Document:

Exhibit10.1

CREDIT AGREEMENT

THIS CREDIT AGREEMENT
(the “Agreement”), dated as of August 31, 2006, is by and among MARTEN
TRANSPORT, LTD., a Delaware corporation (the “Borrower”), the banks which are
signatories hereto (individually, a “Bank” and, collectively, the “Banks”) and
U.S. BANK NATIONAL ASSOCIATION, a national banking association, one of the
Banks, as agent for the Banks (in such capacity, the “Agent”).

ARTICLE
1

DEFINITIONS AND ACCOUNTING TERMS

Section 1.1             Defined Terms.  As used in this Agreement the following terms
shall have the following respective meanings (and such meanings shall be
equally applicable to both the singular and plural form of the terms defined,
as the context may require):

“Advance”:
Any portion of the outstanding Loans by a Bank as to which one of the available
interest rate options and, if pertinent, an Interest Period, is
applicable.  Revolving Loans may be LIBOR
Advances or Prime Rate Advances and Swing Line Loans shall be Daily Floating
LIBOR Advances.

“Affiliate”:
When used with reference to any Person, (a) each Person that, directly or
indirectly, controls, is controlled by or is under common control with, the
Person referred to, (b) each Person which beneficially owns or holds, directly
or indirectly, five percent or more of any class of voting stock of the Person
referred to (or if the Person referred to is not a corporation, five percent or
more of the equity interest), (c) each Person, five percent or more of the
voting stock (or if such Person is not a corporation, five percent or more of
the equity interest) of which is beneficially owned or held, directly or
indirectly, by the Person referred to, and (d) each of such Person’s officers,
directors, joint venturers and partners. 
The term control (including the terms “controlled by” and “under common
control with”) means the possession, directly, of the power to direct or cause
the direction of the management and policies of the Person in question.

“Agent”: As
defined in the opening paragraph hereof.

“Agent’s Fee Letter”:  That certain letter agreement, dated as of
August 31, 2006 (as thereafter amended, modified, renewed or replaced from time
to time) between the Borrower and the Agent pertaining to certain fees and
charges.

“Aggregate
Revolving Commitment Amounts”: As of any date, the sum of the Revolving
Commitment Amounts of all the Banks.

“Applicable
Lending Office”: For each Bank and for each type of Advance, the office of
such Bank identified as such Bank’s Applicable Lending Office on the signature
pages hereof or such other domestic or foreign office of such Bank (or of an
Affiliate of such Bank) as such Bank may specify from time to time, by notice
given pursuant to Section 9.4, to the Agent and the Borrower as the office by
which its Advances of such type are to be made and maintained.

 

“Applicable Commitment
Fee Percentage; Applicable Margin”: Subject to the last sentence of this
definition, with respect to the period beginning five calendar days after the
financial statements and Compliance Certificate required by Sections 5.1(a),
(c) and (d) are delivered with respect to any fiscal quarter and ending on the
day five calendar days after the date such financial statements and Compliance
Certificate for the next fiscal quarter are actually delivered, the percentage
specified below based on the Cash Flow Leverage Ratio calculated as of the end
of the fiscal quarter for which such statements were delivered:

	
  

  	
   

  	
   

  	
   

  	
  Applicable Margin

  	
   

  
	
  Cash Flow

  	
   

  	
  Applicable Commitment

  	
   

  	
  LIBOR

  	
   

  	
  Prime Rate

  	
   

  
	
  Leverage Ratio:

  	
   

  	
  Fee Percentage:

  	
   

  	
  Advances*:

  	
   

  	
  Advances:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Greater than
  2.25 to 1.00:

  	
   

  	
  0.150

  	
  %

  	
  1.000

  	
  %

  	
  0.000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equal to or less
  than 2.25 to 1.00 but greater than 1.75 to 1.00:

  	
   

  	
  0.150

  	
  %

  	
  0.900

  	
  %

  	
  -0.250

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equal to or less
  than 1.75 to 1.00 but greater than 1.25 to 1.00:

  	
   

  	
  0.125

  	
  %

  	
  0.800

  	
  %

  	
  -0.250

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equal to or less
  than 1.25 to 1.00 but greater than 0.75 to 1.00:

  	
   

  	
  0.125

  	
  %

  	
  0.700

  	
  %

  	
  -0.500

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equal to or less than 0.75
  to 1.00:

  	
   

  	
  0.100

  	
  %

  	
  0.600

  	
  %

  	
  -0.500

  	
  %

  

 

*Applicable Margin
for Daily Floating LIBOR Advance is same as for LIBOR Advances.

The minus sign (-)
preceding certain of the foregoing percentages is intended to indicate a
negative percentage.

During the period
beginning on the date five days after the financial statements and Compliance
Certificate for a fiscal quarter are required to be delivered pursuant to
Sections 5.1(a), (c) and (d) but are not delivered and ending five days after
the date such financial statements are delivered, the Applicable Commitment Fee
Percentage and Applicable Margins shall be as specified for a Cash Flow
Leverage Ratio greater than 2.25.

“Bank”: As
defined in the opening paragraph hereof.

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

“Borrower”:
As defined in the opening paragraph hereof.

 2
 

 

“Borrowing Base”:
As of any date of determination shall mean 80% of the net book value
(determined in accordance with GAAP) of all revenue-generating transportation
equipment of the Borrower, less the outstanding balance of all funded
Indebtedness other than the Obligations, and less all trade accounts
payable as of the date of determination.

“Borrowing Base
Certificate”: A certificate in the form of Exhibit B hereto.

“Borrowing Base
Deficiency”: At the time of any determination, the amount, if any, by which
Total Outstandings exceed the Borrowing Base.

“Business Day”: 
Any day (other than a Saturday, Sunday or legal holiday in the State of
Minnesota) on which national banks are permitted to be open in Minneapolis,
Minnesota and New York, New York and, with respect to LIBOR Advances, a day on
which dealings in United States Dollars may be carried on by the Agent in the
interbank eurodollar market.

“Capital
Expenditures”: For any period, the sum of all amounts that would, in
accordance with GAAP, be included as additions to property, plant and equipment
on a consolidated statement of cash flows for the Borrower during such period,
in respect of (a) the acquisition, construction, improvement, replacement or
betterment of land, buildings, machinery, equipment or of any other fixed
assets or leaseholds, (b) to the extent related to and not included in (a)
above, materials and contract labor (excluding expenditures properly chargeable
to repairs or maintenance in accordance with GAAP), and (c) other capital
expenditures and other uses recorded as capital expenditures or similar terms
having substantially the same effect.

“Capitalized
Lease”: A lease of (or other agreement conveying the right to use) real or
personal property with respect to which at least a portion of the rent or other
amounts thereon constitute Capitalized Lease Obligations.

“Capitalized
Lease Obligations”: As to any Person, the obligations of such Person to pay
rent or other amounts under a lease of (or other agreement conveying the right
to use) real or personal property which obligations are required to be
classified and accounted for as a capital lease on a balance sheet of such
Person under GAAP (including Statement of Financial Accounting Standards No. 13
of the Financial Accounting Standards Board), and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP (including such Statement No. 13).

“Cash Flow
Leverage Ratio”: For any period of determination, the ratio of

(a)           the sum (without duplication) of (i)
the aggregate principal amount of all outstanding Capitalized Lease Obligations
of the Borrower and the Subsidiaries, (ii) that portion of Total Liabilities
bearing interest determined as of the last day of that period, (iii) the stated
amount of all Letters of Credit as of the last day of that period, plus (iv) an
amount equal to six times transportation equipment operating lease expense for
such period,

to

 3
 

 

(b)           EBITDAR determined for said period on
a consolidated basis in accordance with GAAP.

“Change of
Control”: The occurrence, after the Closing Date, of any of the following
circumstances: (a) any Person or two or more Persons acting in concert
acquiring beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of 1934),
directly or indirectly, of securities of the Borrower (or other securities
convertible into such securities) representing 35% or more of the combined
voting power of all securities of the Borrower entitled to vote in the election
of directors, and such percentage of voting power is equal to or greater than
the aggregate direct and indirect percentage of voting power held by Randolph L.
Marten and Christine K. Marten or heirs, or (b) during any period of up to
twelve consecutive months, whether commencing before or after the Closing Date,
individuals who at the beginning of such twelve-month period were directors of
the Borrower ceasing for any reason to constitute a majority of the Board of
Directors of the Borrower (other than by reason of death, disability or
scheduled retirement), or (c) a “Change in Control Event” or similar event
providing for acceleration or prepayment (whether mandatory or at the option of
the holders of the notes thereunder) shall occur under the Senior Unsecured
Note Documents.

“Closing Date”:
Any Business Day on or after the date of this Agreement selected by the
Borrower for the making of the first Loans hereunder; provided, that all the
conditions precedent to the obligation of the Banks to make such Loans, as set
forth in Article 3, have been, or, on such Closing Date, will be, satisfied.

“Code”: The
Internal Revenue Code of 1986, as amended.

“Commitments”: 
The Revolving Commitments and the Swing Line Commitments.

“Compliance Certificate”:  A certificate in the form of Exhibit C,
duly completed and signed by either the chief financial officer or the chief
operating officer of the Borrower.

“Contingent
Obligation”: With respect to any Person at the time of any determination,
without duplication, any obligation, contingent or otherwise, of such Person
guaranteeing or having the economic effect of guaranteeing any Indebtedness of
any other Person (the “primary obligor”) in any manner, whether directly or
otherwise: (a) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness or to purchase (or to advance or supply funds
for the purchase of) any direct or indirect security therefor, (b) to purchase
property, securities or services for the purpose of assuring the owner of such
Indebtedness of the payment of such Indebtedness, (c) to maintain working
capital, equity capital or other financial statement condition of the primary obligor
so as to enable the primary obligor to pay such Indebtedness or otherwise to
protect the owner thereof against loss in respect thereof, or (d) entered into
for the purpose of assuring in any manner the owner of such Indebtedness of the
payment of such Indebtedness or to protect the owner against loss in respect
thereof; provided, that the term “Contingent Obligation” shall not include
endorsements for collection or deposit, in each case in the ordinary course of
business.  The amount of any such Contingent
Obligation shall be determined in accordance with GAAP.

 4
 

 

“Daily Floating
LIBOR”:  LIBOR (Reserve Adjusted)
determined on each Business Day, based on the rates on Page 3750 of the
Telerate Service on such Business Day (without regard to the two-day forward
delivery convention) for an Interest Period of one month, which shall change on
each Business Day.

“Daily Floating
LIBOR Advance”: An Advance with respect to which the interest rate is
determined by reference to Daily Floating LIBOR.

“Default”:
Any event which, with the giving of notice (whether such notice is required
under Section 7.1, or under some other provision of this Agreement, or
otherwise) or lapse of time, or both, would constitute an Event of Default.

“EBITDAR”: 
For any period of determination, the consolidated net income of the
Borrower and its Subsidiaries before provision for income taxes, plus,
to the extent subtracted in determining consolidated net income, Interest
Expense, transportation equipment operating lease expense, depreciation and
amortization, all as determined in accordance with GAAP, excluding (to the
extent included): (a) non-operating gains (including, without limitation,
extraordinary or nonrecurring gains and gains from discontinuance of
operations); and (b) similar non-operating losses during such period, provided,
however, that gains or losses from sale of revenue- generating capital
assets shall not be excluded from the determination of net income for purposes
of calculation of EBITDAR.

“ERISA”:
The Employee Retirement Income Security Act of 1974, as amended.

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

“Event of
Default”: Any event described in Section 7.1.

“Existing Agreement”:  That certain Credit Agreement, dated as of
October 30, 1998, as thereafter amended, between the Borrower and U.S. Bank
National Association, as Agent, and as the sole Bank thereunder.

“Existing Letters of
Credit”:  Certain letters of credit
issued for the account of the Borrower identified on Schedule 1.1.1
hereof.

“Fixed Charge Coverage
Ratio”:  For any period of
determination, the ratio of:

(a) EBITDAR minus the sum of (i) any Restricted Payments, (ii) 25% of
Capital Expenditures (net of value received for trade-ins), and (iii) tax
expenses of the Borrower and the Subsidiaries paid in cash,

to

(b) the sum of (i) Interest Expense, (ii) transportation equipment
operating lease expense and (iii) an amount equal to one-sixth of Total
Liabilities bearing interest.

 5
 

 

“GAAP”:
Generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
may be approved by a significant segment of the accounting profession, which
are applicable to the circumstances as of any date of determination.

“Holding
Account”: A deposit account belonging to the Agent for the benefit of the
Banks into which the Borrower may be required to make deposits pursuant to the
provisions of this Agreement, such account to be under the sole dominion and
control of the Agent and not subject to withdrawal by the Borrower, with any
amounts therein to be held for application toward payment of any outstanding
Letters of Credit when drawn upon.  The
Holding Account shall be a money market savings account or substantial
equivalent (or other appropriate investment medium as the Borrower may from
time to time request and to which the Agent in its sole discretion shall have
consented) and shall bear interest in accordance with the terms of similar
accounts held by the Agent for its customers.

“Immediately
Available Funds”: Funds with good value on the day and in the city in which
payment is received.

“Indebtedness”:
With respect to any Person at the time of any determination, without
duplication, all obligations, contingent or otherwise, of such Person which in
accordance with GAAP should be classified upon the balance sheet of such Person
as liabilities, but in any event including: (a) all obligations of such Person
for borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (c) all obligations of such
Person upon which interest charges are customarily paid or accrued, (d) all
obligations of such Person under conditional sale or other title retention
agreements relating to property purchased by such Person, (e) all obligations
of such Person issued or assumed as the deferred purchase price of property or
services, (f) all obligations of others secured by any Lien on property owned
or acquired by such Person, whether or not the obligations secured thereby have
been assumed, (g) all Capitalized Lease Obligations of such Person, (h) all
obligations of such Person in respect of interest rate protection agreements,
(i) all obligations of such Person, actual or contingent, as an account party
in respect of letters of credit or bankers’ acceptances, (j) all obligations of
any partnership or joint venture as to which such Person is or may become
personally liable, and (k) all Contingent Obligations of such Person.

“Interest
Expense”: For any period of determination, the aggregate consolidated
amount, without duplication, of interest paid, accrued or scheduled to be paid
in respect of any Indebtedness of the Borrower, including (a) all but the
principal component of payments in respect of conditional sale contracts,
Capitalized Leases and other title retention agreements, (b) commissions,
discounts and other fees and charges with respect to letters of credit and
bankers’ acceptance financings and (c) net costs under interest rate protection
agreements, in each case determined in accordance with GAAP.

“Interest
Period”: With respect to each LIBOR Advance, the period commencing on the
date of such Advance or on the last day of the immediately preceding Interest Period,
if any, applicable to an outstanding Advance and ending one, two, three or six
months thereafter, as the 

 6
 

 

Borrower may elect in the applicable notice of borrowing, continuation
or conversion; provided that:

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

(b)           Any Interest Period that begins on
the last Business Day of a calendar month (or 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 a calendar month; and

(c)           Any Interest Period that would
otherwise end after the Termination Date shall end on the Termination Date.

The Interest
Period for any Daily Floating LIBOR Advance shall be one Business Day.

“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 or 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.  The amount of any Investment shall be the
original cost of such Investment plus the cost of all additions thereto,
without any adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment.

“Letter of
Credit”: An irrevocable letter of credit issued by the Agent pursuant to
this Agreement for the account of the Borrower.

“Letter of
Credit Fee”: As defined in Section 2.18.

“Letter of
Credit Sublimit”: $10,000,000.

“Lien”:
With respect to any Person, any security interest, mortgage, pledge, lien,
charge, encumbrance, title retention agreement or analogous instrument or
device (including the interest of each lessor under any Capitalized Lease), in,
of or on any assets or properties of such Person, now owned or hereafter
acquired, whether arising by agreement or operation of law.

“LIBOR”: The
offered rate for deposits in United States Dollars for delivery of such
deposits on the first day of an Interest Period of a LIBOR Advance, for the
number of days comprised therein, quoted by the Agent from Page 3750 of the
Telerate Service as of approximately 11:00 a.m., London time, on the day that
is two Business Days preceding the first day of the Interest Period of such
LIBOR Advance, or the rate for such deposits determined by the Agent at such
time based on such other published service of general application as shall be
selected by the Agent for such purpose; provided, that in lieu of determining
the rate in the 

 7
 

 

foregoing manner, the Agent may determine the rate
based on rates offered to the Agent for deposits in United States Dollars 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.

“LIBOR Advance”:
An Advance with respect to which the interest rate is determined by reference
to LIBOR (Reserve Adjusted).

“LIBOR (Reserve Adjusted)”:  The rate per annum calculated for the
Interest Period of a LIBOR Advance in accordance with the following formula:

	
  LRA

  	
   

  	
  =

  	
   

  	
     LIBOR

  
	
   

  	
   

  	
   

  	
   

  	
  1.00 - LRR

  

 

In such formula, “LRR” means “LIBOR Reserve Rate” and “LRA”
means “LIBOR (Reserve Adjusted)”, in each instance determined by the Agent for
the applicable Interest Period.  The
Agent’s determination of all such rates for any Interest Period shall be
conclusive in the absence of manifest error.

“LIBOR Reserve Rate”:  The percentage equal to the daily average
during such Interest Period of the aggregate maximum reserve requirements
(including all basic, supplemental, marginal and other reserves), as 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) or applicable to extensions
of credit by the Agent, the rate of interest on which is determined with regard
to rates applicable to Eurocurrency liabilities.  Without limiting the generality of the
foregoing, the LIBOR Reserve Rate shall reflect any reserves required to be
maintained by the Agent against (i) any category of liabilities that includes
deposits by reference to which LIBOR is to be determined, or (ii) any category
of extensions of credit or other assets that includes LIBOR Advances.

“Loan Date”:  The date of the making of any Loans
hereunder.

“Loan Documents”:  This Agreement, the Notes, each Letter of
Credit Agreement, the Agent’s Fee Letter and each other instrument, document,
guaranty, security agreement, mortgage, or other agreement executed and
delivered by the Borrower in connection with this Agreement, the Loans, the
Letters of Credit or the Letter of Credit obligations, as amended from time to
time.

“Loans”: 
The Revolving Loans and the Swing Line Loans.

“Multiemployer
Plan”: A multiemployer plan, as such term is defined in Section 4001 (a)
(3) of, ERISA, which is maintained (on the Closing Date, within the five years
preceding the Closing Date, or at any time after the Closing Date) for
employees of the Borrower or any ERISA Affiliate.

“Note Purchase
Agreement”: The Note Purchase and Private Shelf Agreement dated October 30,
1998, for the $25,000,000 6.78% Series A Senior Notes due October 30, 2008 and
the $15,000,000 8.57% Series B Senior Notes dated April 6, 2000 and due April
6, 2010 between

 8
 

 

the Borrower and The Prudential Insurance Company of America and each
Prudential Affiliate (as defined therein) which becomes a Purchaser (as defined
therein) thereunder.

“Notes”: 
The Revolving Notes and the Swing Line Note.

“Obligations”:
The Borrower’s obligations, without duplication, in respect of the due and
punctual payment of principal and interest on the Revolving Loans, Swing Line
Loans and Unpaid Drawings when and as due, whether by acceleration or otherwise
and all fees (including Revolving Commitment Fees), expenses, indemnities,
reimbursements and other obligations of the Borrower under this Agreement or
any other Loan Document, in all cases whether now existing or hereafter arising
or incurred.

“Patriot Act”:  The Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001 (Title III of Pub. L. No. 107-56 (signed into law October 26, 2001)).

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

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

“Plan”:
Each employee benefit plan (whether in existence on the Closing Date or
thereafter instituted), as such term is defined in Section 3 of ERISA,
maintained for the benefit of employees, officers or directors of the Borrower
or of any ERISA Affiliate.

“Prime Rate” means the
rate of interest from time to time announced by the Agent as its “prime rate.”  For purposes of determining any interest rate
which is based on the Prime Rate, such interest rate shall be adjusted each
time that the prime rate changes.

“Prime Rate
Advance”: An Advance with respect to which the interest rate is determined
by reference to the Prime Rate.

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

“Regulatory
Change”: Any change after the Closing Date in federal, state or foreign
laws or regulations or the adoption or making after such date of any
interpretations, directives or requests applying to a class of banks including
any Bank under any federal, state or foreign laws or regulations (whether or
not having the force of law) by any court or governmental or monetary authority
charged with the interpretation or administration thereof.

“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 a failure to meet the

 9
 

 

minimum funding standard of Section 412 of the Code and of 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.

“Required Banks”:  At any time, Banks holding more than 50% of
the aggregate unpaid principal amount of the Revolving Loans or, if no
Revolving Loans are at the time outstanding hereunder, Banks holding more than
50% of the Aggregate Revolving Commitment Amounts, provided, however,
that at any time that there shall only be two Banks, Required Banks shall mean
both of such Banks.

“Restricted
Payments”: With respect to the Borrower, collectively, all dividends or
other distributions of any nature (cash, securities other than common stock of
the Borrower, assets or otherwise), and all payments on any class of equity
securities (including warrants, options or rights therefor) issued by the
Borrower, whether such securities are authorized or outstanding on the Closing
Date or at any time thereafter and any redemption or purchase of, or
distribution in respect of, any of the foregoing, whether directly or
indirectly.

