         thereto,  or to any  claim by such  Account  Debtor  denying  liability
         thereunder in whole or in part, and such Account Debtor has not refused
         to accept any of the goods or  services  which are the  subject of such
         Account Receivable or offered or attempted to return any of such goods;

                  (f)  there  are no  proceedings  or  actions  which  are  then
         threatened or pending  against the Account Debtor with respect  thereto
         or to which such  Account  Debtor is a party which might  result in any
         material adverse change in such Account Debtor's financial condition or
         in its ability to pay any Account Receivable in full when due;

                  (g) it does not arise out of a contract or order which, by its
         terms, forbids, restricts or makes void or unenforceable the assignment
         by such Borrower to the Lender of such Account Receivable;

                  (h)  the  Account  Debtor  with  respect   thereto  is  not  a
         Subsidiary,  Related Party or Obligor, or a director, officer, employee
         or agent of either Borrower, a Subsidiary, Related Party or Obligor;

                  (i) the Account  Debtor with respect  thereto is a resident or
         citizen of and is located  within the United  States of America  unless
         the sale of goods giving rise to such Account  Receivable  is on letter
         of  credit,   banker's   acceptance  or  other  credit   support  terms
         satisfactory to the Lender;

                  (j) it does not  arise  from a  "sale on  approval,"  "sale or
         return" or  "consignment,"  nor is it subject to any  other  repurchase
         or return agreement;

                  (k) it is not an  Account  Receivable  with  respect  to which
         possession  and/or  control of the goods sold  giving  rise  thereto is
         held,  maintained  or retained by any such  Borrower,  any  Subsidiary,
         Related  Party or  Obligor  (or by any agent or  custodian  of  anysuch
         Borrower, any Subsidiary,  Related Party or Obligor) for the account of
         or subject to further  and/or future  direction from the Account Debtor
         with respect thereto;

                  (l) it does  not,  in any  way,  violate  or fail to meet  any
         warranty,  representation  or covenant  contained in the Loan Documents
         relating   directly  or  indirectly  to  either   Borrower's   Accounts
         Receivable;


                  (m) (Reserved);

      <PAGE>

                  (n) it  arises  in  the  ordinary  course  of  such Borrower's
         business;

                  (o) if the Account  Debtor with respect  thereto is the United
         States of America or any department,  agency or instrumentality thereof
         (a "Federal  Governmental  Authority"),  or any state,  county or local
         governmental  authority,  or any department,  agency or instrumentality
         thereof,  such  Borrower  has  assigned  its right to  payment  of such
         Account  Receivable to the Lender  pursuant to the Assignment of Claims
         Act of 1940  as  amended  in the  case  of the a  Federal  Governmental
         Authority,  or pursuant to  applicable  state law, if any, in all other
         instances,  and such  assignment has been accepted and  acknowledged by
         the appropriate government officers;

                  (p) if the Lender,  in its sole and absolute  discretion,  has
         established a credit limit for the Account Debtor with respect thereto,
         the  aggregate  dollar  amount  of  Accounts  Receivable  due from such
         Account Debtor, including such Account Receivable, does not exceed such
         credit limit; and

                  (q) if it is evidenced by chattel  paper or  instruments,  (i)
         the Lender  shall have  specifically  agreed to  include  such  Account
         Receivable as an Eligible Account  Receivable,  (ii) only payments then
         due and  payable  under  such  chattel  paper  or  instrument  shall be
         included as an Eligible  Account  Receivable and (iii) the originals of
         such chattel paper or  instruments  have been assigned and delivered to
         the Lender in a manner satisfactory to the Lender.

An Account  Receivable which is at any time an Eligible  Account  Receivable but
which  subsequently  fails  to  meet  any of the  foregoing  requirements  shall
forthwith cease to be an Eligible Account Receivable.  Further,  with respect to
any Account Receivable, if the Lender at any time or times hereafter determines,
in its sole and absolute discretion, that the prospect of payment or performance
by the Account Debtor with respect thereto is or will be impaired for any reason
whatsoever,  notwithstanding  anything to the  contrary  contained  above,  such
Account Receivable shall forthwith cease to be an Eligible Account Receivable.

         "Environmental  Laws":  The Resource  Conservation  and Recovery Act of
1987, the Comprehensive Environmental Response,  Compensation and Liability Act,
any so-called  "superfund" or "superlien" law, the Toxic Substances Control Act,
and any other  federal,  state or local  statue,  law,  ordinance,  code,  rule,
regulation,  order or decree  regulating,  relating to, or imposing liability or
standards of conduct  concerning  any  Hazardous  Materials or other  hazardous,
toxic or dangerous waste, substance or constituent, or other substance,  whether
solid, liquid or gas, as now or at any time hereafter in effect.

         "Environmental  Lien": A Lien in favor of any  governmental  entity for
(a) any liability  under any  Environmental  Law, or (b) damages arising from or
costs incurred by such governmental entity in response to a spillage,  disposal,
or release into the  environment of any Hazardous  Material or other  hazardous,
toxic or dangerous waste, substance or constituent, or other substance.


<PAGE>

         "Equipment":  All  equipment  of the  Borrowers or any of them of every
description,  including, without limitation,  fixtures,  furniture, vehicles and
trade  fixtures,  together  with any and all  accessions,  parts  and  equipment
attached thereto or used in connection therewith, and any substitutions therefor
and replacements thereof.

         "ERISA":  The  Employee  Retirement  Income  Security  Act  of 1974, as
amended,  or any  successor  statute, together with the regulations thereunder.

         "ERISA Affiliate":  Any trade or business (whether or not incorporated)
that is a member of a group of which  aeither  Borrower is a member and which is
treated as a single employer under Section 414 of the Code.

         "Eurodollar  Advance":  An Advance  designated as  such  in a notice of
borrowing  under Section 2.5(a) or a notice of continuation  or conversion under
Section 2.5(e).

         "Eurodollar  Interbank  Rate": The average offered rate for deposits in
United States Dollars  (rounded  upwards,  if necessary,  to the nearest 1/16 of
1%), for delivery of such  deposits on the first day of an Interest  Period of a
Eurodollar Advance,  for the number of days comprised therein,  which appears on
the Reuters  Screen LIBO Page as of 11:00 a.m.,  London time (or such other time
as of which such rate  appears) on the day that is two Business  Days  preceding
the first day of the Interest Period or the rate for such deposits determined by
the  Lender  at such time  based on such  other  published  service  of  general
application as shall be selected by the Lender for such purpose;  provided, that
in lieu of  determining  the  rate  in the  foregoing  manner,  the  Lender  may
determine  the rate  based on rates  offered to Lender  for  deposits  in United
States Dollars  (rounded  upwards if necessary to the nearest 1/16 of 1%) in the
interbank  eurodollar  market at such time for  delivery on the first day of the
Interest Period for the number of days comprised  therein.  "Reuters Screen LIBO
Page" means the display  designated  as page "LIBO" on the Reuter  Monitor Money
Rates  Service (or such other page as may replace the LIBO Page on that  service
for the purpose of displaying  London interbank offered rates of major banks for
United States Dollar deposits).

         "Eurodollar  Rate  (Reserve  Adjusted)":   A  rate  per  annum (rounded
upward,  if necessary,  to the nearest 1/16th of 1%) calculated for the Interest
Period of a Eurodollar Advance in accordance with the following formula:

         ERRA              =         Eurodollar Interbank Rate
                                          1.00 - ERR

In such  formula,  "ERR"  means  "Eurodollar  Reserve  Rate"  and  "ERRA"  means
"Eurodollar Rate (Reserve Adjusted)",  in each instance determined by the Lender
for the applicable Interest Period. The Lender's determination of all such rates
for any Interest Period shall be conclusive in the absence of manifest error.



<PAGE>



         "Eurodollar  Reserve  Rate":  A percentage  equal to the daily  average
during  such  Interest  Period of the  aggregate  maximum  reserve  requirements
(including all basic, supplemental,  marginal and other reserves), (a) specified
under  Regulation  D of the  Federal  Reserve  Board,  or any  other  applicable
regulation  that  prescribes  reserve  requirements  applicable to  Eurocurrency
liabilities  (as presently  defined in  Regulation  D) and/or (b)  applicable to
extensions of credit by the Lender,  the rate of interest on which is determined
with regard to rates  applicable to eurocurrency  liabilities.  Without limiting
the generality of the foregoing, the Eurocurrency Reserve Rate shall reflect any
reserves  required to be  maintained  by the Lender  against (i) any category of
liabilities  that  includes  deposits  by  reference  to  which  the  Eurodollar
Interbank Rate is to be determined, or (ii) any category of extensions of credit
or other assets that includes Eurodollar Advances.


         "Event of Default":  The term "Event of Default" shall have the meaning
given such term in Section 7.1.

         "Federal Reserve Board":  The Board of Governors of the Federal Reserve
System or any successor thereto.

         "Fraudulent Conveyance": A fraudulent conveyance or fraudulent transfer
under  Section  548 of  Title  11 of the  United  States  Code  or a  fraudulent
conveyance  or  fraudulent  transfer  under  the  provisions  of any  applicable
fraudulent  conveyance or  fraudulent  transfer law or similar law of any state,
province, nation, or other governmental unit, as in effect from time to time.

         "GAAP":  Generally  accepted  accounting  principles promulgated by the
Financial  Accounting  Standards Board,  as  applied  in the  preparation of the
audited  financial  statement of the Borrower  referred to in Section 4.6.

         "General   Intangibles":   All  intangible  personal  property  of  the
Borrowers or any of them  including  things in action,  causes of action and all
other personal property of the Borrowers or any of them of every kind and nature
(other than goods, accounts,  chattel paper,  documents,  instruments and money)
including, without limitation,  corporate or other business records, inventions,
designs, patents, patent applications, trademarks, trademark applications, trade
names, trade secrets,  goodwill,  copyrights,  registrations,  leases, licenses,
franchises,  customer  lists,  tax refund claims,  claims  against  carriers and
shippers,  guarantee  claims,  security  interests,  security  deposits or other
security held by or granted to the Borrowers or any of them to secure payment by
an  Account  Debtor  of any of the  Accounts  Receivable,  any  other  rights to
payment,   including,   without   limitation,   rights   to   reimbursement   or
indemnification,  and any other rights of whatsoever  nature,  whether earned or
unearned.

         "Guaranteed  Obligations":  The term "Guaranteed Obligations shall have
the meaining given such term in Section 12.16.

         "Hazardous   Materials":   Any  hazardous  substance  or  pollutant  or
contaminant  defined as such in (or  for  the purposes of) any Environmental Law
including,  without limitation,  petroleum  and  petroleum  products,  including
crude oil or any  fraction  thereof  which is  liquid at standard  conditions of
temperature  or  pressure (60 degrees Fahrenheit and 14.7 pounds per square inch
absolute),  any  radioactive  material,  including  any source,  special nuclear
or  by-product  material  as  defined  at  42 U.S.C.  section 2011 et. seq.,  as
amended or hereafter  amended, and asbestos in any form or condition.

<PAGE>

         "Indebtedness":  Without  duplication,  all obligations,  contingent or
otherwise,  which in accordance with GAAP should be classified upon the Person's
balance sheet as liabilities,  but in any event including the following (whether
or not they should be classified as liabilities  upon such balance  sheet):  (a)
any obligation secured by any mortgage,  pledge, security interest, lien, charge
or other  encumbrance  existing on property owned or acquired  subject  thereto,
whether or not such  obligation  shall have been assumed and whether or not such
obligation is the obligation of the owner or another  party;  (b) any obligation
on account of deposits or advances; (c) any obligation for the deferred purchase
price of any  property  or  services,  except  accounts  payable  arising in the
ordinary course of business;  (d) any obligation as lessee under any Capitalized
Lease; (e) any guaranty,  endorsement or other contingent  obligation in respect
to indebtedness of others;  and (f) any undertaking or agreement to reimburse or
indemnify issuers of letters of credit. For all purposes of this Agreement,  the
Indebtedness of any Person shall include the  Indebtedness of any partnership or
joint venture in which such Person is a general partner or a joint venturer.

         "Indemnified  Liabilities":  The  term "Indemnified  Liabilities" shall
have the meaning given such term in Section 10.2.

         "Indemnitees":  The  term  "Indemnitees"  shall  have the meaning given
such term in Section 10.2.

         "Interest Period": For any Eurodollar Advance, the period commencing on
the  borrowing  date of such  Eurodollar  Advance or the date a  Reference  Rate
Advance  is  converted  into  such  Eurodollar  Advance,  or the last day of the
preceding Interest Period for such Eurodollar Advance if a Eurodollar Advance is
continued,  as the case may be, and ending on the numerically  corresponding day
one, two, three or six months  thereafter,  as selected by the Borrower pursuant
to Section 2.5; provided, that:

                  (i) any  Interest  Period which would  otherwise  end on a day
         which is not a Business Day shall end on the next  succeeding  Business
         Day unless such next succeeding  Business Day falls in another calendar
         month,  in  which  case  such  Interest  Period  shall  end on the next
         preceding Business Day;

                  (ii) any Interest Period which begins on the last Business Day
         of a  calendar  month  (or on a day for which  there is no  numerically
         corresponding  day in the  calendar  month at the end of such  Interest
         Period) shall end on the last Business Day of the calendar month at the
         end of such Interest Period; and

                  (iii) no  Interest  Period shall extend beyond the Termination
         Date.

         "Inventory":  Any  and  all  goods  of the  Borrowers  or any of  them,
including,  without limitation,  goods in transit, wheresoever located which are
or may at any time be leased by a Borrower to a lessee,  held for sale or lease,
furnished  under any  contract  of  service  or held as raw  materials,  work in
process, or supplies or materials used or consumed in a Borrower's business,  or
which are held for use in connection with the  manufacture,  packing,  shipping,
advertising,  selling or  finishing  of such goods,  and all goods,  the sale or
other  disposition of which has given rise to an Account  Receivable,  which are
returned to and/or  repossessed  and/or  stopped in transit by a Borrower or the
Lender,  or at any time  hereafter in the  possession  or under the control of a
Borrower  or the  Lender,  or any agent or bailee  of  either  thereof,  and all
documents of title or other documents representing the same.



<PAGE>



         "Investment": The acquisition, purchase, making or holding of any stock
or other security,  any loan,  advance,  contribution  to capital,  extension of
credit (except for trade and customer accounts  receivable for inventory sold or
services  rendered in the ordinary  course of business and payable in accordance
with customary  trade terms),  any  acquisitions  of real and personal  property
(other  than real and  personal  property  acquired  in the  ordinary  course of
business) and any purchase or  commitment  or option to purchase  stock or other
debt or equity securities of, or any interest in, another Person or any integral
part of any business or the assets comprising such business or part thereof.

         "L/C Draft":  A draft drawn on the Letter of Credit Issuer, pursuant to
a Letter of Credit.

         "Letter of Credit":  A letter of credit  issued by the Letter of Credit
Issuer  pursuant to a Letter of Credit  Application as said letter of credit may
be amended or extended from time to time.

         "Letter  of  Credit  Agreements":  Collectively,  the  Letter of Credit
Application  and any and all documents,  instruments  and  agreements  between a
Borrower,  Lender and/or Letter of Credit Issuer related to the Letter of Credit
Application  and/or Letter of Credit together with any and all amendments and/or
extensions thereto or thereof.

         "Letter of Credit Application":  An application submitted by a Borrower
for  issuance  of a Letter of Credit  pursuant  to  Section  2.2,  in a form and
containing  terms and  provisions  acceptable  to the  Lender  and the Letter of
Credit Issuer.

         "Letter of Credit Issuer":  With respect to any given Letter of Credit,
the Lender or Affiliate  issuing such Letter of Credit.

         "Letter of Credit Obligations":  The  aggregate amount of all  possible
drawings  under all Letters of Credit plus all amounts drawn under any Letter of
Credit and not reimbursed by either Borrower.

         "Letter  of  Credit  Sublimit":  The term  "Letter of Credit  Sublimit"
shall have the  meaning  given such term in Supplement A.

         "Lien": Any security interest,  mortgage,  pledge, lien, hypothecation,
statutory  lien,  judgment lien or similar legal process,  charge,  encumbrance,
title retention agreement or analogous instrument or device (including,  without
limitation,  the interest of a lessor under Capitalized  Leases and the interest
of a vendor under any conditional sale or other title retention agreement).

         "Loan":  A  Loan  referred  to in  Section  2.1  and any other loans or
advances  made  to  the  Borrowers  by  the  Lender  under  or  pursuant to this
Agreement.


<PAGE>


         "Loan  Account":  The  term "Loan Account" shall have the meaning given
such term in Section 2.3(a).

         "Loan  Availability":  The  lesser  of (a) the  Credit Amount minus the
Letter  of  Credit  Obligations  or (b) the  Borrowing  Base minus the Letter of
Credit Obligations.

         "Loan Documents":  This Agreement, any Note, and each other instrument,
document,  guaranty, mortgage, deed of trust, chattel mortgage, pledge, power of
attorney,  consent,  assignment,  contract,  notice, security agreement,  lease,
financing statement,  subordination agreement, trust account agreement, or other
agreement  executed  and  delivered  by the  Borrowers  or either of them or any
Guarantor  or party  granting  a  security  interest  in  connection  with  this
Agreement,  the Loans, the Letters of Credit or the Collateral,  as the same may
be amended, modified, restated or replaced from time to time.

         "Maximum Obligated Amount": For each Borrower,  respectively, as of the
Determination  Date, the greater of (a) an amount equal to the aggregate  amount
of the Loans made under this  Agreement  the proceeds of which are used (whether
directly or indirectly) to make a Valuable Transfer to such Borrower, or (b) the
maximum  amount  that  would  not cause  this  Agreement  to cause a  Fraudulent
Conveyance with respect to such Borrower.

         "Multiemployer  Plan": A multiemployer plan, as such term is defined in
Section  4001(a)(3) of ERISA,  which is, or which has been, within five years of
the date of this  Agreement,  or at any time  after the date of this  Agreement,
maintained for the employees of a Borrower or any ERISA Affiliate.

         "Net  Worth":  At any  determination  date,  the  total  of all  assets
appearing  on a  consolidated  balance  sheet  of the  Borrowers  at such  date,
prepared in accordance with GAAP, after deducting all proper reserves (including
without limitation,  reserves for depreciation,  obsolescence,  amortization and
taxes  related  to a LIFO to FIFO  conversion)  minus all  liabilities  which in
accordance  with GAAP would be included on the liability  side of a consolidated
balance sheet.

         "Note":   Any   promissory  note  of  the  Borrowers  or  any  of  them
evidencing any loan or advance  (including but not limited to the Loans) made by
the Lender to the Borrowers  pursuant  to this  Agreement,  as  the same  may be
amended, modified, restated or replaced from time to time.

         "Obligations": All of the liabilities,  obligations and indebtedness of
the  Borrowers or any of them to the Lender,  or any  Affiliate,  of any kind or
nature,  however  created,  arising or  evidenced,  whether  direct or indirect,
absolute or contingent,  now or hereafter  existing or due or to become due, and
including,  without  limitation,  (a) the obligations of the Borrowers or any of
them under the Loan Documents,  including  obligations of  performance,  (b) the
Letter of Credit  Obligations and all other  obligations of the Borrowers or any
of them with respect to any Letter of Credit or any Letter of Credit  Agreement,
and (c)  interest,  fees,  charges,  expenses,  Attorneys'  Fees and other  sums
chargeable to the Borrowers or any of them by the Lender or any Affiliate  under
the Loan  Documents.  "Obligations"  shall also include any and all  amendments,
extensions, renewals, refundings or refinancings of any of the foregoing.


<PAGE>





         "Obligor":  Each  Borrower and each other Person who is or shall become
primarily or secondarily liable on any Obligations or who grants  to the  Lender
a Lien on any  property  of such  Person  as  security  for any Obligations.

         "Occupational  Safety  and Health  Law":  The  Occupational  Safety and
Health  Act of 1970 as  amended  from time to time,  or any  successor  statute,
together with the regulations  thereunder and any other federal,  state or local
statute,  law, ordinance,  code, rule,  regulation,  order or decree regulating,
relating to or imposing  liability or standards of conduct  concerning  employee
health and/or safety.

         "Over Advance":  The  term  "Over Advance" shall have the meaning given
such term in Section 2.8.

         "Overdraft Loan":  The  term  "Overdraft Loan"  shall  have the meaning
given such term in Section 2.7.

         "Participant":  Any Person,  now  or  at  any  time or times hereafter,
participating  with the Lender in the Loans made to the Borrowers hereunder.

         "Payment  Date":  The  Termination  Date or any other date on which the
Credit  terminates,  plus the last day of each month of each year.

         "PBGC":  The Pension Benefit Guaranty Corporation, established pursuant
to Subtitle A of Title IV of ERISA, or any successor thereto or to the functions
thereof.

         "Person":  Any natural person, corporation, partnership, joint venture,
firm,   association,   trust,   unincorporated   organization,   government   or
governmental  agency or political  subdivision  thereof,  or  any other  entity,
whether acting in an individual, fiduciary or other capacity.

         "Plan":  Each  employee  pension  or  benefit plan (as those  terms are
defined in Section 3 of ERISA) maintained for the benefit of employees, officers
or directors of a Borrower or of any ERISA Affiliate.

         "Prohibited  Transaction":  The  respective  meanings  assigned to such
term in Section 4975 of the Code and Section 406 of ERISA.





         "Reference  Rate":  The rate of  interest  from  time to time  publicly
announced  by  Lender  as its  "reference  rate."  The  Lender  may  lend to its
customers at rates that are at, above or below the Reference  Rate. For purposes
of  determining  any interest  rate which is based on the Reference  Rate,  such
interest rate shall change on the effective  date of any change in the Reference
Rate.



<PAGE>



         "Reference  Rate  Advance":  An Advance  designated as such in a notice
of  borrowing  under  Section 2.5(a)  or a notice of  continuation or conversion
under Section 2.5(e).


         "Related  Party":  Any  Person  (other  than a  Subsidiary):  (a) which
directly  or  indirectly,  through  one of  more  intermediaries,  controls,  is
controlled  by  or  is  under  common  control  with,  a  Borrower,   (b)  which
beneficially owns or holds 15% or more of the equity interest of a Borrower,  or
(c) 15% or more of the equity interest of which is beneficially owned or held by
a Borrower or a Subsidiary. The term "control" means the possession, directly or
indirectly,  of the power to direct or cause the direction of the management and
policies of a Person,  whether  through the ownership of voting  securities,  by
contract or otherwise.

         "Reportable  Event": A reportable  event, as defined in Section 4043 of
ERISA and the  regulations  issued under such  Section,  with respect to a Plan,
excluding,  however,  such events as to which the PBGC by regulation  has waived
the  requirement of Section  4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event; provided,  that for purposes of this Agreement,
a failure to meet the  minimum  funding  standard of Section 412 of the Code and
Section 302 of ERISA shall be a Reportable  Event  regardless of the issuance of
any waiver in accordance with Section 412(d) of the Code.

         "Subordinated  Debt":  That portion of any liabilities,  obligations or
Indebtedness  of a Borrower which contains terms  satisfactory to the Lender and
is subordinated, in a manner satisfactory to the Lender, as to right and time of
payment of principal and interest thereon, to any and all Obligations.

         "Subsidiary":  Any Person of which or in which a Borrower and its other
Subsidiaries own, alone or in combination,  directly or indirectly,  50% or more
of: (a) the combined  voting power of all classes of stock having general voting
power under ordinary circumstances to elect a majority of the board of directors
of such  Person,  if it is a  corporation,  (b) the capital  interest or profits
interest  of such  Person,  if it is a  partnership,  joint  venture  or similar
entity,  or (c) the  beneficial  interest  of  such  Person,  if it is a  trust,
association or other unincorporated organization.

         "Supplemental  Documentation":  The term  "Supplemental  Documentation"
shall have the meaning given such term in Section 3.5.

         "Taxes":  With  respect to  any  Person  means  taxes,  assessments  or
other governmental charges or levies imposed upon such Person, its income or any
of its properties, franchises or assets.

         "Termination Date":  The term "Termination Date" shall have the meaning
given such term in Supplement A.

         "UCC":  The  Uniform  Commercial  Code as in  effect  in the  State  of
Minnesota and any successor statute,  together with any regulations  thereunder,
in each case as in effect from time to time.  References  to sections of the UCC
shall be construed to also refer to any successor sections.



<PAGE>



         "Unmatured  Event of  Default":  Any  event  which,  with the giving of
notice to the  Borrowers or lapse of time, or both, would constitute an Event of
Default.


         "Unused  Credit Fee":  The  term  "Unused  Credit  Fee" shall  have the
meaning given such term in Supplement A.

         "Valuable  Transfer":  In  respect  of each  Borrower,  (a) all  loans,
advances or capital  contributions  made directly or indirectly to such Borrower
with proceeds of Loans,  (b) all debt  securities or other  obligations  of such
Borrower acquired from such Borrower,  or retired by such Borrower,  with direct
or  indirect  proceeds  of  Loans,  (c) the fair  market  value of all  property
acquired  with direct or  indirect  proceeds of Loans (but only to the extent of
the economic benefit to such Borrower of the property so  transferred),  (d) all
equity  securities of such  Borrower  acquired from such Borrower with direct or
indirect proceeds of Loans, and (e) the value of quantifiable  economic benefits
not  included in clauses (a)  through (d) above  accruing to such  Borrower as a
result of the Loans.

         1.2  Accounting  Terms and  Calculations.  Except  as may be  expressly
provided to the  contrary  herein,  all  accounting  terms used herein or in any
certificate  or  other  document  made or  delivered  pursuant  hereto  shall be
interpreted  and all accounting  determinations  hereunder  (including,  without
limitation,  determination  of compliance with financial ratios and restrictions
in Articles V and VI and in Supplement A) shall be made in accordance  with GAAP
consistently applied,  using a first in first out method of Inventory valuation.
Any reference to "consolidated"  financial terms apply to circumstances in which
a  Borrower  has  Subsidiaries  and shall be deemed to refer to those  financial
terms as applied to such Borrower and the  Subsidiaries in accordance with GAAP.
If, in Lender's judgment,  a material change occurs in GAAP, then either (a) the
Lender  and the  Borrowers  shall  amend,  in  writing,  the  covenants  in this
Agreement,  Supplement A, and the other Loan  Documents  which are calculated on
the basis of GAAP to reflect such change, or (b) if the Lender and the Borrowers
fail to agree on and enter into such an  amendment,  then the Lender  shall have
the right to deem such change in GAAP to be an Event of Default.

         1.3 Other  Definitional  Provisions.  Unless otherwise defined therein,
all terms defined in this Agreement  shall have such defined  meanings when used
in any other Loan Document.  Terms used in this  Agreement  which are defined in
any Supplement,  Exhibit or Schedule hereto shall,  unless the context otherwise
indicates, have the meanings given them in such Supplement, Exhibit or Schedule.
Other terms used in this  Agreement  and not  otherwise  defined  herein  shall,
unless the context  otherwise  indicates,  have the meanings given such terms in
the Minnesota Uniform Commercial Code to the extent the same are used or defined
therein.   Reference  to  "this  Agreement"  shall  include  the  provisions  of
Supplement A.  References to Sections,  Exhibits,  Schedules and like references
are to this Agreement unless otherwise expressly provided.

         1.4 Rules of Construction.  Section captions used in this Agreement are
for convenience  only, and shall not affect the  construction of this Agreement.
The words  "hereof,"  "herein," and "hereunder" and words of similar import when
used in this  Agreement  shall refer to this Agreement as a whole and not to any
particular   provision  of  this   Agreement.   Gender   references  are  freely
interchangeable and shall refer to the masculine, feminine or neuter.



<PAGE>





            ARTICLE II LOANSCREDIT; LETTERS OF CREDIT; OTHER MATTERS

         2.1      Loans.

                  (a) Amount, Authority to Make Certain Advances. Subject to the
         terms and  conditions of the Loan  Documents,  and in reliance upon the
         representations and warranties of the Borrowers set forth herein and in
         the  other   Loan   Documents,   the   Lender   agrees  to  make  loans
         (individually, a "Loan" and collectively, the "Loans") to the Borrowers
         during the period  from and after the date  hereof to the date on which
         the Credit terminates,  in such amounts,  in the type of Advance and at
         such times as the Borrowers  may from time to time  request,  up to but
         not in excess of the Loan Availability. Loans made by the Lender may be
         repaid and, subject to the terms and conditions  hereof,  reborrowed to
         the date on which the Credit terminates.

                  (b) Types of Advances.  The Loans shall be Eurodollar Advances
         or Reference  Rate Advances,  as requested by the Borrowers,  except as
         otherwise  provided herein. Any combination of types of Advances may be
         outstanding  at the same  time,  provided  that,  no more than five (5)
         Eurodollar Advances may be outstanding at any one time. Each Eurodollar
         Advance  shall be in a minimum  amount of  $1,000,000 or in an integral
         multiple of $500,000 above such amount.

                  (c)  Indemnification.  Each Borrowers  hereby  indemnifies the
         Lender  against  any loss or expense  which the  Lender may  sustain or
         incur (including,  without limitation, any loss or expense sustained or
         incurred in obtaining, liquidating or employing deposits or other funds
         acquired to effect,  fund, or maintain any Advance) as a consequence of
         (i) any  failure of the  Borrowers  or any of them to make any  payment
         when due of any  amount  due  hereunder  or under  any  Note,  (ii) any
         failure of the Borrowers or any of them to borrow,  continue or convert
         an Advance on a date specified  therefor in a notice thereof,  or (iii)
         any payment  (including,  without  limitation,  any payment pursuant to
         Section 7.2),  prepayment or conversion of any Eurodollar  Advance on a
         date other than the last day of the Interest Period for such Eurodollar
         Advance.  Lender's  certificate or invoice  setting forth the amount or
         amounts  Lender is entitled to receive  pursuant to this Section 2.1(c)
         delivered to the Borrowers shall be conclusive in the absence of error.
         The amount  shown as due on such  certificate  or invoice is payable on
         demand.



<PAGE>



                  (d)  Mandatory  Payments.  All  Loans  and  other  Obligations
         hereunder shall be paid by the Borrowers on the Termination Date unless
         payable  sooner  pursuant  to the  provisions  of  this  Agreement.  In
         addition,  Borrowers shall pay to the Lender all proceeds of Collateral
         in  accordance  with the  provisions  of this  Agreement and other Loan
         Documents for  application  against the  Obligations  in such order and
         manner as Lender may deem  appropriate.  If the  aggregate  outstanding
         principal  balance of the Loans exceeds the Loan  Availability or there
         is  a  negative  Loan  Availability,  then,  unless  the  Lender  shall
         otherwise  consent in writing,  the  Borrowers  shall  immediately  and
         without  notice of any kind make such payments as shall be necessary to
         eliminate such excess or negative Loan Availability, or take such other
         action (including, without limitation,  delivery of cash collateral) as
         Lender may require.


                  (e) Recourse to Collateral. The Borrowers' payment obligations
         under this Agreement and under any Note, Letter of Credit Agreement and
         any other Loan  Document  are primary and absolute and Lender shall not
         be required to seek recourse to Collateral,  Third Party  Collateral or
         other security at any time.

         2.2      Letters of Credit.

                  (a)  Application,  Agreement to Issue.  From time to time from
         and after the date hereof to the Termination  Date or, if earlier,  the
         date on which the Credit terminates,  a Borrower may request Lender, or
         any  Affiliate,  to issue one or more Letters of Credit for the account
         of such Borrower  and,  upon receipt of duly executed  Letter of Credit
         Applications and such other Letter of Credit  Agreements as the Lender,
         or such Affiliate,  may require, Lender or such Affiliate shall, in its
         discretion,  issue Letters of Credit on such terms as are  satisfactory
         to the Letter of Credit Issuer;  provided,  however,  that no Letter of
         Credit will be issued if,  before or after taking such Letter of Credit
         into account,  the Letter of Credit Obligations exceed the least of (i)
         the  Letter  of  Credit  Sublimit,  (ii) the  Credit  Amount  minus the
         outstanding  principal  balance of the Loans,  and (iii) the  Borrowing
         Base minus the outstanding principal balance of the Loans.

                  (b)  Fees  and  Commissions.  The  Borrowers  agree to pay the
         Letter of Credit  Issuer,  on  demand,  the  Letter of Credit  Issuer's
         standard administrative  operating fees and charges in effect from time
         to time for issuing, administering or making payments under any Letters
         of Credit.  The Borrowers  further agree to pay the Lender a commission
         on the undrawn  amount of each  Letter of Credit  (which  amount  shall
         include,  without limitation,  the amount of each L/C Draft accepted by
         the Letter of Credit  Issuer but  unpaid)  in the  amounts  and at such
         times as are set forth in Supplement A.

                  (c)   Reimbursement   Obligations.   The  Borrowers  agree  to
         reimburse  the Letter of Credit  Issuer on demand for each payment made
         by the  Letter of Credit  Issuer  under or  pursuant  to any  Letter of
         Credit or L/C Draft. The Borrowers  further agree to pay to the Lender,
         on demand,  interest  at the  Default  Rate,  on any amount paid by the
         Letter of Credit  Issuer,  under or pursuant to any Letter of Credit or
         L/C Draft,  from the date of payment until the date of reimbursement to
         the Letter of Credit Issuer.  The Borrowers hereby authorize Lender, at
         Lender's  option,  to make an Advance under this Agreement in an amount
         equal to the  amount  paid by the  Letter of Credit  Issuer,  under any
         Letter of Credit or L/C  Draft,  and pay such  amount to the  Letter of
         Credit Issuer in reimbursement for such payment.



<PAGE>



                  (d) Acceleration,  Required Deposits. Notwithstanding anything
         to the contrary  herein or in any Letter of Credit  Agreement or Letter
         of Credit,  without notice to any Borrower or Obligor, upon termination
         of the Credit, (whether pursuant to Section 7.1(a) or (b) or otherwise)
         and, at Lender's  discretion,  at any time that an Event of Default has
         occurred and is continuing  (whether or not the Credit is  terminated),
         an  amount  equal to the  aggregate  amount  of the  Letter  of  Credit
         Obligations  shall be deemed (as between the Lender and the  Borrowers)
         to have been paid or disbursed by the Letter of Credit Issuer under the
         Letters  of Credit  and L/C  Drafts  accepted  by the  Letter of Credit
         Issuer,  notwithstanding that such amounts may not in fact have been so
         paid or disbursed.


         Upon the occurrence of the events described in the preceding paragraph,
         Lender is hereby  authorized,  at its option,  to make an Advance under
         this Agreement in an amount equal to such Letter of Credit Obligations,
         which Advance  shall be  immediately  due and payable,  the proceeds of
         which shall be deposited into a separate cash collateral account as set
         forth in this Section 2.2(d) below.  In lieu of the foregoing,  Lender,
         at its  election,  may  demand,  and upon such demand  Borrowers  shall
         deliver to Lender,  cash or cash  equivalents in an amount equal to the
         Letter of Credit Obligations.  (Cash equivalents, if acceptable,  shall
         have the value as determined by the Lender.)

         The proceeds of such Advance and/or cash or cash  equivalents  received
         by Lender  pursuant to this  Section  2.2(d)  shall be deposited by the
         Lender  in a  separate  account  appropriately  designated  as  a  cash
         collateral  account in relation to this Agreement and shall be retained
         by the Lender, or Affiliate, as collateral security for the Obligations
         including,  without limitation, the Letter of Credit Obligations.  Such
         amounts  shall not be used by the Letter of Credit  Issuer,  to pay any
         amounts  drawn  under any  Letter of Credit or L/C Draft.  At  Lender's
         option,  such amounts may be applied by Lender to reimburse  the Letter
         of Credit  Issuer  for  payments  made  under a Letter of Credit or L/C
         Draft or to  payment  of such other  Obligations  as the  Lender  shall
         determine.   Following   payment  in  full  of  all  Obligations,   the
         termination or expiration of all Letters of Credit and the  termination
         of the Credit,  any amounts  remaining in any cash  collateral  account
         established  pursuant  to this  Section  2.2 shall be  returned  to the
         Borrowers or other Person legally  entitled thereto (after deduction of
         the Lender's and any Affiliate's expenses). The deposit of cash or cash
         equivalents by Borrowers shall not relieve  Borrowers or any Obligor of
         any Obligations under any of the Loan Documents.

         2.3         Loan Account; Disbursement Account; Controlled Disbursement
                     Account.

                  (a) Loan  Account.  The Lender shall  establish or cause to be
         established on its books in the  Borrowers'  names one or more accounts
         (each, a "Loan  Account") to evidence Loans made to the Borrowers.  Any
         amounts  advanced as a Loan pursuant to this  Agreement will be debited
         to the  applicable  Loan  Account  and  result  in an  increase  in the
         principal  balance  outstanding  in such  Loan  Account  in the  amount
         thereof,  provided,  however,  any failure by Lender to debit such Loan
         Account  in  respect  of any such  Loans  shall not  affect  Borrowers'
         obligations  to repay such Loans in accordance  with the  provisions of
         this  Agreement  or any Note.  Any  amount  received  by the Lender and
         applied by the Lender as  principal  payments  in  accordance  with the
         provisions hereof,  will be credited to the applicable Loan Account and
         result in a reduction in the principal balance outstanding in such Loan
         Account.



<PAGE>



                  (b)  Disbursement  Account.  The Borrowers  shall  maintain in
         their  names a  commercial  account  (the  "Disbursement  Account")  at
         Lender's  office at 15 West South Temple,  Salt Lake City,  Utah 84101.
         Unless otherwise provided in this Agreement,  the Lender will credit or
         cause to be  credited  to the  Disbursement  Account the amount of each
         Advance made by Lender hereunder.


                  (c)  Controlled  Disbursement  Account.  At its  option,  each
         Borrower may maintain in its name a commercial account (the "Controlled
         Disbursement  Account")  with a bank  selected  by  such  Borrower  and
         satisfactory to the Lender,  into which deposits from the  Disbursement
         Account may be authorized  by the Borrowers  and/or the Lender and from
         which the applicable  Borrower may draw checks for corporate  purposes.
         If a Borrower so elects, such Borrower, Lender and such depository bank
         shall enter into an agreement  satisfactory to Lender regarding,  among
         other things, the Controlled Disbursement Account and access to amounts
         on deposit therein or attributable thereto.

         2.4      Interest; Fees.

                  (a) Interest.  The outstanding  principal balance of each Loan
         to  the  Borrowers   hereunder  shall  bear  interest  at  the  rate(s)
         applicable  to such  Loan  as set  forth  in  Supplement  A;  provided,
         however,  that no  provision  of this  Agreement  or of any Note  shall
         require the payment or permit the  collection  of interest in excess of
         the rate permitted by applicable  law.  Interest as aforesaid  shall be
         charged for the actual number of days elapsed over a year consisting of
         360 days on the actual  daily  balance of such  Loan.  Interest  on the
         unpaid  principal  of any Loan shall  accrue from the date such Loan is
         made to the date such Loan is paid in full.  Interest  shall be paid on
         the Payment  Dates for the  applicable  types of Loans.  Any accrued or
         accruing interest after the Termination Date or other date on which the
         Credit terminates shall be payable on demand.

                  (b)  Interest  After  Default.  At any  time  that an Event of
         Default has  occurred  and is  continuing,  the  outstanding  principal
         amount of all Loans,  all past due  interest  and all past due fees and
         other sums payable to the Lender  hereunder or under any Loan  Document
         shall bear interest at the Default Rate.

                  (c) Unused Credit Fee. The  Borrowers  shall pay to the Lender
         an Unused  Credit  Fee for the  period  from and after the date  hereof
         through and  including  the date the Credit is terminated in the amount
         and at the times set forth in Supplement A.

         2.5      Requests  for  Loans;  Borrowing  Base  Certificates;    Other
                  Information;  Continuation and Conversion of Loans.


                  (a) Loan  Requests.  Except as  otherwise  expressly  provided
         elsewhere in this Agreement,  Loans shall be requested by telephone and
         promptly confirmed in writing by a Borrower, and must be given so as to
         be received by the Lender not later than:

                           (i) 1:00 p.m.,  Minneapolis  time, on the date of the
                  requested  Loan, if the Loan is to  be comprised  of Reference
                  Rate Advances; or

                           (ii) 11:00 a.m.,  Minneapolis time, two Business Days
                  prior to the date of the requested Loan, if the Loan is to be,
                  or include, a Eurodollar Advance.


<PAGE>





         Each  request for a Loan shall  specify (i) the  borrowing  date (which
         shall be a Business Day),  (ii) the amount of such Loan and the type or
         types of Advances  comprising  such Loan (subject to the  limitation on
         amount  set forth in  Section  2.1(bc)),  and (iii) if such Loan  shall
         include Eurodollar Advances, the initial Interest Periods for each such
         Eurodollar  Advance.  The  failure  of  any  Borrower  to  confirm  any
         telephonic  request or  otherwise  comply with the  provisions  of this
         Section  2.5(a) shall not in any manner  affect the  obligation  of the
         Borrowers  to repay  such  Loan in  accordance  with the  terms of this
         Agreement.

                  (b) Additional Information. In the event that a Borrower shall
         at any time,  or from time to time,  (i) make a request for a Loan,  or
         (ii) be deemed to have requested an Overdraft Loan, the Borrowers agree
         to  forthwith  provide  the  Lender  with  such  information,  at  such
         frequency  and in such  format,  as is  required  by the  Lender,  such
         information to be current as of the time of such request.

                  (c) Borrowing Base  Certificate.  Each Borrower further agrees
         to  provide  to  the  Lender  a  current   borrowing  base  certificate
         ("Borrowing  Base  Certificate")  at the end of each  month and at such
         other times as the Lender may request.  Such Borrowing Base Certificate
         shall be in  substantially  the form of  Exhibit  A, and  include  such
         supporting  documentation  as Lender may  require and shall be executed
         and  certified  as accurate by such person or persons as such  Borrower
         designates,  from time to time,  in writing  to the Lender as  provided
         herein.

                  (d) Borrower's Authorized Representatives. Each Borrower shall
         provide  the  Lender  with  documentation  satisfactory  to the  Lender
         indicating the names of those employees of such Borrower  authorized by
         such Borrower to sign, among other things, Borrowing Base Certificates,
         and/or to make a  telephone  request  for a Loan,  and/or to  authorize
         disbursement  of the proceeds of a Loan by wire  transfer or otherwise.
         The Lender  shall be  entitled  to rely upon such  documentation  until
         notified in writing by such  Borrower of any  change(s) in the names of
         persons so  authorized.  The  Lender  shall be  entitled  to act on the
         instructions  of  anyone  identifying  himself  as one  of the  persons
         authorized  to  request  Loans or  disbursements  of Loan  proceeds  by
         telephone and the  Borrowers  shall be bound thereby in the same manner
         as if the person were actually so  authorized.  The Borrowers  agree to
         indemnify  and  hold  the  Lender  harmless  from  any and all  claims,
         damages, liabilities,  losses, costs and expenses (including Attorneys'
         Fees) which may arise or be created by the  acceptance of  instructions
         (telephonic or otherwise) for making Loans or disbursing  Loan proceeds
         by wire transfer or otherwise, or for application of payments.

                  (e) Continuation and Conversion of Loans. A Borrower may elect
         to continue any outstanding Eurodollar Advance from one Interest Period
         into a  subsequent  Interest  Period  to  begin  on the last day of the
         earlier  Interest  Period,  or convert  any  outstanding  Advance  into
         another type of Advance (on the last day of an Interest Period only, in
         the instance of a Eurodollar Advance),  by giving the Lender telephonic
         notice promptly confirmed in writing, given so as to be received by the
         Lender not later than:



<PAGE>



                           (i) 1:00 p.m.,  Minneapolis  time, on the date of the
                  requested conversion, if requesting conversion of a Eurodollar
                  Advance to a Reference Rate Advance; or


                           (ii) 11:00 a.m.,  Minneapolis  time, two (2) Business
                  Days  prior  to the  date  of the  requested  continuation  or
                  conversion,  if requesting  the  continuation  of a Eurodollar
                  Advance or the  conversion  of a Reference  Rate  Advance to a
                  Eurodollar Advance.

         Each notice of  continuation  or conversion of an Advance shall specify
         (x) the effective date of the  continuation or conversion  (which shall
         be a Business  Day),  (y) the amount and the type or types of  Advances
         following such continuation or conversion (subject to the limitation on
         amount set forth in Section  2.1(b),  and (z) for  continuation  as, or
         conversion  into,  Eurodollar  Advances,  the Interest Periods for such
         Advances.  Absent timely notice of  continuation  or  conversion,  each
         Eurodollar  Advance shall  automatically  convert into a Reference Rate
         Advance on the last day of an applicable  Interest Period,  unless paid
         in full on such  last  day.  No  Advance  shall  be  continued  as,  or
         converted  into, a Eurodollar  Advance if the shortest  Interest Period
         for such Advance may not transpire prior to the Termination  Date or if
         an Event of Default or  Unmatured  Event of Default has occurred and is
         continuing.

         2.6 Notes.  Lender,  in its sole and absolute  discretion,  may require
that  any and all  Loans  hereunder  be  evidenced  by a  Note.  Whether  or not
evidenced  by a Note,  all Loans and payments  thereof  shall be recorded on the
Lender's books, which shall be rebuttable  presumptive evidence of the amount of
such Loans outstanding at any time hereunder. The Lender will account monthly as
to all Loans and payments  hereunder.  Notwithstanding  any term or condition of
this Agreement to the contrary, the failure of the Lender to record the date and
amount of any Loan shall not limit or  otherwise  affect the  obligation  of the
Borrowers to repay any such Loan.

         2.7 Overdraft  Loans. The Lender,  in its sole and absolute  discretion
and subject to the terms  hereof,  may make a Loan to the Borrowers in an amount
equal to the  amount of any  overdraft  which may from time to time  exist  with
respect  to the  Disbursement  Account  or any  other  bank  account  which  the
Borrowers  may now or  hereafter  have with Lender or any other  Affiliate.  The
existence of such overdraft shall be deemed to be a request by the Borrowers for
such  Loan.  The  Borrowers  acknowledge  that  the  Lender  is under no duty or
obligation  to make  any  Loan to the  Borrowers  to cover  any  overdraft.  The
Borrowers further agree that an overdraft shall constitute a separate Loan under
this Agreement (an "Overdraft Loan"),  which shall bear interest,  from the date
on which the overdraft occurred until paid, in an amount equal to the greater of
130% of the  highest  rate of  interest  then  charged  for  Loans  (other  than
Overdraft  Loans or Over  Advances)  made  hereunder,  or $50.00 per day. If the
Lender, in its sole and absolute discretion, decides not to make a Loan to cover
part or all of any  overdraft,  the Lender may return any check(s) which created
such overdraft.



<PAGE>



         2.8 Over Advances. The Lender, in its sole and absolute discretion, may
make Loans to the Borrowers,  either at the Borrowers' request or to pay amounts
due to the  Lender or any  Affiliate  under  this  Agreement  or any other  Loan
Document, in excess of the Loan Availability or permit the total Loans to exceed
the Loan  Availability  at any time (such  excess  Obligations  are  hereinafter
referred  to as "Over  Advances").  No Over  Advance or series of Over  Advances
shall cause or  constitute a waiver by the Lender of its right to refuse to make
any further  Loan or to issue,  or cause to be issued,  any Letters of Credit at
any time that an Over  Advance  exists or would  result  therefrom.  During  any
period in which an Over Advance  exists,  the amount of the Over Advances  shall
bear  interest  at a rate equal to 130% of the  highest  rate of  interest  then
charged for Loans (other than Overdraft Loans or Over Advances) made hereunder.


         2.9 All Loans One  Obligation.  All Loans  under this  Agreement  shall
constitute  one  Loan,  and  all  Obligations   shall   constitute  one  general
obligation, secured by the Lien granted by the Borrowers hereunder on all of the
Collateral  and by all  other  Liens  heretofore,  now or at any  time or  times
hereafter   granted  by  the  Borrower  or  any  other  Obligor  to  secure  the
Obligations.  The Borrowers agree that all of the rights of the Lender set forth
in the Loan Documents shall, unless otherwise agreed to in writing, apply to any
modification of or supplement to the Loan Documents.

         2.10     Making  of Payments; Application  of  Collections; Charging of
                  Accounts.

                  (a) All payments hereunder (including payments with respect to
         any Notes) shall be made without set-off or  counterclaim  and shall be
         made to the Lender in immediately available funds (or as the Lender may
         otherwise  consent) prior to 11:00 a.m.,  Minneapolis time, on the date
         due at its  office  at  U.S.  Bank  Place,  601  Second  Avenue  South,
         Minneapolis,  Minnesota  55402-4302,  or at such other  place as may be
         designated by the Lender to the Borrowers in writing from time to time.
         Any payments  received after such time shall be deemed  received on the
         next Business Day.  Whenever any payment to be made  hereunder or under
         any Note shall be stated to be due on a date other than a Business  Day
         such payment may be made on the next  succeeding  Business Day and such
         extension  of time shall be included in the  computation  of payment of
         interest or any fees.



<PAGE>



                  (b) The  Borrowers  authorize  the  Lender  to, and the Lender
         will,  subject to the  provisions  of this Section  2.10(b),  apply the
         whole  or any  part  of any  amounts  received  by the  Lender,  or any
         Affiliate  (whether  deposited in the  Collateral  Account or otherwise
         received by the Lender,  or any Affiliate) from the collection of items
         of payment and  proceeds of any  Collateral  or Third Party  Collateral
         against  the  principal  and/or  interest  of any Loans made  hereunder
         and/or any other Obligations, whether or not then due, in such order of
         application  as the Lender  may  determine,  unless  such  payments  or
         proceeds are, in the Lender's sole and absolute discretion, released to
         the Borrowers.  No checks,  drafts or other instruments received by the
         Lender, or any Affiliate,  shall constitute final payment to the Lender
         unless and until such item of payment has actually been collected.  All
         items or amounts  which are  delivered to the Lender by or on behalf of
         the  Borrowers  or any  Obligor  or any  Account  Debtor on  account of
         partial  or  full  payment  or  otherwise  as  proceeds  of  any of the
         Collateral or Third Party  Collateral  (including  any items or amounts
         which may have been deposited to the Collateral  Account) may from time
         to time, in the Lender's sole and absolute  discretion,  be released to
         the  Borrowers  or may be  applied by the  Lender  towards  such of the
         Obligations,  whether or not then due, in such order of  application as
         the Lender may  determine.  Notwithstanding  anything  to the  contrary
         herein,  (i) solely for purposes of  determining  the  occurrence of an
         Event of Default  hereunder,  all cash,  checks,  instruments and other
         items of payment,  shall be deemed  received upon actual receipt by the
         Lender  unless  the  same is  subsequently  dishonored  for any  reason
         whatsoever,  (ii) solely for  purposes of  determining  whether,  under
         Sections 2.1 and 2.2,  there is Loan  Availability,  all cash,  checks,
         instruments  and other  items of payment  shall be applied  against the
         Obligations  no later than the first  Business  Day  following  receipt
         thereof by the Lender in  Minneapolis,  Minnesota or the first Business
         Day following the initiation by the Lender of an ACH  transaction  from
         the  Collateral  Account,  and (iii)  solely for  purposes  of interest
         calculation hereunder, all cash, checks, instruments and other items of
         payment shall be deemed to have been applied against the Obligations no
         later than the second  Business Day  following  receipt  thereof by the
         Lender in  Minneapolis,  Minnesota or the second Business Day following
         the initiation by the Lender of an ACH transaction  from the Collateral
         Account.


                  (c) The Borrowers hereby irrevocably  authorize the Lender and
         the Lender may, in its sole and  absolute  discretion,  at any time and
         from time to time, pay all or any portion of any Obligations including,
         without limitation, interest, Attorneys' Fees and other fees, costs and
         expenses of the Lender for which the Borrowers  are liable  pursuant to
         the  terms  of  the  Loan  Documents,   by  charging  the  Disbursement
         Account(s)  or any other bank  account of the  Borrowers or any of them
         maintained  with Lender or any  Affiliate  or by  advancing  the amount
         thereof to the  Borrowers  as a Loan and  applying the proceeds of such
         Loan against such Obligations;  provided,  however, that the provisions
         of this Section 2.10(c) shall not affect the Borrowers'  obligations to
         pay when due all amounts payable by the Borrowers under any of the Loan
         Documents  whether or not there are  sufficient  funds  therefor in the
         Disbursement Account(s) or any such other bank account of the Borrowers
         or any of them with Lender or any other  Affiliate,  or sufficient Loan
         Availability.

         2.11  Lender's  Election  Not to Enforce.  Notwithstanding  any term or
condition  of this  Agreement  to the  contrary,  the  Lender,  in its  sole and
absolute  discretion,  at any time and from time to time may  suspend or refrain
from enforcing any or all of the restrictions  imposed in this Article II but no
such  suspension or failure to enforce shall impair the Lender's right and power
under this Agreement to refrain from making a Loan or issuing,  or causing to be
issued,  a  Letter  of  Credit  requested  by the  Borrowers  if all  conditions
precedent to the Lender's  obligation to make such Loan or issue, or cause to be
issued, such Letter of Credit have not been satisfied.

         2.12     Additional Provisions Relating to Loans

                  (a)  Increased  Costs.  If,  as a  result  of any  law,  rule,
         regulation,  treaty  or  directive,  or any  change  therein  or in the
         interpretation or administration  thereof,  or compliance by the Lender
         or Affiliate  with any request or directive  (whether or not having the
         force of law) from any court,  central  bank,  governmental  authority,
         agency or instrumentality, or comparable agency:



<PAGE>



                           (i) any tax, duty or other charge with respect to any
                  Loan,  any Note or the Credit is  imposed,  modified or deemed
                  applicable, or the basis of taxation of payments to the Lender
                  of interest or  principal of the Loans or any fees (other than
                  taxes  imposed on the  overall net income of the Lender by the
                  jurisdiction in which the Lender has its principal  office) is
                  changed;


                           (ii) any reserve, special deposit, special assessment
                  or similar requirement against assets of, deposits with or for
                  the account of, or credit  extended by, the Lender is imposed,
                  modified or deemed applicable;

                           (iii) any increase in the amount of capital  required
                  or  expected  to be  maintained  by the  Lender or any  Person
                  controlling   the  Lender  is  imposed,   modified  or  deemed
                  applicable; or

                           (iv) any other  condition  affecting  this  Agreement
                  or the Credit is imposed on the Lender or the relevant funding
                  markets;

         and the Lender  determines  that,  by reason  thereof,  the cost to the
         Lender of making or  maintaining  the Loans or the Credit is increased,
         or the amount of any sum  receivable  by the Lender  hereunder or under
         any Note in respect of any Loan is reduced;

         then, the Borrowers shall pay to the Lender such  additional  amount or
         amounts as will compensate the Lender (or the controlling Person in the
         instance of (iii)  above) for such  additional  costs or  reduction  in
         amounts received (provided that the Lender has not been compensated for
         such  additional cost or reduction in the calculation of the Eurodollar
         Reserve Rate).  Lender's or Affiliate's  certificate or invoice setting
         forth the amount or amounts such Person is entitled to receive pursuant
         to this Section  2.12(a) shall be conclusive in the absence of manifest
         error. In determining  such amounts,  the Lender may use any reasonable
         averaging,  attribution and allocation methods. The amount shown as due
         on any  certificate or invoice  delivered under this Section 2.12(a) is
         payable on demand.

                  (b) Deposits  Unavailable or Interest Rate  Unascertainable or
         Inadequate;    Impracticability.    If  the  Lender  determines  (which
         determination  shall  be conclusive  and binding on the parties hereto)
         that:

                           (i) deposits of the necessary amount for the relevant
                  Interest  Period for any Eurodollar  Advance are not available
                  to the Lender in the  relevant  markets or that,  by reason of
                  circumstances  affecting such market,  adequate and reasonable
                  means do not exist for ascertaining  the Eurodollar  Interbank
                  Rate, as the case may be, for such Interest Period;

                           (ii) the Eurodollar Rate (Reserve  Adjusted) will not
                  adequately and fairly reflect the cost to the Lender of making
                  or funding the  Eurodollar  Advances  for a relevant  Interest
                  Period; or

                           (iii) the making or funding  of  Eurodollar  Advances
                  has become  impracticable  as a result of any event  occurring
                  after the date of this Agreement  which, in the opinion of the
                  Lender,  materially and adversely affects such Advances or the
                  Lender's ability to make such Advances or the relevant market;



<PAGE>



         the Lender  shall  promptly  give notice of such  determination  to the
         Borrowers,  and (i) any  request  for a new  Eurodollar  Advance or for
         conversion  of  a  Reference  Rate  Advance  to  a  Eurodollar  Advance
         previously given by a Borrower and not yet funded or converted shall be
         deemed to be a  request  for a  Reference  Rate  Advance,  and (ii) the
         Borrowers  shall  be  obligated  to  either  (A)  prepay  in  full  any
         outstanding  Eurodollar Advances without premium or penalty on the last
         day of the current  Interest Period with respect thereto or (B) convert
         any such Eurodollar Advance to a Reference Rate Advance on the last day
         of the current Interest Period.


                  (c) Changes in Law Rendering Eurodollar Advances Unlawful.  If
         at any time due to the adoption of any law, rule, regulation, treaty or
         directive,   or  any  change  therein  or  in  the   interpretation  or
         administration  thereof  by  any  court,  central  bank,   governmental
         authority, agency or instrumentality, or comparable agency charged with
         the interpretation or administration  thereof,  or for any other reason
         arising  subsequent  to the date of this  Agreement,  it  shall  become
         unlawful or  impossible  for the Lender to make or fund any  Eurodollar
         Advance,  the  obligation of the Lender to provide such Advance  shall,
         upon the  happening  of such  event,  forthwith  be  suspended  for the
         duration of such illegality or  impossibility.  If any such event shall
         make  it  unlawful  or  impossible  for  the  Lender  to  continue  any
         Eurodollar Advance  previously made by it hereunder,  the Lender shall,
         upon the  happening  of such  event,  notify the  Borrowers  thereof in
         writing,  and the Borrowers  shall, at the time notified by the Lender,
         either (i) convert  each such  Eurodollar  Advance to a Reference  Rate
         Advance,  or (ii) repay such Eurodollar Advance in full,  together with
         accrued interest thereon, subject to the provisions of Section 2.1(cd).

                  (d)  Funding.

                           (i) Discretion of the Lender as to Manner of Funding.
                  Notwithstanding   any  provision  of  this  Agreement  to  the
                  contrary,  the Lender  shall be entitled to fund and  maintain
                  its  funding  of all or any part of the Loans in any manner it
                  elects;  it being  understood,  however,  that for purposes of
                  this Agreement,  all determinations hereunder shall be made as
                  if  the  Lender  had  actually   funded  and  maintained  each
                  Eurodollar Advance during the Interest Period for such Advance
                  through the purchase of deposits  having a term  corresponding
                  to such Interest  Period and bearing an interest rate equal to
                  the  Eurodollar   Interbank  Rate  for  such  Interest  Period
                  (whether   or  not  the   Lender   shall  have   granted   any
                  participations in such Advances).