“Revolving
Commitment”: With respect to a Bank, the agreement of such Bank to make
Revolving Loans to the Borrower in an aggregate principal amount outstanding at
any time not to exceed such Bank’s Revolving Commitment Amount upon the terms
and subject to the conditions and limitations of this Agreement.

“Revolving
Commitment Amount”: With respect to a Bank, initially the amount set forth
with respect to that Bank on Schedule 1.1.2, as the same may be (a) amended
from time to time, (b) increased as provided in Section 2.29, or (c) reduced
from time to time pursuant to Section 2.15.

“Revolving
Commitment Fees”: As defined in Section 2.17.

“Revolving Loan”:  The loans made by the Banks under Section
2.1(a).

“Revolving Note”:  A promissory note of the Borrower in the form
of Exhibit A-1 hereto, as such promissory note may be amended, modified
or supplemented from time to time, and such term shall include any
substitutions for, or renewals of, such promissory note.

“Revolving
Percentage”: With respect to any Bank, the percentage equivalent of a
fraction, the numerator of which is the Revolving Commitment Amount of such
Bank and the denominator of which is the Aggregate Revolving Commitment
Amounts.

“Senior
Unsecured Note Documents”: Collectively, (i) the Note Purchase Agreement;
(ii) the Series A Notes (as defined in the Note Purchase Agreement) issued
under the Note Purchase Agreement; and (iii) the Series B Notes (as reference
is made to such in the Note Purchase Agreement) issued under the Note Purchase
Agreement.

“Subordinated
Debt”: Any Indebtedness of the Borrower, now existing or hereafter created,
incurred or arising, which is subordinated in right of payment to the payment
of the Obligations in a manner and to an extent (a) that Required Banks have
approved in writing prior to the creation of such Indebtedness, or (b) as to
any Indebtedness of the Borrower existing on

 10
 

 

the date of this Agreement, that Required Banks have approved as
Subordinated Debt in a writing delivered by Required Banks to the Borrower on
or prior to the Closing Date.

“Subsidiary”:
Any entity of which securities or other ownership interests having ordinary
voting power for the election of a majority of the board of directors or other
Persons performing similar functions are owned by the Borrower either directly
or through one or more Subsidiaries.

“Swing
Line Bank” means U.S. Bank National Association, or its successor.

“Swing Line
Commitment”: With respect to the Swing Line Bank, the agreement of the
Swing Line Bank to make Swing Line Loans to the Borrower in an aggregate
principal amount outstanding at any time not to exceed the Swing Line
Commitment Amount upon the terms and subject to the conditions and limitations
of this Agreement.

“Swing Line
Commitment Amount”: $10,000,000.

“Swing Line
Loan”:  The loans made by the Swing
Line Bank under Section 2.1(b).

“Swing Line
Note”:  A promissory note of the
Borrower in the form of Exhibit A-2 hereto, as such promissory note may
be amended, modified or supplemented from time to time, and such term shall
include any substitutions for, or renewals of, such promissory note.

“Swing
Line Participation Amount” is defined in Section 2.5(b).

“Termination
Date”: The earliest of (a) September 1, 2011, (b) the date on which the
Revolving Commitments are terminated pursuant to Section 7.2 hereof or (c) the
date on which the Revolving Commitment Amounts are reduced to zero pursuant to
Section 2.15 hereof.

“Total
Liabilities”: At the time of any determination, the amount, on a
consolidated basis, of all items of Indebtedness of the Borrower and its
Subsidiaries that would constitute “liabilities” for balance sheet purposes in
accordance with GAAP.

“Total
Outstandings”: As of any date of determination, the sum of (a) the
aggregate unpaid principal balance of Revolving Loans outstanding on such date,
(b) the aggregate unpaid principal balance of the Swing Line Loans outstanding
on such date, (c) the aggregate maximum amount available to be drawn under
Letters of Credit outstanding on such date and (d) the aggregate amount of
Unpaid Drawings on such date.

“Unpaid Drawing”:
As defined in Section 2.12.

“Unrefunded
Swing Line Loans” is defined in Section 2.5(b).

“Unused
Revolving Commitment”: With respect to any Bank as of any date of
determination, the amount by which such Bank’s Revolving Commitment Amount
exceeds such Bank’s Revolving Percentage of the Total Outstandings on such
date.

“U.S. Bank”:
U.S. Bank National Association in its capacity as one of the Banks hereunder.

 

 11

 

Section 1.2             Accounting Terms and
Calculations.  Except as may be
expressly provided to the contrary herein, all accounting terms used herein
shall be interpreted and all accounting determinations hereunder shall be made
in accordance with GAAP.  To the extent
any change in GAAP affects any computation or determination required to be made
pursuant to this Agreement, such computation or determination shall be made to
account for such change in GAAP.

Section 1.3             Computation of Time Periods.  In this Agreement, in the computation of a
period of time from a specified date to a later specified date, unless
otherwise stated the word “from” means “from and including” and the word “to”
or “until” each means “to but excluding.”

Section 1.4             Other Definitional Terms.  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.  References to Sections,
Exhibits, schedules and like references are to this Agreement unless otherwise
expressly provided.  The words “include,”
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation.” Unless the context in which used herein otherwise clearly
requires, “or” has the inclusive meaning represented by the phrase “and/or.”

ARTICLE
2

TERMS OF THE CREDIT FACILITIES

Part
A — Terms of Lending

Section 2.1             The Commitments.  Subject to the terms and conditions hereof
and in reliance upon the representations, warranties and covenants of the
Borrower herein, each Bank agrees, severally and not jointly, to make the
following loans:

2.1(a)      On the terms and subject to the conditions
hereof, each Bank severally agrees to make Revolving Loans to the Borrower on a
revolving basis at any time and from time to time from the Closing Date to the
Termination Date, during which period the Borrower may borrow, repay and
reborrow in accordance with the provisions hereof, provided, that no
Revolving Loan will be made in any amount which, after giving effect thereto,
would cause the Total Outstandings (after application of the Revolving Loan to
pay an outstanding Swing Line Loan) to exceed the lesser of (i) the Aggregate
Revolving Commitment Amounts, or (ii) the Borrowing Base.  Revolving Loans hereunder shall be made by
the several Banks ratably in the proportion of their respective Revolving
Commitment Amounts.  Revolving Loans may
be obtained and maintained, at the election of the Borrower but subject to the
limitations hereof, as Prime Rate Advances or LIBOR Advances or any combination
thereof.

2.1(b)      On the terms and subject to the conditions
hereof, the Swing Line Bank severally agrees to make Swing Line Loans to the
Borrower on a revolving basis at any time and from time to time from the Closing
Date to the Termination Date, during which period the Borrower may borrow,
repay and reborrow in accordance with the provisions hereof, provided,
that no Swing Line Loan will be made in any amount which, after

 12
 

 

giving effect thereto,
would cause the Total Outstandings to exceed the lesser of (i) the Aggregate
Revolving Commitment Amounts, or (ii) the Borrowing Base, and provided, further
that the total outstanding Swing Line Loans shall not exceed the Swing Line
Commitment Amount.  Swing Line Loans shall
be Daily Floating LIBOR Advances.

Section 2.2             Procedure for Loans.

2.2(a)      Any request by the Borrower for Revolving
Loans hereunder shall be in writing or by telephone and must be given so as to
be received by the Agent not later than 12:00 noon (Minneapolis time) two
Business Days prior to the requested Loan Date if the Revolving Loans (or any
portion thereof) are requested as LIBOR Advances and not later than 10:00 a.m.
(Minneapolis time) on the requested Loan Date if the Revolving Loans are requested
as Prime Rate Advances.

2.2(b)      Any request by the borrower for Swing Line
Loans shall be in writing or by telephone and must be given so as to be
received by the Swing Line Bank not later than 3:00 p.m., Minneapolis time, on
the Loan Date of the requested Swing Line Loan, provided, however,
that the Swing Line Bank and the Borrower may, from time to time, enter into
mutually acceptable arrangements for notices of funding, funding and repayment
of the Swing Line Loans under the Swing Line Bank’s “sweep” program which may
vary from the requirements of this paragraph and Section 2.21.

2.2(c)      Each request for Loans hereunder shall be
irrevocable and shall be deemed a representation by the Borrower that on the
requested Loan Date and after giving effect to the requested Loans the
applicable conditions specified in Article 3 have been and will be
satisfied.  Each request for Loans
hereunder shall specify (i) the requested Loan Date, (ii) the aggregate amount
of Loans to be made on such date which shall be in a minimum amount of $100,000
or, if more, an integral multiple thereof, provided, however,
that Swing Line Loans may be in any amount requested by the Borrower, (iii)
whether Revolving Loans are to be funded as Prime Rate Advances or LIBOR
Advances (and, if such Revolving Loans are to be made with more than one
applicable interest rate choice, specifying the amount to which each interest
rate choice is applicable) and (iv) in the case of LIBOR Advances, the duration
of the initial Interest Period applicable thereto.  The Agent may rely on any telephone request
for Loans hereunder which it believes in good faith to be genuine; and the
Borrower hereby waives the right to dispute the Agent’s record of the terms of
such telephone request absent manifest error.

2.2(d)       The Agent shall promptly notify each
other Bank of the receipt of such request, the matters specified therein, and
of such Bank’s ratable share of the requested Revolving Loans.  On the date of the requested Revolving Loans,
each Bank shall provide its share of the requested Revolving Loans to the Agent
in Immediately Available Funds not later than 2:00 p.m., Minneapolis time.  Unless the Agent determines that any
applicable condition specified in Article 3 has not been satisfied, the Agent
will make available to the Borrower at the Agent’s principal office in
Minneapolis, Minnesota in Immediately Available Funds not later than 2:00 p.m.
(Minneapolis time) on the requested Loan Date the amount of the requested
Revolving Loans.  If the Agent does not receive
funding from any Bank of its Revolving Percentage of any Revolving Loan by

 13
 

 

the next Business Day
after the date of any Revolving Loan, the Agent shall be entitled to recover
such Revolving Loan, with interest thereon at the rate (or rates) then applicable
to such Revolving Loan (but not including any funding losses with respect to
such Revolving Loan that is a LIBOR Advance), on demand, from the Borrower,
without prejudice to the Agent’s and the Borrower’s rights against such
non-funding Bank.  Such Bank’s
obligations in respect of such funding are set forth in Section 2.30 hereof.

Section 2.3             Notes.

2.3(a)      The Revolving Loans of each Bank shall be
evidenced by a single Revolving Note payable to the order of such Bank in a
principal amount equal to such Bank’s Revolving Commitment Amount originally in
effect.

2.3(b)      The Swing Line Loans of the Swing Line
Bank shall be evidenced by a single Swing Line Note payable to the order of the
Swing Line Bank in a principal amount equal to the Swing Line Commitment Amount
originally in effect.

2.3(c)      Each Bank shall enter in its ledgers and
records the amount of each Loan, the various Advances made, converted or
continued and the payments made thereon, and each Bank is authorized by the
Borrower to enter on a schedule attached to its Note or Notes a record of such
Loans, Advances and payments; provided, however that the failure
by any Bank to make any such entry or any error in making such entry shall not
limit or otherwise affect the obligation of the Borrower hereunder and on the
Notes, and, in all events, the principal amounts owing by the Borrower in
respect of the Notes shall be the aggregate amount of all Loans made by the
Banks less all payments of principal thereof made by the Borrower.

Section 2.4             Conversions and Continuations.  On the terms and subject to the limitations
hereof, the Borrower shall have the option at any time and from time to time to
convert all or any portion of the Revolving Loans into Prime Rate Advances or
LIBOR Advances, or to continue a LIBOR Advance as such; provided, however
that a LIBOR Advance may be converted or continued only on the last day of the
Interest Period applicable thereto and no Advance may be converted to or
continued as a LIBOR Advance if a Default or Event of Default has occurred and
is continuing on the proposed date of continuation or conversion.  Advances may be converted to, or continued
as, LIBOR Advances only in integral multiples, as to the aggregate amount of
the Advances of all Banks so converted or continued, of $100,000 or, if larger,
in integral multiples of $100,000.  The
Borrower shall give the Agent written notice of any continuation or conversion
of any Advances and such notice must be given so as to be received by the Agent
not later than 12:00 noon (Minneapolis time) two Business Days prior to the
requested date of conversion to, or continuation of, LIBOR Advances and on the
date of the requested conversion to Prime Rate Advances.  Each such notice shall specify (a) the amount
to be continued or converted, (b) the date for the continuation or conversion
(which must be (i) the last day of the preceding Interest Period for any
continuation or conversion of LIBOR Advances, and (ii) a Business Day in the
case of continuations as or conversions to LIBOR Advances and a Business Day in
the case of conversions to Prime Rate Advances), and (c) in the case of
conversions to or continuations as LIBOR Advances, the Interest Period
applicable thereto.  Any notice given by
the Borrower under this Section shall be irrevocable.  If the Borrower shall fail to

 14
 

 

notify the Agent of the
continuation of any LIBOR Advances within the time required by this Section,
such Advances shall, on the last day of the Interest Period applicable thereto
automatically be continued as LIBOR Advance of the same type and the same
Interest Period if LIBOR Advances shall be available to the Borrower, otherwise
such Advances shall be converted to Prime Rate Advances.  All conversions and continuation of Advances
must be made uniformly and ratably among the Banks (e.g., when continuing a
two-month LIBOR Advance of one Bank to a three-month LIBOR Advance, the
Borrower must simultaneously continue all two-month LIBOR Advances of all Banks
having Interest Periods ending on the date of continuation as three-month LIBOR
Advances.)

Section 2.5              
Refunding of Swing Line Loans.

2.5(a)       
Swing Line Loans are only intended to be outstanding for a period of
five (5) Business Days or less after the making thereof.  To maintain compliance with this limitation,
at any time permitted hereunder, the Borrower may request the Banks to make
Revolving Loans which may be applied to repay the Swing Line Loans then
outstanding.  If the Borrower shall not
make such requests in a timely manner, or upon occurrence and during continuance
of a Default or Event of Default, the Swing Line Bank may, on behalf of the
Borrower (which hereby irrevocably direct the Swing Line Bank to act on its
behalf), upon notice given by the Swing Line Bank no later than 12:00 noon,
Minneapolis time, on the relevant refunding date, request each Bank to make,
and each Bank hereby agrees to make, a Revolving Loan (which shall be a Prime
Rate Advance), in an amount equal to such Bank’s Revolving Percentage of the
aggregate amount of the Swing Line Loans (the “Refunded Swing Line Loans”)
outstanding on the date of such notice, to refund such Swing Line Loans.  Each Bank shall make the amount of such
Revolving Loan available to the Agent in immediately available funds, no later
than 2:00 p.m., Minneapolis time, on the date of such notice.  The proceeds of such Revolving Loans shall be
distributed by the Agent to the Swing Line Bank and shall immediately be
applied by the Swing Line Bank to repay the Refunded Swing Line Loans.

2.5(b)       
If, for any reason, Revolving Loans may not be (as determined by the
Agent in its sole discretion), or are not, made pursuant to Section 2.5(a)
to repay Swing Line Loans, then, effective on the date such Revolving Loans
would otherwise have been made, each Bank severally, unconditionally and
irrevocably agrees that it shall purchase a participating interest in such
Swing Line Loans (“Unrefunded Swing Line Loans”) in an amount equal to
the amount of Revolving Loans which would otherwise have been made by such Bank
pursuant to Section 2.5(a).  Each
Bank will immediately transfer to the Agent, in immediately available funds,
the amount of its participation (the “Swing Line Participation Amount”),
and the proceeds of such participation shall be distributed by the Agent to the
Swing Line Bank in such amount as will reduce the amount of the participating
interest retained by the Swing Line Bank in its Swing Line Loans.

2.5(c)       
Whenever, at any time after the Swing Line Bank has received from any
Bank such Bank’s Swing Line Participation Amount, the Swing Line Bank receives
any payment on account of the Swing Line Loans, the Swing Line Bank will
distribute to such Bank its Swing Line Participation Amount (appropriately
adjusted, in the case of interest payments, to reflect the period of time
during which such Bank’s participating

 15
 

 

interest was outstanding
and funded and, in the case of principal and interest payments, to reflect such
Bank’s pro  rata portion of such payment if such payment is not
sufficient to pay the principal of and interest on all Swing Line Loans then
due); provided,  however, that in the event that such payment
received by the Swing Line Bank is required to be returned, such Bank will
return to the Swing Line Bank any portion thereof previously distributed to it
by the Swing Line Bank.

2.5(d)       
Each Bank’s obligation to make the Loans referred to in Section
2.5(a) and to purchase participating interests pursuant to Section
2.5(b) shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, (i) any setoff, counterclaim,
recoupment, defense or other right which such Bank or the Borrower may have
against the Swing Line Bank, the Borrower or any other Person for any reason
whatsoever; (ii) the occurrence or continuance of a Default or an Event of
Default or the failure to satisfy any of the other conditions precedent
specified in Article 3; (iii) any adverse change in the condition (financial or
otherwise) of the Borrower; (iv) any breach of this Agreement or any other Loan
Document by the Borrower or any Bank; or (v) any other circumstance, happening
or event whatsoever, whether or not similar to any of the foregoing.

Section 2.6             Interest Rates, Interest
Payments and Default Interest. 
Interest shall accrue and be payable on the Revolving Loans as follows:

2.6(a)      Subject to paragraph (d) below, each LIBOR
Advance shall bear interest on the unpaid principal amount thereof during the
Interest Period applicable thereto at a rate per annum equal to the sum of (i)
LIBOR (Reserve Adjusted) for such Interest Period, plus (ii) the Applicable
Margin.

2.6(b)      Subject to paragraph (d) below, each Prime
Rate Advance shall bear interest on the unpaid principal amount thereof at a
varying rate per annum equal to the sum of (i) the Prime Rate, plus or minus,
as applicable, (ii) the Applicable Margin.

2.6(c)      Subject to paragraph (d) below, each Daily
Floating LIBOR Advance shall bear interest on the unpaid principal amount
thereof at a varying rate per annum equal to the sum of (i) the Daily Floating
LIBOR Rate, plus (ii) the Applicable Margin.

2.6(d)      Upon the occurrence of any Event of
Default, each Advance shall, at the option of the Required Banks, bear interest
until paid in full (i) during the balance of any Interest Period applicable to
such Advance, at a rate per annum equal to the sum of the rate applicable to
such Advance during such Interest Period plus 2.00%, or (ii) otherwise, at a
rate per annum equal to the Prime Rate plus 2.00%.

2.6(e)      Interest shall be payable (i) with respect
to each LIBOR Advance having an Interest Period of three months or less, on the
last day of the Interest Period applicable thereto; (ii) with respect to any
LIBOR Advance having an Interest Period greater than three months, on the last
day of the Interest Period applicable thereto and on each day that would have
been the last day of the Interest Period for such Advance had successive
Interest Periods of three months duration been applicable to such Advance;
(iii) with

 16
 

 

respect to any Prime Rate
Advance, on the last day of each month; (iv) with respect to all Advances, upon
any permitted prepayment (on the amount prepaid); and (E) with respect to all
Advances, on the Termination Date; provided that interest under Section 2.6(d)
shall be payable on demand.

Section 2.7             Repayment.  The unpaid principal amount of all Advances,
together with all accrued and unpaid interest thereon, shall be due and payable
on the Termination Date.

Section 2.8             Prepayments.

2.8(a)      Mandatory Payments.  If at any time a Borrowing Base Deficiency
exists, the Borrower shall immediately pay on the principal of the Advances an
amount equal to such Borrowing Base Deficiency. 
Any such payments shall be applied first against Prime Rate Advances and
then to LIBOR Advances in order starting with the LIBOR Advances having the
shortest time to the end of the applicable Interest Period.  Amounts paid on the Advances under this
paragraph (a) shall be for the account of each Bank in proportion to its share
of outstanding Revolving Loans.  If,
after paying all outstanding Advances, a Borrowing Base Deficiency still
exists, the Borrower shall pay into the Holding Account an amount equal to the
amount of the remaining Borrowing Base Deficiency.

2.8(b)      Other Mandatory Prepayments.  If at any time Total Outstandings exceed the
Aggregate Revolving Commitment Amounts, the Borrower shall immediately repay to
the Agent for the account of the Banks the amount of such excess.  Any such payments shall be applied first
against Prime Rate Advances and then to LIBOR Advances in order starting with
the LIBOR Advances having the shortest time to the end of the applicable
Interest Period.  If, after payment of
all outstanding Advances, the Total Outstandings still exceed the Aggregate Revolving
Commitment Amounts, the remaining amount paid by the Borrower shall be placed
in the Holding Account.