                           (ii) Funding Through Affiliate.  At the Lender's sole
                  option,  it may  fulfill  its  commitment  to make  Eurodollar
                  Advances  by causing an  Affiliate  to make or  continue  such
                  Eurodollar  Advances;  provided,  that in such  instance  such
                  Eurodollar  Advances  shall be  deemed  for  purposes  of this
                  Agreement  to have been made by the Lender and the  obligation
                  of the Borrowers to repay such Eurodollar Advances shall be to
                  the  Lender  and shall be deemed  held by the  Lender  for the
                  account of such Affiliate.




<PAGE>



                             ARTICLE III COLLATERAL


         3.1 Grant of  Security  Interest.  As  security  for the payment of all
Loans now or hereafter  made by the Lender to the  Borrowers  hereunder or under
any Note,  and as security  for the payment or other  satisfaction  of all other
Obligations,  the Borrowers hereby pledge,  assign and grant to the Lender,  and
its  Affiliates,  a security  interest in all right,  title and  interest of the
Borrowers or any of them in and to the  following  property of the  Borrowers or
any of them, whether now owned or existing, or hereafter acquired or coming into
existence,  wherever now or hereafter  located (all such property is hereinafter
referred to collectively as the "Collateral"):

                  (a)  Accounts  Receivable  (whether or not  Eligible  Accounts
         Receivable),  including all other rights and interests  (including  all
         liens and security interests) that the Borrower may at any time have by
         law or agreement  against any Account Debtor or other obligor obligated
         to make any such payment or against any of the property of such Account
         Debtor or other obligor;

                  (b) General Intangibles;

                  (c) documents;

                  (d) all chattel paper and instruments evidencing,  arising out
         of or relating to any obligation to a Borrower for goods sold or leased
         or  services  rendered or  otherwise  arising out of or relating to any
         property described in clauses (a) through (c) above;

                  (e)  any and  all  balances,  credits,  deposits  (general  or
         special, time or demand,  provisional or final),  accounts or monies of
         or in the name of a Borrower now or hereafter  with the Lender,  or any
         Affiliate,  and any and all property of every kind or description of or
         in the name of a Borrower now or  hereafter,  for any reason or purpose
         whatsoever,  in the possession or control of, in transit to or standing
         to a Borrower's credit on the books of, the Lender, any Affiliate,  any
         agent or bailee for the Lender or any Affiliate, or any Participant and
         all items in any lockbox;

                  (f) all  replacements,  substitutions, additions or accessions
          to or for any of the foregoing;

                  (g) to the extent related to the property described in clauses
         (a)  through  (f)  above,  all  books,  correspondence,  credit  files,
         records,  invoices and other papers and documents,  including,  without
         limitation,  to the extent so related, all tapes, cards, computer runs,
         computer  programs and other papers and documents in the  possession or
         control of a Borrower or any  computer  bureau from time to time acting
         for a Borrower,  and,  to the extent so related,  all rights in, to and
         under all policies of insurance, including claims of rights to payments
         thereunder  and  proceeds  therefrom  and refunds of unearned  premiums
         related thereto,  including,  without limitation, any credit insurance;
         and

                  (h) all proceeds of any of the foregoing.



<PAGE>



         3.2      Accounts Receivable.


                  (a)  Adjustments.   The  Borrowers  shall  notify  the  Lender
         immediately of all disputes and claims by any Account Debtor and settle
         or adjust them at no expense to the Lender.  If the Lender directs,  no
         discount  or  credit  allowance  shall  be  granted  thereafter  by any
         Borrower to any Account Debtor. All Account Debtor payments and all net
         amounts received by the Lender in settlement, adjustment or liquidation
         of  any  Account  Receivable  may  be  applied  by  the  Lender  to the
         Obligations  or  credited  to  the  Disbursement  Account  (subject  to
         collection),  as  the  Lender  may  deem  appropriate,  as  more  fully
         described in Section  2.10.  If requested by the Lender,  the Borrowers
         will make proper  entries in their books,  disclosing the assignment of
         Accounts Receivable to the Lender.

                  (b) Collateral  Account.  Unless otherwise consented to by the
         Lender in writing,  each Borrower will,  forthwith upon receipt by such
         Borrower of any and all checks,  drafts,  cash and other remittances in
         payment  or as  proceeds  of, or on  account  of,  any of the  Accounts
         Receivable  or other  Collateral,  deposit  the same in a special  bank
         account in Lender's  name  designated  for  receipt of such  Borrower's
         funds (the  "Collateral  Account")  maintained  by Lender or such other
         bank or financial  institution as the Lender shall consent,  over which
         the Lender alone has power of withdrawal,  and will designate with each
         such  deposit  the  particular  Accounts  Receivable  or other  item of
         Collateral   upon  which  the   remittance   was  made.  The  Borrowers
         acknowledge  that the  maintenance of the Collateral  Account is solely
         for the  convenience of the Lender in  facilitating  its own operations
         and the  Borrowers  do not and  shall  not  have  any  right,  title or
         interest  in the  Collateral  Account  or in the  amounts  at any  time
         appearing to the credit  thereof.  Said proceeds  shall be deposited in
         precisely the form received except for a Borrower's  endorsement  where
         necessary  to  permit  collection  of  items,  which  endorsement  each
         Borrower agrees to make. The applicable  Borrower(s) shall be liable as
         endorsee on all items  deposited in the Collateral  Account  whether or
         not in fact endorsed by such  Borrower(s).  Pending such  deposit,  the
         Borrowers  agree not to  commingle  any such checks,  drafts,  cash and
         other remittances with any of its funds or property, but will hold them
         separate and apart  therefrom  and upon an express trust for the Lender
         until deposit thereof if made in the Collateral Account.  Upon the full
         and final liquidation of all Obligations and termination of the Credit,
         the Lender will pay over to the Borrowers any excess  amounts  received
         by the Lender as payment or proceeds of Collateral, whether received by
         the Lender as a deposit in the  Collateral  Account or  received by the
         Lender as a direct payment on any of the sums due hereunder.



<PAGE>



                  (c) Lockbox.  After the occurrence of an Event of Default, the
         Lender may request and upon such  request  Borrowers  will  irrevocably
         direct  all  present  and  future  Account  Debtors  and other  Persons
         obligated to make payments on Accounts  Receivable or other  Collateral
         to make such payments to a special  lockbox (the  "Lockbox")  under the
         control  of  Lender  or an  Affiliate.  The  Borrowers  may,  at  their
         election, at any time direct all present and future Account Debtors and
         other  Persons  obligated to make  payments on Accounts  Receivable  or
         other  Collateral to make such  payments to such a Lockbox.  After such
         request or otherwise at the direction of the  Borrowers,  all invoices,
         account statements and other written or oral  communication  directing,
         instructing,  requesting or demanding payment of any Account Receivable
         or other amount constituting  Collateral shall direct that all payments
         be made to the Lockbox  and shall  include  the  Lockbox  address.  All
         payments  received in the Lockbox shall be processed to the  Collateral
         Account.  Borrowers  agree to execute  and  deliver  all  documentation
         required by Lender related to the  establishment and maintenance of the
         Lockbox,  when  required  or  when  so  elected  by the  Borrowers,  as
         applicable.


                  (d) Government  Claims.  If any Accounts  Receivable,  chattel
         paper  or  General   Intangible   arises  out  of  contracts  or  other
         transactions  with the  United  States of  America  or any  department,
         agency, or instrumentality thereof (a "Federal Governmental Authority")
         or  with  any  state,  county  of  local  government  authority  or any
         department, agency or instrumentality thereof (collectively, the "Other
         Governmental Authorities"), the Borrowers will, unless the Lender shall
         otherwise  agree in writing,  immediately  notify the Lender in writing
         and execute any  instruments  and take any steps required by the Lender
         in order that all monies due and to become due under such  contracts or
         other transactions shall be assigned to the Lender and, with respect to
         Federal   Governmental   Authorities,   notice  thereof  given  to  the
         government  under the  Federal  Assignment  of Claims  Act of 1940,  as
         amended,  and/or with  respect to all Other  Governmental  Authorities,
         notice thereof given to the appropriate authority.

                  (d) Chattel Paper.  If any Account  Receivable is evidenced by
         chattel paper or  instruments,  the Borrowers  will,  unless the Lender
         shall otherwise agree in writing,  deliver the originals of same to the
         Lender, appropriately endorsed to the Lender's order and, regardless of
         the form of such  endorsement,  the Borrowers  hereby  expressly  waive
         presentment,  demand, notice of dishonor, protest and notice of protest
         and all other notices with respect thereto.

         3.3      Reserved.

         3.4      Reserved.



<PAGE>



         3.5 Supplemental Documentation.  At the Lender's request, the Borrowers
shall execute and/or deliver to the Lender, at any time or times hereafter, such
agreements,  assignments,  documents, financing statements,  warehouse receipts,
bills of lading,  notices of  assignment  of Accounts  Receivable,  schedules of
Accounts Receivable assigned, and other written matter necessary or requested by
the Lender to perfect and  maintain a  perfected  the  security  interest in the
Collateral  granted  hereunder  (all  the  above  hereinafter   referred  to  as
"Supplemental  Documentation"),  in form and substance acceptable to the Lender,
and pay all  taxes,  fees and  other  costs  and  expenses  associated  with any
recording or filing of the same. Borrowers agree to reimburse the Lender for the
costs of all searches and updates of searches in public records deemed necessary
by the Lender in connection with the protection of its security  interest.  Each
Borrower hereby irrevocably makes,  constitutes and appoints the Lender (and all
Persons  designated by the Lender for that purpose) as such  Borrower's true and
lawful attorney (and  agent-in-fact) to sign the name of such Borrower on any of
the  Supplemental   Documentation   and  to  deliver  any  of  the  Supplemental
Documentation to such Persons as the Lender in its sole and absolute discretion,
may elect. The Borrowers agrees that a carbon,  photographic,  photostatic,  and
other  reproduction of this Agreement or of a financing  statement is sufficient
as a financing statement.


         3.6 Power of Attorney.  Each Borrower  irrevocably  designates,  makes,
constitutes,  and appoints the Lender (and all Persons designated by the Lender)
as such Borrower's true and lawful attorney (and  agent-in-fact) and the Lender,
or the Lender's agent, may, without notice to such Borrower:

                  (a) at such  time or times  hereafter  as the  Lender  or said
         agent,  in its sole and absolute  discretion,  may  determine,  in such
         Borrower's  or the  Lender's  name,  (i)  after an  Event  of  Default,
         receive,  open and dispose of all mail  received at the address of such
         Borrower;  (ii) notify  and/or  require  such  Borrower to notify,  any
         Account  Debtor or other  Person  obligated  under or in respect of any
         Collateral,  of  the  fact  of the  Lender's  Lien  thereon  and of the
         collateral  assignment  thereof  to the  Lender;  (iii)  direct  and/or
         require  such  Borrower to direct,  any Account  Debtor or other Person
         obligated  under  or in  respect  of any  Collateral,  to make  payment
         directly to the Lender of any  amounts due or to become due  thereunder
         or with  respect  thereto;  (iv) endorse  such  Borrower's  name on any
         checks,  notes, drafts or any other items of payment relating to and/or
         proceeds of the Collateral which come into the possession of the Lender
         or under the Lender's control and apply such payment or proceeds to the
         Obligations in such manner as Lender shall  determine;  and (v) endorse
         such  Borrower's  name  on any  chattel  paper,  document,  instrument,
         invoice,  freight bill, bill of lading or similar document or agreement
         in the Lender's possession relating to Accounts Receivable or any other
         Collateral; and

                  (b) at such time or times after the  occurrence of an Event of
         Default,  as the  Lender  or  said  agent,  in its  sole  and  absolute
         discretion, may determine, in such Borrower's or the Lender's name: (i)
         receive, open and dispose of all mail received at the street address or
         any post office box address of such  Borrower;  (ii)  demand,  collect,
         surrender, release or exchange all or any part of any Collateral or any
         amounts due thereunder or with respect thereto;  (iii) settle,  adjust,
         compromise,  extend or renew for any period (whether or not longer than
         the  initial  period)  any and all sums which are now or may  hereafter
         become due or owing upon or with respect to any of the Collateral; (iv)
         enforce,  by suit or otherwise,  payment or  performance  of any of the
         Collateral;  (v) settle,  adjust or  compromise  any legal  proceedings
         brought to collect any sums due or owing upon or with respect to any of
         the  Collateral;  (vi)  exercise  all of  such  Borrower's  rights  and
         remedies with respect to the collection of any amounts due upon or with
         respect to any of the Collateral; (vii) if permitted by applicable law,
         sell or assign the Collateral upon such terms,  for such amounts and at
         such time or times as the Lender may deem advisable;  (viii)  discharge
         and release the Collateral; (ix) prepare, file and sign such Borrower's
         name on any proof of claim in  bankruptcy or similar  document  against
         any Account Debtor; (x) prepare,  file and sign such Borrower's name on
         any  notice of lien,  assignment  or  satisfaction  of lien or  similar
         document  in  connection  with the  Accounts  Receivable  and/or  other
         Collateral;  and (xi) do all acts and things necessary, in the Lender's
         sole and absolute  discretion,  to obtain  repayment of the Obligations
         and to fulfill such Borrower's other obligations under this Agreement.



<PAGE>



                  (c) at such time or times  after the  assertion  by the Lender
         that an Event of Default has occurred and is continuing (whether or not
         an Event of Default has in fact occurred), as the Lender or said agent,
         in its reasonable discretion,  may determine, in such Borrower's or the
         Lender's name, notify the post office authorities to change the address
         for delivery of such  Borrower's  mail to an address  designated by the
         Lender.


This power, being coupled with an interest, is irrevocable until all Obligations
are paid in full, all Letters of Credit have expired or been  terminated and the
Credit is terminated.  Under no circumstances shall the Lender be under any duty
to act in regard to any of the foregoing  matters.  The costs relating to any of
the foregoing  matters,  including  Attorneys' Fees and  out-of-pocket  expenses
shall be borne  solely by the  Borrowers  whether  the same are  incurred by the
Lender or the Borrowers.

The Lender and Affiliates and their respective directors, officers, employees or
agents  shall not be liable for any acts of  commission  or omission nor for any
error in judgment or mistake of fact or law, unless the same shall have resulted
from gross negligence or willful misconduct.

         3.7  License.  Each  Borrower  grants to Lender  and its  Affiliates  a
non-exclusive,  worldwide and royalty-free  license to use or otherwise  exploit
all leases, licenses, trademarks, franchises, tradenames, copyrights and patents
of the Borrower (to the extent  permissible  under the terms of such agreements)
for the  purposes  of  selling,  leasing,  preparing  for sale or  disposing  or
enforcing its rights in any or all of the Collateral.


                    ARTICLE IV REPRESENTATIONS AND WARRANTIES

         To induce the Lender to enter into this  Agreement and to make Loans to
the Borrowers and issue or cause to be issued  Letters of Credit for the account
of the Borrowers  hereunder,  each Borrower makes the following  representations
and  warranties,  all of which shall be true and correct as of the date the each
Loan is made or Letter of Credit is issued and  survive  the  execution  of this
Agreement and the making of the initial Loan or issuance of Letter of Credit:

         4.1  Organization,  Name.  Each  Borrower  and each of such  Borrower's
corporate Subsidiaries are corporations duly incorporated,  validly existing and
in  good  standing  under  the  laws of the  jurisdiction  of  their  respective
incorporation.  All of each Borrower's other Subsidiaries,  if any, are entities
duly  organized,  validly  existing and in good  standing  under the laws of the
jurisdictions  of their  respective  organization.  Each Borrower and all of its
Subsidiaries  are in good standing and are duly qualified to do business in each
state where, because of the nature of their respective activities or properties,
such qualification is required. During the last ten years each Borrower and each
Subsidiary has conducted business solely in the names set forth on Schedule 4.1,
and has no trade names,  styles or doing  business  forms except as disclosed on
Schedule 4.1. The taxpayer  identification  number of Simon is  87-0545608.  The
taxpayer identification number of Trucking is 87-0293383.



<PAGE>



         4.2  Authorization.  Each  Borrower is duly  authorized  to execute and
deliver the Loan Documents and any  Supplemental  Documentation  contemplated by
this Agreement,  and is and will continue to be duly authorized to borrow monies
hereunder  and to  perform  its  obligations  under the Loan  Documents  and any
Supplemental  Documentation  contemplated  by this  Agreement and the borrowings
hereunder  do  not  and  will  not  require  any  consent  or  approval  of  any
governmental agency or authority.


         4.3 No  Conflicts.  The  execution,  delivery and  performance  by each
Borrower of the Loan Documents and any Supplemental  Documentation  contemplated
by this  Agreement,  do not and will not conflict with (a) any provision of law,
(b) the charter or by-laws of such Borrower,  (c) any agreement binding upon any
Borrower,  or (d) any court or administrative  order or decree applicable to any
Borrower,  and do not and will not  require,  or  result  in,  the  creation  or
imposition  of any Lien on any asset of any Borrower or any of the  Subsidiaries
except as provided herein.

         4.4 Validity and Binding Effect. The Loan Documents constitute (and any
Supplemental  Documentation  contemplated by this Agreement,  when duly executed
and delivered will constitute) the legal, valid and binding  obligations of each
Borrower and each Obligor, enforceable against each Borrower and each Obligor in
accordance with their respective terms. The execution,  delivery and performance
of the Loan  Documents by each  Borrower and any Obligor,  and the  borrowing of
money,  incurring of  obligations  and granting of Liens  thereunder  are within
their respective corporate powers and have been duly authorized by all necessary
corporate action.

         4.5 No  Default.  None of the  Borrowers  nor any of  their  respective
Subsidiaries  is in default  under any  agreement  or  instrument  to which such
Borrower  or any  Subsidiary  is a party  or by which  any of  their  respective
properties or assets is bound or affected,  which  default (a) might  materially
and  adversely  affect  the  Lender's  Lien on or  rights  with  respect  to any
Collateral or Third Party  Collateral or (b)  constitutes an Adverse  Event.  No
Event of Default or Unmatured Event of Default has occurred and is continuing.

         4.6 Financial  Statements.  Each Borrower's  audited  consolidated  and
consolidating  financial  statement as at September 30, 1998 and such Borrower's
unaudited  consolidated  and  consolidating  financial  statement as at June 30,
1999,  copies of which have been furnished to the Lender,  have been prepared in
conformity  with  GAAP  and  applied  on a  basis  consistent  with  that of the
preceding  fiscal year and period and present fairly the financial  condition of
such  Borrower  and its  Subsidiaries  as at such dates and the results of their
operations  for the  periods  then  ended,  subject  (in the case of the interim
financial  statement)  to year-end  audit  adjustments.  Since June 30, 1999, no
Adverse Event has occurred.

         4.7  Insurance.  Schedule  4.7 sets forth a summary of the property and
casualty  insurance program carried by each Borrower and its Subsidiaries on the
date hereof,  including the insurer's(s') name(s), policy number(s),  expiration
date(s),  amount(s) of coverage,  type(s) of  coverage,  the annual  premium(s),
Best's  policyholder's  and financial size ratings of the insurers,  exclusions,
deductibles   and   self-insured   retention,   and   describes  in  detail  any
retrospective  rating plan, fronting  arrangement or any other self-insurance or
risk assumption  agreed to by any Borrower or any Subsidiary or imposed upon any
Borrower or any  Subsidiary by any such insurer.  This summary also includes any
self-insurance program that is in effect.



<PAGE>



         4.8      Litigation; Contingent Liabilities.


                  (a) Except for those  referred to in  Schedule  4.8, no claims
         litigation,  arbitration  proceedings or  governmental  proceedings are
         pending or  threatened  against or are  affecting  any  Borrower or any
         Subsidiary.

                  (b)  Other  than  any   liability   incident  to  the  claims,
         litigation  or  proceedings  disclosed in Schedule 4.8, no Borrower nor
         any  Subsidiary has any  contingent  liabilities  which are material to
         such Borrower or Subsidiary.

         4.9  Ownership  of  Property,  Liens.  Each  Borrower  and  each of the
Subsidiaries  has good and marketable  title to its real properties and good and
sufficient  title to its other  properties,  including all properties and assets
referred to as owned by such  Borrower  and/or its  Subsidiaries  in the audited
financial  statement  of such  Borrower  referred  to in Section 4.6 (other than
property disposed of since the date of such financial  statement in the ordinary
course of business as permitted by this  Agreement).  None of the  Collateral or
other  property or assets of any  Borrower or any  Subsidiary  is subject to any
Lien (including,  without limitation, Liens pursuant to Capitalized Leases under
which said Borrower or any Subsidiary is a lessee) except: (a) Liens in favor of
the Lender;  (b) Liens for current Taxes not delinquent or Taxes being contested
in good faith and by  appropriate  proceedings  and as to which such reserves or
other  appropriate  provisions as may be required by GAAP are being  maintained;
(c) statutory Liens, such as carriers',  loggers',  warehousemen's,  mechanics',
materialmen's and repairmens' Liens,  arising in the ordinary course of business
securing  obligations which are not overdue or which are being contested in good
faith and by  appropriate  proceedings  and as to which such  reserves  or other
appropriate provisions as may be required by GAAP are being maintained;  and (d)
Liens permitted on Schedule 4.9 or under Section 6.13.

         4.10 Subsidiaries, Ownership. The Borrowers have no Subsidiaries except
as listed on Schedule  4.10.  The  ownership  of each  Borrower  and each of the
Subsidiaries is as set forth on Schedule 4.10,  which schedule shows the name(s)
of  each  Person  having  an  ownership  interest,  and the  percentage  of such
ownership  interest in the  respective  entity.  Except as set forth on Schedule
4.10,  no part of the  ownership  interest of any Person in any  Borrower or any
Subsidiary  is  subject  to any  shareholder  agreement,  voting  trust or other
agreement  limiting or otherwise  pertaining to the  ownership  interest of such
Person.

         4.11  Partnerships;  Joint  Ventures;  LLCs. No Borrower nor any of the
Subsidiaries is a partner or joint venturer or member in any partnership,  joint
venture or limited liability company other than the partnerships, joint ventures
and limited liability companies listed on Schedule 4.11.



<PAGE>



         4.12 Business  Locations.  On the date hereof,  the Borrowers' and each
Subsidiary's  chief executive office and principal place of business are located
at the respective addresses set forth on Schedule 4.12. The books and records of
the Borrowers and each  Subsidiary  relating to its business and the  concerning
such  Borrower's  Accounts  Receivable  and  other  Collateral  are kept at such
locations.  All of other  locations or places of business of the  Borrowers  and
each  Subsidiary  are as set forth on  Schedule  4.12.  Each  Borrower  and each
Subsidiary is the lawful owner of fee title or of the lessee's  interest under a
valid and  existing  lease with  respect to the places of business  described on
Schedule  4.12.  For each  location  subject to a lease or  mortgage,  the legal
description(s)  of the real property and the name(s) of the record owner and any
mortgagee of such real property is set forth in Schedule 4.12.


         4.13     Reserved.

         4.14 Eligibility of Collateral.  (a) All of the Accounts Receivable are
and will  continue to be bona fide existing  obligations  created by the sale of
goods, the rendering of services, or the furnishing of other good and sufficient
consideration  to Account  Debtors in the  regular  course of  business  and all
shipping or delivery  receipts and other documents  furnished or to be furnished
to the Lender in connection  therewith are and will be genuine; (b) each Account
Receivable  which a Borrower  shall,  expressly or by  implication,  request the
Lender to classify as an Eligible Account Receivable,  will, as of the time when
such  request  is made,  conform in all  respects  to the  requirements  of such
classification set forth in the definition of "Eligible Account  Receivable" set
forth herein.

         4.15 Control of Collateral;  Lease of Property.  No Collateral is under
the control of any  Subsidiary or other Person who is not a Borrower  under this
Agreement.  Except as listed on Schedule 4.15, none of the machinery,  equipment
or real  property  used by any Borrower or any  Subsidiary is subject to a lease
(excluding only  Capitalized  Leases included on Schedule 6.12) under which such
Borrower or such Subsidiary is the lessee.

         4.16  Patents,   Trademarks,   Etc.  Each  Borrower  and  each  of  the
Subsidiaries  possesses or has the right to use all of the patents,  trademarks,
trade names, service marks and copyrights,  and applications  therefor,  and all
technology,  know-how,  processes,  methods and designs used in or necessary for
the conduct of its business,  without known  conflict with the rights of others.
All  such  licenses,  patents,   trademarks,  trade  names,  service  marks  and
copyrights,  and applications therefor existing on the date hereof are listed on
Schedule 4.16.

         4.17  Solvency.  Each  Borrower  and each of the  Subsidiaries  now has
capital sufficient to carry on its respective  business and transactions and all
business and  transactions in which it is about to engage and is now solvent and
able to pay its respective  debts as they mature,  and each Borrower and each of
the  Subsidiaries  now owns  property  having a value,  greater  than the amount
required to pay such Borrower's or such Subsidiary's debts.

         4.18  Contracts;  Labor Matters.  Except as disclosed on Schedule 4.18:
(a) None of the  Borrowers  nor any  Subsidiary  is a party to any  contract  or
agreement, or subject to any charge, corporate restriction,  judgment, decree or
order,  the  performance of which  constitutes  an Adverse  Event;  (b) no labor
contract to which any  Borrower or any  Subsidiary  is subject is  scheduled  to
expire during the original term of this  Agreement;  and (c) on the date of this
Agreement (i) none of the  Borrowers nor any  Subsidiary is a party to any labor
dispute  and (ii)  there  are no  strikes  or  walkouts  relating  to any  labor
contracts to which any Borrower or any Subsidiary is subject.



<PAGE>



         4.19 ERISA. Each Plan is in substantial  compliance with all applicable
requirements of ERISA and the Code and with all material  applicable rulings and
regulations  issued under the  provisions  of ERISA and the Code  setting  forth
those  requirements.  No Reportable  Event has occurred and is  continuing  with
respect to any Plan.  All of the minimum  funding  standards  applicable to such
Plans have been  satisfied  and there exists no event or  condition  which would
reasonably be expected to result in the  institution of proceedings to terminate
any Plan under Section 4042 of ERISA. With respect to each Plan subject to Title
IV of ERISA,  as of the most recent  valuation  date for such Plan,  the present
value  (determined  on the  basis  of  reasonable  assumptions  employed  by the
independent  actuary for such Plan and  previously  furnished  in writing to the
Lender of such  Plan's  projected  benefit  obligations  did not exceed the fair
market value of such Plan's  assets.  Except as required  under Section 4890B of
the Code,  Section 601 of ERISA or  applicable  state law, none of the Borrowers
nor any Subsidiary is obligated to provide  post-retirement medical or insurance
benefits with respect to employees or former employees.


         4.20  Regulation U. No Borrower is engaged in the business of extending
credit for the purpose of  purchasing  or carrying  margin  stock (as defined in
Regulation U of the Federal Reserve  Board),  and no part of the proceeds of any
Loan will be used to purchase  or carry  margin  stock or for any other  purpose
which would violate any of the margin requirements of the Federal Reserve Board.

         4.21  Compliance.  Each  Borrower  and each of the  Subsidiaries  is in
material  compliance  with all statutes and  governmental  rules and regulations
applicable to it. All Inventory of the Borrowers has been produced in compliance
with all requirements of the Fair Labor Standards Act.

         4.22 Taxes.  Each Borrower and each  Subsidiary  has filed all federal,
state and local tax returns  required to be filed and has paid, or made adequate
provisions  for the  payment  of,  all Taxes due and  payable  pursuant  to such
returns and pursuant to any  assessments  made against it or any of its property
(other than Taxes the amount or validity of which is currently  being  contested
in good faith by appropriate  proceedings  and with respect to which reserves in
accordance  with GAAP have been provided on the books of the  Borrower).  No tax
Liens have been filed and no material  claims are being asserted with respect to
any such Taxes. The charges, accruals and reserves on the books of the Borrowers
in respect of Taxes are  adequate.  The  federal  income tax  liability  of each
Borrower and its  Subsidiaries  has been audited by the Internal Revenue Service
and has been  finally  determined  and  satisfied  (or the time  for  audit  has
expired) for all tax years up to and  including  the period  ended  November 16,
1995.  The  Borrowers  are not  aware of any  proposed  assessment  against  any
Borrower  or any  Subsidiary  for  additional  Taxes  (or any basis for any such
assessment) which might be material to such Borrower and its Subsidiaries  taken
as a whole.

         4.23   Investment Company Act. None of the Borrowers nor any Subsidiary
is an  "investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment  Company Act of 1940, as amended.

         4.24     Public  Utility  Holding  Company Act.  None of the  Borrowers
nor  any  Subsidiary  is  a "holding  company"  or  a "subsidiary  company" of a
"holding   company"  or  an  "affiliate"  of  a  "holding  company"  within  the
meaning of the Public Utility Holding Company Act of 1935, as amended.



<PAGE>



         4.25  Environmental and Safety and Health Matters.  Except as disclosed
on  Schedule  4.25:  (a)  the  operations  of  each  Borrower  and  each  of the
Subsidiaries   complies  in  all  material  respects  with  (i)  all  applicable
Environmental Laws, and (ii) all applicable Occupational Safety and Health Laws;
(b) none of the  operations of any Borrower or any Subsidiary are subject to any
judicial  or   administrative   proceeding   alleging   the   violation  of  any
Environmental  Law or  Occupational  Safety  and  Health  Law;  (c)  none of the
operations of any Borrower or any  Subsidiary is the subject of federal or state
investigation evaluating whether any remedial action is needed to respond to (i)
a spillage,  disposal or release into the environment of any Hazardous  Material
or other hazardous, toxic or dangerous waste, substance or constituent, or other
substance,  or (ii) any unsafe or  unhealthful  condition at any premises of any
Borrower or any  Subsidiary;  (d) no Borrower or any  Subsidiary has received or
filed any notice under any Environmental Law or Occupation Safety and Health Law
indicating  or reporting (i) any past or present  spillage,  disposal or release
into the  environment  of, or  treatment,  storage or disposal of, any Hazardous
Material or other hazardous, toxic or dangerous waste, substance or constituent,
or other  substance or (ii) any unsafe or unhealthful  condition at any premises
of any Borrower or any  Subsidiary;  (e) no Borrower or any  Subsidiary  has any
known  contingent  liability in connection  with (i) any  spillage,  disposal or
release into the  environment  of, or otherwise  with respect to, any  Hazardous
Material or other hazardous, toxic or dangerous waste, substance or constituent,
or other substance,  or (ii) any unsafe or unhealthful condition at any premises
of any Borrower or any Subsidiary; and (f) each Borrower and each Subsidiary has
secured  and is  maintaining  all  necessary  permits,  licenses  and  approvals
necessary under any  Environmental  Law to such Borrower's or such  Subsidiary's
business.


         4.26 Securities Act. No Borrower has issued any unregistered securities
in violation of the registration requirements of Section 5 of the Securities Act
of 1933, as amended, or any other law, and is not violating any rule, regulation
or requirement  under the Securities Act of 1933, as amended,  or the Securities
Act of 1934, as amended, in any material respect.

         4.27 Consents.  No consent of the  shareholders  of any Borrower or any
Subsidiary  or any  other  Person  and no  order,  consent,  approval,  license,
authorization  or validation of, or filing,  recording or registration  with, or
exemption  by, any  governmental  or public body or authority is required on the
part of any Borrower or any Subsidiary to authorize or is required in connection
with the  execution,  delivery and  performance  of, or the legality,  validity,
binding effect or enforceability of, the Loan Documents.


                         ARTICLE V AFFIRMATIVE COVENANTS

From the date of this Agreement and thereafter until all Obligations are paid in
full,  all Letters of Credit have expired or been  terminated and the Credit has
terminated,  the Borrowers agree that unless the Lender shall otherwise  consent
in writing, each Borrower (or the Borrower specified) will:

         5.1      Financial Statements and Other Reports.

                  5.1.1    Financial Reports.  Furnish  to  the  Lender  in form
                  satisfactory to the Lender:



<PAGE>



                           (a) Annual Audit Report.  As soon as available and in
                  any event  within 90 days after the end of each fiscal year of
                  the  Borrowers,  the annual audit report of each  Borrower and
                  its Subsidiaries  prepared on a consolidating and consolidated
                  basis  in  conformity  with  GAAP,   consisting  of  at  least
                  statements of income, cash flow and stockholders'  equity, and
                  a consolidated and  consolidating  balance sheet as at the end
                  of such year,  setting forth in each case in comparative  form
                  corresponding   figures  from  the  previous   annual   audit,
                  certified,  without  qualification,  by independent  certified
                  public  accountants  of recognized  standing  selected by such
                  Borrower  and  acceptable  to the  Lender,  together  with any
                  management letters,  management reports or other supplementary
                  comments or reports to such Borrower or its board of directors
                  furnished by such accountants.


                           (b) Reserved.

                           (c)  Quarterly  Financial   Statement.   As  soon  as
                  available  and in any event  within  25 days  after the end of
                  each of the first three fiscal quarters of each fiscal year of
                  each Borrower,  a copy of the unaudited financial statement of
                  such Borrower and its Subsidiaries prepared in conformity with
                  GAAP,  signed by such Borrower's  chief financial  officer and
                  consisting of at least consolidated statements of income, cash
                  flow  and  stockholders'  equity  for  such  Borrower  and its
                  Subsidiaries  for such  quarter  and for the  period  from the
                  beginning of such fiscal year to the end of such quarter,  and
                  a  consolidated  and  consolidating   balance  sheet  of  such
                  Borrower as at the end of such quarter.

                           (d) Reserved.

                           (e)  Projections.  As  soon as  available  and in any
                  event not later than 45 days after the last day of each fiscal
                  year of each Borrower,  projected financial statements of such
                  Borrower  and  its   Subsidiaries   consisting   of  at  least
                  consolidated statements of income, cash flow and stockholders'
                  equity  and a  consolidated  balance  sheet,  signed  by  such
                  Borrower's chief financial  officer and presenting fairly such
                  Borrower's  best  good  faith  projections  of  the  financial
                  position and results of  operations  of such  Borrower and its
                  Subsidiaries for each month of the following fiscal year.

                           (f)   Officer's   Certificate.   Together   with  the
                  financial  statements furnished by the Borrowers under Section
                  5.1.1(a)  and (c),  a  certificate  of each  Borrower's  chief
                  financial  officer,  in  substantially  the form of  Exhibit B
                  hereto,  dated the date of such  annual  audit  report or such
                  quarterly or monthly financial statement,  as the case may be,
                  to the effect that no Event of Default or  Unmatured  Event of
                  Default has  occurred and is  continuing,  or, if there is any
                  such event,  describing it and the steps,  if any, being taken
                  to cure it, and  containing  a  computation  of,  and  showing
                  compliance with, each of the financial ratios and restrictions
                  contained in Articles V and VI and Supplement A.



<PAGE>



                  5.1.2 Agings;  Ineligible Accounts  Receivable  Certification.
         Within 15 days after the end of each month, (a) a detailed aging of all
         Accounts  Receivable  by  invoice,  including,  without  limitation,  a
         reconciliation  to the aging  report  delivered  to the  Lender for the
         preceding month, (b) a certification of ineligible  Accounts Receivable
         and (c) an aging of all accounts payable as of the end of the preceding
         month, each in form and content acceptable to the Lender.


                  5.1.3    Reserved.

                  5.1.4 Sales and  Collection  Reports.  If requested by Lender,
         not later than 1:00 p.m.,  Minneapolis  time,  on each  Business Day, a
         report of the Borrowers'  sales and  collections  for such day, and for
         any other day for which sales and  collections  have not been reported,
         in form and content acceptable to the Lender.

                  5.1.5    Other Reports.

                           (a) SEC and Other  Reports.  Promptly upon the making
                  or filing thereof, copies of all financial statements, reports
                  and proxy statements  mailed to any Borrower's'  shareholders,
                  and copies of all  registration  statements,  periodic reports
                  and other  documents  filed with the  Securities  and Exchange
                  Commission   (or  any  successor   thereto)  or  any  national
                  securities exchange.

                           (b)  Report  of  Change  in   Subsidiaries  or  Other
                  Entities. Subject to Section 6.7, promptly upon the occurrence
                  thereof,  a written  report of any  change in the list of each
                  Borrower's  Subsidiaries  set forth on Schedule 4.10 or in the
                  list of  partnerships,  joint  ventures  or limited  liability
                  companies set forth on Schedule 4.11.

                           (c)  Patents,  Etc.  Promptly   upon  the  occurrence
                  thereof,   a  written  report  of any change  to  the  list of
                  patents,  trademarks,  copyrights  and  other information  set
                  forth in Schedule 4.16.

                           (d) Insurance Updates.  If requested,  provide to the
                  Lender within 45 days of such request, a certificate signed by
                  the respective  chief financial  officer of each Borrower that
                  attests to and summarizes the property and casualty  insurance
                  program  carried by such Borrower and its  Subsidiaries.  This
                  summary shall include each insurer's name,  policy  number(s),
                  expiration   date(s),   amount(s)  of  coverage,   type(s)  of
                  coverage,  the annual  premium(s),  Best's  policyholder's and
                  financial   size   ratings   of  each   insurer,   exclusions,
                  deductibles and  self-insured  retention and shall describe in
                  detail any retrospective  rating plan, fronting arrangement or
                  any other  self-insurance or risk assumption agreed to by such
                  Borrower or any  Subsidiary  or imposed upon such  Borrower or
                  any   Subsidiary  by  any  such   insurer,   as  well  as  any
                  self-insurance program that is in effect.

                           (e)  Other  Reports.   The  information  required  to
                  be  provided  pursuant to  other provisions of this Agreement,
                  and  such  other  reports  from  time to time requested by the
                  Lender.



<PAGE>



         5.2  Notices.  Notify the  Lender in  writing  of any of the  following
immediately upon learning of the occurrence thereof, describing the same and, if
applicable,  the  steps  being  taken by the  Person(s)  affected  with  respect
thereto:


                  (a)  Default.  The  occurrence  of (i) any Event of Default or
         Unmatured  Event of  Default,  and (ii) to the extent not  included  in
         clause (i) above, the default by any Borrower, any other Obligor or any
         Subsidiary under any note, indenture, loan agreement,  mortgage, lease,
         deed or other material  similar  agreement to which such Borrower,  any
         other Obligor or any Subsidiary, as appropriate, is a party or by which
         it is bound.

                  (b) Litigation. The institution of any litigation, arbitration
         proceeding or governmental proceeding affecting any Borrower, any other
         Obligor, any Subsidiary,  any Collateral or any Third Party Collateral,
         whether or not considered to be covered by insurance wherein the amount
         claimed and which, if such claim were successful, would have to be paid
         by a Borrower, exceeds $250,000.

                  (c) Judgment.  The entry of any judgment or decree against any
         Borrower,  any other Obligor or any  Subsidiary,  if the amount of such
         judgment  exceeds  insurance  coverage,  including any deductible to be
         paid by a Borrower,  by $250,000 for any one judgment or the  aggregate
         amount  of  unpaid  judgments  entered  against  the  Borrower  exceeds
         insurance  coverage,  including  any  deductible  to  be  paid  by  the
         Borrower, by $2,000,000.

                  (d) ERISA.  With  respect  to any Plan,  the  occurrence  of a
         Reportable  Event or Prohibited  Transaction,  a notice  specifying the
         nature  thereof  and what  action  the  Borrowers  propose to take with
         respect thereto, and, when received,  copies of any notice from PBGC of
         intention to terminate or have a trustee appointed for any Plan.

                  (e) Reserved.

                  (f) Change in Place(s) of Business.  Subject to the provisions
         of Section 6.5, any  proposed  opening,  closing or other change in the
         list of offices and other places of business of each  Borrower and each
         Subsidiary set forth in Schedule 4.12 or 4.13, and any opening, closing
         or other  change in the  offices  and other  places of business of each
         other Obligor,  together with a list of such new  location(s) the legal
         description  of the  location  and the name and address of any landlord
         and/or mortgagee.

                  (g) Change of Name.  Subject to the provisions of Section 6.5,
         any  change  in the name of any  Borrower,  any  other  Obligor  or any
         Subsidiary,  and any change in the list of trade names and trade styles
         set forth in Schedule 4.1.



<PAGE>



                  (h)    Environmental    and   Safety   and   Health   Matters.
         Non-compliance with and/or receipt of any notice that the operations of
         any Borrower,  any other Obligor or any  Subsidiary are not in material
         compliance with the requirements of any applicable Environmental Law or
         any  Occupational  Safety  and Health  Law;  the  occurrence  of and/or
         receipt  of  notice  that  any  Borrower,  any  other  Obligor  or  any
         Subsidiary  is  subject  to  federal,   state  or  local  investigation
         evaluating  whether any remedial action is needed to respond to (i) any
         spillage,  disposal or release into the  environment  of any  Hazardous
         Material or other  hazardous,  toxic or dangerous  waste,  substance or
         constituent,  or other  substance,  or (ii) any  unsafe or  unhealthful
         condition at any  premises of any  Borrower,  any other  Obligor or any
         Subsidiary;  or receipt of notice that any  properties or assets of any
         Borrower  any  other  Obligor  or  any  Subsidiary  are  subject  to an
         Environmental Lien.


                  (i) Adverse Event.  The occurrence of an Adverse Event.

                  (j)  Default by Others.  Any  material  default by any Account
         Debtor or other Person obligated to any Borrower, any other Obligor, or
         any  Subsidiary,  under  any  contract,  chattel  paper,  note or other
         evidence  of amounts  payable or due or to become due to any  Borrower,
         such Obligor or Subsidiary if the amount  payable under such  contract,
         chattel paper,  note or other evidence of amounts  payable or due or to
         become due is material.

                  (k) Moveable  Collateral.  If any of the  Collateral  or Third
         Party Collateral shall consist of goods of a type normally used in more
         than one state,  whether or not  actually so used,  any use of any such
         goods in any state other than a state in which the Borrowers shall have
         previously  advised the Lender such goods will be used.  The  Borrowers
         agree  that such goods will not,  unless  the  Lender  shall  otherwise
         consent in writing, be used outside the continental United States or in
         Louisiana.

                  (l)  Change  in  Management   or  Line(s)  of  Business.   Any
         substantial  change in the senior  management  of any  Borrower  or any
         Subsidiary,  or any change in anythe  Borrower's'  or any  Subsidiary's
         line(s) of business.

                  (m) Change in Insurance.  The  Borrowers  shall (a) notify the
         Lender  in  writing  at least  30 days  prior  to any  cancellation  or
         material  change of any insurance by any Borrower or any Subsidiary and
         (b) within  five  business  days after  receipt of any notice  (whether
         formal  or  informal)  of  any  cancellation  or  change  in any of its
         insurance  by any of its  insurers or any  material  change in the cost
         thereof or which reduces the  policyholder's  or financial size ratings
         of the insurance carriers of any Borrower or Subsidiary, as established
         by Best's Insurance Reports.

                  (n) Other  Events.  The  occurrence  of such  other  events as
         the  Lender  may from time to time specify.

         5.3   Existence.   Maintain  and  preserve,   and  cause  each  of  its
Subsidiaries to maintain and preserve, its respective existence as a corporation
or other form of  business  organization,  as the case may be,  and all  rights,
privileges,  licenses,  patents, patent rights,  copyrights,  trademarks,  trade
names,  franchises and other  authority to the extent material and necessary for
the conduct of its respective  business in the ordinary course as conducted from
time to time.

         5.4      Nature of Business. Engage, and cause each of its Subsidiaries
to engage,  in  substantially the same fields of business as it is engaged in on
the date hereof.



<PAGE>



         5.5  Books  and  Records,  Access.  Maintain,  and  cause  each  of its
Subsidiaries  to maintain,  complete and accurate books and records  (including,
without   limitation,   records  relating  to  Accounts   Receivable  and  other
Collateral),  in which full and correct entries in conformity with GAAP shall be
made of all dealings and transactions in relation to its respective business and
activities.  Cause its books and records as at the end of any calendar  month to
be posted and closed not more than 15 days after the last  business  day of such
month.  Permit,  and cause each of its  Subsidiaries  to  permit,  access by the
Lender and its agents or employees to the books and records of each Borrower and
such  Subsidiaries  at such Borrower's or such  Subsidiary's  place or places of
business at intervals to be  determined  by the Lender and without  hindrance or
delay, and permit, and cause each Subsidiary to permit, the Lender or its agents
and  employees to inspect  each  Borrower's  Inventory  and  Equipment  and such
Subsidiary's  inventory and  equipment,  and to inspect,  audit,  check and make
copies and/or  extracts from the books,  records,  journals,  orders,  receipts,
correspondence  and other  data  relating  to  Inventory,  Accounts  Receivable,
chattel paper, General Intangibles,  Equipment and any other Collateral or Third
Party Collateral,  or to any other transactions  between the parties hereto. Any
and all such inspections and/or audits shall be at the Borrowers' expense.


         5.6  Insurance.  Maintain,  and  cause  each  Subsidiary  to  maintain,
insurance to such extent and against such hazards and liabilities as is commonly
maintained  by  companies  similarly  situated or as the Lender may request from
time to time. From time to time,  prior to the expiration of any such insurance,
Borrowers  shall deliver to Lender  certificates  evidencing the renewal of such
policies  of  insurance  together  with  evidence  of  payment  of all  premiums
therefor.

         5.7      Reserved.

         5.8 Repair.  Maintain,  preserve and keep, and cause each Subsidiary to
maintain,  preserve and keep, its  properties in good repair,  working order and
condition,  and from time to time make,  and cause each  Subsidiary to make, all
necessary and proper repairs, renewals, replacements, additions, betterments and
improvements  thereto so that at all times the efficiency thereof shall be fully
preserved and maintained.

         5.9 Taxes.  File and cause each  Subsidiary to file its federal  income
tax return for each taxable year when due and pay, and cause each  Subsidiary to
pay,  when  due,  all of its  Taxes,  unless  and only to the  extent  that such
Borrower or such  Subsidiary,  as the case may be, is  contesting  such Taxes in
good faith and by appropriate  proceedings  and such Borrower or such Subsidiary
has set  aside  on its  books  such  reserves  or other  appropriate  provisions
therefor as may be required by GAAP.

         5.10 Compliance.  Comply, and cause each Subsidiary to comply, with all
federal,  state and  local  statutes  and  governmental  rules  and  regulations
applicable to it, including,  without limitation,  the Fair Labor Standards Act,
all Environmental Laws and all Occupational Safety and Health Laws.



<PAGE>



         5.11 ERISA. Maintain, and cause each ERISA Affiliate to maintain,  each
Plan in compliance with all material applicable requirements of ERISA and of the
Code and with all applicable rulings and regulations issued under the provisions
of ERISA and of the Code and not and not permit any of the ERISA  Affiliates  to
(a) engage in any  transaction  in connection  with which any Borrower or any of
the  ERISA  Affiliates  would be  subject  to  either a civil  penalty  assessed
pursuant  to Section  502(i) of ERISA or a tax  imposed  by Section  4975 of the
Code,  in either  case in an  amount  exceeding  $50,000,  (b) fail to make full
payment when due of all amounts  which,  under the  provisions of any Plan,  any
Borrower or any ERISA Affiliate is required to pay as contributions  thereto, or
permit to exist any accumulated  funding  deficiency (as such term is defined in
Section 302 of ERISA and Section 412 of the Code),  whether or not waived,  with
respect to any Plan in an aggregate amount exceeding $50,000 or (c) fail to make
any payments in an aggregate amount exceeding $50,000 to any Multiemployer  Plan
that any Borrower or any of the ERISA  Affiliates  may be required to make under
any agreement relating to such Multiemployer Plan or any law pertaining thereto.


         5.12 Collateral Monitoring. Permit the Lender to (a) use the Borrowers'
stationery  and  sign the  name of such  Borrower  to  request  verification  of
Accounts  Receivable or other Collateral from Account  Debtors,  and (b) use the
information  recorded  on or  contained  in any data  processing  equipment  and
computer  hardware and  software to which any  Borrower  has access  relating to
Accounts Receivable, Inventory, Equipment and/or other Collateral.


                          ARTICLE VI NEGATIVE COVENANTS

         From the date of this  Agreement and thereafter  until all  Obligations
are paid in full, all Letters of Credit have expired or been  terminated and the
Credit has  terminated,  each  Borrower  agrees  that,  unless the Lender  shall
otherwise  consent in writing,  it will not, and will not permit any  Subsidiary
to, do any of the following:

         6.1      Merger.  Merge or consolidate  or  enter  into  any  analogous
reorganization  or  transaction  with any Person.

         6.2 Sale of Assets. Sell, transfer,  convey, lease, assign or otherwise
dispose  (with or without  recourse)  of any of its assets  (including,  without
limitation,  any Accounts  Receivable,  instruments or chattel paper) except for
sales and leases of Inventory,  Equipment and terminal locations outside of Utah
and Georgia in the ordinary course of business.

         6.3      Purchase of Assets.  Purchase or lease or otherwise  acquire
all or substantially  all the assets of any Person.

         6.4 ERISA.  Permit any event to occur or condition to exist which would
permit any Plan to terminate under any circumstances  which would cause the Lien
provided for in Section  4068 of ERISA to attach to any assets of any  Borrower;
and no Borrower will permit,  as of the most recent  valuation date for any Plan
subject to Title IV of ERISA,  the  present  value  (determined  on the basis of
reasonable  assumptions  employed by the  independent  actuary for such Plan and
previously  furnished in writing to the Lender) of such Plan's projected benefit
obligations to exceed the fair market value of such Plan's assets.



<PAGE>



         6.5  Changes  in  Collateral  or  Business  Locations.  Change  (a) the
location of its chief executive office or chief place of business; (b) its name;
or (c) the  locations  where it  stores  or  maintains  Inventory  or  Equipment
without, in each case, at least 30 days' prior written notice to the Lender.


         6.6      Fiscal Year.  Change the end of its fiscal year from September
30.

         6.7      Subsidiaries,  Partnerships  and Joint  Ventures.  Either: (a)
form or  acquire  any  corporation  which  would  thereby  become a  Subsidiary;
or (b) form or enter  into any  partnership  as a limited  or general partner or
into any joint venture or any limited liability company or other similar entity.

         6.8 Other  Agreements.  Enter into any agreement,  bond,  note or other
instrument  with or for the  benefit of any Person  other than the Lender  which
would (a) prohibit any Borrower or Subsidiary from granting,  or otherwise limit
the ability of such Borrower or such Subsidiary to grant, to the Lender any Lien
on the Collateral, or (b) be violated or breached by such Borrower's performance
of its obligations under the Loan Documents.

         6.9 Restricted  Payments.  Purchase or redeem or otherwise  acquire for
value any shares of any Borrower's or any Subsidiary's stock, declare or pay any
cash  dividends  thereon (other than stock and other  dividends  payable to such
Borrower),  make any  distribution  to  stockholders  as such  (other  than such
Borrower)  directly or indirectly,  or set aside any funds for any such purpose;
prepay, purchase or redeem any subordinated Indebtedness of such Borrower or any
Subsidiary;  and not take any  action  which will  result in a decrease  in such
Borrower's or any Subsidiary's ownership interest in any Subsidiary.

         6.10     Reserved.

         6.11   Investments.   Acquire  for  value,   make,  have  or  hold  any
Investments,  except:  (a) advances to employees of a Borrower or any Subsidiary
for travel or other ordinary business  expenses;  (b) advances to subcontractors
and suppliers in maximum aggregate amounts reasonably  acceptable to the Lender;
(c)  extensions  of  credit  in the  nature  of  Accounts  Receivable  or  notes
receivable arising from the sale of goods and services in the ordinary course of
business;  (d) shares of stock,  obligations  or other  securities  received  in
settlement of claims arising in the ordinary course of business; (e) Investments
(other than  Investments in the nature of loans or advances)  outstanding on the
date hereof in  Subsidiaries  by such Borrower and its other  Subsidiaries;  (f)
other  Investments  outstanding  on the date hereof and listed on Schedule 6.11;
and (g) other Investments consented to by the Lender in writing.

         6.12 Indebtedness.  Incur, create, issue, assume or suffer to exist any
Indebtedness,  including,  without limitation,  Indebtedness as lessee under any
Capitalized  Lease,  except: (a) Indebtedness under the terms of this Agreement;
(b)  Subordinated  Debt  listed on Schedule  6.12;  (c)  Indebtedness  hereafter
incurred in connection  with Liens permitted  under Section  6.13(d);  (d) other
Indebtedness outstanding on the date hereof and listed on Schedule 6.12; and (e)
other Indebtedness approved in writing by the Lender.



<PAGE>



         6.13  Liens.  Create,  incur,  assume  or suffer to exist any Lien with
respect to any  property,  revenues or assets now owned or hereafter  arising or
acquired,  except:  (a) Liens for current  Taxes not  delinquent  or Taxes being
contested  in good  faith and by  appropriate  proceedings  and as to which such
reserves or other  appropriate  provisions  as may be required by GAAP are being
maintained;  (b) statutory Liens, such as carriers',  loggers',  warehousemen's,
mechanics', materialmen's, and repairmen's Liens, arising in the ordinary course
of  business  securing  obligations  which  are not  overdue  or which are being
contested  in good  faith and by  appropriate  proceedings  and as to which such
reserves or other  appropriate  provisions  as may be required by GAAP are being
maintained;  (c) pledges or deposits in connection  with workers'  compensation,
unemployment  insurance  and other  social  security  legislation;  (d) Liens in
connection  with  Capital  Expenditures  attaching  only to the  property  being
acquired if the  Indebtedness  secured  thereby does not exceed 100% of the fair
market value of such property at the time of acquisition  thereof;  (e) Liens in
favor of the  Lender;  (f)  Liens  permitted  on  Schedule  4.9;  and (g)  Liens
consented to by the Lender in writing.


         6.14     Contingent  Liabilities.   Either:  (a)  endorse,   guarantee,
contingently agree to  purchase or to provide  funds  for  the  payment  of,  or
otherwise  become  contingently  liable  upon,  any   obligation  of  any  other
Person,  except  by  the  endorsement of negotiable  instruments  for deposit or
collection (or similar  transactions) in the  ordinary  course of  business,  or
(b) agree to  maintain the net worth or working  capital of, or provide funds to
satisfy any other financial test applicable to, any other Person.

         6.15 Change in Accounts Receivable. After the occurrence of an Event of
Default or receipt of notice from the Lender that the Lender intends to commence
direct  collection  of Accounts  Receivable,  permit or agree to any  extension,
compromise  or  settlement  or make any  change or  modification  of any kind or
nature  with  respect  to any  Account  Receivable,  including  any of the terms
relating thereto.

         6.16 Unconditional  Purchase  Obligations.  Enter into or be a party to
any  contract  for the  purchase of  materials,  supplies  or other  property or
services,  if such  contract  requires  that payment be made by it regardless of
whether  or not  delivery  is ever  made of such  materials,  supplies  or other
property or services.

         6.17 Use of  Proceeds.  Use or permit any  proceeds  of the Loans to be
used,  either  directly  or  indirectly,  for the  purpose,  whether  immediate,
incidental or ultimate,  of "purchasing or carrying any margin stock" within the
meaning of Regulation U of the Federal  Reserve  Board,  as amended from time to
time, and furnish to the Lender upon request, a statement in conformity with the
requirements  of Federal  Reserve  Form U-1  referred to in  Regulation U of the
Federal Reserve Board.

         6.18 Transactions with Related Parties. Enter into or be a party to any
transaction or arrangement,  including,  without limitation, the purchase, sale,
lease or exchange of property or the rendering of any service,  with any Related
Party,  except  in the  ordinary  course  of  and  pursuant  to  the  reasonable
requirements of such Borrower's or such Subsidiary's  business and upon fair and
reasonable  terms no less  favorable to such  Borrower or such  Subsidiary  than
would  obtain  in a  comparable  arm's-length  transaction  with a Person  not a
Related Party.



<PAGE>





                   ARTICLE VII EVENTS OF DEFAULT AND REMEDIES

         7.1      Events of Default.  The  occurrence  of any one or more of the
following  events shall  constitute an "Event of Default":

                  (a) Non-Payment.  The Borrowers  shall  fail to pay, when due,
         whether by  acceleration,  maturity or otherwise, any Obligations;

                  (b) Non-Payment of Other Indebtedness. Any Borrower, any other
         Obligor  or any  Subsidiary  shall  fail to pay,  when due,  whether by
         acceleration or otherwise (subject to any applicable grace period), any
         Indebtedness of, or guaranteed by, such Borrower, such other Obligor or
         such Subsidiary;

                  (c) Acceleration of Other Indebtedness. Any event or condition
         shall occur which  results in the  acceleration  of the maturity of any
         Indebtedness  of, or guaranteed by, any Borrower,  any other Obligor or
         any  Subsidiary  or  enables  the  holder  or  holders  of  such  other
         Indebtedness  or any trustee or agent for such  holders  (any  required
         notice of default  having been given and any  applicable  grace  period
         having expired) to accelerate the maturity of such other Indebtedness;

                  (d) Other Obligations.  Any Borrower, any other Obligor or any
         Subsidiary  shall fail to pay,  when due,  whether by  acceleration  or
         otherwise,  or perform  or observe  (subject  to any  applicable  grace
         period or waiver of such  default) (i) any  obligation  or agreement of
         such  Borrower,  such other  Obligor or such  Subsidiary to or with the
         Lender  (other  than  any  obligation  or  agreement  of the  Borrowers
         hereunder  and under  any  Notes) or (ii) any  material  obligation  or
         agreement of such Borrower, such other Obligor or such Subsidiary to or
         with any other Person (other than (A) any such  material  obligation or
         agreement constituting or related to Indebtedness, (B) accounts payable
         arising  in the  ordinary  course  of  business,  and (C) any  material
         obligation  or agreement of any  Subsidiary  to such Borrower or to any
         other Subsidiary), except only to the extent that the occurrence of any
         such failure is being contested by such Borrower, such other Obligor or
         such  Subsidiary,  as the case may be, in good faith and by appropriate
         proceedings and such Borrower,  such other Obligor or such  Subsidiary,
         as applicable, shall have set aside on its books such reserves or other
         appropriate provisions therefor as may be required by GAAP;



<PAGE>



                  (e)  Insolvency.  Any  Borrower,  any  other  Obligor  or  any
         Subsidiary becomes  insolvent,  or generally fails to pay, or admits in
         writing its inability to pay, its debts as they mature, or applies for,
         consents to, or acquiesces in, the  appointment of a trustee,  receiver
         or other  custodian  for such  Borrower,  such  other  Obligor  or such
         Subsidiary, or for a substantial part of the property of such Borrower,
         such other Obligor or such  Subsidiary,  or makes a general  assignment
         for the benefit of creditors;  or, in the absence of such  application,
         consent or  acquiescence,  a trustee,  receiver or other  custodian  is
         appointed for any Borrower,  any other Obligor or any Subsidiary or for
         a substantial part of the property of such Borrower,  any other Obligor
         or any Subsidiary; or any bankruptcy,  reorganization, debt arrangement
         or other  proceeding  under any  bankruptcy or  insolvency  law, or any
         dissolution or liquidation proceeding,  is instituted by or against any
         Borrower,  any other  Obligor  or any  Subsidiary;  or any  warrant  of
         attachment or similar legal process is issued  against any  substantial
         part  of the  property  of  any  Borrower,  any  other  Obligor  or any
         Subsidiary;


                  (f)  ERISA.  The  institution  by any  Borrower  or any  ERISA
         Affiliate  of steps to  terminate  any Plan if, in order to  effectuate
         such termination, any Borrower or any ERISA Affiliate would be required
         to make a  contribution  to such  Plan or would  incur a  liability  or
         obligation to such Plan, in excess of $50,000;  or the  institution  by
         the PBGC of steps to terminate any Plan;

                  (g)  Non-Compliance  With this  Agreement.  Any Borrower shall
         fail to comply  with any of the Borrowers' agreements set  forth herein
         or in Supplement A;

                  (h) Non-Compliance  With Other Loan Documents.  Failure by any
         Borrower, any other Obligor or any Subsidiary to comply with any of its
         respective  agreements set forth in any Loan Documents  other than this
         Agreement  (and not  constituting  an Event of Default under any of the
         other  subsections  of this  Section  7.1),  and such failure to comply
         shall continue after the grace period (if any) set forth therein;

                  (i)  Representations  and Warranties.  Any  representation  or
         warranty  made by any Borrower or any other  Obligor in any of the Loan
         Documents is untrue or misleading in any material  respect when made or
         deemed made; or any schedule, statement, report, notice, certificate or
         other  writing  furnished by any  Borrower or any other  Obligor to the
         Lender is untrue or misleading  in any material  respect on the date as
         of which the facts set forth  therein are stated or  certified;  or any
         certification  made or deemed made by any Borrower or any other Obligor
         to the Lender is untrue or misleading in any material  respect on or as
         of the date made or deemed made;

                  (j)  Litigation.  There shall be entered against any Borrower,
         any other Obligor or any Subsidiary one or more judgments or decrees in
         excess of $250,000 for any one judgment and $2,000,000 in the aggregate
         at any one time  outstanding,  excluding those judgments or decrees (i)
         that shall have been  outstanding  less than 30 calendar  days from the
         entry thereof or that are the subject of a pending  appeal being timely
         pursued and for which the  Borrower in question has posted any required
         bond,  (ii) for and to the extent which such Borrower,  such Obligor or
         such  Subsidiary,  as applicable,  is insured and with respect to which
         the  insurer has  assumed  responsibility  in writing or for and to the
         extent  which  such  Borrower,  such  Obligor  or such  Subsidiary,  as
         applicable,   is   otherwise   indemnified   if  the   terms   of  such
         indemnification are satisfactory to the Lender;

                  (k) Death or  Incompetence of Obligor.  If any natural  person
         who is  an  Obligor,  partner in a partnership which is an Obligor,  or
         owner of  a material  interest in a corporate Obligor,  shall die or be
         declared legally incompetent;



<PAGE>



                  (l)  Validity.  If  the  validity  or  enforceability  of  any
         of the  Loan Documents shall  be challenged by any Borrower,  any other
         Obligor or any other Person,  or shall fail to remain in full force and
         effect;


                  (m) Conduct of Business. If any Borrower, any other Obligor or
         any Subsidiary is enjoined, restrained or in any way prevented by court
         order,  which has not been  dissolved  or stayed  within five  Business
         Days, from conducting all or any material part of its business affairs;

                  (n)  Change  in  Management   or  Line(s)  of  Business.   Any
         substantial  change in the senior  management of any  Borrower,  or any
         change in any Borrower's line(s) of business.