2.8(c)      Optional Prepayments.  The Borrower may prepay Prime Rate Advances,
in whole or in part, at any time, without premium or penalty.  Any such prepayment must be accompanied by
accrued and unpaid interest on the amount prepaid.  Each partial prepayment shall be in an
aggregate amount for all the Banks of $100,000 or an integral multiple
thereof.  Except upon an acceleration
following an Event of Default or upon termination of the Revolving Commitments
in whole or as required under Sections 2.8(a) or (b), the Borrower may pay
LIBOR Advances only on the last day of the Interest Period applicable
thereto.  Amounts paid (unless following
an acceleration or upon termination of the Revolving Commitments in whole) or
prepaid on Advances under this paragraph (c) may be reborrowed upon the terms
and subject to the conditions and limitations of this Agreement.  Amounts paid or prepaid on the Advances under
this paragraph (c) shall be for the account of each Bank in proportion to its
share of outstanding Revolving Loans.

Part
B — Terms of the Letter of Credit Facility

Section 2.9             Letters of Credit.  Upon the terms and subject to the conditions
of this Agreement, the Agent agrees to issue Letters of Credit for the account
of the Borrower from time

 17
 

 

to time between the
Closing Date and the Termination Date in such amounts as the Borrower shall
request up to an aggregate amount at any time outstanding not exceeding the
Letter of Credit Sublimit; provided that no Letter of Credit will be issued in
any amount which, after giving effect to such issuance, would cause Total
Outstandings to exceed the lesser of (a) the Aggregate Revolving Commitment
Amounts, or (b) the Borrowing Base.

Section 2.10           Procedures for Letters of Credit.  Each request for a Letter of Credit shall be
made by the Borrower in writing, by telex, facsimile transmission or electronic
conveyance received by the Agent by 2:00 p.m., Minneapolis time, on a Business
Day which is not less than one Business Day preceding the requested date of
issuance (which shall also be a Business Day). 
Each request for a Letter of Credit shall be deemed a representation by
the Borrower that on the date of issuance of such Letter of Credit and after
giving effect thereto the applicable conditions specified in Article 3 have
been and will be satisfied.  The Agent
may require that such request be made on such letter of credit application and
reimbursement agreement form as the Agent may from time to time specify, along
with satisfactory evidence of the authority and incumbency of the officials of
the Borrower making such request.  The
Agent shall promptly notify the other Banks of the receipt of the request and
the matters specified therein.  On the
date of each issuance of a Letter of Credit the Agent shall send notice to the
other Banks of such issuance, accompanied by a copy of the Letter or Letters of
Credit so issued.

Section 2.11           Terms of Letters of Credit.  Letters of Credit shall be issued in support
of obligations of the Borrower.  All
Letters of Credit must expire not later than the Business Day preceding the
Termination Date.  No Letter of Credit
may have a term longer than twelve months (except for standard “evergreen” Letters of
Credit containing automatic extension provisions in form acceptable to the
Agent).

Section 2.12           Agreement to Repay Letter of
Credit Drawings.  If the Agent has
received documents purporting to draw under a Letter of Credit that the Agent
believes conform to the requirements of the Letter of Credit, it shall honor
such drawing and provide Borrower with a notice of such drawing.  If the Agent has received documents
purporting to draw under a Letter of Credit that the Agent believes does not conform
to the requirements of the Letter of Credit, it shall notify the Borrower of
such fact and, if Agent nevertheless is authorized to honor such draw by the
Borrower, the Agent may honor such nonconforming draw, provided, however, if a
Default has occurred and is continuing, the Agent may do so only with the
consent of all of the Banks.  The
Borrower shall reimburse the Agent by 9:30 a.m. (Minneapolis time) on the day
on which such drawing is to be paid in Immediately Available Funds in an amount
equal to the amount of such drawing.  Any
amount by which the Borrower has failed to reimburse the Agent for the full
amount of such drawing by 10:00 a.m. on the date on which the Agent in its
notice indicated that it would pay such drawing, until reimbursed from the
proceeds of Loans pursuant to Section 2.14 or out of funds available in the
Holding Account, is an “Unpaid Drawing.”

Section 2.13           Obligations Absolute.  The obligation of the Borrower under Section
2.12 to repay the Agent for any amount drawn on any Letter of Credit and to
repay the Banks for any Revolving Loans made under Section 2.16 to cover Unpaid
Drawings shall be absolute, unconditional and irrevocable, shall continue for
so long as any Letter of Credit is outstanding notwithstanding any termination
of this Agreement, and shall be paid strictly in accordance with

 18
 

 

the terms of this
Agreement, under all circumstances whatsoever, including without limitation the
following circumstances:

2.13(a)      Any
lack of validity or enforceability of any Letter of Credit;

2.13(b)      The
existence of any claim, setoff, defense or other right which the Borrower may
have or claim at any time against any beneficiary, transferee or holder of any
Letter of Credit (or any Person for whom any such beneficiary, transferee or
holder may be acting), the Agent or any Bank or any other Person, whether in
connection with a Letter of Credit, this Agreement, the transactions
contemplated hereby, or any unrelated transaction; or

2.13(c)      Any
statement or any other document presented under any Letter of Credit proving to
be forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect whatsoever.

Neither the Agent nor any Bank nor officers, directors
or employees of any thereof shall be liable or responsible for, and the
obligations of the Borrower to the Agent and the Banks shall not be impaired
by:

(i)            The
use which may be made of any Letter of Credit or for any acts or omissions of
any beneficiary, transferee or holder thereof in connection therewith;

(ii)           The
validity, sufficiency or genuineness of documents, or of any endorsements
thereon, even if such documents or endorsements should, in fact, prove to be in
any or all respects invalid, insufficient, fraudulent or forged;

(iii)          The
acceptance by the Agent of documents that appear on their face to be in order,
without responsibility for further investigation, regardless of any notice or
information to the contrary; or

(iv)          Any
other action of the Agent in making or failing to make payment under any Letter
of Credit if in good faith and in conformity with U.S. or foreign laws,
regulations or customs applicable thereto.

Notwithstanding the foregoing, the Borrower shall have
a claim against the Agent, and the Agent shall be liable to the Borrower, to
the extent, but only to the extent, of any direct, as opposed to consequential,
damages suffered by the Borrower which the Borrower proves were caused by the
Agent’s willful misconduct or gross negligence in determining whether documents
presented under any Letter of Credit comply with the terms thereof.

Section 2.14           Existing Letters of Credit.   The Existing Letters of Credit shall be
deemed for all purposes to have been issued under this Agreement and shall
constitute “Letters of Credit” under this Agreement.

 19
 

 

Part
C — General

Section 2.15           Optional Reduction of Revolving
Commitment Amounts or Termination of Revolving Commitments.  The Borrower may, at any time, upon not less
than two Business Days prior written notice to the Agent, reduce the Revolving
Commitment Amounts, ratably, with any such reduction in a minimum aggregate
amount for all the Banks of $1,000,000, or, if more, in an integral multiple of
$1,000,000; provided, however, that the Borrower may not at any
time reduce the Aggregate Revolving Commitment Amounts below the Total
Outstandings.  The Borrower may, at any
time when there are no Letters of Credit outstanding, upon not less than two
Business Days prior written notice to the Agent, terminate the Revolving Commitments
in their entirety.  Upon termination of
the Revolving Commitments pursuant to this Section, the Borrower shall pay to
the Agent for the account of the Banks the full amount of all outstanding
Advances, all accrued and unpaid interest thereon, all unpaid Revolving
Commitment Fees accrued to the date of such termination, any indemnities
payable with respect to Advances pursuant to Section 2.27 and all other unpaid
obligations of the Borrower to the Agent and the Banks hereunder.

Section 2.16           Loans to Cover Unpaid Drawings.  Whenever any Unpaid Drawing exists for which
there are not then funds in the Holding Account to cover the same, the Agent
shall give the other Banks notice to that effect, specifying the amount
thereof, in which event each Bank is authorized (and the Borrower does here so
authorize each Bank) to, and shall, make a Revolving Loan (as a Prime Rate
Advance) to the Borrower in an amount equal to such Bank’s Revolving Percentage
of the amount of the Unpaid Drawing.  The
Agent shall notify each Bank by 11:00 a.m. (Minneapolis time) on the date such
Unpaid Drawing occurs of the amount of the Revolving Loan to be made by such
Bank.  Notices received after such time
shall be deemed to have been received on the next Business Day.  Each Bank shall then make such Revolving Loan
(regardless of noncompliance with the applicable conditions precedent specified
in Article 3 hereof and regardless of whether an Event of Default then exists)
and each Bank shall provide the Agent with the proceeds of such Revolving Loan
in Immediately Available Funds, at the office of the Agent, not later than 2:00
p.m. (Minneapolis time) on the day on which such Bank received such notice (or,
in the case of notices received after 11:00 a.m., Minneapolis time, is deemed
to have received such notice).  The Agent
shall apply the proceeds of such Revolving Loans directly to reimburse itself
for such Unpaid Drawing.  If any portion
of any such amount paid to the Agent should be recovered by or on behalf of the
Borrower from the Agent in bankruptcy, by assignment for the benefit of
creditors or otherwise, the loss of the amount so recovered shall be ratably
shared between and among the Banks in the manner contemplated by Section 8.10
hereof.  If at the time the Banks make
funds available to the Agent pursuant to the provisions of this Section, the
applicable conditions precedent specified in Article 3 shall not have been
satisfied, the Borrower shall pay to the Agent for the account of the Banks
interest on the funds so advanced at a floating rate per annum equal to the sum
of the Prime Rate plus two percent (2.00%). 
If for any reason any Bank is unable to make a Revolving Loan to the
Borrower to reimburse the Agent for an Unpaid Drawing, then such Bank shall
immediately purchase from the Agent a risk participation in such Unpaid
Drawing, at par, in an amount equal to such Bank’s Revolving Percentage of the
Unpaid Drawing.

Section 2.17           Revolving Commitment Fee.  The Borrower shall pay to the Agent for the
account of each Bank fees (the “Revolving Commitment Fees”) in an amount
determined by

 20
 

 

applying the Applicable
Commitment Fee Percentage to the average daily Unused Revolving Commitment of
such Bank for the period from the Closing Date to the Termination Date.  Such Revolving Commitment Fees are payable in
arrears quarterly on the last day of each fiscal quarter and on the Termination
Date.

Section 2.18           Letter of Credit Fees, Letter of
Credit Default Fees and Administrative Fees.  For each Letter of Credit issued, the
Borrower shall pay to the Agent for the account of the Banks, in advance
payable on the date of issuance, a fee (a “Letter of Credit Fee”) in an amount
determined by applying the Applicable Margin for LIBOR Advances to the original
face amount of the Letter of Credit for the period from the date of issuance to
the scheduled expiration date of such Letter of Credit.  In addition, upon occurrence of any Event of
Default, the Borrower shall pay to the Agent for the account of the Banks a fee
in an amount determined by applying the rate of 2.00% per annum (the “Letter of
Credit Default Fee”) to the face amount of the Letter of Credit for the period
from the date of such Event of Default to the scheduled expiration date of such
Letter of Credit.   In addition to the
Letter of Credit Fee, the Borrower shall pay to the Agent, on demand, all
issuance, amendment, drawing and other fees regularly charged by the Agent to
its letter of credit customers and all out-of-pocket expenses incurred by the
Agent in connection with the issuance, amendment, administration or payment of
any Letter of Credit, and a fronting fee for each Letter of Credit issued equal
to 0.125% of the stated amount of the Letter of Credit as of the date of
issuance.

Section 2.19           Agent’s Fee.   The Borrower shall pay fees to the Agent for
its own account in amounts and at times provided in the Agent’s Fee Letter.

Section 2.20           Computation.  Revolving Commitment Fees, Letter of Credit
Fees, Letter of Credit Default Fees and interest on Advances shall be computed
on the basis of actual days elapsed (or, in the case of Letter of Credit Fees
which are paid in advance, actual days to elapse) and a year of 360 days, provided,
that interest that is determined with reference to the Prime Rate shall be
computed on the basis of actual days elapsed and a year of 365 or 366 days.

Section 2.21           Payments.  Payments and prepayments of principal of, and
interest on, the Notes and all fees, expenses and other obligations under this
Agreement payable to the Agent or the Banks shall be made without setoff or
counterclaim in Immediately Available Funds not later than 1:00 p.m.
(Minneapolis time) on the dates called for under this Agreement and the Notes
to the Agent at its main office in Minneapolis, Minnesota.  Funds received after such time shall be
deemed to have been received on the next Business Day.  The Agent will promptly distribute in like
funds to each Bank its ratable share of each such payment of principal,
interest, Revolving Commitment Fees and Letter of Credit Fees received, by the
Agent for the account of the Banks.  Whenever any payment to be made hereunder or
on the Notes shall be stated to be due on a day which is not a Business Day,
such payment shall be made on the next succeeding Business Day and such
extension of time, in the case of a payment of principal, shall be included in
the computation of any interest on such principal payment.

Section 2.22           Use of Loan Proceeds.  The proceeds of the Loans shall be used for
the Borrower’s general business and working capital purposes in a manner not in
conflict with any of the Borrower’s covenants in this Agreement.

 

 21

 

Section 2.23           Interest Rate Not Ascertainable,
Etc.  If, on or prior to the date for
determining LIBOR (Reserve Adjusted) in respect of the Interest Period for any
LIBOR Advance, any Bank determines (which determination shall be conclusive and
binding, absent error) that:

2.23(a)     
deposits in dollars (in the applicable amount) are not being made
available to such Bank in the relevant market for such Interest Period, or

2.23(b)     
LIBOR (Reserve Adjusted) will not adequately and fairly reflect the cost
to such Bank of funding or maintaining LIBOR Advances for such Interest Period,

such Bank shall forthwith give notice to the Borrower
and the other Banks of such determination, whereupon the obligation of such
Bank to make or continue, or to convert any Advances to, LIBOR Advances shall
be suspended until such Bank notifies the Borrower and the Agent that the
circumstances giving rise to such suspension no longer exist.  While any such suspension continues, all
further Advances by such Bank shall be made as Prime Rate Advances.  No such suspension shall affect the interest
rate then in effect during the applicable Interest Period for any LIBOR Advance
outstanding at the time such suspension is imposed.

Section 2.24           Increased Cost.  If any Regulatory Change:

2.24(a)     
shall subject any Bank (or its Applicable Lending Office) to any tax,
duty or other charge with respect to its LIBOR Advances, its Note or its
obligation to make LIBOR Advances or shall change the basis of taxation of
payment to any Bank (or its Applicable Lending Office) of the principal of or
interest on its LIBOR Advances or any other amounts due under this Agreement in
respect of its LIBOR Advances or its obligation to make LIBOR Advances (except
for changes in the rate of tax on the overall net income of such Bank or its
Applicable Lending Office imposed by the jurisdiction in which such Bank’s
principal office or Applicable Lending Office is located); or

2.24(b)     
shall impose, modify or deem applicable any reserve, special deposit or
similar requirement (including, without limitation, any such requirement
imposed by the Board, but excluding with respect to any LIBOR Advance any such
requirement to the extent included in calculating the applicable LIBOR (Reserve
Adjusted)) against assets of, deposits with or for the account of, or credit
extended by, any Bank’s Applicable Lending Office or against Letters of Credit
issued by the Agent or shall impose on any Bank (or its Applicable Lending
Office) or the interbank eurodollar market any other condition affecting its
LIBOR Advances, its Note or its obligation to make LIBOR Advances or affecting
any Letter of Credit;

and the result of any of the foregoing is to increase
the cost to such Bank (or its Applicable Lending Office) of making or
maintaining any LIBOR Advance or issuing or maintaining any Letter of Credit,
or to reduce the amount of any sum received or receivable by such Bank (or its
Applicable Lending Office) under this Agreement or under its Note, then, within
30 days after demand by such Bank (with a copy to the Agent), the Borrower
shall pay to such Bank such additional amount or amounts as will compensate
such Bank for such increased cost or reduction. 
Each Bank will promptly notify the Borrower and the Agent of any event
of which it

 22
 

 

has knowledge, occurring after the date hereof, which
will entitle such Bank to compensation pursuant to this Section and will
designate a different Applicable Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank.  If any Bank fails to give such notice within
45 days after it obtains knowledge of such an event, such Bank shall, with
respect to compensation payable pursuant to this Section, only be entitled to
payment under this Section for costs incurred from and after the date 45 days
prior to the date that such Bank does give such notice.  A certificate of any Bank claiming
compensation under this Section, setting forth the additional amount or amounts
to be paid to it hereunder and stating in reasonable detail the basis for the
charge and the method of computation, shall be conclusive in the absence of
error.  In determining such amount, any
Bank may use any reasonable averaging and attribution methods.  Failure on the part of any Bank to demand
compensation for any increased costs or reduction in amounts received or
receivable with respect to any Interest Period shall not constitute a waiver of
such Bank’s rights to demand compensation for any increased costs or reduction
in amounts received or receivable in any subsequent Interest Period.  Each of the Banks agrees that, as promptly as
practicable after becoming aware of the occurrence of an event or the existence
of a condition that would entitle such Bank to receive payments under this
Section 2.24, it will, to the extent not inconsistent with the internal
policies of such Bank and any applicable legal or regulatory restrictions, take
reasonable measures to reduce any additional amounts that would otherwise be
payable to such Bank pursuant to this Section 2.24.

Section 2.25           Illegality.  If any Regulatory Change shall make it
unlawful or impossible for any Bank to make, maintain or fund any LIBOR
Advances, such Bank shall notify the Borrower and the Agent, whereupon the
obligation of such Bank to make or continue, or to convert any Advances to,
LIBOR Advances shall be suspended until such Bank notifies the Borrower and the
Agent that the circumstances giving rise to such suspension no longer
exist.  Before giving any such notice,
such Bank shall designate a different Applicable Lending Office if such
designation will avoid the need for giving such notice and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank.  If such Bank determines that it may not
lawfully continue to maintain any LIBOR Advances to the end of the applicable
Interest Periods, all of the affected Advances shall be automatically converted
to Prime Rate Advances as of the date of such Bank’s notice, and upon such
conversion the Borrower shall indemnify such Bank in accordance with Section
2.27.

Section 2.26           Capital Adequacy.  In the event that any Regulatory Change
reduces or shall have the effect of reducing the rate of return on any Bank’s
capital or the capital of its parent corporation (by an amount such Bank deems
material) as a consequence of its Revolving Commitment and/or Advances and/or
any Letters of Credit or any Bank’s obligations to make Advances to cover
Letters of Credit to a level below that which such Bank or its parent
corporation could have achieved but for such Regulatory Change (taking into
account such Bank’s policies and the policies of its parent corporation with
respect to capital adequacy), then the Borrower shall, within 30 days after
written notice and demand from such Bank (with a copy to the Agent), pay to
such Bank additional amounts sufficient to compensate such Bank or its parent
corporation for such reduction.  If any
Bank fails to give such notice within 45 days after it obtains knowledge of
such an event, such Bank shall, with respect to compensation payable pursuant
to this Section, only be entitled to payment under this Section for diminished
returns as a result of such reduction for the period from and after the date 45
days prior to the date that such

 23
 

 

Bank does give such
notice.  Any determination by such Bank
under this Section and any certificate as to the amount of such reduction given
to the Borrower by such Bank shall be final, conclusive and binding for all
purposes, absent error.  Each of the
Banks agrees that, as promptly as practicable after becoming aware of the
occurrence of an event or the existence of a condition that would entitle such
Bank to receive payments under this Section 2.26, it will, to the extent not
inconsistent with the internal policies of such Bank and any applicable legal
or regulatory restrictions, take reasonable measures to reduce any additional
amounts that would otherwise be payable to such Bank pursuant to this Section 2.26.

Section 2.27           Funding Losses; LIBOR Advances.  The Borrower shall compensate each Bank, upon
its written request, for all losses, expenses and liabilities (including any
interest paid by such Bank to lenders of funds borrowed by it to make or carry
LIBOR Advances to the extent not recovered by such Bank in connection with the
re-employment of such funds and including loss of anticipated profits) which
such Bank may sustain: (i) if for any reason, other than a default by such
Bank, a funding of a LIBOR Advance does not occur on the date specified
therefor in the Borrower’s request or notice as to such Advance under Section
2.2 or 2.4, or (ii) if, for whatever reason (including, but not limited to,
acceleration of the maturity of Advances following an Event of Default), any
repayment of a LIBOR Advance, or a conversion pursuant to Section 2.4 or
Section 2.25, occurs on any day other than the last day of the Interest Period
applicable thereto.  A Bank’s request for
compensation shall set forth the basis for the amount requested and shall be
final, conclusive and binding, absent error.

Section 2.28           Discretion of Banks as to Manner
of Funding.  Each Bank shall be
entitled to fund and maintain its funding of LIBOR Advances in any manner it
may elect, it being understood, however, that for the purposes of this
Agreement all determinations hereunder (including, but not limited to,
determinations under Section 2.27) shall be made as if such Bank had actually
funded and maintained each LIBOR Advances during the Interest Period for such
Advance through the purchase of deposits having a maturity corresponding to the
last day of the Interest Period and bearing an interest rate equal to LIBOR for
such Interest Period.