         7.2      Effect of Event of Default; Remedies.

                  (a) In the event that one or more Events of Default  described
         in Section  7.1(e) shall  occur,  then the Credit  extended  under this
         Agreement shall terminate and all Obligations  shall be immediately due
         and  payable  without  demand,   notice  or  declaration  of  any  kind
         whatsoever.

                  (b) Upon the occurrence of an Event of Default, or at any time
         thereafter during the continuance thereof, (other than one described in
         Section 7.1(e)) the Lender may declare all Obligations  immediately due
         and payable without demand or notice of any kind whatsoever,  whereupon
         the  Credit  extended  under this  Agreement  shall  terminate  and all
         Obligations  shall be  immediately  due and payable  without  demand or
         notice of any kind  whatsoever.  The Lender shall  promptly  advise the
         Borrowers  of any such  declaration,  but  failure  to do so shall  not
         impair the effect of such declaration.

                  (c) Upon the occurrence of an Event of Default, or at any time
         thereafter during the continuance  thereof, the Lender may exercise any
         one or  more  or  all  of the  following  remedies,  all of  which  are
         cumulative and non-exclusive:

                           (i) any other  remedy  contained  in this  Agreement,
                    the other Loan  Documents or any Supplemental Documentation;

                           (ii) any rights and remedies  available to the Lender
                    under the Uniform Commercial Code as enacted in Minnesota as
                    of the date of this Agreement, and any other applicable law;

                           (iii) without notice,  demand or legal process of any
                    kind,  the Lender may take  possession  of any or all of the
                    Collateral (in addition to Collateral which it might already
                    have in its possession), wherever it might be found, and for
                    that  purpose may pursue the same  wherever it may be found,
                    and may enter into any premises  where any of the Collateral
                    may be or is supposed to be, and search for, take possession
                    of, remove,  keep and store any of the Collateral  until the
                    same shall be sold or otherwise  disposed of, and the Lender
                    shall  have  the  right  to  store  the  same  in any of the
                    Borrowers' premises without cost to the Lender;



<PAGE>



                           (iv) at the Lender's request,  the Borrowers will, at
                    the Borrowers' expense,  assemble the Collateral and make it
                    available  to  the  Lender  at  a  place  or  places  to  be
                    designated  by the Lender and  reasonably  convenient to the
                    Lender and the Borrowers; and


                           (v)  the  Lender  at  its  option,  and  pursuant  to
                    notification  given to the  Borrowers as provided for below,
                    may sell any Collateral  actually or  constructively  in its
                    possession  at public or private sale and apply the proceeds
                    thereof as provided in Section 8.2 below.

         7.3  Setoff.  In  addition  to and not in  limitation  of all rights of
offset that the Lender,  any  Affiliate,  or any other holder of any interest in
this  Agreement or any Note may have under  applicable  law, upon the occurrence
and during the  continuation of any Event of Default,  or any Unmatured Event of
Default,  Lender and any Affiliate  shall have the right, in its sole discretion
and without  demand and without  notice to anyone to  appropriate or set off and
apply  to the  payment  of the  Obligations,  whether  or not  due,  any and all
balances, credits, deposits, accounts or moneys of the Borrowers and any of them
then or thereafter  with such Person and any and all other  liabilities  owed to
the Borrower by such Person.

         7.4 Use of Premises.  Borrower hereby  irrevocably grants to Lender the
right, subject to the rights of any landlord of the premises,  to enter upon and
hold the  premises  of  Borrower  wherever  located  at any time  following  the
occurrence of an Event of Default and during the  continuation  thereof.  Lender
may use the premises to hold, process, manufacture, sell, use, store, liquidate,
realize upon or otherwise  dispose of Collateral and for other purposes that the
Lender may in good faith deem to be  related or  incidental  purposes.  Lender's
right to hold the  premises  shall cease and  terminate  upon the earlier of (i)
payment in full of all Obligations,  expiration or termination of all Letters of
Credit and  termination  of the Credit or (ii) final sale or  disposition of all
goods constituting Collateral and delivery of all such goods to purchasers.  The
Lender  shall not be  obligated  to pay any rent or other  compensation  for the
occupancy or use of any of the premises  unless required by the landlord of such
premises, provided, however, if Lender does pay or account for any rent or other
compensation  for the  occupancy  or use of any of the  premises,  such  rent or
compensation  shall be  considered  an Advance  under this  Agreement  and shall
constitute part of the Obligations.


                 ARTICLE VIII COLLATERAL AND THE LENDER'S RIGHTS

         8.1 Notice of Disposition of Collateral.  Any  notification of intended
disposition of any of the Collateral  required by law shall be deemed reasonably
and properly given if given at least ten calendar days before such disposition.



<PAGE>



         8.2  Application  of  Proceeds  of  Collateral.  Any  proceeds  of  any
disposition  by the Lender of any of the Collateral may be applied by the Lender
to the payment of expenses in connection with the taking possession of, storing,
preparing for sale, and disposition of Collateral, including Attorneys' Fees and
legal  expenses,  and any balance of such  proceeds may be applied by the Lender
toward the payment of such of the Obligations, and in such order of application,
as the Lender may from time to time elect.


         8.3 Care of  Collateral.  The Lender shall be deemed to have  exercised
reasonable  care  in the  custody  and  preservation  of any  Collateral  in its
possession if it takes such action for that purpose as the Borrower  owning such
Collateral  requests in  writing,  but failure of the Lender to comply with such
request shall not, of itself,  be deemed a failure to exercise  reasonable care,
and no failure of the Lender to preserve  or protect any rights with  respect to
such  Collateral  against  prior  parties,  or to do any act with respect to the
preservation  of such  Collateral  not so requested by the  Borrowers,  shall be
deemed a failure to exercise  reasonable  care in the custody or preservation of
such Collateral.

         8.4  Performance of Borrower's  Obligations.  The Lender shall have the
right, but shall not be obligated, to discharge any claims against or Liens, and
any Taxes at any time  levied or placed  upon any or all  Collateral  including,
without limitation, those arising under statute or in favor of landlords, taxing
authorities,  government,  public  and/or  private  warehousemen,  common and/or
private carriers,  processors,  finishers,  draymen, coopers, dryers, mechanics,
artisans,  laborers,  attorneys,  courts, or others. The Lender may also pay for
maintenance and preservation of Collateral. The Lender may, but is not obligated
to,  perform  or  fulfill  any of the  Borrowers'  responsibilities  under  this
Agreement  which the Borrowers or any of them have failed to perform or fulfill.
All amounts  expended by Lender  under this Section 8.4 shall be deemed to be an
Advance under this Agreement.

         8.5 Lender's Rights. None of the following shall affect the obligations
of the Borrowers to the Lender under this Agreement or the Lender's  rights with
respect to the  Collateral  or any Third Party  Collateral  (any or all of which
actions may be taken by the Lender at any time, whether before or after an Event
of  Default,  at its sole and  absolute  discretion  and  without  notice to the
Borrowers):

                  (a) acceptance or retention by the Lender of other property or
         interests in property as security for the Obligations, or acceptance or
         retention of any Obligor(s), in addition to the Borrowers, with respect
         to any Obligations;

                  (b)  release of its  security  interest  in, or  surrender  or
         release of, or the  substitution or exchange of or for, all or any part
         of the  Collateral or any Third Party  Collateral or any other property
         securing any Obligations (including,  without limitation,  any property
         of any Obligor other than the  Borrowers),  or any extension or renewal
         for one or more  periods  (whether  or not  longer  than  the  original
         period),  or  release,  compromise,  alteration  or  exchange,  of  any
         obligations  of any  Guarantor  or other  Obligor  with  respect to any
         Collateral or any such property;

                  (c)  extension or renewal for one or more periods  (whether or
         not  longer  than  the  original  period),   or  release,   compromise,
         alteration or exchange of any Obligations,  or release or compromise of
         any obligation of any Obligor with respect to any Obligations; or

                  (d)  failure  by the  Lender to resort  to other  security  or
         pursue any Person liable for any  Obligations  before  resorting to the
         Collateral.



<PAGE>





                          ARTICLE IX CONDITIONS PRECEDENT

         9.1      Conditions  Precedent  to  Initial  Loan.  The  obligation  of
the Lender to make the initial Loan shall be subject  to the satisfaction of the
following   conditions  precedent,  in  addition  to the  applicable  conditions
precedent set forth in Section 9.2:

                  9.1.1 No Change in  Condition.  No change in the  condition or
         operations, financial or otherwise, of any Borrowers, any other Obligor
         or any Subsidiary, shall have occurred which change, in the sole credit
         judgment  of the  Lender,  may  constitute  an Adverse  Event or have a
         material  adverse effect on any Collateral or Third Party Collateral or
         the Lender's interest therein.

                  9.1.2  Accounting  Methods.  No  Borrower  shall have made any
         material, as determined by the Lender, change in its accounting methods
         or principles.

                  9.1.3  Survey.  The Lender  shall have  completed  its updated
         survey of the business,  operations and assets of the  Borrowers,  each
         Subsidiary  and each other  Obligor,  and such survey shall provide the
         Lender  with   results  and   information   which,   in  the   Lender's
         determination, are satisfactory to the Lender.

                  9.1.4 No  Material  Transaction.  None of the  Borrowers,  any
         other Obligor or any  Subsidiary  shall have entered into any material,
         as determined  by the Lender,  commitment  or  transaction,  including,
         without   limitation,   transactions   for   borrowings   and   Capital
         Expenditures,  which are not in the ordinary course of their respective
         businesses.

                  9.1.5  Litigation.  No litigation shall be outstanding or have
         been  instituted  or  threatened  which  the  Lender  determines  to be
         material against any Borrower, any other Obligor or any Subsidiary.

                  9.1.6 Filing of Documents. All financing statements, mortgages
         and  other  documents  relating  to  the  Collateral  and  Third  Party
         Collateral shall have been filed or recorded, as appropriate.


                  9.1.7  Delivery  of  Documents.   The  Borrowers   shall  have
         delivered  or cause to be  delivered  to the  Lender  with  each of the
         following, each in form and substance satisfactory to the Lender in all
         respects and each duly  executed and dated the date of the initial Loan
         or such earlier date as shall be acceptable to the Lender:

                           (a) This Agreement.  Duly  executed  by Borrowers and
                    Lender.

                           (b)  Other  Agreements.  Duly   executed   copies  of
                    each  of  the  Loan  Documents  not specifically  identified
                    herein  which  the  Lender  determines  to  be  necessary or
                    desirable,  each  in  form  and  content satisfactory to the
                    Lender;



<PAGE>



                           (c)  Resolutions of Borrower.  A copy, duly certified
                    by the secretary or an assistant secretary of each Borrower,
                    of (i) the  resolutions  of the Board of  Directors  of such
                    Borrower  authorizing  (A) the  borrowings  by such Borrower
                    hereunder,  (B) the execution,  delivery and  performance by
                    such  Borrower of the Loan  Documents to which such Borrower
                    is a party or by which it is bound,  (C) the conveyance of a
                    lien on the Collateral owned by such Borrower to Lender, and
                    (D)  certain  officers  or  employees  of such  Borrower  to
                    request  borrowings  by telephone  and to execute  Borrowing
                    Base  Certificates;  (ii)  all  documents  evidencing  other
                    necessary  corporate  action;  and  (iii) all  approvals  or
                    consents, if any, with respect to the Loan Documents;


                           (d) Incumbency Certificate of Borrower. A certificate
                    of the secretary or an assistant secretary of each Borrower,
                    certifying  the  names  of the  officers  of  such  Borrower
                    authorized to sign the Loan Documents to which it is a party
                    and any Supplemental  Documentation,  together with the true
                    signatures of such officers;

                           (e)  Bylaws of  Borrower.  A copy, duly  certified by
                    the  secretary  or an  assistant secretary of each Borrower,
                    of such Borrower's Bylaws;

                           (f) Articles of  Incorporation  of Borrower.  A copy,
                    duly certified by the Secretary of State  of each Borrower's
                    state  of  incorporation, of  such  Borrower's  Articles  of
                    Incorporation;

                           (g)   Good   Standing   Certificates   of   Borrower.
                    Certificates  of good standing as to each Borrower issued by
                    the  Secretary of State of the state in which such  Borrower
                    is  organized,  and each other state in which the failure of
                    such  Borrower to be in good  standing  would  constitute an
                    Adverse  Event  or have a  material  adverse  effect  on the
                    Lender's rights in any Collateral;

                           (h) Opinion.  A  legal  opinion  of Scudder Law Firm,
                    P.C., counsel to the Borrowers;

                           (i) Borrower's  Certificate.  The  certificate of the
                    chief   executive   officer/President   of   each   Borrower
                    certifying,  to the best of his/her knowledge after diligent
                    inquiry,  to the fulfillment of all conditions  precedent to
                    closing  and  funding  the  secured  financing   transaction
                    contemplated   by  this  Agreement  and  to  the  truth  and
                    accuracy,  as of  such  date,  of  the  representations  and
                    warranties of such Borrower  contained in the Loan Documents
                    to which such Borrower is a party;

                           (j) Insurance. Evidence satisfactory to the Lender of
                    the existence of insurance on the  Collateral in amounts and
                    with  insurers  acceptable  to  the  Lender,  together  with
                    evidence  establishing  that the  Lender  is named as a loss
                    payee and, if required by the Lender, additional insured, on
                    all related  insurance  policies  and an  endorsement  or an
                    independent  instrument  from each  issuer  of an  insurance
                    policy substantially in the form set forth as Exhibit D; and


<PAGE>





                           (k)  Other.  Such  other  documents,  instruments  or
                    agreements  as the  Lender  shall determine to  be necessary
                    or desirable.

                  9.1.8 Security Interest.  The Lien in the Collateral and Third
         Party Collateral  granted to the Lender to secure the Obligations shall
         be senior, perfected Liens except as otherwise agreed by the Lender.

                  9.1.9  Special  Accounts.  Each  Borrower  shall have  entered
         into  (a)  a Collateral  Account and  Disbursement  Account  Agreement,
         substantially in the form of Exhibit E, with the Lender.

                  9.1.10  Effect  of Law.  No law or  regulation  affecting  the
         Lender's entering into the secured financing  transaction  contemplated
         by this Agreement shall impose upon the Lender any material obligation,
         fee, liability, loss, cost, expense or damage.

                  9.1.11 Exhibits;  Schedules. All Exhibits and Schedules to the
         Loan  Documents  shall  have  been  completed  in  form  and  substance
         satisfactory  to the Lender and shall  contain no facts or  information
         which the Lender, in its sole judgment, determines to be unacceptable.

         9.2 Conditions  Precedent to all Loans. The obligation of the Lender to
make any Loan  (including the initial Loan) or to issue,  or cause to be issued,
any  Letter of Credit  shall be  subject to the  satisfaction  of the  following
conditions precedent:

                  (a) Representations and Warranties. All of the representations
         and  warranties  of  each  Borrower,   whether  made   individually  or
         collectively  and each other Obligor set forth in the Loan Documents to
         which such Borrower or such other Obligor,  as  applicable,  is a party
         shall be true and correct.

                  (b) Event of Default. Immediately before and after making such
         Loan or  issuing,  or causing to be issued  such  Letter of Credit,  no
         Event of  Default  or  Unmatured  Event of  Default  shall  exist or be
         continuing.


                               ARTICLE X INDEMNITY



<PAGE>



         10.1  Environmental  and  Safety and Health  Indemnity.  Each  Borrower
hereby  indemnifies  the Lender and Affiliates and agrees to hold the Lender and
Affiliates harmless from and against any and all losses,  liabilities,  damages,
injuries,   costs,  expenses  and  claims  of  any  and  every  kind  whatsoever
(including,  without  limitation,  court costs and Attorneys' Fees) which at any
time or from time to time may be paid,  incurred  or  suffered  by, or  asserted
against, the Lender or any Affiliate (a) for, with respect to, or as a direct or
indirect  result of the  violation  by any  Borrower or any  Subsidiary,  of any
Environmental Law or Occupational Safety and Health Law; or (b) with respect to,
or as a direct or  indirect  result  of (i) the  presence  on or  under,  or the
escape, seepage, leakage,  spillage,  disposal,  discharge,  emission or release
from,  properties owned or utilized by any Borrower and/or any Subsidiary in the
conduct  of  its  business  into  or  upon  any  land,  the  atmosphere,  or any
watercourse,  body of water  or  wetland,  of any  Hazardous  Material  or other
hazardous,  toxic  or  dangerous  waste,  substance  or  constituent,  or  other
substance  (including,  without limitation,  any losses,  liabilities,  damages,
injuries,  costs, expenses or claims asserted or arising under the Environmental
Laws) or (ii) the existence of any unsafe or unhealthful  condition on or at any
premises owned or utilized by any Borrower  and/or any Subsidiary in the conduct
of its business.  The provisions of and undertakings and indemnification set out
in this Section 10.1 shall survive  satisfaction  and payment of the Obligations
and termination of this Agreement.


         10.2 General Indemnity. In addition to the payment of expenses pursuant
to Section 12.3,  whether or not the transactions  contemplated  hereby shall be
consummated,  each Borrower hereby  indemnifies,  and agrees to pay and hold the
Lender,  its  Affiliates  and any  holder of any  Notes,  and  their  respective
officers,  directors,  employees,  agents,  successors and assigns (collectively
called  the  "Indemnitees")  harmless  from  and  against,  any  and  all  other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims,  costs,  expenses  and  disbursements  of any kind or nature  whatsoever
(including, without limitation, the reasonable fees and disbursements of counsel
for any of such Indemnitees in connection with any investigative, administrative
or  judicial  proceeding  commenced  or  threatened,  whether or not any of such
Indemnitees  shall be  designated  a party  thereto),  that may be  imposed  on,
incurred by, or asserted against the Indemnitees (or any of them), in any manner
relating to or arising out of the Loan  Documents,  the statements  contained in
any commitment  letters delivered by the Lender,  the Lender's agreement to make
the Loans or any Letter of Credit Issuer's  agreement to issue Letters of Credit
hereunder,  or the use or intended  use of any Letters of Credit,  or the use or
intended   use  of  the   proceeds  of  any  of  the  Loans  (the   "Indemnified
Liabilities"); provided, however, that the Borrowers shall have no obligation to
an Indemnitee hereunder with respect to Indemnified Liabilities arising from the
gross negligence or willful misconduct of an Indemnitee.  To the extent that the
undertaking  to  indemnify,  pay and hold  harmless  set forth in the  preceding
sentence  may be  unenforceable  because  it is  violative  of any law or public
policy,  the Borrowers shall contribute the maximum portion that it is permitted
to pay and satisfy under  applicable law, to the payment and satisfaction of all
Indemnified  Liabilities  incurred  by  the  Indemnitees  or any  of  them.  The
provisions of the undertakings and  indemnification set out in this Section 10.2
shall survive  satisfaction  and payment of the  Obligations  and termination of
this Agreement.



<PAGE>



         10.3 Capital  Adequacy.  If the Lender shall reasonably  determine that
the   application  or  adoption  of  any  law,  rule,   regulation,   directive,
interpretation,  treaty or guideline  regarding capital adequacy,  or any change
therein  or in the  interpretation  or  administration  thereof,  whether or not
having the force or law (including,  without limitation,  application of changes
to  Regulation  H and  Regulation Y of the Federal  Reserve  Board issued by the
Federal  Reserve Board on January 19, 1989 and regulations of the Comptroller of
the Currency,  Department of the Treasury,  12 CFR Part 3, Appendix A, issued by
the  Comptroller  of the Currency on January 27, 1989)  increases  the amount of
capital  required  or  expected  to be  maintained  by the  Lender or any Person
controlling  the Lender,  and such  increase is based upon the  existence of the
Lender's  obligations  hereunder and other  commitments of this type,  then from
time to time,  within 10 days after demand from the Lender,  the Borrowers shall
pay to the Lender such amount or amounts as will  compensate  the Lender or such
controlling Person, as the case may be, for such increased capital  requirement.
The  determination  of any amount to be paid by the Borrowers under this Section
10 shall  take into  consideration  the  policies  of the  Lender or any  Person
controlling the Lender with respect to capital  adequacy and shall be based upon
any reasonable  averaging,  attribution and allocation methods. A certificate of
the  Lender  setting  forth  the  amount or  amounts  as shall be  necessary  to
compensate  the Lender as  specified  in this Section 10.3 shall be delivered to
the  Borrowers and shall be  conclusive  in the absence of manifest  error.  The
amounts set forth in said certificate shall be payable on demand.



                        ARTICLE XI ADDITIONAL PROVISIONS

         Additional provisions are set forth in Supplement A.


                               ARTICLE XII GENERAL

         12.1  Borrower's  Waiver.  Except  as  otherwise  provided  for in this
Agreement, the Borrowers waive (a) presentment, demand and protest and notice of
presentment,  protest,  default,  non-payment,  maturity,  release,  compromise,
settlement,  one or more extensions or renewals of any or all commercial  paper,
accounts, documents,  instruments, chattel paper and guaranties at any time held
by the Lender on which any Borrower may in any way be liable and hereby ratifies
and confirms whatever the Lender may do in this regard; (b) all rights to notice
and a hearing  prior to the  Lender's  taking  possession  or control of, or the
Lender's  relevy,  attachment  or levy on or of, the  Collateral  or any bond or
security  which might be  required by any court prior to allowing  the Lender to
exercise any of the  Lender's  remedies;  and (c) the benefit of all  valuation,
appraisement and exemption laws.

         12.2 Borrower's Acknowledgement. Each Borrower acknowledges that it has
read and  understands  this  Agreement  and has been  advised  by counsel of its
choice with respect to this  Agreement  and the  transactions  evidenced by this
Agreement or has knowingly waived its right to such counsel.



<PAGE>



         12.3 Expenses;  Attorney's Fees. The Borrowers  agrees,  whether or not
any Loan is made or Letter of Credit  issued  hereunder,  to pay the Lender upon
demand for all expenses and  Attorneys'  Fees,  including,  without  limitation,
those incurred by the Lender in connection with (a) the preparation, negotiation
and execution of the Loan Documents  (subject to the limitation on amount agreed
to by letter of September 1, 1999, which limitation is incorporated herein), (b)
the  preparation  of any and all  amendments to the Loan Documents and all other
instruments  or  documents  provided for therein or delivered or to be delivered
thereunder or in connection therewith,  (c) the collection or enforcement of the
Borrowers' or any other Obligor's  obligations  under any of the Loan Documents,
(d) the costs of all searches and updates of searches in public  records  deemed
necessary  by the  Lender in  connection  with the  protection  of its  security
interest, and (e) the collection or enforcement of any of the Lender's rights in
or to any  Collateral or Third Party  Collateral.  The Borrowers also (y) hereby
indemnify and holds the Lender harmless from any loss or expense which may arise
or be created by the acceptance of telephonic or other  instructions  for making
Loans and (z) agree to pay, and save the Lender harmless from all liability for,
any stamp or other taxes which may be payable with  respect to the  execution or
delivery  of  this  Agreement  or the  issuance  of  any  Note  or of any  other
instruments or documents provided for herein or to be delivered  hereunder or in
connection  herewith.  The Borrowers'  foregoing  obligations  shall survive any
termination of this Agreement.


         12.4 Lender Fees and Charges. The Borrowers agree to pay the Lender, or
any Affiliate,  on demand the customary fees and charges of the Lender,  or such
Affiliate,  for maintenance of accounts with the Lender,  or such Affiliate,  or
for providing  other services to the Borrowers.  The Lender may, in its sole and
absolute  discretion,  provide  for such  payment by charging  the  Disbursement
Account or any other account of any one or more of the Borrowers with the Lender
or any other  Affiliate,  or advancing the amount  thereof to the Borrowers as a
Loan.

         12.5 No Waiver by Lender;  Amendments.  No failure or delay on the part
of the Lender in the  exercise  of any power or right,  and no course of dealing
between  any one or more of the  Borrowers  and the  Lender  shall  operate as a
waiver of such power or right,  nor shall any single or partial  exercise of any
power or right preclude other or further exercise thereof or the exercise of any
other power or right.  The remedies  provided for herein are  cumulative and not
exclusive  of any  remedies  which may be  available  to the Lender at law or in
equity or otherwise by  agreement.  No notice to or demand on the  Borrowers not
required  hereunder  shall in any event  entitle the  Borrowers  to any other or
further  notice or demand in  similar or other  circumstances  or  constitute  a
waiver  of the  right of the  Lender  to any  other  or  further  action  in any
circumstances without notice or demand. No amendment, modification or waiver of,
or consent with respect to, any provision of this  Agreement  shall in any event
be effective unless the same shall be in writing and signed and delivered by the
Lender.  Any waiver of any provision of this  Agreement,  and any consent to any
departure by the Borrowers  from the terms of any  provision of this  Agreement,
shall be effective  only in the specific  instance and for the specific  purpose
for which given.

         12.6 Notice.  Except as otherwise expressly provided herein, any notice
hereunder to the Borrowers or the Lender shall be in writing (including telecopy
communication)  and shall be given to the Borrowers or the Lender at the address
or fax number set forth on the signature  pages hereof or at such other address,
or  telecopier  number as the  Borrowers  or the Lender may, by written  notice,
designate  as its address or fax number for  purposes of notice  hereunder.  All
such notices shall be deemed to be given (i) when transmitted by fax on the date
the appropriate  answer back is received,  (ii) when delivered by a commercially
recognized   courier   service  on  the  date  specified  for  delivery  in  the
instructions to the courier,  (iii) on the date personally delivered or, (iv) in
the case of notice by mail,  three days  following  deposit in the United States
mails,  certified mail,  return receipt requested  properly  addressed as herein
provided, with proper postage prepaid provided,  however, that any notice to the
Lender  under  Article  II hereof  shall be deemed to have been  given only when
received by the Lender.



<PAGE>



         12.7 Participations;  Information.  The Borrowers hereby consent to the
Lender's  grant of  participations  in or sale,  assignment,  transfer  or other
disposition, at any time and from time to time hereafter, of the Loan Documents,
or of any portion of any thereof,  including without limitation lender's rights,
titles,  interests,  remedies,  powers and/or duties. The Lender may furnish any
information  concerning  the Borrowers in the possession of the Lender from time
to time to assignees of the rights and/or  obligations  of the Lender  hereunder
and  to  participants  in  any  Loan   (including   prospective   assignees  and
participants)  and may  furnish  information  in  response  to credit  inquiries
consistent with general banking practice.


         12.8 Severability.  Any provision of this Agreement which is prohibited
or  unenforceable  in  any  jurisdiction  shall,  as to  such  jurisdiction,  be
ineffective  to the  extent  of such  prohibition  or  unenforceability  without
invalidating  the  remaining  provisions  hereof or  affecting  the  validity or
enforceability of such provision in any other jurisdiction.

         12.9 Successors. This Agreement shall be binding upon the Borrowers and
the Lender and their respective  successors and assigns,  and shall inure to the
benefit of the  Borrowers and the Lender and the  successors  and assigns of the
Lender.  The  Borrowers  shall  not  assign  their  respective  rights or duties
hereunder without the consent of the Lender.

         12.10 Entire  Agreement.  This  Agreement and the other Loan  Documents
embody the entire  agreement  and  understanding  between the  Borrowers and the
Lender with respect to the subject  matter  hereof and thereof.  This  Agreement
supersedes  all prior  agreements  and  understandings  relating  to the subject
matter hereof.

         12.11  Counterparts.  This  Agreement  may be executed in any number of
counterparts,  all of which taken  together  shall  constitute  one and the same
instrument,  and either of the parties  hereto may  execute  this  Agreement  by
signing any such counterpart.

         12.12  Construction.  Each Borrower  acknowledges  that this  Agreement
shall  not be  binding  upon the  Lender or become  effective  until and  unless
accepted by the  Lender,  in  writing.  If so  accepted by the Lender,  THE LOAN
DOCUMENTS AND ANY SUPPLEMENTAL  DOCUMENTATION  SHALL, UNLESS OTHERWISE EXPRESSLY
PROVIDED  THEREIN,  BE DEEMED TO HAVE BEEN  NEGOTIATED  AND ENTERED INTO IN, AND
SHALL BE GOVERNED AND CONTROLLED BY THE INTERNAL LAWS OF, THE STATE OF MINNESOTA
WITHOUT  GIVING  EFFECT  TO  CHOICE  OF  LAW  PROVISIONS  AS TO  INTERPRETATION,
ENFORCEMENT,  VALIDITY,  CONSTRUCTION,  EFFECT,  CHOICE OF LAW, AND IN ALL OTHER
RESPECTS,  INCLUDING,  BUT NOT LIMITED TO, THE LEGALITY OF THE INTEREST RATE AND
OTHER CHARGES,  BUT EXCLUDING  PERFECTION OF SECURITY  INTERESTS AND LIENS WHICH
SHALL BE GOVERNED AND CONTROLLED BY THE LAWS OF THE RELEVANT JURISDICTION.

         12.13  Consent to  Jurisdiction.  To induce  the Lender to accept  this
Agreement, each Borrower, irrevocably, agrees that, subject to the Lender's sole
and absolute election, ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT,
ARISING  OUT OF OR FROM OR RELATED  TO THE LOAN  DOCUMENTS  OR ANY  SUPPLEMENTAL
DOCUMENTATION OR THE COLLATERAL SHALL BE LITIGATED IN COURTS HAVING SITUS WITHIN
THE CITY OF MINNEAPOLIS,  STATE OF MINNESOTA.  EACH BORROWER HEREBY CONSENTS AND
SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURTS LOCATED WITHIN
SAID CITY AND STATE AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON SUCH
BORROWER,  AND CONSENTS  THAT ALL SUCH SERVICE OF PROCESS BE MADE BY  REGISTERED
MAIL  DIRECTED  TO SUCH  BORROWER AT THE ADDRESS  STATED ON THE  SIGNATURE  PAGE
HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED  UPON ACTUAL  RECEIPT
THEREOF.


<PAGE>





         12.14  Subsidiary  Reference.  Any reference  herein to a Subsidiary or
Subsidiaries of a Borrower, and any financial definition,  ratio, restriction or
other  provision  of this  Agreement  which is  stated  to be  applicable  to "a
Borrower and the  Subsidiaries" or which is to be determined on a "consolidated"
or  "consolidating"  basis, shall apply only to the extent such Borrower has any
Subsidiaries  and, where  applicable,  to the extent any such  Subsidiaries  are
consolidated with such Borrower for financial reporting purposes.

         12.15 WAIVER OF JURY TRIAL.  THE  BORROWERS  AND THE LENDER EACH WAIVES
ANY RIGHT TO A TRIAL BY JURY IN ANY  ACTION OR  PROCEEDING  TO ENFORCE OR DEFEND
ANY  RIGHTS (a) UNDER THE LOAN  DOCUMENTS  OR UNDER ANY  AMENDMENT,  INSTRUMENT,
DOCUMENT  OR  AGREEMENT  DELIVERED  OR WHICH MAY IN THE FUTURE BE  DELIVERED  IN
CONNECTION THEREWITH OR (b) ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION
WITH THIS  AGREEMENT,  AND AGREES  THAT ANY SUCH ACTION OR  PROCEEDING  SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY.

         12.16 Joint and Several Obligations. Each Borrower shall be jointly and
severally liable for the Obligations arising in connection with Loans made to it
and  Letters of Credit  issued for its account  and the  Obligations  arising in
connection  with Loans made to the other  Borrowers and Letters of Credit issued
for the account of the other Borrowers;  provided, however, that if it is at any
time  determined that any Borrower is liable as guarantor (and not as co-obligor
or  co-borrower)  with respect to such  Obligations  arising in connection  with
Loans made to the other  Borrowers  and Letters of Credit issued for the account
of other Borrowers (the "Guaranteed Obligations), each Borrower hereby agrees to
the  terms  set  forth  on  Exhibit  G hereto  with  respect  to the  Guaranteed
Obligations; provided further, however, that notwithstanding any other provision
hereof, the obligation of each Borrower, whether as a co-obligor with respect to
the  Obligations  or as a guarantor with respect to Guaranteed  Obligations,  is
limited  to its  respective  Maximum  Obligated  Amount.  Any  action to enforce
payment of the  Obligations  may be commenced by the Lender against any Borrower
as a sole defendant  without naming the other Borrowers in such proceeding,  and
each Borrower hereby  acknowledges and agrees that the other Borrowers shall not
be claimed by any Borrower to be an indispensable  party in any such proceeding.
Each  Borrower  further  acknowledges  and agrees  that the Lender  will  suffer
hardship and irreparable  harm if the Lender is delayed in pursuing its remedies
against any of the Borrowers.  Upon the occurrence and during the continuance of
an Unmatured  Event of Default or an Event of Default,  each Borrower agrees not
to exercise any right to claim or seek indemnification,  recourse,  subrogation,
reimbursement or contribution  from the other Borrowers  arising with respect to
this Agreement,  the Loans and Letters of Credit and each Borrower hereby waives
any  right  to  claim  or  seek  such  indemnification,  recourse,  subrogation,
reimbursement or contribution arising with respect to this Agreement,  the Loans
and  Letters  of Credit  until all  obligations  of the Lender to make Loans and
issue Letters of Credit  hereunder have terminated and the Obligations have been
irrevocably paid in full.


<PAGE>





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

                                              SIMON TRANSPORTATION SERVICES INC.


                                              By:  ________________________
                                              Title: President & CEO

                                              Address:5175 West 2100 South
                                              West Valley City, Utah 84120-1252

                                              Attention: Alban B. Lang
                                              Telephone: 801-924-7000
                                              Fax No.: 801-924-7327


                                              DICK SIMON TRUCKING, INC.


                                              By:  ________________________
                                              Title: President & CEO

                                              Address: 5175 West 2100 South
                                              West Valley City, Utah 84120-1252

                                              Attention: Alban B. Lang
                                              Telephone: 801-924-7000
                                              Fax No.: 801-924-7327


                                              U.S. BANK NATIONAL ASSOCIATION

                                              By:  _______________________
                                              Title:  ______________________

                                              Address:  U.S. Bank Place MPFP0504
                                              601 Second Avenue South
                                              Minneapolis, Minnesota 55402-4302

                                              Attention:     Asset Based Lending
                                              Telephone:     (612) 973-1133
                                              Fax No.:       (612) 973-0829


<PAGE>






                                    EXHIBITS

Exhibit A-               Form of Borrowing Base Certificate
Exhibit B-               Form of Compliance Certificate
Exhibit C-               Excluded
Exhibit D-               Excluded
Exhibit E-               Form  of Collateral  Account;  and Disbursement Account
                         Agreement
Exhibit F-               Excluded
Exhibit G -              Terms with respect to Guaranteed Obligations


                                    SCHEDULES

Schedule 4.1 -           Trade Names, Etc.
Schedule 4.7 -           Insurance
Schedule 4.8 -           Litigation and Contingent Liabilities
Schedule 4.9 -           Liens
Schedule 4.10-           Subsidiaries/Ownership
Schedule 4.11-           Partnerships; Joint Ventures; LLCs
Schedule 4.12-           Business Locations
                           Principal offices
                           Other locations
Schedule 4.13-           Excluded
Schedule 4.15-           Leases
Schedule 4.16-           Patents, Trademarks, Copyrights
Schedule 4.18-           Contracts and Labor Disputes
Schedule 4.25-           Environmental Matters
Schedule 6.11-           Investments
Schedule 6.12-           Indebtedness

<PAGE>
                                  SUPPLEMENT A
                       effective as of September 28, 1999
                                       to
                          CREDIT AND SECURITY AGREEMENT
                                     Between
                  U.S. BANK NATIONAL ASSOCIATION (the "Lender")
                                       and
                       SIMON TRANSPORTATION SERVICES INC.
                                       And
           DICK SIMON TRUCKING, INC. (the "Borrowers", each a "Borrower")

         1. Credit Agreement Reference.  This Supplement A, as it may be amended
or modified from time to time,  is a part of the Credit and Security  Agreement,
dated as of September __, 1999,  between the Borrowers and the Lender  (together
with  all  amendments,   modifications  and  supplements  thereto,  the  "Credit
Agreement").  Capitalized  terms  used  herein  which are  defined in the Credit
Agreement  shall have the  meanings  given  such  terms in the Credit  Agreement
unless the context otherwise requires.

         2.       Definitions.

                  2.1      Credit  Amount.  The  term "Credit  Amount"  shall be
         Twenty Million Dollars ($20,000,000).

                  2.2      Borrowing Base.

                           (a) Definition. The term "Borrowing Base" shall mean:

                                    (i)  an  amount  (the  "Accounts  Receivable
                           Availability")  of up to 85% of the  net  amount  (as
                           determined  by the  Lender  after  deduction  of such
                           reserves  and  allowances  as the Lender deems proper
                           and  necessary) of the Borrower's  Eligible  Accounts
                           Receivable.

                  2.3      Letter of Credit Sublimit. The term "Letter of Credit
         Sublimit" shall mean $5,000,000.

                  2.4      Termination  Date. The term "Termination  Date" shall
         mean the earliest of (i)September 30,  2002,  or (ii) the date on which
         the  Credit is  terminated  pursuant  to  Section  7.2  of  the  Credit
         Agreement.

         3.       Interest; Fees.

                  3.1      Loans.

                           (a) Interest  Rate.  The unpaid  principal balance of
                  the Loans (other than Overdraft Loans and Over Advances) shall
                  bear interest at the following rates:



<PAGE>



                                    (i)   Eurodollar   Advances.    The   unpaid
                           principal  amount of each  Eurodollar  Advance  shall
                           bear  interest  at a  rate  per  annum  equal  to the
                           Eurodollar Rate (Reserve Adjusted) in effect for each
                           Interest  Period  for such  Eurodollar  Advance  plus
                           1.75% per annum.


                                    (ii)  Reference  Rate  Advances.  The unpaid
                           principal amount of each Reference Rate Advance shall
                           bear  interest  at a  rate  per  annum  equal  to the
                           Reference Rate in effect from time to time.

                           (b) Default Rate.  The  rate  per annum equal to 2.0%
                           in excess of the Reference Rate.

                  3.2      Overdraft Loans;  Over Advances.  Overdraft Loans and
         Over Advances shall bear interest at the rate(s) determined pursuant to
         Section 2.7 or Section 2.8 of the Credit Agreement, as applicable.

                  3.3  Unused  Credit  Fee.  The  Unused  Credit Fee shall be an
         amount  equal to 0.25% per annum of the  average  Daily  Unused  Credit
         Amount,  calculated  on the basis of actual days elapsed over a year of
         360 days and twelve 30-day  months.  The Unused Credit Fee shall be and
         is payable  quarterly  in arrears on the last day of each March,  June,
         September and December, commencing on the first such day to occur after
         the date hereof, and on the date the Credit terminates.

                  3.4 Letter of Credit  Commission.  The Borrower  shall pay the
         Letter of Credit  Issuer,  a commission  on the undrawn  amount of each
         Letter of Credit and on each L/C Draft accepted by the Letter of Credit
         Issuer but not paid, in an amount equal to 1.0% per annum calculated on
         the basis of actual days elapsed over for year of 360 days.  The Letter
         of Credit Commission shall be and is payable in advance.

                  3.5      Closing  Fee.  The  Borrowers shall pay to the Lender
         a  nonrefundable  closing  fee of $50,000 on the Closing Date.

         4.       Eligible   Account   Receivable   Requirements.   The  Account
Receivable  must not be unpaid on the date that is 91 days after the date of the
invoice evidencing such Account Receivable.

If invoices  representing  25% or more of the unpaid net amount of all  Accounts
Receivable  from any one  Account  Debtor are unpaid more than 90 days after the
dates of such invoices,  then all Accounts  Receivable  relating to such Account
Debtor shall cease to be Eligible Accounts Receivable.

         5.       Reserved.

         6.       Reserved.



<PAGE>



         7.  Additional  Covenants.  From  the  date  of this  Supplement  A and
thereafter  until all of the Borrowers'  Obligations  under the Credit Agreement
are paid in full, the Borrowers  agree that,  unless the Lender shall  otherwise
consent in writing, they will not, and will not permit any Subsidiary to, do any
of the following:


                  7.1 Net Worth. Permit the Borrowers' consolidated Net Worth to
         be less than  $50,000,000  as of the the end of the  Borrower's  fiscal
         year ending September 30, 1999, plus, thereafter, 50% of the Borrower's
         net income (without reduction for net loss) measured at the end of each
         six month period.



Borrower's Initials _____________
Borrower's Initials _____________
Lender's Initials  ____________
Date  _____________________

<PAGE>

                               CERTIFICATE

         I, Richard D. Simon, do hereby certify that:

1        I  am  the  duly  elected,  qualified  and  acting  President  of Simon
         Transportation  Services  Inc.  (the "Borrower"),  a  corporation  duly
         organized, existing and in good standing under the laws of the State of
         Nevada; and

2.       all conditions  precedent,  except any which may have been specifically
         waived by U.S. Bank National  Association (the "Lender"),  set forth in
         Article IX of that certain Credit and Security  Agreement,  dated as of
         even date  herewith,  between the  Borrower and the Lender (the "Credit
         Agreement") have been met;

3.       all  representations  and  warranties  contained  in  Article IV of the
         Credit  Agreement are true and correct as of the date hereof; and

4.       no Event of Default or Unmatured  Event of  Default (as such  terms are
         defined in the Credit Agreement) has occurred and is continuing.

IN WITNESS  WHEREOF,  I have  hereunto  subscribed  my name as  President of the
Borrower this 28th day of September, 1999.

                                              ---------------------
                                              President
                                              Simon Transportation Services Inc.


<PAGE>



                                   CERTIFICATE

         I, Richard D. Simon, do hereby certify that:

1        I  am  the  duly  elected, qualified and acting President of Dick Simon
         Trucking, Inc. (the "Borrower"), a corporation duly organized, existing
         and in good standing under the laws of the State of Utah; and

2.       all conditions  precedent,  except any which may have been specifically
         waived by U.S. Bank National  Association (the "Lender"),  set forth in
         Article IX of that certain Credit and Security  Agreement,  dated as of
         even date  herewith,  between the  Borrower and the Lender (the "Credit
         Agreement") have been met;

3.       all  representations  and warranties  contained  in  Article IV  of the
         Credit  Agreement are true and correct as of the date hereof; and

4.       no Event of  Default or  Unmatured  Event of Default (as such terms are
         defined in the Credit Agreement) has occurred and is continuing.

IN WITNESS  WHEREOF,  I have  hereunto  subscribed  my name as  President of the
Borrower this 28th day of September, 1999.

                                                       ---------------------
                                                       President
                                                       Dick Simon Trucking, Inc.







<PAGE>

                                    EXHIBIT A

   U.S. Bank National Association           BORROWING BASE CERTIFICATE
   Asset Based Lending Division             Computed as of
   601 Second Avenue South                  Date:                     Report No.
   Minneapolis, MN 55402-4302

                  The  undersigned  are the Borrowers  under Credit and Security
   Agreement,  dated September ____, 1999, (as the same may be amended, modified
   or supplemented  from time to time,  herein called the  "Agreement")  between
   Simon  Transportation  Services Inc.,  and Dick Simon  Trucking,  Inc.,  (the
   "Borrowers") and U.S. Bank National Association (the "Lender').
                  The  Borrowers   hereby  reaffirm  all   representations   and
   warranties to the Agreement and certify and warrant that the Borrowers  hold,
   subject to the  security  interest  of the Lender  under the  Agreement,  the
   following collateral computed as of
   ----------------.

<TABLE>
<S>   <C>                                                                                                   <C>
                                                                                                                     Total
 I.      ACCOUNTS RECEIVABLE
--------
      1. Accounts Receivable Balance (From last BBC No.                 , dated                     )       $
                                                        ----------------        --------------------
                                                                                                            ------------------------

      2. Add:  New Sales and other Debits
                                                                                                            ------------------------

      3. Less:  Collection of Accounts (Net Cash)
                                                                                                            ------------------------

      4. Less:  Misc. Credit Memos
                                                                                                            ------------------------

      5. Discounts Allowed and Other Adjustments to Receivables
                                                                                                            ------------------------

      6. Accounts Receivable Balance as of period ending above (sum Lines 1 - 5)                            $
                                                                                                            ------------------------

      7. Total Ineligible Accounts as of Aging dated
                                                                                                            ------------------------

      8. Total Eligible Accounts Receivable (Line 6 - Line 7)                                               $
                                                                                                            ------------------------

      9. Eligible Loan Value @ 85%                                                                          $
                                                                                                            ------------------------

     10. Unadjusted Eligible Loan Value (Line 9)                                                            $
                                                                                                            ------------------------

     11. Less:  Letter of Credit Obligation (not collateralized by cash)
                                                                                                            ------------------------

     12. Adjusted Collateral Value (Line 10 - Line 11)                                                      $
                                                                                                            ========================

II.      LOAN AVAILABILITY
     13. Credit Amount                                                                                      $20,000,000.00
                                                                                                            ------------------------

     14. Less:  Letter of Credit Obligations
                                                                                                            ------------------------

     15. Adjusted Credit Amount                                                                             $
                                                                                                            ------------------------

     16. Loan Availability (The lesser of Line 12 and Line 15)                                              $
                                                                                                            ------------------------

     17. Loan Balance report (From last BBC No. _____________, dated ______________)                        $
                                                                                                            ------------------------

     18. Add:  new Loan Advances requested since last report
         (Add monthly interest charge, and other fees if applicable)
                                                                                                            ------------------------

     19. Less:  Collections applied to loan since last report
                                                                                                            ------------------------

     20. Loan Balance this report (Line 17 + Line 18 - Line 19)                                             $
                                                                                                            ------------------------

     21. Excess (Deficit) Eligible Loan Value of Collateral (Line 16 - Line 20)                             $
                                                                                                            ========================
</TABLE>

                  The  Borrowers  further  certify and warrant  that no Event of
   Default is existing as of the date  hereof  and,  to the best  knowledge  and
   belief  of the  officer  of  the  Borrowers  executing  this  Borrowing  Base
   Certificate, there has not been (except as may otherwise indicated below) any
   change  to the  information  set  forth  above  since  the  computation  date
   specified  above which  would  materially  reduce the  amounts  shown if such
   amounts were computed as of the date of this Borrowing Base Certificate.


        SIMON TRANSPORTATION SERVICES INC.

   By                                     Title:                           Date:

            DICK SIMON TRUCKING, INC.

   By                                     Title:                           Date:






<PAGE>



                                    EXHIBIT B


                             COMPLIANCE CERTIFICATE

TO:      U.S. Bank National Association

THE UNDERSIGNED HEREBY CERTIFIES THAT:

                  (1) I am the duly elected officer (or deputy thereof) of Simon
         Transporation  Services  Inc.,  a Nevada  corporation  and  Dick  Simon
         Trucking, Inc., a Utah corporation (the "Companies");

                  (2) I have  reviewed  the  terms of the  Credit  and  Security
         Agreement  dated as of September 28, 1999,  (as the same may be amended
         or otherwise  modified from time to time being the "Credit  Agreement")
         between  U.S.  Bank  National   Association   (the  "Lender")  and  the
         Companies,  and I have  made,  or  have  caused  to be  made  under  my
         supervision,  a detailed review of the  transactions  and conditions of
         the Companies  during the  accounting  period covered by the attachment
         hereto,  and the  financial  information  contained  in the  attachment
         hereto is  accurate  as of the date of said  attachment  for the period
         specified.

                  (3)  The  examinations  described  in  paragraph  (2)  did not
         disclose,  and I have no  knowledge  of,  whether  arising  out of such
         examinations  or  otherwise,  the  existence of any  condition or event
         which  constitutes an Event of Default or an Unmatured Event of Default
         (as such terms are  defined in the Credit  Agreement)  during or at the
         end of the accounting  period covered by the attachment hereto or as of
         the  date of this  Certificate,  except  as  described  below  (or in a
         separate  attachment to this Certificate).  The exceptions  listing, in
         detail,  the nature of the condition or event,  the period during which
         it has  existed  and the action  which the  Companies  have  taken,  is
         taking,  or proposes  to take with  respect to each such  condition  or
         event, are as follows:

          ----------------------------------------------------------------------

          ----------------------------------------------------------------------

          ----------------------------------------------------------------------

          ----------------------------------------------------------------------

                  (4) No policy of insurance required to be maintained  pursuant
         to the Credit  Agreement  or any other Loan  Document  (as such term is
         defined in the Credit Agreement) has lapsed during the reporting period
         described  on  Attachment  No. 1 hereto and no such  policy  will lapse
         within the next 60 days.

                  (5) In the case of any circumstances whereby the Companies are
         in  violation  of or alleged  to be in  violation  of any laws,  rules,
         regulations or orders,  including without  limitation any environmental
         protection or pollution  control law, the Companies  have taken any and
         all corrective or remedial  actions in accordance with the requirements
         of and are  satisfactory to any  governmental  department,  commission,
         board,  bureau,  agency  or  instrumentality  of the  United  States of
         America or any state, county, town or municipality as have jurisdiction
         with respect thereto.

                  (6) The Companies  have paid all fees and expenses due for the
         storage  of  Inventory,  including  any  fees  due  and  owing  to  any
         warehouseman or other bailee, where such fees and expenses, if not paid
         when due would give rise to a lien against Inventory.


<PAGE>




                  The foregoing  certifications,  together with the computations
         set  forth in  Attachment  No. 1 hereto  and the  financial  statements
         delivered  with  this  Certificate  in  support  hereof,  are  made and
         delivered  this ____ day of _______ 19__,  pursuant to Section 5.1.1 of
         the Credit Agreement.





                                              SIMON TRANSPORTATION SERVICES INC.

                                              By
                                                 -------------------------------
                                              Its
                                                 -------------------------------

                                              DICK SIMON TRUCKING, INC.

                                              By
                                                 -------------------------------

                                              Its
                                                 -------------------------------

<PAGE>
                       SIMON TRANSPORTATION SERVICES INC.
                                       and
                            DICK SIMON TRUCKING, INC.

                                ATTACHMENT NO. 1
                            TO COMPLIANCE CERTIFICATE

                     AS OF __________, 19__, WHICH PERTAINS
                       TO THE PERIOD FROM __________, 19__
                               TO __________, 19__

Terms  defined in the Credit  Agreement  are used herein as defined  therein and
Section  references  herein refer to the Sections in  Supplement A of the Credit
Agreement.
<TABLE>
<S>      <C>                                                                          <C>

1 .      Net Worth
         (prescribed by Section 7.1)

         (a)      Minimum Net Worth  required  under Section 7.1 to be less than
                  $50,000,000 as the fiscal year ending September 30, 1999, plus
                  thereafter, 50% of the Company's net income (without
                  reduction for net loss) measured at                                 $
                  the end of each six month period.

         (b)      Actual Net Worth                                                    $
                  as of the date of determination

</TABLE>

<PAGE>


                                    Exhibit E



              COLLATERAL ACCOUNT AND DISBURSEMENT ACCOUNT AGREEMENT

         This  Agreement is made this 28th day of  September,  1999 by and among
SIMON TRANSPORTATION  SERVICES INC., DICK SIMON TRUCKING, INC. (collectively and
separately the "Borrower"), U.S. BANK NATIONAL ASSOCIATION (the "Lender").

         WHEREAS,  the Lender and the  Borrower  have  entered into that certain
Credit and  Security  Agreement,  dated as of  September  28, 1999 (the  "Credit
Agreement");

         WHEREAS,  in furtherance of the Credit Agreement,  the Borrower and the
Lender have established (a) the Collateral Account  (hereinafter  defined),  and
(b) the Disbursement Account (hereinafter defined);

         NOW,  THEREFORE,  in  consideration  of the  mutual  agreements  herein
contained, the parties hereto agree as follows:

                         Section 1 - Collateral Account

         1.1      Pursuant to the Credit  Agreement,  the Lender  has a security
interest in certain property of the Borrower, including, without limitation, all
present and future accounts, general intangibles,  rights  to payment and  other
forms of  obligations  for  the  payment of money  and in all  proceeds  thereof
(the  "Collateral").  The  Borrower  has  agreed  with the Lender that all Items
received by the Borrower with respect to the  Collateral shall be deposited into
U.S. Bank National Association (re. funds  received  from  Simon  Transportation
Services,  Inc. and Dick Simon Trucking, Inc.) Account No. ________________ (the
"Collateral Account").

         1.2 The Lender  agrees to operate and maintain the  Collateral  Account
exclusively  for the benefit of the Lender,  to hold all Items  deposited in the
Collateral  Account for the Lender and to make any  withdrawals or  transmittals
out of or on account  of the  Collateral  Account  only to the  Lender,  or such
person  as the  Lender  may from  time to time  designate  in  writing.  Neither
Borrower  shall  have any  interest  in the  Collateral  Account or in any Items
deposited in the Collateral Account.

         1.3 In the event that Items  deposited  in the  Collateral  Account are
returned  uncollected,  the Lender shall provide  notice to the Borrower and the
Borrower shall pay to the Lender the amount of such  uncollected  Items, and all
other fees and charges attributable to such uncollected Items, or, at the option
of the Lender, the Lender may debit the Disbursement  Account by an amount equal
to the sum of such  uncollected  Items and fees and charges.  The Lender  agrees
that its recourse for  uncollected  Items and fees and charges  attributable  to
such uncollected Items shall be against the Borrower,  the Disbursement  Account
or the Collateral Account.

                        Section 2 - Disbursement Account

         2.1      The  Borrower  hereby agrees to maintain with the Lender Simon
Transportation   Services,  Inc.   And  Dick Simon  Trucking,  Inc.  Account No.
153100281127  (the  "Disbursement  Account").  All sums advanced as loans  under
the Credit Agreement shall be deposited into the  Disbursement  Account  by  the
Lender and shall be subject to instructions and orders issued by the Borrower.


<PAGE>






                            Section 3 - Miscellaneous

         3.1 The  Borrower  shall be liable to the  Lender for any  ordinary  or
usual fees and charges of the Lender,  including,  without limitation,  fees and
charges  attributable to uncollected Items, in connection the Collateral Account
and the Disbursement  Account and the Lender may charge the Disbursement Account
for such fees and charges.  The  Borrower  hereby  agrees to maintain  collected
funds in the Disbursement  Account for the payment of uncollected Items and fees
and charges,  including,  without limitation,  fees and charges  attributable to
uncollected Items.

         3.2 The Borrower  hereby  agrees to pay,  indemnify and hold the Lender
harmless from and against any and all liability,  losses, damages, penalties and
expenses (including, without limitation, reasonable attorneys' fees) arising out
of  the  Lender's  performance  of  this  Agreement  or any  agreement  executed
herewith,  except as solely caused by the willful misconduct or gross negligence
of the Lender,  its agents or employees.  The Borrower hereby release the Lender
from  responsibility  for  any  losses  occasioned  in  whole  or in part by any
circumstances  beyond  the  Lender's  reasonable  control,  including,   without
limitation, equipment failure, war and emergencies. IN NO EVENT SHALL THE LENDER
BE  LIABLE  FOR ANY  SPECIAL,  INDIRECT  OR  CONSEQUENTIAL  DAMAGES,  OR LOSS OF
PROPERTY,  NOTWITHSTANDING  NOTICE  TO THE  LENDER  OF THE  POSSIBILITY  OF SUCH
DAMAGES OR LOSSES.

         3.3 This Agreement may be terminated upon agreement  signed by both the
Lender and the Borrower.  No  termination  shall affect the  obligations  of the
parties  hereto  with  respect  to  Items  received  by the  Lender  before  the
termination has become  effective.  Termination shall not impair the indemnities
made by the Borrower herein.

         3.4      This Agreement may be executed in any number of  counterparts,
which  together shall  constitute one and the same instrument.

         3.5 This  Agreement  shall be governed by and  construed in  accordance
with the internal laws of the State of  Minnesota,  giving effect to all federal
laws and regulations applicable to national banks.


<PAGE>






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


                                              SIMON TRANSPORTATION SERVICES INC.

                                              By:  _____________________________
                                              Title:  __________________________


                                              DICK SIMON TRUCKING, INC.