Section 2.29           Accordion Feature.   The Borrower may, from time to time,
increase the Aggregate Revolving Commitment Amount hereunder, by giving notice
to the Agent, specifying the dollar amount of the increase (which shall be in
an integral multiple of $5,000,000, and which shall not result in the Aggregate
Revolving Commitment Amount hereunder exceeding $100,000,000); provided,
however, that an increase in the Aggregate Revolving Commitment Amount
hereunder may only be made at a time when no Default or Event of Default shall
have occurred and be continuing.   The
Borrower may increase the Aggregate Revolving Commitment Amount by either
increasing a Revolving Commitment Amount with an existing Bank or obtaining a
Revolving Commitment from a new financial institution, the selection of which
shall require the consent of the Agent, not to be unreasonably withheld.   The Borrower, the Agent and each Bank or
other financial institution that is increasing its Revolving Commitment Amount
or extending a new Revolving Commitment shall enter into an amendment to this
Agreement setting forth the amounts of the Revolving Commitment Amount, as so
increased, providing that any new financial institution extending a new
Revolving Commitment shall be a Bank for all purposes under this
Agreement.  No such amendment shall
require the approval or consent of any Bank whose Revolving Commitment Amount
is not being increased and no Bank shall be required to increase its Revolving
Commitment Amount unless it shall so agree in writing.  Upon

 24
 

 

the execution and
delivery of such amendment as provided above, this Agreement shall be deemed to
be amended accordingly and the Agent shall adjust the funded amount of the
Revolving Loans of the Banks so that each Bank (including the Banks with new or
increased Revolving Commitment) shall hold their respective Revolving
Percentages (as amended by such amendment) of the Revolving Loans outstanding
and the unfunded Revolving Commitment Amount (and each Bank shall so fund any
increased amount of Advances), and shall participate in the Letter of Credit obligations
and have obligations to participate in Unrefunded Swing Line Loans in their
respective Revolving Percentages (as amended by such amendment).

Section 2.30           Late Funding by Banks.  If the Agent has made a Revolving Loan to the
Borrower on behalf of a Bank but has not received the amount of such Revolving
Loan from such Bank by the time herein required, or if a Bank is required to
fund a Swing Line Participation Amount under Section 2.5(b) or a risk
participation in an Unpaid Drawing under Section 2.16 and fails to so fund by
the time herein required, such Bank shall pay interest to the Agent on the
amount so advanced at the overnight Federal Funds Rate (or if such funds are
received by the Agent more than five (5) Business Days after such required funding
interest at the rate then applicable to Revolving Loans) from the date of such
funding requirement to the date funds are received by the Agent from such Bank,
such interest to be payable with such remittance from such Bank of the amount
of such funding.  If such Bank pays the
Agent the amount herein required with interest as provided above, such Bank
shall be entitled to the interest payable by the Borrower with respect to the
Revolving Loan, Swing Line Loan or Letter of Credit in question accruing during
the period from the relevant funding by the Agent through funding by such Bank.

ARTICLE
3

CONDITIONS PRECEDENT

Section 3.1             Conditions of Initial
Transaction.  The making of the
initial Loans and the issuance of the initial Letter of Credit shall be subject
to the prior or simultaneous fulfillment of the following conditions:

3.1(a)      Documents.  The Agent shall have received the following
in sufficient counterparts (except for the Revolving Notes and the Swing Line
Note) for each Bank:

(i)  The Notes payable to each Bank (including the
Swing Line Bank) executed by a duly authorized officer (or officers) of the
Borrower.

(ii)  A certificate or certificates of the
Secretary or an Assistant Secretary of the Borrower, attesting to and attaching
(i) a copy of the corporate resolution of the Borrower authorizing the
execution, delivery and performance of the Loan Documents, (ii) an incumbency
certificate showing the names and titles, and bearing the signatures of, the
officers of the Borrower authorized to execute the Loan Documents, (iii) a copy
of the Articles or Certificate of Incorporation of the Borrower with all
amendments thereto, and (iv) a copy of the Bylaws of the Borrower with all
amendments thereto.

 25
 

 

(iii) A
Certificate of Good Standing for the Borrower in the jurisdiction of its
incorporation, certified by the appropriate governmental officials.

(iv) An opinion of
counsel to the Borrower, addressed to the Agent and the Banks, in substantially
the form of Exhibit D.

(v) The initial Borrowing
Base Certificate required under Section 5.1.

(vi) A copy of each of
the executed Senior Unsecured Note Documents, certified as true and correct
copies by an officer of the Borrower.

3.1(b)      Fees and Expenses.  The Agent shall have received for itself and
for the account of the Banks all fees and other amounts due and payable by the
Borrower on or prior to the Closing Date, including the reasonable fees and
expenses of counsel to the Agent payable pursuant to Section 9.2, and the Agent
shall have received the payments set forth in the Agent’s Fee Letter.

Section 3.2             Conditions Precedent to all
Loans and Letters of Credit.  The
obligation of the Banks to make any Loan hereunder (including the initial
Loans) and of the Agent to issue each Letter of Credit (including the initial
Letter of Credit) shall be subject to the fulfillment of the following
conditions:

3.2(a)      Representations and Warranties.  The representations and warranties contained
in Article 4 shall be true and correct on and as of the Closing Date and on the
date of each Loan or the date of issuance of each Letter of Credit, with the
same force and effect as if made on such date.

3.2(b)      No Default.  No Default or Event of Default shall have
occurred and be continuing on the Closing Date and on the date of each Loan or
the date of issuance of each Letter of Credit or will exist after giving effect
to the Loans made on such date or the Letter of Credit so issued.

3.2(c)      Notices and Requests.  The Agent shall have received the Borrower’s
request for such Loan as required under Section 2.2 or its application for such
Letters of Credit specified under Section 2.10.

ARTICLE
4

REPRESENTATIONS AND WARRANTIES

To induce the Banks to
enter into this Agreement and to make Loans hereunder and to induce the Agent
to issue Letters of Credit, the Borrower represents and warrants to the Banks:

Section 4.1             Organization, Standing, Etc.  The Borrower is a corporation duly
incorporated and validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to carry on its business as now conducted, to enter into this
Agreement and to issue the Notes and to perform its obligations under the Loan
Documents.  Each Subsidiary is a
corporation or a limited liability company duly

 26
 

 

incorporated or organized
and validly existing and in good standing under the laws of the jurisdiction of
its incorporation or organization and has all requisite power and authority to
carry on its business as now conducted. 
Each of the Borrower and the Subsidiaries (a) holds all certificates of
authority, licenses and permits necessary to carry on its business as presently
conducted in each jurisdiction in which it is carrying on such business, except
where the failure to hold such certificates, licenses or permits would not have
a material adverse effect on the business, operations, property, assets or
condition, financial or otherwise, of the Borrower and the Subsidiaries taken
as a whole, and (b) is duly qualified and in good standing or good status  as a foreign corporation or limited liability
company in each jurisdiction in which the character of the properties owned,
leased or operated by it or the business conducted by it makes such qualification
necessary and the failure so to qualify would permanently preclude the Borrower
or such Subsidiary from enforcing its rights with respect to any assets or
expose the Borrower or such Subsidiary to any liability, which in either case
would be material to the Borrower and the Subsidiaries taken as a whole.

Section 4.2             Authorization and Validity.  The execution, delivery and performance by
the Borrower of the Loan Documents have been duly authorized by all necessary
corporate action by the Borrower, and this Agreement constitutes, and the Notes
and other Loan Documents when executed will constitute, the legal, valid and
binding obligations of the Borrower, enforceable against the Borrower in
accordance with their respective terms, subject to limitations as to
enforceability which might result from bankruptcy, insolvency, moratorium and
other similar laws affecting creditors’ rights generally and subject to
limitations on the availability of equitable remedies.

Section 4.3             No Conflict; No Default.  The execution, delivery and performance by
the Borrower of the Loan Documents will not (a) violate any provision of any
law, statute, rule or regulation or any order, writ, judgment, injunction,
decree, determination or award of any court, governmental agency or arbitrator
presently in effect having applicability to the Borrower, (b) violate or
contravene any provision of the Certificate of Incorporation or bylaws of the
Borrower, or (c) result in a breach of or constitute a default under any
indenture, loan or credit agreement or any other agreement, lease or instrument
to which the Borrower is a party or by which it or any of its properties may be
bound in which the consequences of such default or violation could have a
material adverse effect on the business, operations, properties, assets or
condition (financial or otherwise) of the Borrower and its Subsidiaries taken
as a whole, or result in the creation of any Lien thereunder.  Neither the Borrower nor any Subsidiary is in
default under or in violation of any such law, statute, rule or regulation,
order, writ, judgment, injunction, decree, determination or award or any such
indenture, loan or credit agreement or other agreement, lease or instrument in
any case in which the consequences of such default or violation could have a
material adverse effect on the business, operations, properties, assets or
condition (financial or otherwise) of the Borrower and its Subsidiaries taken
as a whole.

Section 4.4             Government Consent.  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 the Borrower or its Subsidiaries 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.

 27
 

 

Section 4.5             Financial Statements and
Condition.  The Borrower’s audited
consolidated financial statements as at December 31, 2005 and its unaudited
financial statements as at June 30, 2006, as heretofore furnished to the Banks,
have been prepared in accordance with GAAP on a consistent basis (except for
the absence of footnotes and subject to year-end audit adjustments as to the
interim statements) and fairly present the financial condition of the Borrower
and its Subsidiaries as at such dates and the results of their operations and
changes in financial position for the respective periods then ended.  As of the dates of such financial statements,
neither the Borrower nor any Subsidiary had any material obligation, contingent
liability, liability for taxes or long-term lease obligation which is not
reflected in such financial statements or in the notes thereto.  Since December 31, 2005, there has been no
material adverse change in the business, operations, property, assets or
condition, financial or otherwise, of the Borrower and its Subsidiaries taken
as a whole.

Section 4.6             Litigation.  There are no actions, suits or proceedings
pending or, to the knowledge of the Borrower, threatened against or affecting
the Borrower or any Subsidiary or any of their properties before any court or
arbitrator, or any governmental department, board, agency or other
instrumentality which, if determined adversely to the Borrower or such
Subsidiary, could reasonably be expected to have a material adverse effect on
the business, operations, property or condition (financial or otherwise) of the
Borrower and the Subsidiaries taken as a whole or on the ability of the
Borrower or any Subsidiary to perform its obligations under the Loan Documents.

Section 4.7             Environmental, Health and Safety
Laws.  There does not exist any
violation by the Borrower or any Subsidiary of any applicable federal, state or
local law, rule or regulation or order of any government, governmental
department, board, agency or other instrumentality relating to environmental,
pollution, health or safety matters which could reasonably be expected to
impose a material liability on the Borrower or a Subsidiary or to require a
material expenditure by the Borrower or such Subsidiary to cure.  Neither the Borrower nor any Subsidiary has
received any notice to the effect that any part of its operations or properties
is not in material compliance with any such law, rule, regulation or order or
notice that it or its property is the subject of any governmental investigation
evaluating whether any remedial action is needed to respond to any release of
any toxic or hazardous waste or substance into the environment, which
non-compliance or remedial action could reasonably be expected to have a
material adverse effect on the business, operations, properties, assets or
condition (financial or otherwise) of the Borrower and its Subsidiaries taken
as a whole.  The Borrower does not have
knowledge that it or its property or any Subsidiary or the property of any
Subsidiary will become subject to environmental laws or regulations during the
term of this Agreement, compliance with which could reasonably be expected to
require Capital Expenditures which would have a material adverse effect on the
business, operations, properties, assets or condition (financial or otherwise)
of the Borrower and its Subsidiaries taken as a whole.

Section 4.8             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

 28
 

 

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 Banks) of such Plan’s accumulated benefit
obligations did not exceed the fair market value of such Plan’s assets by more
than $50,000.

Section 4.9             Federal Reserve Regulations.  Neither the Borrower nor any Subsidiary is
engaged principally or as one of its important activities in the business of
extending credit for the purpose of purchasing or carrying margin stock (as
defined in Regulation U of the Board). 
The value of all margin stock owned by the Borrower does not constitute
more than 25% of the value of the assets of the Borrower.

Section 4.10           Title to Property; Leases; Liens;
Subordination.  Each of the Borrower
and the Subsidiaries has (a) good and marketable title to its real properties
and (b) good and sufficient title to, or valid, subsisting and enforceable
leasehold interest in, its other material properties, including all real
properties, other properties and assets, referred to as owned by the Borrower
and its Subsidiaries in the most recent financial statement referred to in
Section 4.5 (other than property disposed of since the date of such financial
statements except as allowed under Section 6.2).  None of such properties is subject to a Lien,
except as allowed under Section 6.14. 
The Borrower has not subordinated any of its rights under any obligation
owing to it to the rights of any other person.

Section 4.11           Taxes.  Each of the Borrower and the Subsidiaries has
filed all federal, state and local tax returns required to be filed and has
paid or made provision 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 and all other taxes, fees and other charges imposed on it or any of
its property by any governmental authority (other than taxes, fees or charges
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, fees or charges.  The charges, accruals and reserves on the
books of the Borrower in respect of taxes and other governmental charges are
adequate and the Borrower knows of no proposed material tax assessment against
it or any Subsidiary or any basis therefor.

Section 4.12           Trademarks, Patents.  Each of the Borrower and 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.

Section 4.13           Burdensome Restrictions.  Neither the Borrower nor any Subsidiary is a
party to or otherwise bound by any indenture, loan or credit agreement or any
lease or other agreement or instrument or subject to any charter, corporate or
partnership restriction which would foreseeably have a material adverse effect
on the business, properties, assets, operations or condition (financial or
otherwise) of the Borrower or such Subsidiary or on the ability of the Borrower
or any Subsidiary to carry out its obligations under any Loan Document.

 29
 

 

Section 4.14           Force Majeure.  Since the date of the most recent financial
statement referred to in Section 4.5, the business, properties and other assets
of the Borrower and the Subsidiaries have not been materially and adversely
affected in any way as the result of any fire or other casualty, strike,
lockout, or other labor trouble, embargo, sabotage, confiscation, condemnation,
riot, civil disturbance, activity of armed forces or act of God.

Section 4.15           Investment Company Act.  Neither the Borrower 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.

Section 4.16           Retirement Benefits.  Except as required under Section 4980B of the
Code, Section 601 of ERISA or applicable state law, neither the Borrower nor
any Subsidiary is obligated to provide post-retirement medical or insurance
benefits with respect to employees or former employees in an aggregate amount
exceeding $50,000.

Section 4.17           Subsidiaries.  The Borrower’s Subsidiaries are listed on Schedule
4.17.

ARTICLE
5

AFFIRMATIVE COVENANTS

Until any obligation of
the Banks hereunder to make the Loans and of the Agent to issue Letters of
Credit shall have expired or been terminated and the Notes and all of the other
Obligations have been paid in full and all outstanding Letters of Credit shall
have expired or the liability of the Agent thereon shall have otherwise been
discharged, unless the Required Banks shall otherwise consent in writing:

Section 5.1             Financial Statements and Reports.  The Borrower will furnish to the Banks:

5.1(a)      As soon as available and in any event
within 90 days after the end of each fiscal year of the Borrower, the
consolidated financial statements of the Borrower and the Subsidiaries
consisting of at least statements of income, cash flow and changes in
stockholders’ equity, and a consolidated 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 an independent
certified public accountants of recognized national standing selected by the
Borrower and acceptable to the Agent, together with any management letters,
management reports or other supplementary comments or reports to the Borrower
or its board of directors furnished by such accountants, provided, however,
that to the extent that the foregoing information and certifications are
included in the Borrower’s timely-filed form 10K filed with the Securities and
Exchange Commission (“SEC”) and available to the Bank on the SEC’s internet
site, the delivery requirement of this paragraph shall be deemed satisfied.

5.1(b)      As soon as available and in any event
within 45 days after the end of each fiscal quarter, unaudited consolidated
statements of income, cash flow and changes in stockholders’ equity for the
Borrower and the Subsidiaries for such quarter and for the period from the
beginning of such fiscal year to the end of such quarter, and a

 30
 

 

consolidated balance
sheet of the Borrower as at the end of such quarter, setting forth in
comparative form figures for the corresponding period for the preceding fiscal
year, accompanied by a certificate signed by the chief financial officer of the
Borrower stating that such financial statements present fairly the financial
condition of the Borrower and the Subsidiaries and that the same have been
prepared in accordance with GAAP (except for the absence of footnotes and
subject to year-end audit adjustments as to the interim statements), provided,
however, that to the extent that the foregoing information and
certifications are included in the Borrower’s timely-filed form 10Q filed with
the SEC and available to the Bank on the SEC’s internet site, the delivery
requirement of this paragraph shall be deemed satisfied.

5.1(c)      As soon as practicable and in any event
within (i) 45 days after the end of each of the first three fiscal quarters of
each fiscal year and (ii) 90 days after the end of the last fiscal quarter of
each fiscal year, the following: (1) a Compliance Certificate demonstrating in
reasonable detail compliance (or noncompliance, as the case may be) with the
financial covenants of this Agreement as at the end of such quarter and stating
that as at the end of such quarter there did not exist any Default or Event of
Default or, if such Default or Event of Default existed, specifying the nature
and period of existence thereof and what action the Borrower proposes to take
with respect thereto, and (2) the internal financial analysis prepared by the
Borrower, including information reasonably satisfactory in scope to the
Required Banks.

5.1(d)      As soon as practicable and in any event
within 25 days after the end of each month, a Borrowing Base Certificate signed
by either the chief financial officer or chief operating officer of the
Borrower, reporting the Borrowing Base as of the last day of the month just
ended.

5.1(e)      As soon as practicable and in any event
within 90 days after the beginning of each fiscal year of the Borrower,
statements of forecasted consolidated income for the Borrower and the
Subsidiaries for each fiscal quarter in such fiscal year and a forecasted
consolidated balance sheet of the Borrower and the Subsidiaries, together with
supporting assumptions, as at the end of such fiscal year, all in reasonable
detail and reasonably satisfactory in scope to the Required Banks.

5.1(f)       Immediately upon any officer of the
Borrower becoming aware of any Default or Event of Default, a notice describing
the nature thereof and what action the Borrower proposes to take with respect
thereto.

5.1(g)      Immediately upon any officer of the
Borrower becoming aware of the occurrence, with respect to any Plan, of any
Reportable Event or any Prohibited Transaction which could reasonably be
expected to result in a material excise tax or civil penalty payable directly
or indirectly by the Borrower or otherwise have a material adverse effect, a
notice specifying the nature thereof and what action the Borrower proposes 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.

 31

 

5.1(h)      From time to time, such other information
regarding the business, operation and financial condition of the Borrower and
the Subsidiaries as any Bank may reasonably request.

Section 5.2             Existence.  The Borrower will maintain, and cause each
Subsidiary to maintain, its existence in good standing under the laws of its
jurisdiction of incorporation or organization and its qualification to transact
business in each jurisdiction where failure so to qualify would permanently
preclude the Borrower or such Subsidiary from enforcing its rights with respect
to any material asset or would expose the Borrower or such Subsidiary to any
material liability; provided, however, that nothing herein shall
prohibit the merger or liquidation of any Subsidiary allowed under Section 6.1.

Section 5.3             Insurance.  The Borrower shall maintain, and shall cause
each Subsidiary to maintain, with financially sound and reputable insurance
companies such insurance as may be required by law and such other insurance in
such amounts and against such hazards as is customary in the case of reputable
firms engaged in the same or similar business and similarly situated.  Such insurance policies may be subject to
deductibles and self-insurance as is customary in the case of reputable firms
engaged in the same or similar business and similarly situated.

Section 5.4             Payment of Taxes and Claims.  The Borrower shall file, and cause each
Subsidiary to file, all tax returns and reports which are required by law to be
filed by it and will pay, and cause each Subsidiary to pay, before they become
delinquent, all taxes, assessments and governmental charges and levies imposed
upon it or its property and all claims or demands of any kind (including but
not limited to those of suppliers, mechanics, carriers, warehouses, landlords
and other like Persons) which, if unpaid, might result in the creation of a
Lien upon its property; provided that the foregoing items need not be paid if
they are being contested in good faith by appropriate proceedings, and as long as
the Borrower’s or such Subsidiary’s title to its property is not materially
adversely affected, its use of such property in the ordinary course of its
business is not materially interfered with and adequate reserves with respect
thereto have been set aside on the Borrower’s or such Subsidiary’s books in
accordance with GAAP.

Section 5.5             Inspection.  The Borrower shall permit any Person
designated by the Agent or any Banks to visit and inspect any of the
properties, books and financial records of the Borrower and the Subsidiaries,
to examine and to make copies of the books of accounts and other financial
records of the Borrower and the Subsidiaries, and to discuss the affairs,
finances and accounts of the Borrower and the Subsidiaries with, and to be advised
as to the same by, its officers at such reasonable times and intervals as the
Agent or any such Bank may designate.  So
long as no Event of Default exists, the expenses of the Agent or any such Bank
for such visits, inspections and examinations shall be at the expense of the
Agent or any such Bank, but any such visits, inspections and examinations made
while any Event of Default is continuing shall be at the expense of the
Borrower.

Section 5.6             Maintenance of Properties.  The Borrower will maintain, and cause each
Subsidiary to maintain its properties used or useful in the conduct of its
business in good condition, repair and working order (ordinary wear and tear
excepted), and supplied with all necessary equipment, and make all necessary
repairs, renewals, replacements, betterments and

 32
 

 

improvements thereto, all
as may be necessary so that the business carried on in connection therewith may
be properly and advantageously conducted at all times.