                                              By:  _____________________________
                                              Title:  __________________________


                                              U.S. BANK NATIONAL ASSOCIATION

                                              By:  _____________________________
                                              Title:  __________________________




<PAGE>




                                    EXHIBIT G


                  TERMS WITH RESPECT TO GUARANTEED OBLIGATIONS



         1  Obligations  Absolute.  No act or thing need occur to establish  the
liability of each Borrower for its Guaranteed Obligations,  and no act or thing,
except full payment and discharge of all such Guaranteed  Obligations,  shall in
any way  exonerate  such  Borrower  or  modify,  reduce,  limit or  release  the
liability of such Borrower for its Guaranteed  Obligations.  The  obligations of
each Borrower for its Guaranteed  Obligations shall be absolute,  unconditional,
and irrevocable, and shall not be subject to any right of setoff or counterclaim
by such Borrower.

         2 Continuing Guaranty. Each Borrower shall be liable for its Guaranteed
Obligations,  plus accrued interest thereon and all attorneys' fees,  collection
costs and enforcement expenses referable thereto.  Guaranteed Obligations may be
created and continued in any amount without affecting or impairing the liability
of such Borrower therefor.  No notice of such Guaranteed  Obligations already or
hereafter  contracted or acquired by the Lender,  or any renewal or extension of
any thereof need be given to such Borrower and none of the foregoing  acts shall
release such Borrower from liability  hereunder.  The agreement of each Borrower
pursuant to the  Agreement  with  respect to its  Guaranteed  Obligations  is an
absolute,  unconditional  and continuing  guaranty of payment of such Guaranteed
Obligations  and shall continue to be in force and be binding upon such Borrower
until  such  Guaranteed  Obligations  are  paid in full  and  the  Agreement  is
terminated,  and the Lender may continue, at any time and without notice to such
Borrower, to extend credit or other financial  accommodations and loan monies to
or for the benefit of the other  Borrowers on the faith  thereof.  Each Borrower
hereby waives,  to the fullest extent  permitted by law, any right they may have
to revoke or terminate  its guaranty of the  Guaranteed  Obligations  before the
Guaranteed Obligations are paid in full and the Agreement is terminated.  In the
event any  Borrower  shall  have any right  under  applicable  law to  otherwise
terminate or revoke its guaranty of the Guaranteed  Obligations  which cannot be
waived,  such  termination  or revocation  shall not be effective  until written
notice of such termination or revocation,  signed by such Borrower,  is actually
received by the officer of the Lender  responsible for such matters.  Any notice
of termination or revocation  described  above shall not affect such  Borrower's
guaranty of the Guaranteed  Obligations in relation to (i) any of the Guaranteed
Obligations  that arose prior to receipt  thereof or (ii) any of the  Guaranteed
Obligations created after receipt thereof,  if such Guaranteed  Obligations were
incurred  either  through loans by the Lender,  including,  without  limitation,
advances or  readvances  in an  aggregate  outstanding  amount not to exceed the
aggregate  amount of the  Revolving  Credit Amount as of the time such notice of
termination or revocation was received, and/or for the purpose of protecting any
collateral,  including,  but not limited,  to all  protective  advances,  costs,
expenses,  and attorneys' and paralegals'  fees,  whensoever  made,  advanced or
incurred by the Lender in connection  with the  Guaranteed  Obligations.  If, in
reliance on any Borrower's  guaranty of its Guaranteed  Obligations,  the Lender
makes loans or other  advances  to or for the  benefit of any other  Borrower or
takes other action  under the  Agreement  after such  aforesaid  termination  or
revocation  by the  undersigned  but prior to the  receipt by the Lender of said
written notice as set forth above, the rights of the Lender shall be the same as
if such termination or revocation had not occurred.



<PAGE>



         3  Other  Transactions.  The  liability  of  the  Borrowers  under  the
Agreement  with respect to the Guaranteed  Obligations  shall not be affected or
impaired by any of the  following  acts or things (which the Lender is expressly
authorized  to do,  omit or  suffer  from  time to time,  without  notice  to or
approval by the  Borrowers):  (i) any acceptance of collateral  security,  other
guarantors,  accommodation  parties  or  sureties  for  any  or  all  Guaranteed
Obligations;  (ii)  any  one  or  more  extensions  or  renewals  of  Guaranteed
Obligations  (whether  or not  for  longer  than  the  original  period)  or any
modification  of the  interest  rates,  maturities  or other  contractual  terms
applicable to any Guaranteed Obligations; (iii) any waiver or indulgence granted
to the other  Borrowers,  any delay or lack of diligence in the  enforcement  of
Guaranteed Obligations,  or any failure to institute proceedings,  file a claim,
give any required notices or otherwise protect any Guaranteed Obligations;  (iv)
any full or partial  release of,  settlement  with, or agreement not to sue, the
other  Borrowers or any other guarantor or other person liable in respect of any
Guaranteed  Obligations;  (v)  any  discharge  of  any  evidence  of  Guaranteed
Obligations  or  the  acceptance  of  any  instrument  in  renewal   thereof  or
substitution  therefor;  (vi) any  failure  to obtain  collateral  security  for
Guaranteed  Obligations,  or to see to the  proper or  sufficient  creation  and
perfection thereof, or to establish the priority thereof, or to protect, ensure,
or  enforce  any  collateral  security,   or  any  modification,   substitution,
discharge,  impairment or loss of any collateral security; (vii) any foreclosure
or enforcement of any collateral security; (viii) any transfer of any Guaranteed
Obligations  or any  evidence  thereof;  (ix) any  order of  application  of any
payments  or  credits  upon  Guaranteed  Obligations;  (x)  any  release  of any
collateral  security  for  Guaranteed  Obligations;  (xi)  any  amendment  to or
modification of, any agreement  between the Lender and the other  Borrowers,  or
any waiver of  compliance by the other  Borrowers  with the terms  thereof;  and
(xii) any  election by the Lender  under  Section  1111(b) of the United  States
Bankruptcy Code.


         4. Waivers of Defenses  and Rights.  Each  Borrower  waives any and all
defenses,  claims and discharges of the other  Borrowers,  or any other obligor,
pertaining  to the  Guaranteed  Obligations,  except the defense of discharge by
payment in full.  Without limiting the generality of the foregoing,  no Borrower
will assert, plead or enforce against the Lender any defense of waiver, release,
discharge  in  Bankruptcy,  statute of  limitations,  res  judicata,  statute of
frauds,  anti-deficiency  statute,  fraud, usury, illegality or unenforceability
which may be  available  to any other  Borrower  or any other  person  liable in
respect of any  Guaranteed  Obligations,  or any setoff  available  against  the
Lender  to the other  Borrowers  or any such  other  person,  whether  or not on
account of a related  transaction.  Each  Borrower  expressly  agrees  that such
Borrower  shall  be  and  remain  liable  for  any  deficiency  remaining  after
foreclosure   of  any  mortgage  or  security   interest   securing   Guaranteed
Obligations,  whether or not the  liability of the other  Borrowers or any other
obligor for such deficiency is discharged pursuant to statute, judicial decision
or contract.  Each Borrower waives  presentment,  demand for payment,  notice of
dishonor or  nonpayment,  and protest of any  instrument  evidencing  Guaranteed
Obligations. Each Borrower agrees that its liability under the Agreement for the
Guaranteed  Obligations  shall be primary and direct,  and that the Lender shall
not be required first to resort for payment of the guaranteed Obligations to the
other  Borrowers  or other  person  or their  properties,  or first to  enforce,
realize upon or exhaust any collateral security for the Guaranteed  Obligations,
or to commence any action or obtain any judgment  against the other Borrowers or
against any such collateral  security or to pursue any other right or remedy the
Lender may have against any other  Borrower  before  enforcing  the liability of
such Borrower for the Guaranteed Obligations under the Agreement.

         5. Approval of Credit.  Each of the Borrowers  has,  independently  and
without reliance upon the Lender or its respective directors,  officers,  agents
or employees,  and instead in reliance upon  information  furnished by the other
Borrowers and upon such other  information as such Borrower deemed  appropriate,
made  its  own  independent   credit  analysis  and  decision  to  guaranty  the
obligations of the other Borrowers pursuant to the Agreement.



<PAGE>



         6. Waiver of Subrogation.  Each Borrower  expressly  waives any and all
rights of subrogation,  reimbursement,  indemnity, exoneration,  contribution or
any other claim which it may now or hereafter have against the other  Borrowers,
any  endorser  or any  other  guarantor  of all or any  part  of the  Guaranteed
Obligations,  and each  Borrower  hereby waives any benefit of, and any right to
participate in, any security or collateral given to the Lender to secure payment
of the Guaranteed  Obligations or any other  liability of the other Borrowers to
the Lender.  Each  Borrower  further  agrees that any and all claims it may have
against the other  Borrowers,  any endorser or any other guarantor of all or any
part  of  the  Guaranteed   Obligations  or  against  any  of  their  respective
properties,  whether  arising by reason of any  payment by such  Borrower to the
Lender  pursuant to the provisions  hereof or otherwise,  is hereby  waived.  In
furtherance,  and not in  limitation  of the  preceding  waivers,  each Borrower
hereby  agrees that any payment to the Lender by such Borrower on account of the
Guaranteed  Obligations  and any loan made to or  obligation  incurred  from the
other  Borrowers shall be deemed to be a contribution to the other Borrowers (of
capital or  otherwise),  and after giving effect to such payment,  loan or other
obligation such Borrower shall not be a creditor of the other Borrowers.




<PAGE>



                              SOLVENCY CERTIFICATE


         The  undersigned  hereby  certifies that he/she is the chief  financial
officer of Dick Simon Trucking,  Inc., a Utah corporation (the "Borrower"),  and
is  authorized to certify as to the  financial  statements  of the Borrower,  is
familiar with its  properties,  business and assets and is authorized to execute
this Certificate on behalf of the Borrower and to deliver this Certificate.  The
undersigned further certifies that he/she has carefully reviewed the contents of
this Certificate and, in connection  herewith,  has made such investigations and
inquiries as he/she  deemed  necessary  and  prudent.  The  undersigned  further
certifies that he/she  believes that the financial  information  and assumptions
which  underlie  and  form  the  basis  for  the  representations  made  in this
Certificate  were  reasonable  when made and continue to be reasonable as of the
date  hereof.  Capitalized  terms used herein that are defined in the Credit and
Security  Agreement,  dated as of September  28 , 1999 (the "Credit  Agreement')
between the Borrower, Simon Transportation Services, Inc. and U.S. Bank National
Association  are used  herein as so  defined.  The  undersigned  hereby  further
certifies that it is his/her belief that:

1 .  As  of  the  date  hereof,  after  taking  into  account  the  transactions
contemplated by the Credit Agreement,  the Borrower has capital, cash flows and,
taking into account availability under the Credit Agreement,  sources of working
capital  sufficient to carry on its business and  transactions  and all business
and transactions in which it is about to engage.

2.       As of the date hereof,  after taking into account the Credit Agreement,
the Borrower is able to pay its debts as they mature.

3. As of the date hereof,  after taking into account the Credit  Agreement,  the
Borrower has assets (tangible and intangible)  whose fair saleable value exceeds
its  total  liabilities  (including  contingent,   subordinated,  unmatured  and
unliquidated).

4. The  Borrower  does not intend to, nor believe  that it will,  incur debts or
liabilities beyond its ability to pay such debts and liabilities as they mature.

5.         The  Borrower does  not  intend, in  consummating  the   transactions
contemplated  by  the Credit  Agreement,  to  disturb, delay,  hinder or defraud
either present or future creditors  or other Persons to which the Borrower is or
will become,  on or after the date hereof, indebted.

6.       In  reaching   the   conclusions  set forth  in  this  Certificate, the
undersigned has considered, among other things:

         (a)          the cash and other current assets of the Borrower;

         (b)          refinancing or other replacements of existing liabilities,
         debts,  obligations  and  commitments  which  the  Borrower  reasonably
         expects will be available on the date hereof;

         (c)          the estimated value of all  property,  real  and personal,
         tangible and intangible, of the Borrower and  the financial information
         attached hereto on Exhibit A;

         (d)          all  liabilities  of the Borrower  known to him/her on all
         claims,  whether or not reduced to  judgment, liquidated, unliquidated,
         matured, unmatured,  disputed,  undisputed, legal, equitable,  secured,
         unsecured, fixed or contingent, including,  among  other things, claims
         arising out of, pending or, to his/her knowledge, threatened litigation
         against the Borrower;

         (e)          the experience  of  the Borrower's management in acquiring
         and  disposing  of its  assets and  publicly  available  information on
         purchases and sales of properties comparable  to  those operated by the
         Borrower;

         (f)          historical  and  anticipated  growth  in revenues and cash
         flows of the Borrower;

         (g)          customary  terms  of  trade  payables  in  the  Borrower's
         industry;

         (h)          the  amount  of   credit  extended  to  customers  of  the
         Borrower; and

         (i)          the amount of equity capital of the Borrower.

         IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
this 28th day of September, 1999.

                                                       DICK SIMON TRUCKING, INC.

                                                       By:
                                                       Title:



<PAGE>











                              SOLVENCY CERTIFICATE


        The  undersigned  hereby  certifies  that he/she is the chief  financial
officer  of Simon  Transportation  Services,  Inc.,  a Nevada  corporation  (the
"Borrower"),  and is authorized to certify as to the financial statements of the
Borrower, is familiar with its properties, business and assets and is authorized
to execute  this  Certificate  on behalf of the  Borrower  and to  deliver  this
Certificate.  The  undersigned  further  certifies  that  he/she  has  carefully
reviewed the contents of this Certificate and, in connection herewith,  has made
such  investigations  and inquiries as he/she deemed necessary and prudent.  The
undersigned   further   certifies  that  he/she   believes  that  the  financial
information  and  assumptions   which  underlie  and  form  the  basis  for  the
representations  made in this Certificate were reasonable when made and continue
to be reasonable as of the date hereof.  Capitalized  terms used herein that are
defined in the Credit and Security  Agreement,  dated as of  September  28, 1999
(the "Credit  Agreement")  between the Borrower,  Dick Simon Trucking,  Inc. and
U.S. Bank National  Association  are used herein as so defined.  The undersigned
hereby further certifies that it is his/her belief that:

1 .  As  of  the  date  hereof,  after  taking  into  account  the  transactions
contemplated by the Credit Agreement,  the Borrower has capital, cash flows and,
taking into account availability under the Credit Agreement,  sources of working
capital  sufficient to carry on its business and  transactions  and all business
and transactions in which it is about to engage.

2.       As of the date hereof,  after taking into account the Credit Agreement,
the Borrower is able to pay its debts as they mature.

3. As of the date hereof,  after taking into account the Credit  Agreement,  the
Borrower has assets (tangible and intangible)  whose fair saleable value exceeds
its  total  liabilities  (including  contingent,   subordinated,  unmatured  and
unliquidated).

4. The  Borrower  does not intend to, nor believe  that it will,  incur debts or
liabilities beyond its ability to pay such debts and liabilities as they mature.

5.         The  Borrower  does  not intend,  in  consummating  the  transactions
contemplated  by  the  Credit Agreement,   to disturb,  delay, hinder or defraud
either present or future creditors or other Persons to which the Borrower is  or
will become,  on or after the date hereof, indebted.

6.       In  reaching  the  conclusions  set forth  in  this  Certificate,   the
undersigned has considered, among other things:

         (a)      the cash and other current assets of the Borrower;

         (b)      refinancing or other  replacements of existing  liabilities,
         debts,  obligations  and  commitments  which  the  Borrower  reasonably
         expects will be available on the date hereof;

         (c)      the  estimated  value of  all  property,  real  and  personal,
         tangible and intangible, of the Borrower  and the financial information
         attached hereto on Exhibit A;

         (d)      all  liabilities  of  the  Borrower  known  to  him/her on all
         claims,  whether or not reduced to judgment,  liquidated, unliquidated,
         matured, unmatured,  disputed,  undisputed, legal, equitable,  secured,
         unsecured, fixed or contingent, including, among  other  things, claims
         arising out of, pending or, to his/her knowledge, threatened litigation
         against the Borrower;

         (e)      the experience of the Borrower's management in  acquiring  and
         disposing of its assets and publicly available information on purchases
         and sales of properties comparable to those operated by the Borrower;

         (f)      historical  and  anticipated growth in revenues and cash flows
         of the Borrower;

         (g)      customary  terms of trade payables in the Borrower's industry;

         (h)      the  amount of credit  extended  to customers of the Borrower;
         and

         (i)      the amount of equity capital of the Borrower.

         IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
this 28th day of September, 1999.

                                             SIMON TRANSPORTATION SERVICES, INC.

                                             By:
                                             Title:



<PAGE>


                             SECRETARY'S CERTIFICATE

    I,  Alban  Lang  Secretary,  hereby  certify  that  I am the  duly  elected,
qualified and acting Secretary and keeper of the records of Dick Simon Trucking,
Inc.,  (the  "Borrower"),  a corporation  duly  organized,  existing and in good
standing under the laws of the State of Utah and further certify as follows:

    1 .  Attached  hereto  as  Exhibit  A is a full,  true and  correct  copy of
resolutions  duly  adopted  by the  Borrowers  Board of  Directors  at a meeting
thereof,  convened on August 18, 1999 which meeting was held in accordance  with
the Borrower's Articles of Incorporation and Bylaws and all applicable laws, and
which  resolutions  have not in any way been modified or  rescinded,  but are in
full force and effect.

    2. The Articles of Incorporation attached hereto as Exhibit B and the Bylaws
attached  hereto as Exhibit C are,  respectively,  true,  complete  and  correct
copies of this  Corporation's  Articles  of  Incorporation  (duly filed with the
Secretary of State of the state of Nevada) and Bylaws, which articles and bylaws
have been duly adopted by this  Corporation  and are presently in full force and
effect.

    3. On the date hereof,  the following named persons are the present officers
and/or  directors of the  Borrower  who are  authorized  by the  Corporation  to
perform  the  actions  set  forth in the  resolutions  attached  hereto  and the
following signatures are genuine signatures of such named persons:

 NAME                     TITLE                              SIGNATURE
 Richard D. Simon      CEO & President             _____________________________
 Alban B. Lang         COO, CFO & Secretary        _____________________________

IN WITNESS  WHEREOF,  I have  executed,  this  Certificate  and have  caused the
corporate  seal of the Borrower to be hereto  affixed this 28th day of September
1999.

                                                   ----------------------------
                                                   Secretary

(Corporate Seal)

    I hereby  certify  that  Alban  Lang has been  elected  and is now acting as
Secretary of Dick Simon Trucking,  Inc., and that the signature to the foregoing
Certificate is his/her genuine signature.

                                                   ----------------------------
                                                   President




<PAGE>



                                    EXHIBIT A
                           TO SECRETARY'S CERTIFICATE
                    Resolutions of the Board of Directors of
                            Dick Simon Trucking, Inc.
                             Adopted August 18, 1999
"RESOLVED, that anyone of the following acting singly: Dick Simon and Alban Lang
[insert  titles of  authorized  off  icers/directors]  (each such  person  being
hereinafter referred to as a "Designated Person") is hereby authorized, directed
and empowered now and from time to time  hereafter to make,  execute and deliver
for  and on  behalf  of and in the  name of this  Corporation  such  agreements,
instruments and documents,  including, but not limited to, a Credit and Security
Agreement  between this  Corporation  and U.S.  Bank National  Association  (the
"Lender")  substantially  in the form of the Credit and Security  Agreement (the
"Credit  Agreement')  presented  to  this  meeting,  except  for  such  changes,
additions and  deletions as to any or all of the terms or provisions  thereof as
the  officer  executing  the Credit  and  Security  Agreement  on behalf of this
Corporation  shall deem  proper,  and all other  agreements,  notes,  schedules,
security documents,  assignments,  of accounts,  designations of inventory, real
estate,  mortgages,  trust deeds, assignments,  certificates,  reports, bills of
sale, leases, contracts, conditional sale contracts,  guaranties,  subordination
and stand-by agreements,  pledge agreements,  assignments of beneficial interest
in any real or personal  property,  and other such  agreements,  instruments and
documents (all and each of the foregoing  agreements,  instruments and documents
are hereinafter  referred to collectively as the "Other Loan Documents") with or
for the benefit of the Lender,  as he/she may in his/her  sole  discretion  deem
advisable,  necessary,  expedient,  convenient  or  proper,  providing  for  and
evidencing  various  financial  arrangements with and obligations to the Lender,
including,  without limitation,  the borrowing of monies by this Corporation and
as security therefor, granting a security interest in the Collateral (as defined
in the Credit Agreement and all proceeds and products of the foregoing  property
and interests in property;

         BE IT  FURTHER  RESOLVED,  that the  Credit  Agreement  and Other  Loan
Documents may contain such provisions, terms, conditions,  covenants, warranties
and representations as any Designated Person may in his/her sole discretion deem
advisable, necessary or expedient;

         BE IT FURTHER  RESOLVED,  that any  Designated  Person acting singly is
hereby  authorized,  directed and empowered for and on behalf of and in the name
of this  Corporation now and from time to time  hereafter,  as he/she in his/her
sole discretion deems advisable, necessary, expedient, convenient or proper, to:
(a) borrow  monies from the Lender or an  affiliate  of Lender;  (b) execute and
deliver  to the  Lender  or  its  affiliate  such  agreements,  instruments  and
documents as the Lender or such  affiliate  may request or require to effectuate
the purpose and intent of the Credit Agreement and Other Loan Documents or these
resolutions;  (c) amend, modify, alter, extend, renew or otherwise change any of
the provisions,  terms,  conditions,  covenants,  guaranties or  representations
contained in the Credit  Agreement or Other Loan Documents;  and (d) execute and
deliver to the Lender and/or its affiliate  any direction or  authorization  for
the  application,  payment,  transfer,  receipt  or  other  disposition  of  any
property, real or personal, belonging to this Corporation;

         BE IT FURTHER  RESOLVED,  that any  Designated  Person acting singly is
hereby authorized,  directed and empowered to do and perform all acts and things
he/she deems advisable,  necessary,  expedient, convenient or proper in order to
consummate fully all of the transactions contemplated under the Credit Agreement
or Other Loan Documents or these resolutions;

         BE IT FURTHER RESOLVED,  that in order to facilitate borrowings of this
Corporation  from the  Lender or its  affiliate  under  the terms of the  Credit
Agreement and Other Loan Documents,  pursuant to which it is or will be required
that  a  number  of  reports,  certificates  and  documents  including,  without
limitation,  a report of loan balances and confirmation of advances  theretofore
requested,   borrowing  base   certificates,   collection   reports,   inventory
certification reports, and transmittal letters of accounts receivable agings, be
periodically  supplied  to  the  Lender,  it is in the  best  interest  of  this
Corporation  to provide to the Lender a list of  employees  of this  Corporation
which are  authorized  to sign any such  reports on behalf of this  Corporation,
along with examples of such employees' signatures;

         BE IT FURTHER  RESOLVED,  that in order to accomplish  the  resolutions
hereinabove  stated,  the President of this  Corporation or the Chief  Financial
Officer   acting  singly  is  hereby   authorized  to  sign  any  such  reports,
certificates  or other  documents  required under the Credit  Agreement or Other
Loan  Documents  or  requested  by the  Lender  in  accordance  with the  Credit
Agreement  or  Other  Loan  Documents  from  time  to  time  on  behalf  of this
Corporation,  and further,  the  President is hereby  authorized to designate in
writing to the Lender  from time to time any other  persons  authorized  to sign
such  reports,  certificates  and other  documents,  and to delete  any  persons
theretofore authorized, or add other persons not theretofore authorized,  and to
cause examples of any such persons' signatures to be delivered to the Lender;

         BE IT FURTHER RESOLVED,  that the President of this Corporation  acting
singly,  and any other person or persons  which the  President  may from time to
time  designate in writing to the Lender,  is  authorized  to make  requests for
borrowings,  including, without limitation,  telephonic requests for borrowings,
under the Credit Agreement or Other Loan Documents on behalf of this Corporation
and the Lender is hereby authorized to honor such requests of the President,  or
of any person so designated by the  President,  until such time as the Lender is
notified in writing by this Corporation of the election of a new president or of
the revocation of the authorization of any person designated by the President to
make such  requests  for  borrowings  under the Credit  Agreement  or Other Loan
Documents;

         BE IT FURTHER RESOLVED,  that by adopting the above resolutions at this
meeting,  the Directors of this Corporation  hereby ratify,  approve and confirm
any and all acts and things that any Designated Person has done or may do in any
way relating to or arising from or in  connection  with the Credit  Agreement or
Other  Loan  Documents  and these  resolutions  and such acts and  things of any
Designated  Person  shall at all times  receive  full  faith and  credit by this
Corporation without the necessity of inquiry by the Lender; and

         BE IT FURTHER RESOLVED,  that (a) the  authorizations  herein set forth
shall remain in full force and effect for the term of the Credit  Agreement  and
Other Loan Documents and all renewal terms thereof; and (b) the Secretary or any
Assistant  Secretary of this  Corporation  is hereby  authorized and directed to
certify and affix the corporate  seal thereunto and furnish to the Lender a copy
of these resolutions."



<PAGE>



Date:  September 28, 1999

U.S. Bank National Association
U.S. Bank Place MPFP0504
601 Second Avenue South
Minneapolis, Minnesota 55402-4302

Attention:      Asset Based Lending

Re:      Telephonic Requests for Loans/Signature Authorization

Ladies/Gentlemen:

Reference is made to that certain  Credit and  Security  Agreement,  dated as of
(the "Credit Agreement"), between Dick Simon Trucking, Inc. (the "Borrower") and
U.S. Bank National Association (the "Lender"). Capitalized terms used herein and
not  otherwise  defined  herein shall have the meanings  given such terms in the
Credit Agreement.

The  undersigned,  as President of the  Borrower,  and pursuant to the authority
granted  to the  undersigned  in  those  certain  resolutions  of the  Board  of
Directors dated August 18, 1999 does hereby:

1.  Designate  the  following  employees of the Borrower as  authorized  to make
requests for Loans, including telephonic requests for Loans, on its behalf under
the Credit Agreement:

    NAME                       TITLE                            SIGNATURE
Richard D. Simon           CEO & President                ______________________

Alban B. Lang              COO, CFO & Secretary           ______________________

William J. Baker           Controller                     ______________________


The  Lender is hereby  authorized  to honor any  request  made by any one of the
persons named above,  and to forward any such  requested Loan as may be directed
at the time of such request.

2.  Designate the  following  employees of the Borrower as authorized to execute
certain  reports  including,  among other things,  a report of loan balances and
confirmation of advances  theretofore  requested,  Borrowing Base  Certificates,
collection reports,  inventory certification reports, and transmittal letters of
accounts receivable agings, on its behalf under the Credit Agreement:

    NAME                      TITLE                              SIGNATURE
Richard D. Simon         CEO & President                  ______________________

Alban B. Lang            COO, CFO & Secretary             ______________________

William J. Baker         Controller                       ______________________

                                                       Very truly yours,

                                                       DICK SIMON TRUCKING, INC.

                                                       By:
                                                       Title: President


<PAGE>


                             SECRETARY'S CERTIFICATE

         I, Alban Lang,  Secretary,  hereby  certify that I am the duly elected,
qualified and acting Secretary and keeper of the records of Simon Transportation
Services Inc., (the "Borrower"),  a corporation duly organized,  existing and in
good  standing  under the laws of the State of Nevada  and  further  certify  as
follows:

         1 . Attached  hereto as Exhibit A is a full,  true and correct  copy of
resolutions  duly  adopted by the  Borrower's  Board of  Directors  at a meeting
thereof,  convened on August 18, 1999, which meeting was held in accordance with
the Borrower's Articles of Incorporation and Bylaws and all applicable laws, and
which  resolutions  have not in any way been modified or  rescinded,  but are in
full force and effect.

         2. The Articles of  Incorporation  attached hereto as Exhibit B and the
Bylaws  attached  hereto as  Exhibit C are,  respectively,  true,  complete  and
correct copies of this Corporation's  Articles of Incorporation (duly filed with
the  Secretary of State of the state of Nevada) and Bylaws,  which  articles and
bylaws have been duly  adopted by this  Corporation  and are  presently  in full
force and effect.

         3. On the date  hereof,  the  following  named  persons are the present
officers and/or  directors of the Borrower who are authorized by the Corporation
to perform  the  actions set forth in the  resolutions  attached  hereto and the
following signatures are genuine signatures of such named persons:

 NAME                                  TITLE                     SIGNATURE
Richard D. Simon                   CEO & President          ____________________
Alban B. Lang                      COO, CFO & Secretary     ____________________

IN  WITNESS  WHEREOF,  I have  executed  this  Certificate  and have  caused the
corporate seal of the Borrower to be hereto affixed 18th day of August 1999.

                                                        ------------------------
                                                        Secretary

(Corporate Seal)

         I hereby  certify that Alban Lang has been elected and is now acting as
Secretary of Simon  Transportation  Services Inc., and that the signature to the
foregoing Certificate is his genuine signature.