Section 5.7             Books and Records.  The Borrower will keep, and will cause each
Subsidiary to keep, adequate and proper records and books of account in which
full and correct entries will be made of its dealings, business and affairs.

Section 5.8             Compliance.  The Borrower will comply, and will cause each
Subsidiary to comply, in all material respects with all laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to which
it may be subject; provided, however, that failure so to comply
shall not be a breach of this covenant if such failure does not have, or is not
reasonably expected to have, a materially adverse effect on the properties,
business, prospects or condition (financial or otherwise) of the Borrower or
such Subsidiary taken as a whole and the Borrower or such Subsidiary is acting
in good faith and with reasonable dispatch to cure such noncompliance.

Section 5.9             Notice of Litigation.  The Borrower will give prompt written notice
to the Agent of the commencement of any action, suit or proceeding before any
court or arbitrator or any governmental department, board, agency or other
instrumentality affecting the Borrower or any Subsidiary or any property of the
Borrower or a Subsidiary or to which the Borrower or a Subsidiary is a party in
which an adverse determination or result could reasonably be expected to have a
material adverse effect on the business, operations, property or condition
(financial or otherwise) of the Borrower and the Subsidiaries taken as a whole
or on the ability of the Borrower or any Subsidiary to perform its obligations
under this Agreement and the other Loan Documents, stating the nature and
status of such action, suit or proceeding.

Section 5.10           ERISA.  The Borrower will maintain, and cause each
Subsidiary 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 will not
and not permit any of the ERISA Affiliates to (a) engage in any transaction in
connection with which the Borrower or any of the ERISA Affiliates would be
subject to either a civil penalty assessed pursuant to Section 502(1) 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, the 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 the 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.

Section 5.11           Environmental Matters; Reporting.  The Borrower will observe and comply with,
and cause each Subsidiary to observe and comply with, all laws, rules,
regulations and orders of any government or government agency relating to
health, safety, pollution, hazardous materials or other environmental matters
to the extent non-compliance could result in a material liability or otherwise
have a material adverse effect on the Borrower and the Subsidiaries taken as a
whole.  The Borrower will give the Agent
prompt written notice of any violation as to any environmental matter by the
Borrower or any Subsidiary and of the

 33
 

 

commencement of any
judicial or administrative proceeding relating to health, safety or
environmental matters (a) in which an adverse determination or result could
reasonably be expected to result in the revocation of or have a material
adverse effect on any operating permits, air emission permits, water discharge
permits, hazardous waste permits or other permits held by the Borrower or any
Subsidiary which are material to the operations of the Borrower or such
Subsidiary, or (b) which will or threatens to impose a material liability on
the Borrower or such Subsidiary to any Person or which will require a material
expenditure by the Borrower or such Subsidiary to cure any alleged problem or
violation.

Section 5.12           Operating Accounts.  The Borrower shall maintain all of its and
its Subsidiaries’ material operating accounts (e.g., checking accounts, savings
and investment accounts, cash management accounts) with U.S. Bank or its
affiliates.

ARTICLE
6

NEGATIVE COVENANTS

Until any obligation of
the Banks hereunder to make the Loans and of the Agent to issue Letters of
Credit shall have expired or been terminated and the Notes and all of the other
Obligations have been paid in full and all outstanding Letters of Credit shall
have expired or the liability of the Agent thereon shall have otherwise been
discharged, unless the Required Banks shall otherwise consent in writing:

Section 6.1             Merger.  The Borrower will not merge or consolidate or
enter into any analogous reorganization or transaction with any Person or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution) or permit any Subsidiary to do any of the foregoing; provided,
however, any Subsidiary may be merged with or liquidated into the
Borrower or any wholly-owned Subsidiary if the Borrower or such wholly-owned
Subsidiary is the surviving entity.

Section 6.2             Disposition of Assets.  The Borrower will not, and will not permit
any Subsidiary to, directly or indirectly, sell, assign, lease, convey,
transfer or otherwise dispose of (whether in one transaction or a series of
transactions) any property (including accounts and notes receivable, with or
without recourse) or enter into any agreement to do any of the foregoing,
except:

6.2(a)      dispositions of inventory, or used,
worn-out or surplus equipment, all in the ordinary course of business;

6.2(b)      the sale of equipment to the extent that
such equipment is exchanged for credit against the purchase price of similar
replacement equipment, or the proceeds of such sale are applied with reasonable
promptness to the purchase price of such replacement equipment; and

6.2(c)      other dispositions of property during each
fiscal year of the Borrower which, in the aggregate, either (i) did not
contribute more than 10% of the consolidated net income of the Borrower and its
Subsidiaries (before extraordinary gains or losses) for any of the three most
recently ended fiscal years, or (ii) did not constitute more than 5%

 34
 

 

of the total consolidated
assets of the Company and its Subsidiaries as shown on its balance sheet as at
the end of its most recent prior fiscal year.

Section 6.3             Plans.  The Borrower will not permit, and will not
allow any Subsidiary to 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 the
Borrower or any Subsidiary; and the Borrower will not 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
Banks) of such Plan’s projected benefit obligations to exceed the fair market
value of such Plans assets by more than $50,000.

Section 6.4             Change in Nature of Business.  The Borrower will not, and will not permit
any Subsidiary to, make any material change in the nature of the business of
the Borrower or such Subsidiary, as carried on at the date hereof, or to enter
into any new lines of business other than those engaged in at the date hereof.

Section 6.5             Subsidiaries.  After the date of this Agreement, the
Borrower will not, and will not permit any Subsidiary to, form or acquire any
Person which would thereby become a Subsidiary.

Section 6.6             Negative Pledges; Subsidiary
Restrictions.  Except for the Senior
Unsecured Note Documents, the Borrower will not, and will not permit any
Subsidiary to, enter into any agreement, bond, note or other instrument with or
for the benefit of any Person other than the Banks which would (i) prohibit the
Borrower or such Subsidiary from granting, or otherwise limit the ability of
the Borrower or such Subsidiary to grant, to the Banks any Lien on any assets
or properties of the Borrower or such Subsidiary, or (ii) require the Borrower
or such Subsidiary to grant a Lien to any other Person if the Borrower or such
Subsidiary grants any Lien to the Banks. 
Except for the Senior Unsecured Note Documents and this Agreement, the
Borrower will not permit any Subsidiary to place or allow any restriction,
directly or indirectly, on the ability of such Subsidiary to (a) pay dividends
or any distributions on or with respect to such Subsidiary’s capital stock or
(b) make loans or other cash payments to the Borrower.

Notwithstanding the
above, in the event that the Borrower or any Subsidiary creates or assumes any
Lien upon any of its property or assets, whether now owned or hereafter
acquired, other than Liens permitted by Section 6.14, the Borrower will make or
cause to be made effective provisions whereby the Obligations hereunder will be
secured by such Lien equally and ratably with any and all other Indebtedness
thereby secured so long as such other Indebtedness shall be so secured.

Section 6.7             Restricted Payments.  The Borrower will not make any Restricted
Payments (a) during any fiscal year of the Borrower, exceeding 25% of the
Borrower’s total consolidated net income as shown on its audited income
statement for its most recent prior fiscal year, or (b) if any Default or Event
of Default shall have occurred and continued hereunder.

Section 6.8             Transactions with Affiliates.  The Borrower will not, and will not permit
any Subsidiary to, enter into any transaction with any Affiliate of the
Borrower, except upon fair

 35
 

 

and reasonable terms no
less favorable to the Borrower or such Subsidiary than would obtain in a
comparable arm’s-length transaction with a Person not an Affiliate.

Section 6.9             Accounting Changes and
Management Changes.  The Borrower
will not, and will not permit any Subsidiary to, make any significant change in
accounting treatment or reporting practices, except as required by GAAP, or
change its fiscal year or the fiscal year of any Subsidiary.  The Borrower will provide to the Agent
written notice of any change of management of the Borrower.

Section 6.10           Capital Expenditures.  The Borrower will not, and will not permit
any Subsidiary, to, make Capital Expenditures for non-revenue generating
capital assets in an amount exceeding $5,000,000 on a consolidated basis in any
fiscal year.

Section 6.11           Subordinated Debt.  The Borrower will not, and will not permit
any Subsidiary to (a) make any scheduled payment of the principal of or
interest on any Subordinated Debt which would be prohibited by the terms of
such Subordinated Debt and any related subordination agreement; (b) directly or
indirectly make any prepayment on or purchase, redeem or defease any
Subordinated Debt or offer to do so (whether such prepayment, purchase or
redemption, or offer with respect thereto, is voluntary or mandatory); (c)
amend or cancel the subordination provisions applicable to any Subordinated
Debt; (d) take or omit to take any action if as a result of such action or
omission the subordination of such Subordinated Debt, or any part thereof, to
the Obligations might be terminated, impaired or adversely affected; or (e)
omit to give the Agent prompt notice of any notice received from any holder of
Subordinated Debt, or any trustee therefor, or of any default under any
agreement or instrument relating to any Subordinated Debt by reason whereof
such Subordinated Debt might become or be declared to be due or payable.

Section 6.12           Investments.  The Borrower will not, and will not permit
any Subsidiary to, acquire for value, make, have or hold any Investments,
except:

6.12(a)     Investments existing on the date of this
Agreement.

6.12(b)     Reasonable travel advances to management
personnel, employees and sales agents and representatives in the ordinary
course of business.

6.12(c)     Investments in readily marketable direct
obligations issued or guaranteed by the United States or any agency thereof and
supported by the full faith and credit of the United States.

6.12(d)     Certificates of deposit or bankers’
acceptances issued by any commercial bank organized under the laws of the
United States or any State thereof which has (i) combined capital and surplus
of at least $100,000,000, and (ii) a credit rating with respect to its
unsecured indebtedness from a nationally recognized rating service that is satisfactory
to the Agent.

6.12(e)     Commercial paper given the highest rating
by a nationally recognized rating service.

 36
 

 

6.12(f)      Repurchase agreements relating to
securities issued or guaranteed as to principal and interest by the United
States of America.

6.12(g)     Other readily marketable Investments in
debt securities which are reasonably acceptable to the Required Banks.

6.12(h)     Notes, chattel paper or other forms of
seller-financed installment sales of tractors and trailers in the ordinary
course of business and permitted by Section 6.2(c) which in the aggregate does
not exceed $3,000,000 at any time (valued at the outstanding principal amount
plus accrued interest as of the date of any determination).

6.12(i)      Any other Investment, including
acquisitions of real estate and equipment not in the ordinary course of
business, if the aggregate consideration therefor does not exceed $100,000.

6.12(j)      Investments in MW Logistics, LLC, in the
form of revolving debt or equity interests, not to exceed, in the aggregate,
$3,000,000.

Any Investments under clauses (c), (d), (e) or (f)
above must mature within one year of the acquisition thereof by the Borrower or
a Subsidiary.

Section 6.13           Indebtedness.  The Borrower will not, and will not permit
any Subsidiary to, incur, create, issue, assume or suffer to exist any
Indebtedness, except:

6.13(a)     The Obligations.

6.13(b)     current liabilities, other than for
borrowed money, incurred in the ordinary course of business.

6.13(c)     Indebtedness disclosed on Schedule 6.13 hereto,
but not including any extension or refinancing thereof.

6.13(d)     Without duplication of Indebtedness under
Section 6.13(c), Indebtedness secured by Liens permitted by Section 6.14(c)
hereof.

6.13(e)     
Indebtedness owed by the Borrower to any Affiliate that arises in the
ordinary course of the Borrower’s business.

Section 6.14           Liens.  The Borrower will not, and will not permit
any Subsidiary to, create, incur, assume or suffer to exist any Lien, or enter
into, or make any commitment to enter into, any arrangement for the acquisition
of any property through conditional sale, lease-purchase or other title
retention agreements, with respect to any property now owned or hereafter
acquired by the Borrower or a Subsidiary, except:

6.14(a)     Any Liens which may hereafter be granted to
the Agent and the Banks to secure the Obligations.

 37
 

 

6.14(b)     Liens existing on the date of this
Agreement and disclosed on Schedule 6.14 hereto.

6.14(c)     Liens securing Indebtedness which, at the
time of determination, does not exceed an amount equal to (i) 15% of
consolidated net worth of the Borrower and its Subsidiaries, less (iii) the sum
of (1) the Indebtedness of the Borrower which is secured by a Lien and (2) the
Indebtedness of any Subsidiary, excluding Indebtedness of any Subsidiary owed
to the Borrower or any wholly-owned Subsidiary of the Borrower.

6.14(d)     Deposits or pledges to secure payment of
workers’ compensation, unemployment insurance, old age pensions or other social
security obligations, in the ordinary course of business of the Borrower or a
Subsidiary.

6.14(e)     Liens for taxes, fees, assessments and
governmental charges not delinquent or to the extent that payment therefor
shall not at the time be required to be made in accordance with the provisions
of Section 5.4.

6.14(f)     Liens of carriers, warehousemen, mechanics
and materialmen, and other like Liens arising in the ordinary course of
business, for sums not due or to the extent that payment therefor shall not at
the time be required to be made in accordance with the provisions of Section
5.4.

6.14(g)     Liens incurred or deposits or pledges made
or given in connection with, or to secure payment of, indemnity, performance or
other similar bonds.

6.14(h)     Liens arising solely by virtue of any
statutory or common law provision relating to banker’s liens, rights of set-off
or similar rights and remedies as to deposit accounts or other funds maintained
with a creditor depository institution; provided that (i) such deposit account
is not a dedicated cash collateral account and is not subject to restriction
against access by the Borrower or a Subsidiary in excess of those set forth by
regulations promulgated by the Board, and (ii) such deposit account is not
intended by the Borrower or any Subsidiary to provide collateral to the
depository institution.

6.14(i)      Encumbrances in the nature of zoning
restrictions, easements and rights or restrictions of record on the use of real
property and landlord’s Liens under leases on the premises rented, which do not
materially detract from the value of such property or impair the use thereof in
the business of the Borrower or a Subsidiary.

6.14(j)      Purported Liens evidenced by the filing of
precautionary Uniform Commercial Code financing statements relating solely to
operating leases of personal property entered into by the Borrower in the
ordinary course of business.

Section 6.15           Contingent Liabilities.  The Borrower will not, and will not permit
any Subsidiary to, be or become liable on any Contingent Obligations, except
Contingent Obligations existing on the date of this Agreement and described on Schedule
6.15, or which, if deemed to be Indebtedness, would not cause a Default or
Event of Default under any other covenant contained in this Article 6.

 38
 

 

Section 6.16           Fixed Charge Coverage Ratio.  The Borrower will not permit the Fixed Charge
Coverage Ratio, as of the last day of any fiscal quarter, for the four
consecutive fiscal quarters ending on that date to be less than 1.75 to 1.00.

Section 6.17           Cash Flow Leverage Ratio.  The Borrower will not permit the Cash Flow
Leverage Ratio, as of the last day of any fiscal quarter for the four
consecutive fiscal quarters ending on that date to be more than 2.50 to 1.00.

Section 6.18           Loan Proceeds.  The Borrower will not, and will not permit
any Subsidiary to, use any part of the proceeds of any Loan or Advances
directly or indirectly, and whether immediately, incidentally or ultimately,
(a) to purchase or carry margin stock (as defined in Regulation U of the Board)
or to extend credit to others for the purpose of purchasing or carrying margin
stock or to refund Indebtedness originally incurred for such purpose or (b) for
any purpose which entails a violation of, or which is inconsistent with, the
provisions of Regulations G, U or X of the Board.

Section 6.19           Senior
Unsecured Note Documents.

6.19(a)    The Borrower will not enter into any
amendment of the Senior Unsecured Note Documents affecting any material terms
of the Notes (as defined in the Note Purchase Agreement) or covenants, and will
provide to the Agent a prior copy of any notice or confirmation given by the
Borrower to the lender(s) thereunder, and a copy of any waiver by the lender(s)
thereunder promptly upon receipt.

6.19(b)    None of such Notes shall be secured by any
assets of the Borrower or any of its Subsidiaries.

6.19(c)    The Borrower will not optionally prepay (or
purchase, defease or otherwise retire except in accordance with its terms) all
or any portion of such Notes while any of its Obligations under this Agreement
remain outstanding.

ARTICLE
7

EVENTS OF DEFAULT AND REMEDIES

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

7.1(a)      The Borrower shall fail to make when due,
whether by acceleration or otherwise, any payment of principal of or interest
on any Note or any other Obligation, required to be made to the Agent or any
Bank pursuant to this Agreement.

7.1(b)      Any representation or warranty made by or
on behalf of the Borrower, any Subsidiary or any Affiliate in this Agreement or
any other Loan Document or by or on behalf of the Borrower, any Subsidiary or
any Affiliate in any certificate, statement, report or document herewith or
hereafter furnished to any Bank or the Agent pursuant to this Agreement or any
other Loan Document shall prove to have been false or misleading in any
material respect on the date as of which the facts set forth are stated or
certified.

 39
 

 

7.1(c)      The Borrower shall fail to comply with
Sections 5.2 or 5.3 hereof or any Section of Article 6 hereof.

7.1(d)      The Borrower shall fail to comply with any
other agreement, covenant, condition, provision or term contained in this
Agreement (other than those hereinabove set forth in this Section 7.1) and such
failure to comply shall continue for 30 calendar days after whichever of the
following dates is the earliest: (i) the date the Borrower gives notice of such
failure to the Banks, (ii) the date the Borrower should have given notice of
such failure to the Banks pursuant to Section 5.1, or (iii) the date the Agent
or any Bank gives notice of such failure to the Borrower.

7.1(e)      The Borrower or any Subsidiary shall
become insolvent or shall generally not pay its debts as they mature or shall
apply for, shall consent to, or shall acquiesce in the appointment of a
custodian, trustee or receiver of the Borrower or such Subsidiary or for a
substantial part of the property thereof or, in the absence of such
application, consent or acquiescence, a custodian, trustee or receiver shall be
appointed for the Borrower or a Subsidiary or for a substantial part of the
property thereof and shall not be discharged within 60 days, or the Borrower or
any Subsidiary shall make an assignment for the benefit of creditors.

7.1(f)       Any bankruptcy, reorganization, debt arrangement
or other proceedings under any bankruptcy or insolvency law shall be instituted
by or against the Borrower or any Subsidiary, and, if instituted against the
Borrower or any Subsidiary, shall have been consented to or acquiesced in by
the Borrower or such Subsidiary, or shall remain undismissed for 60 days, or an
order for relief shall have been entered against the Borrower or such
Subsidiary.

7.1(g)      Any dissolution or liquidation proceeding
not permitted by Section 6.1 shall be instituted by or against the Borrower or
a Subsidiary, and, if instituted against the Borrower or any Subsidiary, shall
be consented to or acquiesced in by the Borrower or such Subsidiary or shall
remain for 60 days undismissed.

7.1(h)      A judgment or judgments for the payment of
money in excess of the sum of $2,000,000 in the aggregate shall be rendered
against the Borrower or a Subsidiary and either (i) the judgment creditor
executes on such judgment or (ii) such judgment remains unpaid or undischarged
for more than 60 days from the date of entry thereof or such longer period
during which execution of such judgment shall be stayed during an appeal from
such judgment.

7.1(i)       The maturity of any material Indebtedness
of the Borrower (other than Indebtedness under this Agreement) or a Subsidiary
shall be accelerated, or the Borrower or a Subsidiary shall fail to pay any
such material Indebtedness when due (after the lapse of any applicable grace
period) or, in the case of such Indebtedness payable on demand, when demanded
(after the lapse of any applicable grace period), or any event shall occur or
condition shall exist and shall continue for more than the period of grace, if
any, applicable thereto and shall have the effect of causing, or permitting the
holder of any such Indebtedness or any trustee or other Person acting on behalf
of such holder to cause,

 40
 

 

such material
Indebtedness to become due prior to its stated maturity or to realize upon any
collateral given as security therefor. 
For purposes of this Section, Indebtedness of the Borrower or a
Subsidiary shall be deemed “material” if it exceeds $7,500,000 as to any item
of Indebtedness or in the aggregate for all items of Indebtedness with respect
to which any of the events described in this Section 7.1(i) has occurred.

7.1(j)       Any execution or attachment shall be
issued whereby any substantial part of the property of the Borrower or any
Subsidiary shall be taken or attempted to be taken and the same shall not have
been vacated or stayed within 30 days after the issuance thereof.

7.1(k)      Any Change of Control shall occur.

Section 7.2             Remedies.  If (a) any Event of Default described in
Sections 7.1(e), (f) or (g) shall occur with respect to the Borrower, the
Revolving Commitments shall automatically terminate and the Notes and all other
Obligations shall automatically become immediately due and payable, and the
Borrower shall without demand pay into the Holding Account an amount equal to
the aggregate face amount of all outstanding Letters of Credit; or (b) any
other Event of Default shall occur and be continuing, then, upon receipt by the
Agent of a request in writing from the Required Banks, the Agent shall take any
of the following actions so requested: (i) declare the Revolving Commitments
terminated, whereupon the Revolving Commitments shall terminate, (ii) declare
the outstanding unpaid principal balance of the Notes, the accrued and unpaid
interest thereon and all other Obligations to be forthwith due and payable,
whereupon the Notes, all accrued and unpaid interest thereon and all such
Obligations shall immediately become due and payable, in each case without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived, anything in this Agreement or in the Notes to the
contrary notwithstanding, and (iii) demand that the Borrower pay into the
Holding Account an amount equal to the aggregate face amount of all outstanding
Letters of Credit.  Upon the occurrence
of any of the events described in clause (a) of the preceding sentence, or upon
the occurrence of any of the events described in clause (b) of the preceding
sentence when so requested by the Required Banks, the Agent may exercise all
rights and remedies under any of the Loan Documents, and enforce all rights and
remedies under any applicable law.

Section 7.3             Security Agreement in Accounts
and Setoff.  As additional security
for the payment of all of the Obligations, the Borrower grants to the Agent,
each Bank and each holder of a Note a security interest in, a lien on, and an
express contractual right to set off against, each deposit account and all
deposit account balances, cash and any other property of the Borrower now or
hereafter maintained with, or in the possession of, the Agent, such Bank or
such other holder of a Note.  Upon the occurrence
of any Event of Default, upon written direction by the Agent to such effect,
the Agent, each such Bank and each such holder of a Note may: (a) refuse to
allow withdrawals from any such deposit account; (b) apply the amount of such
deposit account balances and the other assets of the Borrower described above
to the Obligations; and (c) offset any other obligation of the Agent, such Bank
or such holder of a Note against the Obligations; all whether or not the
Obligations are then due or have been accelerated and all without any advance
or contemporaneous notice or demand of any kind to the Borrower, such notice
and demand being expressly waived.  Each
of the Agent and the Banks agrees to notify the Borrower promptly after any
such setoff and application.

 41

ARTICLE
8

THE AGENT

The following provisions
shall govern the relationship of the Agent with the Banks.

Section 8.1             Appointment and Authorization.  Each Bank appoints and authorizes the Agent
to take such action as agent on its behalf and to exercise such respective
powers under the Loan Documents as are delegated to the Agent by the terms
thereof, together with such powers as are reasonably incidental thereto.  Neither the Agent nor any of its directors,
officers or employees shall be liable for any action taken or omitted to be
taken by it under or in connection with the Loan Documents, except for its own
gross negligence or willful misconduct. 
The Agent shall act as an independent contractor in performing its obligations
as Agent hereunder and nothing herein contained shall be deemed to create any
fiduciary relationship among or between the Agent, the Borrower or the Banks.

Section 8.2             Note Holders.  The Agent may treat the payee of any Note as
the holder thereof until written notice of transfer shall have been filed with
it, signed by such payee and in form satisfactory to the Agent.

Section 8.3             Consultation With Counsel.  The Agent may consult with legal counsel
selected by it and shall not be liable for any action taken or suffered in good
faith by it in accordance with the advice of such counsel.

Section 8.4             Loan Documents.  The Agent shall not be under a duty to
examine or pass upon the validity, effectiveness, genuineness or value of any
of the Loan Documents or any other instrument or document furnished pursuant
thereto, and the Agent shall be entitled to assume that the same are valid,
effective and genuine and what they purport to be.

Section 8.5             U.S. Bank and Affiliates.  With respect to its Commitments and the Loans
made by it, U.S. Bank shall have the same rights and powers under the Loan
Documents as any other Bank and may exercise the same as though it were not the
Agent consistent with the terms thereof, and U.S. Bank and its Affiliates may
accept deposits from, lend money to and generally engage in any kind of
business with the Borrower as if it were not the Agent.

Section 8.6             Action by Agent.  Except as may otherwise be expressly stated
in this Agreement, the Agent shall be entitled to use its discretion with
respect to exercising or refraining from exercising any rights which may be
vested in it by, or with respect to taking or refraining from taking any action
or actions which it may be able to take under or in respect of, the Loan
Documents.  The Agent shall be required
to act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required Banks, and such
instructions shall be binding upon all holders of Notes; provided, however,
that the Agent shall not be required to take any action which exposes the Agent
to personal liability or which is contrary to the Loan Documents or applicable
law.  The Agent shall incur no liability
under or in respect of any of the Loan Documents by acting upon any notice,
consent, certificate,

 42
 

warranty or other paper
or instrument believed by it to be genuine or authentic or to be signed by the
proper party or parties and to be consistent with the terms of this Agreement.

Section 8.7             Credit Analysis.  Each Bank has made, and shall continue to make,
its own independent investigation or evaluation of the operations, business,
property and condition, financial and otherwise, of the Borrower in connection
with entering into this Agreement and has made its own appraisal of the
creditworthiness of the Borrower.  Except
as explicitly provided herein, the Agent has no duty or responsibility, either
initially or on a continuing basis, to provide any Bank with any credit or
other information with respect to such operations, business, property,
condition or creditworthiness, whether such information comes into its
possession on or before the first Event of Default or at any time thereafter.

Section 8.8             Notices of Event of Default, Etc.  In the event that the Agent shall have
acquired actual knowledge of any Event of Default or Default, the Agent shall
promptly give notice thereof to the Banks.

Section 8.9             Indemnification.  Each Bank agrees to indemnify the Agent, as
Agent (to the extent not reimbursed by the Borrower), ratably according to such
Bank’s share of the aggregate Revolving Commitment Amounts from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on or incurred by the Agent in any way relating
to or arising out of the Loan Documents or any action taken or omitted by the
Agent under the Loan Documents, provided that no Bank shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent’s
gross negligence or willful misconduct. 
No payment by any Bank under this Section shall relieve the Borrower of
any of its obligations under this Agreement.

Section 8.10           Payments and Collections.  All funds received by the Agent in respect of
any payments made by the Borrower on the Notes, Revolving Commitment Fees or
Letter of Credit Fees shall be distributed forthwith by the Agent among the
Banks, in like currency and funds as received, ratably according to each Bank’s
Revolving Percentage (except for payments of the Swing Line Notes, which shall
be paid to the Swing Line Bank).  After
any Event of Default has occurred, all funds received by the Agent, whether as
payments by the Borrower or as realization on collateral, shall (except as may
otherwise be required by law) be distributed by the Agent in the following
order: (a) first to the Agent or any Bank who has incurred unreimbursed costs
of collection with respect to any Obligations hereunder, ratably to the Agent
and each Bank in the proportion that the costs incurred by the Agent or such
Bank bear to the total of all such costs incurred by the Agent and all Banks;
(b) next to the Agent for the account of the Banks (in accordance with their
respective Revolving Percentages) for application on the Revolving Notes; (c)
next to the Agent for the account of the Banks (in accordance with their
respective Revolving Percentages) for any unpaid Revolving Commitment Fees or Letter
of Credit Fees owing by the Borrower hereunder; and (d) last to the Agent to be
held in the Holding Account to cover any outstanding Letters of Credit, provided,
however, that if any Bank shall not have funded its Swing Line
Participation Amount, as provided in Section 2.5(b), or funded a required
purchase of a risk participation in an Unpaid Drawing as provided in Section
2.16, any

 43
 

amounts otherwise payable
to such Bank in accordance with this Section shall be applied to such funding
requirements prior to any payment being made to such Bank.

Section 8.11           Sharing of Payments.  If any Bank shall receive and retain any
payment, voluntary or involuntary, whether by setoff, application of deposit
balance or security, or otherwise, in respect of Indebtedness under this
Agreement or the Revolving Notes in excess of such Bank’s share thereof as
determined under this Agreement, then such Bank shall purchase from the other
Banks for cash and at face value and without recourse, such participation in
the Revolving Notes held by such other Banks as shall be necessary to cause
such excess payment to be shared ratably as aforesaid with such other Banks;
provided, that if such excess payment or part thereof is thereafter recovered
from such purchasing Bank, the related purchases from the other Banks shall be
rescinded ratably and the purchase price restored as to the portion of such
excess payment so recovered, but without interest.  Subject to the participation purchase obligation
above, each Bank agrees to exercise any and all rights of setoff, counterclaim
or banker’s lien first fully against any Revolving Notes and participations
therein held by such Bank, next to any other Indebtedness of the Borrower to
such Bank arising under or pursuant to this Agreement and to any participations
held by such Bank in Indebtedness of the Borrower arising under or pursuant to
this Agreement, and only then to any other Indebtedness of the Borrower to such
Bank.

Section 8.12           Resignation.  If at any time U.S. Bank shall deem it advisable,
in its sole discretion, it may submit to each of the Banks and the Borrower a
written notification of its resignation as Agent under this Agreement, such
resignation to be effective upon the appointment of a successor Agent, but in
no event later than 30 days from the date of such notice.  Upon submission of such notice, the Required
Banks in consultation with the Borrower may appoint a successor Agent.

ARTICLE
9

MISCELLANEOUS

Section 9.1             Modifications.  Notwithstanding any provisions to the
contrary herein, any term of this Agreement may be amended with the written
consent of the Borrower; provided that no amendment, modification or waiver of
any provision of this Agreement or any other Loan Document or consent to any
departure therefrom by the Borrower or other party thereto shall in any event
be effective unless the same shall be in writing and signed by the Required
Banks, and then such amendment, modification, waiver or consent shall be
effective only in the specific instance and for the purpose for which
given.  (The Agent may enter into
amendments or modifications of, and grant consents and waivers to departure
from the provisions of, those Loan Documents to which the Banks are not
signatories without the Banks joining therein, provided the Agent has first
obtained the separate prior written consent to such amendment, modification,
consent or waiver from the Required Banks.) Notwithstanding the forgoing, no
such amendment, modification, waiver or consent shall:

9.1(a)      Reduce the rate or extend the time of
payment of interest thereon, or reduce the amount of the principal thereof, or
modify any of the provisions of any Note

 44
 

with respect to the
payment or repayment thereof, without the consent of the holder of each Note so
affected; or

9.1(b)      Increase the amount or extend the time of
any Revolving Commitment of any Bank, except as provided in Section 2.29 or
with the consent of all of the Banks; or

9.1(c)      Reduce the rate or extend the time of
payment of any fee payable to a Bank, without the consent of the Bank affected;
or

9.1(d)      Amend the definition of Required Banks or
otherwise reduce the percentage of the Banks required to approve or effectuate
any such amendment, modification, waiver, or consent, without the consent of
all the Banks; or

9.1(e)      Amend any of the foregoing Sections 9.1(a)
through (d) or this Section 9.1(e) without the consent of all the Banks; or

9.1(f)       Amend any provision of this Agreement
relating to the Agent in its capacity as Agent without the consent of the
Agent; or

9.1(g)      Amend any provision of this Agreement
relating to the issuance of Letters of Credit without the consent of the Agent.

Section 9.2             Expenses.  Whether or not the transactions contemplated
hereby are consummated, the Borrower agrees to reimburse the Agent upon demand
for all reasonable out-of-pocket expenses paid or incurred by the Agent
(including filing and recording costs and fees and expenses of counsel to the
Agent) in connection with the negotiation, preparation, approval, review,
execution, delivery, administration, amendment, modification and interpretation
of this Agreement and the other Loan Documents and any commitment letters
relating thereto.  The Borrower shall
also reimburse the Agent and each Bank upon demand for all reasonable
out-of-pocket expenses (including expenses of legal counsel) paid or incurred
by the Agent or any Bank in connection with the collection and enforcement of
this Agreement and any other Loan Document. 
The obligations of the Borrower under this Section shall survive any
termination of this Agreement.

Section 9.3             Waivers, etc.  No failure on the part of the Agent or the
holder of a Note to exercise and no delay in exercising any power or right
hereunder or under any other Loan Document shall operate as a waiver thereof;
nor shall any single or partial exercise of any power or right preclude any
other or further exercise thereof or the exercise of any other power or
right.  The remedies herein and in the
other Loan Documents provided are cumulative and not exclusive of any remedies
provided by law.

Section 9.4             Notices.  Except when telephonic notice is expressly
authorized by this Agreement, any notice or other communication to any party in
connection with this Agreement shall be in writing and shall be sent by manual
delivery, facsimile transmission, overnight courier or United States mail
(postage prepaid) addressed to such party at the address specified on the
signature page hereof, or at such other address as such party shall have
specified to the other party hereto in writing. 
All periods of notice shall be measured from the date of delivery
thereof if manually delivered, from the date of sending thereof if sent by
facsimile transmission, from

 45
 

the first Business Day
after the date of sending if sent by overnight courier, or from four days after
the date of mailing if mailed; provided, however, that any notice
to the Agent or any Bank under Article 2 hereof shall be deemed to have been
given only when received by the Agent or such Bank.

Section 9.5             Taxes.  The Borrower agrees to pay, and save the
Agent and the Banks 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 the Notes, which obligation of the Borrower shall
survive the termination of this Agreement.

Section 9.6             Successors and Assigns;
Disposition of Loans; Transferees. 
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that the
Borrower may not assign its rights or delegate its obligations hereunder or
under any other Loan Documents without the prior written consent of all the
Banks.  Each Bank may at any time sell,
assign, transfer, grant participations in, or otherwise dispose of any portion
(in a minimum amount of $10,000,000) of its Revolving Commitments, the
Revolving Loans and/or Advances (each such interest so disposed of being herein
called a “Transferred Interest”) to banks or other financial institutions (“Transferees”);
provided, however, that a Bank may dispose of a Transferred
Interest only with the consents of the Agent and the Borrower (which consents
shall not be unreasonably withheld) and only upon payment to the Agent by the
Banks party to such disposition of a processing and recording fee in the amount
of $3,000 for each party.  
Notwithstanding the preceding sentence, a Bank may dispose of a
Transferred Interest without consent of the borrower if an Event of Default has
occurred and is continuing.  The Borrower
agrees that each Transferee shall be entitled to the benefits of this Agreement
with respect to its Transferred Interest and that each Transferee may exercise
any and all rights of banker’s Lien, setoff and counterclaim as if such
Transferee were a direct lender to the Borrower.  If any Bank makes any assignment to a
Transferee, then upon notice to the Borrower such Transferee, to the extent of
such assignment (unless otherwise provided therein), shall become a “Bank”
hereunder and shall have all the rights and obligations of such Bank hereunder
and such Bank shall be released from its duties and obligations under this
Agreement to the extent of such assignment. 
Notwithstanding the sale by any Bank of any participation hereunder, (a)
no participant shall be deemed to be or have the rights and obligations of a
Bank hereunder except that any participant shall have a right of setoff under
Section 7.3 as if it were such Bank and the amount of its participation were
owing directly to such participant by the Borrower and (b) such Bank shall not
in connection with selling any such participation condition such Bank’s rights
in connection with consenting to amendments or granting waivers concerning any
matter under any Loan Document upon obtaining the consent of such participant
other than on matters relating to (i) any reduction in the amount of any
principal of, or the amount of or rate of interest on, any Revolving Note or
Advance in which such participation is sold, (ii) any postponement of the date
fixed for any payment of principal of or interest on any Revolving Note or
Advance in which such participation is sold, or (iii) the release of any
guaranty.  No Bank shall be permitted to
enter into any assignment or participation with any Transferee who is not a
United States Person unless such Transferee represents and warrants to such
Bank that, as at the date of such assignment of participation, it is entitled
to receive interest payments without withholding or deduction of any taxes and
such Transferee executes and delivers to such Bank on or before the date of
execution and delivery of documentation of such participation or assignment, a
United States Internal Revenue Service Form W8-BEN or W-8ECI,

 46
 

or any successor to
either of such forms, as appropriate, properly completed and claiming complete
exemption from withholding and deduction of all federal income taxes.  A “United States Person” means any citizen,
national or resident of the United States, any corporation or other entity
created or organized in or under the laws of the United States or any political
subdivision hereof or any estate or trust, in each case that is not subject to
withholding of United States federal income taxes or other taxes on payment of
interest, principal or fees hereunder.

Section 9.7             Confidentiality of Information.  The Agent and each Bank shall use reasonable
efforts to assure that information about the Borrower and its operations,
affairs and financial condition, not generally disclosed to the public or to
trade and other creditors, which is furnished to the Agent or such Bank
pursuant to the provisions hereof is used only for the purposes of this
Agreement and any other relationship between any Bank and the Borrower and
shall not be divulged to any Person other than the Banks, their Affiliates and
their respective officers, directors, employees and agents, except: (a) to
their attorneys and accountants, (b) in connection with the enforcement of the
rights of the Banks hereunder and under the Notes or otherwise in connection
with applicable litigation, (c) in connection with assignments and
participations and the solicitation of prospective assignees and participants
referred to in the immediately preceding Section, and (d) as may otherwise be
required or requested by any regulatory authority having jurisdiction over any
Bank or by any applicable law, rule, regulation or judicial process, the
opinion of such Bank’s counsel concerning the making of such disclosure to be
binding on the parties hereto.  No Bank
shall incur any liability to the Borrower by reason of any disclosure permitted
by this Section 9.7.

Section 9.8             Governing Law and Construction.  THE VALIDITY, CONSTRUCTION
AND ENFORCEABILITY OF THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF
LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE UNITED STATES
APPLICABLE TO NATIONAL BANKS.  Whenever
possible, each provision of this Agreement and the other Loan Documents and any
other statement, instrument or transaction contemplated hereby or thereby or
relating hereto or thereto shall be interpreted in such manner as to be
effective and valid under such applicable law, but, if any provision of this
Agreement, the other Loan Documents or any other statement, instrument or
transaction contemplated hereby or thereby or relating hereto or thereto shall
be held to be prohibited or invalid under such applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement, the other Loan Documents or any other statement, instrument or
transaction contemplated hereby or thereby or relating hereto or thereto.

Section 9.9             Consent to jurisdiction.  AT THE OPTION OF THE
AGENT, THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY BE ENFORCED IN ANY
FEDERAL COURT OR MINNESOTA STATE COURT SITTING IN HENNEPIN COUNTY, MINNESOTA;
AND THE BORROWER CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND
WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT.  IN THE EVENT THE BORROWER COMMENCES ANY
ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY
ARISING

 47
 

DIRECTLY
OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT, THE AGENT AT ITS
OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE
JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE
ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.

Section 9.10           Waiver of Jury Trial.  EACH OF THE BORROWER, THE
AGENT AND THE BANKS IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

Section 9.11           Survival of Agreement.  All representations, warranties, covenants
and agreement made by the Borrower herein or in the other Loan Documents and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement or any other Loan Document shall be deemed to
have been relied upon by the Banks and shall survive the making of the Loans by
the Banks and the execution and delivery to the Banks by the Borrower of the
Notes, regardless of any investigation made by or on behalf of the Banks, and
shall continue in full force and effect as long as any Obligation is
outstanding and unpaid and so long as the Revolving Commitments have not been
terminated; provided, however, that the obligations of the
Borrower under Section 9.2, 9.5 and 9.12 shall survive payment in full of the
Obligations and the termination of the Revolving Commitments.

Section 9.12           Indemnification.  The Borrower hereby agrees to defend,
protect, indemnify and hold harmless the Agent and the Banks and their
respective Affiliates and the directors, officers, employees, attorneys and
agents of the Agent and the Banks and their respective Affiliates (each of the
foregoing being an “Indemnitee” and all of the foregoing being collectively the
“Indemnitees”) from and against any and all claims, actions, damages,
liabilities, judgments, costs and expenses (including all reasonable fees and
disbursements of counsel which may be incurred in the investigation or defense
of any matter) imposed upon, incurred by or asserted against any Indemnitee,
whether direct, indirect or consequential and whether based on any federal,
state, local or foreign laws or regulations (including securities laws,
environmental laws, commercial laws and regulations), under common law or on
equitable cause, or on contract or otherwise:

(a)           by
reason of, relating to or in connection with the execution, delivery,
performance or enforcement of any Loan Document, any commitments relating
thereto, or any transaction contemplated by any Loan Document; or

(b)           by
reason of, relating to or in connection with any credit extended or used under
the Loan Documents or any act done or omitted by any Person, or the exercise of
any rights or remedies thereunder, including the acquisition of any collateral
by the Banks by way of foreclosure of the Lien thereon, deed or bill of sale in
lieu of such foreclosure or otherwise;

provided, however, that the
Borrower shall not be liable to any Indemnitee for any portion of such claims,
damages, liabilities and expenses resulting from such Indemnitee’s gross
negligence

 48
 

or willful misconduct. 
In the event this indemnity is unenforceable as a matter of law as to a
particular matter or consequence referred to herein, it shall be enforceable to
the full extent permitted by law.

This indemnification
applies, without limitation, to any act, omission, event or circumstance
existing or occurring on or prior to the later of the Termination Date or the
date of payment in full of the Obligations, including specifically Obligations
arising under clause (b) of this Section. 
The indemnification provisions set forth above shall be in addition to
any liability the Borrower may otherwise have. 
Without prejudice to the survival of any other obligation of the
Borrower hereunder the indemnities and obligations of the Borrower contained in
this Section shall survive the payment in full of the other Obligations.

Section 9.13           Captions.  The captions or headings herein and any table
of contents hereto are for convenience only and in no way define, limit or
describe the scope or intent of any provision of this Agreement.