                                                        ------------------------
                                                        President



<PAGE>







                                    EXHIBIT A

                         TO SECRETARY'S CERTIFICATE

                         Resolutions of the Board of Directors of

                         Simon Transportation Services Inc.
                         Adopted August 18, 1999

             "RESOLVED, that anyone of the following acting singly:

                            Dick Simon and Alban Lang

[insert  titles  of  authorized  officers/directors]  (each  such  person  being
hereinafter referred to as a "Desiqnated Person") is hereby authorized, directed
and empowered now and from time to time  hereafter to make,  execute and deliver
for  and on  behalf  of and in the  name of this  Corporation  such  agreements,
instruments and documents,  including, but not limited to, a Credit and Security
Agreement  between this  Corporation  and U.S.  Bank National  Association  (the
"Lender")  substantially  in the form of the Credit and Security  Agreement (the
"Credit  Agreement')  presented  to  this  meeting,  except  for  such  changes,
additions and  deletions as to any or all of the terms or provisions  thereof as
the  officer  executing  the Credit  and  Security  Agreement  on behalf of this
Corporation  shall deem  proper,  and all other  agreements,  notes,  schedules,
security documents,  assignments,  of accounts,  designations of inventory, real
estate,  mortgages,  trust deeds, assignments,  certificates,  reports, bills of
sale, leases, contracts, conditional sale contracts,  guaranties,  subordination
and stand-by agreements,  pledge agreements,  assignments of beneficial interest
in any real or personal  property,  and other such  agreements,  instruments and
documents (all and each of the foregoing  agreements,  instruments and documents
are hereinafter  referred to collectively as the "Other Loan Documents') with or
for the benefit of the Lender,  as he/she may in his/her  sole  discretion  deem
advisable,  necessary,  expedient,  convenient  or  proper,  providing  for  and
evidencing  various  financial  arrangements with and obligations to the Lender,
including,  without limitation,  the borrowing of monies by this Corporation and
as security therefor, granting a security interest in the Collateral (as defined
in the Credit Agreement) and all proceeds and products of the foregoing property
and interests in property;

         BE IT  FURTHER  RESOLVED,  that the  Credit  Agreement  and Other  Loan
Documents may contain such provisions, terms, conditions,  covenants, warranties
and representations as any Designated Person may in his/her sole discretion deem
advisable, necessary or expedient;

         BE IT FURTHER  RESOLVED,  that any  Designated  Person acting singly is
hereby  authorized,  directed and empowered for and on behalf of and in the name
of this  Corporation now and from time to time  hereafter,  as he/she in his/her
sole discretion deems advisable, necessary, expedient, convenient or proper, to:
(a) borrow  monies from the Lender or an  affiliate  of Lender;  (b) execute and
deliver  to the  Lender  or  its  affiliate  such  agreements,  instruments  and
documents as the Lender or such  affiliate  may request or require to effectuate
the purpose and intent of the Credit Agreement and Other Loan Documents or these
resolutions;  (c) amend, modify, alter, extend, renew or otherwise change any of
the provisions,  terms,  conditions,  covenants,  guaranties or  representations
contained in the Credit  Agreement or Other Loan Documents;  and (d) execute and
deliver to the Lender and/or its affiliate  any direction or  authorization  for
the  application,  payment,  transfer,  receipt  or  other  disposition  of  any
property, real or personal, belonging to this Corporation;

         BE IT FURTHER  RESOLVED,  that any  Designated  Person acting singly is
hereby authorized,  directed and empowered to do and perform all acts and things
he/she deems advisable,  necessary,  expedient, convenient or proper in order to
consummate fully all of the transactions contemplated under the Credit Agreement
or Other Loan Documents or these resolutions;

         BE IT FURTHER RESOLVED,  that in order to facilitate borrowings of this
Corporation  from the  Lender or its  affiliate  under  the terms of the  Credit
Agreement and Other Loan Documents,  pursuant to which it is or will be required
that  a  number  of  reports,  certificates  and  documents  including,  without
limitation,  a report of loan balances and confirmation of advances  theretofore
requested,   borrowing  base   certificates,   collection   reports,   inventory
certification reports, and transmittal letters of accounts receivable agings, be
periodically  supplied  to  the  Lender,  it is in the  best  interest  of  this
Corporation  to provide to the Lender a list of  employees  of this  Corporation
which are  authorized  to sign any such  reports on behalf of this  Corporation,
along with examples of such employees' signatures;

         BE IT FURTHER  RESOLVED,  that in order to accomplish  the  resolutions
hereinabove  stated,  the President of this  Corporation or the Chief  Financial
Officer   acting  singly  is  hereby   authorized  to  sign  any  such  reports,
certificates  or other  documents  required under the Credit  Agreement or Other
Loan  Documents  or  requested  by the  Lender  in  accordance  with the  Credit
Agreement  or  Other  Loan  Documents  from  time  to  time  on  behalf  of this
Corporation,  and further,  the  President is hereby  authorized to designate in
writing to the Lender  from time to time any other  persons  authorized  to sign
such  reports,  certificates  and other  documents,  and to delete  any  persons
theretofore authorized, or add other persons not theretofore authorized,  and to
cause examples of any such persons' signatures to be delivered to the Lender;

BE IT FURTHER  RESOLVED,  that the President of this Corporation  acting singly,
and any  other  person or  persons  which  the  President  may from time to time
designate  in  writing  to the  Lender,  is  authorized  to  make  requests  for
borrowings,  including, without limitation,  telephonic requests for borrowings,
under the Credit Agreement or Other Loan Documents on behalf of this Corporation
and the Lender is hereby authorized to honor such requests of the President,  or
of any person so designated by the  President,  until such time as the Lender is
notified in writing by this Corporation of the election of a new president or of
the revocation of the authorization of any person designated by the President to
make such  requests  for  borrowings  under the Credit  Agreement  or Other Loan
Documents;

           BE IT FURTHER  RESOLVED,  that by adopting the above  resolutions  at
  this meeting,  the Directors of this  Corporation  hereby ratify,  approve and
  confirm any and all acts and things that any Designated Person has done or may
  do in any way  relating to or arising  from or in  connection  with the Credit
  Agreement  or Other Loan  Documents  and these  resolutions  and such acts and
  things of any  Designated  Person  shall at all times  receive  full faith and
  credit by this Corporation without the necessity of inquiry by the Lender; and

           BE IT FURTHER RESOLVED,  that (a) the authorizations herein set forth
  shall remain in full force and effect for the term of the Credit Agreement and
  Other Loan Documents and all renewal terms  thereof;  and (b) the Secretary or
  any Assistant  Secretary of this Corporation is hereby authorized and directed
  to certify and affix the corporate  seal thereunto and furnish to the Lender a
  copy of these resolutions."


<PAGE>


Date:  September 28, 1999

U.S. Bank National Association
U.S. Bank Place MPFP0504
601 Second Avenue South
Minneapolis, Minnesota 55402-4302

Attention:      Asset Based Lending

Re:      Telephonic Requests for Loans/Signature Authorization

  Ladies/Gentlemen:

  Reference is made to that certain Credit and Security  Agreement,  dated as of
  September  28, 1999 (the "Credit  Agreement"),  between  Simon  Transportation
  Services,  Inc.  (the  "Borrower")  and U.S. Bank  National  Association  (the
  "Lender").  Capitalized  terms used herein and not  otherwise  defined  herein
  shall have the meanings given such terms in the Credit Agreement.

  The undersigned,  as President of the Borrower,  and pursuant to the authority
  granted  to the  undersigned  in those  certain  resolutions  of the  Board of
  Directors dated August 18, 1999, does hereby:

  1.  Designate  the  following  employees of the Borrower as authorized to make
  requests for Loans,  including  telephonic  requests for Loans,  on its behalf
  under the Credit Agreement:

   NAME                       TITLE                              SIGNATURE
 Richard D. Simon         CEO & President                  _____________________

 Alban B. Lang            COO, CFO & Secretary             _____________________

 William J. Baker         Controller                       _____________________


  The Lender is hereby  authorized  to honor any request  made by any one of the
  persons named above, and to forward any such requested Loan as may be directed
  at the time of such request.

2.       Designate  the  following  employees of the Borrower as  authorized  to
         execute certain reports including, among other things, a report of loan
         balances and confirmation of advances theretofore requested,  Borrowing
         Base Certificates, collection reports, inventory certification reports,
         and transmittal  letters of accounts  receivable  agings, on its behalf
         under the Credit Agreement:


 NAME                               TITLE                      SIGNATURE

Richard D. Simon                   CEO & President        ______________________

Alban B. Lang                      COO, CFO & Secretary   ______________________

William J. Baker                   Controller             ______________________

                                             Very truly yours,

                                             SIMON TRANSPORTATION SERVICES, INC.

                                             By:
                                             Title: President






Dick Simon Trucking, Inc.
Trade Names, Etc.
Schedule 4.1

Simon Transportation Services Inc.
Dick Simon Trucking, Inc.
Simon Dry Vans
Simon Integrated Logistics
Simon Consolidated Services


<PAGE>
 Dick Simon Trucking, Inc.
  Schedule of Insurance Coverages
  Schedule 4.7

<TABLE>

<S>                   <C>          <C>                                           <C>             <C>                       <C>
Policy Type           Policy #     Carrier                                       Period          Limits                    Premium
--------------------- ------------ --------------------------------------------- --------------- -----------------------------------
Workers Compensation  RL 913-7977  Industrial Indemnity Company of the Northwest 11/l/98-11/l/99  $1,000.000 per Accident    250,000
                                                                                                  $1,000,000 per Employee
                                                                                                  $1,000,000 Policy Limit

Workers Compensation  RL 913-7978  Industrial Indemnity Company                  11/l/98-11/1/99  $1,000,000 per Accident   Included
                                                                                                  $1,000,000 per Employee     above
                                                                                                  $1,000,000 Policy Limit

Commercial Auto       048064771    Allstate Insurance Company                     5/l/99-5/1/00   $1,000,000 Liability        16,605
Commercial Auto       050443384    Allstate Insurance Company                     5/1/99-5/l/00   $1,000,000 Liability         1,421
Commercial Auto       048065853    Allstate Insurance Company                     5/l/99-5/1/00   $1,000,000 Liability         1,341

Property              IM08306481   St. Paul Mercury Insurance Company            11/l/98-11/l/99 $14,667,000 Buildings        45,107
                                                                                                  $2,350,000 Contents
                                                                                                     $85,000 Fences & Signs
                                                                                                  $2,000,000 Tractors and
                                                                                                             Trailers
                                                                                                 $25,000,000 Business
                                                                                                             interruption

General Liability     YXB300629    Genesis Insurance Company                     11/l/98-11/l/01  $1,500,000 General          25,000
                                                                                                             Aggregate
                                                                                                    $750,000 Products
                                                                                                    $750,000 Personal
                                                                                                             Injury
                                                                                                    $750,000 Per Occurrence
Truckers Liability                                                                                $1,000,000 per Accident  1,313,000
Cargo                                                                                             $1,000,000 per Accident     42,000

Umbrella              4398-9100    The lnsurance Company of the                  l1/l/98-11/l/99 $10,000,000 Each            526,400
                                   State of Pennsylvania                                                     Occurrence
                                                                                                 $10,000,000 Aggregate

Excess Umbrella       RXU0202781   RLI Insurance Company                         11/1/98-11/1/99 $25,000,000 Each             15,000
                                                                                                             Occurrence
                                                                                                 $25,000,000 Aggregate

Excess Liability      XLXG1951576A Indemnity Insurance Company of North America                  $15,000,000 Each              7,500
                                                                                                             Occurrence
                                                                                                 $15,000,000 Aggregate


</TABLE>

<PAGE>



                             Schedule 4.8
                Litigation and Contingent Liabilities

         Simon and  certain of its  officers  and  directors  have been named as
defendants  in a securities  class action  filed in the United  States  District
Court for the District of Utah, Caprin v. Simon Transportation  Services,  Inc..
et al.,  No.  2:98CV 863K (filed  December 3, 1998).  Plaintiffs  in this action
allege that defendants made material misrepresentations and omissions during the
period  February 13, 1997 through April 2, 1998 in violation of Sections  10(b),
11, and 20(a) of the Securities Exchange Act of 1934 and Rule I Ob-5 promulgated
thereunder. Simon intends to vigorously defend this action.

        There is a motion for summary  judgment filed on behalf of Borrower that
is pending in the State of California  regarding an employee's claim for damages
under the Americans with  Disabilities Act. The employee claims Borrower did not
make reasonable  accommodations  for a cancer-related  illness.Borrower's  local
counsel has stated that the Americans with  Disabilities  Act does not provide a
remedy for the  employee's  claim.  If the employee  were  successful,  Borrower
thinks damages will be nominal.


<PAGE>



                               Schedule 4.9
                                   Liens

1.   Liens securing debt and capitalized leases listed on the attached schedule.

2.   Liens securing  debt or capitalized  leases used to finance the purchase of
assets after the date hereof.
<PAGE>
                               Schedule 4.10
                          Subsidiaries, Ownership

1.      Simon  Transportation  Services  Inc.,  a Nevada  corporation,  has one
        wholly-owned subsidiary, Dick Simon Trucking, Inc., a Utah corporation.
        Borrowers have no other Subsidiaries.

2.      Simon is a  publicly-held  company,  with  its  officers  and  directors
        holding  approximately  22% of the  outstanding  shares.  A copy  of the
        Security  Ownership Of Principal  Stockholders and Management table from
        Simon's most recent proxy statement is attached hereto and  incorporated
        herein by this reference. Trucking is wholly-owned by Simon.

3.      The Borrowers do not have actual knowledge of any shareholder agreement,
        voting trust. or other agreement limiting or otherwise pertaining to the
        ownership interest of any  Person  in the Borrowers,  provided, Simon is
        publicly-held and such agreements may exist.



<PAGE>


Attachment to Schedule 4. 10

                      SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS
                                    AND MANAGEMEENT

        The following  table sets forth,  as of October 31, 1998, the number and
percentage  of  outstanding  shares of Common Stock  beneficially  owned by each
person known by the Company to beneficially  own more than 5 % of such stock, by
each  director,  by each Named Officer of the Company,  and by all directors and
executive officers of the Company as a group.
<TABLE>

<CAPTION>
             SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
<S>                 <C>                                                <C>                      <C>
 Title of Class     Name of Beneficial Owner'                          Amount & Nature          Percent of Class 3
                                                                        of Beneficial
                                                                          Ownership
 Class A Common         Richard D. Simon                                     24,501                  Class A -
 Class B Common         Richard D. Simon                                    913,751              Class B - 100.0%
                                                                                                    Total - 14.8%
 Class A Common         Alban B. Lang                                        91,207                          1.4%
 Class A Common         Kelle A. qimon                                       94,099                          1.5%
 Class A Common         Lyn Simon                                            94,011                          1.5%
 Class A Common         Richard D. Simon, Jr.                               101,395                          1.6%
 Class A Common         Sherry L. Bokovoy                                    93,740                          1.5%
 Class A Common         Irene Warr                                            3,700                           *
 Class A Common         H. J. Frazier                                         8,000                           *
 Class A Common         Warburg Pincus Counsellors                          397,600                          6.3%
 Class A Common         Wynnefield Group                                    330,500                          5.2%
 Class A & Class B      All directors, executive officers and other 5 %   2,152,504                         33.9%
      Common            stockholders as a group (10 persons)

<FN>

*  Less than one percent.

  1  The business address of Richard D. Simon,   Alban B. Lang,  Kelle A. Simon,
  Lyn Simon,  Richard D. Simon,  Jr., Sherry L. Bokovoy,  and Irene Warr is P.O.
  Box 26297,  Salt Lake City, Utah  84126-0297.   The address of H.J. Frazier is
  2700 West Sackett Drive, Park City, Utah 84098.  The address of Warburg Pincus
  Counsellors is 466 Lexington  Avenue,  New York, New York 1OO17.   The address
  of Wynnefield Group  is One Penn Plaza,  Suite 4720, New York, New York 10119.

  2  In accordance  with  applicable  rules under the Securities Exchange Act of
  1934, as  amended,  the number of shares  beneficially  owned  includes 39,600
  shares of Class A Common Stock underlying options to purchase granted  to each
  of Alban  B. Lang,  Kelle A.  Simon,  Lyn Simon,  Richard D. Simon,  Jr.,  and
  Sherry L.   Bokovoy (the "Optionees") that are either currently exercisable or
  will become exercisable within 60 days. The 85,400 remaining shares underlying
  options   granted to the Optionees that are not exercisable within 60 days are
  excluded. The shares owned also include an  aggregate  37,915  shares of Class
  A Common Stock  held in the Company's ss.401(k) Plan on behalf of  Richard  D.
  Simon  (14,501 shares),  Alban B. Lang  (7,348 shares),  Kelle A. Simon (5,923
  shares), Lyn Simon (7,568 shares), and Sherry L. Bokovoy (2,575 shares).   The
  total  shares  include  2,000 shares underlying stock options granted to Irene
  Warr and  3,000  shares  underlying  stock  options  granted  to H.J.  Frazier
  that are  currently  exercisable or will be exercisable within 60 days. Unless
  otherwise indicated all shares are owned directly.

  3  Percentage  based on both Class A and Class B Common Stock and includes for
  purposes  of  this  chart only the vested portion of options granted under the
  Company's Incentive Stock Plan and Outside Director Stock Plan.

  4 All shares are held by Richard D. Simon,  Trustee  of  the  Richard D. Simon
  Revocable Trust, UTAD 2/12/93, of which the four  children of Richard D. Simon
  are the  beneficiaries.  subject to a life   estate in favor of Valene  Simon,
  wife of Richard D.  Simon.  Because  the Class B Common  Stock is entitled  to
  two votes per share,  Mr.  Simon,  as Trustee,  controls 25.5% of the combined
  voting power of the Common Stock.

</FN>
</TABLE>



<PAGE>



                                     Schedule 4.11
                          Partnerships; Joint Ventures; LLCs

NONE


<PAGE>



Dick Simon Trucking, Inc.
Listing of Business Locations
Schedule 4.12

Terminals

5175 West 2100 South
West Valley City, Utah 84120


1545 Cedargrove Road
Conley, Georgia 30027


15816 Santa Ana Avenue
Fontana, California 92338


5821 West Buckeye
Phoenix, Arizona


23623 Colonial Parkway, Suite B
Katy, Texas 77493


264 Farrell Road
Syracuse, New York 13209


Trailer Drop Yards

Rupert, Idaho

Springville, Utah

Gaffney, South Carolina

Laredo, Texas


<PAGE>



Dick Simon Trucking, Inc.
Long Term Debt Schedule
Schedule 4.15
                         Loan/
Bank                     Lease            Date                  Cost        Term
Core States Bank:
#531360 to 531408 &
#531410 to 531459        Lease #1        Sep-97             3,861,296.00     60
#531460 to 531519        Lease #2        Sep-97             2,315,693.00     60
#531520 to 531594        Lease #3        Oct-97             2,924,679.00     60
#532020 to 532036
#532038 to 532115
#532117 to 532119
#535085 to 535091        Lease #4        Feb-98             3,955,483.98     60
#2380,2436 to 2492       Lease #5        Apr-98             4,332,240.00     36
#2513 to 2532            Lease #6        May-98             1,493,920.00     36
#2493 to 2512            Lease #7        May-98             1,487,335.00     36

Associates:
#531720 to 531819        Lease #3        Dec-97             3,900,897.50     60
#531970 to 532019        Lease #4        Feb-98             1,949,786.00     60

Banc Boston Leasing:
#530570 to 530619        Lease #1        May-96             1,976,432.50     60
#530620 to 530669        Lease #2        Aug-96             1,946,667.00     60
#530670 to 530719        Lease #3        Aug-96             1,946,667.00     60
#530720 to 530769        Lease #4        Aug-96             1,946,400.00     60
#530770 to 530772
& 530774 to 530819       Lease #5        Sep-96             1,909,396.72     60
#530970 to 531069        Lease #6        Jan-97             3,842,937.50     60
#531245 to 531294        Lease #7        Aug-97             1,931,443.50     60
#531295 to 531359        Lease #8        Aug-97             2,535,851.50     60
Add'I trailer costs      Lease #9        Sep-97                18,550.00     60
#531820 to 531919        Lease #10       Jan-98             3,900,633.00     60
#531920 to 531969        Lease #11       Jan-98             1,949,909.50     60
#532238 to 532312        Lease #12       Jul-98             3,039,135.00     60
#2768 to 2770 &
#2781 to 2812            Lease #13       Dec-98             2,663,536.75     36
#2813 to 2857            Lease #14       Jan-99             3,353,197.50     36


Banc One Ls:
#1791 to 1795            Lease #7        Oct-96               389,300.00     36

<PAGE>
Fifth Third Leasing:
#531220 to 531244        Lease #1        May-97               965.671.00     60


First Security Leasing:
#2533 to 2551            Lease #1        May-98             1,412,968.25     36
#2552 to 2571            Lease #2        Jun-98             1,493,920.00     36
#2572 to 2574 &
#2591 to 2601            Lease #3        Jul-98             1,041,131.00     36
#2602 to 2614            Lease #4        Jul-98               966,764.50     36


First Union Leasing:
#530820 to 530869 &
#535034 to 535083 &
#530870 to 530919        Lease #1        Sep-96             4,794,318.00     60
#1731 to 1735
#1737 to 1790            Lease #2        Dec-96             4,520,542.00     36
#2130 to 2157 &
#2172 to 2191            Lease #3        Jul-97             3,555,273.60     36
#2158 to 2171            Lease #4        Aug-97             1,036,954.80     36
#2192 to 2244            Lease #5        Sep-97             3,925,614.60     36
#2245 to 2258            Lease #6        Oct-97             1,036,954.80     36


Fleet Capital:
#1627  to  1657,  1674   Lease #12       Oct-96             2,401,315.88     36
#1680 to 1704 &
#1706 to 1730 Volvos     Lease #13       Oct-96             3,460,700.00     39
#1797 to 1820 Volvos
#1822 to 1845            Lease #14       Dec-96             3,322,272.00     39
#531170 to 531219        Lease #15       May-97             1,934,496.00     60
#2259 to 2265 &
#2283 to 2292            Lease #16       Oct-97             1,259,159.40     36
#531595 to 531719        Lease #17       Oct-97             4,875,397.25     60
#2321 to 2337
#2339 to 2350,  2616     Lease #18       Dec-97             2,239,874.45     36
#2362 to 2379            Lease #19       Feb-98             1,331,744.40     36
#2575 to 2590, 2615      Lease #20       Jul-98             1,264,230.50     36
#2617 to 2658            Lease #21       Aug-98             3,154,099.50     36
#2659 to 2698  (LBJ)     Lease #22       Sep-98             2,971,840.00     36
#3036 to 3047  (CIT)     Lease #23       May-99             2,016,771.75     36
#3049 to 3055
#3073 to 3074
#3076,77,78,80,81,82
#3048,56 to 72 (CIT)     Lease #24       May-99             1,643,027.75     36
#3075, 79,83,84

<PAGE>
Key Corp Leasing:
#1866 to 1900            Lease #17       Jan-97             2,698,246.45     36
#2266 to 2279            Lease #18       Oct-97             1,036,954.80     36
#2280 to 2282 &
#2293 to 2309 &
#2311 to 2313            Lease #19       Nov-97             1,703,568.60     36
#2310,2314  to 2320      Lease #20       Dec-97               592,545.60     36
#2351 to 2360            Lease #21       Jan-98               748,433.50     36
#2381 to 2390            Lease #22       Feb-98               748,433.50     36
#2391 to 2435            Lease #23       Apr-98             3,159,095.00     36
#2699 to 2721 &
#2723 to 2728            Lease #24       Oct-98             2,204,652.00     36
#600,2722,  29 to 48
#2771  to 2780           Lease #25       Nov-98             2,406,135.00     36
#2749 to 2767            Lease #26       Dec-98             1,414,089.25     36
#2858 to 2872            Lease #27       Feb-99             1,120,425.00     36
#2932,2937,2942          Lease #28       Apr-99             4,317,457.75     36
#2956 to 2989
#3015 to 3035


Mercedes-Benz Credit:
#2873 to 2931,33,35,36   Lease #1        Mar-99             5,659,950.25     36
#2838 to 2841
#2946 to 2953,55,56
#2934, 2943 to 2945      Lease #2        Apr-99             2,153,483.25     36
#2990 to 3014
#53231 to 53260          Lease #3        Jul-99             1,240,419.22     60


Nations Bank:
#530920 to 530969        Lease #6        Dec-96             1,921,790.50     60
#ABS001 to ABS032        Lease #7        May-98             3,045,644.60     60
&532120 to 532162        Lease #8        Jun-98             3,035,400.75     60
#532163 to 532237        Lease #9        Jun-99             4,569,088.00     36
#3085 to 3145 (MBC)      Lease #10       Jun-99               764,065.75     36
#3146 to 3149 (DIME)     Lease #11       Sep-99             2,001,663.50     36
#3150 to 3176


Safeco Credit:
#1846 to 1864             Lease #2       Dec-96             1,405,991.45     36
#80088 to 80137           Lease #3       Feb-99             1,002,441.00     60

<PAGE>
U.S. Bancorp Leasing:
#530120 to 530137
#530139 to 530170
& 530172 to 530179        Lease #2       Jan-96             2,160,606.33     60


Volvo Truck Finance:
#1941 to 1973             #401 & 402     Apr-97             2,411,306.00     39
#1974 to 1983
#1985 to 2040
(Excluding 1997,03,06)    #403           May-97             4,605,552.00     39
#1997,2003,2006           #404           Jun-97               219,312.00     39

<PAGE>



                                       Schedule 4.16
                             Patents, Trademarks, Copyrights

 1.     Borrower's logo of the skunk holding a flag is registered with the State
 of Utah.

 2.     Borrowers also have unregistered rights of various kinds.


<PAGE>



                                      Schedule 4.18
                              Contracts and Labor Disputes

NONE


<PAGE>




                                      Schedule 4.25
                                 Environmental Matters

NONE


<PAGE>



                                      Schedule 6.11
                                       Investments

NONE



<PAGE>




Dick Simon Trucking, Inc
Capitalized Leases -- Principal and Interest
August 3l.1999
Schedule 6.12
<TABLE>

<S>    <C>     <C>       <C>  <C>      <C>       <C>     <C>       <C>      <C>       <C>       <C>       <C>        <C>
                                                                   Interest Principal                      Current     Residual
                Original               Residual  Monthly Principal   8/l/99   8/i/99  Principal Principal Principal   Due Within
Asset   Date     Amount  Term Residual  Value    Payment  7/31/99   8/31/99  8/31/99    Payoff   8/31/99  at 8/31/99  12 Months
-----  ------  --------- ---- -------- --------- ------- --------- -------- --------- --------- --------- ---------- -----------
FSU03  Sep-95  2,012,409  60    50%    1,006,204  25,515 1,272,306   7,197   18,318       --    1,253,988    228,072         --
FCRO7  May-95    184,350  60    50%       92,175   2,390   109,932     662    1,728       --      108,204     16,029     92,175
FCRO8  Aug-95    643,297  60    50%      321,649   8,011   400,357   2,149    5,862       --      394,495     72,847    321,649
FCRO9  Oct-95    252,930  60    50%      126,465   3,141   161,951     862    2,279       --      159,672     28,311         --
FCR11  Dec-95    870,343  60    50%      435,172  10,691   572,368   2,948    7,743       --      564,625     96,086         --
               ---------               ---------  ------ --------- -------- --------- --------- --------- ---------- -----------
TOTAL          3,963,329               1,981,664  49,747 2,516,914  13,817   35,930       --    2,480,984    441,344    413,824
               ---------               ---------  ------ --------- -------- --------- --------- --------- ---------- -----------

                            Total Lease Payments 8/1/99 - 8/31/99   49,747                                  Current     855,167
                            New Leases 8/l/99 - 8/31/99                 --
                                                                                                            Long-term 1,625.817

</TABLE>





<PAGE>


Dick Simon Trucking.  Inc
Debt Summary
August 31, 1999
Schedule 6.12
<TABLE>
<S>                     <C>  <C>     <C>          <C>  <C>      <C>     <C>       <C>         <C>          <C>          <C>
                                                                                                             Principal Due During
                                       Original         Stated  Current  Monthly    Monthly      Balance       the Period Ending
Bank & Collateral       Loan  Date      Amount    Term   Rate    Rate   Principal   Payment      8/31/99      8/31/00      8/31/01
----------------------- ---- ------ ------------- ---- -------- ------- --------- ----------- ------------ ------------ ------------
First  Union
 Trailers 530180-530219  1   Feb-96  1,565,640.00  60  Fixed      6.37%     --      30,536.35   522,488.15   342,626.52   179,861.63
 Trailers 530023-530279  2   Feb-96  1,869.898.80  60  Fixed      6.37%     --      36,472.97   625,194.62   410,366.43   214,828.19
 Trailers 530220-530319  3   Feb-96  1,898,742.16  60  Fixed      6.24%     --      36,916.74   633,036.65   415,271.88   217,764.77
 Trailers 535014-535033  4   Mar-96    352,728.40  60  Fixed      6.55%     --       6,909.80   130,554.70    83,225.09    47,329.61
 Trailers 530320-530369  5   Mar-96  1.946.554.00  60  Fixed      6.55%     --      38,132.18   657,206.30   396,015.53   261,190.77
 Trailers 530370-530419  6   Mar-96  1,946.554.00  60  Fixed      7.09%     --      38,626.81   692,364.93   428,255.76   264,109.17
 Trailers 530420-530469  7   Apr-96  1,946,654.00  60  Fixed      7.20%     --      38,728.05   727,860.08   463,155.05   264,705.03
 Trailers 530470-530519  8   Apr.96  1,946,806.00  60  Fixed      7.18%     --      38,714.62   756,783.13   492,152.23   264,630.90
 Trailers 530520-530569  9   May-96  1,946,651.00  60  LIBOR+1.1  6.04%  32,444.18       0.00   681,327.98   389,330.16   291,997.82
   Subtotal                         15,420,027.36                        32,444.18 265,037.52 5,426,816.54 3,420,308.64 2,006,417.90

Bank of Boston
 Headquarters-WVC        1   Aug-97 12,900,000.00  33  Eurodollar 5.88% 365,656.56      0.00  4,387,878.90 4,387,878.72         0.18
   Subtotal                         12,900,000.00                       365,656.66      0.00  4,387,878.90 4,387,378.72         0.18


                                                                Current Portion of Debt       7,808,277.36
                                                                Long-term Portion of Debt     2,006,418.08
                                                                Total                         9,814,695.44 7,808.277.36 2,006,418.08
</TABLE>