Section 9.14           Entire Agreement.  This Agreement and the other Loan Documents
embody the entire agreement and understanding between the Borrower, the Agent
and the Banks with respect to the subject matter hereof and thereof.  This Agreement supersedes all prior
agreements and understandings relating to the subject matter hereof.  Nothing contained in this Agreement or in any
other Loan Document, expressed or implied, is intended to confer upon any
Persons other than the parties hereto any rights, remedies, obligations or
liabilities hereunder or thereunder.

Section 9.15           Counterparts.  This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.

Section 9.16           Existing Agreement.   Effective upon satisfaction of all of the
conditions precedent set forth in Article 3, this Agreement shall be deemed to
amend and restate in its entirety the Existing Agreement.  Any Loans made under the Existing Agreement
shall be deemed to be Loans hereunder and the Agent shall promptly allocate
such Loans to the Banks hereunder in accordance with the terms of this
Agreement.

Section 9.17           Patriot Act.   Each Bank hereby notifies the Borrower that
pursuant to the requirements of the Patriot Act, it is required to obtain,
verify and record information that identifies the Borrower, which information
includes the name and address of the Borrower and other information that will
allow such Bank to identify the Borrower in accordance with the Patriot Act.

(signature pages follow)

 49

 

	
  

  	
  MARTEN TRANSPORT, LTD.,

  
	
   

  	
  as Borrower

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  James J. Hinnendael

  	
   

  
	
   

  	
   

  	
  James J. Hinnendael

  
	
   

  	
   

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
  129 Marten Street

  
	
   

  	
  Mondovi, Wisconsin 54755

  
	
   

  	
  Attention: Mr. James J. Hinnendael

  
	
   

  	
   

  	
  Chief Financial Officer

  
	
   

  	
  Fax: (715) 926-4530

  
	
   

  	
  Telephone: (715) 926-4216

  
						

 

 1
 

 

	
   

  	
  U.S. BANK NATIONAL
  ASSOCIATION,

  
	
   

  	
  as Agent and a
  Bank

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  Michael J.
  Reymann

  	
   

  
	
   

  	
   

  	
  Michael J.
  Reymann

  
	
   

  	
   

  	
  Senior Vice
  President

  
	
   

  	
   

  
	
   

  	
  800 Nicollet
  Mall

  
	
   

  	
  Mail Code
  BC-MN-H03N

  
	
   

  	
  Minneapolis, MN
  55402

  
	
   

  	
  Attention:
  Michael J. Reymann

  
	
   

  	
  Fax: (612)
  303-2265

  
	
   

  	
  Telephone: (612)
  303-3781

  

 

 2
 

 

	
  

  	
  BANK OF AMERICA,
  N.A.,

  
	
   

  	
  as a Bank

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  Mark R. Motuelle

  	
   

  
	
   

  	
   

  	
   

  	
   Mark R. Motuelle

  	
   

  
	
   

  	
  Title: Senior
  Vice President

  
	
   

  	
   

  
	
   

  	
  231 S. LaSalle

  
	
   

  	
  Chicago,
  Illinois 60697

  
	
   

  	
  Attention: Mark
  R. Motuelle

  
	
   

  	
  Fax: (312)
  974-0333

  
	
   

  	
  Telephone: (312)
  828-4192

  

 

 3

 

Exhibit A-1

REVOLVING NOTE

	
  [$Commitment]

  	
  August
  31, 2006

  
	
   

  	
  Minneapolis,
  Minnesota

  

FOR VALUE RECEIVED, MARTEN TRANSPORT, LTD., a Delaware
corporation, hereby promises to pay to the order of [Bank] (the “Bank”) at the
main office of U.S. Bank National Association, as Agent for the Bank, at 800
Nicollet Mall, Minneapolis, Minnesota, in lawful money of the United States of
America in Immediately Available Funds (as such term and each other capitalized
term used herein are defined in the Credit Agreement hereinafter referred to)
on the Termination Date, the principal amount of                  
DOLLARS ([$Commitment]) or, if less, the aggregate unpaid principal amount of
the Revolving Loans made by the Bank under the Credit Agreement, and to pay
interest in like funds on the unpaid principal amount hereof from time to time
outstanding at the rates and times set forth in the Credit Agreement, computed
as set forth in the Credit Agreement.

This note is one
of the Revolving Notes referred to in the Credit Agreement dated as of August
31, 2006 (as the same has been and may hereafter be amended, restated or
otherwise modified, the “Credit Agreement”) among the undersigned, the Bank,
the other banks named therein and the Agent. 
This note is subject to certain permissive and mandatory prepayments and
its maturity is subject to acceleration, in each case upon the terms provided
in said Credit Agreement.

In the event of
default hereunder, the undersigned agrees to pay all costs and expenses of collection,
including reasonable attorneys’ fees. 
The undersigned waives demand, presentment, notice of nonpayment,
protest, notice of protest and notice of dishonor.

THE VALIDITY,
CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE GOVERNED BY THE INTERNAL
LAWS OF THE STATE OF MINNESOTA WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS
PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE UNITED STATES
APPLICABLE TO NATIONAL BANKS.

	
   

  	
  MARTEN TRANSPORT, LTD.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  

 

Exhibit A-2

SWING LINE NOTE

	
  $10,000,000

  	
  August
  31, 2006

  
	
   

  	
  Minneapolis,
  Minnesota

  

FOR VALUE RECEIVED, MARTEN TRANSPORT, LTD., a Delaware
corporation, hereby promises to pay to the order of U.S. BANK NATIONAL
ASSOCIATION (the “Bank”) at the main office of the Bank at 800 Nicollet Mall,
Minneapolis, Minnesota, in lawful money of the United States of America in
Immediately Available Funds (as such term and each other capitalized term used
herein are defined in the Credit Agreement hereinafter referred to) on the
Termination Date, the principal amount of TEN MILLION DOLLARS ($10,000,000) or,
if less, the aggregate unpaid principal amount of the Swing Line Loans made by
the Bank under the Credit Agreement, and to pay interest in like funds on the
unpaid principal amount hereof from time to time outstanding at the rates and
times set forth in the Credit Agreement, computed as set forth in the Credit
Agreement.

This note is the
Swing Line Note referred to in the Credit Agreement dated as of August 31, 2006
(as the same has been and may hereafter be amended, restated or otherwise
modified, the “Credit Agreement”) among the undersigned, the Bank, the other
banks named therein and the Agent.  This
note is subject to certain permissive and mandatory prepayments and its
maturity is subject to acceleration, in each case upon the terms provided in
said Credit Agreement.

In the event of
default hereunder, the undersigned agrees to pay all costs and expenses of
collection, including reasonable attorneys’ fees.  The undersigned waives demand, presentment,
notice of nonpayment, protest, notice of protest and notice of dishonor.

THE VALIDITY,
CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE GOVERNED BY THE INTERNAL
LAWS OF THE STATE OF MINNESOTA WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS
PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE UNITED STATES
APPLICABLE TO NATIONAL BANKS.

	
  

  	
  MARTEN TRANSPORT, LTD.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  

 

Exhibit B

Form of Borrowing Base Certificate

To:                              The
Agent and Banks party to the Credit

Agreement described herein

U.S. Bank National
Association

800 Nicollet Mall

Minneapolis, MN  55402

Attention: Michael
J. Reymann

Re:
Borrowing Base Certificate as of              ,
20   .

Ladies/Gentlemen:

Reference is made to that
certain Credit Agreement, dated as of August 31, 2006 (as amended from time to
time, the “Credit Agreement”), among MARTEN TRANSPORT, LTD. (the “Borrower”),
the Banks named therein and U.S. BANK NATIONAL ASSOCIATION, as Agent (the “Agent”).  Terms not otherwise expressly defined herein
shall have the meanings set forth in the Credit Agreement.  This letter is intended to be a Borrowing
Base Certificate under the Credit Agreement.

As
required pursuant to Section 5.1(d) of the Credit Agreement, the
Borrower hereby certifies that as of                         ,
20   , the Borrowing Base is calculated as follows:

	
  Net book value of all
  revenue-generating transportation equipment of Borrower:

  	
  $

  	
   

  	
   

  	
              

  	
   

  
	
  x 80%

  	
   

  	
  $

  	
              

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  minus
  outstanding balance of funded Indebtedness other than Obligations under the
  Credit Agreement:

  	
   

  	
  $

  	
              

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  minus
  trade accounts payable:

  	
   

  	
  $

  	
              

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  Total (Borrowing
  Base):

  	
   

  	
  $

  	
              

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  Total
  Outstandings:

  	
   

  	
  $

  	
              

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  Availability (or
  shortfall):

  	
   

  	
  $

  	
              

  	
   

  	 

									

 

	
  

  	
  MARTEN
  TRANSPORT, LTD.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
					

 

Exhibit C

Form of Compliance
Certificate

To:                              The
Agent and Banks party to the Credit

Agreement described herein

U.S. Bank National
Association

800 Nicollet Mall

Minneapolis, MN  55402

Attention: Michael
J. Reymann

Re:
Compliance Certificate as of             ,
20   .

Ladies/Gentlemen:

Reference is made to that
certain Credit Agreement, dated as of August 31, 2006 (as amended from time to
time, the “Credit Agreement”), among MARTEN TRANSPORT, LTD. (the “Borrower”),
the Banks named therein and U.S. BANK NATIONAL ASSOCIATION, as Agent (the “Agent”).  Terms not otherwise expressly defined herein
shall have the meanings set forth in the Credit Agreement.  This letter is intended to be a Compliance
Certificate under the Credit Agreement.

As required pursuant to Section
5.1(c) of the Credit Agreement, the Borrower hereby certifies that as of                    ,
20    (the “Statement Date”), the following is true, correct and
accurate in all respects:

1.  The financial statements and internal
financial analysis submitted herewith are true, correct and complete.

2.  No Default and no Event of Default, has occurred
and is continuing, except as described on 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 Borrower has taken, is taking or proposes to
take with respect to such condition or event.

3.  Covenant compliance is demonstrated as
follows:

 

Section 6.16  Fixed
Charge Coverage Ratio. (calculated for period of four consecutive fiscal
quarters ending on the Statement Date):

	
  EBITDAR:

  	
   

  	
  $

  	
                      

  	
   

  
	
  minus
  Restricted Payments:

  	
   

  	
  $

  	
                      

  	
   

  
	
  minus
  25% of Capital Expenditures (net of trade-ins):

  	
   

  	
  $

  	
                      

  	
   

  
	
  minus
  tax expenses paid in cash:

  	
   

  	
  $

  	
                      

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total:

  	
   

  	
  $

  	
   

  
	
  to

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Interest
  Expense:

  	
   

  	
  $

  	
                      

  	
   

  
	
  plus
  operating lease expense for transportation equipment:

  	
   

  	
  $

  	
                      

  	
   

  
	
  plus
  1/6 x Total Liabilities bearing interest:

  	
   

  	
  $

  	
                      

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Ratio:

  	
   

  	
       
  to 1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Required:
  not less than 1.75 to 1.00.

  	
   

  	
   

  	
   

  

Section 6.17  Cash
Flow Leverage Ratio. (calculated for period of four consecutive fiscal
quarters ending on the Statement Date):

	
  Capitalized Lease
  Obligations:

  	
   

  	
  $

  	
                     

  	
   

  
	
  plus
  Total Liabilities bearing interest (as of last day of period):

  	
   

  	
  $

  	
                     

  	
   

  
	
  plus
  stated amount of Letters of Credit (as of the last day of period):

  	
   

  	
  $

  	
                     

  	
   

  
	
  plus
  6 x transportation equipment operating lease expense:

  	
   

  	
  $

  	
                     

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total:

  	
   

  	
  $

  	
   

  
	
  to

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EBITDAR:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Ratio:

  	
   

  	
         
  to 1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Required:
  not more than 2.50 to 1.00.

  	
   

  	
   

  	
   

  

 

EBITDAR is calculated as follows:

EBITDAR:

	
  Consolidated Net Income:

  	
   

  	
  $

  	
                      

  	
   

  
	
  plus,
  to the extent deducted in determining

  Consolidated Net Income:

  	
   

  	
   

  	
   

  
	
  income taxes:

  	
   

  	
  $

  	
                      

  	
   

  
	
  Interest
  Expense:

  	
   

  	
  $

  	
                      

  	
   

  
	
  transportation
  equipment operating lease expense:

  	
   

  	
  $

  	
                      

  	
   

  
	
  depreciation:

  	
   

  	
  $

  	
                      

  	
   

  
	
  amortization:

  	
   

  	
  $

  	
                      

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  plus or minus
  other non-operating gains or losses:

  	
   

  	
  $

  	
                      

  	
   

  
	
  (not including
  gains or losses from the sale of revenue-generating capital assets)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total:

  	
   

  	
  $

  	
                      

  	
   

  

 

	
  

  	
  MARTEN TRANSPORT, LTD.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
					

 

Exhibit D

Form of Legal Opinion

August 31, 2006

To the Financial
Institutions

Party to the Credit
Agreement

Referred to Below

and U.S. Bank National
Association, as Agent

800 Nicollet Mall

Mail Code BC-MN-H03

Minneapolis,
Minnesota 55402

Ladies
and Gentlemen:

We have acted as counsel to Marten Transport, Ltd., a
Delaware corporation, as the borrower (the “Borrower”), in connection
with its execution, delivery, and performance under the following documents:

(i)            that
certain Credit Agreement, dated as of August 31, 2006, entered into by and
among the Borrower, the lenders party thereto (the “Banks”), and U.S.
Bank National Association, as agent (the “Agent”) for the Banks (the “Credit
Agreement”);

(ii)           those
certain Revolving Notes, each dated as of August 31, 2006, made by the Borrower
in favor of each of the Banks (the “Revolving Notes”);

(iii)          that
certain Swing Line Note, dated as of August 31, 2006, made by the Borrower in
favor of the Agent (the “Swing Line Note”); and

(iv)          that
certain fee letter agreement, dated as of August 31, 2006, entered into by and
between the Borrower and the Agent (the “Fee Letter”).

Capitalized terms used herein but not otherwise defined
herein shall have the respective meanings ascribed to such terms in the Credit
Agreement.

We
have examined originals, or copies certified or otherwise identified to our
satisfaction, of (i) the Credit Agreement; (ii) the Revolving Notes; (iii) the
Swing Line Note; and (iv) the Fee Letter (the aforementioned documents are
collectively referred to herein as the “Loan Documents”).

In
rendering our opinions herein, we have examined the certificate of
incorporation and bylaws of the Borrower as in effect on the date hereof.  We also have examined such certificates of
public officials, including certain certificates of good standing and
certificates relating to foreign qualifications, corporate documents and
records and other certificates, opinions and instruments, and have made such
other investigation, as we have deemed necessary in connection with this
opinion.  As to questions of fact
relevant to this opinion, without any independent investigation or
verification, we have relied upon, and assumed the accuracy of, the
representations and warranties of each party as to factual matters thereto and
have relied upon certificates of officers of the Borrower and written
statements of certain public officials.

In rendering this
opinion, we have assumed:

 

(a)           the genuineness of all signatures,
the legal capacity of all natural Persons, the authenticity of all documents
submitted to us as originals and the conformity to originals of all documents
submitted to us as certified or photostatic copies; and

(b)           that each of the Loan Documents has
been duly executed and delivered by each of the parties thereto other than the
Borrower, and that each of such parties other than the Borrower has the
corporate power and authority to enter into and perform such Loan Documents.

We also wish to
advise you of the following:

A.            We are specifically providing no
opinion regarding whether (1) franchise, income, sales, gross receipts, profits
or other like taxes are payable in the State of Minnesota by any party that may
seek to enforce the Loan Documents against the Borrower (an “Enforcing Party”)
under Minnesota law or in Minnesota courts; or (2) an Enforcing Party is
required to file a business activity report pursuant to Minnesota Statutes
Section 290.371 (“Business Activity Report”).  Failure to comply with the Business Activity
Report requirement, if applicable, prevents an out-of-state entity from using
the courts in Minnesota for all contracts executed at any time before the end
of the period for which the entity failed to file such required report and the
entity does not have cause of action on which it may bring suit in the State of
Minnesota.  If the entity subsequently
files the report and pays all taxes, interest and civil penalties due, the
courts in which the issues arise must excuse non-compliance with the Business
Activity Report filing requirement.

B.            No foreign corporation may transact
business in the State of Minnesota unless it holds a Certificate of Authority
to do so.  Without excluding other
activities which may not constitute transacting business in the State of
Minnesota, a foreign corporation shall not be considered to be transacting
business in the State of Minnesota solely by reason of the corporation making,
participating in or investing in loans or creating, as borrower or lender, or
otherwise acquiring indebtedness or mortgage or other security interests in
real or personal property or securing or collecting its debts or enforcing any
rights in property securing them.  Hence,
to the extent that the actions of a lender are limited strictly to the above,
it will not be necessary for the lender to qualify as a foreign corporation and
obtain a Certificate of Authority.  The
statutory exception to the necessity to qualify does not go to a corporation
whose other activities in the State of Minnesota would require qualification.

Upon the basis of
the foregoing, we are of the opinion that, under applicable law in effect on
the date of this opinion:

1.             The Borrower is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Delaware.  The Borrower is duly qualified to do business and is in good
standing or good status as a foreign corporation in each jurisdiction set forth
on Exhibit A hereto.

2.             The Borrower has full corporate
power and authority to own and operate its properties and assets, carry on its
business as presently conducted, and enter into and perform its obligations
under the Loan Documents.

 

3.             The execution and delivery of the
Loan Documents, the performance by the Borrower of its obligations under the
Loan Documents, and the borrowing by the Borrower under the Credit Agreement,
have been duly authorized by all necessary corporate action, and each of the
Loan Documents have been duly executed and delivered by the Borrower, and each
of such Loan Documents constitutes the valid and binding obligation of the
Borrower, enforceable in accordance with its respective terms.

4.             The execution and delivery by the
Borrower of the Loan Documents and the performance by the Borrower of its
obligations under such Loan Documents, each in accordance with its respective
terms, do not conflict with the Certificate of Incorporation or the Bylaws of
the Borrower.  The execution and delivery
by the Borrower of the Loan Documents and the performance by the Borrower of
its obligations under such Loan Documents, each in accordance with its terms,
do not constitute a violation of or a default under any material contract or
other material agreement or instrument to which the Borrower is a party that is
listed as an exhibit to the Borrower’s Annual Report on Form 10-K for the year
ended December 31, 2005 (except that we express no opinion with respect to
compliance with financial covenants or tests).

5.             The execution and delivery by the
Borrower of the Loan Documents and the performance by the Borrower of its
obligations under such Loan Documents, each in accordance with its terms, do
not violate any provision of applicable law, statute, rule, or regulation
(other than state securities and blue sky laws, as to which we express no
opinion and except that any right to indemnity and contribution may be limited
by federal and state securities laws and public policy considerations) that we,
based on our experience, recognize as applicable to the Borrower in a
transaction of this type.

6.             The execution and delivery by the
Borrower of the Loan Documents and the performance by the Borrower of its
obligations under such Loan Documents, each in accordance with its terms, do
not, to our knowledge, contravene any writ, order or decree of any governmental
instrumentality that has jurisdiction over the Borrower.

7.             To our knowledge, there are no
actions, suits, or proceedings pending or overtly threatened in writing against
the Borrower before any court or arbitrator or by or before any administrative
agency or governmental authority, which, if adversely determined, could
reasonably be expected to have a material adverse effect on the business or
operations of the Borrower.

8.             No consent or approval of any
governmental instrumentality, which has not been obtained or taken and is not
in full force and effect, is required in connection with (i) the execution or
performance of any of the Loan Documents by the Borrower, or (ii) any
borrowings that may be requested from time to time by the Borrower pursuant to
the terms of the Credit Agreement except as may be required to be made or
obtained by the Banks or the Agent as a result of their involvement in the
transactions contemplated by the Loan Documents.

9.             The Borrower is not an “investment
company” or a company “controlled” by an “investment company,” as such terms
are defined in the Investment Company Act of 1940, as amended.

 

10.           To our knowledge, the Borrower is not
engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System, and, to our knowledge, no portion of
the proceeds of the Loans will be used (i) to purchase or carry margin stock or
(ii) to extend credit to others for the purpose of purchasing or carrying any
margin stock.

The
opinions set forth above are subject to the following qualifications:

a.             The opinions expressed herein are
based upon and limited to matters governed by: (i) the laws of the State of
Minnesota, (ii) the corporate laws of the State of Delaware, and (iii) the
federal laws of the United States of America. 
We assume no responsibility as to the applicability thereto, or the
effect thereon, and we expressly exclude from this opinion, the laws of any
other jurisdiction.

b.             The enforceability of the Loan
Documents against the Borrower may be limited by bankruptcy, insolvency,
fraudulent conveyance, fraudulent transfer, reorganization, moratorium and
other similar laws relating to or affecting creditors’ rights generally and by
general equitable principles (regardless of whether enforcement is sought in
equity or at law), including, without limitation, principles regarding good
faith and fair dealing.  In addition, we
express no opinion as to the enforceability of (i) provisions relating to the
availability of specific remedies or relief, including indemnification and
contribution, or the release or waiver of any remedies or rights or time
periods in which claims are required to be asserted, (ii) provisions that allow
cumulative remedies, late charges or default interest, or (iii) provisions
relating to choice of forum.

c.             Where
we render an opinion based upon factual matters “known to us,” “to our
knowledge,” “to the best of our knowledge” or similar language, it is based
solely upon inquiries of this firm’s attorneys who have worked on the above
described transactions, an examination of documents made available to us by the
Borrower, and inquiries of officers of the Borrower.  We have relied on written statements of
officers of the Borrower covering certain of such matters.

The
opinions set forth herein are solely for your benefit and the benefit of your
legal counsel, assignees and participants, and you and your counsel, assignees,
participants, and agents of the foregoing hereby are authorized to rely on such
opinions.  The opinions set forth herein
may not be relied upon by, and copies of such opinion may not be delivered to,
any other person without the prior written consent of the undersigned.  This opinion is given only as of the date
hereof and we expressly disclaim any duty to update the statements made herein.

Very truly yours,

OPPENHEIMER
WOLFF & DONNELLY LLP

 

Exhibit A

FOREIGN JURISDICTIONS

	
  ENTITY

  	
   

  	
  JURISDICTION

  
	
  Marten Transport, Ltd.

  	
   

  	
  WisconsinExhibit 10.42

FIFTH
AMENDMENT TO 

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

This Fifth Amendment to Amended and
Restated Loan and Security Agreement (the “Fifth Amendment”), dated as of the 5th day of September, 2006 is made by and among
IWT TESORO CORPORATION, a Nevada corporation with its chief executive office
and principal place of business at Suite 10, 191 Post Road West, Westport,
Connecticut 06880, INTERNATIONAL WHOLESALE TILE, INC., a Florida corporation
with its chief executive office and principal place of business at 3500 S.W. 42nd Avenue, Palm City, Florida 34990; THE TILE
CLUB, INC., a Delaware corporation with its chief executive office and
principal place of business at Suite 10, 191 Post Road West, Westport,
Connecticut 06880 (“The Tile Club”), and TESORO DIRECT, INC., a Delaware
corporation with its chief executive office and principal place of business at
Suite 10, 191 Post Road West, Westport, Connecticut 06880 (“TDI”) (jointly and
severally and together with their successors and assigns, collectively, the
“Borrower”) and BANK OF AMERICA, N.A., with an office at 200 Glastonbury
Boulevard, Glastonbury, Connecticut 06033 (the “Lender”).

W I T N E S S E T H:

WHEREAS, Borrower and the Lender are parties to a certain Amended and
Restated Loan and Security Agreement dated as of December 31, 2004, as amended
by that certain First Amendment to Amended and Restated Loan and Security
Agreement, that certain Second Amendment to Amended and Restated Loan and
Security Agreement, that certain Third Amendment to Amended and Restated Loan
and Security Agreement and that certain Fourth Amendment to Amended and
Restated Loan and Security Agreement (collectively, the “Loan Agreement”),
pursuant to which the Lender agreed to extend to Borrower a revolving loan in
the principal amount of up to $25,000,000; and

WHEREAS, Borrower and Lender desire to amend the Loan Agreement to
change certain provisions and to increase the original principal amount
available thereunder by ONE MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($1,500,000.00); and

WHEREAS, Section 11.3 of the Loan Agreement provides, in part, that no
modification or amendment of the Loan Agreement shall be effective unless the
same shall be in writing and signed by the parties thereto;

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

1.             Defined Terms. Capitalized terms used in this Fifth
Amendment which are defined in the Loan Agreement shall have the same meanings
as defined therein, unless otherwise defined herein.

 

2.             Amendment.

(a)           The first full paragraph of Section 1 of the
Loan Agreement, entitled “Credit Facility”, is hereby deleted in its
entirety and replaced by the following:

Subject to the terms
and conditions of, and in reliance upon the representations and warranties made
in, this Agreement and the other Loan Documents, Lender agrees to make a Total
Credit Facility of up to $26,500,000 available upon Borrower’s request
therefor, as follows:

(b)           Section 4.1 of the Loan Agreement, entitled “Term
of the Agreement”, is hereby deleted in its entirety and replaced with the
following:

4.1           Term
of Agreement.  Subject to Lender’s
right to cease making Loans to Borrower upon or after the occurrence of any
Default or Event of Default, this Agreement shall be in effect for a period,
through and including December 10, 2006 (the “Term”).

(c)           The
following Section, entitled “Prepayment of Subordinated Debt” is hereby
added as a new Section 8.2.15 of the Loan Agreement:

Section 8.2.15 Prepayment
of Subordinated Debt.  Use any of the
proceeds of the Loan to prepay any Subordinated Debt; provided, however,
the proceeds of the Loan may be used for regularly scheduled amortization
payments of said Subordinated Debt.

(d)           Section 8.3.3 of the Loan Agreement, entitled “Minimum Fixed Charge
Coverage Ratio”, is hereby deleted in its entirety and replaced with the
following:

8.3.3        Minimum
Fixed Charge Coverage Ratio.
Maintain a ratio of EBITDA less (1) Unfunded Capital Expenditures and
less (2) taxes to Principal Paid (not including the Loan) plus (i)
Interest Expenses and (ii) Distributions of not less than the following ratios
for each of the following fiscal quarters:

	
  Ratio

  	
   

  	
  Fiscal
  Quarter Ending

  
	
   

  	
   

  	
   

  
	
  0.50 : 1.0

  	
   

  	
  September 30,
  2006

  

This covenant shall be tested on September 30,
2006 by reference to the fiscal quarter then ending.

(e)           The
following Section, entitled “Minimum EBITDA” is hereby added as a new
Section 8.3.4 of the Loan Agreement:

 

8.3.4        Minimum EBITDA.  Maintain EBITDA of not less than the
following amounts for each of the following calendar months in the 2006 fiscal
year:

	
  Amount

  	
   

  	
  Calendar
  Month

  
	
   

  	
   

  	
   

  
	
  $155,000.00

  	
   

  	
  August

  
	
  $165,000.00

  	
   

  	
  September

  
	
  $180,000.00

  	
   

  	
  October

  
	
  $165,000.00

  	
   

  	
  November

  
	
  $150,000.00

  	
   

  	
  December

  

 

This
covenant shall be tested on the last day of each calendar month by reference to
the calendar month then ending.

(f)            The
following Section, entitled “Total Net Worth” is hereby added as a new
Section 8.3.5 of the Loan Agreement:

8.3.5        Total
Net Worth.  Maintain a total net worth on Borrower’s
balance sheet, as determined per GAAP, plus the Laurus Master Fund, Ltd.
loan discount cost as indicated on the Borrower prepared financial statements,
of not less than $0 as of the fiscal quarter ending September 30, 2006.  This covenant shall be tested on the last day
of each fiscal quarter by reference to the fiscal quarter then ended.

(g)           Section
8.2.8 of the Loan Agreement, entitled “Unfunded Capital Expenditures”,
Section 8.3.1 of the Loan Agreement, entitled “Leverage” and Section
8.3.2 of the Loan Agreement, entitled “Inventory Turnover” are hereby
deleted in their entirety and replaced with the phrase “Intentionally Omitted”.

(h)           Appendix
A of the Loan Agreement, entitled “General Definitions”, is hereby
amended by deleting subsection (i) of the definition of the term “Borrowing
Base” and replacing it with the following:

(i)            $26,500,000.00
at such date; or

(i)            Appendix
A of the Loan Agreement, entitled “General Definitions”, is hereby
amended by deleting Section (ii)(c) of the definition of the term “Borrowing
Base” and replacing it with the following:

(c)           the
lesser of (1) $17,000,000.00 or (2) the sum of (1) 65% of the value of Eligible
Inventory consisting of floor tile, wall tile, marble and decorative tile, plus
(2) 50% of the value of Eligible Inventory consisting of trim; plus (3)
40% of Listello; plus (4) 10% of Intransit Inventory at such date, each
calculated on the basis of the lower of cost or market with the cost of raw
materials and finished goods calculated on a first-in, first-out basis; minus

 

(j)            Appendix
A of the Loan Agreement, entitled “General Definitions”, is hereby
amended by deleting the definition of the term “Total Credit Facility”
and replacing it with the following:

Total Credit
Facility - $26,500,000.00.

(k)           Exhibit
A of the Loan Agreement, entitled “Amended and Restated Revolving Credit
Note”, is hereby replaced in its entirety by Exhibit A, attached hereto and
made a part hereof.

3.             No Other Changes. Except as explicitly amended by this Fifth
Amendment, all of the terms and conditions of the Loan Agreement shall remain
in full force and effect and shall apply to any loan, letter of credit or swing
line loans thereunder.

4.             Representations and Warranties. Borrower hereby represents and warrants to
Lender as follows:

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

(b)           The execution, delivery and performance by Borrower of this Fifth
Amendment have been duly authorized by all necessary corporate action and do
not (i) require any authorization, consent or approval by any governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, (ii) violate any provision of any law, rule or regulation or of
any order, writ, injunction or decree presently in effect, having applicability
to Borrower, or the articles of incorporation or by-laws of Borrower, or
(iii) result in a breach of or constitute a default under any indenture or
loan or credit agreement or any other agreement, lease or instrument to which
Borrower is a party or by which it or its properties may be bound or affected.

(c)           All of the representations and warranties contained in Section 7 of the
Loan Agreement are correct on and as of the date hereof as though made on and
as of such date, except to the extent that such representations and warranties
relate solely to an earlier date.

5.             References. All references in the Loan Agreement to “this Agreement” shall be
deemed to refer to the Loan Agreement as amended hereby; and any and all
references in the Loan Documents to the Loan Agreement shall be deemed to refer
to the Loan Agreement as amended hereby.

6.             Release. Borrower hereby absolutely and unconditionally releases and forever
discharges the Lender, and any and all participants, parent corporations,
subsidiary corporations, affiliated corporations, insurers, indemnitors,
successors and assigns thereof, together with all of the present and former
directors, officers, agents and employees of any of the foregoing, from any and
all claims, demands or causes of action of any kind, nature or description,
whether arising in

 

law
or equity or upon contract or tort or under any state or federal law or
otherwise, which Borrower has had, now has or has made claim to have against
any such person for or by reason of any act, omission, matter, cause or thing
whatsoever arising from the beginning of time to and including the date of this
Fifth Amendment, whether such claims, demands and causes of action are matured
or unmatured or known or unknown.

7.             Confirmation of other Loan Documents. 
Borrower agrees notwithstanding the amendment of the Loan Agreement
pursuant to this Fifth Amendment, that the other Loan Documents and its
agreements, covenants, obligations, representations and warranties thereunder
and therein are hereby expressly ratified, confirmed and restated.

8.             Benefit.  This Fifth Amendment shall
inure to the benefit of and bind the parties hereto and their respective
successors and assigns.

9.             Fees and Expenses. 
Borrower agrees to pay the reasonable legal and other fees, commissions,
costs, charges, taxes and other expenses incurred by Lender in connection with
the preparation, execution and delivery of this Fifth Amendment and the fees
and disbursements of Lender’s counsel.

10.           Miscellaneous.  This
Fifth Amendment may be executed in any number of counterparts, each of which
when so executed and delivered shall be deemed an original and all of which
counterparts, taken together, shall constitute one and the same instrument.

 

[signature page follows]

 

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

	
  

  	
  IWT TESORO CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Henry J.
  Boucher, Jr.

  
	
   

  	
   

  	
  Its President

  
	
   

  	
   

  	
  Duly Authorized

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INTERNATIONAL
  WHOLESALE TILE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Paul F. Boucher

  
	
   

  	
   

  	
  Its President

  
	
   

  	
   

  	
  Duly Authorized

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE TILE CLUB,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Henry J.
  Boucher, Jr.

  
	
   

  	
   

  	
  Its President

  
	
   

  	
   

  	
  Duly Authorized

  

 

 

 

	
  

  	
  TESORO DIRECT,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Henry J.
  Boucher, Jr.

  
	
   

  	
   

  	
  Its President

  
	
   

  	
   

  	
  Duly Authorized

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BANK OF AMERICA,
  N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Deirdre Sikora

  
	
   

  	
   

  	
  Its Vice
  President

  
	
   

  	
   

  	
  Duly Authorized

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  STATE OF

  	
  )

  	
   

  
	
   

  	
  ) ss.

  	
   

  
	
  COUNTY OF

  	
  )

  	
   

  

 

On this          day
of August, 2006, before me the undersigned officer, personally appeared Henry
J. Boucher, Jr., who acknowledged himself to be the President of IWT Tesoro
Corporation, a Nevada corporation, and that he, as such President, being
authorized so to do, executed the foregoing instrument for the purposes therein
contained as his free act and deed and the free act and deed of the
corporation.

In Witness Whereof I hereunto set my hand.

 

	
   

  	
   

  	
   

  
	
  

  	
  Commissioner of
  the Superior Court

  
	
   

  	
  Notary Public

  
	
   

  	
  My commission
  expires:

  

 

 

 

	
  STATE OF

  	
  )

  	
   

  
	
   

  	
  ) ss.

  	
   

  
	
  COUNTY OF

  	
  )

  	
   

  

 

On this          day
of August, 2006, before me the undersigned officer, personally appeared Paul F.
Boucher, who acknowledged himself to be the President of International
Wholesale Tile, Inc., a Florida corporation, and that he, as such President,
being authorized so to do, executed the foregoing instrument for the purposes
therein contained as his free act and deed and the free act and deed of the
corporation.

In Witness Whereof I hereunto set my hand.

 

	
   

  	
   

  	
   

  
	
  

  	
  Commissioner of
  the Superior Court

  
	
   

  	
  Notary Public

  
	
   

  	
  My commission
  expires:

  

 

	
  STATE OF

  	
  )

  	
   

  
	
   

  	
  ) ss.

  	
   

  
	
  COUNTY OF

  	
  )

  	
   

  

 

On this          day
of August, 2006, before me the undersigned officer, personally appeared Henry
J. Boucher, Jr., who acknowledged himself to be the President of The Tile Club,
Inc., a Delaware corporation, and that he, as such President, being authorized
so to do, executed the foregoing instrument for the purposes therein contained
as his free act and deed and the free act and deed of the corporation.

In Witness Whereof I hereunto set my hand.

 

	
   

  	
   

  	
   

  
	
  

  	
  Commissioner of
  the Superior Court

  
	
   

  	
  Notary Public

  
	
   

  	
  My commission
  expires:

  

 

 

 

	
  STATE OF

  	
  )

  	
   

  
	
   

  	
  ) ss.

  	
   

  
	
  COUNTY OF

  	
  )

  	
   

  

 

On this          day
of August, 2006, before me the undersigned officer, personally appeared Henry
J. Boucher, Jr., who acknowledged himself to be the President of Import
Flooring Group, Inc., a Delaware corporation, and that he, as such President,
being authorized so to do, executed the foregoing instrument for the purposes
therein contained as his free act and deed and the free act and deed of the
corporation.

In Witness Whereof I hereunto set my hand.

 

	
   

  	
   

  	
   

  
	
  

  	
  Commissioner of
  the Superior Court

  
	
   

  	
  Notary Public

  
	
   

  	
  My commission
  expires:

  

 

 

EXHIBIT A

SECOND
AMENDED AND RESTATED REVOLVING CREDIT NOTE

	
  $26,500,000.00

  	
  December 31, 2004

  
	
   

  	
  Amended and
  Restated as of August    , 2006

  
	
   

  	
  Hartford,
  Connecticut

  

 

FOR VALUE RECEIVED, the
undersigned, IWT TESORO CORPORATION,
a Nevada corporation, INTERNATIONAL WHOLESALE
TILE, INC., a Florida corporation, THE TILE CLUB, INC., a Delaware
corporation, and IMPORT FLOORING GROUP, INC., a
Delaware corporation (collectively “Borrower”),
jointly and severally, promises to pay to the order of BANK OF
AMERICA, N.A. (“Lender”), at
the office of the Lender, located at 200 Glastonbury Boulevard, Glastonbury,
Connecticut 06033, in lawful money of the United States of America and in
immediate available funds, the principal amount of TWENTY-SIX MILLION FIVE
HUNDRED THOUSAND AND NO/100 DOLLARS ($26,500,000.00) or so much of such
principal amount as shall be outstanding and unpaid on December 10, 2006.

This Amended and
Restated Revolving Credit Note (the “Note”) is the
Revolving Credit Note referred to
in, and is issued pursuant to, that certain Amended and Restated Loan and
Security Agreement between Borrower and Lender dated December 31, 2004
(hereinafter, as amended from time to time, the “Loan
Agreement”), and is entitled to all of the benefits and security of
the Loan Agreement.  This Note has been
issued by Borrower to amend and restate that certain Amended and Restated
Revolving Credit Note, dated December 31, 2004 in the original principal amount
of up to TWENTY-FIVE MILLION AND NO/100 DOLLARS ($25,000,000.00) (the “Original
Note”) in its entirety and evidences the same indebtedness that has been
evidenced by the Original Note plus additional indebtedness in the original
principal amount of ONE MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($1,500,000.00).  The Original Note is
hereby replaced and superseded in its entirety by this Second Amended and
Restated Revolving Credit Note.  This
Note is not a novation of the Original Note. 
Any reference to the Note in any of the Loan Documents shall hereafter
mean this Note as the same may be modified, amended, supplemented, extended, or
consolidated in writing, and any note(s) issued in exchange therefore or in
replacement thereof. All of the terms, covenants and conditions of the Loan
Agreement and the Security Documents are hereby made a part of this Note and
are deemed incorporated herein in full. 
All capitalized terms used herein, unless otherwise specifically defined
in this Note, shall have the meanings ascribed to them in the Loan Agreement.

The rate of
interest in effect hereunder shall be calculated with reference to the Base
Rate or LIBOR, as applicable, as more specifically provided in the Loan
Agreement.  The interest due shall be
computed in the manner provided in the Loan Agreement.

Except
as otherwise expressly provided in the Loan Agreement, if any payment on this
Note becomes due and payable on a day other than a Business Day, the maturity
there of shall be

 

extended to the
next succeeding Business Day, and with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension.  Notwithstanding the
foregoing, if any portion of the Revolving Credit Loans evidenced by this
promissory note constitutes a LIBOR Advance, and an extension of the maturity
of any payment hereon would cause the maturity thereof to occur during the next
calendar month, then such payment shall mature on the next preceding Business
Day.

This Note shall be
subject to mandatory prepayment in accordance with the provisions of Section 3.3 of the Loan Agreement.  Borrower may also terminate the Loan
Agreement and, in connection with such termination, prepay this Note in the
manner provided in Section 4 of
the Loan Agreement.

Upon
the occurrence and continuation of any one or more of the Events of Default
specified in the Loan Agreement which have not been cured by Borrower or waived
by Lender, Lender may declare all Obligations evidenced hereby to be
immediately due and payable (except with respect to any Event of Default set
forth in subsection 10.1.10 of the Loan Agreement,
in which case all Obligations evidenced hereby shall automatically become
immediately due and payable without the necessity of any notice or other
demand) without presentment, demand, protest or any other action or obligation
of the Lender.

Time
is of the essence of this Note.  Borrower
hereby waives presentment, demand, protest and notice of any kind.  No failure to exercise, and no delay in
exercising, any rights hereunder on the part of the holder hereof shall operate
as a waiver of such rights.

Wherever possible,
each provision of this Note shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Note
shall be prohibited or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or remaining provisions of this
Note.  No delay or failure on the part of
Lender in the exercise of any right or remedy hereunder shall operate as a
waiver thereof, nor as an acquiescence in any default, nor shall any single or
partial exercise by Lender of any right or remedy preclude any other right or
remedy.  Lender, at its option, may
enforce its rights against any collateral securing this Note without enforcing
its rights against Borrower, any guarantor of the indebtedness evidenced hereby
or any other property or indebtedness due or to become due to Borrower.  Borrower agrees that, without releasing or
impairing Borrower’s liability hereunder, Lender may at any time release,
surrender, substitute or exchange any collateral securing this Note and may at
any time release any party primarily or secondarily liable for the indebtedness
evidenced by this Note.

The validity, interpretation and
enforcement of this promissory note shall be governed by the internal laws of
the state of Connecticut without giving effect to the conflict of laws
principles thereof.

 

[signature page
follows]

 

[signature
page to Second Amended and Restated Revolving Credit Note]

 

	
  

  	
  IWT TESORO CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Henry J.
  Boucher, Jr.

  
	
   

  	
   

  	
  Its President

  
	
   

  	
   

  	
  Duly Authorized

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INTERNATIONAL
  WHOLESALE TILE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Paul F. Boucher

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Duly Authorized

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE TILE CLUB,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Henry J.
  Boucher, Jr.

  
	
   

  	
   

  	
  Its President

  
	
   

  	
   

  	
  Duly Authorized

  

 

 

 

	
  

  	
  IMPORT FLOORING GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Henry J.
  Boucher, Jr.

  
	
   

  	
   

  	
  Its President

  
	
   

  	
   

  	
  Duly Authorized

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